Worldwide Tax News
Malta's Inland Revenue Department has published a FAQ on its new property tax system, including examples. The new system includes the introduction of a final withholding tax on immovable property transfers at a rate of 8% as included in the 2015 Budget. The new tax for the most part replaces the capital gains tax and 12% final withholding tax.
The 8% final withholding tax applies from 1 January 2015, although there are a few exceptions, including:
- A 5% final withholding tax applies for the transfer of property that has been owned for less than 5 years and is not part a project (development)
- A 10% final withholding tax applies for the transfer of property acquired prior to 1 January 2004
- A 2% final withholding tax applies for the transfer of residential property, where the property is owned by an individual or co-owned by two individuals, it is declared in the original deed of acquisition that the property is the individual(s) sole ordinary residence, the property is owned for less than 3 years, and the individual(s) does not own any other residential property
- A 5% final withholding tax applies for the transfer of property situated in Valletta, if acquired by the transferor before the 31st December 2018, has been restored and/or rehabilitated after the date of acquisition, and is owned for less than 5 years
In certain cases an election may still be made to exclude a transfer of immovable property from the final withholding tax and instead be taxed on the profit or gain.
Click the following link for the New Property Tax System - FAQ.
On 7 April 2015, Romania's government approved the measure for reducing the VAT rate on foodstuffs from the standard 24% rate to the reduced 9% rate with effect from 1 June 2015. The country is also planning to cut the standard rate to 20%, which the government had indicated might take place in 2015, but will now likely happen in the beginning of 2016. The government has also indicated the possibility of an additional cut in the standard rate to 18% in 2018.
The European Commission will reportedly consider changes to the VAT Mini One Stop Shop (MOSS) system, which was introduced as part of the VAT place of supply changes for telecommunications, broadcasting, and electronic B2C services in the EU. The system allows suppliers to account for VAT on their sales to customers located in other EU countries without having to register in each country.
While the MOSS system generally reduces the compliance burden resulting from the place of supply change for businesses with sales in multiple EU countries, it has increased the compliance burden for small and micro enterprises that now have to register for VAT in their country in order to use the MOSS system even though they do not meet necessarily meet the VAT registration threshold of their country. Based on this and other issues, the Commission will consider changes to the rules regarding MOSS, including the possible introduction of a specific e-commerce registration threshold.
On 22 October 2014, officials from Ecuador and Qatar signed an income tax treaty. The treaty is the first of its kind between the two countries.
The treaty covers Ecuador income tax and Qatar income tax.
If a company is considered resident in both Contracting States, then it shall be deemed to be a resident only of the State of which it is a national. If the company is a national of both Contracting States, then the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If the authorities cannot reach mutual agreement, the benefits of the treaty will not apply.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services within a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days within any 12 month period.
- Dividends - 5% if the beneficial owner is a company that directly owns at least 10% of the voting stock of the paying company, otherwise 10%
- Interest - 10%
- Royalties - 10%
- Capital gains - generally exempt except for gains from the alienation of immovable property, gains from the alienation of movable properly forming part of the business property of a permanent establishment, and gains from the alienation of shares directly or indirectly deriving more than 50% of their value from immovable property situated in a Contracting State
Qatar applies the credit method for the elimination of double taxation, while Ecuador generally applies the exemption method. However, for dividend, interest and royalty income, Ecuador applies the credit method.
The treaty includes a limitation of benefits article (25), which includes the provision that a resident of a contracting state will not receive the benefits or any reduction in or exemption from tax provided for in the treaty if the main purpose or one of the main purposes of the resident or a connected person is to obtain the benefits of the treaty.
The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.
On 8 April 2015, officials from Portugal and Saudi Arabia 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.