Worldwide Tax News
China to Finalize Nationwide Expansion of Tax Concessions for Advanced Technology Service Enterprises by End of September
According to recent reports, the Chinese tax authorities are planning to finalize the nationwide expansion of the tax concessions for advanced technology service enterprises by the end of September 2017. The tax concessions, initially introduced in 2010, are currently only available for enterprises in certain model cities and include:
- A reduced corporate tax rate of 15%;
- An increased deduction cap for employee education expenses equal to 8% of total salaries (standard 2.5%); and
- VAT zero-rating for exported services.
Qualifying services include information technology outsourcing (ITO), business process outsourcing (BPO), and knowledge process outsourcing (KPO).
Ireland Publishes eBrief on Review of Opinions or Confirmations
On 15 September 2017, Irish Revenue published eBrief No. 80/17 announcing the publication of a new Tax and Duty Manual Part 37-00-41. The purpose of the manual is to set out Revenue policy on the maximum period of validity of Revenue opinions/confirmations, which is generally five years. The manual also provides an update in respect of a review of opinions/confirmations issued by Revenue before 1 January 2012, which may no longer be relied on unless an application for renewal or extension was made by 30 June 2017.
Romania Amends Taxation of Rep Offices and Deduction of Expenses for Disposal of Receivables
On 31 August 2017, Romania published Government Ordinance 25/2017 in the Official Gazette, which makes a number of amendments to the Fiscal Code. One of the main areas of amendment is with respect to representative (rep) offices, including:
- The tax due by rep offices in Romania of foreign legal entities is changed from EUR 4,000 to RON 18,000;
- The payment of rep office tax is changed from two installments to a single installment, which is due by the end of February of the tax year;
- When a rep office is opened during the year, a tax return and payment is due within 30 days, with the tax amount calculated (prorated) from the first day of the month in which the office is opened until the end of the year;
- When a rep office is closed during the year, a tax return is due within 30 days, with the tax amount recalculated (prorated) for the period of activity from the beginning of the year to the first day of the month following the month in which it is closed.
In addition to the changes for rep offices, the Ordinance also amends the tax treatment of expenses for the disposal of receivables, which includes that the deduction of such expenses is restricted to 30% of the receivable's value, as opposed to the full deduction currently allowed.
The changes made by Government Ordinance 25/2017 generally apply from 1 January 2018.
U.A.E. Launches Registration for Selective Excise Tax
On 17 September 2017, the United Arab Emirates Federal Tax Authority (FTA) launched the registration process for the selective excise tax. The selective excise tax, which has been agreed to by all GCC Member States, will be levied in the U.A.E. from 1 October 2017 at a rate of 50% for carbonated drinks and a rate of 100% for tobacco products and energy drinks. Click the following link for the FTA release on registration for more information.
Legislation Introduced in Australian Parliament to Remove the Double Taxation of Digital Currency
On 14 September 2017, the Australian Treasury announced the introduction of the Treasury Laws Amendment (2017 Measures No. 6) Bill 2017, which amends the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to ensure that supplies of digital currency receive equivalent GST treatment as supplies of money. The main aspects of the legislation are largely unchanged from the version consulted on (previous coverage) and include the following:
- The amendments provide that supplies and acquisitions of digital currency are generally disregarded for the purposes of GST. Consistent with supplies of money, supplies of digital currency are only recognized for the purposes of GST if the supply is made in exchange for money or digital currency.
- For the purpose of these amendments, digital currency means fungible digital units of consideration that do not have a value based on the value of any other thing or associated entitlements.
- The amendments make a number of additional changes to ensure consistent treatment between money and digital currency.
The legislation, which is currently before the House of Representatives, is to apply to supplies and payments made on and after 1 July 2017. Click the following link for the legislation webpage, which includes links to the Bill and the Explanatory Memorandum.
Singapore Publishes e-Tax Guide on Customer Accounting for Prescribed Goods to Deter GST Fraud
On 15 September 2017, the Inland Revenue Authority published e-Tax Guide - GST: Customer Accounting for Prescribed Goods. Under customer accounting, the responsibility to account for output GST shifts from the supplier to the customer. This approach is meant to deter fraud schemes where sellers do not remit the GST collected, but businesses further down the supply chain continue to claim the input tax. In particular, customer accounting will apply for supplies of mobile phones, memory cards, and off-the-shelf software.
Customer accounting and the e-tax guide will apply from 1 January 2019, subject to the passing of the GST (Amendment) Bill 2017 (previous coverage) by Parliament and the assent of the President.
Czech Republic Ratifies TIEA with Belize
According to recent reports, the Czech Republic ratified the pending tax information exchange agreement with Belize on 29 August 2017. The agreement, signed 12 February 2016, is the first of its kind between the two countries and will enter into force after the ratification instruments are exchanged. It will apply on the date of its entry into force for criminal tax matters and for other matters for any taxable period beginning on or after 1 January of the year following its entry into force.
TIEA between Dominica and New Zealand has Entered into Force
The tax information exchange agreement between Dominica and New Zealand entered into force on 7 September 2017. The agreement, signed 16 March 2010, is the first of its kind between the two countries. It applies for taxable periods beginning on or after 1 January 2018 or, where there is no taxable period, all charges to tax arising on or after that date.
Russia Clarifies that Dividends Paid by Vladivostok Free Port Companies may be Eligible for Reduced Treaty Rate
The Russian Ministry of Finance has published Letter No. 03-08-05/53455 of 12 August 2017, which clarifies whether dividends paid by a resident of the Vladivostok free port (0% corporate tax rate) to a resident of Australia are eligible for the reduced withholding tax rate (5%) provided under the 2000 Australia-Russia tax treaty. As part of the conditions for the 5% rate, the dividends must be paid out of profits that have borne the normal rate of tax, which for a Russian resident means profits have borne the normal rate of tax to the extent that they are assessable to tax. The letter provides that the profits of a Russian dividend payer are considered to have been taxed at the normal rate if taxed in accordance with Chapter 25 of the Russian Tax Code, including those that have received the status of a resident of the Vladivostok free port.
Vietnam Looking to Conclude Tax Treaty Negotiations with Ethiopia
According to recent reports, Vietnam's Ambassador to Tanzania and Ethiopia, Nguyen Kim Doanh, met with officials from Ethiopia on 13 September 2017 and urged the finalization of negotiations for the signing of an income tax treaty. The treaty will be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.