Month: April 2017

Ghana: Amendments to the VAT Act

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The Commissioner-General of the Ghana Revenue Authority (GRA) on 24 April 2017 published a notice on the Value Added Tax (Amendment) Act, 2017 (Act 948), informing taxpayers that the following changes have been made in relation to Value Added Tax (VAT):

  1. Section 3 of Act 870 Amended
  • The combined tax rate of 17.5% (VAT 15%, NHIL 2.5%) has been reduced to a flat rate of 3% calculated on the value of the taxable supplies in respect of retailers and wholesalers of goods. In order to avoid any doubt, the notice clarifies that the tax rate for the value of the taxable service and the taxable value of the import is 17.5%.
  • However, the 3% charged on the value of the taxable supply does not apply to the supply of any form of power, refrigeration or ventilation equipment in accordance with s. 27 of the Value Added Tax Act, 2013 (Act 870).
  1. Section 48 of Act 870 Amended
  • The Value Added Tax (Amendment) Act, 2017 (ACT 948), has amended Section 48 of the Value Added Tax Act, 2013 (Act 870) by deleting paragraph (d) of sub-section (1) and;
  • The new text for subsection (7A) provides that “a taxable person to whom subsection (2) of section 3 applies does not qualify for an input tax deduction in respect of a supply of goods”. This means that a retailer or wholesaler who accounts for the value of taxable supplies through the VAT Flat Rate Scheme at 3% does not qualify for an input tax deduction.
  1. Section 65 of Act 870 Amended
  • The VAT Flat Rate Scheme has been defined as accounting for VAT on the value of the total taxable goods supplied at 3%.

The above-mentioned amendments entered into force on 7 April 2017, the date of publication of the Official Journal.

Kazakhstan, Ireland sign the DTA

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On 26th of April 2017, the Double Taxation Agreement (DTA) between Ireland and Kazakhstan was signed by the Governments of Kazakhstan and Ireland for the avoidance of double taxation and prevention of tax evasion concerning income taxes. From the Kazakh side, the document was signed by Finance Minister, Bakhyt Sultanov, and from the Irish side by Ambassador Extraordinary and Plenipotentiary of Ireland to Kazakhstan (with residence in Moscow) Adrian McDaid. The sides stressed there are concrete opportunities for mutually beneficial cooperation in the trade and economic sphere and noted the importance of concluding this Convention which will undoubtedly give serious impetus to business partnership.

Thailand- new tax on e-commerce to be introduced in April 2017

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The Revenue Department of Thailand is planning to enforce a new law to tax cross-border e-commerce transactions by April 2017.

Currently, a foreign operator which carries on e-commerce business but does not enter Thailand or does not have any employee, agent or representative and/or server located in Thailand, were not regarded as carrying on business in Thailand and therefore are not subject to income tax in Thailand.

But now the Thai Revenue Department (TRD) is intended to improve and increase revenue collection from the e-commerce business.


Czech Republic, Ghana sign DTA

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On 11th of April 2017, the Double Taxation Agreement (DTA) between Czech Republic and Ghana was signed in Accra. From the Ghana side, the document was signed by Finance Minister, Ken Ofori Atta and from the Czech side by the Czech Ambassador to Ghana, Margita Fuschova.  This agreement was signed after the two countries concluded negotiations for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income. It will remove the incidence where income from both countries are taxed double and as well as increase Ghana’s exchange of information network, which allows treaty partners to exchange information in order to mitigate tax risk and tax evasion across borders.

Bulgaria, Pakistan sign avoidance of Double Taxation Agreement

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On 26th of April 2017, Pakistan and Bulgaria signed an Agreement on Avoidance of Double Taxation (DTA) and prevention of fiscal evasion with regard to taxes on Income after the conclusion of second round of negotiations in Islamabad. It will also provide certainty of tax treatment in each country so that the investors feel free from any fear or apprehension. Moreover, through the exchange of information mechanism, information could be obtained on request basis for the administration or enforcement of the domestic laws which will help minimize the possibility of tax evasion.

Iceland presents fiscal plan for 2018 to 2020

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The Minister of Finance and Economic Affairs announced fiscal plan for 2018 to 2020 to reduce the standard VAT rate from 24% to 22.5%. This plan will be effective from 1st 2019.

Costa Rica: Tax Authority issues transfer pricing guidelines

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Costa Rican tax authority on 21 April 2017, issued Resolution DGT-R-16-2017 in relation to transfer pricing documentation guidelines. The Resolution establishes requirement of taxpayers having transactions with related parties to retain supporting documentation of certain corporate information and company local information.  The requirements are aligned with Master File and Local File maintenance as proposed by the OECD BEPS project.

The DGT’s corporate information is equivalent to the Master File that is summarizes qualitative and quantitative data from the multinational group. The company local information (equivalent to the Local File) requires the taxpayer to provide the organization structure, chain value, financial information etc. Failure to comply with this provision could lead to a penalty of an amount up to approximately USD 90,000.