WTA Briefs

World Tax Brief: May 2017

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Australia Corporate tax rate: The 2017-18 federal budget has been delivered on 9 May 2017 and the government announced a reduction in the small business tax rate from 28.5% to 27.5% for the 2016–17 income year. The turnover threshold to qualify for the lower rate will start at $10 million (in 2016-17) and progressively rise until the 27.5% rate applies to corporate tax entities with less than $50 million aggregated annual turnover in the 2018-19 income year. From 2017-18, entities eligible for the lower tax rate will be known as base rate entities.
Capital gains tax: The Budget for 2017 -18 also proposes the changes to the foreign resident capital gains withholding (FRCGW) rate and threshold. The changes will apply to contracts entered into on or after 1 July 2017, for real property disposals where the contract price is $750,000 and above (currently $2 million) and the FRCGW withholding tax rate will be 12.5% (currently 10%).
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Central management and control: Recently, the Australian Tax Office has released a new draft ruling TR 2017/D2 and has withdrawn its preceding Ruling TR 2004/15 on the tax residence of foreign incorporated companies. Accordingly, if a company carries on business and has its central management and control in Australia, it will necessarily carry on business in Australia. That is so even when the only business carried on in Australia consists of that central management and control, and its trading operations are conducted outside Australia.
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Canada Incentives: The Canadian government has proposed to extend the small deduction to certain farmers. The small business deduction effectively reduces corporation tax from 15 percent to 10.5 percent on the first CAD500, 000 (USD365, 281) of active business income generated by a Canadian-controlled private company.
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France Dividends/Profits Distributions: The Court of Justice of the European Union (CJEU) issued a judgment on 17 May 2017, ruling that the 3% contribution on distributed profits is not compatible with article 4-1 of the European Union (EU) Parent-Subsidiary Directive (PSD) when the parent company makes the redistribution of the dividends received from its subsidiaries.
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Corporate tax rate: French newly elected president has committed to reducing the corporate tax rate from current rate of 33.3% to 25% with the aim to bring it in line with the EU average within five years.
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Italy Incentives: The Italian revenue on 9 March 2017 provided tax instruction, the clarification of the Italian patent fund regimes, the tax credit for research and development activities (R & D) and the tax credit for new operating assets.
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Singapore Incentives: Singapore has released Budget for 2017 on 20 February 2017, for the financial year 1 April 2017 to 31 March 2018. The Budget bill raised the existing corporate income tax (CIT) rebate cap from SGD 20,000 to SGD 25,000 for the assessment year 2017, but the rebate rate remains unchanged at 50% of tax payable. This CIT rebate will be extended for another year to YA 2018 but there will be a reduced rate of 20% of tax payable with a cap of SGD 10,000.
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Kenya Incentives: The Finance Bill, 2017 published on 3rd April 2017 which was announced on 30th March 2017. The Bill has amended various tax provisions while at the same time providing clarity on the existing provisions. As a result, A 150% investment deduction allowance has been introduced for capital expenditure in the economy; 100% investment deduction on capital expenditure added on the construction of a building or machine installation by or for use in the Special Economic Zone. This is aimed at encouraging investment at the SEZs; To encourage investment and the assembly of motor vehicles in Kenya the corporate tax rate is to be reduced from 30% to 15% for the first 5 year for new assemblers who assembling motor vehicles locally; A 150% deduction incentive will be applicable to the fishing sector; A 100% investment deduction will be applied to the special economic zone on buildings and machinery.
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India Dividend distribution tax: The Supreme Court of India in the case of: Godrej & Boyce Manufacturing Company Limited v. DCIT (Civil Appeal No. 7020 of 2011), held that disallowance under Section 14A of the Income-tax Act, 1961 (the Act) would apply to dividend income which is subject to dividend distribution tax (DDT).
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Computation of taxable income: The Supreme Court of India in the case of:  Raj Dadarkar and Associates v. ACIT (Civil Appeal No. 6455-6460 OF 2017), held that the income from the sub-licensing of the property is taxable as house property income and not business income.
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Hong Kong Incentives: Hong Kong introduced new tax rules for aircraft leasing industry to foster the proposed development of Hong Kong as an aircraft leasing centre.
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Czech Republic Withholding tax on interest: The Czech Republic introduces new withholding tax requirements which contain the withholding tax provisions. The changes will take effect on the 15th day of their publication. There is a reference to the publication date and is July 1, 2017. The new provisions of the withholding tax are in principle for shareholders’ associations and profit-sharing companies and financial institutions that pay interest on these companies. The changes extend the chance of 19% withholding tax on interest on deposits. This new measure requires additional requirements for banks and savings banks and credit institutions.
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Norway Participation relief: The tax authorities released a binding advance ruling on 4 May 2017, regarding the application of a domestic exemption from dividends to an Irish holding company. The judgment provides that the dividends paid by the Norwegian company to the Irish holding company are exempt from Norwegian withholding tax under the domestic exemption from Norway. To be qualified for the withholding tax exemption, the dividend recipient must be practically identical to certain non-individual assessable person according to the Norwegian Tax Act.
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Malaysia Sanctions for non-compliance:  The Inland Revenue Board of Malaysia (IRB) has proposed to increase the rate of penalty to 100% on tax payable on undeclared or under-declared income beginning with effect from 1 January 2018.
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Audits: On 1 May 2017, the Inland Revenue Board of Malaysia (IRBM) adopted a modified Tax Examination Board. The aim of the revised framework is to ensure that tax audits are conducted fairly, transparently and impartially. The framework outlines the rights and obligations of audit officers, taxpayers and taxpayers in relation to a tax audit. In addition, the objective of the framework is to assist the auditors in carrying out their tasks efficiently and effectively and to assist taxpayers in fulfilling their obligations.
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Hungary Tax Rate: The Hungarian Parliament has approved an increase in the country’s advertising tax. The new legislation will increase advertising revenues from 5.3% to 7.5% as from 1 July 2017.
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South Africa Tax compliance: On 15 May 2017, the South African Revenue Service (SARS) has introduced important changes and improvements to its current dispute settlement process as part of the ongoing commitment to providing a better service to taxpayers. For the first time, SARS has implemented an electronic requirement for reasons via eFiling or SARS branches. The Request for Reasons functionality allows taxpayers to request reasons for an assessment where the grounds provided in the assessment do not sufficiently enable a taxpayer to understand the basis of the assessment and to formulate an objection if the taxpayer is aggrieved by the assessment.
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Nigeria Late payments of tax due: The Finance Minister on 22 May 2017, announced that 5% increased interest charge would impose from 1st of July 2017 on firms that fail to fulfil their tax obligations as and when due as part of measures to sanction tax defaulters and enhance voluntary compliance on tax obligation.
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Greece Tax payment procedure: The Parliament of Greece has adopted a draft bill on 11th of April 2017, which contains some amendments to income tax code. Accordingly, the corporate income tax payment needs to be completed by six instalments instead of eight. Note that, the first instalment needs to be paid on the last working day of the month following the filing deadline and the rest of five instalments must be paid by the last working day of the following five months. The first payment shouldn’t be paid during filing of the corporate tax return.
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Poland Incentives: Government has published an amended draft bill regarding the R&D tax relief. The bill proposes an increase of current income tax deduction from 50% and 30% to 100% depends on the category of eligible costs and the size of the taxpayer. This means that all taxpayers who benefited from the R & D tax exemption are able to save in the income tax PLN 19 to each PLN 100 of qualified costs from 2018 onwards. R&D Tax Relief will come into force on 1 January 2018.
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Netherlands Withholding tax on dividend: On 16 May 2017, the Dutch Government published a public consultation on the previously announced legislative proposals on amendments to the dividend withholding tax rules for holding cooperatives. The Dutch government expects the new amendments to the Dutch Dividend Tax Act (DWTA) to enter into force on 1 January 2018.
