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Approved Changes (4)

Denmark

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Denmark Temporarily Suspends Dividend Withholding Tax Refunds amid Fraud

Due to suspected tax fraud involving dividend withholding tax refund claims amounting to nearly DKK 6.2 billion (~USD 0.9 billion), the Danish tax authorities (SKAT) have temporarily suspended the processing of refund claims. Although processing is currently suspended, SKAT still expects to complete processing of pending claims within the statutory 6-month period, although the process will likely include greater scrutiny.

A suspected tax fraud report was filed with the Danish Public Prosecutor for Serious Economic Crime on 24 August 2015, involving more than 100 non-resident companies during the tax years 2012 to 2015. The fraudulently claimed refunds primarily concerned Danish listed companies involving shareholdings that did not actually exist.

Ecuador

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Ecuador Introduces Profits and Dividends Reporting Requirement

On 18 August 2015, Ecuador published Resolution No. NAC-DGERCGC15-00000564 in the Official Gazette. The Resolution entered into force the day after it was published and introduces a new requirement for taxpayers to submit an annual report (annex) concerning profits, dividends distributed and dividends received during the reporting period (calendar year ending 31 December). The reporting requirement applies for resident companies, and branches and permanent establishments in Ecuador of non-resident companies, and includes;

  • Profits of the reporting period;
  • Profits of the period preceding the reporting period that are pending distribution as of 1 January of the reporting period;
  • Dividends distributed during the reporting period; and
  • Dividends received from abroad or from foreign companies established in Ecuador during the reporting period (such dividends must also be reported by resident individuals)

The new requirement covers 2013 and subsequent periods. The report must be filed electronically via the Ecuador Internal Revenue Service (SRI) website in May of the year following the reporting period, even if the values are zero. The exact deadline date is based on the taxpayer registration number (RUC). However, for the 2013 and 2014 periods, the report must be filed by the last day of October and November 2015 respectively.

Ireland

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Ireland Publishes eBrief Summarizing Corporate Tax Changes introduced in Finance Act 2014

On 28 August 2015, Ireland Revenue published eBrief No. 79/15. The eBrief summarizes corporate tax changes introduced in Finance Act 2014, which was enacted in December 2014 and published 6 January 2015. It also provides links to updated tax manuals for each change. See the following for the text of the eBrief and the related links.

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Part 02.02.03 (PDF, 132KB) - Company Residence in the State (section 23A TCA 1997)

Section 43 of the Finance Act amended the rules in relation to company residence to provide that a company which is incorporated in the State will be regarded as tax resident in the State.

Part 09.02.04 (PDF, 108KB) - Accelerated Capital Allowances for Energy-Efficient Equipment (section 285A TCA 1997)

Section 38 provided for a 3-year extension, to 31 December 2017, of the period for which expenditure on energy-efficient equipment will qualify for accelerated capital allowances and amended the descriptions of the qualifying classes of technology.

Part 09.02.05 (PDF, 179KB) - Capital Allowances for Intangible Assets (section 291A TCA 1997)

Section 40 removed the 80% cap on the aggregate amount of capital allowances, and related interest expense, which may be offset in any accounting period against trading income of the relevant trade in which the intangible assets are used. It also extended the list of specified intangible assets to include customer lists, except where acquired in connection with the transfer of a business as a going concern.

Part 15.03.03 (PDF, 142KB) - Tax Relief for new Start-up Companies (section 486C TCA 1997)

Section 39 extended the date for commencement of a qualifying trade by a start-up company to 31 December 2015. In addition to updating the tax manual to reflect this amendment, it has been revised to incorporate relevant Revenue Tax Briefing articles on section 486C.

Part 20.01.10 (PDF, 88KB) - Company Ceasing to be Member of Group (section 623 TCA 1997)

Section 41 clarified when tax becomes due and payable in respect of a chargeable gain arising under section 623 of the Taxes Consolidation Act 1997 on a company leaving a group.

For additional information, please consult Revenue’s Notes for Guidance on the Taxes Consolidation Act 1997. The Finance Act 2014 edition of the Notes for Guidance is available on the Revenue website at: Tax Practitioners - Legislation - Notes for Guidance.

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Peru Enacts Tax Deferral Incentive for REIT Property Contributions

Peru has enacted Legislative Decree 1188, which was published in the Official Gazette on 21 August 2015. The Decree implements an incentive to promote investments in real estate investment trusts (REIT) by allowing taxpayers to defer capital gains tax and transfer tax on the contribution of immovable property to a REIT. Under the new rules, those taxes are instead levied when the REIT subsequently transfers the property to a third party or the contributor of the property transfers its share in the REIT to a third party. The basis for tax is the value of the property at the time it was initially contributed to the REIT.

The Decree applies for property contributions made from 1 January 2016 to 31 December 2019.

Treaty Changes (5)

Australia-Austria

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New SSA between Australia and Austria Signed

Officials from Australia and Austria reportedly signed a new social security agreement on 12 August 2015. This is the second such agreement between the two countries, and once in force and effective will replace the 1992 social security agreement, which is currently in force.

Costa Rica-Germany

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Costa Rica Approves Tax Treaty with Germany

On 27 August 2015, Costa Rica's Legislative Assembly approved the pending income and capital tax treaty with Germany. The treaty, signed 13 February 2013, will be the first of its kind between the two countries, although a tax treaty had been signed in 1993, but was not ratified.

Taxes Covered

The treaty covers Costa Rican income tax, the tax on immovable property and the tax on vehicles, ships and aircraft. It covers German income tax, corporation tax, trade tax and capital tax.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is company directly holding at least 20% of the paying company's capital; otherwise 15%
  • Interest - 0% if paid in respect of a sale on credit of commercial or scientific equipment, a sale on credit of goods by an enterprise to another enterprise, or a loan made by a bank that is a resident of either country; otherwise 5%
  • Royalties - 10%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of shares or similar rights in a company, the assets of which directly or indirectly consist principally of immovable property situated in the other State; and
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Costa Rica applies the credit method for the elimination of double taxation, while Germany generally applies the exemption method. However, Germany may apply the credit method for dividends, interest, royalties and certain other items of income in accordance with German tax law.

Entry into Force and Effect

The tax treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.

Ghana-Mauritius

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Negotiations for a Tax Treaty between Ghana and Mauritius Ongoing

According to an announcement from the Mauritius government on 25 August 2015, negotiations for an income tax treaty with Ghana are ongoing with the most recent round of negotiations held 24 August 2015. The two sides have been negotiating a tax treaty since 2009, and once finalized, signed and ratified, it will be the first of its kind between the two countries.

Kazakhstan-Serbia

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Tax Treaty between Kazakhstan and Serbia Signed

On 28 August 2015, officials from Kazakhstan and Serbia signed an income tax treaty. The treaty is the first of its kind between the two countries and will enter into force after the ratification instruments are exchanged. Additional details will be published once available.

San Marino-OECD

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San Marino Deposits Ratification Instrument for Mutual Assistance Convention

On 28 August 2015, San Marino deposited the ratification instrument for the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 protocol. San Marino signed the convention as amended on 21 November 2013.

The convention will enter into force and apply in San Marino on 1 December 2015.

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