Worldwide Tax News
Australia Issues Taxation Ruling on Effective Life of Depreciating Assets
On 28 June 2017, the Australian Taxation Office issued Taxation Ruling (TR) 2017/2 on the effective life of depreciating assets. Under Australian depreciation rules, taxpayers may choose to use the Commissioner's determination of the effective life of a depreciating asset as included in tables A and B of TR 2017/2 or choose to make their own estimate. Table A lists the effective life for industry specific assets and Table B lists the effective life for general assets.
For the use of the listed effective lives, if a depreciating asset is first used or installed ready for use within five years of entering into the contract to acquire the asset, beginning construction of the asset, or otherwise acquiring the asset (relevant time), then the effective life is that which was in force at the relevant time. If an asset is not used or installed ready for use within five years, then the effective life is that which was in force at the time of first use or installed ready for use.
India Delays GST Withholding for E-Commerce Supplies
India's Ministry of Finance has announced its decision to delay the provisions of Tax Deduction at Source (Section 51 of the CGST / SGST Act 2017) and Tax Collection at Source (Section 52 of the CGST/SGST Act, 2017). The provisions are in relation to GST withholding on supplies of goods and services made via e-commerce platforms. The 1% tax collected at source was to apply as part of the countries new GST regime, which will become effective 1 July 2017. As planned, e-commerce platform operators would be required to collect and remit the 1% tax and suppliers selling via the platform would be required to report and remit the balance due. No indication is given on when the GST withholding will apply.
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OECD Publishes Results of Fast-Track Review Process for Tax Transparency
The OECD has published an overview of the results of the Fast-Track review process to evaluate continuing efforts by some jurisdictions to meet transparency standards before the upcoming G20 Leaders summit that will be held 7 to 8 July 2017, during which a list of non-cooperative jurisdictions is to be presented.
Following the review process, the Global Forum on Transparency and Exchange of Information for Tax Purpose has given provisional ratings of:
- Largely Compliant - Andorra, Antigua and Barbuda, Costa Rica, Dominica, the Dominican Republic, Guatemala, the Federated States of Micronesia, Lebanon, Nauru, Panama, Samoa, the United Arab Emirates and Vanuatu
- Partially Compliant - Marshall Islands
- Non-Compliant - Trinidad and Tobago (rating unchanged due to lack of any demonstrable progress)
Of the jurisdictions reviewed, Trinidad and Tobago will automatically be included in the list of non-cooperative jurisdictions based on its non-compliant rating. Micronesia will also likely be included given that, although it was found largely compliant, it does not meet either of the other two conditions for exclusion from the list: commitment to the automatic exchange of information standard; and participation in the mutual assistance convention or a sufficiently broad exchange network. The other jurisdictions reviewed should be excluded as they meet at least two out of the three conditions for exclusion.
Click the following link for the results overview.
Slovenia Publishes CbC Reporting Regulations
Slovenia has published the regulations for the implementation of certain aspects of amendments to the Tax Procedures Act, including the rules for preparing and submitting CbC reports. The final regulations are largely unchanged from those consulted on in May, and include:
- The requirement to submit a CbC reporting notification to the tax authority in an electronic form at the same time as the submission of the corporate tax return, which includes details (as applicable) of the taxpayer, the reporting entity, the ultimate parent, surrogate parent, etc.
- The requirement to submit CbC reports to the tax authority within 12 months following the end of the reporting fiscal year in accordance with the prescribed OECD CbC XML Schema using the eDavki portal.
The CbC reporting notification (obvestilo CbCR) and a technical protocol for the CbC report Schema will be published on the Financial Administration website (Slovenian language). An English language version of the webpage is also available, but contains less information.
Spain Publishes General State Budget Law for 2017 with Limited Tax Changes
Spain has published Law 3/2017 of 27 June 2017 on the General State Budget for 2017 in the Official Gazette. The tax-related changes are limited, and include bringing certain supplies within the scope of the 10% reduced VAT rate. These include admission to theaters, circuses, bullfights, concerts and other cultural performances, as well as certain additional hospitality and food services. The law also provides for various fee changes and tax benefits for various local events.
Bahrain Signs Mutual Assistance Convention and Multilateral Agreement on Financial Account Information Exchange
The OECD has announced that on 29 June 2017, Bahrain signed the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 protocol, as well as the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (MCAA). The Convention must now be ratified by Bahrain and the ratification instrument deposited before entering into force in the country. With regard to financial account information exchange, Bahrain intends to begin the first exchange by September 2018.
Protocol to Tax Treaty between Hong Kong and New Zealand Signed
On 28 June 2017, officials from Hong Kong and New Zealand signed an amending protocol to the 2010 income tax treaty between the two countries. The protocol replaces paragraph 4 of the original final protocol signed with the treaty to remove the provision that Article 24 (Exchange of Information) does not require the Contracting Parties to exchange information on an automatic or a spontaneous basis. The protocol will enter into force once the ratification instruments are exchanged, and once in force, will allow Hong Kong and New Zealand to automatically exchange tax information with each other.
Amendment to SSA between India and Netherlands Signed
According to a release from the Indian Ministry of External Affairs, officials from India and the Netherlands signed an amendment to the 2009 social security agreement between the two countries on 27 June 2017. As previously announced, the amendment incorporates the "Country of Residence" principle into the agreement and will enter into force after the ratification instruments are exchanged.
South African Ruling on MFN Withholding Exemption for Preference Share Dividends Paid to Sweden
On 28 June 2017, the South African Revenue Service published Binding Private Ruling (BPR) 276 – Dividends tax and the most favoured nation clause in a tax treaty. The ruling concerns the payment of dividends that may accrue in respect of preference shares in a South African company wholly-owned by a Swedish Company and whether the MFN clause under the 1995 South Africa-Sweden tax treaty as amended by the 2010 protocol applies.
In line with a previous ruling on general dividend payments to Sweden, BPR 276 provides that dividends paid In respect of the preference shares are not subject to withholding tax as long as documentary requirements are met. The exemption is the result of the MFN clause as triggered by the 2004 Kuwait-South Africa tax treaty, which provides an exemption for withholding tax on dividends paid by a company resident in a Contracting State to a resident of the other State that is the beneficial owner.
Switzerland Approves Pending Protocol to Tax Treaty with Latvia
On 28 June 2017, the Swiss Federal Council announced its adoption of the dispatch for the approval of the pending protocol to the 2002 income and capital tax treaty with Latvia. The protocol, signed 2 November 2016, includes several BEPS-related provisions, as well as new withholding tax exemptions for dividends, interest, and royalties, and new exchange of information provisions (previous coverage).
The protocol will enter into force once the ratification instruments are exchanged, and will generally apply from 1 January of the year following its entry into force.