Worldwide Tax News
According to recent reports, Hungary published a decree in the Official Gazette on 18 October 2017 to amend the country's transfer pricing documentation requirements in order to bring them in line with the Master and Local file requirements of BEPS Action 13. Hungary already followed the prior EU master/local transfer pricing file concept, but will now require greater detail based on the latest OECD guidance. The new Master/Local file requirements are mandatory for fiscal years beginning on or after 1 January 2018, but may also be followed in respect of the 2017 fiscal year in certain cases. Preparation in English is allowed.
Additional details will be published once available.
Informative Bulletin Published on Registration and Filing Requirements for Entities and Individuals Doing Business in Puerto Rico
The Puerto Rico Treasury Department (PRTD) has published Internal Revenue Informative Bulletin No. 17- 26 regarding the tax registration and filing requirements for entities and individuals doing business in Puerto Rico. The publication is made following the impact of hurricanes Irma and Maria and the resulting number of new entities and individuals now doing business in the country. In particular, the purpose of the Informative Bulletin is to alert all entities and individuals that started or will start operations in Puerto Rico, of their obligation to register with the PRTD, following the procedures and requirements established by the Code. These requirements may include, but are not limited to, the following:
- Registration with the PRTD to notify the Employer’s Identification Number (EIN) issued by the Internal Revenue Service (IRS) for purposes of income and payroll tax compliance; and
- Registration with the PRTD’s Merchants Registry to obtain the Merchant’s Registry Certificate for SUT purposes.
In addition to the registration requirements, entities and individuals may be required to file monthly, quarterly, and/or annual returns with the PRTD and comply with obligations as a withholding agent. Penalties for non-compliance may apply.
The Inland Revenue Authority of Singapore (IRAS) has published guidance on the corporate tax filing season 2017. The guidance notes that all companies, including those that had not carried out any business activities in the financial year or are in a loss position, must e-File their corporate income tax returns for year of assessment 2017 by 15 Dec 2017, or 30 Nov 2017 if a paper filing is made. Particular aspects of return filing covered by the guidance include:
- Submitting complete and accurate tax returns (Form C and Form C-S);
- Logging in to the myTax Portal;
- Avoiding Common Mistakes;
- Severe Penalties for Failure to File and Submitting Incorrect Returns;
- Getting Assistance; and
- Disclosure or Reporting of Errors.
Click the following link for the guidance page on the IRAS website.
The Trinidad and Tobago Ministry of Finance has announced the establishment of the Trinidad and Tobago Revenue Authority (TTRA). As noted in the announcement, the TTRA will be responsible for the collection of government revenue and the provision of other services for the protection of government revenue, including investigation of tax evasion, the conduct of audits, and border protection. The TTRA will subsume the powers, responsibilities, and functions of the Board of Inland Revenue and the Customs and Excise Division under the provisions of the Exchequer and Audit Act and all other relevant revenue legislation and regulations.
On 26 October 2017, corrections to the U.S. IRS final and temporary regulations (TD 9815) were published in the Federal Register. The regulations provide guidance for nonresident alien individuals and foreign corporations that hold certain financial products providing for payments that are contingent upon or determined by reference to U.S. source dividend payments (previous coverage). The corrections clarify aspects of the regulations as originally published that may prove to be misleading, including certain rewording. The corrections are effective 26 October 2017 and are applicable on 19 January 2017.
