Worldwide Tax News
Greece has published the tax reform amendments recently adopted by parliament as part of the conditions that have been set for the extension of Greece's bailout. The main changes are summarized as follows.
The corporate tax rate is increased from 26% to 29% for tax years beginning on or after 1 January 2015, and 100% advance payment of tax is now required (previously 80%).
A number of changes are made regarding VAT, including:
- The super reduced VAT rate is reduced from 6.5% to 6%, and while it will continue to apply to pharmaceutical products, books, newspapers and magazines, from 1 October 2015 it will no longer apply for hotel accommodation services (from that date the rate for accommodation services will be 13%)
- A number of goods and services are recategorized as being subject to the standard 23% VAT rate instead of the reduced 13% rate, including:
- Packaged foodstuffs, sugar, salt, coffee, tea, spices, fats, flowers and certain plants, cocoa, prepared or processed meat and fish, and animals; and
- Passenger transportation services, restaurant and catering services, tickets for cinemas, concerts, sporting events, etc., and non-exempt medical and dental services; and
- The reduced rates applicable for certain Aegean islands (16%, 9% and 4%) will be abolished in three stages: from 1 October 2015 for more developed islands; from 1 June 2016 for less developed islands; and from 31 December 2016 for remote islands - details of the implementation will be provided by Ministerial Decision.
Aside from the specific dates mentioned above, the changes apply for invoices issued on or after 20 July 2015, regardless of when the transaction took place.
In addition, a new anti-avoidance measure will be put in place where payments must be made through the banking system for B2B transactions exceeding EUR 3,000 and retails sales exceeding EUR 1,500 and the VAT must be withheld and remitted directly to the Greek State by the bank. Guidelines will be issued on the implementation of this measure.
From 16 July 2015, the general insurance premium tax (IPT) rate is increased from 10% to 15%, while the rate for fire insurance is 20% and the rate for life insurance is 4%. In addition, all IPT exemptions are repealed, except for life insurance contracts with a term of at least 10 years.
The luxury tax rate is increased from 10% to 13% for "luxury assets" reported in 2015 and subsequent years.
The special solidarity tax rates on individual income are set as follows:
- EUR 12,001 - 20,000: 0.7%
- EUR 20,001 - 30,000: 1.4%
- EUR 30,001 - 50,000: 2%
- EUR 50,001 - 100,000: 4%
- EUR 100,001 - 500,000: 6%
- EUR 500,001 and above: 8%
The new rates apply for income earned from 1 January 2015.
Spain has published Royal Decree 634/2015, which includes new transfer pricing documentation requirements including the implementation of the country-by-country (CbC) reporting requirement developed as part of Action 13 of the OECD BEPS Project. The new requirements apply for fiscal years beginning on or after 1 January 2016.
The CbC reporting requirement applies for Spanish resident entities that are the head of a corporate group and are not held under any other resident or non-resident entity. The threshold for reporting follows the OECD recommendation of consolidated group revenue of EUR 750 million in the previous fiscal year.
However, the reporting requirement may also apply for Spanish entities and permanent establishments (PE) held by a non-resident entity if:
- The Spanish entity or PE has been appointed to file the CbC report (surrogate parent entity rule);
- The country of residence of the parent entity has not implemented the CbC reporting requirements;
- The country of residence of the parent entity has not signed an information exchange agreement that meets the conditions to exchange the CbC report with Spain; or
- The country of residence of the parent entity has systematically failed to comply with the CbC reporting requirements.
The CbC report must be filed within 12 months of the end of the fiscal year concerned using a specific form that will be published by the Spanish tax authorities.
Spanish entities not required to report, are required to notify the Spanish tax authorities of the name and residence of the group company that is filing a CbC report. This notification must be given before the end of the reporting fiscal year.
The CbC report must include information for each country in which the group operates on a per country aggregate basis, including:
- Total revenue, separated by revenue from related and unrelated parties;
- Accounting profits before tax;
- Tax effectively paid and tax accrued, including withholding taxes;
- Share capital and equity at the end of the fiscal year;
- Average number of employees;
- Tangible assets and real estate investments;
- A list of entities and permanent establishments in each country including the main activities of each; and
- Any other information deemed relevant and explanations as needed.
In preparing the CbC report for Spain, the amounts must be denominated in Euro.
The master file (group level) and local file (taxpayer level) information reporting requirements are also amended in line with the OECD BEPS recommendations. In general, this means the level of detail for each is increased.
For the master file, additional information required includes:
- A description of the organizational structure and business activities of the group, including a description of the primary geographic markets in which it operates, its primary sources of revenue and its supply chain activities representing at least 10% of total group revenue;
- A description of business restructuring transactions, relevant acquisitions and divestments occurring during the fiscal year;
- A description of the intangible assets of the group, including a general description of the group's overall strategy for intangible assets’ development, ownership and exploitation, and any significant transfers of intangible assets with details of the parties involved and amounts paid;
- A descriptions of the group's research and development (R&D) activities, including the location of the main facilities where R&D activities are carried out, and identification of the R&D activity management;
- Details of the financing activities of the group, including an overall description of the group’s funding structure, details of the group entities carrying out the main financing activities and agreements with unrelated parties; and
- A list and description of any advance pricing agreements in force and any other relevant tax rulings affecting the allocation of income to specific jurisdictions.
An exemption from filing the master file applies for entities in groups with net revenue below EUR 45 million in the preceding year.
For the local file, additional information required includes:
- The management structure, including an organizational chart, the reporting structure, and the people or entities receiving reports and their tax residence;
- A description of the activities of the taxpayer and its business strategy;
- A description of any intangible assets’ restructuring, assignment or transfer operations the taxpayer has been involved in;
- An overview of main competitors;
- A reconciliation of data applied in the transfer pricing policy with annual financial statements; and
- Financial data of comparables and their source.
Simplified local file requirements apply for entities in groups with net revenue below EUR 45 million in the preceding year. The information required in the simplified local file includes:
- Details of the taxpayer and the related parties with which it carries out transactions;
- A description of related party transactions including the amounts;
- The valuation method used for the transactions; and
- The comparables used and the value or range of values derived from their use.
For fiscal years beginning before 1 January 2016, Spain's current TP documentation requirements continue to apply.
On 16 July 2015, the Irish Department of Finance published the Finance (Tax Appeals) Bill 2015, which will establish a new Tax Appeal Commission to handle taxpayer appeals of Revenue decisions. According to a press release concerning the bill, the objective of the change is "to improve the administration of the tax system, and provide enhanced arrangements for an independent, efficient, well-defined, clear and transparent system for appeals relating to decisions of the Revenue Commissioners, while delivering value for money and increased certainty for both taxpayers and the State"
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The date for the implementation of the bill has not been set.
On 19 July 2015, officials from Cape Verde and Guinea-Bissau 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.
The tax information exchange agreement between Indonesia and Guernsey entered into force on 22 September 2014. The agreement, signed 27 April 2011, is the first of its kind between the two jurisdictions and is in line with the OECD standard for information exchange. It generally applies from the date of its entry into force.
Kyrgyzstan and Turkmenistan have reportedly concluded tax treaty negotiations with officials of the countries initialing a tax treaty on 17 July 2015. The treaty will be the first of its kind between the two countries, and must be signed and ratified before entering into force.