Worldwide Tax News
Belarus Allows Taxpayers to Suspend Depreciation in 2017
The Belarusian Council of Ministers has issued Decree No. 84 of 30 January 2017 on suspending depreciation of assets in 2017. According to the decree, taxpayers may elect to suspend the depreciation of fixed assets and intangible assets for the period 1 January 2017 to 31 December 2017, with the useful life of the assets extended by an equal period. The election, however, is not available for banks, open joint-stock companies, non-bank financial institutions, and individual entrepreneurs. The election also does not apply in respect of fixed assets used to provide subsidized housing and utilities services, and transport services to the public.
France CbC Reporting Form Published
The French Country-by-Country reporting form (Form No. 2258 SD) was published 2 February 2017. The French CbC reporting requirements were adopted as part of the Finance Act 2016 and were implemented via Decree No. 2016-1288 published in October 2016 (previous coverage). The CbC reporting requirements apply for fiscal years beginning on or after 1 January 2016 for MNE groups meeting the standard EUR 750 million annual consolidated revenue threshold.
Form No. 2258 SD is in line with Action 13 guidelines, including the three tables for aggregate tax information by jurisdiction, information on constituent entities, and additional information. Basic instructions included in the form note that it is to be used by ultimate parent entities resident in France, as well non-parent entities designated to file. When required, the report must be submitted electronically within 12 months following the close of the fiscal year concerned. Failure to submit will result in penalties of up to EUR 100,000. Lastly, the form notes that the information must be in English.
Click the following link for Form No. 2258 SD (French language).
Gabon Publishes Finance Law for 2017 including CbC Reporting
Gabon's Finance Law for 2017 was published in a special edition of the Official Journal on 9 January 2017. Some of the main measures of the law include the introduction of new transfer pricing rules, including the three-tiered transfer pricing documentation requirements recommended under BEPS Action 13.
The law provides that each company is required to annually report information to the tax authority specifying:
- The nature of the relations with related parties or groups operating in Gabon or abroad;
- The method of determining the prices of operations carried out with such related parties or groups; and
- The activities carried in relation to the operations carried out with such related parties or groups.
The law provides for new transfer pricing documentation requirements in relation to transactions with related parties established abroad:
- A Master file that contains information on the MNE group as a whole; and
- A Local file that contains information to justify compliance with the arm's length principle of the individual company's intra-group transactions.
The documentation is not a substitute for the supporting documentation for each transaction. Details of the Master/Local file content will be issued in future tax instruction.
The Master file is to be prepared and available upon request by the deadline for the ultimate parent's tax return. The Local file is to be prepared and submitted by the tax return deadline of the individual company (30 April). The documentation should be in the French language, and if in another language, a certified French translation must be submitted. If the documentation is not available by the deadline, or is only partially available, a formal notice will be issued requiring submission within 60 days. Failure to produce required transfer pricing documentation will result in a penalty equal to 5% of the total amount of intra-group trade of the company, with a minimum penalty of XAF 65 million per year.
The law provides that every taxpayer must determine its transfer pricing for tax purposes in accordance with the arm's length principle, including an analysis of the functions performed, the assets used and the risks assumed, as well as an explanation regarding the selection and application of the method(s) used.
The law provides that ultimate parent entities are required to submit a CbC report within 12 months of the end of the fiscal year if consolidated annual turnover meets or exceeds a threshold of XAF 491,967,750,000 (near equivalent of EUR 750 million). For this purpose, the ultimate parent means an entity directly or indirectly holding sufficient ownership interests in subsidiaries that is required to prepare consolidated accounts according to the OHADA standards. The content of the report is based on BEPS Action 13, with the form and procedures for submission to be provided in future tax instruction.
In addition, constituent entities of the group resident in Gabon must provide notification on the ultimate parent no later than the last day of the fiscal year. The notification and CbC report requirements apply for fiscal years beginning on or after 1 January 2017. Failure to submit a CbC report when required will result in a penalty equal to 0.5‰ (0.05%) of consolidated turnover excluding tax, capped at XAF 100 million per year.
Other important measures of the law include the following:
- The standard rate of corporate income tax is maintained at 30%, with an increased rate of 35% for oil and mining companies, and a reduced rate of 25% for companies holding IP rights, qualified real estate companies developing urban land for socio-economic housing, qualifying tourism companies, and public institutions;
- A non-deductible special solidarity contribution (CSS) is introduced at a rate of 1% on turnover of all companies deriving taxable income, excluding VAT, in excess of XAF 30 million effective 1 March 2017;
- In association with the CSS, the mandatory contribution for health insurance is removed effective 1 March 2017;
- A 0.5% vocational training levy on payroll costs is introduced from 1 January 2017;
- A 5% withholding tax is introduced on immovable property rent paid by a company;
- Electronic filing of returns is made mandatory for companies with turnover exceeding XAF 1.5 billion; and
- The filing deadline for the annual return of employees is harmonized with the corporate tax return due date (30 April).
Click the following link for the Finance Law for 2017 (French language).
