Month: March 2017
A public consultation has been announced on 27th March 2017 by the Treasury and Resources department to request comments on proposed new tax penalties. The Taxes Office is asking for public views on proposed new financial penalties. This would be an efficient and cost effective way to inspire individuals and businesses to file correct tax information and supplementary payment on time. Measures being considered include financial penalties for providing inaccurate information to the taxes office, charging interest on all tax debts, financial penalties for late tax returns and late payment, which depends on whether people failure to meet deadlines, new closing dates for filing tax returns electronically, penalties for not keeping appropriate records that support information given to the taxes office. In the most serious cases, criminal penalties will apply. Deadline for comments should be sent by 16th June 2017.
A number of major tax changes have been introduced as of 1 January 2017. The changes are given below:
Personal income tax:
Personal income tax has a major change on the tax-free amount that is based on the tax base. In accordance with the new provision, tax deduction is not possible in case of when a taxable income more than PLN 127000.
Corporate income tax:
- The small corporate taxpayers are subject to 15% CIT instead of the standard rate of 19%. The reduced rate applies also to taxpayers starting their business;
- The investment incentive accessible to small taxpayers as well as established companies, whether business or individual taxpayers will be PLN 215,000 (EUR 50,000). It refers instant depreciation of fixed assets in the classification groups 3 to 8, excluding passenger car.
Transfer pricing documentation:
New regulations on transfer pricing applicable as at 1 January 2017 will lead to the situation where the obligation to formulate transfer pricing documentation will have to be analyzed.
- A new threshold has been introduced for the related party status that associate companies need to hold at least 25% (previously 5%) of equity interest in another enterprise;
- Taxpayers with more than EUR 10 million in revenues or expenses, need to prepare a benchmarking study and have to provide a summary report on transactions with associate enterprises along with a tax return.
- The regulation introduced new requirements for taxpayers. Taxpayers have to file their monthly VAT returns electronically and sign the VAT returns with an e-signature;
- The tax authorities calculates the correct VAT amount and impose an additional VAT sanction corresponding to 30% for the discrepancy. The sanction rate will go up to 100% in certain cases;
- Introduced an additional requirement to a fulfilled VAT refund amount within 25 days;
- The outstanding amounts under other invoices cannot exceed PLN 15,000.
Contribution of fixed assets to the share capital of an Ukrainian company is treated as a controlled transaction for transfer pricing purposes. On 9 March 2017, the State Fiscal Service (SFS) clarified this through issuing Guidance Letter No. 5898/7/99-99-14-01-02-17.
Any commercial transaction would be treated as controlled transaction that affects the taxpayer’s taxable base. The letter clarified that the contribution of fixed assets to the share capital of the company does not affect the company’s taxable base in the period when the contribution is performed; such fixed assets are subject to depreciation deductions starting from the month following that in which they are put into business use.
Consequently, the contribution of fixed assets to the share capital of the Ukrainian company should be included in the Report on the Controlled Operations, provided that the general criteria of controlled transactions are satisfied.
The Finance Ministry has published a revised draft bill on 21st March 2017 that amends the Tax and Social Security Procedure Code (TSSPC) with regard to the new country-by-country (CbC) reporting requirements. It is proposed that the amendments will enter into force on 1st July 2017. The bill specifies that the deadline for companies to submit a notification to the National Revenue Agency regarding the group entity that will file the CbC report for the financial year 2016 will be extended to 30th September 2017. Primarily, the proposed deadline was 30th June 2017. Failure to submit CbC reports would be charged an amount between BGN 100,000 and BGN 200,000 and for more violations this charge would be from BGN 200,000 to BGN 300,000. Due to report misleading information, the charge would be between BGN 50,000 and BGN 150,000 and for more violations, it would be within BGN 100,000 to BGN 250,000. Another penalty will be charged in case of fail to notify the tax authorities of the ultimate parent’s refusal to provide CbC reporting information. In this situation, the charging amount would be BGN 10,000. A penalty of BGN 15,000 would be charged for subsequent violations.
The Dutch Tax and Customs Administration has issued an explanation on 30 March 2017 regarding dividend withholding tax exemption for exempt companies. According to the explanation domestic and foreign entities which are exempt from corporate income tax may elect for an exemption from dividend withholding tax for dividends received from 2018. The amendment is generally related to pension funds, exempt investment companies and investment institutions.
