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Worldwide Tax News

Approved Changes (1)

Italy

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Italy Publishes Amended Jurisdiction White List

On 22 August 2016, Italy published in the Official Gazette the Ministerial Decree amending the list of jurisdictions with which Italy has an agreement allowing for the adequate exchange of information (white list). The white list impacts the tax treatment of certain transactions in relation to listed jurisdictions, including withholding tax, payment deductions, inbound migration, and certain other areas.

As amended, the white list includes:

  • Albania, Alderney, Algeria, Anguilla, Argentina, Armenia, Aruba, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium, Belize, Bermuda, Bosnia and Herzegovina, Brazil, British Virgin Islands, Bulgaria,
  • Cameroon, Canada, Cayman Islands, China, Colombia, Congo (Rep.), Cook Islands, Costa Rica, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Ethiopia,
  • Faroe Islands, Finland, France, Georgia, Germany, Ghana, Gibraltar, Greece, Greenland, Guernsey, Herm, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Ivory Coast,
  • Japan, Jersey, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mauritius, Mexico, Moldova, Montenegro, Montserrat, Morocco, Mozambique,
  • Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russia,
  • San Marino, Saudi Arabia, Senegal, Serbia, Seychelles, Singapore, Sint Maarten, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Syria,
  • Taiwan, Tajikistan, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Turks and Caicos, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan,  Venezuela, Vietnam and Zambia.

Click the following link for the Ministerial Decree.

Proposed Changes (1)

Poland

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Poland Council of Ministers Approves Increased R&D Incentives

Poland's Council of Ministers has reportedly approved proposed amendments to the country's research and development incentives. The amendments, originally proposed by the Ministry of Finance in March (previous coverage), include:

  • Increasing the deduction amount for R&D expenses up to 150%;
  • Extending the carry forward for unused R&D deductions to six years;
  • Expanding the scope of eligible R&D expenses; and
  • Certain other beneficial changes.

Subject to approval from parliament and the president, the amendments are to apply from 1 January 2017.

Treaty Changes (6)

Andorra-Senegal-OECD

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Andorra and Senegal Deposit Ratification Instruments for Mutual Assistance Convention

On 25 August 2016, Andorra and Senegal deposited their ratification instruments for the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 protocol. The convention as amended was signed by Andorra on 5 November 2013 and by Senegal on 4 February 2016.

According to the OECD overview of signatories to the convention, the convention will enter into force in both countries on 1 December 2016.

Austria-Iceland

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Update - Tax Treaty between Austria and Iceland

The income and capital tax treaty between Austria and Iceland was signed on 30 June 2016. The treaty is the first of its kind between the two countries.

Taxes Covered

The treaty covers Austrian income tax and corporation tax. It covers Icelandic income taxes to the state and to the municipalities, and net wealth taxes to the state.

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 - 0%
  • Royalties 5%

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; and
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment 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

Iceland applies the credit method for the elimination of double taxation, while Austria generally applies the exemption method. However, Austria will apply the credit method in respect of income taxed in Iceland in accordance with the provisions of Articles 10 (Dividends) and 12 (Royalties).

Entry into Force and Effect

The treaty will enter into force on the first day of the third month following the exchange of the ratification instruments, and will apply from 1 January of the year following its entry into force.

Guernsey-Turks Caics

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Protocol to TIEA between Guernsey and Turks and Caicos Islands Signed

Officials from Guernsey and the Turks and Caicos Islands have signed a protocol to the 2014 tax information exchange agreement between the two jurisdictions. The protocol, signed 15 August 2016 by Guernsey and 29 June 2016 by Turks and Caicos, is the first to amend the agreement. It adds Article 5A (Automatic Exchange of Information) and Article 5B (Spontaneous Exchange of Information), and revises paragraph 1 of Article 11 (No Prejudicial or Restrictive Measures) and paragraph 2 of Article 13 (Mutual Agreement Procedure).

The protocol will enter into force once the ratification instruments are exchanged.

Kazakhstan-Saudi Arabia

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Tax Treaty between Kazakhstan and Saudi Arabia to Enter into Force

According to an update from the Kazakh Ministry of Finance, the income tax treaty between Kazakhstan and Saudi Arabia will enter into force on 1 September 2016. The treaty, signed 7 June 2011, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Kazakhstan corporate income tax and individual income tax, and covers Saudi Zakat and income tax including the natural gas investment tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or connected projects for a period or periods aggregating more than 6 months within any 12-month period.

Withholding Tax Rates

  • Dividends - 5% (the protocol to the treaty includes that 5% rate may also apply to profits of PE's after having been taxed under Article 7 (Business Profits))
  • Interest - 10% (the protocol to the treaty includes that for debt-claims arising in Kazakhstan, the gross amount of income from debt claims for withholding tax purposes is equal to 50% of the gross amount)
  • Royalties - 10%

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 that constitute a share in a company resident 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

Both countries apply the credit method for the elimination of double taxation.

Non-Discrimination

The treaty does not include non-discrimination provisions.

Effective Date

The treaty applies from 1 January 2017.

Liechtenstein-Andorra-Iceland-Untd A Emirates

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Liechtenstein Approves Tax Treaties with Andorra, Iceland and the U.A.E.

On 24 August 2016, the government of Liechtenstein announced that it has approved the ratification of the pending income and capital tax treaties with:

The treaties are the first of their kind between Liechtenstein and the respective countries and will enter into force after the ratification instruments are exchanged.

Poland-Thailand

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Poland Intends to Negotiate Revisions to Tax Treaty with Thailand

According to recent reports, the Polish Ministry of Finance has expressed its intent to the Thai government to begin negotiations by the beginning of 2017 for revisions to the 1978 tax treaty between the two countries. Any resulting revisions would be the first to the treaty, although it is unclear if Poland intends to sign a protocol to amend the current treaty or sign a new treaty. Additional details will be published once available.

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