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Approved Changes (4)

Belgium

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Belgian Parliament Adopts Legislation to Implement EU Parent-Subsidiary Directive Amendments and Introduce Exit Tax Payment Options

On 17 November, the Belgian Parliament adopted legislation that implements the following measures:

  • Transposes amendments to the EU Parent-Subsidiary Directive (2011/96/EU) into domestic law regarding:
    • Hybrid-mismatches - The dividends-received deduction will not apply if the dividends are deductible for the paying company; and
    • General anti-abuse provision - No dividends-received deduction or exemption from withholding tax will be available if in relation to artificial legal acts entered into for the primary purpose of obtaining the benefit and not for valid business reasons that reflect economic reality.
  • Partially transposes the EU Anti-Tax Avoidance Directive (2016/1164/EU) by introducing the option to pay exit tax at once or in installments over five years, provided that the assets are maintained within a company or establishment located in another EU or EEA Member State that has a tax treaty with Belgium that provides for mutual assistance in the recovery of taxes.

The effective dates of the measures will depend on the date the Program Law is published in the Official Gazette as follows:

  • The restriction in relation to the dividend-received deduction is effective for income paid or attributed as from 1 January 2016, but does not apply for amounts paid or attributed during a financial year that closes before the first day of the month following the date the Program Law is published;
  • The restriction in relation to the withholding tax exemption applies for amounts paid or attributed on or after the first day of the month following the date the law is published; and
  • The option to pay exit tax in installments applies from assessment year 2017 for transactions made on or after the date the law is published.

Click the following link for the legislation (Dutch and French language).

Update - The legislation was published in the Official Gazette on 8 December 2016. As such, the restriction in relation to the dividend-received deduction does not apply for amounts paid or attributed during a financial year that closes before 1 January 2017, and the restriction in relation to the withholding tax exemption applies for amounts paid or attributed on or after 1 January 2017.

Denmark

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Denmark Publishes Updated Rate and Threshold Tables for 2017

The Danish Ministry of Taxation has published updated rate and threshold tables for individual and corporate tax purposes. The tables cover 2010 to 2017. For individual income tax purposes, changes between 2016 and 2017 are mainly limited to an increase in top tax bracket threshold to DKK 479,600 as well as increases in certain allowances and credits. For corporate tax purposes, the only change is an increase in the carried forward loss offset limit to DKK 8.025 million in taxable income (for taxable income in excess of this amount the 60% offset limit applies).

Click the following links for the tax rate table (Danish language) and the threshold table (Danish language).

Slovenia

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Slovenia Transposes EU Directive on Anti-Money Laundering including Beneficial Ownership Registry

The law transposing Directive (EU) 2015/849 into Slovenia's domestic law was published on 4 November 2016 and entered into force on 19 November. The Directive includes new anti-money laundering rules including the requirement that all EU Member States maintain a central register of information on beneficial ownership that must be accessible to competent authorities, financial intelligence units, obliged entities such as banks, and any other person or organization that can demonstrate a legitimate interest (previous coverage). Beneficial ownership information is to be added to the new registry within 14 months of the law's entry into force.

Click the following link for the Law on Prevention of Money Laundering and Terrorist Financing (Slovenian language).

United Kingdom

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UK Publishes Guide on GAAR and Provisional Counteraction Notices

UK HMRC has published guidance on the general anti-abuse rule (GAAR) and provisional counteraction notices. The guidance provides an overview of the GAAR and when tax arrangement are considered abusive, as well as an overview of provisional counteraction notices on adjustments HMRC intends to make to counteract tax advantages and the actions taxpayers can take.

Click the following link for Compliance checks: general anti-abuse rule and provisional counteraction notices - CC/FS34.

Proposed Changes (1)

Russia

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Russian Tax Code Amendments Include Loss Carry Forward Changes.

Draft legislation amending Russia's Tax Code was passed by the State Duma (lower house of parliament) on 18 November 2016 and is now before the Federation Council (upper house). One of the main amendments is a change in the treatment of carried forward losses. Currently, losses may be carried forward for up to 10 years with no limit on the amount of taxable income that can be offset in a particular year. With the amendments, losses may be carried forward indefinitely, but may only offset up to 50% of the taxpayer’s taxable income per year. The change would also affect consolidated groups.

Other amendments in the draft legislation include increasing the late payment penalty when more than 30 days late, extending the value added tax zero rate for railway transportation to 2030 and introducing the zero rate for related services, increasing the mineral extraction tax, and increasing certain excise duties.

Subject to approval by the Federation Council, the amendments will generally apply from 1 January 2017.

Treaty Changes (5)

Armenia-Serbia

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Tax Treaty between Armenia and Serbia has Entered into Force

The income and capital tax treaty between Armenia and Serbia reportedly entered into force on 3 November 2016. The treaty, signed 10 March 2014, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Armenian profit tax, income tax, and property tax. It covers Serbian corporate income tax, personal income tax, and tax on capital.

Withholding Tax Rates

  • Dividends - 8%
  • Interest - 8%
  • Royalties - 8%

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 the capital stock of a company the property of which consists directly or indirectly 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. A tax sparing credit is also provided where tax paid in a Contracting State will be deemed to include tax that is otherwise payable but has been reduced or waived in that State under its legal provisions for tax incentives.

Effective Date

The treaty applies from 1 January 2017.

Egypt-Bahrain

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Egypt Approves New Tax Treaty with Bahrain

On 15 November 2016, the Egyptian parliament approved the ratification of the pending income tax treaty with Bahrain. The treaty, signed 26 April 2016, will enter into force after the ratification instruments are exchanged, and once in force and effective, will replace the 1997 tax treaty between the two countries.

Details of the treaty will be published once available.

Nigeria-Singapore

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Nigeria to Sign Tax Treaty with Singapore

On 16 November 2016, the Nigerian government approved the signature of an income tax treaty with Singapore. Any resulting treaty would be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.

Spain-Estonia

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Spain Confirms Effect of MFN Clause in Tax Treaty with Estonia

On 18 November 2016, Spain's Ministry of Finance published the letter sent to the Estonian Ministry of Finance concerning the effect of the MFN clause in the 2003 Estonia-Spain tax treaty as triggered by the 2014 Estonia-Switzerland tax treaty (previous coverage). The letter confirms the following changes:

  • The duration of the period after which a building site, construction or installation project, or a related supervisory activity will constitute a permanent establishment is extended from 9 months to 12 months;
  • Interest payments are taxable only in the recipients State of residence (i.e. withholding exemption); and
  • Royalty payments are taxable only in the recipients State of residence (i.e. withholding exemption) and the use of, or the right to use, industrial, commercial, or scientific equipment is excluded from the definition of royalties.

The changes are effective from 1 January 2016.

Switzerland-Brazil-Mexico-Uruguay

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Switzerland Signs Joint Declarations on the Automatic Exchange of Financial Account Information with Brazil, Mexico, and Uruguay

On 18 November 2016, Switzerland signed joint declarations on the automatic exchange of financial account information on a reciprocal basis with Brazil, Mexico, and Uruguay. The information exchange will be carried out based on the OECD Common Reporting Standard (CRS). Switzerland and the respective countries intend to start collecting data in 2018 and to exchange it from 2019.

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