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Approved Changes (6)

Belarus

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Belarus New Tax Incentives for 2017

Belarus has introduced new tax incentives for 2017 as part of its National Social and Economic Development Program, which was approved by President Alexander Lukashenko on 15 December 2016. The incentives include:

  • A two-year corporate tax exemption from the first year profits are declared;
  • A two-year property tax exemption from the date taxable immovable property is acquired; and
  • A value added tax and customs duties exemption for SMEs on imports of technology equipment.

The two-year tax exemptions are not available for companies located in Minsk and five regional centers, or for companies created as the result of certain reorganizations.

Finland

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Guidance on Finland CbC Report and Notification Submission

The Finnish tax authority has published updated guidance concerning Country-by-Country (CbC) reporting and notification submission obligations. Finland's CbC reporting requirements apply for fiscal years beginning on or after 1 January 2016 for MNE groups meeting a EUR 750 million annual consolidated revenue threshold (previous coverage).

The guidance includes that the CbC report is to be submitted electronically within 12 months after the end of the fiscal year using either:

  • An online form submitted via the Suomi.fi service (forms for 2016 and 2017 are available - requires log in); or
  • An XML file via the Ilmoitin.fi service (technical guidance currently being developed).

The CbC reporting notification is to be submitted electronically by the end of the fiscal year concerned (first year extension to 31 May 2017 for fiscal years ending up to that date) using either:

  • An online form submitted via the Suomi.fi service (forms for 2016 and 2017 are available - requires log in); or
  • A data file via the Ilmoitin.fi service (technical guidance currently being developed).

Click the following link for the CbC guidance (Finnish language), which also includes a link to draft in-depth guidance that is to be finalized in early 2017.

Guernsey

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Guernsey Publishes CbC Reporting Regulations

The Guernsey government has published the Income Tax (Approved International Agreements) (Implementation) (Country by Country Reporting) Regulations, 2016. The regulations, which came into force on 1 January 2017, provide from the implementation of the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country (CbC) reports, and set out the CbC reporting obligations in Guernsey.

The main aspects of Guernsey's CbC reporting requirements are as follows:

  • The requirements apply for fiscal years beginning on or after 1 January 2016 for MNE groups meeting a EUR 750 million consolidated group revenue threshold in the previous year;
  • The requirement to submit a CbC report applies for ultimate parent entities resident in Guernsey;
  • The requirement to submit also applies for local non-parent constituent entities if:
    • The ultimate parent is not required to file a CbC report in its jurisdiction of residence;
    • The ultimate parent's jurisdiction of residence does not have a competent authority agreement in place for automatic exchange of CbC reports with Guernsey by the time the report would be due; or
    • There is a systemic failure of the jurisdiction of residence of the ultimate parent for exchange, and this has been notified to the local entity.
  • If there are multiple local entities in such case, one may be selected to submit the CbC report on behalf of the others (notification of the selected entity must be provided to the authorities by the due date for the report);
  • The local filing requirement will not apply if a surrogate parent entity has filed a CbC report for the year in another jurisdiction, and that report will be exchanged with Guernsey;
  • The deadline for the CbC report is 12 months following the close of the fiscal year concerned;
  • The report must be submitted via the Information Gateway Online Reporter (IGOR) using the OECD XML schema;
  • All Guernsey entities of an MNE group must provide notification on:
    • Whether it is the ultimate parent of the group or a surrogate parent within six months following the close of the fiscal year; or if neither
    • The identity and residence of the entity submitting a CbC report on behalf of the group by 30 November following the close of the fiscal year (with tax return); and
  • Failure to comply with the CbC reporting requirements without a reasonable excuse will result in fines and possible imprisonment for up to one year.

Click the following link for the CbC reporting page on the Guernsey government website, which includes links to the regulation and other relevant information.

Jersey-Portugal

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Jersey Removed from Portugal's Blacklist

On 12 January 2017, a news release from the Jersey government was published announcing the removal of Jersey from Portugal's blacklist. Jersey's removal was effected through a decree signed 30 December 2016 and that entered into force 1 January 2017.

Residents of jurisdictions included in Portugal's blacklist are subject to certain tax consequences, including an increased withholding tax rate of 35% for dividends, interest, and royalties, and ineligibility for Portugal's participation exemption.

Malta

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Malta Regulations Published on Information Exchange including for CbC Reports

Malta's government has published the Cooperation with Other Jurisdictions on Tax Matters (Amendment) Regulations, 2016. The regulation transposes amendments made to the EU Administrative Cooperation Directive by EU Council Directives 2014/107/EU, 2015/2376, and 2016/881 concerning the exchange of financial account information, tax rulings and APAs, and Country-by-Country (CbC) reports.

