Worldwide Tax News
China State Council Approves Tax Changes to Reduce Tax Burden and Support Growth
On 19 April 2017, the Chinese government announced that the State Council has approved a series of measures to reduce the tax burden and support economic growth. The main measures include:
- Eliminating the 13% VAT rate by reducing the rate to 11% for agricultural products, natural gas, and other supplies currently subject to 13% rate from 1 July 2017 (remaining standard rates will be 17%, 11%, and 6%);
- Increasing the taxable income threshold for the reduced 20% corporate tax rate for small businesses from CNY 300,000 to CNY 500,000 from 1 January 2017 to 31 December 2019;
- Increasing the extra deduction for qualifying R&D costs of SMEs from 50% to 75% from 1 January 2017 to 31 December 2019; and
- Expanding the scope of eligible investors for the 70% deduction of investments in high-tech SMEs to also include individual investors from 1 July 2017.
Details on the application of the measures are expected to be issued by China's State Administration of Taxation in the near future.
Colombia Clarifies New Income Surtax does Not apply for Capital Gains
Colombia's National Tax Authority (DIAN) recently published a ruling on whether the new income surtax introduced for 2017 and 2018 applies for capital gains. The surtax, which was introduced by Law No. 1819 of 2016 at the rates of 6% and 4% for 2017 and 2018 respectively, serves as a transitional tax to replace the CREE surtax that was eliminated from 2017 along with the CREE tax (previous coverage). The ruling notes that since the tax base for CREE tax and surtax did not include capital gains, the DIAN's position on the new surtax is that its tax base does not include capital gains either.
Saudi Shura Council Approves Selective Tax Scheme
On 16 April 2017, the Saudi Shura Council (consultative assembly) approved the draft selective tax scheme, which provides for the levy of an excise tax on products deemed harmful to health. In the first phase, tax will apply at a rate of 100% on tobacco and tobacco products and 50% on energy and carbonated drinks. The selective tax scheme must now be approved by Saudi King Salman, and is expected to be implemented in May.
The selective tax has been agreed to by all Gulf Cooperation Council (GCC) Member States along with the implementation of value added tax, which is meant to counter lost revenue due to falling oil prices/demand. The other GCC States include Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates.
Update - Protocol to the Tax Treaty between Armenia and India
The protocol to the 2003 income tax treaty between Armenia and India was signed 27 January 2016. The protocol, which is the first to amend the treaty, replaces Article 26 (Exchange of Information) to bring it in line with the OECD standard for information exchange. It will enter into force once the ratification instruments are exchanged and will apply from that date.
Protocol to Tax Treaty between Bahrain and the Philippines Signed
On 13 April 2017, officials from Bahrain and the Philippines signed an amending protocol to the 2001 income and capital tax treaty between the two countries. The protocol clarifies that the State of Bahrain became known as the Kingdom of Bahrain as of 14 February 2002 and adds a new Article 26A (Exchange of Information) in line with the OECD standard for information exchange (original treaty has no exchange provisions). The protocol is the first to amend the treaty and will enter into force once the ratification instruments are exchanged.
Tax Treaty between Bangladesh and Bhutan Signed
On 18 April 2017, officials from Bangladesh and Bhutan 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.
SSA between China and Japan under Negotiation
According to recent reports, official from China and Japan began negotiations for a social security agreement on 18 April 2017. Any resulting agreement would be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.