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Approved Changes (4)

Belgium

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Belgium Refers to CJEU for a Preliminary Ruling on the Fairness Tax

Belgium has recently referred to the Court of Justice of the European Union (CJEU) for a preliminary ruling in regard to whether or not the country's Fairness Tax is in compliance with the EU Parent-Subsidiary Directive. This follows a determination by the European Commission that it views the tax as incompatible with the Directive in regard to freedom of establishment and the free movement of capital.

The Fairness Tax was introduced in 2013 and was first due in assessment year 2014. The tax is a separate corporate assessment of 5.15% (5% + 3% crisis surcharge) on distributed profits (dividends) that were not effectively taxed due to the application of the notional interest deduction or losses carried forward.

The Fairness Tax applies to large and medium-sized companies established in Belgium and permanent establishments (PE) of foreign companies. Small companies established in Belgium are exempt from the Fairness Tax and can be defined as a company that has not exceeded any of the following limits

  • Number of workers employed on an annual average: 50
  • Annual turnover: €7.3 million
  • Balance sheet total: €3.65 million

For the purpose of the Fairness Tax, dividends include normal dividends, share premiums, profit certificates, and reimbursements of share capital, but excludes reimbursements of paid-in capital as a result of decision to decrease share capital. For PEs, the tax applies to the portion of dividends distributed by a foreign company attributable to the accounting result of the foreign company's PE in Belgium.

Costa Rica

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Costa Rica Launches AMPO Tax Information Reporting Platform

The online information filing platform (AMPO) for Large National Taxpayers has been launched. The platform and new information submission requirements had been announced in August 2014.

Taxpayers qualifying as Large National Taxpayers have until 5 March 2015 to submit the required information, which includes details of:

  • The taxpayer, including name, corporate ID, tax period, business activities, etc.,
  • Legal representatives and shareholders,
  • Participations in other entities and groups,
  • Agencies, branches and commercial premises,
  • Accounting information,
  • Customs information,
  • Sales information,
  • Tax incentive information,
  • Dividend payments,
  • Retained earnings,
  • Movable and immovable assets,
  • Intangibles assets, including use, ownership, sales and royalty payments,
  • Services received from or provided to an economic group,
  • Related party financing,
  • Clients and suppliers abroad, and
  • Certain other information

A taxpayer is general considered a Large National Taxpayers if meeting any one of the following:

  • Average tax liability of at least CRC 250 million,
  • Average gross income of at least CRC 40 billion,
  • Average total assets of at least CRC 40 billion, or
  • Are of fiscal interest to the tax authorities and are regulated by law by the administrative authorities responsible for overseeing financial entities

The technical requirements, downloadable software, and user guide for the system can be found on the Hacienda.go.cr website (Spanish).

South Africa

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South Africa has Published a Draft Interpretation Note on Special Tax Relief for Holding Companies and the Related Anti-Avoidance Rules

The South African Revenue Service has recently published a draft interpretation note covering the special tax relief provisions for holding companies, as well as the related anti-avoidance rules designed to prevent misuse or abuse of those provisions.

According to the draft interpretation note, A headquarter company is subject to tax in the same way as any other resident company, however it is entitled to certain relief from income tax, CGT and dividends tax which is not available to resident companies that are not headquarter companies. As a consequence of the special relief granted to headquarter companies they are also subject to special anti-avoidance rules.

In addition to the headquarter companies themselves, a foreign person receiving interest or royalties from a headquarter company will, under specified circumstances, be exempt from withholding tax on interest and royalties respectively.

The drat note covers multiple aspects of the regime, including the requirements for election and the tax treatment of various income types, as well as multiple examples.

Comments on the draft must be submitted by 31 May 2015, and should be sent to policycomments@sars.gov.za. Click the following link for the Draft Interpretation Note - Headquarter Companies

United States

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U.S. IRS Completes the "Dirty Dozen" Tax Scams for 2015

The U.S. Internal Revenue Service recently published its final list of the "Dirty Dozen" Tax Scams for 2015. The list is compiled annually, and lists a variety of common scams taxpayers can encounter at any point during the year, but typically peak during filing season as people prepare their tax returns. The "Dirty Dozen"  and other such illegal scams can lead to significant penalties and interest and possible criminal prosecution.

For 2015, the "Dirty Dozen" are:

Phone Scams: Aggressive and threatening phone calls by criminals impersonating IRS agents remains an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent months as scam artists threaten police arrest, deportation, license revocation and other things. The IRS reminds taxpayers to guard against all sorts of con games that arise during any filing season. (IR-2015-5)

Phishing: Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will not send you an email about a bill or refund out of the blue. Don’t click on one claiming to be from the IRS that takes you by surprise. Taxpayers should be wary of clicking on strange emails and websites. They may be scams to steal your personal information. (IR-2015-6)

Identity Theft: Taxpayers need to watch out for identity theft especially around tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security number. The IRS is making progress on this front but taxpayers still need to be extremely careful and do everything they can to avoid becoming a victim. (IR-2015-7)

Return Preparer Fraud: Taxpayers need to be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest high-quality service. But there are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. Return preparers are a vital part of the U.S. tax system. About 60 percent of taxpayers use tax professionals to prepare their returns. (IR-2015-8)

Offshore Tax Avoidance: The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore. Taxpayers are best served by coming in voluntarily and getting their taxes and filing requirements in order. The IRS offers the Offshore Voluntary Disclosure Program (OVDP) to help people get their taxes in order. (IR-2015-09)

Inflated Refund Claims: Taxpayers need to be on the lookout for anyone promising inflated refunds. Taxpayers should be wary of anyone who asks them to sign a blank return, promise a big refund before looking at their records, or charge fees based on a percentage of the refund. Scam artists use flyers, advertisements, phony store fronts and word of mouth via community groups and churches in seeking victims. (IR-2015-12)

Fake Charities: Taxpayers should be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. Be wary of charities with names that are similar to familiar or nationally known organizations. (IR-2015-16)

Hiding Income with Fake Documents: Hiding taxable income by filing false Form 1099s or other fake documents is a scam that taxpayers should always avoid and guard against. The mere suggestion of falsifying documents to reduce tax bills or inflate tax refunds is a huge red flag when using a paid tax return preparer. Taxpayers are legally responsible for what is on their returns regardless of who prepares the returns. (IR-2015-18)

Abusive Tax Shelters: Taxpayers should avoid using abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2015-19)

Falsifying Income to Claim Credits: Taxpayers should avoid inventing income to erroneously claim tax credits. Taxpayers are sometimes talked into doing this by scam artists. Taxpayers are best served by filing the most-accurate return possible because they are legally responsible for what is on their return. (IR-2015-20)

Excessive Claims for Fuel Tax Credits: Taxpayers need to avoid improper claims for fuel tax credits. The fuel tax credit is generally limited to off-highway business use, including use in farming. Consequently, the credit is not available to most taxpayers. But yet, the IRS routinely finds unscrupulous preparers who have enticed sizable groups of taxpayers to erroneously claim the credit to inflate their refunds. (IR-2015-21)

Frivolous Tax Arguments: Taxpayers should avoid using frivolous tax arguments to avoid paying their taxes. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. These arguments are wrong and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000. (IR-2015-23)

Treaty Changes (1)

Albania-Austria-Canada-Germany-Italy-Macedonia-Romania

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Albania Provides Update on Current SSA Negotiations

The Albanian Minister of Social Welfare and Youth has recently announced that the country is currently negotiating social security agreements with Austria, Canada, Germany, Italy, Macedonia and Romania. The agreements would all be the first of the kind between Albania and the respective countries, and must be finalized, signed and ratified before entering into force.

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