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Approved Changes (2)

Egypt

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Egypt Amends Tax Laws for New Capital Gain, Stamp Tax and Personal Tax Rules

The Egyptian Government has approved Tax Laws 76 and 82 of 2017, which amend the Capital Gains Rules, the Stamp Duty and the Personal Income Tax:

  • Prior to the amendment, Capital Gains for Egyptian residents who transferred listed securities were exempt from tax until May 16, 2017;  the amendment extended this exemption another 3 years to May 16, 2020.  
  • The amendments also introduced new Capital Gain rules when an entity experiences a change in legal form - such as a corporate merger, spin-off, or change of entity type (corporate to partnership or vice versa).   The Capital Gain arising from a revaluation at the change event can be deferred provided that a proper tax value of assets and liabilities is established.
  • The amendments also introduced a new Stamp Tax that applies to the purchase or sale of any type of security - whether listed or unlisted and without deducting any costs. The rates for the new Stamp Duty on security transfers are:
    • between June 20, 2017 and May 31, 2018 - 0.25% of the value of the securities
    • between June 1, 2018 and May 31, 2019  - 0.30% of the value of the securities
    • after June 1, 2019 - 0.35% of the value of the securities
  • Also amended were the personal income tax rates to reduce the tax burden on low-income persons.  The amendments increased Bracket 1 from 6,500 to 7,200 EGP.  The new brackets will apply to salaried taxpayers as of 1/1/2017;  to professional and non-salaried taxpayers as of 7/1/2017:
    • Bracket 1:  income up to 7,200 EGP  ($400 USD) = exempt  
    • Bracket 2:  income from 7,201 to 30,000 EGP ($1, 666 USD) = 10% tax (with an 80% discount)
    • Bracket 3:  income from 30,001 to 45,000 EGP ($2,500 USD) = 15% tax (with a 40% discount)
    • Bracket 4:  income from 45,001 to 200,000 EGP ($11,111 USD) = 20% tax (with a 5% discount)
    • Bracket 5:  income over 200,001 EGP = 22.5% tax (with 0% discount)  

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Fiji Provides Details on Transitional Tax Arising from Repeal of Tax on Dividends

On July 14, 2017, the Fiji Revenue & Customs Authority published a Notice on the 1% Transitional Tax which is part of tax reforms that repealed the Tax on Dividends after 29 June 2017. The Notice sets out details on the 1% Transitional Tax:

  • The 1% Transitional Tax will not apply to Dividends Paid from 2016 and from future Profits.
  • The 1% Transitional Tax still applies to 2014 and 2015 undistributed Profits after tax for which the tax has not been paid.
  • The 1% Transitional Tax also applies to all Pre-2014 undistributed profits after tax, including capital profits in the balance of retained earnings.
  • The 1% Transitional Tax is due on or before September 30, 2017.
  • The 1% Transitional Tax is a final tax:  no further tax will be applicable on Dividends.
  • The Transitional Tax applies the same to both Corporations and Branches registered in Fiji.
  • An Exemption to the Transitional Tax applies to Companies listed on the SPSE.

Click the following link for the Public Notice on Transitional Tax which is effective from 29 June 2017.

Treaty Changes (3)

Brazil-Argentina

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Update - Protocol to Tax Treaty between Brazil and Argentina to be signed

The protocol to the 1980 income tax treaty between Brazil and Argentina could be signed as early as next week, according to media reports of the recent meetings in Brasilia between Argentine Foreign Minister Jorge Faurie and Brazilian President Michel Temer / Foreign Minister Aloysio Nunes.  The amendments would be the first to the Treaty since it entered into force in 1983 and would focus on promoting trade in services.  Additional developments will be reported as they occur.

Canada-Grenada

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TIEA between Canada and Grenada Signed

On July 14, 2017, officials from Canada and Grenada signed a tax information exchange agreement.  The agreement is the first of its kind between the two countries and will enter into force once the ratification instruments are exchanged.

Ukraine-United States

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Ukraine State Fiscal Service Clarifies when a Distributor's Payments to a Software Copyright Holder are Subject to Royalty Withholding Tax under U.S. Tax Treaty

In a Letter published on 19 July 2017 (Guidance Letter No. 722/6/99-99-01-02-02-15/IPK)  Ukraine's State Fiscal Service ("SFS")  discussed different arrangements between the software copyright holder and the software distributor and the extent to which each would qualify as a royalty under  Article 12 of the Ukraine - United States treaty and be subject to a 10% withholding tax:

  • Distribution Rights only without the right to reproduce the program:  as there are no rights granted to the software copyright, but just to distribute copies of the software - whether as tangible media or electronically-- payments for the distribution rights alone do not constitute a royalty.  
  • End-User Rights to copy the program onto the hard drive / into random access memory for use:  the right to copy the program incident to use is a user convenience and not a use of the software copyright.  Accordingly, End-User payments for an operating license to the software - which include the incidental right to copy the program in order to use the program -- are also not considered royalties.
  • Rights to Reproduce the software for distribution:  by implication when rights are granted a software distributor to copy or reproduce the software, these rights rise to the level of "use of the copyright".  Payments for these rights, under the Treaty would be considered royalties.

The letter reminded that to claim treaty benefits a non-resident entity needs to provide the tax agent with a document confirming residency in a treaty country.  For a US software copyright holder in receipt of Ukrainian-source income, IRS Form 6166 would work to establish US tax residency.

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