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Approved Changes (3)

Argentina

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Argentine Tax Administration Issues Circular Clarifying that Fines and Other Penalties Imposed by Regulating Agencies are Non-Deductible

The Argentine tax administration (AFIP) recently issued Circular 1/2015, which clarifies the AFIP's position that fines, and other administrative, disciplinary and criminal penalties imposed by regulating agencies on banks, insurance companies and other financial institutions are non-deductible for tax purposes. Regulating agencies specified in the Circular include Argentina's Central Bank (BCRA), the Financial Intelligence Unit (UIF- investigates money laundering), the National Securities Commission (CNV), and the National Insurance Superintendency (SSN).

Nigeria

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Nigeria Reduces Withholding Tax on Construction Activities

The Nigerian government has recently reduced the withholding tax rate on certain construction activities with effect from 1 January 2015. The 5% rate is reduced to 2.5% for building, construction, and related activities. However, the rate remains 5% for survey, design, and deliveries.

The withholding tax applies to income from construction activities for both residents and non-residents. For residents, the withholding tax may offset part of the corporate tax. For non-residents, the withholding tax is a final tax.

United Kingdom

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U.K Publishes Guidance on Promoters of Tax Avoidance Schemes and Introduces New Regulations on When a Company is Not to be treated as a Promoter

The U.K HMRC has published guidance on the rules aimed and deterring promoters of tax avoidance schemes, which are included in Part 5 of the Finance Act 2014. The guidance's covers:

  • The definitions of promoters, intermediaries, clients and avoidance arrangements
  • Threshold conditions for HMRC actions
  • Information disclosure requirements and other obligations that may be imposed on promoters, intermediaries and clients
  • Information powers of HMRC and restrictions
  • Maximum penalties for compliance failures, which range from £5,000 to £1,000,000
  • Other matters and examples

Click the following link for the full guidance on Promoters of Tax Avoidance Schemes

Also recently published are new regulations that essentially provide an exemption for a company from being considered a promoter of tax avoidance schemes when the promoter is part of the same group as the company to whom services relating to tax avoidance schemes are provided. Conditions includes that the promoter has not provided such services to any person outside of the group in the past three years, and does not subsequently provide such services to any person outside of the group.

The new regulations enters into force 2 March 2015, and applies with retrospective effect from 17 July 2014, the date Finance Act 2014 received royal assent.

Treaty Changes (2)

Algeria-United Kingdom

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Tax Treaty between Algeria and the U.K. Signed

On 18 February 2015, officials from Algeria and the U.K. signed an income and capital tax treaty. The treaty is the first of its kind between the two countries.

Taxes Covered

The treaty covers Algerian tax on global income, tax on the profits of companies, tax on professional activity, and royalties and taxes on results relating to activities of prospecting, research, exploitation and transport of hydrocarbons by way of pipelines. It covers U.K. income tax, corporation tax and capital gains tax.

Residence

If a company is considered resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If the authorities cannot reach mutual agreement, the company will not be entitled to the benefits of the treaty aside from those covered in Article 21 Elimination of Double Taxation and Article 23 Mutual Agreement Procedure.

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 engaged personnel for the same or connected project for a period or periods aggregating more than 183 days within any 12 month period.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owners is a company directly holding at least 25% of the paying company's capital, otherwise 15%
  • Interest - 7%
  • Royalties - 10%
  • Capital Gains - generally exempt, except for gains from the alienation immovable property, gains from the alienation of movable property forming part of the business property of a permanent establishment, and gains from the alienation of shares or comparable interests deriving more than 50% of their value from immovable property (exemption for shares regularly traded on a Stock Exchange, or if the company carries on its business in the property)

Double Taxation Relief

Both countries generally apply the credit method for the elimination of double taxation. However, the U.K. will exempt dividends paid by a Algerian company to a company resident in the U.K. if the conditions for an exemption under U.K. law are met. Exemption may also apply for profits of a permanent establishment in Algeria of a U.K. company if the conditions for an exemption under U.K. law are met.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged.

For withholding taxes, the treaty will apply in both countries from 1 January of the year following its entry into force. For other taxes, the treaty will apply in Algeria from 1 January of the year following its entry into force. In the U.K. it will apply for corporation tax from 1 April next following its entry into force, and for income tax and capital gains tax from 6 April next following its entry into force.

Sweden-Uruguay

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Sweden Ratifies TIEA with Uruguay

On 18 February 2015, Sweden ratified the pending tax information exchange agreement with Uruguay. The agreement, signed 14 December 2011, is the first of its kind between the two countries and will enter into force 30 days after the ratification instruments are exchanged.

The agreement will apply for criminal tax matters from the date of its entry into force, and for other matters in respect of tax periods beginning on or after that date.

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