Worldwide Tax News
France to Close Tax Regularization Program end of 2017
In a recent interview published in the French publication Libération, France's Minister of Public Action and Accounts Gérald Darmanin announced that the country's tax regularization program will be closed on 31 December 2017. The program was first introduced in 2013 and provides for reduced penalty rates on disclosed assets (previous coverage). The primary reason for the closure of the program is the implementation of the OECD's Common Reporting Standard (CRS) on the automatic exchange of financial account information, which provides France with more powerful means to detect evasion.
Australia Consults on Eligibility for Reduced Corporate Tax Rate
On 18 September 2017, the Australian Treasury launched a public consultation on the Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017. The legislation would amend the Income Tax Rates Act 1986 to ensure that a corporate tax entity would only qualify for Australia's reduced corporate tax rate if:
- The corporate tax entity carries on a business in the income year;
- The aggregated turnover of the corporate tax entity for the income year is less than the aggregated turnover threshold for that income year; and
- The corporate tax entity does not have passive income for that income year of 80% or more of its assessable income for that income year (new condition).
Currently, the reduced rate is 27.5% as set by the Treasury Laws Amendment (Enterprise Tax Plan) Act 2017 (previous coverage). The reduced rate is available for smaller companies (base rate entities) meeting an aggregated turnover threshold of AUD 10 million for 2016-17, AUD 25 million for 2017-18, and AUD 50 million for 2018-19. A separate bill, the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, is currently before the House of Representatives and would progressively extend the reduced rate to all companies by 2023-24. If this bill enters into force and commences, the restriction based on passive income would apply accordingly as the turnover threshold increases each year and would be repealed effective 2023-24.
Click the following link for the Treasury consultation page. The closing date for submissions is 29 September 2017.
Austria, Bulgaria, Greece, Portugal, Romania, and Slovenia Support Equalization Tax on Digital Companies
The Finance Minister of Austria, Bulgaria, Greece, Portugal, Romania, and Slovenia have reportedly signed on to the letter asking the European Commission to develop a proposal for an equalization tax that would be levied on the turnover generated by digital companies in the EU (previous coverage). This and other proposals for the taxation of the digital companies were discussed during an informal meeting of economic and financial affairs ministers (ECOFIN) on 15 to 16 September. A summary of possible solutions is to be prepared by the European Commission for further discussion in the coming weeks.
Dutch Budget and Tax Plan for 2018 Presented
On 19 September 2017, Finance Minister Jeroen Dijsselbloem presented the Dutch Budget for 2018 to Parliament. Some of the main measures of the accompanying Tax Plan for 2018 include:
- Expanding the dividend withholding tax obligation to qualifying interests in holding cooperatives (rights to at least 5% of the annual profit or the liquidation proceeds), if in the previous year, at least 70% of the actual activities of the cooperative consisted of the holding of participations or the direct or indirect financing of related entities (group financing);
- Extending the withholding exemption that applies for EU/EEA countries to also apply for third countries that have concluded a tax treaty with the Netherlands that includes dividend provisions;
- Introducing new anti-abuse provisions with regard to both the EU/EEA dividends withholding tax exemption and the new treaty exemption, which provide that the exemptions will not be available if the participation is held with the main purpose or one of the main purposes for the avoidance of tax, and the participation is part of an artificial arrangement or transaction, or series of arrangements/transactions, that are not put in place for valid commercial reasons reflecting economic reality; and
- Changing the scope of the non-resident corporate income tax rules for substantial shareholdings in a Dutch company so that a non-resident entity will only be taxed on income from substantial shareholdings if personal income tax of an indirect shareholder of the Dutch entity is avoided (exemption continues to apply where valid commercial reasons exist, but is updated in line with the new anti-abuse rules for dividend withholding exemption).
Other measures of the tax plan include, amendments to the interest restriction rules with respect to parallel funding, rules to avoid double use of losses in fiscal unity situations, abolition of the VAT agriculture regime and tax amnesty scheme, and specific provisions for the acceptance of Country-by-Country reports filed voluntarily in another jurisdiction as meeting the conditions to avoid local filing.
Click the following link for the Tax Plan 2018 package (Dutch language).
Russian Government Supports Bill to Extend Refund Application Time Limit
The Russian Government has announced its support for draft Bill No. 223287-7, which would extend the time limit for taxpayers to claim a refund of excessively collected taxes, fees, social contributions, penalties, and fines. Currently, taxpayers must submit a refund application within one month of discovering the excessive collection; otherwise, a claim must be filed with the courts within three years. The draft Bill would simplify the process and reduce court cases by just extending the time limit to submit an application to three years.
Bulgaria Approves Pending SSA with Morocco
On 7 September 2017, Bulgaria’s National Assembly reportedly approved the pending social security agreement with Morocco. The agreement, signed 21 September 2016, is the first of its kind between the two countries, and will enter into force after the ratification instruments are exchanged.
Jordan and Tajikistan Conclude Tax Treaty Negotiations
According to a release from the Tajikistan Ministry of Finance, officials from Jordan and Tajikistan concluded negotiations with the initialing of an income and capital tax treaty on 14 September 2017. The treaty will be the first of its kind between the two countries, and must be signed and ratified before entering into force.
Poland Approves Pending SSA with Israel
On 15 September 2017, the Polish Sejm (lower house of parliament) approved the law ratifying the pending social security agreement with Israel. The agreement, signed 22 November 2016, is the first of its kind between the two countries and will enter into force after the ratification instruments are exchanged.