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Approved Changes (5)

Colombia

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Colombia Provides 11.5% Tax Rate for Disclosed Foreign Assets

Colombia's Ministry of Finance has announced that an 11.5% tax rate will apply for the disclosures of previously undeclared foreign assets. The 11.5% rate will be levied on the cost basis of the foreign assets disclosed, and is meant to encourage taxpayers to voluntarily disclose their foreign assets that will eventually be revealed as the tax authorities increase their efforts to target tax evasion.

Greece

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Greece to Increase Standard VAT Rate to 24%

On 20 April 2016, the Greek government reached an agreement with its creditors that includes an increase in the standard value added tax (VAT) rate from 23% to 24% in order to help meet its budget requirements. Greece will also reportedly increase the current reduce VAT rate of 6%, which applies to books and newspapers among others, although the amount of the increase is not yet known.

The increase in the standard rate to 24% will apply from 1 July 2016.

Jersey

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Jersey Issues Notice for 2015 Tax Returns and Statements

On 18 April 2016, Jersey's Treasury and Resources Department issued a notice for 2015 tax returns and statements. For companies, the notice confirms that the tax return deadline is 31 December 2016, which had been extended from the last Friday in July as part of the 2016 Budget. The notice also includes that every company regarded as resident in Jersey or which has a permanent establishment in Jersey that has not already submitted a Company Tax Return for the year of assessment 2015 is required to submit the return online via the Gov.je website.

Click the following link for the full notice, which also includes individual return requirements.

Puerto Rico

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Puerto Rico Issues Administrative Determination on Transition from SUT to VAT

On 18 April 2016, Puerto Rico's Treasury Department issued Administrative Determination No. 16-07 on the transition from sales and use tax (SUT) to value added tax (VAT), which will be effective 1 June 2016. Key aspects of the transition include:

  • The implementation of a new electronic system (Sistema Unificado de Rentas Internas - SURI) that must be used by taxpayers to electronically file monthly VAT returns, make VAT payments, and perform other VAT-related functions, and will eventually be used to manage other taxes as well;
  • The introduction of a new form for VAT returns, which will need to be filed electronically through SURI by the 20th day of the month following each month in which VAT is charged (new form will be available from 1 July 2016);
  • The current Integrated Merchant Portal (PICO) will remain available for fulfilling SUT obligations related to transactions occurring prior to 1 June 2016, as well as for import declaration and import tax requirements;
  • All persons doing business in Puerto Rico must apply for new registration certificates for VAT, while all current SUT registration certificates will expire 20 July 2016;
  • Taxpayers with gross sales of less than USD 125,000 in the previous year may apply for a small trader registration certificate for VAT, which includes an exemption from charging VAT or filing monthly returns, but does not allow the taxpayer to claim input credits; and
  • Current exemption certificates issued for SUT purposes will continue to apply for VAT purposes until formal transition procedures are issued.

Click the following link for Administrative Determination No. 16-07 (Spanish language).

Thailand

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Thailand Increases Top Individual Income Tax Bracket

On 20 April 2016, Thailand's Revenue Department published a notice setting out the individual income tax brackets and rates for 2017 and subsequent years, which includes an increase in the top bracket. The taxable income and rates are as follows.

  • up to THB 300,000 - 5%
  • over THB 300,000 up to 500,000 - 10%
  • over THB 500,000 up to 750,000 - 15%
  • over THB 750,000 up to 1,000,000 - 20%
  • over THB 1,000,000 up to 2,000,000 - 25%
  • over THB 2,000,000 up to 5,000,000 - 30%
  • over THB 5,000,000 - 35%

Note - The tax exemption provided for the first THB 150,000 will continue to apply.