According to a 27 October 2017 release from the Belgian government, the Belgian Council of Ministers has approved the proposed corporate tax reform measures for 2018 Budget. Measures include:
- A reduction in the corporate tax rate from 33% to 29% from 2018, and to 25% from 2020;
- The introduction of a simple flat 20% corporate tax rate for SMEs on the first EUR 100,000 of taxable income (SMEs must meet certain conditions, including that no more than one of the following is exceeded: 50 employees; EUR 9 million annual turnover; and EUR 4.5 million balance sheet total);
- The reduction of the of the 3% austerity (crisis) surcharge to 2% in 2018 and the repeal of the surcharge from 2020;
- An increase in the dividends received deduction from 95% to 100%;
- An increase in the investment allowance (deduction) rate from 8% to 20% for investments made by qualifying SMEs between 1 January 2018 and 31 December 2019;
- The extension of the salary withholding tax exemption for R&D personnel to include bachelors degree holders in certain fields (40% exemption for 2018-2019 and 80% from 2020);
- The introduction of a tax consolidation regime from 2020 allowing for the offset of losses between group companies, subject to a number of conditions, including that the regime is only available for Belgian companies with at least a 90% participation throughout the year, the companies must have been connected for at least five years, the companies must have the same financial year, etc.;
- Changes in the notional interest deduction to provide that only the additional capital as compared to a moving average of the past five years is considered as the calculation basis, with certain transitional provisions;
- The abolishment of the investment reserve for new investment and ongoing investments;
- The introduction of new rules to limit the deduction of carried forward losses, the notional interest deduction, the carried forward dividends received deduction, and the carried forward income innovation deduction, which will be taken together in a single basket that is limited to 70% of taxable income plus EUR 1 million;
- Amendments for capital gains taxation, including:
- The repeal of the 0.4% minimum rate on capital gains for large companies (0.412% with current surcharge); and
- Harmonization of the participation exemption conditions for capital gains on shares with the conditions for the dividends received deduction, including the introduction of minimum participation of at least 10% or investment of at least EUR 2.5 million;
- Penalty Increases, including:
- An increase in the penalty for non-filing (non-declaration) of corporate tax returns, including an increase in the deemed taxable lump sum amount from EUR 19,000 to EUR 34,000 for 2018-2019 and increased to EUR 40,000 from 2020, as well as further increase in the case of a second, third, fourth and subsequent infringements by 25%, 50%, 100% and 200%, respectively; and
- An increase in the base interest rate from 1% to 3% for determining penalties for insufficient prepayment (2.25 multiplier remains unchanged); and
- The implementation of the minimum standard of the EU Anti-Tax Avoidance Directive (ATAD1) and its amendment (ATAD2), including the replacement of the current debt:equity ratio-based thin cap rules with a 30% of EBITDA interest deduction limit, the introduction of new controlled foreign company (CFC) rules and hybrid mismatch rules, and the amendment of existing exit tax rules.
Click the following link for an overview of the measures (Dutch language).
The Tunisian draft Finance Law for 2018 was submitted for consideration by the Assembly of the Representatives of the People (parliament) on 20 October 2017. The main measures of the draft law include:
- An increase in the standard value added tax (VAT) rate from 18% to 19%, and an increase in the 6% and 12% reduced VAT rates to 7% and 13%, respectively;
- An increase in the withholding tax rate on dividends and branch profits from 5% to 10%;
- An increase in the reduced withholding tax rate on interest paid to non-resident banks from 5% to 10%;
- The introduction of a dividends withholding tax exemption for export companies for the years 2018 and 2019;
- The introduction of a 20% corporate tax rate for qualified SMEs (enterprises may qualify as SMEs if turnover is below TND 300,000 for manufacturing activities and below TND 200,000 for service and professional activities);
- The introduction of a 35% corporate tax rate for health insurance cooperatives;
- The introduction of a 10% corporate tax on business activities in economic development zones that applies after the investment tax exemption period ends;
- The introduction of a general 1% non-deductible social solidarity contribution for both individual and companies;
- The introduction of an increased social solidarity contribution rate of 5% for banks in 2018 and 2.5% in 2019, with a minimum contribution of TND 5,000 and TND 2,500 in the respective years;
- The introduction of a three-year corporate tax holiday (exemption) for qualified enterprises established in 2018 and 2019, provided that productive activities begin within 2 years; and
- An increase in fines in relation to tax evasion and delayed reporting.
Subject to approval, the measure will generally apply from 1 January 2018.
According to a recent release from the Pakistan Federal Board of Revenue, officials from Latvia and Pakistan have concluded negotiations with the initialing of an income tax treaty. The treaty will be the first of its kind between the two countries, and must be signed and ratified before entering into force. Details of the treaty will be published once available.