Get an immediate FREE trial of Orbitax's International Tax Research & Compliance Expert (ITRCE) software for 7 days.

The Tax Hub

Daily Tax Newsletter

Worldwide Tax News

Approved Changes (3)

Australia

Responsive image

Australia Publishes Transfer Pricing Guide on Offshore Procurement, Marketing, Sales, and Distribution Hubs

The Australian Taxation Office (ATO) has published Practical Compliance Guideline (PCG) 2017/1, which covers the ATO's compliance approach to transfer pricing issues related to centralized operating models involving procurement, marketing, sales and distribution functions ("hubs").

The framework set out in guidelines can be used to:

  • Assess the compliance risk of the transfer pricing outcomes in accordance with the ATO's risk framework;
  • Understand the compliance approach that the ATO will likely adopt having regard to the risk profile of a hub;
  • Work with the ATO to mitigate the transfer pricing risk in relation to a hub; and
  • Understand the type of analysis and evidence the ATO would require when testing the outcomes of a hub.

Click the following link for Practical Compliance Guideline (PCG) 2017/1, which is effective from 1 January 2017 and applies to existing and newly created hubs.

India

Responsive image

India to Delay GST Implementation to 1 July 2017

According to Finance Minister Arun Jaitley, the Indian government is planning to implement the new Goods and Services Tax (GST) regime from 1 July 2017 instead of 1 April 2017 as originally planned (previous coverage). The delay is due to difficulties in reaching agreement on how control of GST will be split between the Centre (Federal government) and the States. However, agreement has now been reached, and the government is confident that GST will be implemented 1 July. As agreed, the States will have control over the assessment of 90% of taxpayers with annual revenue up to INR 15 million (~USD 220,000), with the remaining 10% under the Centre. For taxpayers with annual revenue above that threshold, control will be split 50/50. Although control is split, taxpayers will only need to deal with a single authority.

United States

Responsive image

U.S. IRS Publishes Final and Temporary Regulations: Guidance for Determining Stock Ownership; Rules Regarding Inversions and Related Transactions

On 18 January 2017, U.S. IRS final and temporary regulations (TD 9812) were published in the Federal Register. The final and temporary regulations concern the determination of stock ownership and rules regarding inversions and related transactions. The regulations adopt and remove prior temporary regulations published in 2014 (TD 9644) and modified in 2016 (TD 9761) concerning the anti-inversion rule that allows the IRS to disregard foreign parent stock attributable to recent inversions or acquisitions of U.S. companies in the previous three years (previous coverage). By disregarding such stock, companies are less likely to be able to meet the continuity of ownership thresholds for an inverted company to be treated as a foreign company for U.S. tax purposes.

Click the following link for final and temporary regulations (TD 9812): Guidance for Determining Stock Ownership; Rules Regarding Inversions and Related Transactions.

Treaty Changes (8)

Belarus-Hong Kong

Responsive image

Tax Treaty between Belarus and Hong Kong Signed

On 16 January 2017, officials from Belarus and Hong Kong signed an income and capital tax treaty. The treaty is the first of its kind between the two jurisdictions.

Taxes Covered

The treaty covers Belarusian tax on income, tax on profits, income tax on individuals, and tax on immovable property. It covers Hong Kong profits tax, salaries tax, and property tax.

Withholding Tax Rates

  • Dividends - 5%
  • Interest - 5%
  • Royalties - 3% for royalties paid for the use of, or the right to use, aircraft; otherwise 5%

Capital Gains

The following capital gains derived by a resident of one Contracting Party may be taxed by the other Party:

  • Gains from the alienation of immovable property situated in the other Party;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other Party; and
  • Gains from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other Party, with an exception for shares quoted on the Stock Exchange of Hong Kong Limited, JSC Belarusian Currency and Stock Exchange, or any other stock exchanges as may be agreed between the competent authorities of the Contracting Parties.

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

Double Taxation Relief

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

Limitation on Benefits

Article 27 (Anti-Abuse Rules) includes the provision that a benefit under the treaty shall not be granted in respect of an item of income if it is reasonable to conclude that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit would be in accordance with the object and purpose of the relevant provisions of the treaty.

Entry into Force and Effect

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

Hungary-Iran

Responsive image

Tax Treaty between Hungary and Iran has Entered into Force

The income and capital tax treaty between Hungary and Iran entered into force on 30 December 2016. The treaty, signed 30 November 2015, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Hungarian personal income tax, corporate income tax, land parcel tax, and building tax. It covers Iranian real estate income tax, tax on income from agriculture, tax on salary income, tax on unincorporated individual business income, tax on the profits of legal persons, tax on incidental income, and capital tax.

Residence

If a company is considered resident in both Contracting States, then it will be deemed to be a resident only in the State in which its place of effective management is located. If its place of effective management cannot be determined, its residence will be determined by the competent authorities through mutual agreement. If no agreement is reached, it will not be entitled to any relief or exemption from tax provided by the treaty.

Withholding Tax Rates

  • Dividends - 0%
  • Interest - 0% if paid in connection with the sale on credit of any merchandise or equipment, or paid on any loan or credit granted by a bank; otherwise 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 other comparable corporate rights 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

Hungary generally applies the exemption method for the elimination of double taxation, although the credit method is applied in respect of income covered by Articles 7 (Business Profits), 11 (Interest), and 12 (Royalties). Iran applies the credit method.

Entitlement to Benefits

Article 27 (Entitlement to Benefits) includes the provision that a benefit provided under the treaty will not be granted if it is reasonable to conclude that obtaining the benefit was one of the principle purposes of any arrangement or transaction that resulted directly or indirectly in the benefit. The denial of benefits will not apply if it is established that the granting of the benefit would be in accordance with the object and purpose of the relevant provisions. Before a resident of a Contracting State is denied benefits, the competent authorities of both States will consult with each other.

