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Worldwide Tax News

Approved Changes (3)

Singapore

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Singapore Publishes Revised GST Guide on Attribution of Input Tax

On 3 August 2015, the Inland Revenue Authority of Singapore published the second edition of the e-Tax Guide - GST Guide on Attribution of Input Tax. The purpose of the guide is to explain how businesses should attribute input tax when making both GST-taxable and exempt supplies.

According to the guide, a taxpayer may only claim an input tax deduction if it is directly attributable to a taxable supply. However, a de minimis rule applies, whereby input tax may be fully claimed if:

  • The total value of exempt supplies does not exceed an average of SGD 40,000 per month; and
  • The value of exempt supplies does not exceed 5% of the total value of all supplies made in the period.

A taxpayer may also claim input tax incurred in making the following exempt supplies subject to certain conditions:

  • The deposit of money;
  • The exchange of currency;
  • The first issue of a debt security;
  • The first issue of an equity security;
  • The provision of any loan, advance or credit to an employee;
  • The assignment of trade receivables;
  • The issue of units under any unit trust or business trust;
  • Prescribed hedging activities;
  • Interest received from bonds;
  • Provision of trade credit;
  • Issue or transfer of ownership of Islamic debt securities; and
  • Provision of financing under an Islamic debt securities arrangement

In order to claim input tax incurred in making the above supplies, the value of the supplies may not exceed 5% of the total value of all supplies made in the period. However, the ability to claim input tax on the above supplies does not apply for taxpayers carrying on any of the following, or similar, businesses:

  • A full bank, wholesale bank or offshore bank required to be licensed under the Banking Act;
  • A merchant bank required to be approved as a financial institution under section 28 under the Monetary Authority of Singapore Act;
  • A life insurance company, general reinsurance company or life reinsurance company required to be registered under the Insurance Act;
  • A reinsurance broker;
  • A finance company required to be licensed under the Finance Companies Act;
  • A moneylender required to be licensed under the Moneylenders Act;
  • A money-changer or remitter required to be licensed under the Money-changing and Remittance Business Act;
  • A currency trader;
  • A pawnbroker required to be licensed under the Pawnbrokers Act;
  • A debt factor;
  • A credit card, charge card or other payment card company; and
  • A unit trust excluding any real estate investment trust (or its special purpose vehicles) or business trust (or its special purpose vehicles)

Click the following link for the GST Guide on Attribution of Input Tax.

Ukraine

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Ukraine Issues APA Procedures

On 17 July 2015, the Ukrainian government issued Decree 504, which sets out the procedures for concluding advanced pricing agreements (APA). The Decree allows for unilateral, bilateral or multilateral APAs. It entered into force on 24 July 2015.

Preliminary Examination

To begin the APA process, the taxpayer may submit a request for a preliminary examination of the relevant transaction to the State Fiscal Service (SFS). The SFS must then respond within 60 days as to whether it would be reasonable to begin the price coordination procedure.

Documentation Requirements

To begin the price coordination procedure, the taxpayer must file a petition with the SFS, including the following documentation:

  • A copy of the taxpayer's organizational documents;
  • The taxpayer's accounting and financial reporting documents for the preceding 3 years;
  • A description of any ongoing tax disputes involving the transaction;
  • A certificate of tax residence of the relevant foreign party(s) to the controlled transaction;
  • A description of how an applicable tax treaty between Ukraine and the relevant foreign jurisdiction would affect the transaction;
  • An analysis of the possible influence of the provisions of an APA on the tax liabilities of the parties to the controlled transaction;
  • Copies of any documents submitted to the relevant foreign tax authority for an APA by the taxpayer or the counterparty to the transaction;
  • Copies of documents granting authority to the taxpayer's representative to take part in the price coordination procedure;
  • Transfer pricing documentation, including:
    • Details of affiliated persons involved in the controlled transaction, including those with a 20% or greater direct or indirect participation in the taxpayer;
    • A description of the business and other activities of the group involved in the controlled transaction, as well as its organizational structure and transfer pricing policy;
    • A description of the relevant controlled transaction, including the goods, works and/or services involved, and its terms and conditions;
    • Information about the functions and risks of the affiliated persons involved in the relevant controlled transaction, and the assets used;
    • A description of the factors that affected the determination of the transaction price;
    • A description of the transfer pricing methods and comparables used, including the reasoning for their use; and
    • The results of a comparability analysis of commercial and financial conditions; and
  • Any other documentation/information deemed relevant by the taxpayer or requested by the SFS

The documentation must be submitted in the Ukrainian language, and if in a foreign language, must be accompanied by a Ukrainian translation. For a bilateral or multilateral APA, copies of all documents must also be submitted in English.