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Saudi Arabia Corporate tax rate: The Government of Saudi Arabia has set a range of income tax rates for producers of oil and hydrocarbons, through a royal decree on 27 March 2017. According to the decree, the tax rate for investments exceeding 375 billion riyals ($99.96 billion) will be 50% and the rates will increase for producers with smaller investments.
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UK Facilitation of tax evasion: The United Kingdom adopts a new criminal offence for non-compliance with tax evasion. The Criminal Code, which contains the offences, received royal approval on 27 April 2017 and was due to enter into force in September 2017.
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US Incentives: The IRS has announced that from now “eligible small business start-ups” can elect to apply part or all of their research credit against their payroll tax liability instead of having to apply for the research credit against their income tax liability.
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World Tax Brief: April 2017

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UK Corporate income tax rate: The corporate income tax rate in the UK has been reduced to 19% from the current 20% rate starting from 1st April 2017, in order to support investment, growth and job creation. Further, the main rate of corporation tax will be cut again to 17% by 2020, by far the lowest in the G20 and benefiting over 1 million businesses.
Incentives: According to the Chancellor’s announcement in the Autumn Statement that the government introduced the new corporation tax relief for museums and galleries. The relief will be reduced to 20% for non-touring exhibitions and 25% for tour exhibitions. The relief will be capped at £ 500,000 of the qualifying expenses per exhibition.
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US Corporate income tax rate: President Donald Trump has proposed a significant reduction of corporation tax rates to 15% from the current 35% rate. Under the Trump tax scheme, the United States would be bound by the fourth-lowest tax rate of developed nations between Germany and Poland. He also proposes a 10% tax on more than $ 2.6 trillion in the revenue that US companies have stored offshore. This would allow companies to bring money from overseas to the US with a slightly lower, one-off tax.
Alternative minimum tax:  The President also proposes the abolition of the so-called alternative minimum tax. The decade-long tax, which has been enacted to ensure that the rich pay their fair share, costs Trump 31 million dollars in 2005.
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Turkey Incentives: Turkey has introduced a new law on the reshuffle of certain public claims and the amendment of certain laws and cabinet regulations. The law allows legitimate taxpayers to benefit from tax relief if they fulfil certain conditions. The new tax relief is intended to promote the compliance level of taxpayers and allow them to benefit from a 5% tax deduction from their annual tax.
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China Corporate tax rate: The government of China plans new tax cuts to reduce the burden on businesses, support innovation and stabilise growth. On 19 April 2017, tax cuts were approved at a State Council executive meeting, after the government announced measures to decrease business costs in the first quarter.
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Brazil Withholding tax: Recently, the Brazilian tax Authorities published a withholding tax guideline ( Solução De Consulta No. 153/2017 of 2 March 2017) in order to confirm that the triggering event for the specified transaction tax the import of services should be considered when the income will be economic or legal Be available to the foreign creditor.
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Dominican Republic Incentives:  The Directorate General of Internal Taxation has recently introduced the expansion of fiscal support for the agricultural sector, which frees them from the payment of advances on income tax, the payment of the tax on assets and the inclusion of income tax on payments by the state.
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Germany Refund: Recently, the German tax administration has published an updated guidance on the tax refund procedure for non-residents to claim a refund of withholding tax on portfolio dividends. According to the new procedure, as from 1 January 2017, the income from dividends subject to a residual tax rate of 15% under an agreement.
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Hong Kong Filing return: The Inland Revenue Department of Hong Kong has recently published a list of major changes in profit tax return form [BIR51] for the year of 2016/17.
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Australia Sanctions for tax evasion: The Australian Government has introduced a new Diverted Profits Tax (DPT) Bill on 9 February 2017 into the House of Representatives. If passed, the Bill will allow the Commissioner of Taxation to tax the diverted profits of certain entities at a rate of 40%. The DPT will apply to multinationals with annual global income of AUD 1 billion or more. The DPT will apply to income years commencing on or after 1 July 2017 whether or not a relevant transaction was entered into before that date.
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Mexico Incentives: Government introduced general rules on R&D tax credit within the official gazette on 28 February 2017, this rule governs Mexico’s R&D (research and development) tax credit. Accordingly, taxpayers may claim a credit against the income tax liability equal to 30% of the investments and expenses for technological R&D in Mexico and is attributable to the income tax due for the respective fiscal year (FY). Taxpayers calculate the credit based on the incremental expenses and investments made in the current year as compared to the previous three tax years. Taxpayers have to submit their applications between 1 April and 31 May for the fiscal year 2017.
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India Computation of taxable income: The Supreme Court of India in the case of: McDowell & Company Ltd. v. CIT (Civil Appeal No. 3893 of 2006), held that the waiver of interest by financial institutions is computable from the hands of the Amalgamating Company regarding the benefit of section 72A of the Income Tax Act.
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Kenya Corporate tax rate: Kenya’s Cabinet Secretary for Finance has presented the budget for 2017 and proposed to implement the modifications for the corporate tax rate to promote the development of real estate. Accordingly,  the corporation tax rate has been reduced to 20% against corporation tax rates of 30%.
Withholding taxes: Under the budget proposal, dividends paid to non-residents by enterprises operating in Special Economic Zones will be exempt from withholding tax in order to ensure that foreign investors get a good return on their investment. Withholding tax on interest payable to non-residents by special economic zone enterprises will be reduced to 5%.
Incentives: The budget has proposed a 150% deduction incentive to the fishing sector and a 100% investment deduction for the special economic zone on buildings and machinery.
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Thailand Liability to Tax: The Revenue Department of Thailand plans to introduce a new tax on e-commerce in April 2017 to control cross-border e-commerce transactions. 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.
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World Tax Brief: March 2017

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Dominican Republic Filing returns: The Dominican tax authorities allotted new regulation (General Notice No.12-17) in order to improve the tax filing procedures for the annual corporate income tax return (Form: IR-2) and appendices.
Ecuador Refund: The Internal Revenue Service has published a Procedure in the Official Gazette to request an income tax refund. Accordingly, as from 1 January 2017, a tax refund mechanism is available to recover the excess of income tax advance payments made, provided that the amount exceeds the income tax levied and the general or sectoral average income tax burden of the taxpayer according to the procedure defined by the tax administration.
Ghana Capital gains Tax: The Minister of Finance has proposed on 2017 Budget, the exemption from capital gains tax on gains realised from the sale of securities listed on the Ghana Stock Exchange or publicly held securities approved by the Securities and Exchange Commission.
India Withholding tax rates: The Ahmedabad Bench of the Income-tax Appellate Tribunal in the case of:  Uniphos Environtronic (P.) Ltd. v. DCIT [2017] 79, held that higher tax rate not applied when the tax is withheld under tax treaty. In that case, the court has been observed that the taxpayer had deducted the tax at source at the rates prescribed in respective tax treaties between India and Germany at the prescribed rate of 10%. Where the tax has been deducted on the strength of the beneficial provisions of the tax treaties, in that case, the provisions of Section 206AA of the Act cannot be invoked because Section 90(2) of the Act provides that the provisions of the Act shall apply to the extent they are more beneficial to the taxpayer. Therefore, the taxpayer is eligible to avail a beneficial rate of tax.
Portugal Filing Return:  Portugal recently updated the corporate tax return form (Form 22) on 29 March 2017 with the order No. 2608/2017 of February 8, 2017. The new order brought some legal changes and includes instructions for filing the corporate tax return.
Russia Groups: On 3 March 2017, the Government published Guidance clarifying the taxation of CFC profits in determining the corporate tax base of a consolidated tax group (CTG). Mentioning to article 278.1, section 1 of the Tax Code (TC), the Ministry of Finance stated that the corporate tax base of a CTG is the sum of all income received by the members of the CTG, reduced by all expenses incurred by them. The MoF also held that the provisions of article 278.1 of the TC apply exclusively in the course of determining the tax base of a CTG, which is subject to corporate income tax at the standard rate of 20%, as stipulated under article 284, section 1 of the TC.
