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Approved Changes (3)

India

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India Sets Effective Date for Increase in Service Tax Rate

The increase in India's Service Tax rate as included in the recently enacted Finance Act 2015 will apply from 1 June 2015, according to a notice from the Central government. The current service tax of 12.36% (including 2% education cess and 1% secondary and higher education cess) is increased to a consolidated rate of 14% with the cess no longer levied.

Jamaica

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Jamaica Introduces Withholding Tax Requirements for Certain Service Payments

On 14 May 2015, the Jamaican tax authorities announced that a 3% withholding tax on certain service payments will be introduced from 1 June 2015. The withholding tax will be phased in, and initially only Government Ministries, Departments and Agencies, as well as financial institutions regulated by the FSC and BOJ, tourism operators, utility and cable companies, grossing over JMD 500 million will be required to withhold 3% from payments made for services with an invoice value of JMD 50,000 or more.

Puerto Rico

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Puerto Rico Senate Approves Sales Tax Increase

On 25 May 2015, The Senate of Puerto Rico approved a bill increasing the existing sales and use tax from 7% to 11.5%, as well as introducing a 4% sales tax on business-to-business (B2B) and professional services. This follows approval by the House of Representatives on 21 May 2015. Because the version of the bill passed by the Senate includes amendments to the House version, the bill must now go back to the House for final approval.

If the bill receives final approval, the increase from 7% to 11.5% is to apply from 1 July 2015, and the introduction of the 4% tax on B2B and professional services is to apply from 1 October 2015. The changes are meant to act as a transition to a new value added tax regime to be implemented 1 April 2016.

Treaty Changes (4)

Austria-India

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SSA between Austria and India to Enter into Force

The social security agreement between Austria and India will enter into force on 1 July 2015. The agreement, signed 4 February 2013, is the first of its kind between the two countries and generally applies from the date of its entry into force.

Liechtenstein-South Africa

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TIEA between Liechtenstein and South Africa has Entered into Force

On 23 May 2015, the tax information exchange agreement between Liechtenstein and South Africa entered into force. The agreement, signed 29 November 2013, is the first of its kind between the two countries and applies from the date of its entry into force for all requests in respect of tax periods beginning on or after 1 January 2014.

Oman-Switzerland

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Tax Treaty between Oman and Switzerland Signed

On 22 May 2015, officials from Oman and Switzerland signed an income tax treaty. It is the first full treaty of its kind between the two countries, although an air transport agreement was signed in 2007 and is currently in force. Once the 2015 treaty is in force and effective, the 2007 agreement will cease to have effect.

Taxes Covered

The treaty covers Omani income tax and Swiss federal, cantonal and communal taxes on income.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 10% of the paying company's capital; otherwise 15%
  • Interest - 5%, although an exemption is granted for interest paid in relation to the sale on credit of any equipment, merchandise or services; any loan granted by a bank; and intercompany loans
  • Royalties - 8%

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 other corporate rights in a company the assets of which consist directly or indirectly of more than 50% of 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

Oman applies the credit method for the elimination of double taxation while Switzerland generally applies the exemption method. However, for income covered by Articles 10 (Dividends), 11 (Interest) and 12 (Royalties) Switzerland may apply the credit method.

Limitation on Benefits

A protocol to the treaty, signed the same date, includes a limitation on benefits provision. Under the provision, the benefits provided by Articles 10 (Dividends), 11 (Interest) and 12 (Royalties) will not apply if the main purpose of any person concerned with the creation or assignment of any shares, debt-claims or other rights in respect of which the dividends, interest or royalties are paid is to take advantage of the benefits provided by those articles.

MFN Clause

If Oman signs any convention, agreement or protocol with a third state that provides for a lower rate of withholding tax on royalties than provided for in the treaty with Switzerland, then such lower rate will apply between Oman and Switzerland from the date such convention, agreement or protocol between Oman and a third state enters into force.

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.

Once the treaty is in force and effective, the 2007 air transport agreement between the two countries will cease to have effect.

Saint Kitts and Nevi-South Africa

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TIEA between St. Kitts and Nevis and South Africa Signed

According to a recent update published by the South African Revenue Service, officials from St. Kitts and Nevis and South Africa signed a tax information exchange agreement on 7 April 2015. The agreement is the first of its kind between the two countries, and will enter into force after the ratification instruments are exchanged.

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