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Approved Changes (6)

Belarus

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Belarus Clarifies Taxation of Foreign Gratuitous Assistance

The Belarus Ministry of Taxes and Levies has published Letter No. 2-2-10/01528 of 22 August 2017 concerning the taxation of foreign gratuitous assistance. The letter clarifies that under general rules, that the cost of any goods, works, services, property rights, or other assets received by a taxpayer without charge is to be included in the taxpayer's tax base as non-operating income on the date received. However, foreign gratuitous assistance received in the form of goods, works, services, etc. is not included as non-operating income and is tax exempt, provided that the assistance is registered with the Department of Humanitarian Affairs and a certificate confirming registration has been issued. Further, in the case of foreign gratuitous assistance received in the form of cash, the amount must be deposited in a separate charitable account opened in a Belarus bank. Where the required procedures are not followed and confirmed, foreign gratuitous assistance received will be subject to the general rules and subject to tax.

Cambodia-Greenland-Haiti-Madagascar-OECD

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Cambodia, Greenland, Haiti, and Madagascar Join Global Forum on Transparency and Exchange of Information for Tax Purposes

The OECD announced on 5 September 2017 that Cambodia, Greenland, Haiti, and Madagascar have joined the Global Forum on Transparency and Exchange of Information for Tax Purposes as the 143rd, 144th, 145th, and 146th members. As members of the Forum, the four countries will now be subject to monitoring and a peer review process to ensure the implementation of and compliance with the international standards for information exchange.

India

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India Extends Return Deadline for September Return Filers to October

On 31 August 2017, India's Central Board of Direct Taxes announced that the deadline for filing income tax returns and various audit reports has been extended 31 October 2017 for all taxpayers who were liable to file returns by 30 September 2017. The extension does not affect the return due date for taxpayers subject to India's transfer pricing provisions, which generally have a return deadline of 30 November.

Lebanon

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Lebanon Increase VAT, Corporate Tax, and Other Tax Rates

On 21 August 2017, Lebanese President Michel Aoun reportedly signed into law a series of tax measures approved by parliament in July. Two of the main measures include an increase in the corporate tax rate from 15% to 17% and an increase in the value added tax rate to from 10% to 11%. Other measures include a new 2% tax on the transfer of immovable property that will serve as advance payment for the registration tax if registered within one year, as well as well an increase in the stamp duty rate from 0.3% to 0.4% and an increase in excise taxes on tobacco and alcohol.

The measures generally apply from 22 August, although the VAT rate increase applies from 1 October 2017.

United States

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Corrections Made to U.S. Regulations on Guidance for Determining Stock Ownership

On 7 September 2017, corrections to the U.S. IRS final regulations on guidance for determining stock ownership (TD 9812) were published in the Federal Register. The regulations are in relation to the anti-inversion rule that allows the IRS to disregard foreign parent stock attributable to recent inversions or acquisitions of U.S. companies in the previous three years (previous coverage). The corrections clarify certain aspects of the regulations that may prove to be misleading.

Untd A Emirates

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U.A.E. Federal Tax Authority Approves Plans for Selective Excise Tax and VAT

The Emirates News Agency has issued a release announcing that on 6 September 2017, the board of the Federal Tax Authority (FTA) of the United Arab Emirates approved plans and procedures for the introduction of the new selective excise tax from October 2017 and the new value added tax (VAT) from January 2018. The Decree-Laws for the implementation of the excise tax and VAT were issued on 21 August 2017 (previous coverage) and 28 August 2017 (previous coverage), respectively, and the executive regulations for both are currently being finalized. The selective excise tax will be levied at a rate of 50% for carbonated drinks and 100% for tobacco products and energy drinks. VAT will be levied at a standard rate of 5% on most goods and services supplied in the U.A.E., while certain supplies will be zero-rate or exempt.

The FTA is a new tax authority in the U.A.E. established by decree in October 2016 in order to administer the new taxes. Additional information on the FTA and the new taxes can be found on the recently launched FTA website, www.tax.gov.ae, which is available in both Arabic and English.

