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Worldwide Tax News

Approved Changes (1)

Mexico

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Mexico Publishes Tax Amendments

The government of Mexico on 18 July 2017 adopted a number of amendments to the Miscellaneous Tax Resolution for 2017. These amendments were published in the Official Gazette. Among the amendments, important provisions include:  

Repatriation of Capital Provisions

The amendments incorporate the provisions of the Presidential decree announced in January 2017 to allow Mexican residents to repatriate certain undisclosed offshore assets and pay only an 8 percent tax, with certain limits on how those assets could be used -- such as for research and development expenditures, etc. -- to qualify for the reduced tax rate.  

Separately, the deadline for taking part in the repatriation program was extended from 19 July 2017 to 19 October 2017.

Tax Mailbox

The amendments allows a taxpayer to communicate electronically as a means of contact through either the electronic mail ("email") or through a mobile number for sending short text messages.

VAT Refund on Certain Articles Placed Aboard Aircraft for Use and Consumption In-Flight

The amendments provide that airlines of the United States and of Mexico that qualify for Treaty benefits, may request a refund of VAT paid for certain "aircraft supplies" - food, drink, liquor, tobacco intended for sale to passengers;  fuel and lubricants, advertising and publicity materials that are used in international services.

The general effective date of these amendments is 19 July 2017.

Proposed Changes (1)

South Africa

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South Africa Proposes Two Draft Tax Bills for Public Comment

The South African National Treasury and the South African Revenue Service (SARS) have published two draft tax bills - a monetary bill (the Draft Taxation Laws Amendment Bill or "TLAB") that includes a number of measures with a focus on national taxes, levies, duties and surcharges, and an ordinary bill (the Draft Tax Administration Laws Amendment Bill or "TALAB") dealing with administrative tax issues:

The main tax proposals contained in the TLAB include:

  • A levy on bargaining councils to address non-compliance
  • A higher fringe benefit exemption for bursaries to learners with disabilities
  • Removing the foreign employment income tax exemption in respect of South African residents
  • Addressing the circumvention of anti-avoidance rules dealing with share buy backs, dividend stripping and contributed tax capital
  • Strengthening anti-avoidance rules relating to mining environmental rehabilitation funds
  • Extending the application of controlled foreign company rules to interposed foreign trusts and foreign foundations
  • Changes in the tax treatment of banks due to IFRS9
  • Tax amendments due to the SAM framework for long term insurers

The main tax proposals contained in the TALAB include:

  • Assisting micro businesses transitioning into the small business corporation system
  • Employees’ tax and reimbursement of travel expenses
  • Application of the cap on deductible retirement fund contributions
  • Taxation of interest payable in respect of normal tax by SARS
  • Phased implementation of Tax Administration Act, 2011, interest rules by tax type
  • Transitional arrangements regarding processes before commencement of the new Customs Acts

Click the following link for the public announcement of the two tax bills, which will be open for public comment through late August 2017.

Treaty Changes (3)

Moldova-Belgium

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Protocol to Tax Treaty between Moldova and Belgium Approved by Moldovan Parliament

According to information on the Parliament's website, on 18 July 2017 the Moldovan Parliament approved a Protocol to the Tax Treaty with Belgium. The Moldova - Belgium treaty was signed in 2008 but never ratified. Moldova will complete the ratification process when the President signs the treaty. The protocol updates the treaty's exchange of information provisions to help the tax authorities of both countries curb tax evasion and it revises the competent authority in both countries. It is the first protocol to amend the treaty and will enter into force after the ratification instruments are exchanged.

Montenegro-Portugal

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Montenegro Approves Pending Tax Treaty with Portugal

The income tax treaty between Montenegro and Portugal was approved on 30 June 2017 by the Montenegro Government. It was sent to Parliament on 11 July 2017 for Parliament's approval; once approved it then will be sent to the President for signature and Moldova will complete the ratification process. (Portugal completed ratification previously). The treaty was originally signed on 12 July 2016 and is the first of its kind between the two jurisdictions.

Withholding Tax Rates

  • Dividends - 5% for companies with a > 5% beneficial ownership; otherwise 10%
  • Interest - 10%
  • Royalties - 5% for literary, artistic, scientific works and computer software; 10% for use of patent or trademark

Double Taxation Relief

Both jurisdictions apply the credit method for the elimination of double taxation.

Entry into Force and Effect

The treaty will enter into force 30 days after ratification is complete. It will apply beginning 1 January of the year following ratification.

Netherlands-Belgium

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Dutch Tribunal Clarifies How to Apply 183-Day Test in Determining Tax Residence Under the Dutch-Belgium Treaty

The Dutch Supreme Court issued a decision on 19 July 2017 finding that a Belgian employee of a Belgian company who was resident in the Netherlands for 181 work days but more than 183 total days when counting weekends, holidays, personal days etc., met the 183-day physical presence test and that the Belgian employee's salary was subject to Dutch personal income tax. To determine which days to count for the 183-day rule-- and because the treaty does not define "presence"--the Supreme Court looked to the Commentary to the OECD Model Convention which states that the days of physical presence include both days of employment and days related to some extent to employment, such as Saturdays, Sundays holidays and free days. Accordingly, in concluding that the 183-day physical presence test was met, the Supreme Court counted all the days in which the employee was physically present in the Netherlands - whether for business or personal reasons.

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