Local tax news
Hong Kong - Two-tiered Profits Tax Rates Regime Implemented
On 29 March 2018 the two-tiered profits tax rates regime, that will be applicable to any year commencing on or after 1 April 2018 was introduced. According to the new regime the profit tax rate for corporations first HKD 2 million will be reduced to 8.25%, while the standard profit tax rate of 16.5% will remain unchanged for profits beyond HKD 2 million.
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 firstname.lastname@example.org.
Local tax news
Netherlands - Tax Reform to Counter Tax Avoidance Approved by the Council of Ministers
The Council of Ministers agreed to align national laws with EU anti-avoidance rules. The most important amendments are the following:
(i) to implement the EU Anti-Tax Avoidance Directive (EU) 2016/1164;
(ii) to re-introduce thin capitalisation rules (to restrict the deductibility of interest to a maximum of 30% of EBITDA);
(iii) to introduce CFC legislation. CFC rules will apply if a Dutch company owns more than 50% in a foreign company, and if the foreign company is taxed at a rate which is less than half the Dutch rate;
(iv) to implement rules against hybrid mismatches by 2020;
(v) to introduce in 2021 a withholding tax on interest, dividend and royalty payments to low tax jurisdictions, non-cooperative jurisdictions and in abuse situations (artificial structures);
(vi) to include anti-abuse provisions and principle purpose text to all Dutch tax treaties; and
(vii) to amend its Transfer Pricing Decree in line with the OECD - Transfer Pricing Guidelines for MNEs (2017).
Ifric 23 - Uncertain Tax Positions
On January 1, 2019, Ifric 23 – Uncertain Tax Positions will enter into force. This will require companies to collect certain data concerning Uncertain Tax Positions, update and keep track of them over time.
Ifric 23 requires that companies update data regularly and recalculate the positions according to the Ifric 23 framework. We can now offer a module to help companies to set up a robust process for collecting and keeping track of the required information and documentation by:
(i) helping to comply with a formalized process for collecting Ifric 23 data;
(ii) documenting positions and changes to positions;
(iii) presenting and allow searches of Ifric 23 data;
(iv) helping to set up a process for efficient collection with clear roles and responsibilities; and
(v) providing a full audit trail to keep track of changes.
To find out more or to request a demonstration please contact email@example.com.
Local tax news
USA - New CFC rules
The USA implemented major changes to the taxation of CFCs which are effective from 1 January 2018 and include:
(i) broadening the scope of conditions under which a foreign corporation may be treated as a CFC;
(ii) changing the participation exemption regime;
(iii) introducing a repatriation tax on offshore deferred earnings of CFCs; and
(iv) implementing a new category of CFC income, referred to as “global intangible low-taxed income" (GILTI).
GILTI is defined as the income of the CFC that exceeds a deemed 10% rate of return on the CFC’s tangible property. The tangible property is deemed to generate the CFC’s active foreign income, with a 10% return. 10% is presumed to be a normal return on the corporation’s tangible foreign assets. The reminder of the CFC income is deemed to be generated by intangible property. The US shareholder is taxed on 50% of GILTI and may credit 80% of taxes paid in other country against US corporate tax.
New GILTI module on its way
In the light of the US tax reform and the implication it will have for many of our customers we are happy to announce that we are currently developing a new GILTI module with the input from our US partner Saville CPAs & Advisors. Our new module will reflect the new rules and allow you to run calculations with the complete transparency that you are used to have.
Since, however, that the module will be launched in a few weeks and that you already need to start preparing for how GILTI will affect your organization we have added a new section in the Commentary database. You may find this section through Database / choose United States from the list of countries / Anti-avoidance / CFC legislation.
If you require some further information at this time on how GILTI will impact your organization please contact firstname.lastname@example.org.