Worldwide Tax News
Australian Parliament Passes Bill for GST on Low Value Imported Goods with Delay to 2018
On 21 June 2017, the Australian Parliament House of Representatives passed the Treasury Laws Amendment (GST Low Value Goods) Bill 2017, including amendments made by the Senate to delay the effective date of the new requirements from 1 July 2017 to 1 July 2018. The purpose of the Bill is to ensure that Australian GST is payable on supplies of low value imported goods (less than AUD 1,000) that are purchased by consumers in Australia. Once effective, an overseas supplier with turnover for GST purposes exceeding the AUD 75,000 registration threshold will be required to register and remit GST on its low value supplies. In certain cases, operators of electronic distribution platforms and redeliverers will also be held responsible for GST.
The Bill will be enacted when it receives Royal Assent.
Note - The change in effective date for low value goods has no impact on the new GST requirements for overseas suppliers of services and digital products to Australian consumers from 1 July 2017.
Bermuda Launches Tax Information Reporting Portal on FATCA, CRS, and CbC
The Bermuda government has announced the launch of a new Tax Information Reporting Portal on 16 June 2017 as part of steps being taken by the Ministry of Finance to ensure Bermuda is in compliance with the latest global tax cooperation standards. The Portal provides access to comply with UK FATCA (regarding the UK-U.S. IGA), as well as compliance with the OECD's automatic exchange of information regimes for the Common Reporting Standard (CRS) and Country-by-Country reporting.
Click the following link for the Bermuda government CRS page, which includes links to the portal and the enrollment form, as well as related agreements, regulations, and guidance.
China's Increased R&D Expense Super Deduction for SMEs and Increased Taxable Income Threshold for Reduced Corporate Tax Rate
China State Administration of Taxation has published Notice No. 18 of 2017 and interpretation on the increased super deduction for R&D expenses and Notice No. 23 of 2017 on the increased taxable income threshold for the reduced corporate tax rate for low-profit enterprises. Both measures were approved by the State Council in April 2017 (previous coverage).
The Super Deduction tax incentive has been available for several years and allows a 150% deduction of eligible R&D expenses. If the expenses are capitalized, 150% of the amortization may be deducted. From 1 January 2017 to 31 December 2019, the deduction is increased to 175% for eligible SMEs. An enterprise performing R&D activities may generally qualify for the increased Super Deduction if it is a registered resident enterprise in China (mainland), it has 500 or fewer employees, and both its annual sales and total assets do not exceed CNY 200 million. Other standard conditions for the Super Deduction also apply in relation to the increased deduction for SMEs, including those regarding eligible expenses, eligible industries, outsourced R&D, etc.
The taxable income threshold for the reduced 20% corporate tax rate for qualifying low-profit enterprise is increased from CNY 300,000 to CNY 500,000 from 1 January 2017 to 31 December 2019. Aside from meeting the threshold, an enterprise must meet the following conditions to qualify for the low-profit rate:
- 100 or less staff as an industrial enterprise with total assets not exceeding CNY 30 million, or
- 80 or less staff for all other enterprise types with total assets not exceeding CNY 10 million.
The increase in the threshold to CNY 500,000 also applies in relation to the 50% tax reduction for small businesses, i.e., qualifying low-profit enterprises are eligible for a 20% tax rate on 50% of their taxable income.
India Issues Rules on Repatriation of Excess Money for Secondary Transfer Pricing Adjustments
The Indian Central Board of Direct Taxes has issued Notification No. 52/2017, which sets out the repatriation time limit and interest rate rules in relation to secondary adjustments following a primary transfer pricing adjustment of a taxpayer's income that resulted in excess money in the hands of the associated enterprise. The rules apply to primary adjustments exceeding INR 10 million made in respect of the assessment year 2017-18 and later years (2016-17 financial year).