Saudi Arabia Corporate Income Tax: Saudi Arabia issued the Regulations for implementation of Zakat under Ministerial Resolution No. 2082 on 9 March 2017, The regulations applies to all commercial activities established for profit and are carried out by Saudi resident and Gulf Cooperation Council nationals. The new regulations replace all previous directives, resolutions, instructions and circulars issued by the General Authority for Zakat and Tax (GAZT) of Saudi Arabia. According to the regulations, the zakat base has to be higher than the adjusted profit for the year and will be charged at the rate of 2.5% of the assessable funds irrespective of whether the zakat payer follows the Hijri or Gregorian calendar as their fiscal year. Gain and loss from revaluation of financial securities at their market values also be considered for the calculation of Zakat. According to the new rules Government’s share in a commercial venture would also be subject to zakat.
UK Special rate of corporation tax: HMRC publishes a tax information and impact note on 22 March 2017. Amendments are made to the existing rules which apply tax at 45% to restitution interest payable by HMRC. The measure will amend Part 8C of The Corporation Tax Act 2010 (CTA 2010) to remove charitable companies and the income of policyholders of with-profits funds from the scope of the 45% rules. They will bring a corporate beneficiary, in receipt of restitution interest sought on its behalf, within the scope of the rules.
Local Business Rates: The government is to give more support to businesses whose local rate bills have increased following the evaluations affecting English business rates from April 2017. The support includes a limit on the amount of the annual rate increase for businesses losing the Small Business Rate Relief amounting to the greater of GBP 600 or the real terms transitional relief cap. A hardship fund will also be created to allow local authorities to give discretionary relief to individual cases, and pubs with a rateable value up to GBP 100,000 will receive a one year discount of GBP 1,000 from their business rates.
Uruguay Liability to Tax: Uruguay has issued Decree No. 40/017 providing some criteria or condition for determining low or no taxation jurisdictions on 13 February 2017. Accordingly, countries or jurisdictions will be deemed to charge low or no taxes if: the entity is subject in its country of residence to a tax rate of less than 12% on the activities, assets, or economic rights used or located as the case may be in Uruguay; and a tax information exchange agreement or an income tax treaty with an information exchange clause is not in force between Uruguay and the entity’s country of residence.
Vietnam Incentives: Vietnam’s tax authority recently updates and published following corporate tax incentives schemes: (i) No CIT incentive tax rate applicable for investment projects located in industrial parks; and (ii) A company generating income from agricultural and fishery processing is not entitled to multi-CIT incentive schemes simultaneously.
South Africa Dividends tax: Government has been announced in the February 2017 Budget that the rate of the dividends tax will be increased to 20% with effect from 22 February 2017 (the increase and effective date have yet to be legislated).
Bolivia Corporate income tax rate: Bolivia has increased 3% rate from 22% to 25% to the income tax on the profits of companies in the financial sector.
Colombia Corporate income tax rate: A new tax reform law has been enacted in Colombia and accordingly, the CREE (CREE is the Spanish acronym for the “fairness tax”) tax and the CREE surcharge are no longer applicable from 1 January 2017. In addition, with respect to the CREE surcharge, as it has been abolished as from the tax year 2017, advance payments corresponding to such amount must not be settled or paid by taxpayers when filing the CREE tax return for the tax year 2016.
Sanctions for non-compliance: Colombia has recently published new tax penalties regime and under this new law, taxpayers may benefit from a reduction of the penalty for late submission of tax returns, provided that (i) the taxpayer has not incurred any penalties due to late submission of other tax returns in the preceding 2 years; and (ii) DIAN has not issued an administrative decision on the late submission of the tax return. If conditions (i) and (ii) are met, the taxpayer is required to pay only 50% of the tax penalty resulting from the application of the formula provided under article 641 of the TC.
Costa Rica Corporate income tax rate: Costa Rica has been updated the Law N° 9428. This Law provides the corporation flat tax which establishes an applicable progressive rate from 15% to 50%. Thus, the tax considers whether the entity is registered as a taxpayer or not. Also, if registered it considers the gross amount accrued by the entity during the tax period.
Late payment interest: Ministry of Finance has published a Resolutions which recognised an interest rate of 11.73% applicable for late payment and refunds of taxes, surcharges and penalties.

World Tax Brief: February 2017

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India Corporate income tax rate: On 1 February 2017, the Finance Minister has presented the Budget for 2017-18. According to the budget, the corporate tax rate is reduced to 25% for enterprises with annual turnover up to INR 500 million.
Taxation of capital gains: Under the budget, the holding period for categorizing immovable property as long-term capital assets are reduced from 3 to 2 years. Foreign portfolio investors (Categories 1 and 2) will be exempt from tax under provisions relating to the indirect transfer of capital assets. Furthermore, the base year for calculating capital gains will be changed from 1981 to 2001.
Carry forward losses: Under the budget, loss carry-forward subject to 51% shareholding restriction (under section 79 of the ITA) for eligible start-up companies will be relaxed.
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Liability to Tax: The Central Board of Direct Taxes (CBDT) has issued Circular No. 8/2017 of 23 February 2017 clarifying that the existing provisions in place of effective management (POEM) will not apply to a company with a turnover or gross receipts of INR 500 million or less in a financial year.
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Australia Sanctions for non-compliance: According to the 2016-17 Budget, the Government of Australia has announced that it would increase administrative penalties imposed on companies with global revenue of $1 billion or more who fail to adhere to tax disclosure obligations. Therefore, from 1 July 2017, penalties relating to the lodgment of tax documents to the Australian Taxation Office (ATO) will be increased by a factor of 100. This will raise the maximum penalty from $4,500 to $450,000, which will encourage multinational companies to meet their reporting obligations. In addition, from 1 July 2017, penalties relating to making false and misleading statements to the ATO will be doubled, which is aimed at discouraging multinational companies from being reckless or careless in their tax affairs.
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Latvia SME: On 1 January 2017, the amendments to the Law on Micro-Enterprise Tax come into force. Thus, from 2017, micro-enterprise tax is levied at the following rates, subject to further conditions and exceptions: EUR 0 – 7,000: 12% (15% from 2018); EUR 7,000.01 – 100,000: 15%; and EUR 100,000.01 and above: 20%.
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Serbia Submission of returns: The Serbian Ministry of Finance has issued a rulebook on 16 December, 2016 that is effective 1 January 2017 and applies for purposes of preparing the 2016 tax return. The rulebook is on amendments and changes to the rulebook on the contents of the tax Balance and other issues relevant for the assessment of corporate income Tax.
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Kazakhstan Incentives: On 24 January 2017, Government Resolution No. 10 of 20 January 2017 on priority business activities within Special Economic Zones (SEZs) has been published. According to current legislation, to receive tax incentives, a company active within a SEZ must fulfil certain conditions, such as carrying out priority business activities listed by the government. The Resolution provides for this list of priority business activities for each of the ten SEZs.
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Brazil Taxation of capital gains: According to a Private Ruling 88/2017, published in the Official Gazette of 31 January 2017, simplifies the tax treatment of exchange of shares transactions in Brazil where the shareholders are non-resident persons, as follows: income tax is due at a rate of 15% if non-resident shareholders derive capital gains from the transactions, and the new parent company (as a result of the transaction) is responsible for withholding and paying the income tax due on behalf of the non-resident shareholders.
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Chile Interest rate: The Ministry of Finance announced the modifications introduced by Law 20,956 to the tax treatment of bonds issued by both the Central Bank and Treasury. Therefore, as from 1 February 2017, these institutions are obliged to withhold a 4% income tax on the interest accrued at the moment of coupon payment.
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Ireland Directors’ fees: On 12 January 2017, The Irish Revenue published Finance Act 2016, which includes an exemption for resident relevant directors is introduced on certain emoluments not more than EUR 5,000.
Incentives:  Under the Finance Act, the regulation of the new 20% WHT deduction for Irish real estate funds is also expanded with new elements as an anti-avoidance provision regarding multiple funds.