Proposed Changes (2)

Denmark

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Denmark to Simplify Payroll and Related Deduction Determination

On 30 August 2017, the Danish Ministry of Finance announced a draft bill to simplify the determination of whether payroll and related expenses are deductible. The need for the bill is the result of recent judgments of the Supreme Court that there is no basis to deduct wage costs relating to the establishment of new businesses or expansion of existing businesses. The intent of the draft bill is to extend the right to deduct payroll and related expenses and eliminate the administrative burden of determining whether an individual employee deals with the company's ongoing operations or, for example, performs work in connection with the expansion of the company.

Subject to approval, the draft bill is to enter into force on 1 July 2018 and apply with retroactive effect from the 2012 tax year.

Switzerland

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Swiss Federal Council Initiates Consultation on Tax Proposal 17

On 6 September 2017, the Swiss Federal Council announced that it has initiated the consultation on tax proposal 17 (TP17). TP17 follows the failure of the prior reform package (CTR III) to pass a public referendum held in February 2017. The following is a summary of the main proposed measures of TP17 and whether their implementation is mandatory or voluntary at the canton level:

  • Abolition of the arrangements for cantonal status companies (mandatory) - At the cantonal level, status companies pay only a reduced profit tax or none at all. This preferential treatment will be abolished with TP17. Overtaxation will be avoided with a temporary special rate solution.
  • Patent box (mandatory) - Profits from patents and similar rights will be separated from other profits and taxed at a lower level. The relief may not exceed 90%. The arrangement is based on the current international standards.
  • Additional deductions for research and development (voluntary) - There may be additional deductions of no more than 50% for research and development. The measure is aimed at domestic research and development.
  • Relief restriction (mandatory) - The tax relief based on the patent box and additional deductions for research and development may not be higher than 70% of the taxable profit. The calculation also includes amortization based on earlier taxation as a status company.
  • Increased dividend taxation (mandatory) - Dividend taxation for natural persons will be increased to 70% at federal and cantonal level. The cantons can provide for a greater increase.
  • Capital tax adjustments (voluntary) - The cantons can include the capital associated with financial interests and patents and similar rights at a reduced level in the capital tax calculation.
  • Disclosure of hidden reserves (mandatory) - Companies that relocate their headquarters to Switzerland can benefit from additional amortization in the first few years. If headquarters are relocated abroad, an exit tax will be due, as is already the case at present.
  • Transference adjustments (mandatory) - This measure will close a taxation gap by restricting the scope of tax-free capital gains and the impact of the capital contribution principle.
  • Extension of the flat-rate tax credit (mandatory) - The flat-rate tax credit prevents international double taxation. Swiss operating companies of foreign companies should now be entitled to it as well.

The consultation will run for three months ending on 6 December 2017. The Federal Department of Finance is planning to submit the dispatch for Parliament to the Federal Council in spring 2018 and the earliest TP17 can enter into force is 2020.

Treaty Changes (2)

Guernsey-Anguilla-Bahrain-Dominica-Estonia-Ghana-Gibraltar-Kenya-Malawi-Untd A Emirates-United Kingdom-Zambia

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Guernsey Update on TIEA and Tax Treaty Negotiations

The Guernsey government has published an update of its policy on tax information exchange agreements (TIEA) and tax treaties dated 4 September 2017, which includes the status of negotiations.

TIEA Negotiations

TIEA negotiations have been concluded with:

  • Ghana;
  • Kenya;
  • Malawi; and
  • Zambia.

In addition, Guernsey has virtually concluded TIEA negotiations with Anguilla and discussions are ongoing for the negotiation of a TIEA with Dominica for the implementation of the OECD Common Reporting Standard (CRS).

Tax Treaty Negotiations

Tax treaty negotiations have been concluded with:

  • Bahrain, and
  • Gibraltar.

Tax treaty negotiations have commenced and are ongoing with:

  • United Arab Emirates; and
  • United Kingdom (renegotiation of existing treaty).

Discussions are also ongoing for the possible negotiation of a tax treaty with Estonia.

Jordan-Saudi Arabia

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Tax Treaty between Jordan and Saudi Arabia has Entered into Force

The income tax treaty between Jordan and Saudi Arabia entered into force on 1 September 2017. The treaty, signed 19 October 2016, is the first of its kind between the two countries and generally applies from 1 January 2018. The withholding tax rates provided by the treaty are as follows:

  • Dividends - 5%
  • Interest - 5%
  • Royalties - 7%

Additional details will be published once available.

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