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Approved Changes (3)

Chile

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Chile Issues Ruling on the Taxation of Income From Bonds and Other Debt Instruments Issued by Chilean Residents in Foreign Markets

On 25 February 2015, the Chilean tax administration issued ruling 604, which sets out the tax treatment of interest and gains derived from the sales of bonds and other debt instruments by nonresidents when issued by Chilean residents in non-Chilean markets.

According to the ruling, gains from the sale of bonds or other debt instruments in foreign markets is not considered Chilean source income, and is not taxable when derived by nonresidents. However, interest paid on bonds or other debt instruments issued by Chilean residents in foreign markets is considered Chilean source income, and is subject to tax.

European Union

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The EU Parliament Group Releases Roadmap for the Committee on Tax Rulings

On 5 March 2015, the Greens / European Free Alliance group of the EU Parliament released a Roadmap for the Special Committee on Tax Rulings. The Special Committee was approved by the Parliament 12 February 2015, with the mandate to look into tax ruling practices as far back as 1 January 1991, and also review the way the European Commission treats state aid in member states and the extent to which they are transparent about their tax rulings. It will also evaluate the negative impact of aggressive tax planning on public finances and come up with recommendations for the future. Click the following link for the full mandate as approved.

The roadmap is as follows:

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Given the very broad mandate adopted by plenary, we are asked to carry out a comprehensive assessment of corporate tax systems and their problematic features in the EU, and - where relevant - in third countries.

In terms of the legal assessment, the mandate gives clear guidance: Has EU competition law been violated, and have the EU tax law information exchange obligations been respected? Has the Commission done what is in its powers, in the light of its treaty obligation, to ensure EU competition and tax laws have been implemented? Have Member States that have knowingly contributed to the large scale draining of public finances over several decades violated the treaty principle of sincere cooperation? Not explicitly mentioned by the mandate is the question of the compatibility of the modified nexus approach with EU law and especially the freedom of establishment and the freedom to provide services. Given that Council] itself raises this issue, we suggest to add it to our legal agenda.

And last but not least, what are the legislative and non-legislative measures to be taken at MS, EU and global level that based on a thorough analysis of the existing systems the special committee recommends to be adopted?

To this end, we present to the committee 6 draft annexes that we suggest should be built on and further elaborated over the coming weeks. Some flexibility needs to be built in, in particular with regards to the jurisdictions to examine and the special corporate tax regimes and practices to tackle. Much of this will only be clear(er) to us once we have studied the range of documents that TAXE will have to request. The annexes were drafted after discussions on a confidential basis with actors from the aggressive tax planning industry as well as officials from tax authorities.

In terms of chronology, it seems most efficient to us to first analyze the documents, in particular from code of conduct WG on Business Taxation, to be able to better prepare hearings and missions.

Furthermore, knowing that access to information is key, we suggest that the special committee sets up a secure cloud where insiders from multinational companies, consultancies, civil society organizations and officials of tax authorities may deposit anonymously any information they deem of possible interest for the inquiries of the special committee, ranging from names of special corporate regimes to look into to actual tax rulings.

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Tunisia

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Tunisia Publishes Guidance on Minimum Corporate Tax

Tunisia has published guidance on the application of the minimum corporate tax rate, which was increased from 0.1% to 0.2% by the Finance Law 2014, and amended by the Finance Law 2015. The rules are summarized as follows.

In general, companies subject to the standard corporate tax rate of 25% and the increased corporate tax rate of 35% are required to pay the minimum corporate tax at a rate of 0.2% on gross domestic turnover when that amount exceeds the tax payable using standard/increased rates. However, for companies subject to the reduced corporate tax rate of 10%, the 0.1% minimum corporate tax rate applies. When the 0.2% minimum corporate tax rates applies, the minimum tax amount payable is TND 500. When the 0.1% rate applies, the minimum tax amount payable is TND 300.

Under Finance Law 2014, the increased rate applies from year of assessment 2013. Initially the minimum tax paid was allowed to be carried forward as a credit against normal tax liability for up to 5 years. However, under Finance Law 2015, the carry forward is no longer allowed. For year of assessment 2014 and subsequent years, minimum tax paid at the 0.1% or 0.2% rate is considered a final tax, while minimum tax paid for year of assessment 2013 may still be carried forward.

Proposed Changes (1)

South Africa

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South Africa Considers Temporary Cut in Unemployment Insurance Fund Contributions

The South African Ministry of Finance has launched a public consultation for a temporary reduction in Unemployment Insurance Fund (UIF) contributions. As proposed in the 2015 Budget, the monthly basis cap would be reduced from the ZAR 14,872 to ZAR 1,000, but would not affect benefits. Both the employer and employer are obligated to contribute 1% of the monthly wage/salary to the fund.

If the change is adopted, the contributions reduction would draw down on the UIF’s accumulated surplus of over ZAR 72 billion. The reduced basis cap would apply from 1 April 2015, and would be reconsidered for the following fiscal year shortly before 1 April 2016.

Comments may be submitted via email: uif@treasury.gov.za; fax: 086 741 8648; or hand: c/o the Chief Directorate: Legislation, National Treasury, Old Reserve Bank Building, Room HB-02.03, Church Square, City of Tshwane.

Treaty Changes (2)

Bahrain-Cyprus

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Tax Treaty between Bahrain and Cyprus Signed

On 9 March 2015, officials from Bahrain and Cyprus signed an income tax treaty. The treaty is the first of its kind between the two countries, and must be ratified before entering into force.

Additional details will be published once available.

Russia

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Russia Deposits Ratification Instrument for Mutual Assistance Convention

On 4 March 2015, Russia deposited the ratification instrument for the Council of Europe-OECD Convention on Mutual Administrative Assistance in Tax Matters and amending protocol. Russia signed the convention as amended on 3 November 2011, and it will apply in Russia from 1 July 2015.

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