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El Salvador Late payments interest rate: The Ministry of Finance has published the new late payment interest rates on 31 January 2017. According to the announcement, an annual interest rate of 6.37% will apply to late payments of taxes made from 1 February to 31 July 2017. However, such annual interest rate will be 10.37% if the late payments are made after 60 days have passed since the deadline.
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Mauritius Tax Management: According to the 2016-2017 Budget, The Minister of Finance has introduced an alternative dispute resolution mechanism to expedite cases where the amount of tax payable under dispute exceeds Rs10 million (approximately US$285,000).
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Cyprus Payment of tax: The Parliament of Cyprus has approved a new law on 27 January 2017, which provides for the payment of overdue taxes by monthly installments. Under the provisions of the bill payments relating to income taxes are eligible for the payment of overdue taxes by monthly installments. According to the new law amount overdue can be repaid by 54 monthly installments for tax obligations below €100,000 and in up to 60 monthly installments for tax obligations exceeding EUR 100,000.
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Italy Corporate tax rate: The Budget Law for 2017 entered into force on 1 January 2017 and accordingly it has been confirmed that, with effect from 2017, the corporate income tax rate is decreased to 24%. However, qualifying banks and financial institutions, except qualifying investment fund management companies, are subject to a surtax of 3.5%.
Besides, the applicable allowance for corporate equity rate is 2.3% in 2017 and will be increased to 2.7% in 2018.
Withholding tax rate: In addition, the reduced withholding tax levied on dividends paid out to a company resident and subject to corporate income tax in another EEA country that allows an adequate exchange of information with Italy is decreased to 1.2%.
Interest income: Effective from 2017, interest paid by qualifying banks and financial institutions are fully deductible. But insurance companies, parent companies of insurance groups and qualifying investment fund management companies are able to interest deduction only up to 96% of the total amount.
Losses: Subject to certain conditions, a company may be able to transfer tax losses acquired in the first 3 years of functioning of the business to a related company which directly or indirectly holds an equity interest in the transferor granting voting rights and a profit share not lower than 20%, at the end of the fiscal year in which the transfer is made.
Incentives: The tax credit also available for the tourism sector under Law Decree No. 83 of 31 May 2014 has been amended and extended for fiscal years 2017 and 2018. Subject to certain conditions, Hotels and other accommodation facilities will be able to get benefit from a tax credit equal to 65% on documented expenses incurred for renovation and improvement of energy efficiency and seismic performance. Likewise, the tax credit regime available for research and development (R&D) activities under Law Decree No. 145 of 23 December 2013 and subsequently amended by Law No. 190 of 23 December 2014 has been amended and extended.
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Slovenia Payment of tax: The tax authority has issued guidelines on clarifying monthly advance payments of corporate income tax resulting from the increase in the corporate income tax rate from 17% to 19% as from 1 January 2017. Accordingly, the tax authority has specified that, despite the increase in the tax rate, companies will continue to pay monthly advance payments at a rate of 17%. However, this will be effective only until the date at which taxpayers file their corporate income tax returns for the tax year 2016 (i.e. 31 March 2017).
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Colombia Incentives: Law 1819 of 2016, adopting the structural tax reform bill approved on 23 December 2016 and introduces amendments to the corporate income tax (CIT) incentives applicable to small enterprises benefiting from Law 1429 of 2010. Please click below for the details.
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Compliance calendar: The Colombian National Tax Authority (DIAN) issued an official communiqué providing the tax calendar for the tax year 2017, on 22 February 2017. The 2017 tax calendar provides the deadlines for complying with formal and substantial tax obligations regarding withholding taxes, VAT, income tax for large taxpayers, individuals and companies, fairness tax, consumption tax, foreign assets reporting, gas tax and the carbon tax.
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Computation of taxable income: In a recently published regulation, the National Council of Tax Benefits in Science, Technology and Innovation provided the maximum amount deductible for investments made in science, technology and innovation projects (qualified projects) for the tax year 2017, as follows: the maximum annual amount of investments to be made by taxpayers that are eligible for the tax benefit provided for under article 158-1 of the Tax Code (TC) is COP 600 billion; and the maximum annual amount that can be deducted by taxpayers when investing in qualified projects under article 158-1 of the TC is COP 75 billion per project.
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Zambia Incentives: The fiscal Budget for 2017 has proposed, the capital allowances for plant, equipment and machinery used in farming and agro-processing to increase from 50% to 100%.
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Finland Withholding tax payment procedures: The Finnish tax administration on 9 February 2017 released an updated version of the guidance on withholding tax on dividends, interest and royalties paid to non-residents. The updated version clarifies the obligation for the payer of such income to report and remit the withholding tax to the tax authorities, and reflects the amendments made in respect of the collection of taxes and tax procedures. Accordingly, tax returns on self-assessed taxes, including dividend withholding tax, are to be filed electronically. The due date for filing and paying self-assessed taxes is the 12th of each month.
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Israel Incentives: Israel published an amendment to the Law for the Encouragement of Capital Investments on 29 December 2016. The amendment, which aims at increasing the international competitive advantage, promoting the growth of the Israeli high-tech industry and creating high-productivity jobs.
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Austria Incentives: The Ministry of Finance updated the guidance on tax incentives for start-up companies on 14 February 2017. The incentives for start-up companies are granted if certain requirements are met.
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Puerto Rico Withholding tax: The Department of Treasury issued Bulletin 17-02 on 3 February 2017 regarding payments received for services. These payments for services are subject to the withholding of sales and use tax at a rate of 7%.
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Netherlands Participation exemption: Decree No. BLKB2016/803M of 20 January 2017 was published in Official Gazette No. 5003 regarding the application of the participation exemption. The Decree has updated and replaces Decree No. DGB2010/2154M with effect from 24 February 2017 and has retroactive effect to 20 January 2017.
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Singapore Corporate tax rate: The fiscal Budget for 2017 has proposed and raised the existing corporate income tax (CIT) rebate cap from SGD 20,000 to SGD 25,000 for the year of assessment (YA) 2017, but the rebate rate remains unchanged at 50% of tax payable. This CIT rebate will be extended for another year to YA 2018 but there will be a reduced rate of 20% of tax payable with a cap of SGD 10,000.
Incentives: According to the Budget 2017, for the purpose of encouraging the use of IPs arising from research and development (R&D) activities, IP income will provide incentive under the new base erosion and profit shifting (BEPS)-compliant IP regime called the IP Development Incentive (IDI). However, existing incentive receivers will keep on having such income covered under their existing incentive awards until 30 June 2021.
Withholding tax exemption: The period withholding tax exemption on payments made to non-resident non-individuals for structured products offered by Financial Institutions (FI) will be extended until 31 March 2021. Also, the automatic WHT exemption regime will be extended to qualifying payments made on qualifying loans entered into on or before 31 December 2022.  Further, the existing Integrated Investment Allowance (IIA) system will be extended until 31 December 2022.
Incentives: According to the Budget, the existing set of tax incentives for project and infrastructure finance (PIF) providing: (a) tax exemption of qualifying income from qualifying project debt securities, (b) tax exemption of qualifying income from qualifying infrastructure projects or assets received by approved entities listed on the Singapore Exchange; and (c) concessionary tax rate of 10% on qualifying income derived by an approved infrastructure trustee manager or fund management company, will be extended to 31 December 2022.
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Bolivia Corporate tax rates: The Finance Minister has announced a proposal on 7 February 2017 for rising income tax in the financial sector by 3% (from 22% to 25%). The proposal had been submitted to the Assembly.
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Russia Computation of taxable income: The Federal Tax Service has clarified the deduction of expenses for Corporate Income Tax purposes.  Accordingly, a taxpayer may deduct expenses from corporate income in the tax period in which they are incurred, regardless of the tax period in which they were invoiced or paid (i.e. services were provided to a taxpayer in December 2012. The expenses incurred for the payment of these services were deducted from the corporate income received in 2012. The invoice was issued in January 2013).
