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Approved Changes (3)

Ireland

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Ireland Companies Act 2014 Company Form Changes

The Ireland Companies Act 2014 was signed into law on 23 December 2014. The 2014 Act replaces the Companies Acts 1963-2013, but has not yet commenced and companies still operate under the Companies Acts 1963-2013. It is expected that the 2014 Act will commence in June 2015.

In general, the new Act restates existing law, although several areas are streamlined including governance, legal capacity and mergers. One of the main changes is the introduction of two new company forms, LTD (Private company limited by shares) and  DAC (Designated Activity Company). These two forms replace the Private Limited Company. The LTD is a more simplified form, while the DAC is more similar to the existing Private Limited Company.

Differences include:

  • An LTD may have a single director, while a DAC must have at least two
  • A DAC must have an annual general meeting if there are 2 or more members, while an LTD does not
  • An LTD has a single document constitution with no objects clause, while a DAC has a constitution including a memorandum and articles of association
  • An LTD's name must end in “Limited” or “Teoranta”, while a DAC's name must end in “Designated Activity Company” or “Cuideachta Ghníomhaíochta Ainmnithe”

Once the new Act is commenced, Private Limited Companies will need to re-register as either an LTD or a DAC within an 18 month transition period.

Companies may want to re-register as a DAC if they wish to have or retain specific objects for which the company was incorporated. If a company has published an offering document or obtained an admission to trading on a regulated market for its debentures, then it must re-register as a DAC. The election to re-register as a DAC should be made with 15 months of the commencement of the ACT

Companies wishing to re-register as an LTD, may do so within 18 months of the commencement of the Act. If a company fails to make an election, they will automatically be considered an LTD after the 18 month period. However, from the date of commencement of the Act until the end of the 18 month transition period, they will be treated as a DAC.

For more information on the new company types, please click the following links to the Irish Companies Registration Office website:

Private Company Limited by Shares (LTD Company)

The Designated Activity Company (DAC)

Romania

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Romania Lowers Special Constructions Tax to 1%

On 13 January 2015, Romania published the law approving a reduction in the country's tax on special constructions from 1.5% to 1% effective 1 January 2015. The special constructions tax was introduced the end of 2013, and applies from 1 January 2014 on most constructions that are not subject to buildings tax, such as oil and gas wells, drilling platforms, power stations, railways, roads, etc.

Ukraine

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Ukraine Tax Compromise Act in Force

On 16 January 2015 the Ukrainian Act concerning amendments to the Tax Code for corporate tax and value added tax (VAT) comprise was published and entered into force the following day.

Under the provisions of the Act, taxpayers are allowed to report understated corporate tax and VAT liabilities in regard to transactions effected prior to 1 April 2014, and pay only 5% of the understated amount. The remaining 95% is then deemed to be settled and the taxpayer is relieved of any associated fines and penalties on that amount. The tax compromise also applies to assessments in regard to the qualifying period that have been appealed by taxpayers and currently in dispute.

In order to take advantage of the tax compromise, taxpayers must submit adjusted calculations within 90 days of the enactment of the Act.

Proposed Changes (1)

United States

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U.S. Senate Finance Committee Tax Reform Working Groups

With U.S. tax reform set as a top priority for 2015, the U.S. Finance Committee has launched five bipartisan working groups to develop options for legislation. Each group will focus on a particular area for reform, including:

  1. Individual Income Tax,
  2. Business Income Tax,
  3. Savings & Investment,
  4. International Tax, and
  5. Community Development & Infrastructure

Each group will work with the Joint Committee on Taxation to produce an in-depth analysis and reform options for each area. Final reports are expected by the end of May 2015, including recommendations, which will be delivered to Finance Committee Chairman Orrin Hatch and Ranking Member Ron Wyden and used to develop tax reform legislation.

Treaty Changes (2)

Colombia-Portugal

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Tax Treaty between Colombia and Portugal to Enter into Force

The income tax treaty between Colombia and Portugal will enter into force on 30 January 2015. The treaty, signed 30 August 2010, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Colombian income tax and its complementary taxes, and Portuguese personal and corporate income taxes, and the local surtax on corporate income.

Residence

If a company is a resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If the authorities cannot reach mutual agreement, the company will not be entitled to the benefits of the treaty.

Service PE

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

Withholding Tax Rates

  • Dividends - 10% (a protocol to the treaty, signed the same date, states that when a Colombian resident company has not paid income tax on profits distributed to shareholders because of exemptions or because the profit exceeds the non taxed limit contained in Colombian tax law, the dividend distributed may be taxed in Colombia at a rate of 33%)
  • Interest - 10%
  • Royalties - 10% (includes payments for technical assistance, technical services and consulting services)
  • Capital Gains - the following gains made 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,
    • Gains from the alienation of shares or a comparable interest deriving more than 50% of their value directly or indirectly from immovable property situated in the other State, and
    • Gains derived by a resident of a Contracting State from the alienation of shares or other rights representing capital of a company resident in the other State if such resident owned 25% or more of the capital of that company at any time within the 12 month period preceding the alienation (limited to a 20% tax rate)

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Limitation on Benefits

The provisions of the treaty will not apply when the main purpose or one of the main purposes of any person concerned with the creation or assignment of the property or right in respect of which the income is paid is to take advantage of the treaty provisions. (Article 26)

MFN Clause

A protocol to the treaty, signed the same date, includes the provision that if Colombia concludes a Convention with a third State that includes provisions regarding technical assistance, technical services or consulting services that are more favorable than those provided for in Article 12 of the Colombia-Portugal treaty, then the more favorable provisions will automatically apply to the Colombia-Portugal treaty from the date of entry into force of the Convention with the third State.

Effective Date

The treaty applies from 1 January 2016.

Kazakhstan-Saudi Arabia

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Update - Tax Treaty between Kazakhstan and Saudi Arabia

The income tax treaty between Kazakhstan and Saudi Arabia was signed 7 June 2011. It is the first of its kind between the two countries.

Taxes Covered

The treaty covers Kazakhstan corporate income tax and individual income tax. It covers Saudi Zakat and income tax including the natural gas investment 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 projects for a period or periods aggregating more than 6 months within any 12 month period.

Withholding Tax Rates

  • Dividends - 5%
  • Interest - 10%
  • Royalties - 10%
  • Capital Gains - Gains from the alienation of immovable property situated in a Contracting State, gains from the alienation of movable property forming part of the business property of a permanent establishment in a Contracting State, and gains from the alienation of shares in a company resident in a contracting state may be taxable in that State

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Entry into Force and Effect

The treaty will enter into force on the first day of the second month following the exchange of the ratification instruments. It will apply from 1 January of the year following its entry into force.

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