Romania Abolishes Social Security Contribution Caps and Increases Monthly Minimum Salary
Romania's social security contribution basis cap is abolished effective 1 February 2017. As such, employer contributions, which vary depending on the industry, must now be made based on total salary of employees. The previous basis cap was five times the average gross salary (RON 2,981 - 2016). This applied for the pension contribution component (15.8%, 20.8%, 25.8%, depending on working conditions). The cap was also to be introduced for the health insurance contribution component (5.2%) from 2017.
Also effective 1 February 2017, Romania's monthly minimum gross salary is increased from RON 1,250 to RON 1,450.
Singapore Publishes Updated GST e-Tax Guide for the Insurance Industry
The Inland Revenue Authority of Singapore (IRAS) has published an updated version of the e-Tax guide on Goods and Services Tax (GST) for the insurance industry. The guide explains the applicable GST principles, including the GST treatment for insurance products, fees and charges, and commissions for insurance companies, reinsurance companies, and insurance intermediaries, such as brokers and agents. The updated version includes the following changes:
- Revisions to remove time of supply rules applicable to premiums prior to 1 Jan 2011;
- Revisions to clarify GST treatment of introductory services provided by insurance intermediaries;
- Revisions to remove time of supply rules applicable to commissions and fees prior to 1 Jan 2011, and elaborate time of supply rules for insurance intermediaries;
- Revisions to extend self-billing to cover transactions between GST-registered insurance companies and GST-registered credit insurance intermediaries;
- The insertion of footnote 40 to explain the type of customers that may contract for the insurance intermediary’s services; and
- Various other editorial changes.
Click the following link for IRAS e-Tax Guide - GST: Guide for the Insurance Industry (Fourth Edition).
South Africa Publishes Updated Guide on Capital Gains Tax
On 10 February 2017, the South African Revenue Service (SARS) published an updated guide on the basics of capital gains tax for companies. The guide covers:
- Core provisions of capital gains tax (CGT);
- Determination of a capital gain or loss, including definitions of:
- Proceeds; and
- Base cost;
- Determination of base cost for assets acquired before 1 October 2001 (the date CGT was introduced):
- "20% of proceeds" method;
- Market-value method; and
- Time-apportionment base cost method;
- Aggregate capital gain or loss;
- Net capital gain or assessed capital loss;
- Inclusion rate and taxable capital gain;
- Effective rates of CGT, which have been increased due to an increase in the inclusion rate from 1 March 2016 (previous coverage).
Click the follow link for the guide: ABC of capital gains tax for companies (Issue 7).
Australia Consults on Improving Transparency of Beneficial Ownership
On 13 February 2017, the Australian Treasury published a consultation paper on improving transparency of information on beneficial ownership and control of companies. The consultation paper provides an overview of Australia's current framework regarding beneficial ownership, as well as the international context for transparency, including Australia's commitments to G20 principles for beneficial ownership information availability and the implementation of the recommendations of the Financial Action Task Force (FATF). The areas which Treasury is seeking public comment on include:
- The companies that should be within the scope of any new requirements;
- The beneficial ownership information that should be captured;
- The details of beneficial owners to be collected;
- How and where beneficial ownership information should be collected and stored;
- How a central beneficial ownership register should be operated and by whom (Australian Securities and Investments Commission, other government entity, or privately operated);
- How to ensure information is accurate and current;
- The exchange of information between authorities;
- The sanctions for companies or beneficial owners that fail to comply with any new requirements;
- Transitional arrangements, including how long companies should have to report once new requirements commence;
- The impact on affected companies and stakeholders; and
- Other beneficial ownership transparency issues.
Click the following link for the consultation paper: Increasing Transparency of the Beneficial Ownership of Companies. The deadline for submissions is 13 March 2017.
Finland Expert Group Recommends Reform of the Taxation of Unlisted Companies’ Dividends
The Finnish government has published a report from the expert group on business taxation set up by the Ministry of Finance, which was tasked with examining the current level and model of corporate income taxation in Finland from the perspective of competitiveness, economic growth, and productivity. The report makes no proposal for changes in business taxation, finding that the current corporate income tax rate in Finland is competitive, and there is no immediate need to decrease it. However, the report does propose reforms for the taxation of dividends from unlisted companies.
The group proposes:
- Reducing the rate of return used for calculating the portion for which relief is given in the taxation of dividends distributed by unlisted companies from 8% to 4%;
- Increasing the taxable portion of dividend income taxed as capital income from 25% to 40%; and
- Abolishing the EUR 150,000 threshold in connection with dividend taxation relief.
No changes are proposed in relation to the taxation of listed companies' dividends.
Click the following links for the group report (Finnish language with English abstract) and a related release that provides an English language summary.
New SSA between Australia and Austria to Enter into Force
The new social security agreement between Australia and Austria will enter into force on 1 March 2017. The agreement, signed 12 August 2015, replaces the 1992 social security agreement between the two countries. The new agreement generally applies from the date of its entry into force.
TIEA between Italy and Turkmenistan has Entered into Force
The tax information exchange agreement between Italy and Turkmenistan entered into force on 18 January 2017. The agreement, signed 4 May 2015, is the first of its kind between the two countries and generally applies from the date of its entry into force.
Pakistan to Sign Tax Treaty with Senegal
On 7 February 2017, Pakistan's cabinet approved the signature of an income tax treaty with Senegal. The treaty will be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.