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Ukraine Incentives: From 1 January 2017, the amendments to the Tax Code have been effective with some exceptions. Accordingly, incentives on tax holidays until 2021 are introduced for taxpayers with annual income less than UAH 3 million provided they meet some requirements. In addition, accelerated depreciation within 2 years is also allowed for machinery and equipment purchased and set in operation in 2017 and 2018, provided that such machinery or equipment is used solely for the purposes of the taxpayer’s own business activity.
SME: Small enterprises (companies with annual gross income below UAH 3 million) may apply a corporate income tax rate of 0% until 2021 if their employees’ wages exceed two minimum salaries.
Withholding tax rates: The withholding tax rate on interest paid to non-residents is reduced from 15% to 5% or 0% upon fulfilment of special requirements.
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Oman Corporate income tax rate: Oman has increased its corporate income tax through Royal Decree No. 9/2017 (19 February 2017) from 12% to 15% and made all entities subject to tax. In a major development, Oman has removed the OMR30,000 (USD77,912) taxable income threshold for exemption from corporate income tax, noting widespread abuse of the concession. Presently only a few thousand companies pay income tax. The change could bring about a 50-fold increase in corporate taxpayers.
Withholding tax rate: Interest and dividend payments to nonresidents are now subject to withholding tax at 10%. Further, payments to nonresidents for services now attract WHT at 10%. The WHT exemption for payments from Ministries and Government institutions has been removed.
Tax management: Oman has legislated for a simplified regime for small businesses covering tax declarations, audits, tax assessment, and record keeping.
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World Tax Brief: January 2017

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Argentina Special corporate tax rate: Argentina has introduced a new special corporate income tax rate for gambling. According to the Law 27,346 that amends article 69 of the Income Tax Law (LIAG), a 41.5% corporate income tax rate applies to gambling income derived by casinos and similar businesses, instead of the normal 35% rate.
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Colombia Corporate income tax: According to law 1819 of 2016, Colombia adopted the structural tax reform bill and it introduces the following major changes to the corporate income tax regime.  As from 1 January 2019, the fairness tax, the CREE surcharge and the wealth tax are no longer applicable. As from the tax year 2019, the single income tax rate will be 33%.
Green taxes: Colombia has introduced a carbon tax and also announced a tax on plastic bags.
Withholding tax: A 15% income tax withholding applies to foreign payments of interest, commission, fees, royalties, technical services and advisory services. A 15% income tax withholding applies to administration or management fee payments made to headquarters, whether Colombian source income or foreign income.
Dividend tax: Colombia has introduced a dividend tax rate on profits derived from non-resident companies as from 1 January 2017. The rates are -5% final withholding on non-taxable dividends; and 35% final withholding on taxable dividends.
GAAR: Colombian tax reform also introduced detailed definitions of behaviours that could be deemed to be the abuse of tax law and it simplifies and regulates the procedure for applying the anti-avoidance provision.
CFC: Colombian Law 1819 of 2016, introduced the controlled foreign company (CFC) rules with the structural tax reform bill approved on 23 December 2016.
Losses carry-forward: Under the Colombian structural tax reform bill, the carry-forward of tax losses may be allowed up to 12 tax years.
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The tax reform Bill also introduces some major changes to the tax administration, tax procedures and penalties:
Assessment: According to the reform Bill, the tax authority may issue a provisional assessment of the taxes due by taxpayers in the following cases as non-reporting or inaccuracy of the information provided in tax returns on taxes, surtaxes, advance payments and withholding taxes.
Audit: According to the reform Bill, the statute of limitation for tax authorities to audit tax returns is 3 years following the date of filing of the tax return or the last day of the deadline for filing the tax return.
Withholding tax return: According to the reform Bill, withholding tax agents may file withholding tax returns without payment if they are entitled to a credit balance exceeding two times the amount of the withholding tax reported, as it can be offset against the credit balance.
Penalties: The tax reform Bill introduces and amends the provisions related to the application of penalties. Therefore, taxpayers failing to report assets or providing inaccurate information on assets in their income tax returns, or reporting non-existent liabilities exceeding an amount of 7.250 monthly minimum legal wages, will be subject to imprisonment between 48 and 108 months and a fine of 20% of the value of the non-reported asset, the asset that was incorrectly reported or the non-existent liability. However, if the taxpayer amends the income tax return and pays the amounts due, no criminal offence will have been committed.
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Costa Rica Corporate tax rate: The Costa Rican government recently increased the specific tax rate levied on alcoholic beverages by Resolution RES-DGH-002-2017 which is published in the Official Gazette. The resolution provides for an increase of 0.27% on alcoholic beverages, pursuant to article 1 of Law 7972. The Resolution will be effective from 1 February 2017.
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Cyprus Incentive: Cyprus has introduced new tax relief for investors in qualifying small and medium sized innovative enterprises. The relief adopted by the Council of Ministers on 27 July 2016 which was approved by the parliament on 2 December 2016 and entered into force on 1 January 2017.
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Finland Dividends: Recently, the Supreme Administrative Court gave a ruling on a case involving a life insurance company from Luxembourg that among other products also deals in investment-linked insurance products. The company had received Finnish dividends subject to tax at source. The Court’s ruling only applies to the taxes at source paid by life insurance companies with receipts of dividends on the shares they own due to investment-linked insurance. The Finnish Tax Administration only applies the ruling’s interpretation to life insurance policies that are linked with such investments.
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Germany Royalties: The Federal Ministry of Finance recently approved a draft bill on the limitation of the deduction of royalties as from 2018. The new bill offers for a limitation of the deductibility of royalties paid by a German corporation or permanent establishment to a foreign related party or to its head office, respectively.
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Iceland Corporate tax rate: Iceland has published corporate tax rates for 2017 accordingly, the corporate income tax is 20% for public and private limited liability companies and cooperatives, and 36% for other legal entities.
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India Incentives: The Indian Union Cabinet has modified and introduced a Special Incentive Package Scheme to further incentivize investments in Electronic Sector and moving towards the goal of ‘Net Zero imports’ in electronics by 2020.
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GAAR: The Union Finance Ministry has stated that the General Anti-Avoidance Rule (GAAR) will be effective from the 1 April 2017. The General Anti-Avoidance Rule (GAAR) provisions shall be effective from the Assessment Year 2018-19 onwards (i.e. Financial Year 2017-18 onwards).
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Liability to tax: India has issued the guiding principles to be followed for determination of the place of effective management of a company (POEM). The concept of PoEM for deciding the residential status of a company was introduced by the Finance Act, 2015. The guideline was effective from 01.04.2016, and accordingly, shall apply from the assessment year 2017-18 onwards.
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Israel Main Corporate tax rate: The government has to introduce amendments to the Income Tax Ordinance (ITO) in the agenda of the 2017-2018 Law on Economic Arrangements. In accordance with the amendments, the corporate tax rate will be reduced from 25% to 23% gradually during 2017 to 2018.
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Malaysia

Withholding tax: The Finance Act 2016, has been gazette and proposed that special classes of income are subject to withholding tax regardless of place of performance of service. The Act also redefined the royalty income and the definition of “royalty” has been expanded significantly to include items such as software and communications via satellite.
Penalties for incorrect returns: Under the proposed act new penalties also introduced for incorrect returns. Accordingly, any person who is convicted of an offence under these new provisions will be liable to a fine of not less than RM 20,000 and not more than RM 100,000 or imprisonment for a term not exceeding six months.
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Corporate tax rate: Malaysia has enacted the Finance Act 2017 and the act reduced the corporate tax for the year of assessment 2017 and 2018. As per the Finance Act 2017, the reduce tax rate will be between 1 and 4 percentage points for companies with significant increase in taxable income for the year of assessment 2017 and 2018. Reduce tax rate from 19% to 18% will be applicable for SMEs with taxable income up to first RM500,000.
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Mexico Tax Compliance: The tax administration (Servicio de Administración Tributaria) of Mexico has been introduced a guidance on tax purposes in January 2017. The guidance provided forth standards for compliance the rule for electronically or digitally provided tax receipts.
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Netherlands Reduced rate: Netherland government introduces a 2.5% energy investment reduction from on 1 January 2017 in the official gazette (No. 544.) on 29 December 2016.
