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Approved Changes (4)

Lebanon

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Lebanon Constitutional Council Abolishes Recent Law Increasing Tax Rates

On 25 September 2017, Lebanon's Constitutional Court published its decision abolishing the recent tax law approved in August (previous coverage) that, among other measures, increased the corporate tax rate to 17%, increased the value added tax rate to 11%, and introduced a 2% tax on the transfer of immovable property. The decision of the Constitutional Council was based on a number of grounds, including that the law violated the principle of universality because it was specifically for the purpose of funding increased minimum wages, salaries, and pensions for civil servants and pensioners; that it violated the principle of equality in rights and obligations because it resulted in a form of double taxation for certain taxpayers; and that the voting procedure for the law was not in compliance with formal requirements.

Luxembourg

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Luxembourg Publishes CbC FAQ including Submission Information

On 11 October 2017, the Luxembourg tax authority published a Country-by-Country (CbC) reporting FAQ, including information on the submission of CbC reports. Luxembourg CbC reporting requirements apply for fiscal years beginning on or after 1 January 2016, with the first reports due 31 December 2017

The FAQ provides that CbC reports must be submitted via the MyGuichet e-filing system by entering the information directly or with a completed XML file. For this purpose, a user guide and XSD schema for the XML is provided in the FAQ. The FAQ also covers other general CbC reporting requirements, including the requirement to submit notification of the reporting entity by the end of the reporting fiscal year via MyGuichet, the local filing requirements when CbC reports are not exchanged with Luxembourg, and Luxembourg's adherence to the latest version of the OECD guidance on the implementation of CbC reporting.

Saudi Arabia

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Saudi Arabia Issues Royal Decree Amending Income Tax Law

According to recent reports, Saudi Arabia's Income Tax Law has been amended through the issuance of Royal Decree No. M/131 of 20 September 2017. Main changes include:

  • Resident capital companies, including joint stock companies and limited liability companies, are made subject to income tax if owned directly or indirectly by persons operating in oil or hydrocarbon production from 1 January 2017;
  • The tax rates for oil and hydrocarbon companies, which are based on the amount of total capital investment, are formally implemented as follows from 1 January 2017:
    • less than SAR 225 billion - 85%
    • between SAR 225 billion and 300 billion - 75%
    • between SAR 300 billion and 375 billion - 65%
    • more than SAR 375 billion - 50%
  • Intragroup transfers of assets, including cash, shares, financial securities, and other tangible and intangible assets, are allowed on a tax neutral basis (no gain or loss), provided that the assets are held within the group for at least two years prior to any transfer to a non-group party;
  • The exemption for capital gains from the disposal of shares in companies listed on the Saudi Stock Exchange is extended so that the disposal of shares of Saudi listed companies listed on a foreign exchange are exempt as well;
  • A general participation exemption is provided for dividend income received by a resident company from a foreign or resident company, provided that the recipient owns at least 10% of the paying company for a period of at least one year;
  • Contributions made by a resident capital company to a retirement fund, a social insurance fund, or any other fund established for the purpose of settling employee end of service benefits or to meet staff medical expenses are made deductible from 1 January 2017, subject to certain conditions; and
  • Loss carry forward rules are amended so that losses may be carried forward following a change in ownership/control as long as the company continues to undertake the same activities (50% change in ownership rule no longer applies).

Aside from those specified above as applying from the 1 January 2017, the changes generally apply for financial years beginning after the issuance of the Royal Decree.

Singapore

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Singapore Updates Guidance on CbC Report Submission

The Inland Revenue Authority of Singapore (IRAS) has updated its Country-by-Country (CbC) reporting guidance page with revised information on the submission of CbC reports. The revisions include the latest OECD XML schema, the latest OECD XML schema guidance, and updated IRAS supplementary instructions based on the latest XML schema. Singapore's CbC reporting requirements apply for fiscal years beginning on or after 1 January 2017, although voluntary filing will be accepted for the 2016 year. Only CbC reports submitted in the prescribed format will be accepted. An IT system for submission is under development, and in the interim, reports may be emailed.

