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Worldwide Tax News

Approved Changes (1)

Belarus

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Belarus Supreme Court Clarifies Criminal Prosecution for Tax Evasion

The Belarus Supreme Court has issued Decree No. 1 of 26 March 2015, which clarifies the tax evasion actions that will result in criminal prosecution. The specific actions include:

  • Concealing taxable items that should be reported in accounts to the tax authorities;
  • Understating taxable income by reporting false information to the tax authorities, resulting in a reduced tax liability;
  • Failing to file a tax return when it is actually possible to file; and
  • Knowingly including false information in the tax return which affects the tax calculation

In general, the above actions will result in criminal prosecution when the action is found to be intentional. In such case, individuals, entrepreneurs, chief officers of corporate taxpayers, taxpayer representatives and other persons authorized to sign documents and returns on behalf of a taxpayer may face criminal prosecution.

Proposed Changes (1)

Ecuador

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Ecuador Introduces Tax amnesty Bill

A tax amnesty bill was introduced to the Ecuador National Assembly on 31 March 2015. If approved, the bill would allow for a 100% exemption from interest, penalties and surcharges on outstanding taxes due if the full amount of the tax due is paid within 60 days of the bill being published in the Official Gazette. If paid after 60 days but within 90 days, the reduction in interest penalties and surcharges would be 50%.

Treaty Changes (3)

Germany-Philippines

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Germany Ratifies SSA with the Philippines

On 1 April 2015, Germany ratified the pending social security agreement with the Philippines. The agreement, signed 19 September 2014, is the first of its kind between two the countries and will enter into force on the first day of third month following the month in which the ratification instruments have been exchanged.

Luxembourg-Uruguay

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Update - Tax Treaty between Luxembourg and Uruguay

On 10 March 2015, officials from Luxembourg and Uruguay signed an income and capital 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.

Taxes Covered

The treaty covers Luxembourg individual income tax, corporation tax, capital tax and the communal trade tax. It covers Uruguay business income tax, personal income tax, non-resident income tax, social security tax and capital tax.

Service PE

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 6 months within any 12 month period.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 10% of the paying company's capital, otherwise 15%
  • Interest - 10% (exemption for interest on a bank loan used to finance investment projects with a term of at least three years)
  • Royalties - 5% for the use or right to use commercial, industrial or scientific equipment; otherwise 10%

Capital Gains

Capital gains are generally exempt, although the following gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
  • Gains from the alienation of shares directly or indirectly deriving more than 50% of their value from immovable property situated in the other State, although an exemption applies for shares listed on an approved stock exchange, shares alienated as part of a merger or demerger, and shares whose value is derived from immovable property in which business is carried on

Double Taxation Relief

Uruguay generally applies the credit method for the elimination of double taxation, while Luxembourg generally applies the exemption method. However, in the case of income covered by Article 10 (Dividends), Article 11 (Interest), Article 12 (Royalties), paragraph 4 of Article 13 (Capital Gains) and Article 16 (Artistes and Sportspersons), Luxembourg applies the credit method.

Entry into Force and Effect

The treaty will enter into force 15 days after the ratification instruments have been exchanged and will apply from 1 January of the year following its entry into force.

Nigeria-Spain

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Tax Treaty between Nigeria and Spain to Enter into Force 5 June 2015

Spain's Ministry of Foreign Affairs and Cooperation has announced that the pending income and capital tax treaty with Nigeria will enter into force on 5 June 2015. The treaty, signed 23 June 2009, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Nigerian personal income tax, companies income tax, petroleum profits tax, capital gains tax, education tax, and other taxes on income and capital gains. It covers Spanish income tax on individuals, corporation tax, nonresident income tax, capital tax, and local taxes on income and on capital.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services, including technical, management or consultancy services, within a Contracting State through employees or other engaged personnel for the same project for a period or periods aggregating more than 6 months within any 12 month period.

Withholding Tax Rates

  • Dividends - 7.5% if the beneficial owner is a company directly holding at least 10% of the paying company's capital, otherwise 10%
  • Interest - 7.5%
  • Royalties - 7.5% if the beneficial owner is a company, otherwise 3.75%

Capital Gains

Capital gains are generally exempt, although the following gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
  • Gains from the alienation of shares or comparable interests directly or indirectly deriving more than 50% of their value from immovable property situated in the other State

Double Taxation Relief

Both countries generally apply the credit method for the elimination of double taxation.

Effective Date

The treaty enters into force 5 June 2015, and generally applies from that date.

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