Worldwide Tax News
Bermuda's Budget for 2015-2016 was presented on 20 February 2015. The main tax related measures include:
- The Corporate Services Tax rates will be increased from 6% to 7%
- The payroll tax rate will be increased from 14.0% to 14.5%, with the maximum percentage payable by employees increased from 5.25% to 5.50%
- Fuel duties will be increased by BMD 0.5 per liter
- Land tax on commercial buildings will be increased from 4.4% to 5.5%
- A study will be performed on the feasibility of introducing a consumption tax on services
The changes will generally apply from 1 April 2015.
On 4 March 2015, the U.K. House of Commons passed the Corporation Tax (Northern Ireland) Bill. The bill provides for the devolution of tax powers to the Northern Ireland Assembly to set a different rate of corporation tax from the rest of the U.K. Power over the corporation tax base, including reliefs and allowances, will remain with the U.K. Parliament.
The rate, in general, will apply to all of the trading profits of a company if that company is a micro, small or medium-sized enterprise (SME), and the company's employee time and costs fall largely in Northern Ireland. It will also apply to a corporate partner's share of the profits of a partnership trade if that company and partnership are both SMEs and the partnership's employee time and costs fall largely in Northern Ireland.
The rate will also apply to the profits of large companies, and (in the case of a corporate partner not covered by the SME rules referred to above) to a corporate partner's share of the profits of a partnership that are attributable to a Northern Ireland trading presence, that presence being termed as a "Northern Ireland regional establishment" (NIRE).
Although the rate of corporation tax that will be applied has not yet been set, the current tax rate in Northern Ireland of 21% will be reduced to be more in line with the Republic of Ireland tax rate of 12.5% according to recent comments by Northern Ireland officials.
The bill must now be passed by the House of Lords, and receive royal assent before becoming law. The process is expected to be completed by the middle of the year, and Northern Ireland will be able to set the corporation tax rate from April 2017.
The tax information exchange agreement between the Cook Islands and Italy entered into force on 17 February 2015. The agreement, signed 17 may 2011, is the first of its kind between the two countries and is in line with the OECD standard for information exchange.
The agreement applies for criminal tax matters from the date of its entry into force, and for other matters for tax periods beginning on or after that date.
The protocol to the 1989 income and capital tax treaty between Denmark and India entered into force on 1 February 2015. The protocol, signed 10 October 2013, replaces Article 26 Exchange of Information bringing it in line with the OECD standard for information exchange.
The protocol is the first to amend the treaty, and applies from the date of its entry into force.
According to an announcement by the Liechtenstein government, officials from Liechtenstein and the United Arab Emirates have initialed an income and capital tax treaty on 27 February 2015. The treaty will be the first of its kind between the two countries, and must be signed and ratified before entering into force.
Additional details will be published once available.
The income tax treaty between Andorra and Luxembourg was signed on 2 June 2014.The treaty is the first of its kind between the two countries.
The treaty covers Andorran income tax, tax on income from economic activities, tax on income of nonresidents and real estate capital gains tax. It covers Luxembourg individual income tax, corporation tax, wealth tax and the communal trade tax.
- Dividends - 5% if the beneficial owner is a company directly holding at least 10% of the paying company's capital (0% if the beneficial has held 10% of the capital for an uninterrupted period of at least 12 months, and has invested at least 1.2 million euro in the paying company), otherwise 15%
- Interest - 0%
- Royalties - 0%
- Capital gains - generally exempt, except for the following gains which if 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 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 or other rights in a company whose assets are comprised of more than 50% of immovable property situated in the other State
Andorra applies the credit method for the elimination of double taxation, while Luxembourg generally applies the exemption method. However, in the case of dividend income and entertainer and sportspersons income, Luxembourg applies the credit method.
The treaty will enter into force once the ratification instruments are exchange, and will apply from 1 January of the year following its entry into force.
On 6 March 2015, officials from South Africa and Qatar 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.