Proposed Changes (3)

Australia

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Australian Senate Committee Issues Report on Corporate Tax Avoidance

On 22 April 2016, the Australian Senate Economics References Committee issued its second report as part of an inquiry into the matter of corporate tax avoidance and aggressive minimization in Australia (previous coverage). The report covers several issues, including transparency, transfer pricing, debt-related deductions, corporate structuring and others. To address the issues, the report reiterates certain recommendations from the first report and makes new recommendations, including:

  • Implementing a mandatory tax transparency code where Australian corporations and subsidiaries of multinationals with annual turnover above an agreed to figure would be required to publicly report financial information on revenue, expenses, tax paid, and tax benefits/deductions from specific government incentives.
  • Reverting the tax transparency laws threshold for public disclosure of companies' tax return data by the Australian Taxation Office (ATO) from the current AUD 200 million to the previous AUD 100 million for all public and private companies (the transparency laws were repealed for private companies but later reinstated with the higher threshold in 2015).
  • Establishing a public registry of tax avoidance settlements reached with the ATO where settlements exceeding an agreed to value threshold are published.
  • Requiring the ATO to report annually to parliament on:
    • The number of audits or disputes launched concerning multinational corporations;
    • The number of cases settled with multinational corporations;
    • The number of successful legal proceedings concluded against multinational corporations; and
    • The staff resources allocated to tax compliance of multinational corporations.
  • Removing the concept of grandfathered large proprietary companies from the Corporations Act, and requiring such grandfathered companies to lodge financial reports with Australian Securities and Investments Commission (ASIC).
  • Amending the accounting standards so that significant global entities (group revenue of AUD 1 billion or more) are required to file general purpose accounts for their Australian activities that would be made publicly available.
  • Reviewing and, where necessary, redrafting Australia's transfer pricing principles to ensure that transfer pricing cannot be manipulated to the detriment of Australian tax revenue.
  • Implementing stronger penalties to provide an additional incentive for companies to provide information relating to tax plans in a timely manner, including supporting correspondence about tax plans and related contracts.

Click the following link for the report: Corporate tax avoidance - Part II Gaming the system.

Brazil

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Brazil Considering IPI exemption for Certain Essential Products

Legislation has been introduced in Brazil's Chamber of Deputies to provide an exemption from federal excise tax on manufactured products (Imposto sobre Produtos Industrializados - IPI) for products that are essential for health, education and security. If adopted, the IPI exemption would apply for products purchased by municipalities, states, not-for-profit foundations and public enterprises, but IPI would become due if the products are subsequently sold within two years.

Note - IPI is levied on manufactured products produced in Brazil or imported. Rates generally range from 10% to 15%, although rates for certain products may be as high as 330%.

Luxembourg

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Luxembourg Government Announces Revisions to 2017 Tax Reform Plans

On 21 April 2016, Luxembourg's Minister of Finance Pierre Gramegna announced to a parliamentary committee that certain aspects of the previously announced tax reform package for 2017 (previous coverage) would be revised. The main revisions include:

  • Allowing losses to be carried forward for up to 17 years, while limiting the amount of taxable income that may be offset per year to 75% (initial proposal included 10 year carryforward and 80% offset);
  • Increasing the tax credit for increased investments in tangible depreciable assets from 12% to 13%, and increasing the tax credit for the first EUR 150,000 of qualifying new investments from 7% to 8% (the 2% credit for new investments exceeding EUR 150,000 would remain unchanged); and
  • Making aggravated tax fraud a criminal offense, while simple tax fraud would only be subject to administrative fines.

Gramegna also noted that the government would be following international tax developments regarding the OECD BEPS project, as well as related developments at the EU level, to ensure that Luxembourg's tax rules remain compliant.

Other measures in the original tax reform package are generally unchanged, including plans to reduce the corporate tax rate to 19% in 2017 and to 18% in 2018.

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Treaty Changes (2)

Botswana-Czech Rep

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Tax Treaty Negotiations between Botswana and the Czech Republic Concluded

On 12 April 2016, officials from Botswana and the Czech Republic concluded negotiations with the initialing of an income tax treaty. The treaty will be the first of its kind between the two countries, and must be signed and ratified before entering into force.

Estonia-Kyrgyzstan

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Tax Treaty Negotiations between Estonia and Kyrgyzstan Concluded

On 20 April 2016, officials from Estonia and Kyrgyzstan concluded negotiations with the initialing of an income tax treaty. The treaty will be the first of its kind between the two countries, and must be signed and ratified before entering into force.

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