Worldwide Tax News
China Issues Notice on Taxation of Cross Border (B2C) E-commerce
On 24 March 2016, China's Ministry of Finance, State Administration of Taxation and General Administration of Customs jointly issued the Notice on Import Tax Policies for Cross-border Retail e-Commerce (Notice No. 18/2016), which sets out the authorities' new policy for the taxation of B2C cross border supplies of goods through e-commerce. The new policy is meant to promote fair competition between domestic and foreign e-commerce suppliers.
The notice includes that B2C cross border supplies of goods will be subject to customs duty, value added tax and consumption tax. The tax base is the total price of the transaction, including the retail price of the goods, freight and insurance. The duty and taxes are due by the individual consumer, but are withheld by the Chinese e-commerce enterprise, e-commerce platform or logistics enterprise handling the import.
The notice also includes an exemption from the customs duty component on B2C cross border supplies of goods up to the following thresholds:
- CNY 2,000 (~USD 310) per transaction;
- CNY 20,000 (~USD 3,100) per individual per year
In addition to the customs duty exemption, the tax base for the consumption tax component for transactions up to the thresholds is reduced to 70%. VAT applies at normal rates regardless of the thresholds.
Notice No. 18/2016 is effective from 8 April 2016. Click the following link for the notice (Chinese language).
France Issues Interest Rate Limits for Shareholder Loan Interest Payment Deductions for Fiscal Years Ending 31 March 2016 to 29 June 2016
On 25 March 2016, France published the interest rates used in determining the deductibility of interest payments to shareholders for companies whose fiscal year ends between 31 March 2016 and 29 June 2016.
The portion of interest payments exceeding the following rates are generally not deductible unless documentation is provided demonstrating that the interest rate applied is at arm's length. The period in which the fiscal year ends and the applicable rates are as follows:
- Between 31 March 2016 and 29 April 2016 - 2.13%
- Between 30 April 2016 and 30 May 2016 - 2.14%
- Between 31 May 2016 and 29 June 2016 - 2.15%
The interest rate limits are determined by the Central Bank of France based on the average annual interest rates charged by financial institutions on medium-term variable rate loans of 2 years or more.
Ireland Publishes New Tax and Duty Appeals Manual
On 1 April 2016, Irish Revenue issued eBrief 35/16, announcing that a new Tax and Duty Appeals Manual has been published. The new manual covers the new appeals process introduced under the Finance (Tax Appeals) Act 2015, which was enacted 25 December 2015 and commenced 21 March 2016.
The Act provided for the establishment of a new Tax Appeals Commission (TAC) to handle taxpayer appeals of Revenue decisions. From 21 March 2016, all appeals (with the exception of customs duty appeals and 'first-stage' VRT appeals) will have to be made directly to the TAC and not through Revenue in the first instance.
The new Tax and Duty Appeals Manual covers:
- The reform of tax and duty appeals process;
- Short-term implications for Revenue;
- New Appeals received from 21 March 2016;
- Transition of existing appeals to the new appeals process; and
- Issue of ‘settlement letters’ to appellant.
Click the following link for the new Tax and Duty Appeals Manual Example.
Australia Issues Draft Legislation Allowing Taxpayers to Self-assess Effective Life of Certain Intangible Assets for Depreciation Purposes
On 1 April 2016, the Australian Treasury issued an exposure draft of the Tax and Superannuation Laws Amendment (2016 National Innovation and Science Agenda) Bill 2016 for public comment. The draft legislation would allow a taxpayer to choose between using the statutory effective life or self-assessing the effective life of the following intangible depreciating assets:
- A standard patent;
- An innovation patent;
- A petty patent;
- A registered design;
- A copyright (except copyright in film);
- A license (except one relating to a copyright or in-house software);
- A license relating to a copyright (except copyright in a film);
- An in-house software;
- A spectrum license;
- A data-casting transmitter license; and
- A telecommunications site access right.
Taxpayers are allowed to recalculate the effective life in later years if no longer accurate due to a change in the circumstances relating to the nature of the asset's use. Taxpayers are also required to recalculate the effective life if the cost of an asset increases by 10% in a later income year and in certain other cases.
If approved, the changes would apply from 1 July 2016. Click the following for the consultation page on the Treasury site, which includes the exposure draft and explanatory material. Comments are due by 22 April 2016.
Tax Treaty between Georgia and South Korea Signed
On 31 March 2016, officials from Georgia and South Korea signed an income tax treaty. The treaty is the first of its kind between the two countries, and will enter into force after the ratification instruments are exchanged.
Additional details will be published once available.
Update - Tax Treaty between Macedonia and the U.A.E.
The income tax treaty between Macedonia and the United Arab Emirates was signed on 26 October 2015. The treaty is the first of its kind between the two countries.
The treaty covers Macedonian personal income tax and profit tax, and covers U.A.E. income tax and corporate tax.
- Dividends - 5%
- Interest - 5%
- Royalties - 5%
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 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, with an exemption if listed on a recognized stock exchange
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation.
Article 27 (Income from Hydrocarbons) includes the provision that the treaty will not affect the application of domestic laws and regulations related to the taxation of income and profits derived from hydrocarbons and its associated activities situated in the territory of either Contracting State.
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.
Maldives to Negotiate Tax Treaties with Malaysia and Thailand
According to recent reports, the Maldives is planning to begin negotiations for income tax treaties with Malaysia and Thailand. Any resulting treaties would be the first of their kind between the Maldives and the respective countries, and must be finalized, signed and ratified before entering into force.
Saudi Arabia Approves Tax Treaty with Macedonia
Saudi Arabia's Ministry of Foreign Affairs has announced that the Saudi Cabinet approved the pending income tax treaty with Macedonia on 1 February 2016. The treaty, signed 15 December 2014, is the first of its kind between the two countries. It will enter into force on the first day of the second month following the exchange of the ratification instruments, and will apply from 1 January of the year following its entry into force.
Click the following link for details of the treaty as previously covered.