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Approved Changes (7)

Colombia

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Colombia Sets UVT Value for 2017

The Colombian tax authority (DIAN) has issued the adjusted tax value unit (UVT) value for 2017. The UVT value is set at COP 31,859 (~USD 10.7 Dec 2016), an increase from the 2016 value of COP 29,753.

The UVT is used in Colombian tax regulations, including incentives eligibility, tax penalties, individual income tax brackets, and other fixed amounts. It is adjusted yearly based on the accumulated variation in the retail price index.

Finland

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Finland Individual Income Tax Brackets 2017 Published

The Finnish Tax Administration has published the individual income tax rates and brackets for earned income for 2017:

  • EUR 16,900 up to 25,300 - 6.25%  
  • over EUR 25,300 up to 41,200 - 17.50%
  • over EUR 41,200 up to 73,100 - 21.50%  
  • over EUR 73,100 - 31.50%  

In comparison to 2016, the bracket thresholds are increased overall, while the bottom and top rates are each reduced by 0.25%. Also noted are the capital gains tax rates, which are maintained at a base rate of 30% and an increased rate of 34% for gains exceeding EUR 30,000.

Netherlands

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Legislation Incorporating Amendments to Dutch Fiscal Unity Regime Published

Legislation incorporating amendments to the Dutch fiscal unity regime was approved by parliament on 29 November 2016 and published in the Official Gazette on 8 December. The legislation incorporates into the Corporate Income Tax Act 1969, Decree No. BLKB2014/2137M, which was issued in 2014 as a result of a European Court decision that the Netherland's fiscal unity regime was not compliant with EU Law because it violated the principle of freedom of establishment.

The provisions of the Decree, now incorporated into the Corporate Income Tax Act, include that a fiscal unity may be formed:

  • Between a Dutch parent and a Dutch sub-subsidiary when the sub-subsidiary is held by one or more intermediaries resident in other EU/EEA jurisdictions; and
  • Between multiple Dutch subsidiaries when they share a parent company resident in another EU/EEA jurisdiction.

In addition to incorporating the provisions of the Decree, the legislation also provides additional clarification on certain requirements to form a fiscal unity in cases involving non-resident parent companies and intermediaries, including that:

  • The non-resident parent company must be public company, limited liability company, cooperative, mutual insurance association, or a comparable foreign entity;
  • The non-resident intermediary company must be a public company, limited liability company, or a comparable foreign entity;
  • The holding requirement is 95% of the full legal and economic ownership of the shares; and
  • The parent and intermediary companies must be resident in an EU/EEA jurisdiction and subject to tax on profits.

Lastly, the legislation includes provisions for the inclusion of Dutch permanent establishments of non-resident EU/EEA entities in a fiscal unity.

Click the following link for the legislation as published (Dutch language). The legislation entered into force 9 December 2016, although the rules provided under the decree have generally applied since 16 December 2014.

Poland

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Poland Increases Personal Tax Allowance for Lower Income

Poland has approved changes to the personal tax allowance (credit) that replaces the fixed personal tax allowance of PLN 556.02 for individual income tax purposes with a new allowance calculation that provides a larger allowance for lower incomes and no allowance for higher incomes. The result of the changes will apply as follows:

  • For income up to PLN 6,600, an allowance of PLN 1,188 applies, resulting in a tax exemption (PLN 1,188 / 18% tax rate = PLN 6,600);
  • For income over PLN 6,600 up to 11,000, the allowance is gradually reduced to the current PLN 556.02;
  • For income over PLN 11,000 up to 85,528, the current fixed allowance of PLN 556.02 is maintained; and
  • For income over PLN 85,528, the PLN 556.02 allowance is gradually reduced to 0 for income of PLN 127,000 or more.

As with the current rules, the tax amount payable is determined by applying the progressive rate and deducting the personal allowance amount. The tax brackets and rates are unchanged: 18% on income up to PLN 85,528, and 32% on the excess.

The new allowance rules apply from 1 January 2017.

