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Proposed Changes (3)

Hungary

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Hungary Planning to Reduce Bank Tax

According to a recent announcement by the Hungarian government, plans are in the works to reduce the tax on banks and certain other financial institutions to 0.31% in 2016, and further reduced to 0.21% in 2017. The tax will be levied on banks' adjusted balance sheet total as of the end of 2014. Currently the tax is levied on the adjusted 2009 balance sheet total at a rate of 0.15% on the first HUF 50 billion, and a rate of 0.53% on the excess.

Legislation for the change is expected to be introduced to the Hungarian Parliament in June 2015.

Puerto Rico

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Puerto Rico to Introduce 16% GST

The Government of Puerto Rico has submitted tax reform legislation, the Taxation System Transformation Act, to the Legislative Assembly. The legislation includes setting the rate of the proposed goods and services tax (GST) at 16%.

The GST, a value added tax, would replace Puerto Rico's current 7% sales and use tax. According to reports, the government intends to have the new GST apply once the legislation is enacted, which could be as early as 1 April 2015.

Thailand

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Thailand Considers Reduced Rise in VAT in 2015

The Thai government is currently considering increasing the current VAT rate of 7% to 8% from 1 October 2015 instead of the previously planned increase back to the standard 10% rate. The increase will depend on the performance of Thailand's economy.

Thailand's previous standard rate of 10% was reduced to 7% as part of special economic measures taken after the 1997 Asian financial crisis, and has been extended multiple time over the years.

Treaty Changes (5)

Barbados-South Africa

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TIEA between Barbados and South Africa has Entered into Force

The tax information exchange agreement between Barbados and South Africa entered into force on 19 January 2015. The agreement, signed 17 September 2013, is the first of its kind between the two countries 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.

Bermuda-Korea, Rep of

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TIEA between Bermuda and South Korea has Entered into Force

The tax information exchange agreement between Bermuda and South Korea entered into force on 13 February 2015. The agreement, signed 23 January 2012, is the first of its kind between the two countries 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.

Colombia-Czech Rep

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Colombia Ratifies Tax Treaty with the Czech Republic

On 11 February 2015, Colombia published the Constitutional Court's approval for the ratification of the income tax treaty with the Czech Republic. The treaty, signed 22 March 2012, is the first of its kind between the two countries. It was ratified by the Czech Republic in November 2012.

Taxes Covered

The treaty covers Colombian income tax and its complementary taxes, and the Czech tax on income of individuals and the tax on income of legal persons.

Residence

If a company is a resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If the authorities cannot reach mutual agreement, the company will not be entitled to the benefits of the treaty.

Service PE

The treaty includes the provision that a permanent establishment 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 6 months 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 15%
  • Interest - 0% for interest on the credit sale of merchandise or equipment, on a loan or credit granted by a bank for a period of at least three years, or on a loan or credit guaranteed by the government; otherwise 10%
  • Royalties, including technical assistance, technical services or consultancy services - 10%
  • Capital Gains - 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 a comparable interest in a company resident in the other State

Double Taxation Relief

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

Limitation on Benefits

The benefits provided under the treaty will not be granted to companies of either Contracting State if the purpose of such companies is to obtain benefits under the treaty that would not otherwise be available. (Article 25)

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.

Hong Kong-Vietnam

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Hong Kong Ratifies Protocol to the Tax Treaty with Vietnam

According to recent reports, Hong Kong ratified the protocol to the 2008 income tax treaty with Vietnam on 12 December 2014. The protocol, signed 13 January 2014, replaces Article 25 Exchange of Information to bring it in line with the OECD standard for information exchange. It is the first protocol to amend the treaty.

The protocol will enter into force once the ratification instruments are exchanged, and will apply in Hong Kong from 1 April of the year following its entry into force, and in Vietnam from 1 January of the year following its entry into force.

Iran-Tanzania

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Tax Treaty between Iran and Tanzania under Negotiation

According to a recent announcement by the Tanzanian Deputy Minister of Foreign Affairs and International Cooperation, officials from Iran and Tanzania are going to hold a third round of negotiations for 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.

Additional details will be published once available.

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