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Approved Changes (7)

Belarus

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Belarus Issues Guidance on Confirmation of Permanent Residency for Tax Treaty Benefits

On 31 August 2015, the Belarusian Ministry of Taxes and Duties issued guidance that clarifies the permanent residence requirement for claiming tax treaty benefits. According to the guidance, a non-resident with no permanent establishment in Belarus may only be eligible for a reduced rate of withholding under an applicable tax treaty if confirmation of permanent residency is provided to the withholding tax agent. If the confirmation is provided after the dates of the accrual of the Belarusian sourced income and the withholding tax assessment, the withholding tax agent may only apply the reduced rate if the confirmation is provided before the deadline for the payment of the corporate tax and filing of the corporate tax return.

Brazil

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Brazil Amends Taxation of Certain Intangible Assets and Digital Inclusion Exemption Incentive

On 31 August 2015, Brazil published Provisional Measure (PM) 690/2015 in the Official Gazette. Two of the main changes in PM 690 are summarized as follows.

Taxation of Certain Intangible Assets

Currently, income from the use of copyrights, and image, name, brand and voice rights is considered service income with a profit margin of 32% using the presumed method (Lucro Presumido). This margin is used as the tax basis for determining corporate income tax (IRPJ) and social contribution on profits (CSLL) generally at rates of 25% and 9% respectively.

Under PM 690, the presumed method using the 32% margin will no longer be allowed if the owner of the rights to the intangible assets is a shareholder/partner of the legal entity receiving the income. Instead, the full amount of income will be included in the tax base.

This change applies from 1 January 2016.

Exemption under Digital Inclusion Program

The Digital Inclusion Program provides tax incentives for companies involved in projects providing access to information technology in disadvantaged regions of Brazil. One of the incentives is an exemption from the contribution for the Program for Social Integration (PIS) and the contribution for the Financing of Social Security (COFINS). Under PM 690, this exemption is revoked for income from the sale of listed equipment and machinery.

This change applies from 1 December 2015.

PM 690/2015 must be approved or extended by the National Congress within 60 days to remain in effect.

Jamaica

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Jamaica's 3% Withholding Tax on Certain Service Payments in Effect

The Jamaican withholding tax of 3% on certain service payments made by specified large taxpayers is in effect from 1 September 2015. The withholding tax was to apply from 1 June 2015, but was delayed until implementation issues could be addressed.

Payments Subject to Withholding

The 3% tax applies for payments exceeding JMD 50,000 for a number of services, including:

  • Accounting;
  • Consultancy;
  • Engineering;
  • Entertainment;
  • Legal;
  • Management;
  • Transportation; and
  • Others.

An exemption applies for payments to service providers that have obtained an exemption certificate. In order to obtain a certificate, the service provider must have demonstrated a certain level of tax compliance and submit an application with the Jamaican tax authority. If approved, the service provider must present the certificate to the withholding tax agent for the exemption to apply.

Withholding Tax Agents

All government ministries, departments and agencies must act as withholding agents, as well as the following large taxpayers with annual gross revenue exceeding JMD 500 million:

  • Financial institutions regulated by the FSC and BOJ;
  • Tourism operators;
  • Utility service providers; and
  • Cable companies

Tax must be withheld on payments where the invoice was issued on or after 1 September 2015. If the invoice was issued prior to that date, no withholding is required even if paid later. If the withhold tax agent fails to withhold when required, a penalty of up to 50% of the amount due may be imposed.

All large taxpayers will eventually be required to act as withholding agents, although no specific date has been given for full implementation.

Korea, Rep of

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Korea Introduces Voluntary Disclosure Program for Foreign Assets

Korea's Ministry of Strategy and Finance and Ministry of Justice have announced the introduction of a voluntary disclosure program for undeclared foreign assets. Under the program, which runs from 1 October 2015 to 31 March 2016, resident individuals and legal entities that disclose foreign assets and pay the tax overdue will be exempt from penalties, except for a charge of 0.03% per day on the tax amount. In addition, no legal action will be taken on taxpayers taking part in the program unless the declared assets are derived from criminal activity. However, criminal proceedings will result if any undeclared foreign assets are discovered after the program ends.

Nigeria

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Nigeria to Enforce 30% Tax on Interim Dividends

During a meeting held 3 September 2015, acting Chairman of Nigeria's Federal Inland Revenue Service (FIRS) announced that a 30% tax on interim dividends declared would be enforced as part of efforts to improve tax collection. The tax is treated as an advance payment of tax against the final tax due.

Romania

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Romania's Revised Fiscal Procedures Code

On 23 July 2015, Romania published Law No. 207/2015 in its Official Gazette. The Law amends provisions of the Fiscal Procedures Code concerning tax penalties, statute of limitations and audits, and other matters.

Tax Penalties

The main changes regarding tax penalties include:

  • A reduction in the late tax payment penalty from 0.02% to 0.01% per day, and a reduction in the late payment interest penalty from 0.03% to 0.02% per day;
  • A reduction in the late payment interest penalty for local taxes from 2% per month or part thereof to 1%; and
  • The introduction of a penalty for non-declaration at a rate of 0.08% per day until the declaration and payment is made.

Statute of Limitations and Audits

The main changes regarding the statute of limitations and audits include:

  • The starting date for the statute of limitations is changed from 1 January of the year following the year in which the tax obligation arose to 1 July;
  • The maximum duration of an audit is changed from 6 months to 180 days for large tax payers and from 3 months to 45 days for small taxpayers and 90 days for medium taxpayers;
  • The deadline for a taxpayer to submit a written response to audit findings is increased from 3 days for all taxpayers to 5 days for small and medium taxpayers and 7 days for large taxpayers; and
  • The deadline for appealing an assessment resulting from an audit is extended from within 30 days of receiving the audit minutes to 45 days.

Other Changes

Other changes include:

  • In cases of doubt, tax norms are to be interpreted in favor of taxpayers; and
  • The fee for tax rulings is increased from EUR 1,000 to EUR 3,000 for small and medium taxpayers, and EUR 5,000 for large taxpayers.

Effective Date

The changes apply from 1 January 2016.

United States

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U.S. Interest Rates on Overpaid and Underpaid Tax Remain Unchanged for Q4 2015

The IRS has announced that the interest rates for overpaid and underpaid tax will not be changed for the fourth quarter of the year beginning 1 October 2015. The rates are 3% for both underpayment and overpayment by individuals, and 2% and 3% for corporate overpayments and underpayments respectively.

The rate for corporate overpayment portion exceeding USD 10,000 in a tax period will remain at 0.5%, and the rate for large corporate underpayments exceeding USD 100,000 will remain at 5%.

Treaty Changes (3)

Belarus-Ecuador

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Tax Treaty between Belarus and Ecuador to be Signed

Officials from Belarus and Ecuador have reportedly agreed during a 1 September 2015 meeting to move forward with the signing of an income tax treaty in the near future. The treaty has been under negotiation since August 2014, and will be the first of its kind between the two countries. It must be finalized, signed and ratified before entering into force.

Israel-Serbia

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Tax Treaty between Israel and Serbia under Negotiation

Officials from Israel and Serbia met 1 to 3 September 2015 for the first round of negotiations for 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.

Uruguay-Chile

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Uruguay Approves TIEA with Chile

On 1 September 2015, Uruguay's Chamber of Senators approved the pending tax information exchange agreement with Chile. The agreement, signed 12 September 2014, is the first of its kind between the two countries and is in line with the OECD standard for information exchange. It will enter into force once the ratification instruments are exchanged, and will apply from the date of its entry into force for tax periods beginning on or after that date.

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