Proposed Changes (1)

Norway

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Norway National Budget 2018 Presented

On 12 October 2017, the Norwegian government presented the National Budget 2018. The main tax-related measures include:

  • Reducing the corporate tax rate from 24% to 23%, while maintaining the 25% rate for the financial sector;
  • Increasing the special petroleum income tax from 54% to 55%, while reducing the rate of uplift (investment-based extra depreciation) from 5.4% to 5.3%;
  • Increasing the tax on resource rent from 34.3% to 35.7%;
  • Increasing the reduced value added tax rate from 10% to 12%, which applies to passenger transport, hotel accommodation, admission to cinemas, sporting events, amusement parks, and museums, and certain other supplies; and
  • Reducing the individual income tax rate from 24% to 23% and adjusting the rates under the bracket tax as follows:
    • up to NOK 169,000 - 0.0%
    • NOK 169,000 to 237,900 - 1.4%
    • NOK 237,900 to 598,050 - 3.3%
    • NOK 598,050 to 962,050 - 12.4%
    • over NOK 962,050 - 15.4%

Click the following link for the National Budget 2018 web page (English language) for more information. The changes are to generally apply from 1 January 2018.

Treaty Changes (4)

Austria-Ireland

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Austria to Revise Tax Treaty with Ireland for Taxation of Digital Profits

According to a 20 September 2017 announcement from the Austrian Ministry of Finance, the Austrian Council of Ministers has authorized the negotiation of revisions to the 1966 income tax treaty with Ireland. The announcement notes that the purpose of the revisions is to establish provisions for the taxation of digital profits in Austria.  

Chad-Untd A Emirates

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Tax Treaty between Chad and the U.A.E. to be Signed

According to a release from the United Arab Emirates Ministry of Foreign Affairs and International Operations, officials from Chad and the U.A.E. met on 12 October 2017 to discuss bilateral relations and the finalization of an income tax treaty that will be signed later in the year. The treaty will be the first of its kind between the two countries, and must be signed and ratified before entering into force.

Cyprus-Jordan

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Tax Treaty between Cyprus and Jordan under Negotiation

On 10 October 2017, officials from Cyprus and Jordan met to discuss bilateral relations and agreed to the negotiation of an income tax treaty. Any resulting treaty will be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.

Italy-Romania

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Tax Treaty between Italy and Romania has Entered into Force

The new income tax treaty between Italy and Romania entered into force on 25 September 2017. The treaty, signed 25 April 2015, replaces the 1977 tax treaty between the two countries.

Taxes Covered

The treaty covers Italian personal income tax, corporate income tax, and regional tax on productive activities (IRAP). It covers Romanian tax on income and tax on profit.

Residence

If a company is considered resident in both Contracting States, the competent authorities will determine its residence for the purpose of the treaty through mutual agreement having regard to its place of effective management. If no agreement is reached, the company will not be entitled to claim any relief or exemption from tax provided for by the treaty.

Withholding Tax Rates

  • Dividends - 0% if the beneficial owner is a company that directly holds at least 10% of the paying company's capital on the date the dividends are paid and has done so or will have done so for an uninterrupted period of two years in which that date falls; otherwise 5%
  • Interest - 5%
  • Royalties- 5%

Limitation on Benefits

The provisions of Articles 10 (Dividends), 11 (Interest), and 12 (Royalties) will not apply if the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares, debt-claims, or other rights in respect of which the income is paid was to take advantage of those Articles by means of that creation or assignment. The limitation is included in each of the Articles.

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 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 deriving more than 50% of their value directly or indirectly from immovable property situated 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.

Effective Date

The treaty applies from 1 January 2018. The 1977 tax treaty between the two countries will cease to have effect from the date the new treaty is in effect.

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