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Worldwide Tax News

Approved Changes (2)

Belgium

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Belgian Legislation Published including Repeal of Patent Box Regime and New Condition for Reduced Dividends Tax Rate

On 11 August 2016, Belgium published the recently approved bill on various urgent tax measures in the Official Gazette. In addition to the repeal of the country's patent box regime effective 1 Jul 2016 (previous coverage), the bill also introduces a new condition for the 1.6995% withholding tax rate on dividends paid to qualifying non-resident companies. For the reduced rate to apply, the new condition requires that a non-resident company be subject to tax.

The reduced rate is a result of a 2012 decision of the Court of Justice of the EU that Belgium infringed the free movement of capital by providing a participation exemption (95%) for residents that have a participation in company of less than 10% with a value of at least EUR 2.5 million, but not for non-residents (previous coverage).

The new subject-to-tax condition applies from 11 August 2016.

Italy

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Italy Issue Circular on Regional Tax Credit for New Asset Investment

The Italian tax authorities recently issued a circular concerning a regional tax credit provided for investments in new assets from 1 January 2016 to 31 December 2019. The credit amount depends on the size of the enterprise as follows:

  • 20% for qualifying small enterprises - annual turnover or balance sheet total less than EUR 10 million and less than 50 employees;
  • 15% for qualifying medium enterprises - annual turnover less than EUR 50 million or balance sheet total less than EUR 43 million and less than 250 employees; and
  • 20% for qualifying large enterprises - exceeding above thresholds

Qualifying enterprises include those investing in new assets in the regions of Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia or Sicily. The new assets must be used for the enterprise's business activity and be related to a new establishment or to the improvement of the production capacity or process of an existing establishment.

Proposed Changes (2)

Kazakhstan

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Kazakhstan to Tax Online Transactions Starting with Apple and Google

Kazakhstan's State Revenue Committee Chairman Daulet Yergozhin has announced that the country will begin studying measures in the fall to ensure that online transactions completed in Kazakhstan will be subject to tax in Kazakhstan. To start, a meeting with representatives of Apple and Google is scheduled for September 2016 to discuss options for the taxation of transactions that take place through their specific platforms.

Vietnam

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Update - Vietnam Proposed Corporate Tax Rate Cut for SMEs

According to release published by Vietnam's General Department of Taxation on 16 August 2016, the Ministry of Finance has submitted a formal proposal for a reduction in the corporate tax rate for SMEs. As proposed, the corporate tax rate will be reduced from 20% to 17% effective 1 January 2017 and apply for four years. Although a separate law on supporting SMEs is being drafted that would define SMEs as business with revenue less than VND 100 million,  the proposed reduced rate would only be available for SMEs with annual revenue less than VND 20 billion.  

Click the following link for the release.

Treaty Changes (4)

Ethiopia-Ireland

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Tax Treaty between Ethiopia and Ireland has Entered into Force

The income tax treaty between Ethiopia and Ireland entered into force on 12 August 2016. The treaty, signed 3 November 2014, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Ethiopian tax on income and profit, and the tax on income from mining, petroleum and agricultural activities. It covers Irish income tax, universal social charge, corporation tax and capital gains tax.

Withholding Tax Rates

  • Dividends - 5%
  • Interest - 5%
  • Royalties - 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;
  • 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 an interest in a partnership or trust deriving more than 50% of their value directly or indirectly from immovable property situated in the other State (exemption for shares quoted on a recognized stock exchange)

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

Offshore PE

Article 23 (Miscellaneous Rules Applicable to Certain Offshore Activities) includes the provision that a permanent establishment will be deemed constituted if an enterprise carries on offshore activities in connection with the exploration or exploitation of the seabed and subsoil and their natural resources situated in a Contracting State for a period or periods aggregating more than 30 days within any 12-month period.

Double Taxation Relief

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

Effective Date

The treaty applies in Ethiopia from 8 July 2017 and in Ireland from 1 January 2017.

Indonesia-Armenia

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Indonesia Confirms Entry into Force of Tax Treaty with Armenia

An update from the Indonesian Ministry of Foreign Affairs has confirmed the entry into force of the income and capital tax treaty with Armenia on 8 April 2016. The treaty, signed 12 October 2005, is the first of its kind between the two countries and applies from 1 January 2017. Click the following link for previous coverage of the treaty for details.

Ireland-Oman

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Tax Treaty between Ireland and Oman under Negotiation

According to an update from Irish Revenue, negotiations are underway for an income tax treaty with Oman. 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.

Poland-Kuwait-Morocco-Philippines-Spain

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Poland to Negotiate Amending Protocols to Tax Treaties with Kuwait, Morocco, the Philippines and Spain

According to a recent update from the Polish government, Poland is planning to negotiate protocols to amend the current tax treaties with Kuwait, Morocco, the Philippines and Spain. Any resulting protocols would be the first to amend the respective treaties, and must be finalized, signed and ratified before entering into force.

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