Taiwan

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Taiwan Extends Securities Transaction Tax Exemption for Bank Debentures and Corporate Bonds

Taiwan's Legislative Yuan has reportedly approved an extension of the securities transaction tax exemption for trading in bank debentures and corporate bonds. The exemption from the tax, which is generally levied at a rate of 0.1 to 0.3%, was set to expire 31 December 2016, but is now extended to 31 December 2026. The scope of the exemption is also expanded to include exchange traded funds that principally invest in bonds.

United States

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U.S. Final Reporting Regs for Foreign-Owned Domestic Disregarded Entities to Improve Transparency

On 13 December 2016, final regulations (TD 9796) were published in the U.S. Federal Register that introduce reporting requirements for foreign-owned domestic disregarded entities. The collection of information under the regulations is meant to enhance the United States' compliance with international standards of transparency and exchange of information for tax purposes, and will strengthen the enforcement of U.S. tax laws.

The final regulations treat a domestic disregarded entity wholly owned by a foreign person as a domestic corporation separate from its owner for the limited purposes of the reporting, record maintenance, and associated compliance requirements that apply to 25% foreign-owned domestic corporations under section 6038A of the Internal Revenue Code. Under section 6038A, the required information to be reported includes:

  • The name, principal place of business, nature of business, and country or countries in which organized or resident, of each person which:
    • Is a related party to the reporting corporation; and
    • Had any transaction with the reporting corporation during its taxable year;
  • The manner in which the reporting corporation is related to each person referred to above; and
  • Transactions between the reporting corporation and each foreign person which is a related party to the reporting corporation.

The information is to be reported using Form 5472. The explanation of provisions includes that the generally applicable exceptions to the requirements of section 6038A do not apply in regard to the new reporting requirement.

The final regulations (TD 9796) apply to taxable years of entities beginning after 31 December 2016 and ending on or after 13 December 2017. If the foreign owner has a U.S. return filing obligation, the entity's taxable year is the same as the foreign owner. If the foreign owner has no U.S. return filing obligation, the entity's taxable year is the calendar year.

United States

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U.S. IRS Issues Interest Rates on Overpaid and Underpaid Tax for Q1 2017

The U.S. IRS has issued a revenue ruling on the interest rates for overpaid and underpaid tax for the calendar quarter beginning 1 January 2017, which are unchanged from the previous quarter. The rates are 4% for both underpayment and overpayment by individuals, and 3% and 4% for corporate overpayments and underpayments, respectively.

The rate for corporate overpayments exceeding USD 10,000 in a tax period is 1.5% on the portion exceeding that amount, and the rate for large corporate underpayments exceeding USD 100,000 is 6%.

Treaty Changes (3)

Brazil-United States

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SSA between Brazil and the U.S. Transmitted to U.S. Congress

On 8 December 2016, U.S. President Barack Obama transmitted to Congress the pending social security agreement with Brazil for ratification. The agreement, signed 30 June 2015, is the first of its kind between the two countries. It will enter into force on the first day of the month following 90 days after the date the countries have notified each other of the completion of all necessary internal procedures.

Korea, Rep of-B Virgin Isl-Jersey

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South Korea's TIEA with the British Virgin Islands and Jersey in Force

South Korea's tax information exchange agreements with the British Virgin Islands and Jersey both entered into force on 21 November 2016. The agreement with the British Virgin Islands was signed 5 December 2014, and the agreement with Jersey was signed 21 July 2015. Both agreements are the first of their kind between South Korea and the respective jurisdictions and generally apply from the date of their entry into force.

Luxembourg-Tunisia

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Protocol to Tax Treaty between Luxembourg and Tunisia has Entered into Force

The protocol to the 1996 income and capital tax treaty between Luxembourg and Tunisia entered into force on 30 November 2016. The protocol, signed 8 July 2014, replaces Article 26 (Exchange of Information) to bring it in line with the OECD standard for information exchange. It is the first to amend the treaty and applies from 1 January 2017.

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