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Worldwide Tax News

Approved Changes (1)

United Kingdom

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UK Rates and Thresholds for PAYE Tax, National Insurance Contributions, and Other Benefits

The UK HMRC has published the rates and thresholds for PAYE tax (individual income tax) for the tax year beginning 6 April 2016. PAYE tax rates and threshold are as follows:

  • up to GBP 32,000 - 20%
  • GBP 32,001 up to 150,000 - 40%
  • over GBP 150,000 - 45%

The annual personal allowance is increased from GBP 10,600 to GBP 11,000.

Also published are the rates and thresholds for National Insurance contributions, which vary based on the category of the employee. The rates and thresholds for general employees (Category A) are as follows:

  • Employee Contributions:
    • up to GBP 8,060 - 0%
    • GBP 8,061 up to 43,000 - 12%
    • over GBP 43,000 - 2%
  • Employer Contributions:
    • up to GBP 8,112 - 0%
    • over GBP 8,112 - 13.80%

Click the following link to the HMRC website for a more detailed breakdown of the applicable rates and thresholds for various employee categories, as well as other benefits requirements concerning work benefits (car, phone, etc.), sick pay, maternity pay and others.

Proposed Changes (2)

China

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China Considering "Tobin Tax" on Currency Transactions

According to recent reports, China's Central Bank is considering the introduction of a so-called "Tobin Tax" on foreign exchange transactions. The "Tobin Tax" is a tax proposed by economist James Tobin in 1972 as a way to stabilize capital flows, and would be used by China to curb speculative trading against the Chinese yuan.

No details have been finalized on when the tax would be effective or what the rate would be, although the initial rate is expected to start at zero and would be adjusted as needed.

Kuwait

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Kuwait Cabinet Approves 10% Business Tax for Domestic Companies

According to an announcement made 14 March 2016, Kuwait's Cabinet has approved a proposal from the Ministry of Finance to introduce a 10% business tax for domestic companies. Currently a 15% corporate tax applies only for foreign companies, while domestic companies are exempt.

An initial proposal included rules for withholding taxes, tax losses, permanent establishments and other aspects of the regime (previous coverage). Aside from the 10% rate, it is unclear what all is included in the version approved by the Cabinet or the intended effective date.

The latest version must be approved by the parliament before entering into force. Additional details will be published once available.

Treaty Changes (5)

Botswana-Malawi

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Tax Treaty between Botswana and Malawi Signed

On 15 March 2016, officials from Botswana and Malawi 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.

Jamaica-Sweden

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Protocol to the Tax Treaty between Jamaica and Sweden in Force

According to a recent update from the Swedish Ministry of Foreign Affairs, the protocol to the 1985 income tax treaty with Jamaica entered into force on 18 October 2013. The protocol, signed 4 December 2012, is the first to amend the treaty. It replaces Article 26 (Exchange of Information) to bring it in line with the OECD standard for information exchange, and replaces Article 28 (Excluded Companies) with a new Article 28 (Limitation of Benefits). The limitation of benefits provisions apply for companies of a Contracting State that derive income primarily from other states from banking, shipping, financing or insurance activities, or from being a headquarters, co-ordination centre or similar entity providing administrative services or other support.

The protocol generally applies from 1 January 2014, although the new exchange of information provisions apply from the date of its entry into force.

Philippines-Turkey

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Tax Treaty between the Philippines and Turkey has Entered into Force

The income tax treaty between the Philippines and Turkey entered into force on 11 January 2016. The treaty, signed 18 March 2009, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Philippine income taxes and stock transactions tax. It covers Turkish income tax, corporation tax and levies on those taxes.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services in a Contracting State through employees or other engaged personnel for a period or periods aggregating more than 6 months within any 12-month period.

Withholding Tax Rates

  • Dividends - 10% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise 15%
  • Interest - 10%
  • Royalties -
    • 10% for royalties for the use of, or the right to use, any copyright of literary, artistic or scientific work, any patent, trade mark, design or model, plan, secret formula or process, or from the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience; and
    • 15% for royalties for the use of, or the right to use, any cinematographic films and films or tapes for television or radio broadcasting

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 of a company or interest in a partnership or a trust, the property of which consists principally of 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.

Effective Date

The treaty applies from 1 January 2017.

Sweden-Belize-Saint Kitts and Nevi-St. Vincent

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Sweden's TIEAs with Belize, St. Kitts and Nevis, and St. Vincent and the Grenadines in Force

According to a recent update from the Swedish Ministry of Foreign Affairs, the tax information exchange agreements with Belize, St. Kitts and Nevis, and St. Vincent and the Grenadines entered into force as follows:

  • Belize - entered into force on 19 October 2014
  • St. Kitts and Nevis - entered into force on 31 December 2010
  • St. Vincent and the Grenadines - entered into force on 26 December 2010

The agreements are all the first of their kind between Sweden and the respective countries and are in line with the OECD standard for information exchange. They all generally apply from the date of their entry into force.

United Kingdom-Guernsey-Isle Of Man-Jersey

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United Kingdom Enters into Protocols Amending Tax Arrangements with Guernsey, Isle of Man and Jersey

On 16 March 2016, the United Kingdom entered into protocols through the exchange of letters that amend the 1952 tax arrangements with Guernsey, the 1955 tax arrangement with the Isle of Man and the 1952 tax arrangement with Jersey. The tax arrangements are amended to close a loophole that may have allowed non-UK resident property developers to avoid income tax or corporation tax in the UK in certain circumstances.

The protocols will enter into force after the ratification instruments are exchanged, and will apply retroactively from 16 March 2016.

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