The Tax Hub

Daily Tax Newsletter

Worldwide Tax News

Approved Changes (2)

Greece

Responsive image

Greece Clarifies Tax Treatment of Immovable Property Owned by Non-Residents

Greece has recently issued POL 1138/2015, which clarifies the tax treatment of immovable property situated in Greece that is owned by non-resident legal persons or entities. Some of the key areas clarified by the Circular include:

  • Non-residents deriving income from immovable property situated in Greece are allowed deductions for related expenses under Greek tax law whether they have a permanent establishment in Greece or not;
  • From 1 January 2014, the acquisition or construction cost of the immovable property is to be taken into account for depreciation purposes including acquisition and construction costs incurred before that date;
  • Non-residents owning Greek immovable property are required to file tax returns whether income is derived from the property or not; and
  • When a non-resident is resident in a country with which Greece has entered into a tax treaty, the provisions in the treaty regarding permanent establishments will apply in determining if the non-resident has a PE in Greece

Thailand

Responsive image

Thai Cabinet Extends 7% VAT Rate

The Thai Cabinet has reportedly approved the extension of the reduced VAT rate of 7% until 30 September 2016. Early in the year, Thailand had been considering increasing the rate to 8% from 1 October 2015, but later decided to keep the current rate of 7%.

Thailand's standard rate of VAT is 10%, but was reduced to 7% as part of special economic measures taken after the 1997 Asian financial crisis. The reduced rate was to be temporary, but has been extended multiple times over the years.

Proposed Changes (1)

United States

Responsive image

U.S. Senator Says OECD BEPS Action Items Require Congressional Approval in order to be Implemented

In a speech given on the U.S. Senate floor on 16 July 2015, Finance Committee Chairman Orrin Hatch R-UT urged the Obama Administration to work with Congress to ensure that proposals considered under the OECD BEPS Project do not have a negative impact on U.S. companies and the economy.

The senator expressed misgivings, saying, "As we all know, only Congress can make changes to U.S. tax law. Yet, no representatives from Congress have been offered a seat at the table in any of the BEPS negotiations." He further stated that, "many, if not all, of the action plan items would need congressional action in order to be implemented in the U.S."

The main BEPS measures Senator Hatch is concerned with include the strengthening of CFC rules (Action 3), limiting interest deductions (Action 4), preventing treaty abuse (Action 6), and reporting requirements and information sharing among governments (Action 13). In regard to Action 13, which includes the country-by-country report, the main concerns are to do with information sharing and confidentially of U.S. companies.

In addition to the speech on the Senate floor, Senator Hatch has also sent a request to the Government Accountability Office (GAO) to conduct an analysis of the impact that OECD BEPS proposals would have.

Click the following link for the full Senate speech, and the letter to the GAO.

Treaty Changes (5)

Brunei-Luxembourg

Responsive image

Tax Treaty between Brunei and Luxembourg Signed

On 14 July 2015, officials from Brunei and Luxembourg signed an income and capital 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.

Bulgaria-Norway

Responsive image

Bulgaria Approves Tax Treaty with Norway

On 8 July 2015, the Bulgarian parliament approved for ratification the pending income tax treaty with Norway. The treaty, signed 22 July 2014, will replace the 1988 income and capital tax treaty between the two countries, which currently applies.

Taxes Covered

The treaty covers Bulgarian personal income tax, corporate income tax and patent tax, and covers the following Norwegian taxes:

  • National tax on income;
  • County municipal tax on income;
  • Municipal tax on income;
  • National tax relating to income from the exploration for and the exploitation of submarine petroleum resources and related activities and work, including pipeline transport of petroleum produced; and
  • National tax on remuneration to non-resident artistes

Residence

When a person, other than an individual, is a considered resident of both Contracting States, the competent authorities of both States will determine its residence for treaty purposes through mutual agreement. If no agreement is reached, the person will not be considered a resident of either State for the purpose of claiming any benefits provided by the treaty.

