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Approved Changes (3)

Costa Rica

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Costa Rica Publishes Corporate and Individual Income Tax Brackets for 2016-2017

On 29 September 2016, Costa Rica published the executive decrees amending the corporate and individual income tax brackets for the 2016-2017 tax year in the Official Gazette. Although the brackets are adjusted, the rates remain the same.

Corporate income tax brackets and rates:

  • up to CRC 52,634,000- 10%
  • over CRC 52,634,000 up to 105,872,000 - 20%
  • over CRC 105,872,000 - 30%

Individual employment income tax brackets and rates (monthly):

  • up to CRC 792,000 - 0%
  • over CRC 792,000 up to 1,188,000 - 10%
  • over CRC 1,188,000 - 15%

Individual business income tax brackets and rates (annually):

  • up to CRC 3,517,000 - 0%
  • over CRC 3,517,000 up to 5,251,000 - 10%
  • over CRC 5,251,000 up to 8,760,000 - 15%
  • over CRC 8,760,000 up to 17,556,000 - 20%
  • over CRC 17,556,000 - 25%

The rates apply from 1 October 2016.

Poland

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Legislation Amending Poland's Individual and Corporate Income Tax Laws Published

On 29 September 2016, amendments to Poland's individual and corporate income tax laws were published in the Official Gazette after being signed into law by the president on 21 September. The measures include a reduced 15% corporate tax rate for small businesses, clarification of the meaning of Polish-source income, the definition of beneficial ownership, and certain anti-avoidance measures (previous coverage). The measures are effective from 1 January 2017.

United Kingdom

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UK Conservative Party Leaders Committed to Finalizing Brexit and Reducing Corporate Tax Rate

While speaking at the UK Conservative Party annual conference on 2 October 2016, Prime Minister Theresa May announced that the UK will invoke article 50 of the Lisbon Treaty no later than the end of March 2017, which begins the formal process of leaving the EU. Once invoked, the UK's membership in the EU will end within two years, unless the two sides decide to extend the negotiation period for the exit.

Also speaking at the conference, Chancellor of the Exchequer Philip Hammond confirmed that the government remains committed to reducing the corporate tax rate to 17% in 2020 in order put the UK in a competitive position after exiting the EU. The current 20% will be reduced to 19% from the 2017 financial year and to 17% from the 2020 financial year as provided for under the Finance Act 2015 and Finance Act 2016 respectively.

Proposed Changes (2)

France

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Corporate Tax Changes for Large Companies in French Finance Bill 2017

In addition to the progressive reduction of the corporate tax rate to 28% for all companies by 2020 (previous coverage), the French Finance Bill 2017 also includes certain other corporate tax changes for large companies.

Installment Payments

For large companies with revenue exceeding EUR 250 million, five corporate tax installment payments are due during the year. From 1 January 2017, the amount due for the fifth installment will be increased as follows depending on the revenue amount:

  • Revenue up to EUR 1 billion - 80% of the estimated tax liability for the year, less installments already paid (increased from 75%);
  • Revenue over EUR 1 billion up to EUR 5 billion - 90% of the estimated tax liability for the year, less installments already paid (increased from 85%); and
  • Revenue over EUR 5 Billion - 98% of the estimated tax liability for the year, less installments already paid (increased from 95%).

Exceptional Surcharge

The exceptional 5% surcharge introduced in 2011 and increased to 10.7% in 2014 is not renewed. As such, the surcharge will no longer apply for large companies (revenue exceeding EUR 250 million) for financial years ending after 30 December 2016.

Singapore

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Singapore Publishes Summary of Responses to Public Consultation on Draft Income Tax (Amendment) (no. 3) Bill 2016

On 3 October 2016, the Singapore Ministry of Finance (MOF) published the summary of responses to the public consultation on the Draft Income Tax (Amendment No. 3) Bill 2016, which includes both Budget 2016 changes and non-Budget changes (previous coverage). According to the MOF release, most of the feedback received focused on the following tax changes:

  • Introduction of the Business and Institute of a Public Character Partnership Scheme;
  • Introduction of a specific anti-avoidance mechanism for writing down allowances on intellectual property rights transfers; and
  • Allocation of pre-commencement expenses to income streams that are assessed to tax under different tax rates.

Click the following link for the summary release, which includes the key items of feedback and the MOF response.

Treaty Changes (5)

Austria-Japan

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Amendment of Tax Treaty between Austria and Japan under Negotiation

Japan's Ministry of Finance has that the first round of negotiations for the amendment of the 1961 income tax treaty with Austria began 4 October 2016. It is uncertain if the two countries intend to draft a protocol to amend the current treaty or draft an entirely new treaty.

Ethiopia-Slovak Republic

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Tax Treaty between Ethiopia and Slovakia Signed

On 30 September 2016, officials from Ethiopia and Slovakia 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.

France-Colombia

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France Approves Pending Tax Treaty with Colombia

On 29 September 2016, the French senate approved the pending income tax treaty with Colombia. The treaty, signed 25 June 2015, is the first of its kind between the two countries. It will enter into force on the first day of the month following the exchange of the ratification instruments, and will apply from 1 January of the year followings its entry into force.

Click the following link for details of the treaty.

India-Japan

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Protocol to Tax Treaty between India and Japan to Enter into Force

The 2015 protocol to the 1989 income tax treaty between India and Japan will enter into force on 29 October 2016. The protocol, signed 11 December 2015, is the second to amend the treaty. The changes made by the protocol include:

  • Article 11 (Interest) is updated to clarify the withholding tax exemption for interest derived and beneficially owned by the government, central bank or government owned financial institutions;
  • Article 26 (Exchange of Information) is replaced to bring it in line with the OECD standard for information exchange; and
  • Article 26A (Assistance in the Collection of Taxes) is added.

The changes in Article 11 apply in Japan from 1 January 2017 and in India from 1 April 2017. The New Articles 26 and 26A apply for both countries from 29 October 2016.

Morocco-Mauritius-Sao Tome-Slovenia

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Morocco Ratifies Pending Tax Treaties Mauritius, Sao Tome and Principe and Slovenia

On 15 September 2016, Morocco published in the Official Gazette the royal decrees ratifying the following tax treaties:

  • The income tax treaty between Mauritius, signed 25 November 2015;
  • The income tax treaty with Sao Tome and Principe, signed 25 January 2016; and
  • The income tax treaty with Slovenia, signed 5 April 2016

The pending treaties are all the first of their kind between Morocco and the respective countries and will enter into force after the ratification instruments are exchanged.

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