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Approved Changes (7)

European Union-Denmark

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EC Launches State Aid Investigation into Danish Fat Tax

According to recent reports, the European Commission (EC) has launched an investigation for suspected illegal State aid into Denmark's so called Fat Tax. The tax was introduced in 2011 and abolished in the beginning of 2013. The tax had applied to meats, dairy products, oils and other foods with a saturated fat content greater than 2.3%. The view of the EC is that the tax may have constituted illegal State aid because it did not apply for all foods containing saturated fat, providing an exemption for certain producers.

Hong Kong

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Hong Kong Passes Legislation to Exempt ETFs from Stamp Duty

On 4 February 2015, Hong Kong's Legislative Council passed the Stamp Duty (Amendment) Bill 2014, which exempts all transfers of shares in exchange traded funds (ETF) from stamp duty. A partial exemption was provided for ETFs in 2010, but stamp duty still applied at a rate of 0.1% paid by both the buyer and seller of shares in ETFs that tracked indices comprising more than 40% of Hong Kong stocks that have their registers of holders in Hong Kong.

The new exemption for all Hong Kong ETFs will have effect from 13 February 2015.

Malaysia

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Malaysia Extends Registration Deadline for GST

Malaysia has extended the registration deadline for Goods and Service Tax (GST) to 28 February 2015. GST will be implemented in Malaysia from 1 April 2015. Failure to register by the deadline may result in a fine of MYR 30,000.

The registration threshold for GST is turnover exceeding or expected to exceed MYR 500,000 in a 12 month period, including both standard-rated and zero-rated supplies. Non-residents must register through an appointed agent when supplying goods in Malaysia. Supplies of service are subject to reverse charge when supplied by a non-resident, so no registration is required.

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OECD Issues 2015 Going for Growth Report

On 9 February 2015, the OECD issued the 2015 Going for Growth Report. The report looks at reform progress and growth since 2013, and sets out new priorities to encourage new growth and income equality. In general the report shows that reforms for growth have generally been declining in developed countries, while reform is accelerating in most major developing countries.

The report also includes country notes for individual OECD members and major country partners, including a review of actions taken to improve the efficiency of the tax systems and other areas, as well as recommendations.

For more information, click the following link for the OECD Going for Growth webpage, which includes links to the full report, country notes and other info.

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OECD Publishes Additional Discussion Draft Comments on Transfer Pricing Issues of the BEPS Action Plan

On 10 February 2015, the OECD published additional comments received in response to the public discussion drafts on the Base Erosion and Profit Shifting (BEPS) Project Actions 8, 9, and 10 dealing with transfer pricing issues. The comments published are in regard to:

Revisions to Chapter I of the Transfer Pricing Guidelines (including risk, recharacterization and special measures),

Profit splits in the context of global value chains, and

Transfer pricing aspects of cross-border commodity transactions

A public consultation meeting will be held 19-20 march 2015 concerning transfer pricing matters.

Qatar

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Cash Refunds for Tax Losses to be Provided in Qatar Financial Centre

On 5 February 2015, it was announced that tax losses companies licensed for the Qatar Financial Centre (QFC) will be eligible to claim a cash refund for tax losses in their first two years of operations subject to certain conditions, including:

  • The QFC entity is a Limited Liability Company,
  • Operations were launched after 1 January 2015,
  • It carries on a permitted activity in or from the QFC,
  • It has at least 3 full time employees, and
  • It has not elected to benefit from exempt status or to be taxed at the 0% concessionary tax rate

The cash refund is equal to 8% of qualifying losses, and a cumulative cap of QAR 200,000 (~USD 55,000) applies. Only expenses incurred in Qatar excluding depreciation and interest costs are eligible for tax credits. Claims may be made as part of the annual tax return, and are to be paid within 6 months of a claim.

Spain

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Spain's New VAT Reverse Charge Requirements

From 1 March 2015, new value added tax (VAT) reverse charge requirements will come into effect in Spain. The changes are in regard to the 2013 EU Quick Response Mechanism for VAT reverse charge, which was developed as an anti-fraud measure to counter suppliers claiming sales as zero-rated intra-Community supplies when the sales are actually domestic with full VAT charged, but not paid. This applies mainly to the sale of personal computer, tablets, computer chips, games consoles, carbon trading licenses and wholesale electricity supplies.

Under the new Spanish requirements, in order to use the domestic reverse charge in Spain, suppliers must first seek approval from the Spanish tax authorities to use a nil rate on local supplies, and must then demonstrate to customers that they have been approved to not charge VAT. The customer can then account for both the input and output VAT in their return.

Treaty Changes (5)

China-Malaysia

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Tax Treaty between China and Malaysia under Negotiation

On 5 February 2015, the Malaysian government announced that negotiations are underway for a new tax treaty with China. The treaty must be finalized, signed and ratified before entering into force. Once in force and effective, the new treaty would replace the 1985 tax treaty between the two countries, which is currently in force.

Additional details will be published once available.

Germany-Uzbekistan

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Protocol to the Tax Treaty between Germany and Uzbekistan Signed

According to recent reports, a protocol to the 1999 income and capital tax treaty between Germany and Uzbekistan was signed on 14 October 2014. The protocol amends Article 26 Exchange of Information, to bring it in line with the OECD standard for information exchange. It also adds Article 26a, which covers administrative assistance in tax collection.

The protocol will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.

Liechtenstein-United States

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Protocol to the TIEA between Liechtenstein and the U.S. has Entered into Force

On 22 January 2015, the protocol to the 2008 tax information exchange agreement between Liechtenstein and the United States entered into force. The protocol, signed 16 May 2014, adds article 5A to the agreement, which covers automatic exchange of information.

The protocol is the first to amend the agreement, and applies from the date of its entry into force.

Lithuania-Oman

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Tax Treaty between Lithuania and Oman to be Signed

On 3 February 2015, officials from Lithuania and Oman met and agreed to the signing of an income tax treaty. The treaty would be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.

Additional details will be published once available.

Nepal-Malaysia

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Tax Treaty between Malaysia and Nepal under Negotiation

On 5 February 2015, the Malaysian government announced that negotiations are underway for a tax treaty with Nepal. The treaty would be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.

Additional details will be published once available.

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