Effective Date

The treaty applies from 1 January 2017.

India-Kuwait

Responsive image

Protocol to Tax Treaty between India and Kuwait Signed

The Kuwait Ministry of Finance has announced the signing of a protocol to the 2006 income tax treaty with India on 15 January 2017. The protocol is the first to amend the treaty. It amends Article 2 (Taxes Covered) in respect of Kuwaiti taxes and amends Article 26 (Exchange of Information).

Additional details will be published once available.

Italy-Barbados-Philippines

Responsive image

Italy Approves Tax Instruments with Barbados and the Philippines

On 12 January 2017, the Italian Senate approved the pending income tax treaty with Barbados and the pending protocol to the 1980 income tax treaty with the Philippines.

The treaty with Barbados was signed on 24 August 2015 and is the first of its kind between the two countries. It will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force (previous coverage).

The protocol to the treaty with the Philippines was signed on 9 December 2013 and is the first to amend the treaty. It amends Articles 2 (Taxes Covered), 3 (General Definitions), and 22 (Methods for Elimination of Double Taxation), and replaces Article 25 (Exchange of Information). It will enter into force and apply from the date the ratification instruments are exchanged.

Japan-Mongolia

Responsive image

Japan and Mongolia to Negotiate Tax Treaty

On 11 January 2017, officials from Japan and Mongolia met to discuss bilateral relations, including the negotiation of an income tax treaty. Any resulting treaty would be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.

Jersey-Seychelles

Responsive image

Tax Treaty between Jersey and Seychelles has Entered into Force

The income tax treaty between Jersey and Seychelles entered into force on 5 January 2017. The treaty, signed 28 July 2015, is the first of its kind between the two jurisdictions.

Taxes Covered

The treaty covers Jersey income tax and Seychelles business tax, income and non-monetary benefits tax, and petroleum income tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through employees or other engaged personnel if the activities continue for the same or connected project within a Contracting Party for a period or periods aggregating more than 183 days within any 12-month period.

Withholding Tax Rates

  • Dividends - 0%
  • Interest - 0%
  • Royalties - 0%

Capital Gains

The following capital gains derived by a resident of one Contracting Party may be taxed by the other Party:

  • Gains from the alienation of immovable property situated in the other Party;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other Party; and
  • Gains from the alienation of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in the other Party

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

Note - The text of the treaty as published by the Jersey government includes a duplication of the standard provision regarding the taxing rights of gains from the alienation ships and aircraft operated in international traffic, and does not include the standard provision regarding the taxing rights of gains from the alienation of movable property of a PE. This is assumed to be in error.

Double Taxation Relief

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

Effective Date

The treaty applies from 1 January 2018.

Paraguay-Untd A Emirates

Responsive image

Tax Treaty between Paraguay and the U.A.E. Signed

On 16 January 2017, officials from Paraguay and the United Arab Emirates signed an income tax treaty. The treaty is the first of its kind between the two countries and will enter into force after the ratification instruments are exchanged.

Additional details will be published once available.

Portugal-Vietnam

Responsive image

Tax Treaty between Portugal and Vietnam has Entered into Force

Vietnams' General Department of Taxation has announced that the income tax treaty with Portugal entered into force on 9 November 2016. The treaty, signed 3 June 2015, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Portuguese personal income tax, corporate income tax, and surtaxes on corporate income tax. It covers Vietnamese personal income tax and business income tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services in a Contracting 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 that directly owns at least 70% of the paying company's capital;
    • 10% if the beneficial owner is a company that directly owns at least 25% of the paying company's capital;
    • Otherwise 15%
  • Interest - 10%
  • Royalties - 10%
  • Technical Fees in consideration for managerial, technical or consultancy services - 7.5%

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;
  • Gains from the alienation of shares or comparable interests in a company, the property of which consists directly or indirectly in more than 50% of immovable property situated in the other State; and
  • Gains from the alienation of shares or comparable interests representing a participation of at least 25% in a company resident 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. A provision is also included for a tax sparing credit, whereby Portugal will deem tax paid in Vietnam to include any amount that would have been payable as Vietnamese tax for any year but was exempted or reduced under specified provisions of Vietnamese law.

Limitation on Benefits

The final protocol to the treaty provides that the benefits of the treaty will not be granted to a resident of a contracting state that is not the beneficial owner of the income.

The protocol also provides that the provisions of the agreement will not apply if the main purpose or one of the main purposes of any person concerned with the creation or assignment of the property or right in respect of which the income is paid was to take advantage of those provisions by means of such creation or assignment.

MFN Clause

The final protocol to the treaty provides that if Vietnam enters into a tax treaty with an EU Member State after the Portugal-Vietnam treaty enters into force, and such other treaty provides for a lower withholding tax rate or exemption in respect of Article 10 (Dividends), 11 (Interest), or 12 (Royalties), then such lower rates or exemption will automatically replace the rates provided in the Portugal-Vietnam treaty from the date such other treaty enters into force.

Effective Date

The treaty applies from 1 January 2017.

Sitemap

Powerful Tax Tools

NEW

FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.

NEW

Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.

NEW

Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.

NEW

Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.

NEW

Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.

NEW

OECD BEPS Project

Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.

NEW

Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.

NEW

Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

NEW

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

NEW

Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.

NEW

Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.

NEW

Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.

NEW

VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.

NEW

NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.

NEW

Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.

NEW

Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Crosss Border Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment Streams.

Get Started with Orbitax Today

With Orbitax, you get reliable and comprehensive solutions for international tax research, compliance and planning. Contact us today to get started with Orbitax.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More