Local tax newsSlovak Republic - Implementation of Anti-Tax Avoidance Directive – Approved by Government The government has approved the bill that implements Anti-Tax avoidance measures as provided in ATAD (EU Council Directive 2016/1164). The main provisions includes changes in “patent box” regime, exit taxation and CFC legislation. The new law will enter in force 1 January 2018, CFC rules will be effective from 1 January 2019. Spain - New Obligation for Taxpayers to Report Related-Party Transactions A new ministerial order has been issued that requires corporate taxpayers to report transactions between related parties in the jurisdictions that are identified as “tax havens”. Reporting obligation applies retroactively for the time period from 1 January 2016. Sri Lanka - New Income Tax Law The Parliament passed the new income tax law that will provide increased certainty for investors and taxpayers. One of the important modifications for corporate taxpayers are changes in currently existing tax rates that be merged in three main groups:
BEPS newsArgentina - CbC reporting - Schedule and Instructions Published The Federal Tax Administration has published the regulatory framework (General Resolution 4130-E ) for country-by-country (CbC) reporting applicable to fiscal years commencing on or after 1 January 2017. The rules entered into force on 20 September 2017 and apply to:
Hungary - Implementation of BEPS Action 13 – Draft Law Published Draft legislation implementing transfer pricing documentation requirements in line with BEPS Action 13 has been published by the Hungarian government. The draft legislation introduces the Master file and Local file documentation requirements in addition to the applicable country-by-country reporting requirements. The three-tiered on transfer pricing documentation is in line with the OECD standards and will apply to resident companies as well as permanent establishments of non-resident Treaty newsCambodia - Thailand
On 7 September 2017, Cambodia and Thailand signed a tax treaty in Phnom Penh. Further developments will be reported as they occur. Estonia - Japan On 30 August 2017, the Estonia - Japan Income Tax Treaty (2017) was signed in Tallinn. Further developments will be reported as they occur. Kuwait - Turkey On 14 September 2017, Kuwait and Turkey signed an amending protocol to update the Kuwait - Turkey Income and Capital Tax Treaty (1997), in Ankara. Further developments will be reported as they occur. If these subjects are something which you find interesting and would like to discuss further we are happy to be at your service. Contact us at sales@comtaxit.com. Local tax newsLatvia - CIT reform in Latvia On 28 July 2017, a new Corporate Income Tax Law was adopted. Effective from 1 January, 2018, the income tax will be paid at the time of profit-distribution rather than at the time profit is gained. The new CIT rate will be 20% instead of the current rate of 15%. Retained profits will not be subject to CIT. CIT credits for business activities in Free Ports and Special Economic Zones will remain unchanged. Additionally a new method of calculation of the tax base will be introduced. The tax base will be adjusted by a coefficient as provided by the Law. Transition rules will apply. Poland - New Anti-tax Avoidance Measures to be introduced The Polish Ministry of Finance has proposed changes in Corporate Income Tax Law partially implementing provisions of the Anti-Tax Avoidance Directive (ATAD). The main measures will include: - Changes in thin capitalization rules that will introduce interest deduction limitation up to 30% of taxpayers EBITDA. The new rules will not apply to financial institutions as well as to debt amounts that do not exceeds PLN 120,000. - With relation to group taxation, the new legislation will:
Proposed provisions are expected to enter into force 1 January, 2018. BEPS newsLuxembourg - Bill on new IP Regime Submitted to Parliament Luxembourg has announced a new IP regime that contains a special tax incentive for certain income from intellectual property rights. The Bill aims to introduce the "modified nexus approach" that will be in line with OECD BEPS action plan. Under the new regime taxpayers will still be able to enjoy 80% exemption from CIT on income from patents and copyright software, resulting into effective tax rate of 5, 2%. However, the new rules will considerably change the conditions for qualifying assets and expenditures. Bulgaria - Legislation Implementing BEPS Measures Gazetted In order to continue implementation of BEPS measures, Bulgaria has adopted amendments to existing rules concerning mandatory automatic exchange of advance cross-border tax rulings as well as country-by-country (CbC) reporting requirements. The new rules define that taxpayers, subject to CbC reporting in Bulgaria, must submit CbC reports within 12 months from the last day of a reporting fiscal year. Non-compliance may be subject to penalties in Bulgaria. The deadline for filing the first CbC report is 31 December 2017. Treaty newsArgentina - Mexico