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Oman Corporate tax rate: Oman with the state budget 2017, has proposed to impose a 15% tax on all the corporates annual income without any exception or discrimination. Revenue from other taxes, customs duties, and fees is expected to increase.
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Pakistan Reduced rate: Pakistan has permitted the tax reduction proposal of 2% for Shariah-compliant listed companies through Finance Act 2016. These criteria provided in sub-clause (a) of clause (18B) of the Second Schedule to the Income Tax Ordinance 2001 (vide SRO 1173(I)/2016).
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Audit rules: The new Audit Policy 2016, approved by the Pakistan Federal Board of Revenue (FBR) for selection of taxpayers for audit. According to the new audit policy, the audit selection will be conducted via computer ballot using a parametric basis based on 7.5% of the cases out of the total returns of Income Tax, Sales Tax and Federal Excise Duty filed for the tax year 2015 and tax periods from July 2014 to June 2015.
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Peru Corporate tax rate: Peru has published certain amendments to the Income Tax Law, accordingly the general corporate income tax rate has been increased from 28% to 29.5%.
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Puerto Rico Transfer Pricing Rules: The Department of Treasury released a proposed transfer pricing regulations which are aimed to arrange in a line Puerto Rico’s Transfer Pricing rules with global norms. The proposed regulations strongly reflect US transfer pricing rules as well as the OECD Transfer Pricing Guidelines. Furthermore, they outline the globally recognised benchmark for intercompany transactions, i.e. the arm’s length principle.
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Saudi Arabia Liability to tax: The General Authority for Zakat and Tax (GAZT) changed the determination procedure of Zakat and income tax liabilities of listed companies by the Circular 6768/16/1438 of 4 December 2016. According to the Circular listed shares will also be taken into consideration for determining the income tax and/or Zakat liabilities.
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Sweden PE rules: Swedish Administrative Court of Appeal has issued a decision in in Gothenburg case regarding permanent establishment. According to the court decision, a German company that was considered to have a fixed place of business in Sweden because a part of the company’s core business was being carried out in Sweden. The Court determined the company had created a permanent establishment.
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Taiwan Corporate tax rate: The tax reform research team commissioned by the Ministry of Finance proposes some reforms regarding the dividend imputation tax system. In order to resolve the controversial issues, the tax reform research team proposed, increasing the corporate tax rate from 17% to 20%. The proposals for these changes are expected to be submitted to the Legislation Yuan (Congress) in May 2017. The government intends to implement this tax reform before the end of 2017 to pursue economic efficiency, simplification of tax administration, equity of the tax system, improvement of fiscal revenue and a stronger capital market.
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E-filing: Taiwan has introduced electronic filing for non-resident taxpayers in the same way as resident taxpayers from 1 January 2017. Additionally, withholding agents of non-resident taxpayers are requisite to withhold taxes within the approved period and submit the tax payable to the tax authority by filing the tax return electronically and timely.
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Turkey Corporate tax rate: Turkey has introduced amendments to the Corporate Income Tax Law (CITL), which introduces a reduced corporate income tax rate for mergers of SMEs. Also, according to the amendment, manufacturing profits of the target company realised until the date of acquisition and manufacturing profits of the buying company realised for a period of 3 years starting from the year of acquisition are subject to the reduced corporate income tax rate. The upper limit of the reduced corporate tax rate is set at 75%. Law 6770 authorises the Council of Ministers to set the reduced corporate income tax rate.
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UK Tax losses: The Government of UK published a draft legislation on the reform of the Corporation Tax loss relief rules. This new draft legislation now includes provisions catering for group relief for carried forward losses in the context of companies owned by a consortium and various anti-avoidance provisions. There are also specific rules for insurance companies and creative industries.
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World Tax Brief: December 2016

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Bulgaria E-filing: The amendments to the Corporate Income Tax Act have been published in the State Gazette on 6th December 2016. Accordingly, a compulsory obligation for electronic filing of corporate income tax returns is announced and the new requirement will be applicable from 1st January 2018.
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Colombia Years records must be retained: According to ruling 31252 of 2016, the tax authority of Colombia (DIAN) pronounced on the obligation for taxpayers to keep accounting records. Commerce Code article 19 provides that individuals and companies considered to be merchants are obliged to keep accounting records of their financial transactions.
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Cyprus Payment of tax: The tax department of Cyprus has recently issued a circular on provisional tax payment. The department clarified that companies whose income is not subject to tax withholding by the employer are required to pay the second instalment of their estimated income tax liability for 2016 under the self-assessment scheme by 31 December 2016.
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PE rules: On 14 October 2016 the Cyprus Parliament passed amendments to the Cyprus Income Tax Law 118/2002, as amended, relating to foreign Permanent Establishments (PEs). After the amendments, Cyprus taxpayers have the option to elect to tax profits of foreign PEs and also be able to claim as a credit any foreign taxes imposed on the foreign PE’s profits. If this option is not elected, the exemption method will remain at the default position. Transitional rules also apply for the claiming of foreign tax credits for those taxpayers that previously had utilised foreign PE tax losses.
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Georgia Filing return: The Ministry of Finance of Georgia published a draft order on 5 December 2016 which introduces a monthly corporate income tax return form. According to the adopted regime, corporate income tax will apply in accordance with the distribution of profits to the shareholders and the taxpayers are required to file a tax return on a monthly basis, no later than the 15th day of the month following the reporting period. The new corporate income tax regime will become effective from 1 January 2017.
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Germany The statute of limitation period for tax evasion: The German Federal Cabinet on 21 December 2016 approved the draft bill on the combat of tax avoidance. Accordingly, the statute of limitation period for tax evasion will be 10 years.
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Loss carry-forward: The Federal Council permitted the bill on amendments to the change-in-ownership rules on 16 December 2016. According to the section 8c of the Corporate Income Tax Act and under the change-in-ownership rules, a company is not allowed to carry over losses if, within 5 years, more than 50% of the capital or participating interest, membership or voting rights in that company are transferred, directly or indirectly, to a purchaser or a person related to the purchaser. The loss carry-forward will be disallowed pro rata for transfers of shares or voting rights between 25% and 50% within 5 years.
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Hungary Corporate income tax rate: Hungary’s prime minister says the government will introduce a flat corporate tax rate of 9% from 2017, the lowest in the European Union. Prime Minister also said that the new rate is part of the government’s efforts to boost competitiveness. The current rates are 10% on annual corporate profits below 500 million forints ($1.7 million) and 19% above.
SME: The rate of small business tax (KIVA) will be reduced to 14% from current rate of 16% and this replaces the corporate income tax, social security tax and vocational training contribution. This rate of KIVA will further be reduced to 13% as from 2018.
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India Incentives: The Central Board of Direct Taxes announced on 19 December 2016, that in order to achieve the government’s mission of moving towards cashless economy and to incentivize small businesses to reduce the existing rate of deemed profit of 8% under section 44AD of the Act to 6% in respect of the amount of total turnover or gross receipts received through banking channel/digital means for the Financial Year (FY) 2016-17.
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Italy Interest & Penalties: Italy issued Ministerial Decree on 7 December 2016 which was published in the Official Gazette. Accordingly article 1 of the Ministerial Decree, the statutory interest rate will be set to 0.1 %( previously 0.2%) on a yearly basis effective from 1 January 2017.
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Japan Incentives: The government released its 2017 tax reform plan on 8 December 2016. According to the plan, the possibility of research and development credits will be expanded to a range between 6% and 14% from 8% to 10%.
CFC rule: Through the 2017 tax reform plan a new CFC income rules have been proposed, with a foreign subsidiary being subject to CFC rules if: it fails to meet any of the economic activity tests and the foreign tax burden is less than 20%; it meets all the economic activity tests but the foreign tax burden is less than 20%. However, only certain passive income will be included as CFC income; or it is either a “paper” company, “cash-box” company or located in a blacklisted country, and has a foreign tax burden that is less than 30%.
