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Approved Changes (5)

Australia

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Australia Local File Lodgment Concession

The Australian Taxation Office has issued a business bulletin on a Local file lodgment concession for reporting entities that have chosen to lodge Part A of the Local file with their tax return.

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Under the administrative solution for the local file, a reporting entity may choose to voluntarily lodge Part A of their local file at the same time as their Income Tax Return.

If a reporting entity chooses this option, they will not need to complete labels 2 to 17 of the international dealings schedule (IDS). The administrative solution is only available for lodgments due on or after 1 July 2017 using the 2017 stationery.

Under the lodgment concession, reporting entities that are December balancers and that choose to take up the administrative solution will have until 15 August 2017 to lodge their income tax return, Part A of the local file and the remaining labels of the IDS.

This is a lodgment concession only and does not change the due date for payment, if required.

See also:

Greece

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Greece Publishes Law to Implement EU Directive on Exchange of Tax Rulings and Other Changes

Greece has published Law No. 4474 in the 7 June 2017 edition of the Official Gazette. The law provides for the implementation of amendments made to the EU Directive on administrative cooperation in the field of taxation (2011/16/EU) by Council Directive (EU) 2015/2376 concerning the exchange of cross border tax rulings and advance pricing agreements between EU Member States. The exchange generally applies for rulings issued, amended, or renewed after 31 December 2016, as well as for past rulings issued, amended, or renewed in 2012 and 2013 if still in valid on 1 January 2014, and rulings issued, amended, or renewed in 2014 to 2016 whether still valid or not.

In addition to the tax ruling exchange, Law No. 4474 also makes a number of other regulatory changes, which include:

  • The Director of the Public Revenue Authority is granted authority to define categories of taxpayers to submit information on business activities on an automatic basis and to determine the related procedures;
  • Penalties up to EUR 1,000 are introduced for failing to comply with documentation requirements in relation to transactions not subject to VAT, and a penalty of EUR 100 per infraction is introduced for non-compliance with the requirement for electronic payment for purchases of good and service over EUR 500;
  • The voluntary disclosure scheme is extended to 30 September 2017 (was to end 31 May) with an additional tax rate of 12% for initial or amended returns filed 1 June to 30 September for undeclared amounts that should have been included in returns filed for tax years up to 2015 (previous coverage);
  • Withholding tax exemption is provided for legal entities having their tax residence in Greece or in a Member State of the EU or EEA that receive fees for technical services, management or consulting fees, and other fees for similar services (amended in relation to decision that withholding tax on payments made to PEs in Greece of EU legal entities violated the EU freedom to provide services - previous coverage); and
  • Unified Property Tax (ENFIA) liability is removed with regard to immovable property under bankruptcy proceedings, although property declaration still required, and for 2017 and 2018, supplementary ENFIA not taken into account for non-urban property.

Click the following link for Law No. 4474 as published (downloads PDF version).

Malaysia

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Malaysia Tourism Tax Start Date and Additional Details

The Malaysian Ministry of International Trade and Industry (MITI) has published Tourism Tax Newsletter No. 1/2017, which clarifies the country's new Tourism Tax that was approved by parliament in April 2017. The new tax applies from 1 August 2017 on tourists (Malaysian national or otherwise) staying at accommodation premises operated in Malaysia at the following rates depending on the orchid/star rating of the accommodation:

  • MYR 2.5 per night for one, two and three orchid accommodation, as well as non-rated accommodation;
  • MYR 5 per night for one, two and three star accommodation
  • MYR 10 per night for four star accommodation; and
  • MYR 20 per night for five star accommodation.

Accommodation premises include any building operated, either wholly or partly, as offering lodging or sleeping accommodation to tourists, including hotels, hostels, inns, boarding houses, etc. The operator of the accommodation premises is responsible for collecting and remitting the Tourism Tax due. Application for registration should be made within 30 days from the date operations begin, and within 30 days of 1 July 2017 for existing operations.

Click the following link for the Tourism Tax Newsletter No. 1/2017 as published in the 6 June edition of the MITI Weekly Bulletin (begins near end of bulletin).

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Upcoming OECD Webcast on International Tax Work including BEPS

The OECD Centre for Tax Policy and Administration will hold a webcast on 26 June 2017 to provide updates on recent and upcoming developments, including:

  • The Inclusive Framework on BEPS – including progress on transfer pricing, the Multilateral Instrument, and updated work on branch mismatch arrangements;
  • The upcoming G20 Summit in Hamburg; and
  • The Global Forum work on tax transparency and exchange of information.

Click the following link for the OECD webcast page to register.

