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Approved Changes (8)

Algeria

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Algeria New Investment Tax Incentives

Algeria has introduced a number of tax incentives for investments related to the production of goods or supply of services. The incentives are introduced through amendments to the Investment Act published in the Official Gazette on 3 August 2016 and apply for investments in newly established projects (new entities), as well as investments to extend or renovate existing projects. The available incentives are broken down into the investment phase and the operational phase of a project as follows.

Investment Phase

  • Customs duties exemption on equipment needed for the investment project;
  • Value added tax (VAT) exemption on goods and services acquired for the project;
  • Registration duties exemption on immovable property acquired for the project, plus a 10-year property tax exemption beginning from the date the immovable property is acquired;
  • Registration duties exemption on documentation related to the establishment of a project and capital increases; and
  • Possible infrastructure cost sharing with the government for investments in developing areas.

Operational Phase

  • 3-year corporate tax and vocational activities tax holiday beginning from the documented date operations begin;
  • Possible extension up to a 5-year tax holiday if the project creates more than 100 permanent jobs in the first year of operation; and
  • Possible extension up to a 10-year tax holiday plus customs duties and VAT relief for projects considered to have a national interest where an investment agreement has been signed with the government.

In order to qualify, an investor must be registered with the National Agency of Investment Development. If an investor would be eligible for other incentives, the investor may choose the most beneficial incentive for a particular tax type. If amendments are made to the incentives in the future, the amendments will not apply retroactively, unless an investor elects for retroactive application.

Australia

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Australia Publishes Voluntary Tax Transparency Code

On 23 August 2016, the Australia Taxation Office (ATO) published the tax transparency code (TTC) that contains a set of principles and minimum standards to guide medium and large businesses on public disclosure of tax information. Medium businesses are defined as those with aggregated Australian turnover of at least AUD 100 million, and large business are those with aggregated Australian turnover of at least AUD 500 million.

Although voluntary, the ATO encourages businesses to adopt the TTC to enhance the community’s understanding of their compliance with Australia’s tax laws. This includes entities treated as companies for Australian tax purposes, and foreign multinationals with operations in Australia.

The information to be disclosed includes two parts:

  • Part A - recommended for both medium and large businesses:
    • A reconciliation of accounting profit to tax expense and to income tax paid or income tax payable;
    • Identification of material temporary and non-temporary differences; and
    • Accounting effective company tax rates for Australian and global operations (pursuant to AASB guidance)
  • Part B - recommended just for large businesses:
    • Approach to tax strategy and governance;
    • Tax contribution summary for corporate taxes paid; and
    • Information about international related party dealings

It is recommended that the TTC be adopted for financial years ending after the date the Board of Taxation issued its final TTC report, 3 May 2016. Once a business makes its TTC report available publically on its website, the ATO is to be notified and the report will be made available on data.gov.au.

For additional information, click the following links for the Voluntary Tax Transparency Code page on the ATO website and the final TTC report from the Board of Taxation.

Belgium

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Belgium Harmonized Bank Tax in Force

On 21 August 2016, the Belgian legislation introducing a harmonized bank tax entered into force. The bank tax replaces several prior taxes, including the annual taxes on  credit institutions, collective investments, and credit and insurance companies, as well the deduction limits for certain losses and the financial stability contribution for banks.

For 2016, the bank tax is due by 15 November and applies at a rate of 0.13231% on the amount of debt held towards clients as of 31 December 2015, with the amount due reduced by the amounts already paid under the prior taxes. For future years, the bank tax rate will be adjusted annually to reach a predetermined budget amount.

Chile-Moldova-United Kingdom

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Chile and Moldova Commit to Exchange of Beneficial Ownership Information

According to a recent update from UK HM Treasury, Chile and Moldova have committed to the initiative for the automatic exchange of beneficial ownership information, which was originally proposed by Finance Ministers from France, Germany, Italy, Spain, and the UK (G5) in April (previous coverage). To date, 45 jurisdictions have committed to exchange beneficial ownership information, although a global standard must still be developed and implemented before exchanges can begin.