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Korea, Rep Of Loss carry-forward: On 2 December 2016, Korea passed the 2017 tax reform bill. According to the adopted Bill the amount of loss carried forward that a foreign company can deduct has been limited to 80% of the income earned in the relevant business year and this rule will be effective from the beginning of the 2017 business year.
WHT on technical fees: Income arising from the provision of “technical services” will be subject to a 3% withholding tax if suggested by an applicable treaty where the consideration for such services is paid in Korea even if the services are provided outside of Korea. This amendment will affect those companies which are planning to conclude a technical services agreement with an Indian company and this will be applicable to applicable services provided after 1 January 2017.
The statute of limitations on refund claims: The adopted Tax Bill has extended the refund request period from 3 years to 5 years and this will be applicable to requests for refund made after 1 January 2017.
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Utilisation rules for losses: Korea recently enacted the tax reform bill of 2017 on 20 December 2016 which was approved by the National Assembly on 2 December 2016. According to the Tax Reform of 2017, domestic merged brother-sister companies would be considered as tax-free if and only both of them are wholly owned by the same parent company and this will effective from 1 January 2017. Additionally, previously domestic companies other than small and medium-sized enterprises and certain other companies (like companies which are under court receivership) were subject to a limitation on the utilisation of net operating losses (NOLs) to 80% of taxable income. The tax reform bill of 2017 further extended to cover domestic branches of foreign companies and this became effective from 1 January 2017.
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Luxembourg Corporate income tax rate: Luxembourg Parliament adopted the 2017 tax reform on 14 December 2016 which introduces new tax measures for corporate taxpayers. According to the new law, the corporate income tax rate (currently 21%) will be reduced to 19% for 2017 and 18% for 2018. However, the rates applicable to the municipal business tax and the solidarity surcharge will not be amended. As a result, the global combined corporation tax rate will stand at 27.08% in 2017 and 26.01% from 2018 for companies with taxable profits exceeding EUR 30,000 in Luxembourg-City, taking into account the municipal business tax and the solidarity surcharge.
Loss carry-forward: Recently, Luxembourg tax law also provides that companies may carry their losses forward indefinitely and off-set them against any future profits. The 2017 tax reform provides that losses generated during and after 2017 will only be carried forward for a maximum period of 17 years. Losses that have been realised before 2017 will remain unaffected by this time limit.
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Netherlands Dividends: The Deputy Minister of Finance presented a bill to the Parliament regarding a proposal for changes to the tax treatment of certain profit distributions on 16 December 2016. According to the bill, it would modify the dividend withholding rules and would make holding cooperatives subject to tax in certain occurrences. It will be effective from 1 January 2018.
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Saudi Arabia Group reporting: The General Authority for Zakat and Tax (GAZT) of Saudi Arabia published Circular No. 36025/9/1437 dated 14/11/1437H (17 August 2016) of the General Authority of Zakat and Tax, each of the wholly owned subsidiaries are now obliged to file an additional information form in addition to the holding company’s filing of a consolidated zakat return. This will be applicable to all zakat payers who file on Hijri year basis from 30th Dhu-al-Hijjah 1437H (that is,1 October 2016) and those filing on Gregorian Calendar basis 31 December 2016.
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Payment procedures: The General Authority for Zakat and Tax (GAZT) of Saudi Arabia published Circular Number 6768/16/1438 on 4 December 2016 (5/3/1438H), according to the circular prior year assessments will be finalised in accordance with the information available. The advance tax payment will be required in following years based on the amount of corporate tax paid in the preceding year. Saudi listed companies that are already subject to zakat and tax according to this circular will no longer able to file a consolidated zakat return. Each wholly owned subsidiaries will file tax return independently.
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Taiwan CFC rule: Taiwan’s Ministry of Finance on 9 November 2016, released proposed regulations on a controlled foreign company (CFC) and according to the new regulations, the CFC rules will require a Taiwan company to include currently in its taxable income its pro rata share of the taxable profits of its CFC. The CFC rules will be triggered where a Taiwan company, alone or with related parties, directly or indirectly owns more than 50% of the shares of a foreign entity or is capable of having a “significant impact” on a foreign entity. The rules will not apply, however, if the foreign entity has active operating activities or if the income it earns each year is below the relevant standard set out by the Ministry of Finance.
Place of effective management rule: Taiwan’s Ministry of Finance on 9 November 2016, released proposed regulations on the place of effective management (the PEM) rules. Currently, an enterprise is considered a Taiwan resident only if its head office is located in Taiwan. Under the new POEM rule, a foreign entity that has its place of effective management in Taiwan will be deemed to be a Taiwan resident and, thus, will be subject to tax on its worldwide income and also will be required to comply with other Taiwan tax rules. In other words, the rules will require foreign companies that carry out all of their management functions in Taiwan to pay tax and file returns as domestic business entities.
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UK Sanctions for tax evasion: The UK Draft Finance Bill 2017 includes a new ‘Requirement to Correct’ (RTC) historic offshore tax evasion and non-compliance. It introduces a new obligation for taxpayers to ensure that undeclared UK tax liabilities in respect of offshore interests relating to all periods up to and including 5 April 2017 are fully disclosed to HMRC before 30 September 2018. Accordingly, taxpayers who fail to correct historic errors in the ‘RTC period’ (6 April 2017 to 30 September 2018) face much tougher new penalties for their ‘Failure to Correct’ (FTC). FTC penalties include: a standard penalty of between 100% and 200% of the tax that has not been corrected; a 10% asset-based penalty (relevant to ‘the most serious cases’ where tax underpaid in a tax year is greater than £25,000); an enhanced penalty of 50% of the standard penalty amount if HMRC could show that assets or funds had been moved to attempt to avoid RTC; and naming and shaming of taxpayers ‘in the most serious cases’ (total loss of tax greater than £25,000).
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Corporate income tax rate: The autumn statement delivered by the Chancellor on 23 November 2016 provided for new tax measures, many of which will be included in the Finance Bill 2017. The Chancellor announced that the corporation tax rate would fall to 17% by 2020.
Incentives: Two new funds are to be introduced in relation to innovation, research and industrial strategy. A review of the current R&D tax incentives will be carried out. Also, investment is planned for innovative start-up businesses through venture capital funds.
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US Compensation for overpaid tax and refunds: The Inland Revenue Service released Revenue Ruling 2016-28 on 5 December 2016 with the announcement of the interest rates on tax overpayments (i.e. tax refunds) and tax underpayments (i.e. tax assessments and late tax payments) for the calendar quarter beginning 1 January 2017.
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World Tax Brief: November 2016

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Australia GAAR: In the 2016-17 Budget, the Australian Government announced that it would implement a Diverted Profits Tax (DPT) to impose a 40% penalty tax on profits that have been artificially diverted from Australia by multinationals. This exposure draft Bill and associated explanatory material would strengthen the anti-avoidance rules in Part IVA of the Income Tax Assessment Act 1936 and amend the Tax Administration Act 1953 and associated Acts to give effect to the decision.
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Bolivia Audit rules: On 27 November 2016, the National Tax Service publishes audit procedure rules which contain the formalities to be observed by the tax authorities during an audit procedure carried out to verify tax liabilities. The Resolution will enter into force on 27 November 2016.
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Bulgaria E-filing: On 23 November 2016, the parliament supported on the adoption of amendments to the corporate income tax reporting rules proposed on 16 September 2016. The bill has gone through some changes and accordingly, an electronic filing obligation will only be introduced for companies from 1 January 2018, businesses will be required to file their annual corporate tax returns online. As a result, companies will no longer be able to claim the existing 5% discount from their tax liability for electronic filing.
The parliament has also accepted rules allowing companies to submit a corrective annual tax return by 30 September of the year in which the annual tax return was initially filed. These changes will be effective from 1 January 2017.