Service PE

A permanent establishment will be deemed constituted when an enterprise of one Contracting State furnishes services in the other State through one or more individuals present in that other State for the same or connected project for an aggregate period of 183 days or more in any 12-month period.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 10% of the paying company's capital, otherwise 15%
  • Interest - 0% on interest paid in respect of a loan granted, insured or guaranteed by a governmental institution for the purposes of promoting exports; in connection with the sale on credit of any industrial, commercial or scientific equipment; or in respect of any loan granted by a bank; otherwise 5%
  • Royalties - 5%

Limitation on Benefits

The beneficial provisions of Articles 10 (Dividends), 11 (Interest) and 12 (Royalties) will not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares, debt-claims or other rights in respect of which the dividends, interest or royalties are paid was to take advantage of those Articles by means of that creation or assignment. The limitation is included in each of those Articles.

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

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 tax treaty will enter into force once the ratification instruments are exchanged, and will generally apply from 1 January of the year following its entry into force. However, Article 26 (Assistance in the Collection of Taxes) will not apply until written confirmation is provided by Bulgaria that it is able to provide such assistance.

Once in force and effective, the treaty will replace the 1988 income and capital tax treaty between the two countries.

Germany-Japan

Responsive image

Germany and Japan Agree on New Tax Treaty

On 16 July 2015, Japan's Ministry of Finance announced that Japan and Germany have negotiated and agreed to a new income tax treaty. The new treaty must be signed and ratified by both countries before entering into force, and once in force and effective, will replace that 1966 income tax treaty between the two countries, which  currently applies.

Additional details will be published once available.

Jersey-Indonesia

Responsive image

TIEA between Indonesia and Jersey in Force

The tax information exchange agreement between Indonesia and Jersey entered into force on 24 September 2014. The agreement, signed 27 April 2011, is the first of its kind between the two jurisdictions and is in line with the OECD standard for information exchange. It generally applies from the date of its entry into force.

Ukraine-Ireland

Responsive image

Ukraine Ratifies Tax Treaty with Ireland

On 15 July 2015, Ukraine ratified the pending income and capital tax treaty with Ireland. The treaty, signed 19 April 2013, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Irish income tax, universal social charge on income, corporation tax, and capital gains tax. It covers Ukrainian tax on profits of enterprises and income tax on individuals.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise 15%
  • Interest - 5% on interest paid in respect of a sale on credit of industrial, commercial or scientific equipment; or in respect of any loan granted by a bank; otherwise 10%
  • Royalties - 5% on royalties paid in respect of any copyright of scientific work, any patent, trade mark, secret formula, process or information concerning industrial, commercial or scientific experience; otherwise 10%

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 shares in a company or interest in a partnership, trust, or any other body the assets of which consist principally of immovable property situated in the other State (an exemption applies for shares quoted on a recognized stock exchange);
  • Gains from the alienation of stock, participation, or other rights in the capital of a company which is a resident of the other State if the recipient of the gains, during the 12-month period preceding such alienation, held a directly or indirect participation of at least 25% of the capital of that company (an exemption applies where such a gain has been derived as a consequence of a reorganization, merger or division of companies or similar transaction); and
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment 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.

MFN Clause

A protocol to the treaty, signed the same date, includes the provision that if Ukraine should agree to an exemption or lower rate of withholding tax in any other tax treaty in regard to income covered by Articles 11 (Interest) or 12 (Royalties) of the Ireland-Ukraine treaty, then those articles may be renegotiated  to provide such exemption or lower rate.

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.

Sitemap

Powerful Tax Tools

NEW

FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.

NEW

Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.

NEW

Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.

NEW

Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.

NEW

Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.

NEW

OECD BEPS Project

Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.

NEW

Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.

NEW

Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

NEW

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

NEW

Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.

NEW

Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.

NEW

Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.

NEW

VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.

NEW

NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.

NEW

Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.

NEW

Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

FX Rates

Global FX Rates including Tax year Average FX Rates and Spot Rates for all Reporting Currencies.

Get an immediate FREE trial of Orbitax ITRCE

Get Started with Orbitax Today

With Orbitax, you get reliable and comprehensive solutions for international tax research, compliance and planning. Contact us today to get started with Orbitax.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More