Panama

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Panama Reduces Threshold for Designation as VAT Withholding Agent

Panama has published Executive Decree No. 128 of 29 May 2017, which amends the requirements for taxpayers to be designated as withholding agents for value added tax purposes. The main change is a reduction in the threshold for being designated from PAB 10 million in acquired goods or services in the previous year to PAB 5 million.

Proposed Changes (1)

India

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India Consults on Draft Notification Concerning Tax Treatment of Foreign Company Deemed to be Resident in India in a Previous Year based on POEM

The Indian Central Board of Direct Taxes has published a draft notification for consultation concerning the tax treatment of foreign companies when deemed to be resident in India in a previous year for the first time as determined by India's new place of effective management (POEM) rules (previous coverage).

In particular, the notification sets out the exceptions, modifications, and adaptations for application of the provisions of the Income Tax Act 1961 in respect of such foreign companies with regard to the computation of total income, the treatment of unabsorbed depreciation, the set off or carry forward of losses, collection and recovery, and the special provisions relating to avoidance of tax. This includes cases where a foreign company is or is not assessed to tax in the foreign jurisdiction and cases where the accounting year does not end 31 March (India standard year end).

Click the following link for the draft notification.

Treaty Changes (4)

Belgium-Kosovo

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Belgium and Kosovo Continue SSA Negotiations

According to a release from the Kosovo Ministry of Labour and Social Welfare, officials from Belgium and Kosovo met 12 to 15 June 2017 for the second round of negotiations for a social security agreement. The agreement must be finalized, signed, and ratified before entering into force, and once in force and effective, will replace the 1954 social security agreement between Belgium and the former Yugoslavia as it applies in respect of Belgium and Kosovo.

Belgium-Moldova

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Update - Tax Treaty between Belgium and Moldova and Amending Protocol

The pending income and capital tax treaty between Belgium and Moldova and the amending protocol were signed on 4 December 2008 and 30 March 2017 respectively.

Taxes Covered

The treaty covers Belgian individual income tax, corporate income tax, income tax on legal entities, and income tax on non-residents. It covers Moldovan income tax and tax on immovable property.

Withholding Tax Rates

  • Dividends -
    • 0% if the beneficial owner is a company that has held directly or indirectly at least 50% of the paying company's capital for an uninterrupted period of at least 12 months and has invested at least EUR 1 million (or equivalent in other currency); or the beneficial owner is a pension fund;
    • 5% if the beneficial owner is a company that has held directly or indirectly at least 25% paying company's capital for an uninterrupted period of at least 12 months;
    • Otherwise 10%
  • Interest - 5%, with an exemption for interest paid to a pension fund, the other Contracting State, a National Bank, or a financial institution
  • 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 deriving more than 50% of their value directly or indirectly from immovable property situated in the other State, with an exemption for:
    • Shares quoted on a recognized stock exchange of either Contracting State;
    • Shares alienated or exchanged in the course of a reorganization of a company; and
    • Shares deriving value from immovable property in which the company carries out its activity.

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

Double Taxation Relief

Moldova applies the credit method for the elimination of double taxation, while Belgium generally applies the exemption method. However, subject to the provisions of Belgian law, Belgium will apply the credit method for interest and royalty income, and for dividend income not otherwise exempted.

Limitation on Benefits

Article 27 (Limitation on Benefits) provides that a resident of a Contracting State will not receive the benefit of any reduction in or exemption from tax provided for in the treaty if the main purpose or one of the main purposes of such resident or a person connected with such resident was to obtain the benefits of the treaty.

Amending Protocol

The 2017 amending protocol:

  • Replaces the definition of the competent authorities for both Belgium and Moldova in Article 3 (General Definitions); and
  • Replaces Article 25 (Exchange of Information).

Entry into Force and Effect

The tax treaty and the protocol will enter into force once the ratification instruments are exchanged and will apply from 1 January of the year following their entry into force. Once in force and effective, the tax treaty, as amended, will replace the 1987 tax treaty between Belgium and the former Soviet Union as it applies in respect of Belgium and Moldova.

Hong Kong-Indonesia

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Hong Kong Signs Agreement for Automatic Exchange of Financial Account Information with Indonesia

The Hong Kong government announced on 16 June 2017 that an agreement has been signed with Indonesia for the automatic exchange of financial account information in tax matters. Under the agreement, Hong Kong and Indonesia will automatically exchange information on accounts held in their respective jurisdiction by tax residents of the other jurisdiction based on the OECD Common Reporting Standard (CRS).

Morocco-Congo, DRC-Tanzania

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Morocco Negotiating Tax Treaties with Congo (DRC) and Tanzania

Morocco's General Tax Administration has recently announced that it will enter into negotiations with the Democratic Republic of the Congo and Tanzania in July 2017. Any resulting treaties would be the first of their kind between Morocco and the respective countries, and must be finalized, signed, and ratified before entering into force.

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