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Approved Changes (8)

Brazil

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Brazil Converts Provisional Measure into Law that Amends Taxation of Certain Intangible Assets and the Digital Inclusion Exemption Incentive

Brazil's Provisional Measure (PM) 690/2015 was converted into Law 13,241/2015 as published in the Official Gazette on 31 December 2015. PM 690/2015, which was published on 31 August 2015 (previous coverage), introduced a restriction on the use of a 32% presumed profit margin for tax purpose for income from the use of copyrights and other intellectual property when the owner of the rights is a shareholder in the legal entity receiving the income. PM 690 also revoked the PIS/COFINS exemption under the Digital inclusion Program for income from the sale of listed equipment and machinery.

Jersey

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Jersey Approves Budget Measures for 2016 including New Individual Income Tax Thresholds, Dividend Tax Credit Restrictions and a New Tax Return Deadline

On 15 December 2015, Jersey's States Assembly approved the Finance (2016 Budget) (Jersey) Law 201.The main measures include:

  • The individual income tax thresholds for 2016 are as follows:
    • Single person - GBP 14,350
    • Single person (Aged 65+) - GBP 15,900 (unchanged)
    • Married Couple/Civil Partnership - GBP 23,000
    • Married Couple/Civil Partnership (Aged 65+) - GBP 26,100 (unchanged)
  • The tax credit for dividends received is no longer repaid in respect of any dividends received by companies subject to the 0% corporate tax rate from the date the budget was lodged (20 October 2015);
  • The tax credit for dividends received by financial services companies is limited to the lower of the tax deducted from the dividend by another Jersey company or the gross dividend at the rate of 10% from the date the budget was lodged (20 October 2015);
  • The tax rate limit for the residency rules that allow a company incorporated in Jersey to be considered tax resident in another jurisdiction is reduced from 20% to 10% so that companies currently treated as UK tax residents will not be affected by the UK's reduction in the corporation tax rate to 19% in 2017; and
  • The deadline for filing the corporate tax return is extended from the last Friday in July following the relevant tax year to 31 December following the relevant tax year.

The Finance Law generally applies from 1 January 2016, aside from the dividend tax credit measures.

Nicaragua

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Nicaragua Delays Implementation of Transfer Pricing Rules

On 17 December 2015, Law 922 was published in Nicaragua's Official Gazette and entered into force the same date. The law delays the implementation of the country's transfer pricing rules to 30 June 2017.

The transfer pricing rules are included in Law 822 of 2012 as amended in 2014, and were meant to apply from 1 January 2016. The rules require that transactions between resident and non-resident related parties (40% participation) be conducted in accordance with the arm’s length principle. The rules also set out the acceptable transfer pricing methods, the local and group documentation requirements, the provisions for advance pricing agreements, and other matters.

Panama

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Panama Further Postpones Introduction of New VAT Withholding Requirements

On 21 December 2015, Panama's tax administration announced that the effective date of the new value added tax withholding requirements is postponed to 1 February 2016. The new requirements, which had already been postponed from 1 November 2015 to 1 January 2016, apply for taxpayers that have acquired goods or services of at least PAB 10 million in the previous year, and for credit and debit card companies (previous coverage).

Portugal

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Portugal Sets Individual Income Tax Surcharge Exemption Threshold for 2016

As previously reported, Portugal has progressively reduced the 3.5% surcharge on individual income of EUR 80,000 or less in 2016. On 30 December 2015, Law 159-D/2015, which includes the changes, was published in the Official Gazette. The law includes that the surcharge exemption threshold for 2016 is EUR 7,070. In addition, the surcharge will be abolished from 2017.

Singapore

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Singapore Issues Third Edition Transfer Pricing Guidelines

On 4 January 2016, the Inland Revenue Authority of Singapore (IRAS) published the third edition of its transfer pricing guidelines. The main changes include:

  • Guidance on the use of the cost plus method is expanded - covered in section 5 of the guidelines;
  • The advance pricing agreement (APA) and mutual agreement procedure (MAP) processes are enhanced and clarified - covered in sections 8, 9 and 10; and
  • It is specified that the arm's length principle should be applied when receiving a loan from a related party, in addition to when making a loan to a related party - covered in section 13.

Click the following link for the e-Tax Guide - Transfer Pricing Guidelines (Third Edition) on the IRAS website.

Turkey

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Turkey Extends Marketable Securities Withholding Tax Exemption

On 1 January 2016, Law No. 6655 was published in Turkey's Official Gazette. The law extends the withholding tax exemption for marketable securities under temporary Article 67 of the Turkish Income Tax Law, including capital gains derived by non-residents from shares listed on the Istanbul Stock Exchange. The exemption was to expire 31 December 2015, but will now apply through 31 December 2020.

United States

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U.S. IRS Publishes Revised List of Areas in which Tax Rulings will not be Issued

On 4 January 2016, the U.S. IRS published Rev. Proc. 2016–7, which revises the list of areas of the Internal Revenue Code relating to matters on which the IRS will not issue letter rulings or determination letters. The list includes both specific and general areas.

Rev. Proc. 2016–7 is effective 4 January 2016, and supersedes Rev. Proc. 2015–7.

Proposed Changes (1)

Cyprus

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Cyprus Announces Plans to Amend IP Regime

On 30 December 2015, the Cyprus Ministry of Finance announced that it is planning to make amendments to the country's intellectual property (IP) regime. The changes will be made to align the IP regime with the guidelines developed as part of Action 5 of the OECD BEPS project, which include a modified nexus approach. This approach involves requiring a more direct connection between the activities of the taxpayer for IP development and the availability of relief under the IP regime.

Cyprus is planning to implement the changes on 1 July 2016, although exact details have not yet been issued, including whether grandfathering provisions will be included. Details of the changes will be published once available.

Treaty Changes (2)

Georgia-Iceland

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Tax Treaty between Georgia and Iceland has Entered into Force

The income tax treaty between Georgia and Iceland entered into force on 31 December 2015. The treaty, signed 13 May 2015, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Georgian profit tax and income tax, and covers Icelandic income taxes to the state and income taxes to the municipalities.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise 10%
  • Interest - 5%
  • 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; and
  • Gains from the 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.

Effective Date

The treaty applies from 1 January 2016.

Montserrat-Sweden

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TIEA between Montserrat and Sweden has Entered into Force

The tax information exchange agreement between Montserrat and Sweden entered into force on 31 December 2015. The agreement, signed 22 November 2010, is the first of its kind between the two jurisdictions and is line with the OECD standard for information exchange.

The agreement generally applies from the date of its entry into force.

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