The time limit for repatriation of excess money is 90 days:
- From the return filing due date if the primary adjustment is made by the taxpayer on its own in its return of income;
- From the date of the order of assessing officer or the appellate authority, as the case may be, if the primary adjustment has been accepted by the taxpayer;
- From the return filing due date if the taxpayer has entered into an advance pricing agreement under section 92CD;
- From the return filing due date if the taxpayer has exercised the option as per the safe harbor rules under section 92CB; and
- From the return filing due date if an agreement has been made under the mutual agreement procedure of a tax treaty entered into under section 90 or 90A.
Any excess money not repatriated within the 90-day time limit as above is subject to interest at the following rates:
- International transaction denominated in India rupee: The one-year marginal cost of fund lending rate of the State Bank of India as on 1 April of the relevant previous year plus three hundred twenty five basis points (3.25%);
- International transaction denominated in foreign currency: The six-month London Interbank Offered Rate as on 30 September of the relevant previous year plus three hundred basis points (3.0%)
Click the following link for Notification No. 52/2017.
India GST Regime Confirmed from 1 July with Simplified Return for First Two Months
Following the latest GST Council meeting held 18 June 2017, India's Finance Minister Arun Jaitley confirmed that the country's new GST regime will be implemented 1 July 2017 as planned, but in order to ensure a smooth rollout of the new system, the submission of a simplified GST return on outward and inward supplies (GSTR-3B) will be allowed for the first two months. Taxpayers will still be required to submit the standard GST return on outward supplies (GSTR-1) for those two months, but with delayed deadlines. For subsequent months, the standard deadlines will apply.
As provided in a release from the Ministry of Finance, the deadlines for the first two months are as follows:
- GSTR-3B will be due 20 August and 20 September for July and August, respectively; and
- GSTR-1 will be due 5 September and 20 September for July and August, respectively.
The return on inward supplies (GSTR-2) for the two months is also due, but will be auto-populated. Further, late fees and penalties will not be imposed for the two-month interim period.
India's new GST regime involves several different return types. The standard returns and deadlines include:
- GSTR-1, which is the return on outward supplies made - due 10th of the following month:
- GSTR-2, which is a return on inward supplies received - due 15th of the following month;
- GSTR-3, which is a final monthly return partially generated based on GSTR-1 and GSTR-2 to determine the amount of GST due (or refund) - due 20th of the following month; and
- GSTR-9, which is an annual return - due 31 December following financial year.
There are also separate returns for non-residents, composition suppliers (scheme for small taxpayers), tax deducted at source, e-commerce operators, and others.
Returns are to be submitted electronically via the GST Common Portal which is managed by the Goods and Services Tax Network. Additional information can be found on the GST webpage of the Central Board of Excise and Customs.
Denmark Planning New Withholding Procedure for Dividends
The Danish Ministry of Taxation has announced plans for the introduction of a new withholding tax procedure for dividends that will effectively end the current refund practice. The new planned procedure is part of efforts to combat fraud.
Under the current procedure, dividends are generally subject to withholding at a rate of 27% and a refund must be requested for the difference between the withholding rate and a reduced rate under an applicable tax treaty. Refund request also required for difference from the standard final 22% rate on dividends introduced in 2016.
Under the new procedure, lower applicable rates may be applied directly at the time the dividends are distributed, provided that documentation is submitted confirming the eligibility of the non-resident shareholder. The new procedure is to be finalized in the fall of 2017, with banks reportedly responsible for ensuring the correct amount of tax is withheld at the time of payment.
New Zealand Consults on Proposals to Make Tax Simpler for Individuals
The New Zealand government launched a public consultation on proposals to make tax simpler for individuals that would reduce the number of people required to file tax returns.
The Government is seeking feedback on proposals set out in the discussion document Making tax simpler - Better administration of individuals’ income tax.
The main proposal is that fewer individuals, who receive income only from salary, wages, interest or dividends, would have to provide year-end income information to Inland Revenue.
