The Tax Hub

Daily Tax Newsletter

Worldwide Tax News

Approved Changes (3)

Belgium

Responsive image

Belgium Adopts Increase to Small Business VAT Threshold

On 26 November 2015, Belgium's parliament adopted legislation to increase the threshold for the special VAT system for small businesses from EUR 15,000 to EUR 25,000. Businesses that elect to apply the system are allowed to treat their supplies as VAT inclusive (exempt), but lose the right to deduct VAT. Only resident businesses are eligible.

The change applies from 1 January 2016.

Bulgaria

Responsive image

Bulgaria Approves 2016 Tax Reform

On 25 November 2015, the Bulgarian National Assembly (parliament) adopted the tax reform legislation for 2016. The main measures include:

  • Implementation of the amendment to EU Parent-Subsidiary Directive that denies the participation exemption if a distribution received is tax deductible for the distributing subsidiary or otherwise reduces the tax base of the subsidiary;
  • The introduction of regional State aid rules in line with the EU guidelines, including that regional tax relief will only be granted with advance approval from the tax authority, and limiting State aid for certain sectors, including agricultural, energy and transport sectors;
  • The introduction of a municipal-level personal income tax that may be set at a rate of up to 2%, which is in addition to the standard 10% personal income tax rate;
  • The definition for jurisdictions with preferential tax regimes is amended to mean jurisdictions that do not have adequate exchange of information with Bulgaria and have corporate tax rates below 60% of the Bulgarian rate; and
  • Use of the reverse charge for value added tax on agricultural products is extended to 31 December 2018.

The changes apply from 1 January 2016.

European Union-Luxembourg

Responsive image

EU Commission Planning to Look into Luxembourg State Aid Issues Concerning McDonalds

According to recent reports, the EU Commission is planning to launch a formal investigation into rulings granted by Luxembourg to McDonalds that may have violated EU State aid rules. The rulings involve McDonalds restructuring of its EU operations by moving its European headquarters from the UK to Switzerland with a royalty structure running through a Luxembourg subsidiary. Reportedly, the Luxembourg subsidiary, with just 13 employees, had revenues of EUR 3.7 billion in the period 2009 to 2013 on which it paid a total of EUR 16 million in Luxembourg tax.

Proposed Changes (2)

European Union

Responsive image

EU Parliament Committee asks Commission to Introduce Legislation for EU Tax Reform

According to an EU Parliament press release published 1 December 2015, the Parliament's Economic and Monetary Affairs Committee will submit a resolution asking the EU Commission to propose legislation for EU tax reform, including measures proposed in the recently approved EU TAXE Committee report (previous coverage).

---

Economic affairs MEPs ask EU Commission to table corporate tax measures

The EU Commission is asked to table measures to improve corporate tax transparency, coordination and EU-wide policy convergence in legislative recommendations voted by the Economic and Monetary Affairs Committee on Tuesday. These recommendations build on the work of Parliament’s Special Committee on Tax Rulings, set up in the wake of the “Luxleaks” revelations, whose recommendations were approved at the 26 November plenary session.

The report by rapporteurs, Anneliese Dodds (S&D, UK) and Luděk Niedermayer (EPP, CR), was approved by 45 votes to 3, with 10 abstentions. The Commission will have to respond to every legal recommendation, even if it does not submit a legislative proposal.

Recommendations

The Economic and Monetary Affairs Committee asks the Commission, inter alia, to:

  • table a proposal for country-by-country reporting on profit, tax and subsidies by June 2016
  • table a proposal for introducing a "Fair Tax Payer" label,
  • introduce a Common Tax Base (CCTB) as a first step, which later on should be consolidated as well (CCCTB),
  • table a proposal for a common European Tax Identification Number,
  • table a proposal for legal protection of whistle-blowers,
  • improve cross-border taxation dispute resolution mechanisms,
  • table a proposal for a new mechanism whereby member states should inform each other if they intend to introduce a new allowance, relief, exception, incentive, etc. that may affect the tax base of others,
  • estimate the corporate tax gap (corporate taxes owed minus what has been paid),
  • strengthen the mandate and improve transparency of the Council Code of Conduct Working Group on Business Taxation,
  • provide guidelines regarding “patent boxes” so as to ensure they are not harmful,
  • come up with common definitions for "permanent establishment" and "economic substance" so as to ensure that profits are taxed where value is generated,
  • come up with an EU definition of "tax haven" and counter-measures for those who use them, and
  • improve the transfer pricing framework in the EU

What's next?

The committee resolution will be put to a vote by Parliament as a whole on 16 December. If it is approved, the Commission will have three months to respond to the recommendations, either with a legislative proposal or with an explanation for not doing so.

Israel

Responsive image

Israel Publishes Draft Legislation to Cut Corporate Tax Rate to 25%

On 22 November 2015, Israel's Ministry of Finance published draft legislation to reduce the corporate income tax rate from 26.5% to 25%. If approved, the reduction will apply from 1 January 2016.

