Worldwide Tax News
Argentina Publishes Legislation on Voluntary Disclosure, Tax Settlement, Eliminating Dividends Withholding Tax, and Other Measures
On 22 July 2016, Law 27260 was published in Argentina's Official Gazette. The Law includes a number of reform measures, including a new voluntary disclosure program, a new tax settlement plan, the elimination of dividends withholding tax, and other tax changes.
The new voluntary disclosure program applies for undeclared domestic and foreign assets held by entities during the financial year ending before 1 January 2016 (21 July 2016 for individuals). Depending on the nature and timing of disclosure, disclosed assets are eligible for reduced tax rates as follows:
- 0% rate for disclosed assets valued up to ARS 305,000, and disclosed assets used to purchase specified three-year government bonds by 30 September 2016 or seven-year government bonds by 31 December 2016, or when invested in certain investment funds approved by the Argentine Securities and Exchange Commission;
- 5% rate for disclosed immovable property and real estate, and assets worth up to ARS 800,000;
- 10% rate for disclosed assets exceeding ARS 800,000, excluding real estate, if disclosed by 31 December 2016; and
- 15% rate for disclosed assets exceeding ARS 800,000, excluding real estate, if disclosed by 31 March 2017.
In addition to the reduce tax rates, taxpayers with assets disclosed under the program are generally protected from related penalties and criminal prosecution. However, if any assets remained undisclosed and are subsequently discovered, the benefits are revoked.
Subject to the timing restrictions noted above, the voluntary disclosure program generally ends 31 March 2017. However, in the case of disclosed holdings of domestic or foreign currency in cash, a deposit must be made with a local financial institution by 31 October 2016.
The new tax debt settlement plan provides for the payment in installments of outstanding tax, social security, and customs liabilities, with an exemption from penalties and criminal prosecution, and reduced interest charges as follows:
- For outstanding liabilities as of 31 May 2016, charges are limited by 10% to 75% of the principal owed, depending on how long the liability has been outstanding; and
- For prospective interest charges, reduced monthly interest rates apply as follows:
- 1.5% per month for installment payments over 60 months with a 5% down payment;
- Interest equal to the average National Bank deposit rate for installment payments over 90 months with a 10% down payment (micro and small businesses);
- Interest equal to the average National Bank deposit rate (minimum 1.5%) for installment payments over 90 months with a 15% down payment (medium and large businesses); and
- 1% per month over 90 months for businesses qualifying under emergency or disaster regime
For outstanding liabilities paid in full in a single payment, a reduction in the principal of up to 15% may apply.
Application for the debt settlement plan must be made by 31 March 2017.
The main tax changes affecting companies include:
- The 10% withholding tax on dividends and profit distributions made by local corporations, partnerships, and permanent establishments of foreign companies is repealed;
- The 0.5% individual asset tax on the net-equity value of shares and equity holdings in Argentine companies is reduced to 0.25% (applies to resident individuals, and non-resident individuals and entities); and
- The 1% corporate asset tax (creditable minimum tax) will be repealed effective 1 January 2019.
Law 27260 is effective the day after its publication, 23 July 2016. Click the following link for the Law as published.
The OECD announced on 26 July 2016 that Egypt has joined the Global Forum on Transparency and Exchange of Information for Tax Purposes as the 135th member. As a member of the Forum, Egypt will now be subject to monitoring and a peer review process to ensure the implementation of and compliance with the international standards for information exchange.
The Finnish parliament has reportedly passed legislation to amend and harmonize the statute of limitations across the various tax regimes, including for withholding tax refund claims. Regarding tax assessments, the statute of limitations for an adjustment that would benefit the taxpayer is reduced from five year to three years. For adjustments that would disadvantage the taxpayer, the statute of limitations is four to six years depending on the nature of the cause for adjustment. Regarding claims for withholding tax refunds on dividends, interest or royalties paid to non-residents, the statute of limitations for a claim is reduced from five years to three years.
The amendments will enter into force on 1 January 2017.
The G20 Finance Ministers have issued a communiqué following their meeting held on 23-24 July 2016 in Chengdu, China. The communiqué covers a number of issues, including the following tax and transparency related issues:
- Support for the inclusive framework for the implementation of the G20/OECD BEPS package;
- A call for countries to commit to the automatic exchange of information by 2018;
- Endorsement of the OECD's proposed objective criteria to indentify non-cooperative jurisdictions;
- Continued work on issues of pro-growth tax policies and tax certainty; and
- Proposals for international tax transparency standards and information exchange, including for beneficial ownership.
The following is the text of the communiqué concerning the above issues.