The government on 31 March 2017 announced that the new Income Tax Return form for Assessment Year 2017-18, has been simplified for filing returns. It will come into effect from 1 April 2017. The new ITR form will have need of the fewer number of columns to be filled, making the tax filing process much easier for individuals.
Requirements for the new form:
Individuals with salary and interest income will have to fill the new ITR1 ‘Sahaj’ form to file their returns. Many of the deductions have been clubbed, reducing the number of columns. Further, for the Assessment year 2017-18, deduction claimed under the different section of Chapter VIA have been removed and only the most commonly used one have been retained. The ITR1/Sahaj form will have only 18 different columns for claiming deduction under section 80 of Income Tax Act.
In addition, the e-filing facility for ITR-1 is enabled from April 1 and ITRs can be filed till the stipulated deadline of July 31. At the time of filing the form, the taxpayer has to fill in PAN, Aadhaar number, personal information and information on taxes paid. TDS will also be auto-filled in the form.
Aside Posted on Updated on
A two-hour webinar, May 9, 2017, from 11am -1pm NYC time
Sponsored by Emerging and Frontier Markets Association
This webinar will not only cover investing in real estate in CEE but will also discuss developing what’s called “build to suit” for companies setting up warehouses or stand alone retail units or companies expanding into CEE and prefering to organize leases on office space and retail space. This should interest many types of legal and financial staff to multinationals.
Countries in central & eastern Europe (CEE) have some of the fastest growth rates in Europe and their future prospects are bright particularly among the countries that are now part of the European Union. Investments in reaI estate are growing rapidly due to reasonable prices, low valuations, good returns and growing economies.
ln first quarter of 2016, 1.4 billion Euros of real estate investments were made in the top five countries of the CEE, including Poland, Czech Republic, Slovakia, Hungary and Romania and for the full year of 2016, more than 7 Billion in deals were done. This is projected to increase into 2017. Leasing activities are growing as well.
Other large markets such as Ukraine and Russia are poised to attract additional investment in the future. GDP in Central and Eastern Europe still remains lower than Western Europe so there is potential for continued growth going forward.
Challenges still exist both economically and politically. This online seminar with speakers from the world’s largest property management group and one of the largest international law firms will discuss the opportunities and the challenges for making profitable investments in central and eastern Europe.
Whether you are already active in CEE countries or are looking to possibly invest or do business in these markets or to exit existing investments this two-hour webinar is something you must attend.
By attending you will learn:
- How to structure investments & M&A operations for commercial real estate deals in CEE
- Issues and pitfalls in getting deals done
- Best practices for “build-to-suit” deals-what to watch out for
- Ways to negotiate leasing agreements for occupiers in CEE offices & retail
- Where to find funding and financing sources for CRE deals in CEE including funding from North America
- Exit and disposal strategies for real estate assets and portfolios
- Tax and legal issues affecting lessors/lessees, investors and developers
- Dealing with defaults on lease agreements
- Evaluating financial returns and risks in key sectors such as retail, industrial & office
Covering Poland, Czech Republic, Hungary, Romania, Slovakia, and Opportunities in Bulgaria, Croatia, Slovenia, Ukraine & Russia.
Who should attend:
Real estate investors, institutional investors, pension & endowment funds, REITs, multinational companies, franchising operators, private equity firms, commercial real estate agents/brokers, property developers, property management companies, wealth funds, lawyers, bankers, consultants, economic development officers, CEE & EU governmental agencies, private investors, service providers and wealth managers.
Neil Blake, EMEA Head of Research, CBRE Group, London
Lina Nemchenko, partner, Baker & McKenzie, Kiev,
Charles Vernon, senior partner VDA Legal, Bucharest
Benedek Kovacs, partner, Baker & McKenzie, Budapest
Joanna Wojnarowska, partner, Baker & McKenzie, Warsaw
Other speakers to be named
Date: May 9th, 2017 from 11am -1PM Eastern Standard time in US
Emerging & Frontier Markets Association- EFMA -www.emerging-frontiermarkets.org
IN CORPORATION WITH: