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Approved Changes (1)

United States

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Washington DC Adopts Tax Haven Blacklist

Washington DC has adopted the Combined Reporting Clarification Amendment Act of 2015 as part of the Fiscal Year 2016 Budget Support Act of 2015, which includes a tax haven blacklist of 39 jurisdictions. This makes Washington DC one of just three U.S jurisdictions to have such a list, the others being the states of Oregon and Montana. The list is applied in regard to the combined reporting statutes, which requires that unitary groups operating in Washington DC include the income and apportionment factors of members doing business in tax haven jurisdictions. The list is in addition to the existing criteria in the DC Code that qualify a jurisdiction as a tax haven.

The tax haven jurisdictions as listed include:

Andorra; Anguilla; Antigua and Barbuda; Aruba; The Bahamas; Bahrain; Barbados; Belize; Bermuda; The British Virgin Islands; The Cayman Islands; The Cook Islands; Cyprus; Dominica; Gibraltar; Grenada; Guernsey-Sark-Alderney; The Isle of Man; Jersey; Liberia; Liechtenstein; Luxembourg; Malta; The Marshall Islands; Mauritius; Monaco; Montserrat; Nauru; The islands formerly constituting the Netherlands Antilles; Niue; Samoa; San Marino; Seychelles; St. Kitts and Nevis; St. Lucia; St. Vincent and the Grenadines; The Turks and Caicos Islands; The U.S. Virgin Islands; and Vanuatu.

Proposed Changes (2)

New Zealand

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New Zealand Launches Consultation on the Implementation of Residential Land Withholding Tax for Non-Residents

On 31 August 2015, the New Zealand government issued an officials’ issues paper for public comment on the implementation of a residential land withholding tax (RLWT) for non-resident sellers of New Zealand property. The plans for implementing the RLWT follow a proposal for introducing a bright-line test for property tax purposes, where gains on the sale of residential land by both residents and non-residents are subject to tax if purchased and sold within two years (previous coverage).

The proposed amount of RLWT withheld is the lower of:

  • 33% of the vendor’s gain on the property (i.e. 33% x (agreed total sales price - vendor’s acquisition price)); and
  • 10% of the total purchase price of the property.

Once approved, the RLWT would apply for property transactions settled on or after 1 July 2016, where the property was acquired on or after 1 October 2015 and held for less than two years (bright-line test). The tax would not be a final withholding tax and the seller would be able to claim a credit for the amount of RLWT withheld against their final income tax liability from the sale of the property.

Click the following link for more information on the Inland Revenue website, including the issues paper and instruction for submitting comments, which are due by 2 October 2015.

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Peru Publishes Draft Law for Capital Gains Tax Exemption on Transfers of Listed Shares

On 24 August 2015, a draft law introducing a capital gains tax exemption on the transfer of shares listed on the Lima Stock Exchange was introduced to the Peruvian parliament. The proposed exemption would apply if both of the following conditions are met:

  • A taxpayer and its related parties transfer no more than 10% of the total listed shares of the company within any 12-month period; and
  • The shares are regularly traded and meet a certain trading volume threshold, which will be set by future regulation

The current rate of capital gains tax on share transfers through the Exchange is 5% for all non-residents and resident individuals, and a 28% income tax applies for resident companies. If approved, the exemption will apply for transfers made from 1 January 2016 to 31 December 2018.

Treaty Changes (6)


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Mutual Assistance Convention as Amended has Entered into Force for Azerbaijan and Nigeria

On 1 September 2015, the 2010 protocol to the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters entered into force for Azerbaijan and the convention as amended by the protocol entered into force for Nigeria. Azerbaijan signed the original convention on 26 March 2003 and the protocol on 23 May 2014. Nigeria signed the convention as amended on 29 May 2013.

The convention as amended generally applies in both countries from 1 January 2016, although the original convention already applies in Azerbaijan.


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TIEA between Bahamas and Indonesia Signed

On 25 June 2015, officials from the Bahamas and Indonesia signed a tax information exchange agreement. The agreement is the first of its kind between the two countries and will enter into force after the ratification instruments are exchanged.


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India and Germany Agree to Continued Tax Information Exchange and to Negotiate Tax Treaty Revisions

According to an announcement issued by the Press Information Bureau of the Indian government on 28 August 2015, officials from India and Germany have agreed to continue the spontaneous exchange of tax information under existing agreements and to negotiate an amending protocol concerning information exchange in the 1995 income and capital tax treaty between the two countries. The two sides will also begin negotiations for a memorandum of understanding laying out the technical details of automatic information exchanges on financial accounts.


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Mauritius Deposits Ratification Instrument for Mutual Assistance Convention

On 31 August 2015, Mauritius deposited the ratification instrument for the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 protocol. Mauritius signed the convention as amended on 23 June 2015.

The convention will enter into force for Mauritius on 1 December 2015.

Netherlands-Sint Maarten

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The Netherlands to Implement New Arrangement for the Avoidance of Double Taxation with Sint Maarten

On 24 August 2015, a draft law was submitted to the Netherland's lower house of parliament for a new arrangement for the avoidance of double taxation with Sint Maarten. The avoidance of double taxation is regulated through an arrangement instead of a tax treaty because of Sint Maarten's status as part of the Kingdom of the Netherlands. Once in force and effective, the new arrangement will replace the 1964 tax arrangement.


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Russia Clarifies that Foreign Tax Credit not Available for Corporate Tax Withheld due to Misapplication of the Tax Treaty with Kazakhstan

The Russian Ministry of Finance recently issued Guidance Letter 03-08-05/45365, which clarifies whether a Russian taxpayer is eligible for a foreign tax credit for corporate tax withheld in Kazakhstan despite not having a permanent establishment in the country.

According to the letter, although Russia provides a tax credit under domestic law for foreign tax paid, for Kazakh-source income, the provisions of the Kazakhstan-Russia tax treaty apply. In the treaty's provisions for double taxation relief, Russia will allow a credit for income or capital that may be taxed in Kazakhstan under the provisions of the treaty. However, because the provisions of the treaty state that the income of an enterprise is only taxable in a Contracting State if connected to a permanent establishment in that State, the double taxation relief provisions do not apply since the income was not taxable. As a result, Russia will not provide a tax credit for the corporate tax inappropriately withheld, and the Russian taxpayer must instead seek a refund from Kazakhstan.


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