The main aspects of Malta's CbC reporting requirements are as follows:

  • The requirements apply for fiscal years beginning on or after 1 January 2016 for MNE groups meeting a EUR 750 million consolidated group revenue threshold in the previous year (local filing requirement outlined below will apply from 1 January 2017);
  • The requirement to submit a CbC report applies for ultimate parent entities resident in Malta;
  • The requirement to submit also applies for local non-parent constituent entities if:
    • The ultimate parent is not required to file a CbC report in its jurisdiction of residence;
    • The ultimate parent's jurisdiction of residence does not have a competent authority agreement in place for automatic exchange of CbC reports with Malta; or
    • There is a systemic failure of the jurisdiction of residence of the ultimate parent for automatic exchange;
  • If there are multiple local entities in such case, one may be selected to submit the CbC report on behalf of the others (notification of the selected entity must be provided to the authorities);
  • In the case of local filing, if the local constituent entity is unable to obtain or acquire all the required information for the CbC report, a report based on available information must still be submitted and the tax authority must be informed that the ultimate parent refused to provide all information;
  • The local filing requirement will not apply if a surrogate parent entity has filed a CbC report for the year in another jurisdiction, and that report will be exchanged with Malta;
  • The deadline for the CbC report is nine months following the close of the fiscal year concerned;
  • All Malta entities of an MNE group must provide notification by its tax return deadline on whether it is the ultimate parent of the group or a surrogate parent, or if neither, the identity and residence of the entity submitting a CbC report on behalf of the group (generally within nine months following the close of the tax year or 31 March of the following year, whichever date is later); and
  • CbC compliance penalties will apply as follows:
    • Failure to submit a CbC report when required will result in an initial penalty of EUR 200, plus EUR 100 per day (maximum EUR 20,000);
    • Submission of incomplete or inaccurate information with minor errors will result in an initial penalty of EUR 200, plus EUR 50 per day (maximum EUR 5,000);
    • Submission of incomplete or inaccurate information with significant errors will result in a penalty of EUR 50,000; and
    • Failure to comply with a request for additional information will result in an initial penalty of EUR 1,000, plus EUR 100 per day (maximum EUR 30,000).

Click the following link for the Cooperation with Other Jurisdictions on Tax Matters (Amendment) Regulations, 2016.

Venezuela

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Venezuela Increases Minimum Monthly Salary

The Venezuelan government has increased the country's minimum monthly salary from VEF 27,092.10 to VEF 40,638.15 effective 1 January 2017. This follows several increases in 2015 and 2016, and is the result of major inflation problems in the country.

The minimum salary is used in determining the basis cap for social security contributions, unemployment insurance, and other benefits. For employer social security contributions, the rates are 9%, 10%, or 11% based on the risk qualification of the company with a basis cap of five minimum monthly salaries. For employer unemployment insurance contributions, the rate is 2% with a basis cap of 10 minimum monthly salaries.

Treaty Changes (2)

Germany-Moldova

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SSA between Germany and Moldova Signed

On 12 January 2017, officials from Germany and Moldova signed a social security agreement. The agreement is the first of its kind between the two countries, and will enter into force after the ratification instruments are exchanged.

South Africa-Zimbabwe

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New Tax Treaty Between South Africa and Zimbabwe has Entered into Force

The new income tax treaty between South Africa and Zimbabwe reportedly entered into force on 1 December 2016. The treaty, signed 4 August 2015, replaces the 1965 income tax treaty between the two countries.

Taxes Covered

The treaty covers South African normal tax, dividends tax, withholding tax on royalties, tax on foreign entertainers and sportspersons, and withholding tax on interest. It covers Zimbabwean income tax, non-resident shareholders' tax, non-residents' tax on fees, non-residents' tax on royalties, capital gains tax, and residents' tax on interest.

Residence

If a company is considered resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement based on the place of effective management, the place where it is incorporated or otherwise constituted, and any other relevant factors. If no agreement is reached, the company will not be entitled to any relief or exemption from tax provided by the treaty unless agreed to by the competent authority.

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 183 days within any 12-month period.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise 10%
  • Interest - 5%, although an exemption applies for interest that arises in respect of any debt instrument listed on the Johannesburg Stock Exchange, the Zimbabwe Stock Exchange, or any other stock exchange agreed upon by the competent authorities of the Contracting States
  • Royalties - 10%
  • Technical fees for any service of an administrative, technical, managerial or consultancy nature - 5%

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 the alienation of shares in a company the assets of which consist directly or indirectly principally of such property; and
  • Gains from the 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 apply the credit method for the elimination of double taxation.

Effective Date

The treaty applies in respect of withholding taxes from 1 February 2017, and in respect of other taxes from 1 January 2017. The 1965 income tax treaty between the two countries ceases to have effect in relation to any tax for any period for which the new treaty applies.

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