Worldwide Tax News
Argentina Extends Eligibility for Domestic Capital Goods Manufacturing Incentives
On 28 July 2015, Argentina published Decree no. 1424/2015 in the Official Gazette. The Decree extends the availability of the incentive provided for the domestic manufacture of certain goods, including capital goods, IT, telecommunications equipment, and agricultural machinery. The incentive is in the form of a tax credit equal to 14% of the value of the goods produced.
In order to remain eligible, taxpayers must submit an affidavit by 31 December 2015, confirming that the number of registered employees has not decreased from the number of employees registered as of December 2011.
Brazil Regulates New Program for Reduction of Tax Litigation
On 29 July 2015 published Ordinance 1,037/2015 in the Official Gazette. The ordinance regulates the Program for Reduction of Tax Litigation (PRORELIT), a new special program to resolve tax disputes. The program allows taxpayers to offset disputed tax debts up to 30 June 2015, using tax losses accrued up to 31 December 2013 (previous coverage). Applications for the program must be made by 30 September 2015.
Japan Issues Guide on 2015 Tax Reform
Japan's Ministry of Finance (MoF) has published an English-language guide on the country's 2015 tax reform, which was enacted 31 March 2015, with measures generally applying from 1 April 2015 (previous coverage). The guide is broken down into six chapters, covering:
- Corporate Taxation;
- Consumption Taxation;
- International Taxation;
- Development of the Environment for Tax Payment;
- Individual Income Taxation; and
- Property Taxation.
Click the following link for the FY 2015 Japan Tax Reform guide (PDF) on the MoF website.
Malaysia Enacts Flexible Working Arrangement Incentives
On 29 June 2015, the Income Tax (Deduction for Consultation and Training Costs for the Implementation of Flexible Work Arrangements) Rules 2015 (P.U. (A) 134) was published in the Official Gazette. The rules provide a double deduction incentive for the costs of implementing flexible work arrangements, such as flextime, telecommuting, permanent part-time, etc. Eligible costs include consultation fees and employee training costs for the implementation of such arrangements.
In order to obtain the incentives, taxpayers must obtain certification from Talent Corporation Malaysia Berhad, an agency established under the Prime Minister’s Department to support Malaysia's workforce needs. The double deduction is available for three consecutive years beginning the year of assessment in which the certification is obtained, with a yearly cap of MYR 500,000.
The incentive applies from year of assessment 2014, and certification applications must be submitted by 31 December 2016.
New Polish Law on Tax Administration
On 31 July 2015, Poland's president Andrzej Duda signed into law the Law on Tax Administration. Once in force, the new Law replaces the Law on Tax Offices and Tax Chambers.
The Law establishes:
- The National Tax Information Office, which is empowered to issue tax rulings;
- The Central Register of Tax Data; and
- Tax information centers where taxpayers can submit tax declarations, enquire on the application of tax law, apply for certificates, etc.
The law generally applies from 1 January 2016, although for tax information centers it applies from 1 September 2015.
U.S. IRS Publishes Five International Practice Units
The U.S. IRS has recently published five international practice units, including:
- Branch-Level Interest Tax Concepts - 4 August 2015;
- Non-Services FDAP Income - 4 August 2015;
- CFC Purchased From Related Party with Same Country Sales - 17 July 2015;
- CFC Sale to Related Party With Same Country Unrelated Party Manufacturing - 17 July 2015; and
- Receipt of Dividends or Interest from a Related CFC - 17 July 2015
International practice units are developed by the Large Business and International Division of the IRS to provide staff with explanations of general international tax concepts as well as information about specific transaction types. They are not an official pronouncement of law, and cannot be used, cited or relied upon as such.
Click the following link for the International Practice Units page on the IRS website.
China to Introduce New Environmental Protection Tax
China's State Council recently published draft legislation for the introduction of a new environmental protection tax (EPT). The new tax will replace the current system of pollution fees, which are not compulsory and are poorly implemented. The forms of pollution covered include water, air, solid waste and noise. The proposed standard rates are as follows:
- Water pollution: RMB 1.4 per pollution equivalent value unit;
- Air pollution: RMB 1.2 per pollution equivalent value unit;
- Solid waste: RMB 5 to 30 per metric ton depending on type; and
- Noise pollution: RMB 350 to 11,200 depending on level of decibels for industrial, 3 RMB per square meter for construction
For air and water pollution, a pollution equivalent value unit is determined by dividing the pollution amounts (in kilograms) by a value assigned to the pollutant. This is then multiplied by the applicable rate, resulting in higher tax on more toxic pollutants. For example, lead has an assigned value of 0.02, while carbon monoxide has an assigned value of 16.7.
The rates applied for all pollution types may be adjusted upwards by provincial governments as needed to meet economic, social, and ecological development goals. In cases where the level of pollutants emitted is higher than set limits, the rate of tax may be doubled or tripled.
If the level of pollutants emitted is less than 50% of the pollutant total discharge control target, the applicable tax rate may be reduced by half. A number of exemptions also apply, including for:
- Pollutants from agricultural production (excluding large-scale animal husbandry);
- Pollutants from urban sewage and waste-water treatment plants, as long as within national standards;
- Pollutants from mobile sources such as motor vehicles, trains, off-road mobile machinery, ships, and aircrafts, as long as within national standards;
- Pollutants discharged by taxpayers into urban sewage and waste-water treatment plants; and
- Industrial solid waste stored or otherwise disposed of in certified facilities/sites.
Additional details will be published on the tax's implementation once the legislation is approved and the entry into force date is set.
Nigeria Confirms Plans to Increase VAT Rate to 10%
According to recent reports, Nigeria's Federal Inland Revenue Service (FIRS) has confirmed plans to increase the value added tax rate from 5% to 10% this year. The change is needed to increase revenue following the major drop in world oil prices over the past year, which is a key export for Nigeria. The exact date for the change will be set after the FIRS completes its consultation with stakeholders.