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Approved Changes (4)

Colombia

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Colombian Tax Authority Issues its Position on the Tax Treatment of Web-Hosting and Certain other Technological Services

Colombia's National Tax Authority (DIAN) recently issued its position on the taxation of certain technological services, including web-hosting services, cloud computing services and data transfer services.

Web-hosting services provided to a Colombian resident are treated as technical services subject to VAT if provided in Colombia, but not if provided abroad. However, for income tax purposes, such services will be subject to tax whether provided in Colombia or abroad (10% withholding tax). Similar treatment applies for cloud computing services and data transfer services under peering agreements.

El Salvador

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El Salvador Publishes Tax Havens List for 2016

On 16 September 2015, the Salvadoran tax authority issued a revised list of jurisdictions and territories that are considered tax havens for tax purposes for the 2016 tax year (Resolution DG - 001/2015). Payments made to recipients domiciled in a listed jurisdiction/territory are subject to an increased withholding tax of 25%. In certain cases, payments to entities under a particular tax regime will be subject to increased withholding, but not the jurisdiction as a whole.

Entities in jurisdictions that are not listed may still be subject to increased withholding if meeting the statutory definition for being deemed a tax haven under Salvadoran tax law. In addition, a taxpayer may submit evidence that a listed jurisdiction does not meet the statutory definition, and if accepted may be relieved from the increased withholding tax rate.

The jurisdictions/territories and their status are summarized as follows.

Low-Tax Jurisdictions/Territories

Albania, Andorra, Azores Islands (Portugal), Barbados, Bosnia and Herzegovina, Botswana, Bulgaria, Cyprus, Czech Republic, Georgia, Gibraltar, Hong Kong, Ireland, Kuwait, Labuan (Malaysia), Latvia, Lebanon, Liechtenstein, Lithuania, Macau, Macedonia, Maldives, Malta, Mauritius, Moldova, Montenegro, Oman, Paraguay, Qatar, Romania, San Marino, Serbia, Singapore, Slovenia, Switzerland (for certain company types), Taiwan and Uzbekistan.

No-Tax Jurisdictions/Territories

Anguilla, Antigua and Barbuda, Aruba, Bahamas, Bahrain, Belize, Bermuda, British Virgin Islands, Brunei, Campione d'Italia (Italy), Cayman Islands, Cook Islands, Curacao, Delaware (United States), Dominica, Florida (United States), Grenada, Guernsey, Isle of Man, Jersey, Liberia, Luxembourg (private asset management companies), Marshall Islands, Monaco, Montserrat, Nevada (United States), Norfolk Islands, Panama (headquarters regime, exempt trusts, financial lease agreements), Qeshm (Iran), St. Helen and Tristan Da Cunha, St. Kitts and Nevis, St. Lucia, St. Martin, St. Vincent and the Grenadines, Samoa, Seychelles, Turks and Caicos, United Arab Emirates, US Virgin Islands, Vanuatu and Wyoming (United States).

Classified as tax havens by the OECD

Nauru and Niue.

Panama

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Panama Updates Requirements for Claiming Tax Treaty Benefits

On 8 September 2015, Panama published Resolution No. 201-15144 in the Official Gazette. The resolution replaces the resolution on claiming treaty benefits issued in August 2015 (previous coverage).

The new resolution includes requirements that are largely unchanged from the previous resolution, but provides additional details on the procedures if a taxpayer fails to submit necessary documentation, such as the certificate of residence of the beneficiary, Proof of payment for the transaction, etc. In such case, the documentation must be provided within 2 months of the initial request, after which the tax authority will make its decision on whether to grant the treaty benefits, but with no requirement that the decision be made prior to the payment to the beneficial owner.

The new resolution applies from 9 September 2015.

Slovak Republic

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Slovakia Approves Changes to Participation Exemption, VAT and Incorrect Return Penalties

The Slovak parliament has approved legislation amending several areas of taxation, including the dividends participation exemption, valued added tax (VAT), and penalties for incorrect income tax returns.

Dividends Participation Exemption Restriction

The participation exemption rules for dividends are amended in line with changes to the EU Parent-Subsidiary Directive, including a rule to counter hybrid mismatch arrangements and a general anti-abuse rule. With the changes, the exemption will not apply if:

  • The dividends are deductible for the distributing subsidiary; or
  • The dividends result from a transaction or series of transactions with no valid business reason or with the main purpose or one of the main purposes of obtaining a tax advantage.

VAT Cash Basis Accounting

An optional cash basis accounting scheme for VAT is introduced for small taxpayers with annual revenue not exceeding EUR 100,000. Under the scheme, qualifying registered taxpayers are able to delay the declaration of output VAT until the related customer payment is actually received. Likewise, the taxpayer may not claim input VAT until the related payment is made.

VAT Reverse Charge Scope Expanded

The scope of the VAT reverse charge is expanded to all supplies of goods by non-established suppliers, excluding distance sales. In addition, the domestic reverse charge is expanded to cover supplies of building operations, supplies of buildings or parts of buildings based on contracts for work or any other similar contracts, and supplies of goods with assembly or installation.

Expanded Scope of Goods under Reduced VAT Rate

Certain foodstuffs, including fish, meat, butter, milk and bread are added under the scope of the 10% reduced VAT rate.

VAT Refund for non-EU Residents

Qualifying non-EU residents are allowed to claim VAT refund on a half-yearly basis, with a minimum eligible amount of EUR 1000 in the first half of the year, and a minimum amount of EUR 50 in the second half. Currently, only yearly claims may be made, with a minimum amount of EUR 50.

Reduced Penalties for Incorrect Tax Returns

Reduced penalties for incorrect income tax returns are introduced if amended returns are filed within certain time limits. The penalty is reduced to 3% per year if an amended return is filed before an audit and 7% per year if filed within 15 days of the beginning of an audit. If no amended return if filed within the time limits or additional tax is assessed, the standard penalty rate applies (3 × basic interest rate of European Central Bank - minimum 10%).

Effective Date

The changes apply from 1 January 2016.

Proposed Changes (1)

Kazakhstan

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Kazakhstan Planning New Social Health Insurance System

On 8 October 2015, legislation was introduced to the Kazakh Senate for a new social health insurance system, including mandatory employer and employee contributions. Beginning in 2017, employers will be required to contribute 2% of employees' salary to the system, with the rate increasing to 5% in 2020. Employees will be required to contribute 1% of their salary in 2019 and 2% from 2020 (withheld by employer). The contribution base will be capped at 15 times the minimum wage and the contributions will be deductible for income tax purposes (corporate and individual).

These changes are in addition to the already approved 5% increase in the employee pension contribution from 2018 (current contribution is 10%).

Treaty Changes (2)

Guernsey-United States

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Protocol to the TIEA between Guernsey and the U.S. has Entered into Force

The protocol to the 2002 tax information exchange agreement between Guernsey and the U.S. entered into force on 26 August 2015. The protocol, signed 13 December 2013, is the first to amend the agreement. It adds Article 5A (Automatic Exchange of Information) and Article 5B (Spontaneous Exchange of Information).

The protocol applies from the date of its entry into force, 26 August 2015.

Italy-Moldova

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New SSA between Italy and Moldova under Negotiation

Official from Italy and Moldova met on 12 October 2015 for negotiations for a social security agreement (SSA). Once in force, any resulting agreement would be the first of its kind between the two countries, although an SSA was signed in 2011, but was not ratified.

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