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Approved Changes (4)

Australia

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Australia Treasury Laws Amendment (Foreign Resident Capital Gains Withholding Payments) Act Published

Australia has published the Treasury Laws Amendment (Foreign Resident Capital Gains Withholding Payments) Act 2017, which received Royal Assent on 22 June 2017. The legislation modifies the capital gains tax withholding on Australian property sales by increasing the withholding rate from 10% to 12.5% and reducing the withholding exemption threshold from AUD 2 million to AUD 750,000 property value. The changes apply in relation to acquisitions of property occurring on or after 1 July 2017.

Brazil

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Brazil Regulates New Tax Regularization Program

On 21 June 2017, Brazil published Normative Instruction 1711/2017 in the Official Gazette, which regulates the new program for the regularization of tax (Programa Especial de Regularização Tributária - PERT) introduced by Provisional Measure (PM) 783/2017 (previous coverage). The PERT program is available for both individuals and legal entities with unpaid tax and non-tax debts up to 30 April 2017, and allows the settlement of debts with different options with varying interest/penalty relief.

Further to the regulation of the PERT program, Brazil has also published Ordinance 592/2017, which clarifies that taxpayers that entered into agreements with the tax authority under the prior regularization program (Programa de Regularizacão Tributária - PRT) are not affected by the new program. The PRT program was introduced by PM 766/2017 (previous coverage), which was revoked following the issuance of PM 783/2017.

Denmark

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Denmark Confirms Investment in a Danish Limited Partnership does Not Constitute a PE

On 20 June 2017, the Danish tax authority (SKAT) published a binding ruling on the existence of a permanent establishment in Denmark of foreign investors in a limited partnership (kommanditselskab, K/S) in Denmark. The ruling confirms that foreign limited partners are not considered to have a permanent establishment in Denmark solely based on their investment in a Danish limited partnership, although other factors may be considered, such as whether the foreign limited partners are otherwise carrying on business in Denmark.

Malaysia

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Malaysia Publishes Guidance on Income Tax Treatment of Goods and Services Tax

On 8 June 2017, the Inland Revenue Board of Malaysia published two public rulings on the country's Goods and Services Tax regime, which has been effective since 1 April 2015.

PR No.1/2017 Income Tax Treatment Of Goods And Services Tax Part I – Expenses

The objective of this Public Ruling is to explain the tax treatment accorded to a person in respect of goods and services tax (GST) paid or to be paid as:

  • Input tax on the purchase or acquisition of goods and services other than capital assets by a person if he is registered or liable to be registered under the Goods and Services Tax Act 2014 (GSTA); and
  • Output tax on the sale of goods and services which is borne by a person if he is registered or liable to be registered under the GSTA.

PR No.1/2017 provides an overview of the basic concepts of GST, the related tax provisions, input/output tax treatment, reverse charge for imported services, and other issues related to GST, as well as several examples.

PR No.2/2017 Income Tax Treatment Of Goods And Services Tax Part II – Qualifying Expenditure For Purposes Of Claiming Allowances

The objective of this Public Ruling is to explain:

  • Whether the qualifying expenditure (QE) incurred by a person, on the purchase or acquisition of capital assets for the purpose of claiming allowances includes the GST paid or to be paid;
  • The income tax adjustment made to the QE of a capital asset if the asset is subject to GST adjustments under the GSTA;
  • The income tax adjustment made to the QE of a capital asset if the asset that is subject to GST adjustments is disposed of; and
  • The income tax adjustment made to the QE of a capital asset that is subject to GST adjustments where the asset is transferred between related parties.

Click the following links for the English language versions of PR No.1/2017 and PR No.2/2017.

Proposed Changes (2)

South Africa

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South Africa Business Requirements Specification Published in Relation to Draft Notification on CbC Report, Master File, and Local File

On 23 June 2017, the South African Revenue Service published the business requirements specification (BRS) as referenced in the draft public notice on the submission of Country-by-Country (CbC) report, Master file, and Local file information returns (previous coverage). The BRS sets out the guidelines on the submission of the three documents, all of which are in line with Action 13 guidance. The CbC report is to be submitted via SARS eFiling using an online form (CbC01) that is filled out by the user. The Master and Local file are also submitted via SARS eFiling, but are uploaded as attachments.

Click the following link for the EXTERNAL BUSINESS REQUIREMENTS SPECIFICATION: Country-by-Country and Financial Data Reporting.

Note - With the publication of the BRS, the comment period for the draft public notice was extended from 22 June to 29 June 2017.

Spain

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Spain Ministry of Finance Proposes Law to Prohibit Tax Amnesty Programs Following Decision that 2012 Program was Unconstitutional

According to recent reports, the Spanish Ministry of Finance has proposed a law that would prohibit any future tax amnesty programs. The proposal follows an 8 June 2017 decision of the Spanish Constitutional Court that the tax amnesty (voluntary disclosure) program introduced in 2012 was unconstitutional. The tax amnesty program had provided for a special levy of 10% on the value of undeclared assets along with relief from surcharges, penalties, and interest. The Court found the program unconstitutional as it violated Article 86.1 of the Constitution, which prohibits the use of any legal instrument that affects in a relevant and substantial manner the duties and obligations of residents, including the obligation to participate in maintaining public funds (by paying taxes) as provided in Article 31.1.

Treaty Changes (3)

Austria-Kosovo

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Austria and Kosovo Conclude Tax Treaty Negotiations

Officials from Austria and Kosovo concluded negotiations held 20 to 22 June 2017 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. Additional details will be published once available.

China-Netherlands

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SSA between China and the Netherlands to Enter into Force

The social security agreement between China and the Netherlands will enter into force on 1 September 2017. The agreement, signed 12 September 2016, is the first of its kind between the two countries, and generally applies from the date of its entry into force.

Costa Rica-South Africa

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TIEA between Costa Rica and South Africa in Force

According to a 23 June 2017 notification from the South African Government, the tax information exchange agreement with Costa Rica entered into force on 8 February 2017. The agreement, signed 27 October 2012, is the first of its kind between the two countries and applies on the date of its entry into force for criminal tax matters and for tax periods beginning on or after that date for other matters.

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