Inland Revenue would automatically calculate and issue refunds or amounts of tax to pay using information received from employers and banks and other investment companies.
The proposals include:
- setting the threshold levels at which Inland Revenue should issue refunds or tax bills;
- direct crediting refunds to bank accounts;
- working with people throughout the year to suggest the right tax code for their circumstances;
- making it easier to claim tax credits for donations.
Feedback from the 2015 consultation document, Making tax simpler - A Government green paper on tax administration, was used to develop the proposals, which are part of the Government’s overall modernisation of the tax system.
For more information see the online forum at www.makingtaxsimpler.ird.govt.nz.
Consultation closes on Friday 28 July 2017.
Singapore Launches Public Consultation on Draft Income Tax (Amendment) Bill 2017
The Singapore Ministry of Finance has launched a public consultation on the draft Income Tax (Amendment) Bill 2017, which incorporates 34 proposed legislative amendments to the Income Tax Act, including changes announced in the 2017 Budget, changes regarding transfer pricing, and other amendments.
The budget measures include:
- Enhance and extend the corporate income tax rebate for year of assessment (YA) 2017 and YA 2018;
- Liberalize tax deduction for payments under cost sharing agreements for R&D projects;
- Extend the tax exemption on payments made to nonresident non-individuals for structured products offered by financial institutions;
- Extend the tax incentive schemes for infrastructure projects;
- Withdraw the tax deduction for computer donation scheme;
- Withdraw the Accelerated depreciation allowance for energy efficient equipment and technology scheme;
- Extend and refine the aircraft leasing scheme; and
- Grant a personal income tax rebate for resident individual taxpayers.
The transfer pricing measures include:
- Introduce (codify) mandatory transfer pricing documentation requirements and penalties for non-compliance (in line with existing guidelines) from YA 2019 for businesses with turnover above SGD 10 million;
- Clarify existing Comptroller powers to disregard the form where the substance of the transaction is inconsistent with the form of the transaction, and to introduce a surcharge for non-compliance with the arm’s length principle (5% of increase in income or reduction in allowance, deduction or loss); and
- Lift the statutory time limit of four years to raise additional assessments for cases under the Mutual Agreement Procedures (MAP) process to give taxpayers certainty that agreements reached will be given full effect.
Other measures include:
- Enable the Minister for Finance to make an order to modify the provisions of a tax treaty with respect to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting;
- Introduce a tax framework for companies which re-domicile into Singapore that sets out the tax treatment for transferred in assets, allowance of tax credit to relieve double taxation, allowance of deduction for pre-commencement expenses, etc.;
- Extend the concessionary income tax rate of 10% on distributions made by the trustee of a real estate investment trust to qualifying non-resident non-individual investors;
- Refine/clarify various industry schemes; and
- Repeal various obsolete provisions.
Bangladesh Approves Pending Tax Treaties with Bahrain and Kuwait
On 19 June 2017, the Bangladesh Council of Ministers approved the ratification of the pending income tax treaties with Bahrain and Kuwait. The tax treaty with Bahrain, signed 22 December 2015, is the first of its kind between the two countries and will enter into force once the ratification instruments are exchanged (previous coverage). The tax treaty with Kuwait, signed 19 February 2014, is also the first of its kind between the two countries and will enter into force once the ratification instruments are exchanged (previous coverage).
Barbados Looking to Sign TIEA and Possible Tax Treaty with Germany
According to recent reports, officials from Barbados and Germany met 15 June 2017 to discuss bilateral and international issues, including Barbados' intent to sign a tax information exchange agreement, as well as the possibility of an income tax treaty. Any resulting agreement or treaty would be the first of their kind between the two countries, and would need to be finalized, signed, and ratified before entering into force.
SSA between Croatia and South Korea to be Negotiated
On 1 June 2017, the Croatian government approved the negotiation of a social security agreement with South Korea. Any resulting agreement would be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.