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Worldwide Tax News

Approved Changes (3)

Ireland

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Ireland Revenue Publishes Updated Research & Development Tax Credit Guidelines

On 17 April 2015, Ireland Revenue published an updated version of the Research & Development Tax Credit Guidelines. The credit is equal to 25% of all qualifying expenditure for R&D activities undertaken within the EEA by companies subject to Irish tax. Previously a limit applied where only the amount of qualifying expenditure exceeding a 2003 base year expenditure amount was eligible, but this was abolished with effect from 1 January 2015.

The R&D tax credit guidelines cover:

  • The general scheme, including basic requirement and the calculation of the credit;
  • Qualifying R&D activities;
  • Qualifying expenditure;
  • Capital expenditure;
  • Subcontracting of R&D activity;
  • Group expenditure on R&D;
  • Requirements for a valid claim; and
  • Payments to key employees

Click the following link for a full copy of the R&D tax credit guidelines.

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OECD BEPS Project Update via Live Webcast on 8 June

On 8 June 2015, the OECD will provide an update on the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project via a live webcast. Senior members from the OECD's Centre for Tax Policy and Administration will cover:

  • A progress report on the BEPS deliverables;
  • The discussion drafts and public consultations;
  • The engagement and input of developing countries; and
  • The schedule for the release of the finalized BEPS package

The webcast will be begin 3:00PM CET (Paris time), and is accessible via http://oecd.streamakaci.com/beps/ (free account registration required). Specific questions may be submitted in advance by email to CTP.BEPS@oecd.org.

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Peru Publishes Decree on a VAT Exemption for Certain Services and Goods Supplied by Non-Residents

Peru published Supreme Decree No. 065-2015-EF in its Official Gazette on 26 March 2015. The decree sets out the exemptions from VAT for certain services provided by non-residents and the import of certain goods.

Services VAT Exemption

Services rendered by a non-resident in Peru will be exempt from VAT if the remuneration for the service is included in the customs value of imported tangible goods and the goods are subject to VAT.

Imported Goods VAT Exemption

The import of tangible goods will be exempt from VAT if included as part of a lump-sum and turn-key construction contract, where the construction services are provided by a non-resident, the services are subject to VAT, and the customs value of the goods is part of the remuneration for those services.

Claiming the VAT Exemption

In order to claim the VAT exemption, a minimum amount of information must be communicated to the tax authorities, including details of:

  • The taxpayer, including name, and taxpayer registration number;
  • The non-resident service provider/contractor, including name, country of residence, and address;
  • The goods being imported, including description, value, and quantity; and
  • The services provided and/or contract, including description and value assigned to the services, engineering work, construction work, etc. as applicable

The Decree enters into force 30 working days following the date it was published in the Official Gazette.

Treaty Changes (3)

Bahamas-Czech Rep

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TIEA between the Bahamas and the Czech Republic has Entered into Force

The tax information exchange agreement between the Bahamas and the Czech Republic reportedly entered into force on 2 April 2015. The agreement, signed 6 March 2014, is the first of its kind between the two countries and is in line with the OECD standard for information exchange.

The agreement applies for criminal tax matters from the date of its entry into force for all tax periods beginning on or after 1 January 2004. For other matters it applies for tax period beginning on or after 1 January 2016.

Ireland-Zambia

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New Tax Treaty between Ireland and Zambia Signed

On 31 March 2015, officials from Ireland and Zambia signed an income and capital tax treaty. Once in force and effective, the treaty will replace the 1971 income tax treaty between the two countries, which is currently in force.

Taxes Covered

The treaty covers Irish income tax, universal social charge, corporation tax and capital gains tax. It covers Zambian income tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days in any 12-month period.

Withholding Tax Rates

  • Dividends - 7.5%
  • Interest - 10%
  • Royalties - 8% for royalties paid in respect of any copyright of scientific work, any patent, trade mark, design or model, plan, secret formula or process or information concerning industrial, commercial or scientific experience; otherwise 10%

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 or an interest in a partnership or trust directly or indirectly deriving more than 50% of their value from immovable property situated in the other State (an exemption applies for shares listed on a recognized stock exchange)

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 generally apply the credit method for the elimination of double taxation.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.

The 1971 income tax treaty between the Ireland and Zambia will cease to have effect on the dates on which the new treaty becomes effective.

Rwanda-Barbados

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Rwanda Approves Tax Treaty with Barbados

On 16 April 2015, the Rwandan Senate approved the law for the ratification of the pending income tax treaty with Barbados. The treaty, signed 22 December 2014, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Barbados income tax and corporation tax, and covers Rwandan personal income tax, corporate income tax, and the tax on rent of immovable property.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days in any 12-month period.

Withholding Tax Rates

  • Dividends - 7.5%
  • Interest - 10%
  • Royalties - 0% for royalties paid in respect of copyrights for the use of, or the right to use any literary, artistic or scientific work; otherwise 10%
  • Management or professional fees for services of a technical, managerial, professional or consultancy nature - 15%

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; and
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment 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 provision is also included for a tax sparing credit for tax that would otherwise be payable but has been reduced or exempted under laws which establish schemes for the promotion of economic development in a Contracting State. Both Contracting States must mutually agree on which schemes qualify for the sparing credit.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.

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