We welcome the first meeting of the G20/OECD Inclusive Framework on BEPS held in Kyoto, particularly its broad membership which will be a key asset in supporting a timely, consistent and widespread implementation of the G20/OECD BEPS package, as well as in tackling the specific challenges faced by developing countries. We call upon all relevant and interested countries and jurisdictions that have not yet committed to the BEPS package to do so and join the framework on an equal footing. We also welcome the recent progress made on effective and widespread implementation of the internationally agreed standards on tax transparency. We reiterate our call on all relevant countries including all financial centers and jurisdictions which have not yet done so to commit without delay to implementing the standard on automatic exchange of information by 2018 at the latest and to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. We support the Global Forum's monitoring of the implementation of automatic exchange of information and look forward to its report before the end of the year. We endorse the proposals made by the OECD working with G20 members on the objective criteria to identify non-cooperative jurisdictions with respect to tax transparency. We ask the OECD to report back to us by June 2017 on the progress made by jurisdictions on tax transparency, and on how the Global Forum will manage the country review process in response to supplementary review requests of countries, with a view for the OECD to prepare a list by the July 2017 G20 Leaders' Summit of those jurisdictions that have not yet sufficiently progressed toward a satisfactory level of implementation of the agreed international standards on tax transparency. Defensive measures will be considered against listed jurisdictions. We encourage countries and IOs (international organizations) to assist developing economies in building their tax capacity and accordingly we acknowledge the establishment of the new Platform for Collaboration on Taxation by the IMF, OECD, UN and WBG, and their recommendations on mechanisms for effective technical assistance in support of tax reforms. We look forward to receiving a progress update by mid-2017. We support the principles of the Addis Tax Initiative. We recognize the significant negative impact of illicit financial flows on our economies and we continue to take forward the work of the G20 on this theme.
We recognize the important role of tax policies in our broader agenda on strong, sustainable and balanced growth and of a fair and efficient international tax environment in diminishing the conflicts among tax systems. As highlighted in our discussion at the G20 High Level Tax Symposium, we emphasize the effectiveness of tax policy tools in supply-side structural reform for promoting innovation-driven, inclusive growth, as well as the benefits of tax certainty to promote investment and trade. In this regard, we ask the OECD and the IMF to continue working on the issues of pro-growth tax policies and tax certainty.
We reiterate our call on the FATF and the Global Forum to make initial proposals by our October meeting on ways to improve the implementation of the international standards on transparency, including on the availability of beneficial ownership information of legal persons and legal arrangements, and its international exchange.
Click the following link for the full text of the communiqué.
On 21 July 2016, Irish Revenue published eBrief No. 68/2016 concerning supporting documentation submission for value added tax (VAT) registration.
Submission of Supporting Documentation for VAT Registration Applications
Arising from recent discussions with tax practitioners on the processing of VAT registration applications, Revenue has enhanced the "MyEnquiries" online service on www.ros.ie to enable supporting documentation to be uploaded at the time that a VAT registration application is submitted. It is intended that this facility will reduce the frequency of follow-up requests for supporting documentation, and will enhance the efficiency of the VAT registration process.
Supporting documentation, where appropriate, can be uploaded via "MyEnquiries" at the time of application by selecting Tax Registration/Cancellation – VAT Supporting Documentation.
Ukraine-Liberia-Albania-Cameroon-Gabon-Pakistan-Senegal-Switzerland-Untd A Emirates-Saint Lucia-OECD
On 26 July 2016, the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes published new peer review reports for 10 jurisdictions. The reports and their results are as follows:
- Phase 1 report for Ukraine - moves on to Phase 2
- Phase 1 supplementary report for Liberia - moves on to Phase 2
- Phase 2 report for Albania - found to be Largely Compliant
- Phase 2 report for Cameroon - found to be Largely Compliant
- Phase 2 report for Gabon - found to be Largely Compliant
- Phase 2 report for Pakistan - found to be Largely Compliant
- Phase 2 report for Senegal - found to be Largely Compliant
- Phase 2 report for Switzerland - found to be Largely Compliant
- Phase 2 report for the United Arab Emirates - found to be Partially Compliant
- Phase 2 supplementary report for Saint Lucia - upgraded from Partially Compliant to Largely Compliant
The reports are produced as part of a two-phase review process for compliance with the international standard for information exchange. The Phase 1 report includes an evaluation of a jurisdiction's legal and regulatory framework for transparency and exchange of information, and provides recommendations for improvement. Jurisdictions deemed to have a sufficient framework in place move on to Phase 2, which includes an evaluation of the actual implementation of the standard for information exchange, with a compliance rating given along with recommendations for improvement. The compliance ratings include Non-Compliant, Partially Compliant, Largely Compliant or Compliant.
Click the following link for an overview of the compliance ratings provided for the 22 jurisdictions that have only completed Phase 1 and the 101 jurisdictions that have completed both Phase 1 and Phase 2.
On 20 July 2016, the Belgian government approved for ratification the pending protocol to the 1970 income tax treaty with Ireland. The protocol, signed 14 April 2014, is the first to amend the treaty. It updates the competent authority in respect of Belgium and replaces Article 26 (Exchange of Information) to bring it in line with the OECD standard for information exchange.
The protocol will enter into force once the ratification instruments are exchanged. It will apply for criminal tax matters from the date of its entry into force, and for other matters from 1 January of the year following its entry into force.
The income tax treaty between Cyprus and Jersey was signed on 11 July 2016. The treaty is the first of its kind between the two jurisdictions.
The treaty covers Cyprus income tax, corporate income tax, the special contribution for the Defense of the Republic, and capital gains tax. It covers Jersey income tax.
- Dividends - 0%
- Interest - 0%
- Royalties - 0%
The following capital gains derived by a resident of one Contracting Party may be taxed by the other Party:
- Gains from the alienation of immovable property situated in the other Party; and
- Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other Party
Gains from the alienation of other property by a resident of a Contracting Party may only be taxed by that Party.
Both jurisdictions apply the credit method for the elimination of double taxation.
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.