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Approved Changes (5)

Belgium

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Belgium Requires all Non-Residents to File Tax Returns Electronically

The Belgian Federal Public Service (SPF) Finance announced on 24 July 2015 that all non-resident taxpayers must file their returns electronically using the BIZTAX system beginning in 2015. This applies for returns for tax-year 2014 and subsequent years.

Click the following link for the BIZTAX system (Dutch language, also available in French).

Colombia

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Colombia Modifies Financial Transactions Tax Exemption for Investment Transfers

The Colombian government recently published Decree 1489 of 2015 in the Official Gazette. The Decree modifies the financial transactions tax (GMF) exemption provided for transfers of investments or portfolios carried out by stock brokerages, trust companies and investment management companies.

According to the decree, the following transactions qualify for the GMF exemption, if the corresponding transfer is made for the same beneficiary:

  • Transfers made by entities qualified as distributors or administrators of collective investments, including omnibus accounts;
  • Transfers between accounts held by administrative entities of mutual funds and accounts held by providers of securities custodian services; and
  • Transfers between accounts held by entities under surveillance and accounts held by providers of securities custodian services

The types of investments that qualify include:

  • Securities registered with the National Registry of Securities and Issuers;
  • Securities registered with international registries;
  • Units of collective investment funds;
  • Commodities traded in agricultural stock exchanges, or other types of commodities, acquired directly or indirectly through mutual funds, trusts or other legal means;
  • Foreign currencies;
  • Deposit and savings certificates; and
  • Money market operations conducted through mutual funds, trusts or other legal means.

The current GMF rate is 0.4%. That rate will apply through 2018, and GMF will then be phased out by 2022, with a reduction to 0.3% in 2019, 0.2% in 2020 and 0.1% in 2021.

Cyprus

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Cyprus Passes Notional Interest Deduction and Immovable Property Tax Measures into Law

The Cyprus House of Representatives has passed into law two of the tax reform measures introduced by the Cabinet on 2 July 2015 (previous coverage). The measures passed are as follows.

Notional Interest Deduction

A notional interest deduction is introduced on new corporate equity investment in Cyprus resident entities, as well as permanent establishments of non-residents. The notional interest is equal to the Cyprus 10-year government bond yield plus 3%, multiplied by the amount of new equity. The total deduction is limited to 80% of taxable profit. Companies recognizing a loss are not eligible for the deduction.

The change applies for tax years beginning on or after 1 January 2015.

Reduced Taxes on Immovable Property Disposals

From the date of the entry into force of the new measures up to the end of 2016, the transfer fee on immovable property in Cyprus is halved, and the disposal of immovable property is exempt from capital gains tax (CGT). However, the indirect disposal of immovable property through the disposal of shares deriving at least 50% of their value from property in Cyprus is still subject to CGT.

Other Measures

The other measures proposed by the Cabinet are expected to be approved after the summer break, including a dividend exemption restriction if derived from hybrid instruments, changes in the tax treatment of forex gains/losses, and others.

Poland

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Poland Expands VAT Reverse Charge for Several Goods

Poland has expanded the application of the reverse charge mechanism for value added tax (VAT) for a number of goods, including:

  • Unprocessed semi-finished non-ferrous metal products;
  • Certain gold products;
  • Steel products; and
  • Several electronic products including mobile phones, tablets, portable computers and notebooks.

Under the reverse charge mechanism, the purchaser of goods or services is required to withhold and remit the VAT due on the supply. The addition of the above listed products is effective 1 July 2015.

United States

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U.S. Congress Passes Three-Month Highway Funding Bill without Tax Reform

Following passage in the U.S. House of Representatives, the U.S. Senate passed a short-term bill that extends funding of the Highway Trust Fund for three months on 30 July 2015. On the same day, the Senate also passed a six-year highway bill, which includes three years of funding through measures for increased tax compliance and other non-tax related measures. Neither bill includes the tax reform that has been discussed for highway funding, such as the one-off deemed repatriation of foreign earnings at a reduced tax rate, which is supported by the House.

The Senate and House will continue negotiations to reach a six-year deal after Congress returns from its August recess and before the three-month extension expires the end of October. It is likely that the House will continue to push for tax reform measures as part of any deal.

Proposed Changes (3)

Kenya

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Kenya Clarifies Proposed Change in Securities Taxation

On 29 July 2015, the Kenya Revenue Authority issued a public notice clarifying the replacement of the 5% capital gains tax on the sale of securities with a 0.3% transaction withholding tax as proposed in the 2015-2016 Budget (previous coverage). According to the notice, the 0.3% withholding tax would only apply for transactions involving listed securities, while the 5% capital gains tax would remain applicable for property transactions and transactions involving unlisted securities.

The 0.3% withholding tax would be levied on the gross transaction value of listed securities from 1 January 2016. The broker of the transaction would be responsible for withholding and must remit the tax due by the 20th day of the month following the month in which the transaction took place.

Slovenia

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Slovenia to Implement Amendments to the EU Parent-Subsidiary Directive and Other Tax Changes

The Slovenian government has proposed the implementation of amendments made to the EU Parent-Subsidiary Directive into domestic law. The amendments include that the participation exemption provided for in the Directive will not be granted if:

  • A profit distribution made by a subsidiary to its parent company is deductible in the Member State of the subsidiary (hybrid mismatch); or
  • An arrangement or a series of arrangements are put in place with the main purpose or one of the main purposes of receiving a tax benefit and not for valid commercial reasons that reflect economic reality.

The government has also proposed aligning the tax treatment of actuarial gains and losses with the treatment of employee benefits, which includes that 50% of the provisions for employee benefits are allowed as deductions from the tax base.

United States

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U.S. Bill Introduced to Permanently Extend Dividends Received Deduction

On 15 July 2015, U.S. Congressman Roger Williams R-TX introduced Bill H.R. 3083, the Bring Jobs Back to America Act of 2015. The Bill would amend the Internal Revenue Code of 1986 to make permanent the dividends received deduction for repatriated foreign earnings. The bill is currently assigned to a congressional committee.

Treaty Changes (1)

San Marino-Switzerland

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TIEA between San Marino and Switzerland has Entered into Force

The tax information exchange agreement between San Marino and Switzerland entered into force on 20 July 2015. The agreement, signed 16 May 2014, is the first of its kind between the two countries and is in line with the OECD standard for information exchange.

The agreement applies for requests made on or after the date of its entry into force concerning tax periods beginning on or after 1 January 2016.

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