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OECD Publishes Comments Received on Conforming Amendments to Chapter IX of the Transfer Pricing Guidelines

On 24 August 2016, the OECD published the comments received on a document for public review on conforming amendments to Chapter IX, "Transfer Pricing Aspects of Business Restructurings", of the Transfer Pricing Guidelines as agreed by Working Party No. 6 of the Committee on Fiscal Affairs. The amendments mainly result from changes to the Guidelines under BEPS Actions 8-10 (Aligning Transfer Pricing Outcomes with Value Creation) and Action 13 (Transfer Pricing Documentation and Country-by-Country Reporting).

The purpose of the consultation is to establish that real or perceived inconsistencies with the revised parts of the Guidelines have been appropriately addressed, and duplication appropriately removed. The consultation is not meant for comment on the new guidelines resulting from the BEPS Project.

Click the following link for the document for public review and the comments received.

Russia

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Russia Clarifies Consequences of Tax Agent's Failure to Withhold Tax

The Russian Federal Tax Service (FTS) recently published Guidance Letter No. SD-4-3/14590, which clarifies the consequences of a Russian tax agent's failure to withhold tax on payments to a non-resident without a permanent establishment (PE) in Russia. The letter is in reference to a Russian legal entity (tax agent) that failed to withhold tax on rental payments to a non-resident legal entity for the use of assets in Russia, but also applies to withholding tax failures in general.

According to the letter, if a Russian tax agent fails to withhold and remit corporate tax due on payments to a non-resident legal entity, the FTS is authorized to collect in full the tax due from the tax agent plus any penalties as calculated up to the date the tax obligation has been met. In such cases, the FTS may not seek to collect tax from the non-resident, as this would result in double taxation in violation of the Russian constitutional principles of equal, fair, and proportionate taxation.

South Africa

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South Africa Issues Employment Tax Incentive Guide

On 16 August 2016, the South African Revenue Service issued a guide on the employment tax incentive (ETI). The ETI is a temporary tax incentive for eligible employers aimed at encouraging employment of young employees between the ages of 18 and 29, as well as employees of any age in special economic zones and in any industry identified by the Minister.

The benefit of the ETI is a reduction in the required amount of employees’ tax (Pay-As-You-Earn - PAYE) for up to 24 months through a cost-sharing mechanism with the government. The reduction in the PAYE liability is based on the qualifying employee's monthly salary as follows:

  • 50% of monthly salary for salaries up to ZAR 2,000;
  • ZAR 1,000 for salaries over ZAR 2,000 up to 4,000; and
  • ZAR 1,000 – .5 × (monthly remuneration –  ZAR R4,000)] for salaries over ZAR 4,000 up to 6,000

The reduction amounts above apply for the first 12 months of employment, and are reduced by half for the second 12 months.

Click the following link for the Guide to the Employment Tax Incentive for more information.

Note - The ETI is scheduled to end 1 January 2017.

United States

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U.S. Treasury Seeks Public Comment on Burden Estimate for CbC Reporting Form 8975

On 22 August 2016, a comment request notice from the U.S. Treasury was published in the Federal Register. The request seeks comments regarding the burden estimate for Country-by-Country Reporting Form 8975 (previous coverage) for submission to the Office of Management and Budget (OMB) as a new collection request for review and clearance in accordance with the Paperwork Reduction Act of 1995.

Click the following link for the comment request notice. The deadline for comments is 21 September 2016.

Treaty Changes (1)

Ethiopia-Singapore

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Tax Treaty between Ethiopia and Singapore Signed

On 24 August 2016, officials from Ethiopia and Singapore signed an income tax treaty. The treaty is the first of its kind between the two countries.

Taxes Covered

The treaty covers Ethiopian tax on income and profit, and the tax on income from mining, petroleum and agricultural activities. It covers Singapore income tax.

Withholding Tax Rates

  • Dividends - 5%
  • Interest - 5%
  • Royalties - 5%

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 deriving more than 50% of their value directly or indirectly from 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 provision is also included for a tax sparing credit for tax that would otherwise be payable but has been reduced or exempted for a limited period of time in a Contracting State in accordance with the laws and regulations of that State aimed at promoting economic development.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged, and will apply in Ethiopia from 8 July next following its entry into force and in Singapore from 1 January of the year following its entry into force.

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