Treaty Changes (4)

Andorra-Liechtenstein

Responsive image

Update - Tax Treaty between Andorra and Liechtenstein

The new income and capital tax treaty between Andorra and Liechtenstein was signed on 30 September 2015. The treaty is the first of its kind between the two countries.

Taxes Covered

The treaty covers Andorran corporate income tax, personal income tax, tax on income of non-residents, and capital gains tax on immovable property transfers. It covers Liechtenstein personal income tax, corporate income tax, real estate capital gains tax, wealth tax and coupon tax.

Withholding Tax Rates

  • Dividends - 0%
  • Interest - 0%
  • Royalties - 0%

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 alienation of movable property forming part of the business property of a permanent establishment in the other State; and
  • Gains from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated 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

Andorra applies the credit method for the elimination of double taxation, while Liechtenstein applies the exemption with progression method.

Entitlement to Benefits

Article 27 (Entitlement to Benefits) of the treaty includes the provision that a resident of a Contracting State shall not receive the benefit of any reduction in or exemption from tax provided for by the treaty if it is reasonable to conclude that the principal purposes was to obtain the benefits of the treaty.

Entry into Force and Effect

The 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.

The provisions of Article 25 (Exchange of Information) will apply from the date the treaty enters into force, and will supersede the provisions of the 2009 tax information exchange agreement between Andorra and Liechtenstein, which is currently in force.

Costa Rica-Sweden

Responsive image

TIEA between Costa Rica and Sweden has Entered into Force

On 1 December 2015, the tax information exchange agreement between Costa Rica and Sweden entered into force. The agreement, signed 29 June 2011, is in line with the OECD standard for information exchange and generally applies from the date it entered into force.

Japan-Qatar

Responsive image

Tax Treaty between Japan and Qatar to Enter into Force

Japan's Ministry of Finance has announced that the pending income tax treaty with Qatar will enter into force on 30 December 2015. The treaty, signed 20 February 2015, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Japanese income tax, corporation tax, special income tax for reconstruction, local corporation tax and local inhabitant tax. It covers Qatari taxes on income.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services within a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days within any 12-month period.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company that has directly or indirectly held at least 10% of the paying company's voting power or total issued shares for a period of at least 6 months ending the date on which entitlement to the dividends is determined, otherwise 10%
  • Interest - 10%, although an exemption applies if the interest is beneficial owned by:
    • A bank,
    • An insurance company,
    • A securities dealer,
    • An enterprise that in the three taxable years preceding the taxable year in which the interest is paid, derives more than 50% of its liabilities from issuing bonds in financial markets or from taking deposits at interest, and less than 50% of the assets of the enterprise consist of debt-claims against Associate Enterprises as defined in the treaty (Article 9), or
    • A pension fund when more than 50% of its members or participants are individuals who are residents of either Contracting State at the end of the prior taxable year
  • Royalties - 5%

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 interests in a company, partnership or trust deriving at least 50% of the value of its property directly or indirectly from immovable property situated in the other State, unless the shares or interest are traded on a recognized stock exchange and the alienator together with related persons owns in the aggregate 5% or less of the shares or interests; and
  • Gains from 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

Both countries apply the credit method for the elimination of double taxation.

Limitation on Benefits

A protocol to the treaty, signed the same date, includes the provision that the relief provided for under the treaty will not apply if the main purpose or one of the main purposes of any person concerned with the creation or assignment of any shares, debt-claims or other rights or properties in respect of which income arises was to take advantage of the treaty by means of that creation or assignment.

Effective Date

The treaty generally applies from 1 January 2016. However, the provisions of Article 25 (Exchange of Information) apply from the date of the treaty's entry into force regardless of the date the taxes are levied or the taxable year to which the taxes relate.

Once in force and effective, the 2009 Shipping and Air Transport Agreement between Japan and Qatar is terminated and ceases to have effect.

Russia-Hong Kong-Oman

Responsive image

Russia to Sign Tax Treaties with Hong Kong and Oman

Russian Deputy Finance Minister Sergey Shatalov announced on 29 November 2015 that Russia plans to sign income tax treaties with Hong Kong and Oman. The treaty with Hong Kong would be the first of its kind signed between the two jurisdictions, while the treaty with Oman would be the second signed, although the first treaty signed in 2001 was never ratified.

Sitemap

Powerful Tax Tools

NEW

FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.

NEW

Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.

NEW

Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.

NEW

Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.

NEW

Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.

NEW

OECD BEPS Project

Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.

NEW

Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.

NEW

Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

NEW

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

NEW

Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.

NEW

Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.

NEW

Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.

NEW

VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.

NEW

NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.

NEW

Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.

NEW

Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

Get an immediate FREE trial of Orbitax ITRCE

Get Started with Orbitax Today

With Orbitax, you get reliable and comprehensive solutions for international tax research, compliance and planning. Contact us today to get started with Orbitax.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More