News November 2019

LOCAL NEWS

Greece – Tax amendments for 2020 proposed
On 7 October 2019, a bill amending the tax legislation was submitted for public consultation. The main amendments are set out below.

• The corporate income tax rate is reduced to 24% for income earned in 2019 and subsequent years.
• Dividend withholding tax will be reduced from 10% to 5%.
• The participation exemption provisions are extended to include capital gains. More specifically, capital gains are exempt from corporate income tax at the level of Greek resident entities, provided that certain requirements are met. Such capital gains are not taxed upon their distribution or capitalization.
  
  

Saudi Arabia -  Zakat calculation rules were changed
On 8 November 2019, the General Authority of Zakat and Tax (GAZT) issued a decision amending the Zakat regulations. The amendment focuses on a new estimation method for Zakat calculation. As per the amendment, the Zakat base, annual sales and Zakat will be calculated as provided below.

(i) The Zakat base will be the higher of the following amounts:

• the business share capital as per the commercial register; or
• the Zakat base calculated on the basis of the aggregation of one eighth of annual sales and 15% of annual sales.

(ii) The annual sales amount will be estimated on the basis of the following criteria:

• VAT returns filed by a business;
• the estimated employees' annual turnover using an average annual turnover of SAR 6,000 per employee;
• annual purchases of imports using an average gross margin of 15% per annum; and
• point of sale data or any other reliable sources.

(iii) The Zakat is applicable at a rate of 2.5% of the estimated Zakat base.

The approved estimation method is applicable only to Zakat payers that have no legal obligation to maintain regular accounting records for their Zakat returns submitted after 31 December 2019.

Slovenia - Corporate tax rate was increased
In the Official Gazette of 5 November 2019, amendments to the Corporate Income Tax Law were gazetted. The amendments will apply as of 1 January 2020. The amendments include increasing general tax rate from 19% to 20%.

ANTI TAX AVOIDANCE

Denmark - New CFC rules are proposed
On 6 November 2019, the Ministry of Taxation presented its law proposal transposing into the Danish legislation the CFC rules in line with the EU ATAD Directive 2016/1164.

The adjustments to the existing CFC rules are based on ATAD Model A. The Danish government aims to achieve a balance that ensures a robust Danish tax base but at the same time reduces the economic and administrative consequences for ordinary businesses. This has resulted in the proposed amendments to the CFC rules having a very broad scope. The key features of the amendments are as follows:

• the rules also apply to domestic subsidiaries;
• there is no low taxation test;
• the rules apply for cases of both legal and economic control (i.e. a CFC relationship exists if the parent company holds more than 50% of the shares or is entitled to more than 50% of the profits of the foreign entity); and
• the definition of CFC income also includes income from sales of goods and services attributable to embedded IP (i.e. when the sales price includes a royalty return on the intangible assets).

The proposal is expected to enter into force on 1 January 2020.

Nigeria - Interest limitation rules are proposed
On 6 November 2019, the Finance Bill for 2019, which had been presented to the National Assembly by the President on 8 October 2019, was presented for a second reading. Bill introduces the BEPS Action 4 recommendation on interest limitation. The maximum interest expense deduction allowable is 30% of EBITDA. If approved the rules will apply from 1 January 2020.

TREATY NEWS

Treaty between Luxembourg and Lithuania – MFN clause on royalties activated
On 22 November 2019, the Luxembourg administration for direct taxes published a press release announcing that the conditions for the activation of the most-favoured-nation (MFN) clause contained in the Protocol to the Lithuania - Luxembourg Income and Capital Tax Treaty had been met. The MFN clause applies as from 1 January 2019. The MFN clause modifies the wording of article 12, paragraphs 2 and 3, as follows:

Royalties shall not be taxable in the contracting state in which they arise. The term "royalties" as used in this article means the remuneration of any kind paid for the use or the concession of the use of a copyright in a literary, artistic or scientific work, cinematographic films or patent, trade mark, design or model, plan, formula or process secret and for information relating to experience acquired in the industrial, commercial or scientific field."