APA Approval or Refusal

Once all required documentation has been submitted and reviewed, the SFS will inform the taxpayer in writing whether or not it is ready to move forward and conclude an APA. If the SFS rejects the petition, the taxpayer may file an appeal within 15 days of the decision. The SFS must respond to the appeal with its decision within 30 days.

If the SFS approves the petition, the APA must be finalized and signed, and will apply from 1 January of the following year. The maximum term of validity is three years.

APA Compliance and Termination

Once an APA is entered into, the taxpayer must file the annual report of controlled transactions with its tax return, and must file an annual APA implementation report by 1 May. An APA may be terminated if the taxpayer does not meet the filing requirements or otherwise fails to meet the conditions of the APA. An APA may also be terminated if the SFS discovers that false information was provided in the petition. For bilateral and multilateral APAs, the competent tax authorities of all the jurisdictions involved must agree to termination.

United States

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Changes to U.S. Tax Return Deadlines Included in Highway Funding Bill

On 31 July 2015, the U.S. President signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, which provides a three-month extension for funding of the Highway Trust Fund. Although the Act does not include the major tax reforms being considered, it does make certain tax compliance changes, including amendments to tax return and other IRS forms deadlines and extensions. The deadlines and extension periods are as follows:

  • Partnerships and S Corporation Tax Return Deadline - 15th day of the third month following the close of the fiscal year (15 March if following the calendar year)
  • C Corporation Tax Return Deadline - 15th day of the fourth month following the close of the fiscal year (15 April if following the calendar year)
  • Extension for Partnership Tax Return - 6 months (15 September if following the calendar year)
  • Extension for C Corporation Tax Return - 6 months (15 November if following the calendar year)
  • Report of Foreign Bank and Financial Accounts (FBAR, FinCEN Report 114) Filing Deadline - 15 April (a 6 month extension is also made available)

The changes generally apply for tax returns and other IRS forms for tax years beginning after 31 December 2015. However, for C corporations with a tax year ending on 30 June the deadline change applies for returns for tax years beginning after 31 December 2025. In addition, the change to a 6-month extension for C corporations is instead 5 months for tax years ending on 31 December and beginning before 1 January 2026, and 7 months for tax years ending 30 June and beginning before 1 January 2026.

Click the following link for the text of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. See Sec. 2006 of the Act for the tax return and other IRS forms due date changes.

Treaty Changes (4)

Brazil-Vietnam

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Tax Treaty between Brazil and Vietnam to be Negotiated

During a meeting held on 27 July 2015, officials from Brazil and Vietnam reportedly agreed to negotiate an income tax treaty. Any resulting treaty will be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.

Cyprus-Iran

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Tax Treaty between Cyprus and Iran Signed

On 4 August 2015, officials from Cyprus and Iran 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.

Guernsey-Ghana-Kenya-Malawi-Korea, Rep of-Spain-Zambia-Anguilla-Malaysia-Panama-Bahrain-Bermuda-Gibraltar-Untd A Emirates-Estonia-Latvia-Saudi Arabia-Thailand-United Kingdom

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Guernsey Provides Update on Tax Treaty and TIEA Negotiations

On 4 August 2015, Guernsey published an updated report on its policy for tax information exchange agreements (TIEA) and tax treaties, including the status of negotiations.

TIEA

TIEA negotiations have been completed with:

  • Ghana;
  • Kenya;
  • Malawi;
  • South Korea;
  • Spain; and
  • Zambia

TIEA negotiations are nearly completed with Anguilla and Malaysia, and are underway with Panama.

Tax Treaty

Tax treaty negotiations have been completed with Bahrain, and are underway with:

  • Bermuda;
  • Gibraltar; and
  • United Arab Emirates

Guernsey is also planning to negotiate tax treaties with Estonia, Latvia, Saudi Arabia and Thailand, and will negotiate a revised treaty with the UK.

Click the following link for the Guernsey TIEA and tax treaty policy report.

Macedonia-Saudi Arabia

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Update - Tax Treaty between Macedonia and Saudi Arabia

The income tax treaty between Macedonia and Saudi Arabia was signed on 15 December 2014. The treaty is the first of its kind between the two countries and will enter into force after the ratification instruments are exchanged.

Taxes Covered

The treaty covers Macedonian personal income tax and profit tax, and covers Saudi Zakat and income tax including the natural gas investment tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise of one Contracting State furnishes services in the other State through employees or other engaged personnel if the activities continue for the same or connected project for a period or periods aggregating more than 183 days in any 12-month period.

Withholding Tax Rates

  • Dividends - 5%
  • Interest - 5%
  • Royalties - 10%

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;
  • 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 that constitute a share in a company resident 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.

Non-Discrimination

The treaty does not include non-discrimination provisions.

Entry into Force and Effect

The treaty 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.

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