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Approved Changes (5)

Belarus

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Belarus Publishes Edict on Tax Evasion through Artificial Transaction Structures

On 22 January 2016, Belarus published Edict No. 14/2016 in the Official Gazette. Edict 14 amends Edict No. 488/2012, which concerns the countering of tax evasion through artificial transactions structures. Under Edict 14, if a financial investigator of the State Control Committee discovers an artificial transaction structure that has resulted in an illegal underpayment of tax, the investigator is authorized to impose taxes.

Edict 14 applies from 23 April 2016.

Chile

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Chilean Legislation to Simplify and Clarify Provisions of the 2014 Tax Reform Signed into Law

Chilean Legislation meant to simplify and clarify certain provisions of the 2014 tax reform was signed into law and promulgated by the president on 1 February 2016. The legislation affects a number of areas of the 2014 tax reform, including the two new tax regimes, the standard attribution regime (AIS) and the partially integrated regime (PIS), which apply from 2017, as well as the new CFC and thin capitalization rules, the new general anti-avoidance rule (GAAR) and others.

Click the following link for previous coverage of the measures. Additional details will be published once available.

China

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China Increases Revenue Thresholds for Exemptions from Certain Government Funds Charges

On 29 January 2014, China's Ministry of Finance and State Administration of Taxation issued Circular 12/2016, which increases the thresholds for exemptions from certain government funds charges. From 1 January 2015, enterprises with monthly revenue not exceeding CNY 30,000 or quarterly revenue not exceeding CNY 90,000 have been exempted from local education surcharges, water conservancy charges, urban maintenance and construction charges, and others. Under Circular 12/2016, the thresholds for the exemptions are increased to monthly revenue not exceeding CNY 100,000 or quarterly revenue not exceeding CNY 300,000.

The change is effective 1 February 2016.

India-United Kingdom

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India Enters into First-Ever Bilateral APAs with the UK

On 1 February 2016, the Indian Central Board of Direct Taxes (CBDT) published a press release announcing that it has signed two bilateral APAs with the UK.

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CBDT Signs Two Bilateral Advance Pricing Agreements (APAs) With United Kingdom

The Central Board of Direct Taxes (CBDT) has entered into two bilateral Advance Pricing Agreements (APAs) with United Kingdom on 29th January, 2016. With this signing, CBDT has concluded three bilateral APAs the first one being a bilateral APA signed with Japan in December, 2014.

The two bilateral APAs were signed with two Indian group entities of a UK based Multi-National Company (MNC). The APAs have been entered into soon after the Competent Authorities of India and United Kingdom finalised the terms of the bilateral arrangement under the Mutual Agreement Procedure (MAP) process contained in the India-UK DTAA.

The APAs cover the period 2013-14 to 2017-18 and also have a "Rollback" provision for 2 years (2011-12 and 2012-13). Transfer pricing disputes on the same transaction were recently resolved under MAP for each of these two companies for the years 2006-07 to 2010-11. With the signing of the bilateral APAs, the two Indian companies have been provided with tax certainty for 12 years each (5 years under MAP and 7 years under APA). This is a significant step towards providing a stable and predictable tax regime.

The two APAs are also significant because they address the issues of payment of management & service charges and payment of royalty. These transactions generally face prolonged and multi-layered transfer pricing disputes.

With this signing, CBDT has so far signed 41 APAs out of which 38 are unilateral and 3 are bilateral.

United Kingdom

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UK Parliament Committee Launches Public Inquiry on UK Tax Policy and the Tax Base

On 27 January 2015, the Treasury Committee of the UK Parliament launched a public inquiry seeking written submissions on UK tax policy and the tax base. The points to be addressed fall under five main areas, including:

  • The making of tax policy;
  • The problem of the shrinking tax base;
  • Radical solutions to the problem of the shrinking tax base;
  • Other mitigations of the problem of the shrinking tax base (addressing tax avoidance and non compliance); and
  • The administration of tax.

Click the following links for additional information on the inquiry on the parliament.uk website, as well as the text of oral evidence concerning the inquiry that was heard by the Treasury Committee during a meeting held 2 February 2016.

Proposed Changes (1)

Venezuela

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Venezuela Tax Unit Value Increase Proposed

A proposal for an increase in the Venezuelan tax unit value was submitted to the country's Commission of the National Assembly on 27 January 2016. If approved, the tax unit value would be increased from VEF 150 to VEF 177 for the 2016 fiscal year. The tax unit is used as a reference value for a number of tax matters including determining applicable progressive income tax rates, deductions, penalties and other matters.

Treaty Changes (2)

Brazil-Bulgaria

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SSA between Brazil and Bulgaria Signed

On 1 February 2016, officials from Brazil and Bulgaria 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.

Latvia-Angola-Holy See-Kosovo-Nicaragua-South Africa-Tanzania

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Latvia to Negotiate Tax Treaties with Angola, the Holy See, Kosovo, Nicaragua, South Africa and Tanzania

On 25 January 2016, the Latvian government issued a press release announcing that it is planning to negotiate income tax treaties with Angola, the Holy See (Vatican City), Kosovo, Nicaragua, South Africa and Tanzania. Any resulting treaties would be the first of their kind between Latvia and the respective countries, and will need to be finalized, signed and ratified before entering into force.

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