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Worldwide Tax News

Approved Changes (3)

Costa Rica

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Costa Rica Amends Corporate and Individual Income Tax Brackets for 2015-2016 Tax Year

On 25 September 2015, Costa Rica published in the Official Gazette the decrees amending the corporate and individual income tax brackets for the 2015-2016 tax year. The brackets are adjusted, although the rates remain the same.

Corporate income tax brackets and rates:

  • up to CRC 53,320,000 - 10%
  • CRC 53,320,001 up to 105,241,000 - 20%
  • over CRC 105,241,000 - 30%

Individual employment income tax brackets and rates:

  • up to CRC 787,000 - 0%
  • CRC 787,001 up to 1,181,000 - 10%
  • over CRC 1,181,000 - 15%

Individual business income tax brackets and rates:

  • up to CRC 3,496,000 - 0%
  • CRC 3,496,001 up to 5,220,000 - 10%
  • CRC 5,220,001 up to 8,708,000 - 15%
  • CRC 8,708,001 up to 17,451,000 - 20%
  • over CRC 17,451,000 - 25%

The rates apply from 1 October 2015.

Guatemala

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Guatemalan Court Rules Increase in Mining Royalties Withholding Tax Unconstitutional

On 17 September 2015, the Guatemala's Constitutional Court ruled that the increase in withholding tax mining royalties to 10% is unconstitutional. The change was included as part of amendments included in the 2015 Budget that were published in the Official Gazette December 2014.

Ukraine

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Ukraine Amends Tax Haven List for Transfer Pricing Purposes

On 16 September 2015, the Cabinet of Ministers of Ukraine issued Decision 977-R, amending the country's tax havens list for transfer pricing purposes. Transactions with residents of listed jurisdictions, whether related or not, are subject to the transfer pricing rules if the income/transaction thresholds are met. This follows the adoption of transfer pricing amendments in July 2015, which included a change in the conditions for inclusion in the list (previous coverage).

Jurisdictions removed from the list include Georgia, Guadeloupe, Jamaica, Lebanon, Luxembourg, Malta, Morocco, Singapore, Switzerland, and the United Arab Emirates. In addition, the Portuguese autonomous region Madeira is specified instead of Portugal, and the Malaysian federal territory Labuan is specified instead of Malaysia.

The changes apply from the date the Decision was issued, with the following jurisdictions now listed.

Andorra, Anguilla, Antigua and Barbuda, Aruba, Bahamas, Bahrain, Barbados, Belize, Bermuda, Bosnia and Herzegovina, British Virgin Islands, Brunei, Bulgaria, Canary Islands, Cape Verde, Cayman Islands, Cook Islands, Curacao, Cyprus, East Timor, French Guyana, Gibraltar, Grenada, Guernsey, Hong Kong, Jersey, Isle of Man, Ireland, Kosovo, Kyrgyzstan, Labuan (Malaysia), Lesotho, Liberia, Liechtenstein, Macau, Macedonia, Madeira (Portugal), Maldives, Marshall Islands, Martinique, Micronesia, Moldova, Montenegro, Montserrat, Nauru, Niue, Northern Mariana Islands, Oman, Palau, Panama, Paraguay, Qatar, San Marino, St. Vincent and the Grenadines, St. Kitts and Nevis, St. Lucia, St. Maarten (Dutch part), Sao Tome and Principe, Seychelles, Sudan, Turkmenistan, Turks and Caicos Islands, U.S. Virgin Islands, Uzbekistan, and Vanuatu.

Proposed Changes (2)

China

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China Planning Risk Assessment Monitoring for Special Tax Adjustment Purposes

As part of its plans to implement new special tax adjustment rules (previous coverage), China is planning to establish a new risk monitoring system that will influence the tax authorities response to compliance failures. A risk assessment will be based on an examination of a taxpayer's tax filings, contemporaneous transfer pricing documentation, and internal control tests of related transaction compliance.

Taxpayers considered generally compliant and low-risk will receive warnings and guidance from the tax authorities if compliance failures are detected, and be allowed to make adjustments. Those considered high-risk though, will likely be subject to an audit directly without warning.

European Union

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EU Commission Publishes Joint Transfer Pricing Forum Program of Work 2015 -2019

On 24 September, the European Commission published the EU Joint Transfer Pricing Forum (JTPF) Program of Work 2015-2019. The general areas of future work identified include:

  • Providing tools for the practical application of TP rules tailored to the EU;
  • Ensuring efficient TP administration in the EU; and
  • Positioning the EU globally towards third countries.

Specific areas of work to be undertaken include:

  • Evaluation of the increasing importance of economic analysis in TP;
  • Evaluation of the interaction between transfer pricing and companies’ internal information systems and tools;
  • Improving communication on JTPF's work with the public;
  • Evaluation of the use of comparables in the EU;
  • Practical application of the transactional profit split method (PSM) in the EU;
  • Evaluation of economic valuation methods used in the EU;
  • Monitoring and determining whether further work is needed on guidance for cost contribution agreements for services not creating intellectual property;
  • Evaluation of the new country-by-country reporting requirements developed as part of Action 13 of the OECD BEPS Project, including work on:
    • How to effectively and efficiently track, collect and reconcile the information to be filled out in the report, and
    • How tax administrations can make best use of the information;
  • Evaluation of how to enable tax administrations to effectively determine which cases and transactions are worth reviewing with the new master file and local file approach developed under Action 13, including the possible development of new IT tools to assist both tax administration and taxpayers; and
  • Other areas

Click the following link for the JTPF Program of Work 2015-2019.

Treaty Changes (5)

Cameroon-Seychelles-OECD

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Mutual Assistance Convention has Entered into Force for Cameroon and Seychelles

On 1 October 2015, the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 protocol entered into force for Cameroon and Seychelles. The amended convention was signed by Cameroon on 25 June 2014 and by Seychelles on 24 February 2015, and will generally apply in each country from 1 January 2016.

China-Switzerland

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SSA between China and Switzerland Signed

On 30 September 2015, officials from China and Switzerland signed a social security agreement. The agreement is the first of its kind between the two countries, and will enter into force after the ratification instruments are exchanged.

Georgia-Latvia

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TIEA between Georgia and Latvia Signed

On 29 September 2015, officials from Georgia and Latvia 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.

Hong Kong-Pakistan

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Tax Treaty between Hong Kong and Pakistan under Negotiation

According recent reports, officials from Hong Kong and Pakistan will meet on 12 October 2015 for the third round of negotiations for an income tax treaty. Any resulting treaty will be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.

Lithuania-San Marino

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Tax Treaty between Latvia and San Marino to be Negotiated

According to a recent announcement from the Latvia Ministry of Foreign Affairs, officials from Latvia and San Marino met on 25 September 2015 and agreed to be begin negotiations for an income tax treaty. Any resulting treaty will be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.

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