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Approved Changes (5)

Austria

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Austria has Published Updated List of Jurisdictions with which Austria has Concluded a Comprehensive Mutual Administrative Assistance Agreement

On 27 January 2015, the Austrian Ministry of Finance published an updated list of jurisdictions with which Austria has concluded a comprehensive mutual administrative assistance agreement as of 1 January 2015. The main change is the addition of Taiwan, whose tax treaty with Austria entered into force in December 2014, and applies from 1 January 2015.

The list is of particular importance in regard to Austria's group taxation regime, which includes the requirement that companies located in third jurisdictions may only be part of an Austrian tax group when the company is an EU Member State or in a jurisdiction with which Austria has an administrative assistance agreement. A similar rule also applies for participation exemption for portfolio dividends derived from companies resident in third countries.

The jurisdictions listed include:

Albania, Anguilla, Algeria, Andorra, Argentina, Armenia, Aruba, Azerbaijan, Australia, Bahrain, Barbados, Belgium, Belize, Bermuda, Bosnia Herzegovina, Brazil, British Virgin Islands, Bulgaria, Costa Rica, Curacao, Denmark, Germany, Estonia, Faroe Islands, Finland, France, Georgia, Ghana, Gibraltar, Greece, Great Britain, Greenland, Guernsey, Hong Kong, India, Indonesia, Ireland, Iceland, Isle of Man, Israel, Italy, Japan, Jersey, Cayman Islands, Canada, Qatar, Colombia, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Morocco, Macedonia, Mexico, Moldova, Monaco, Montserrat, New Zealand, Netherlands, Norway, Philippines, Poland, Portugal, Romania, Saint Vincent and the Grenadines, San Marino, Saudi Arabia, Sweden, Switzerland, Serbia, Singapore, Sint Maarten, Slovak Republic, Slovenia, Spain, South Africa, Tajikistan, Taiwan, Thailand, Czech Republic, Tunisia, Turkey, Turks and Caicos Islands, Ukraine, Venezuela, United States of America, Vietnam and Cyprus.

Brazil

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Brazil Publishes Effective Dates for the Increase in PIS/COFINS on Imports and the Increase in PIS/COFINS and CIDE tax on Fuel

Brazil has recently published Decree 8,395/2015 and Provisional Measure 668/2015 which set effective dates for tax rate increases announced 19 January 2015.

PIS/COFINS and CIDE tax on Fuel

According to Decree 8,395/2015, CIDE is reapplied for certain fuels from 1 May 2015. It was already announced that PIS/COFINS applies from 1 February 2015. The rates are as follows:

  • Gasoline  - CIDE BRL 0.10/liter, PIS/COFINS BRL 0.12/liter
  • Diesel  - CIDE BRL 0.05/liter, PIS/COFINS BRL 0.10/liter

Increase in PIS/COFINS on Imports

According to Provisional Measure 668/2015, the rates on imports are generally increased from 1.65% to 2.1% for PIS and from 7.6% to 9.65% for COFINS. Rates for certain specific goods are increased as follows:

  • Certain pharmaceuticals - PIS is increased from 2.1% to 2.76%, and COFINS is increased from 10.3% to 13.03%
  • Perfumes and hygiene products - PIS is increased from 2.2% to 3.52%, and COFINS is increased from 10.3% to 16.48%
  • Machinery and vehicles - PIS is increased from 2.0% to 2.62%, and COFINS is increased from 9.6% to 12.57%
  • Rubber tires and inner tubes - PIS is increased from 2.0% to 2.88%, and COFINS is increased from 9.5% to 13.68%
  • Auto parts - PIS is increased from 2.3% to 2.62%, and COFINS is increased from 10.8% to 12.57%
  • Certain press paper - PIS is increased from 0.8% to 0.95%, and COFINS is increased from 3.2% to 3.81%

The increased rates apply from 1 May 2015. Imported services are unaffected.

