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Approved Changes (2)

Brazil

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Brazil's Increased Social Contribution on Profit (CSLL) Rate for Financial Institutions Converted into Law

On 7 October 2015, Brazil published Law 13,169/2015 in the Official Gazette. This converts into law Provisional Measure 675/2015, which was published 22 May 2015 and increased the rate of social contribution on profits (CSLL) applicable for financial institutions from 15% to 20% effective 1 September 2015 (non-financial companies pay CSLL at 9%). For credit cooperatives, the law sets the CSLL rate to 17% from 1 October 2015.

For all financial institutions, the CSLL rate will revert to 15% from 1 January 2019.

European Union

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EU Updates List of Non-Cooperative Jurisdictions for Tax Purposes

On 12 October 2015, the European Commission issued a press release announcing that the consolidated list of non-cooperative jurisdictions for tax purposes has been updated.

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The Commission has carried out a technical update of the consolidated version of Member States' lists of third countries for tax purposes, as referenced in the Action Plan for Fair and Effective Taxation (IP/15/5188). The update reflects changes in Member States' assessments of third countries' tax good governance standards, corrections to national lists and Estonia's decision to withdraw all countries from its national list.

The consolidated list is part of the EU's external agenda against corporate tax avoidance and aims to introduce more transparency into national listing processes across the EU, while also encouraging third countries to engage with Member States on tax good governance matters.

The steps taken by the EU contribute to enhancing the dialogue between the jurisdictions and the Member States that list them, and encourage Member States to re-examine their national listings to ensure that they are correct and up-to-date. The ultimate goal is to develop a common EU approach, giving Member States collective strength in addressing risks to their tax bases and provide greater legal certainty for businesses and international partners. The Commission has already started discussions with Member States to this end and intends to present a wider strategy against external risks of tax avoidance in 2016.

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Click the following link for an interactive map providing the lists for each EU Member State.

Proposed Changes (1)

Ireland

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Ireland's Budget for 2016 Delivered including CbC Reporting and Knowledge Development Box Regime

On 13 October 2015, Ireland's Minister for Finance Michael Noonan delivered proposals for the 2016 Budget. In general, the Budget includes several positive measures, with the only tax increase being an increase in the excise tax on cigarettes by 50 cents. The key proposals include:

Universal Social Charge

The Universal Social Charge (USC) exemption threshold will be increased from EUR 12,012 to EUR 13,000, and the rates for the three lowest brackets are reduced as follows:

  • EUR 0 to 12,012 - reduced from 1.5% to 1%;
  • EUR 12,013 to 18,668 - reduced from 3.5% to 3%; and
  • EUR18,669 to 70,044 - reduced from 7% to 5.5%

The upper rates of 8% and 11% for self-employed are unchanged.

PRSI

The weekly threshold over which employer pay-related social insurance contributions are increased from 8% to 10.5% will be increased from EUR 356 to EUR 376.

Local Property Tax

The revaluation date for the Local Property Tax will be postponed from 2016 to 2019.

Bank Levy

The Financial Institutions Levy will be extended to 2021.

Capital Gains Tax

A reduced capital gains tax rate of 20% will be introduced for the disposal in whole or in part of a business up to an overall limit of EUR 1 million in chargeable gains (standard rate 33%).

Tourism VAT

The reduced value added tax rate of 9% for the tourism sector will be maintained.

Film Relief

The eligible expenditure cap for the film tax credit will be increased from EUR 50 million to EUR 70 million.

Knowledge Development Box

A knowledge development box regime will be introduced that is compliant with the OECD nexus approach developed as part of Action 5 of the OECD BEPS Project. Qualifying income will be subject to a reduced corporation tax rate of 6.25%.

Country-by-Country Reporting

Country-by-Country Reporting requirements based on guidelines developed as part of Action 13 of the OECD BEPS Project will be introduced.

