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Approved Changes (2)

Egypt

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Law Amending Egyptian Tax Rates Enters into Force

The law amending Egypt's tax rates as announced in March (previous coverage) has entered into force. Law No. 96 was published in Egypt's Official Gazette on 20 August 2015 and entered into force the following day. It includes the following changes:

  • The standard corporate tax rate is reduced from 25% to 22.5%;
  • The top individual income tax rate is reduced from 25% to 22.5% and the brackets are adjusted as follows:
    • up to EGP 6,500 - 0%
    • over EGP 6,500 to 30,000 - 10%
    • over EGP 30,000 to 45,000 - 15%
    • over EGP 45,000 to 200,000 - 20%
    • over EGP 200,000 to 22.5%;
  • The additional 5% surtax on both corporate and individual income exceeding EGP 1 million is abolished - the surtax was to apply through 2017, but is now only applicable for 2014; and
  • The 10% capital gains tax on the sale of shares listed on the Egyptian stock exchange is suspended for two years and the 10% (5%) dividends tax is made a final tax on the initial distribution (previous coverage)

Further regulations will be issued concerning the implementation of the changes.

Russia

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Russia Clarifies Eligibility for Bond Interest Withholding Tax Exemption

The Russian Ministry of Finance recently issued Guidance Letter 03-08-05/37090, which clarifies eligibility for the withholding tax exemption for interest paid on bonds issued by a Russian corporate borrower under the laws of a foreign country. According to the letter, interest payments on such bonds to a foreign company are exempt from withholding tax provided the following conditions are met:

  • The foreign company has the actual right to receive the income (proof of beneficial ownership may be requested by the paying tax agent);
  • The foreign company is resident in a country with which Russia has entered into a tax treaty; and
  • A certificate of residence issued by the tax authority of the country of residence has been provided to the paying tax agent (with Russian translation if in foreign language)

The withholding tax exemption was initially introduced in 2012 for interest payments on Russian state bonds, bonds directly issued by Russian corporate borrowers under foreign law and interest paid to special purpose vehicles on loans related to Eurobond placements.

Proposed Changes (2)

Bulgaria

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Bulgaria's Tax Reform Plans

In a recent interview published on the Bulgarian Ministry of Finance website, Minister of Finance Vladislav Goranov provided a brief overview of the country's plans for upcoming tax reform. The main areas of focus include:

  • Harmonizing Bulgarian law with EU law;
  • Improving control and reducing tax avoidance; and
  • Reducing the administrative burden and improving services

Click the following link for the press release on the Ministry of Finance website.

Slovenia

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Slovenia to Change VAT Tax Point for Imports

According to recent reports, the Slovenian Ministry of Finance is planning to introduce legislation that will shift the tax point for value added tax on imported goods from the time the goods are imported or clear customs, to the time the goods are sold. The proposed change is meant to reduce the burden on importers, and if approved, will apply from 1 January 2016.

Treaty Changes (3)

Barbados-Italy

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Tax Treaty between Barbados and Italy Signed

On 24 August 2015, officials from Barbados and Italy 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.

Cayman Islands-Italy

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TIEA between the Cayman Islands and Italy has Entered into Force

The tax information exchange agreement between the Cayman Islands and Italy entered into force on 13 August 2015. The agreement, signed 3 December 2012, is the first of its kind between the two jurisdictions and is in line with the OECD standard for information exchange. It generally applies from the date of its entry into force.

China-Taiwan

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Tax Agreement between China and Taiwan Signed

On 25 August 2015, officials from China and Taiwan signed an arrangement for the avoidance of double taxation following several rounds of negotiations that began in 2009. The agreement is the first of its kind between the two jurisdictions.

Taxes Covered

The agreement covers Chinese personal and corporate income tax, and Taiwan enterprise income tax, consolidated income tax and basic income tax.

Service PE

The agreement includes the provision that a permanent establishment will be deemed constituted when an enterprise of one Contracting Party furnishes services in the other Party through employees or other engaged personnel for a period or periods aggregating more than 183 days within any 12-month period.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise 10%
  • Interest - 7%
  • Royalties - 7%

Limitation on Benefits

The agreement includes a limitations on benefits provision whereby any reduction or exemption from tax provided for by the agreement will not be available if the main purpose or one of the main purposes of a resident is to obtain the benefits.

Entry into Force

The agreement will enter into force after the ratification instruments are exchanged.

Additional details will be published once available.

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