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Approved Changes (5)

Brazil

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Brazil to Raise Taxes on Fuel, Imports and Others

On 19 January 2015, Brazil's Finance Minister Joaquim Levy announced that a number of taxes will be increased in the country in order to balance the budget in 2015. The increases are as follows:

  • The CIDE fuel tax and PIS/COFINS tax will be reapplied to gasoline and diesel:
    • Gasoline  - PIS/COFINS BRL 0.12/liter, CIDE BRL 0.10/liter
    • Diesel  - PIS/COFINS BRL 0.10/liter, CIDE BRL 0.05/liter
  • Financial transactions tax on personal loans will increase from 1.5% to 3% - the tax is generally applied daily with a maximum of 365 days (~0.0082% per day x 365 = 3%)
  • The combined PIS/COFINS tax on imports will be increased from 9.25% to 11.75%
  • The excise tax on cosmetics sales will be applied for distributor sales (currently only applies for manufacturers and importers)

According to reports, the changes in PIS/COFINS for fuel and the financial transactions tax will have effect from 1 February 2015, while the other measures will implemented through provision measures to be issued within 90 days.

Cyprus

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Cyprus Sets Interest Rate for Underpaid and Overpaid Tax for 2015

Cyprus has reduced the interest rate for late tax payment from 4.5% in 2014 to 4.0% in 2015. Administrative penalties of €100 to €200 plus 5% of the underpaid tax also apply.

The 4.0% interest rate for underpaid tax also applies for overpaid tax.

Ireland

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Ireland Film Tax Relief Increased for 2015

Ireland Revenue has issued updated guidance on the country's Film Relief Scheme, which is amended as of 1 January 2015, including a larger credit and expanded eligible expenditures. Under the scheme, the rate of relief (payable tax credit) granted is increased to a 32% of the lowest of the following:

  • Eligible expenditure
  • 80% of the total production cost of a film
  • €50 million

General conditions for eligibility include:

  • At least €250,000 must be spent on the production with at least half that amount spent on eligible expenditure
  • The producer company must be resident in Ireland, or resident in an EEA State and carrying on business in Ireland through a branch or agency, and must have made a return of corporation tax for the period preceding the period during which the film is made
  • The film must have received a certificate from the Revenue Commission, which includes consideration of the contribution which the film will make to the development of the film industry in Ireland, and the promotion and expression of Irish culture
  • Eligible Expenditure includes the expenditure incurred by the qualifying company on the employment of eligible individuals or on goods, services or facilities within the State on the production of a qualifying film - this is expanded in 2015 to include all cast and crew working in Ireland, regardless of nationality

Click the following link for more information and application procedures on the Ireland Revenue website.

Latvia

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Latvia's New Optional Tax Treatment for Non-Resident Income from Management and Consultancy Fees and Rent

As part of the Budget for 2015, adopted 17 December 2014, new rules apply for the tax treatment of non-resident income from management and consultancy fees paid by Latvian residents, and rental income from the use of property in Latvia.

Under the new rules, non-resident companies have the option to apply the corporate tax rate (15%) instead of the final withholding tax rates if they are resident in an EU Member State or a jurisdiction that has entered into a tax treaty with Latvia. The withholding tax rate on management and consultancy fees is 10%, while the tax rate for rent is 5%.

The new rules apply from 1 January 2015, and the option may be exercised when filing the Latvian tax return.

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OECD Publishes Discussion Draft Comments on BEPS Action 10: Low Value-Adding Intra-Group Services and Action 14: Dispute Resolution Mechanisms

The OECD has recently published the comments received in response to the public discussion drafts on the Base Erosion and Profit Shifting (BEPS) Project Actions 10 and 14. Comments for Action 10: Proposed modifications to Chapter VII of the Transfer Pricing Guidelines covering low value-adding intra-group services (PDF) were published on 20 January 2015, while comments for Action 14: Make dispute resolution mechanisms more effective (PDF) were published 19 January 2015. Over 350 pages of comments were received for Action 10, and over 400 for Action 14.

A public consultation meeting will be held on 23 January 2015 concerning the comments received for Action 14, and will be broadcast live via http://video.oecd.org/ from 9:30 am to 6 pm CET.

The public consultation meeting concerning Action 10 will be held 19-20 march 2015, though exact details have not yet been provided by the OECD.

Proposed Changes (2)

Czech Rep

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Czech Government Considering Increased Corporate Tax Rate

The government of the Czech Republic is currently considering a 1% to 2% increase in the country's corporate tax rate, which is currently 19%. The increase will be included in the next budget unless other fiscal measures are proposed to balance the budget.

United States

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U.S. Stop Corporate Inversions Act Reintroduced in House and Senate

On 20 January 2015, the bill known as The Stop Corporate Inversions Act of 2015 was reintroduced by U.S. Senators Dick Durbin and Jack Reed, and U.S. Representatives Sander Levin and Lloyd Doggett. The bill was originally introduced in the U.S. House of Representative and the Senate in May 2014, but was not enacted.

The bill is focused on closing what is seen as a corporate inversion loophole, and includes the following main provisions:

  • When a foreign corporation directly or indirectly acquires substantially all properties or assets of a domestic corporation, the foreign corporation will be treated as an inverted domestic corporation for U.S tax purposes if:
    • 50% (80% under current rules) or more of the equity or voting stock of the foreign corporation is held by former shareholders of the domestic corporation (or former partners in the case of a domestic partnership); or
    • The management and control of the expanded affiliate group to which the foreign corporation belongs is exercised in the U.S. and the expanded affiliate group has significant business activities in the U.S. (defined as when 25% or more of a group's employees are based in the U.S., 25% of employee compensation is incurred in respect of employees based in the U.S., 25% of assets are located in the U.S., or 25% of income is derived from the U.S.)
  • The 60% and 80% ownership tests as well as the inversion gain applicable under such circumstances would be repealed by the bill
  • The foreign substantial business exception under Section 7874 is maintained where the affiliated group is exempted if it has substantial business activities in the foreign country where the new corporation is incorporated

If enacted, the bill is estimated to result in USD 33 billion in tax revenue over 10 years. The effective date of the bill is 8 May 2014, and would apply to inversions completed after that date.

Click the following link for a full copy of the Stop Corporate Inversions Act 2015

Treaty Changes (3)

Cambodia-Thailand

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Tax Treaty between Cambodia and Thailand to be Negotiated

According to recent reports, officials from Cambodia and Thailand recently met and have agreed to begin negotiations for an income tax treaty. Any resulting treaty will be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.

Additional details will be published once available.

Grenada-South Africa

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TIEA between Grenada and South Africa Signed

According to a recent announcement by the South Africa Revenue Service, officials from Grenada and South Africa signed a tax information exchange agreement on 10 December 2014. The agreement is the first of its kind between the two countries and will enter into force after the ratification instruments are exchanged.

Guernsey-Slovak Republic

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TIEA between Guernsey and the Slovak Republic to Enter into Force

The tax information exchange agreement between Guernsey and the Slovak Republic will enter into force on 26 January 2015. The agreement, signed 22 October 2013, will apply for criminal tax matters from the date of its entry into force and for other matters concerning tax periods beginning on or after that date.

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