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Approved Changes (3)

European Union

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European Commission Publishes Notice on Notion of State Aid

On 19 May 2016, the European Commission published the Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union. The notice covers several issues and is meant to provide clarification on the key concepts relating to the notion of State aid as referred to in Article 107(1), as well as the Commission’s understanding of Article 107(1) as interpreted by the European Court of Justice and the General Court. While primarily directed at national tax authorities, it also provides insights for companies doing business in the EU.

Click the following link for the Commission Notice.

Singapore

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Singapore Publishes GST: Guidelines on Determining the Belonging Status of Suppliers and Customers

On 25 May 2016, the Inland Revenue Authority of Singapore (IRAS) published an e-Tax guide on the determination of the belonging status of suppliers and customers for the purpose of determining the Goods and Services Tax (GST) treatment of the provision of services. According to the guide, the place where a supplier belongs will affect whether a supply of services is within the charging scope of GST, and the place where a customer belongs will affect whether a supply of services can be zero-rated.

For a supplier of service, the supplier will be deemed to belong in Singapore and the supply will be within the scope of GST if:

  • The supplier has a business establishment (BE) or fixed establishment (FE) only in Singapore;
  • The supplier has a BE or FE both in and outside of Singapore, but the BE or FE in Singapore is most directly concerned with making the supply; or
  • The supplier has no BE or FE in any country, buts its usual place of residence is in Singapore - based on place of incorporation or legal constitution.

If it is determined that that supplier belongs in Singapore, it must then be determined whether or not the customer belongs in Singapore. The determination is made in the same manner as for the supplier above. If it is determined that the customer belongs outside of Singapore, the supply may be zero-rated.

Click the following link for the GST: Guidelines on Determining the Belonging Status of Supplier and Customer for additional information, including examples and a flow chart to determine if a BE or FE exists.

United States

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U.S. Joint Committee on Taxation Publishes Overview of the Tax Treatment of Corporate Debt and Equity

On 20 May 2016, the U.S. Joint Committee on Taxation published a report providing an overview of the tax treatment of corporate debt and equity. The Committee is a nonpartisan committee of the U.S. Congress, and the report was prepared for a 24 May Senate Finance Committee hearing titled "Debt and Equity: Corporate Integration Considerations".

The first part of the report presents an overview of Federal income tax rules relating to debt and equity, and some of the statutory limitations on the tax benefits of each. The overview includes the treatment of both issuers and holders, and the treatment of each in the event of a business downturn in which the instrument becomes worthless.

The second part of the report presents data regarding nonfinancial business sector debt and equity and other business debt over several decades.

The third part of the report discusses the tax incentives created by the present-law tax treatment of debt and equity.

Click the following link for the full report.

Proposed Changes (2)

Costa Rica

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Revised Legislation to Restore Registration Tax Approved by Costa Rican Congressional Committee

On 16 may 2016, revised legislation to restore Costa Rica's annual registration tax was published in the Official Gazette following approval from the Congressional Committee on Financial Affairs. The registration tax was ruled unconstitutional in January 2015, and legislation to make the necessary revisions to retain the tax was submitted to Congress in December 2015 (previous coverage). As revised, the legislation includes that:

  • For companies with gross income exceeding 280 base salaries in the previous year, the annual registration tax is equal to 50% of the base salary;
  • For companies with gross income exceeding 120 base salaries up to 280 base salaries in the previous year, the annual registration tax is equal to 30% of the base salary;
  • For companies with gross income up to 120 base salaries in the previous year, the registration tax is equal to 25% of the base salary; and
  • For holding companies with no active business, the registration tax is equal to 15% of the base salary.

The base salary in 2016 is CRC 424,200 (~USD 790).

The legislation now goes to the full Congress for discussion. The previous rules continued to apply through 2015, and the new rules, subject to approval, are expected to apply from 2016.

Egypt

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Egyptian Cabinet Approves Revised VAT Legislation

According to a recent announcement from the Egyptian Ministry of Finance, the Egyptian Cabinet has approved revised legislation for the introduction of value added tax (VAT). The legislation includes abolishing the current 10% general sales tax regime and replacing it with VAT regime at the same rate. It also provides for a number of exemptions, including:

  • Basic foodstuffs;
  • Certain medical implants and equipment;
  • Certain commodities, including electricity and water, and unprocessed oil, gas and mineral resources;
  • Financial services, including banking and insurance services;
  • Educational, cultural and religious services; and
  • Non-commercial services provided by non-profit organizations.

The revised draft follows the rejection by parliament of a previous draft, and must now be resubmitted to parliament for approval.

Treaty Changes (4)

Cyprus-Latvia

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Tax Treaty between Cyprus and Latvia Signed

On 24 May 2016, officials from Cyprus and Latvia signed an income tax treaty. The treaty is the first of its kind between the two countries, and will enter into force after the ratification instruments are exchanged.

Additional details will be published once available.

France-Monaco

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France Ratifies Protocol to SSA with Monaco

On 23 May 2016, France ratified the pending protocol to the 1952 social security agreement with Monaco. The protocol, signed 18 March 2014, provides that teleworkers residing in France, as defined in the protocol, will be subject Monaco social legislation for the duration of the workers activity if working for a Monaco-based company. It is the sixth protocol to amend the agreement, and will enter into force on the first day of the second month after the ratification instruments are exchanged.

Germany-Moldova

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SSA between Germany and Moldova under Negotiation

On 20 May 2016, officials from Germany and Moldova met for the first round of negotiations for a social security agreement. Any resulting agreement will be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.

Montenegro-Slovak Republic

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SSA between Montenegro and Slovakia Signed

On 20 May 2016, officials from Montenegro and Slovakia signed a social security agreement. The agreement will enter into force after the ratification instruments are exchanged, and once in force and effective, will replace the 1957 social security agreement between the former Czechoslovakia and the former Yugoslavia as it applies in respect of Montenegro and Slovakia.

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