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Approved Changes (3)

Hungary

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Hungarian National Assembly Approves 2016 Budget Measures

On 17 June 2015, the Hungarian National Assembly approved the tax measures included in the 2016 Budget. The main measures include:

  • The individual income tax rate will be reduced from 16% to 15%;
  • The bank tax rate on the adjusted balance sheet total exceeding HUG 50 billion will be reduced from 0.53% to 0.31% in 2016 and further reduced to 0.21% in 2017;
  • The VAT rate on foodstuff will be reduced, beginning with a reduction in the rate on pork from 27% to 5%; and
  • A growth tax credit will be introduced for reinvested earnings

The changes generally apply from 1 January 2016.

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OECD Publishes Discussion Draft Comments on BEPS Action 6 (Prevent Treaty Abuse)

On 18 June 2015, the OECD published comments received in response to the revised public discussion draft for Action 6 (Prevent Treaty Abuse) of the Base Erosion and Profiting Shifting (BEPS) Project.

The revised draft is the third discussion draft on Action 6. The first was issued 14 March 2014 and the second was issued on 21 November 2014 as a follow up to the September 2014 Report on Action 6. The new revised discussion draft reflects the conclusions and proposals that resulted from the comments received and public consultation meetings held on the previous drafts. It covers issues related to the LOB rule, PPT rule, and other issues.

The new draft and the comments received on it will be discussed at the Working Party 1 meeting of 22-26 June 2015, and used to produce a final version of the Report on Action 6.

Click the following links for the discussion draft and the over 340 pages of comments received.

Singapore

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Singapore Publishes Resident and Non-Resident Individual Income Tax Rates for YA 2017

The Inland Revenue Authority of Singapore has published resident and non-resident individual income tax rates for year of assessment 2017.

Resident Individual Income Tax Rates:

  • up to SGD 20,000 - 0%
  • SGD 20,001 - 30,000 - 2%
  • SGD 30,001 - 40,000 - 3.5%
  • SGD 40,001 - 80,000 - 7%
  • SGD 80,001 - 120,000 - 11.5%
  • SGD 120,001 - 160,000 - 15%
  • SGD 160,001 - 200,000 - 18%
  • SGD 200,001 - 240,000 - 19%
  • SGD 240,001 - 280,000 - 19.5%
  • SGD 280,001 - 320,000 - 20%
  • over SGD 320,000 - 22%

Non-Resident Individual Income (Withholding) Tax Rates:

  • Director's remuneration - 22%
  • Income derived from activity as a non-resident professional (consultant, trainer, coach, etc) - 15% of gross income or 22% of net income
  • Income derived from activity as a non-resident public entertainer (artiste, musician, sportsman, etc) - 10% concessionary rate
  • Other income e.g. property rental income - 22%
  • Supplementary Retirement Scheme (SRS) withdrawal by a non-citizen SRS member - 22%
  • Interest, royalty, etc. - Reduced final withholding tax rate (subject to conditions) as follows:
    • Interest: 15% and Royalty: 10%; or
    • 22% if reduced final withholding tax rate is not applicable

The rates for YA 2017 apply for Singapore-source income derived during the year ending 31 December 2016. Foreigners who have stayed/worked in Singapore 183 days or more are considered resident for individual income tax purposes.

Proposed Changes (2)

European Union

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EU Commission Launches Consultation on Corporate Tax Transparency including Options for Implementing CbC Reporting Requirements

On 17 June 2015, the European Commission launched a public consultation on corporate transparency in connection to its Action Plan to reform corporate taxation in the EU. The consultation is looking for input on:

  • Who should be required disclose information; EU enterprises, non-EU enterprises, branches, subsidiaries?
  • To whom the information should be disclosed; tax authorities or also the wider public?
  • What types of information should be disclosed; tax rulings, country-by-country (CbC) reports, statements or other types of information?

In particular, two key questions are posed in relation to the new transfer pricing documentation guidelines and CbC reporting requirements developed as part of Action 13 of the OECD Base Erosion and Profit Shifting (BEPS) Project:

  • Should the Action 13 recommendations be implemented at the national or EU level; and
  • Should certain tax information be made available to the public?

In regard to these questions, five general options are put forward in the consultation document.

Transparency towards tax authorities:

OPTION A: No EU Action

Even if there is no EU action, some Member States may implement OECD BEPS Action 13 recommendations. This would allow tax authorities to obtain tax-related information and exchange that information with other participating countries. However, not all Member States may implement BEPS 13 – especially as not all EU Member States are OECD Members.

OPTION B: Implementation of BEPS 13 at the EU level

The EU would recommend or require, as recommended by BEPS 13, that enterprise disclose tax-related information on a country-by-country basis to the relevant tax authorities. Each ultimate parent enterprise filing a tax return with any of the relevant EU tax authorities would be covered. Its own worldwide consolidated operations would be reported.

Transparency towards the public:

OPTION C: Publication of anonymised/aggregated data by the EU tax authorities

The EU would recommend or require the disclosure by enterprises of tax-related information to tax authorities (possibly based on BEPS 13 recommendations). Moreover, aggregated or anonymised data would be made available to the public in order for the public to have access to tax-related information.

OPTION D: Public disclosure of tax-related information by either enterprises or tax authorities

The EU would require enterprises to disclose tax-related information on a country-by-country basis. The information would be made available to the public either directly (e.g. as part of their annual reporting obligations) or by national tax authorities in, for example, a public register. This option may consist in extending to all sectors the country-by-country reporting requirements currently in place for financial institutions.

OPTION E: Publicly available corporate tax policies

The Commission would require enterprises to report on their approach towards tax compliance and planning (tax management).

Comments must be submitted via an online questionnaire by 9 September 2015.

Click the following link for more information on the consultation.

Netherlands

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Netherlands Considering Reducing Application of Reduced VAT Rate

According to recent reports, the Netherlands is currently considering a significant reduction in the scope of goods and services subject to the reduced value added tax (VAT) Rate. The standard VAT rate in the Netherlands is 21%, and the reduced rate is 6%. The reduced rate currently applies for a number of goods and services, including basic foodstuffs, books, bicycles, certain pharmaceuticals, hotel accommodation, agricultural inputs and related services, restaurant and catering services, and others. If the plan being considered is implemented, the reduced rate would only apply to basic foodstuffs.

Treaty Changes (1)

Bahrain-Tajikistan

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Bahrain Approves Tax Treaty with Tajikistan

On 26 May 2015, the Bahrain Council of Representatives approved for ratification the pending income tax treaty with Tajikistan. The treaty, signed 28 May 2014, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Bahrain income tax, and Tajik income tax, tax on profits, and tax on immovable property.

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 personnel employed by the enterprise if the activities continue for a period or periods aggregating more than 6 months.

Hydrocarbon PE

The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise of one Contracting State carries on any activity which is directly connected with the exploration for or production of crude oil or other natural hydrocarbons from the ground in the other State, or when refining crude oil in its facilities in the other State.

Withholding Tax Rates

  • Dividends - 8%
  • Interest - 8%
  • Royalties - 8%

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 comparable interests directly or indirectly deriving more than 50% of their value 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

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

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.

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