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Worldwide Tax News

Approved Changes (1)

Poland

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Poland's Tax on Financial Institutions Signed into Law

On 15 January 2016, Poland's President Andrzej Duda signed into law the legislation introducing the tax on financial institutions. Although different rates for banks and insurance companies were originally proposed, the final rate signed into law is 0.0366% per month based on the total value of assets exceeding:

  • PLN 4 billion (~USD 1 billion) for banks, including branches of foreign banks;
  • PLN 2 billion (~USD 500 million) for insurance and reinsurance companies, including branches of foreign companies; and
  • PLN 200 million (~USD 50 million) for consumer credit institutions.

Certain reductions in the tax base  apply depending on the institution type.

The new tax is effective from 1 February 2016.

Proposed Changes (1)

Turkey

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Turkey Announces R&D Incentives Reform Package

On 14 January 2016, Turkey's Prime Minister Ahmet Davutoğlu announced a package of reform measures to promote research and development (R&D) activities in the country. Some of the key measures include:

  • The minimum number of employees required to benefit from R&D incentives will be reduced from 30 to 15;
  • The government will finance a portion of R&D employees' salaries up to the minimum wage for two years;
  • Government support will be provided to cover 50% of the cost of machinery and equipment acquired for R&D activities;
  • Goods imported for R&D activities will be exempted from customs duties;
  • Design activities will be included for R&D incentives; and
  • Academics involved in university-industry collaborations will be exempted from income tax.

With the measures, the government hopes to increase R&D expenditure from 1% of GDP to 3%.

Treaty Changes (7)

Chile-Guernsey

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Chile Approves TIEA with Guernsey

On 13 January 2016, Chile's Chamber of Deputies approved for ratification the pending tax information exchange agreement with Guernsey. The agreement, signed 4 April 2012, is the first of its kind between the two jurisdictions and is in line with the OECD standard for information exchange. It will enter into force once the ratification instruments are exchanged and will generally apply from that date.

Germany-Netherlands

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Protocol to the Tax treaty between Germany and the Netherlands Signed

On 11 January 2016, officials from Germany and the Netherlands signed a protocol to the 2012 income tax treaty between the two countries. The protocol is the first to amend the treaty. Additional details will be published once available.

Japan-Slovenia

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Tax Treaty between Japan and Slovenia under Negotiation

According to an announcement from Japan's Ministry of Finance, officials from Japan and Slovenia met on 19 January 2016 for the first round of 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.

Kosovo-Turkey

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Tax Treaty between Kosovo and Turkey has Entered into Force

The income tax treaty between Kosovo and Turkey entered into Force on 15 October 2015. The treaty, signed 10 September 2012, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Kosovo personal income tax and corporate income tax, and covers Turkish income tax and corporation tax.

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% (the protocol to the treaty, signed the same date, includes the provision that dividends paid by a resident of Kosovo to a resident of Turkey are exempt from withholding tax)
  • Interest - 10%
  • Royalties - 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; 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 jurisdictions apply the credit method for the elimination of double taxation.

Effective Date

The treaty applies from 1 January 2016.

Mexico-Saudi Arabia

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Tax Treaty between Mexico and Saudi Arabia Signed

On 17 January 2016, officials from Mexico and Saudi Arabia signed an income 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.

Netherlands-Sint Maarten

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New Income Tax Arrangement between the Netherlands and Sint Maarten to Enter into Force

On 13 January 2016, the Netherlands published the law for a new income tax arrangement with Sint Maarten. Such arrangements are regulated through law instead of a tax treaty because of Sint Maarten's status as part of the Kingdom of the Netherlands. The tax arrangement will enter into force on 1 March 2016 and apply from 1 January 2017. It replaces the 1964 tax arrangement with Aruba and the Netherlands Antilles as it applies in respect of Sint Maarten.

The main withholding tax rates included in the arrangement are as follows:

  • Dividends -
    • 0% if the beneficial owner is a company directly holding at least 10% of the paying company's capital (subject to certain conditions), or is a pension fund;
    • 5% if the beneficial owner holds at least 25% of the paying company's capital (rate applies up to 31 December 2019);
    • Otherwise 15%
  • Interest - 0%
  • Royalties - 0%

Additional details will be published once available.

Nigeria-Untd A Emirates

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Tax Treaty between Nigeria and the U.A.E Signed

On 19 January 2016, officials from Nigeria and the United Arab Emirate signed an income 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.

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