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Worldwide Tax News

Approved Changes (1)

Pakistan

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Pakistan Announces Gwadar Free Zone Incentives

The Pakistani government has announced several incentives to attract investors to turn the Gwadar port into a commercial, economic and industrial zone. Investment in qualifying infrastructure projects in the in the zone will be eligible for:

  • up to a 20 year tax holiday
  • Customs duties exemption for machinery and equipment for projects
  • Sales tax exemption for construction materials for projects

The new incentives will take effect from 1 July 2015.

Proposed Changes (1)

Israel

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Israel Proposes New Cash Transaction Limits and Related Penalties

The Israeli government has adopted a legislative memorandum (draft) introducing a limit on cash transactions in business, as well as related penalties. The proposed draft must be approved by the Knesset (national legislature of Israel) before being enacted.

According to the draft, cash and check payments to and from a business will be limited to ILS 10,000, while business related payments between individuals and for professional service providers (lawyers, accountants, etc.) will be limited to ILS 50,000. For larger amounts, payments will need to be done through debit cards or digital wallets to be set up by banks. In addition, all checks must have the identifying  information of both the payer and the recipient, and may not be made out to cash.

For cash and check payments to and from a business, if the payment amount exceeds the limits or a check is not compliant, a fine equal to 35% of the transaction amount will be imposed on the recipient, and a fine of 25% will be imposed on the payer. For cash transactions between individuals the fine will range from 25% to 35%, and repeat violations may result in imprisonment of up to three years and money laundering charges.

If approved by the Knesset, a review of the system will be conducted one year later. If functioning properly, the limits will be reduced to INS 5,000 for payments to and from a business, and ILS 15,000 for payments between individuals and for professional service providers.

Treaty Changes (9)

Barbados-Chile

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Tax Treaty between Barbados and Chile to be Negotiated

According to recent reports, Barbados and Chile will begin negotiations for an income tax treaty. Any resulting treaty will be the first of its kind between the two countries, and will need to be finalized, signed and ratified before entering into force. No date has yet been given for the first round of negotiations.

Additional details will be published once available.

Cook Isl-Czech Rep

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TIEA between the Cook Islands and the Czech Republic Signed

On 4 February 2015, officials from the Cook Islands and the Czech Republic signed a tax information exchange agreement. The agreement is the first of its kind between the two jurisdictions, and will enter into force after the ratification instruments are exchanged.

The agreement will apply for criminal tax matters from the date of its entry into force, and for other matters in respect of tax periods beginning on or after that date.

Croatia-India

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Tax Treaty between Croatia and India has Entered into Force

The income tax treaty between Croatia and India entered into force on 11 February 2015. The treaty, signed 12 February 2014, is the first of its kind between the two countries.

Taxes Covered

The treaty covers income taxes of both countries.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company holding at least 10% of the paying company's capital, otherwise 15%
  • Interest - 10%
  • Royalties and Fees for Technical Service - 10%

Double Taxation Relief

Both country apply the credit method for the elimination of double taxation

Effective Date

The treaty will apply from 1 January 2016 in Croatia, and from 1 April 2016 in India.

Croatia-United States

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Tax Treaty between Croatia and the United States under Negotiation

Negotiations for an income tax treaty between Croatia and the United States have begun following a meeting between officials of the two countries on 4 to 5 February 2015. Any resulting treaty will be the first of its kind between the two countries, and will need to be finalized, signed and ratified before entering into force.

Additional details will be published once available.

Czech Rep-Bahamas

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Czech Republic Approves TIEA with the Bahamas

On 12 February 2015, the Czech Chamber of Deputies approved for ratification the tax information exchange agreement with the Bahamas. The agreement, signed 6 March 2014, is the first of its kind between the two countries and is in line with the OECD standard for information exchange.

The agreement will enter into force once the ratification instruments are exchanged, and will apply retroactively from 1 January 2004 for criminal tax matters, and will apply for other matters in respect of tax periods beginning on or after the date of its entry into force.

Egypt-Mauritius

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Tax Treaty between Egypt and Mauritius has Entered into Force

The income tax treaty between Egypt and Mauritius entered into force on 10 March 2014. The treaty, signed 19 December 2012, is the first of its kind between the two countries.

Taxes Covered

The treaty applies to Mauritius income tax, and the following Egyptian taxes:

  • Individuals income tax, including:
    • Income from salaries and wages
    • Income from commercial and industrial activities
    • Income from professional activities (independent personal services)
    • Income derived from immovable property including income from agricultural land, building and furnished units
  • Tax on profits of legal entities (corporations and partnerships)
  • Duty for the development of the financial resources of the State
  • Tax withheld at source
  • Supplementary taxes imposed as percentage of taxes mentioned above or otherwise

Service PE

The treaty includes provisions that a permanent establishment will be deemed constituted if an enterprise of one Contracting State furnishes services through employees or other engaged personnel in the other State for the same or connected project for period or periods aggregating more than 6 months in any 12 month period.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company that directly or indirectly holds at least 25% of the paying company's capital, otherwise 10%
  • Interest - 10%
  • Royalties - 12%, including technical assistance when related to the application of any rights, property or information covered under the royalties article of the treaty
  • Capital Gains - generally exempt, except for gains from the alienation of immovable property, gains from the alienation of movable property forming part of the business property of a permanent establishment, and gains from the alienation shares of the capital stock or any other shares of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting state

Limitation on Benefits

A protocol to the treaty, signed the same date, includes the provision that the beneficial withholding tax rates for dividends, interest and royalties will not apply to Mauritius residents registered under the Financial Services Act 2007 (formerly incorporated under the International Companies Act) whose income or profits are not taxed at the normal corporate tax in Mauritius or any comparable income tax.

Double Taxation Relief

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

Effective Date

The treaty generally applies in Egypt from 1 January 2015, and in Mauritius from 1 July 2014.

Hungary-Liechtenstein

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Tax Treaty between Hungary and Liechtenstein Initialed

On 26 January 2015, officials from Hungary and Liechtenstein initialed an income tax treaty. The treaty is the first of its kind between the two countries and must be signed and ratified before entering into force.

Additional details will be published once available.

Ireland-Marshall Isl

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TIEA between Ireland and the Marshall Islands has Entered into Force

The tax information exchange agreement between Ireland and the Marshal Islands entered into force on 10 February 2015. The agreement, signed 2 September 2010, is the first of its kind between the two jurisdictions and is in line with the OECD standard for information exchange.  

The agreement applies for criminal tax matters from the date of its entry into force, and for other matters in respect of tax periods beginning on or after that date.

Latvia-United States

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SSA between Latvia and the United States under Negotiation

According to recent reports, negotiations have begun for a social security agreement between Latvia and the United States. Any resulting agreement will be the first of its kind between the two countries, and will need to be finalized, signed and ratified before entering into force.

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