The Argentina - Mexico Income and Capital Tax Treaty (2015) will enter into force. The treaty generally applies from 1 January 2018 and replaces the Argentina - Mexico Transport Tax Treaty (1997). Belarus - Pakistan The amending protocol, signed on 5 October 2016, to the Belarus - Pakistan Income Tax Treaty (2004) entered into force. The protocol states that reduced withholding tax rate for qualified dividends is adjusted from 10% to 11%. The protocol generally applies from 1 July 2017 for Pakistan and from 1 January 2018 for Belarus. Hong Kong - Saudi Arabia The Hong Kong - Saudi Arabia Income Tax Agreement (2017) was signed in Hong Kong. If these subjects are something which you find interesting and would like to discuss further we are happy to be at your service. Contact us at sales@comtaxit.com. BEPS newsOn 10 July 2017, the OECD issued new OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (the revised Guidelines). The new guidelines provide guidance on the application of the “arm’s length principle”, which represents the international consensus on the valuation, for income tax purposes, of cross-border transactions between associated enterprises. Guidelines reflect a consolidation of the changes resulting from the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. The main modifications include the following:
Local tax newsBelgium - New Tax Reform Announced Belgian government has announced Tax reform which will be included in the Budget 2018. For the corporate income tax payers, the tax reform will lower corporate income tax rates as well as change the notional interest deduction rules. It is proposed that the corporate income tax rate will be reduced in two stages. Reduction from 33% to 29% in 2018 following by further reduction to 25% in year 2020. Additionally, the surcharge of 3%, currently imposed on the adjusted corporate income tax liability, will be reduced to 2% in 2018 and phased out by year 2020. Compensatory measures flowing the decrease in corporate tax rate will be included in the new legislation. Notional interest deduction will continue to apply, however the existing legislation will be modified in order to stimulate the increase of equity. Such a deduction will be limited and in the future based on an increase in the value of the equity of the company. Italy - Taxation of Capital Gains The Italian government published a decree decreasing the exemption percentages of qualifying capital gains. As a consequence qualifying capital gains realised from 1 January 2018 are tax exempt for 41.86% (previously, 50.28%) of their amount. The remaining 58.14% (previously, 49.72%) is part of taxpayers taxable income and therefore taxed at the standard rate of 24%. Slovenia - Liechtenstein Removed from List of Non-Cooperative Tax Jurisdictions The Slovenian Ministry of Finance decided to remove Liechtenstein from the list of non-cooperative tax jurisdictions. The resolution is effective from 17 June 2017. Treaty newsSouth Africa - Sweden - Ruling on MFN Clause
South African tax authority has issued a binding ruling concerning application of the most-favoured-nation (MFN) clause in respect of dividend payments under the South Africa - Sweden Income Tax Treaty. The ruling states that due to the fact that Kuwait - South Africa double tax treaty (2004) provides no source taxation of dividends, the MFN clause in South Africa - Sweden Income Tax Treaty will be automatically triggered. This is due to unusual formulation of MFN provision not limiting the MFN effect to treaties signed after the South Africa - Sweden Income Tax Treaty entered into force 2012. As a result, the MFN clause, according to South African Tax authority, has a retroactive effect. This ruling and the effect of MFN clause is effective until South Africa renegotiates its Double tax treaty with Kuwait. If these subjects are something which you find interesting and would like to discuss further we are happy to be at your service. Contact us at sales@comtaxit.com. |
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