Worldwide Tax News
On 18 August 2015, Belgium published in the Official Gazette the Program Law Bill recently approved by the Chamber of Representatives. The Bill includes measures to extend the availability of the liquidation reserve for SMEs, introduce a transparency tax on deemed income, introduce new start-up incentives for the digital sector, and others. Click the following link for (previous coverage of the Bill).
El Salvador's National Assembly has recently passed amendments to the country's Tourism Law to extend the tourism promotion investment incentive for five years.
Under the tourist promotion regime, El Salvador provides a number of incentives for investment in new tourism projects located in specified tourist areas declared by the government. The benefits include:
- Corporate income tax exemption for 10 years;
- Import duties exemption on goods, machinery, equipment, vehicles, etc. used in the project;
- Exemption from real estate acquisition taxes when used for the project; and
- 5-year reduction of municipal tax by 50%
In order to enjoy the incentives the investment must equal at least USD 25,000, and 5% of profits during the exemption period must be contributed to the government-administered tourism promotion fund.
The tax reform measures adopted as part of Greece's third bailout program under its agreement with the EU were gazetted on 14 August 2015, as Law 4336/2015. Details of the main measures are summarized as follows.
For the tax year beginning on or after 1 January 2016, the advance corporate tax payment for partnerships, non-profit entities and certain other entities is increased to 100%. As a transition, for the 2014 tax year, a 55% advance payment applies and for the 2015 tax year, a 75% advance payment applies. For corporations, advance payment was already increased from 80% to 100% (previous coverage).
In addition, the number of advance corporate tax payments is reduced to five equal monthly installments for tax returns filed on or after 14 August 2015.
The 26% tax prepayment on certain cross border transactions was repealed (previous coverage). As a result, the previous rule limiting the deductibility of expenses paid to non-cooperative jurisdiction or jurisdictions with preferential tax regimes is reinstated. Under the rule, a taxpayer must prove such transactions do not have the purpose of tax avoidance or evasion. If not proven, the expense is non-deductible.
Other changes include that final adjustments for deductible input VAT are to be made through any periodic return within 4 months following the end of the tax year; additional conditions are set for the VAT exemption for educational services; and the reduced annual interest rates under the 2014 and 2015 tax leniency programs have been increased to 5.05%.
On 21 August 2015, the UK Chancellor of the Exchequer George Osborne announced that the EU Commission has given State Aid approval for the planned increase in the UK's film industry tax relief. The increased relief allows for a tax credit equal to 25% of all qualifying expenditure. Under the prior rules, the 25% credit was limited to expenditure up to GBP 20 million with the excess eligible for a 20% credit. The full 25% credit will apply retroactively from April 2015.
Click the following link for the full announcement on the GOV.UK website.
The U.S. IRS has recently published ten international practice units, including:
- Short Term Loan Exclusion from United States Property - 21 August 2015;
- Bona Fide Residence Test for Purposes of Qualifying for IRC § 911 Tax Benefits - 21 August 2015;
- U.S. Persons Residing Abroad Claiming Additional Child Tax Credit - 21 August 2015;
- Calculating Foreign Earned Income Exclusion -Self-Employed Individual - 21 August 2015;
- Sourcing of Fringe Benefits for FTC Limitation - 21 August 2015;
- U.S. Territories – Determining Bona Fide Residency Status - 21 August 2015;
- Sourcing of Salary and Compensation - 21 August 2015;
- Calculating Foreign Earned Income Exclusion -Employee - 21 August 2015;
- Payee Documentation for Treaty Benefits - 21 August 2015; and
- Effectively Connected Income (ECI) - 21 August 2015.
International practice units are developed by the Large Business and International Division of the IRS to provide staff with explanations of general international tax concepts as well as information about specific transaction types. They are not an official pronouncement of law, and cannot be used, cited or relied upon as such.
Click the following link for the International Practice Units page on the IRS website.
On 19 August 2015, the Brazilian Senate approved Law Project 57/2015 (PLC 57), which increases the rates of the social security contribution on gross revenue (CPRB). CPRB was introduced in 2011 to replace the standard social security contribution (INSS) based on payroll for businesses in certain labor-intensive service and industrial sectors. It now applies for 56 different sectors.
The current rate of CPRB levied varies from 1% to 2.5% on monthly gross revenue depending on the business type. Under PLC 57, the rates will generally be increased as follows:
- Businesses subject to a 1% rate will have the rate increased to 2%;
- Businesses subject to a 2% rate will have the rate increased to 3%; and
- Businesses subject to a 2.5% rate will have the rate increased to 4.5%
However, certain business types subject to a 1% rate will have the rate increased to 1.5%, including:
- News, radio, and television;
- Cargo transportation,
- Air and sea passenger transportation,
- Port operations; and
- Shoe and textile manufacturing.
In addition, a few business types will not have the rate changed at all, including businesses in the meat, fish, and poultry industries, which will remain subject to a 1% rate.
The new rates will apply 90 days after PLC 57 is enacted.
On 20 August 2015, the Romanian parliament confirmed a reduction in the standard VAT rate from 24% to 20% effective 1 January 2016, and a further reduction to 19% in 2017. The country had planned to cut the rate to 19% in 2016, but decided to cut the rate in two stages following opposition from the EU Commission and IMF concerning the effect of the rate cut on Romania's deficit.
Taiwan's ruling party, the Kuomintang party, has recently proposed reforms to the country's securities transactions tax. Currently, Taiwan levies a securities transactions tax of 0.3% for company shares and 0.1% for corporate bonds and certain other government approved securities, with some exemptions. From 1 January 2015, an optional 15% capital gains tax (CGT) in lieu of the transactions tax was to be introduced for active traders with transactions exceeding TWD 1 billion, but this was delayed to 1 January 2018.
Under the recently proposed changes, the 0.3% rate would be reduced to 0.25% and active traders with transactions exceeding TWD 1 billion would have the option for the 15% CGT or an additional 0.5% securities transactions tax. In addition, there would be no CGT exemption for foreign investors.
A formal legislative proposal for the reforms is expected to be submitted to Taiwan's legislature before the end of the year.
According to an announcement from the Serbian government on 20 August 2015, the country has approved the signing of a draft income tax treaty with Kazakhstan. The treaty will be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.