Employment and Investment Incentive Scheme

The amount of finance that can be raised by a company under the Employment and Investment Incentive Scheme will be increased from EUR 10 million in total to EUR 15 million, and from EUR 2.5 million per year to EUR 5 million.

Start-Up Tax Relief

The availability of the 3-year corporate tax relief for start-up companies will be extended for new start-ups that commence business by the end of 2018.

Effective Date

The proposals will be included in Finance Bill 2015, and will generally apply from 1 January 2016.

Click the following link for additional information on Ireland's Budget 2016.

Treaty Changes (5)

Albania-Morocco

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Update - Tax Treaty between Albania and Morocco Signed

The income tax treaty between Albania and Morocco was signed on 5 October 2015. 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 Albanian income taxes, including corporate profits tax, personal income tax and capital gains tax from the alienation of the movable or immovable property, and the tax on small business activities. It covers Moroccan income tax and corporation tax.

Service PE

The treaty includes the provision that a permanent establishment (PE) will be deemed constituted when an enterprise of one Contracting State furnishes services in the other State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 1 month within any 12-month period.

A PE will also be deemed constituted when an enterprise provides any services, facilities, or plant or machinery on hire in connection with the prospecting for or extraction or exploitation of mineral oils in a Contracting State. No particular time period is set for a PE in such case.

Withholding Tax Rates

  • Dividends - 10%
  • Interest - 10%
  • Royalties, including payments for technical assistance and services - 10%

Capital Gains

The following capital 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 alienation of movable property forming part of the business property of a permanent establishment in the other State;
  • Gains from the alienation of shares of the capital stock of a company, the property of which consists directly or indirectly principally of immovable property situated in the other State; and
  • Gains from the alienation of shares, other than those mentioned above, that represent a participation of at least 10% in a company resident in the other State

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation. In addition, a sparing credit is provided for income benefiting from a reduction in or exemption from tax in accordance with the domestic legislation of a Contracting State for tax incentives.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.

Colombia-Luxembourg

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Colombia and Luxembourg Considering a Tax Treaty

On 7 October 2015, officials from Colombia and Luxembourg met to discuss the negotiation of an income tax treaty. Any resulting treaty would be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.

Finland-Jamaica

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TIEA between Finland and Jamaica in Force

On 13 October 2015, the Finnish government announced via Decree 1250/2015 that the tax information exchange agreement with Jamaica entered into force on 18 October 2013. The agreement, signed 4 December 2012 applies for criminal tax matters from the date of its entry into force, and for other matters from 1 January 2014.

Gibraltar-Guernsey

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Protocol to the TIEA between Gibraltar and Guernsey has Entered into Force.

The Protocol to the 2013 tax information exchange agreement between Gibraltar and Guernsey entered into force on 7 October 2015. The protocol was signed by Guernsey on 23 March 2015 and by Gibraltar on 6 April 2015. It adds Article 5A (Automatic Exchange of Information) and Article 5B (Spontaneous Exchange of Information), and amends Article 11 (Mutual Agreement and Arbitration Procedures) to reflect the addition of Articles 5A and 5B.

The protocol applies from the date of its entry into force, 7 October 2015.

Netherlands-Curacao

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Dutch Tax Arrangement with Curaçao to Enter into Force

The new income, inheritance and gift tax arrangement between the Netherlands and Curaçao was published in the Official Gazette on 9 October 2015, and will enter into force on 1 December 2015. The arrangement will replace the 1964 tax arrangement for the Kingdom of the Netherlands in respect of Curaçao and the Netherlands.

Withholding Tax Rates

  • Dividends - 0% if the beneficial owner is a company directly holding at least 10% of the paying company's capital subject to certain conditions; otherwise 15%
  • Interest - 0%
  • Royalties - 0%

Capital Gains

The following capital 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; and
  • Gains from alienation of movable property forming part of the business property of a permanent establishment in the other State

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries may apply the exemption or credit method depending on the type of income and the applicable provisions of its domestic law.

Effective Date

The arrangement applies from 1 January 2016.

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