Chile

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Chile's Optional Profit Distribution Tax Regime for 2015

The Chilean tax administration recently issued instructions for the optional final tax regime for 2015 that was introduced by the major Chilean tax reform enacted 29 September 2014.

Under Chile's current tax regime, retained earnings and corporate income tax paid are recorded in a special ledger (Fondo de Utilidades Tributables, FUT). When those earnings are distributed to shareholders, a 35% tax rate applies, with a credit for the corporate income tax paid. However, with the 2014 tax reform, the current regime, including the FUT ledger, will be abolished and a new attribution regime and alternative distribution regime will apply from 2017.

As part of the transition, an optional regime is introduced where taxpayers can instead apply a final tax at a rate of 32% on a portion of their FUT balance, with a credit for the corporate income tax paid on that portion. The portion eligible for the tax rate is the portion exceeding the average withdrawals/distributions made during 2011, 2012 and 2013. In order to qualify, the taxpayer must have started business before 1 January 2013, and have an FUT balance as of 31 December 2014.

The optional regime only applies from 1 January 2015 to 31 December 2015.

Curacao

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Curacao Corporate Taxation Changes for 2015 and 2016

On 30 December 2014, Curacao's parliament adopted the Ordinance Tax Revisions 2015-2016. The main corporate tax related changes are summarized as follows.

Investment Allowance

The investment allowance of 8% of the acquisition cost assets (12% for buildings) is changed to 10%. Originally available in the year of investment and the following year, the allowance is now only available in the year of investment. The rules for investments made prior to 1 January 2015 continue to apply.

General Expense Deduction Limits

Certain deduction limits are changed, including:

  • Representation expenses such as receptions, entertainment, excursions and related travel expenses are no longer deductible
  • Expenses for business gifts, courses and seminars are fully deductible, while related travel expenses are 80% deductible
  • Expenses for meals and beverages are 80% deductible

Tax Exempt Status

Tax exempt status previously only available for private limited companies (BV) subject to certain conditions, is extended for public limited companies (NV).

Interest Deduction Limit

The limit on the deduction on interest expense for loans from a tax exempt company in the same group is extended to interest on loans from non-residents of the same group if the non-resident is not subject to any profit tax. The same 3:1 debt to equity ratio applies.

Profit Tax Rate Reduction

The profit tax rate is reduced to 25%. The change applies for tax periods beginning on or after 1 January 2015. The rate will be further reduced to 22% from 1 January 2016.

Depreciation

From 1 January 2016, accelerated depreciation will be discontinued. In addition, buildings will only be able to be depreciated to 50% of their value. There will be no claw-back for buildings already depreciated below 50%.

European Union-Belgium

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European Commission Announces State Aid Investigation into Belgian Excess Profit Rulings

On 3 February 2015, the European Commission (EC) published an announcement that a state aid investigation has been opened regarding Belgium's "excess profit" tax rulings. According to the announcement, the rulings allow multinational entities in Belgium to reduce their corporate tax liability by "excess profits" that allegedly result from the advantage of being part of a multinational group. Since such an advantage is only available for companies that are part of a multinational group and not for stand-alone companies, it is the EC's view that the rulings are a breach of EU state aid rules and the investigation was therefore opened.

Click the following link for the EC press release.

Treaty Changes (2)

Bangladesh-Nepal

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Tax Treaty Negotiations between Bangladesh and Nepal Concluded

Officials from Bangladesh and Nepal have recently agreed to the signing of an income tax treaty following a fourth round of negotiations. The treaty will be the first of its kind between the two countries, and must be signed and ratified before entering into force.

Additional details will be published once available.

India-Norway

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SSA between India and Norway has Entered into Force

The social security agreement between India and Norway entered into force on 1 January 2015. The agreement, signed 29 October 2010, is the first of its kind between the two countries and generally applies from the date of its entry in to force as well as for periods prior to that date subject to certain conditions.

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