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Colombia Corporate income tax rate: On 19 October 2016 The Colombian Government has proposed replacing the current corporate income tax, equity tax and equity tax surcharge with a single tax rate that would be implemented gradually as follows:  For 2017, the corporate income tax rate would be 34%, plus a 5% surcharge for those with income of COP800m or more; For 2018, the corporate income tax rate would be 33%, plus a 3% surcharge for those with income of COP800m or more, and  for 2019 onwards the corporate income tax rate would be 32% with no surcharge.
Carry forward period for Losses: The Colombian Government has proposed restricting the loss carry forward period to 8 years.
Withholding tax: The Colombian Government has proposed increasing the 14% default withholding tax rate to 15% on foreign payments.
Withholding tax rate on interest: The Colombian Government has proposed replacing the 33% and 14% interest withholding tax rates with a single 15% withholding tax rate.
Withholding tax rate on dividend: The Colombian Government has proposed introducing a 10% withholding tax on dividends paid to non-residents from profits taxed at the corporate level from 1 January 2017.
Withholding tax rate on royalties: The Colombian Government has proposed reducing the 33% withholding tax rate for royalties to 15%.
Statute of limitations period on tax audits: The Colombian Government has proposed increasing the standard statute of limitations period on tax audits from two years to three years. The statute of limitations period where there is a loss or where loss relief is carried forward would be increased from five years to six years. For taxpayers subject to transfer pricing rules, the statute of limitations period would be six years.
CFC rules: The Colombian Government has proposed the introduction of controlled foreign company (CFC) rules. The CFC rules would apply to resident companies and other taxpayers that (whether alone or together) hold directly or indirectly at least 10% of the capital of a CFC. CFCs would include investment vehicles such as corporations, trusts, mutual funds and private foundations. An entity would automatically qualify as a CFC if it is domiciled, incorporated or in operation in a non-cooperative jurisdiction or low or no tax jurisdiction. Resident companies and taxpayers subject to the CFC rules would be required to pay corporate income tax on the passive income received by the CFC in proportion to their share in the capital of the CFC.
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Croatia Corporate income tax rate: On 4th November 2016, the Tax Administration published proposed amendments to the Corporate Income Tax Law. Accordingly, the corporate income tax rate will be reduced from 20% to 18%. The proposal also introduces a lower corporate income tax rate 12% for entrepreneurs with up to HRK 3 million of gross income in the preceding calendar year and for farmers.
Incentives: With respect to regional tax incentives for business activities in the second category of local government areas will be abolished; and for business activities in the first category of local government areas or in the city of Vukovar, a 50% reduction of the prescribed corporate tax rate will apply.
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Denmark Corporate income tax: The Danish Ministry of Taxation has proposed a threshold for the deduction of net financing expenses and a limit is 21,300,000 and Maximum loss carry-forward limit is 8,025,000.
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France Dividend: On 18 November 2016, the Amending Finance Bill for 2016 was presented by the government and submitted to the National Assembly which introduce a provision which would expand the benefit of an exemption from the 3% tax which is applied to dividend distributions to foreign parent companies (both the French parent companies and the foreign parent companies that satisfy apart from their nationality, the conditions to be the head of a French tax group). According to the proposed amendments, this benefit will be  extended to distributions made to any resident or non-resident parent company with the direct or indirect holding of at least 95% of the capital of the distributing subsidiary. To get this benefit the non-resident parent companies must be subject to corporate income tax and must be located in a state which concluded a convention on administrative assistance with France, excluding non-cooperative states or jurisdictions (NCSTs).
Participation exemption: According to article 30 of the new Finance Bill, the participation exemption for dividends is no longer conditioned upon the parent company holding 5% of the voting rights of the subsidiary. Therefore, dividends from shares with no voting rights may benefit from the participation exemption. However, a requirement relating to the 5% voting rights threshold is introduced with regard to the long-term capital gains regime applicable to certain shares.
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Greece Incentives: The draft law regarding the company establishment under the electronic one-stop shop process was submitted to the parliament on 25th November 2016. The draft law covers a 30% discount in respect of incorporation fee, which is normally paid by companies established under the physical one-stop shop process. Also, companies set up under this procedure can be exempt from the incorporation fee for the first year of their operation under certain criteria.
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Hungary Main Corporate tax rate: The Hungarian Ministry of Economy announced on 17 November 2016, a reduction of corporate income tax rates from 2017. The current progressive rate of 10% and 19% will be reduced to a flat rate of 9%. This proposal has been submitted for the approval of employer and employee organisations. If approved, the proposal will be presented to the parliament.
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Israel Main Corporate tax rate: On 31 October 2016, the draft Budget Plan for 2017/2018 (the Draft) was presented by the Minister of Finance. According to the Draft bill, the corporate income tax rate will be  24% in 2017.
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Malaysia Rate reduction for increased revenue: The Malaysian Government has proposed a special corporate tax scheme for years of assessment 2017 and 2018. Under the scheme, taxpayers who increase their revenue by at least 5% compared to the previous year would be entitled to a corporate tax rate reduction as follows:
5% increase for 1% corporate tax rate reduction; 10% increase for 2% corporate tax rate reduction; 15% increase for 3% corporate tax rate reduction; and 20% increase for 4% corporate tax rate reduction. The rate reduction would be applied to the increased revenue.
SME: The Government has also proposed reducing the corporate tax rate for resident SME companies with income up to RM500, 000 from 19% to 18% from 1 January 2017.
Withholding tax exemptions for interest: The Government has proposed removing the withholding tax exemptions for interest arising from an approved loan in Malaysia, or paid or credited to a non-resident company in the same group in respect of securities issued by the government, or in respect of ringgit-denominated Islamic securities and debentures, other than convertible loan stocks, approved by the Securities Commission. If enacted, the changes would apply from the year of assessment 2017.
Penalties for late return: The Government has proposed increasing the penalties for late return filing or late payment of GST as follows: 10% for 30 days or less; an additional 15% for 31 to 60 days and an additional 15% for 61 to 90 days. The provision providing for a maximum penalty of 25% of the GST owed would be removed. The proposed amendments would also clarify that the penalty applies to the GST wholly or partly owed.
Withholding tax on service fees and royalties: The Budget has proposed to amend the Malaysian withholding tax laws to apply a 10% withholding tax to all amounts paid or credited to nonresidents in consideration for services, even if such services are performed outside Malaysia.  In addition, the budget proposes to expand the definition of “royalty” to include any consideration paid for the use of or the right to use software. Accordingly, such amounts will be subject to the 10% domestic royalty withholding tax which may be reduced under tax treaties.
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Mexico Incentives: On 15 November 2016, the Decree which contains the Federal Revenue Law for 2017 approved by the Congress on 20 October 2016 and by the Senate on 26 October 2016 and proposed following tax incentives: (i) Taxpayers engaged exclusively in public and private ground transportation and in touristic activities, that use the national highways, may credit against the income tax 50% of the amount of tolls paid in the same year. For income tax purposes, the amount credited will be considered taxable income.(ii) Taxpayers engaged in mining activities with an annual gross turnover lower than MXN 50 million derived from the sale of minerals and other substances referred to in the Mining Law may credit against the income tax the special duty on mining  paid in the same tax year. (iii)  Taxpayers subject to tax under Chapter II of the Income Tax Law may reduce the tax profit with the profit sharing paid in the same tax year And(iv) Taxpayers benefitting from a cinematographic project tax credit may reduce their income tax advance payments with the amount of such credit.
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Nigeria Incentives: The amended Companies Income Tax Act bill 2015 approved on 16 November 2016 and it has proposed the following additional tax incentives to companies: Companies those are engaged in the mining of solid minerals and gas utilization from 3 years to 5 years can get the increased facility of tax holiday; 10-year tax holiday is provided for new companies those are situated in areas without government-provided infrastructure; increase in the rate of rural investment allowance to be claimed on tarred roads from 15% to 20%.
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Poland Incentives: On 14 November 2016, Poland’s Parliamentary Public Finance Commission presented and voted on a revised bill amending rules for the corporate income tax (CIT) exemption for investment funds. The revised bill gives the CIT exemption to close-ended investment funds, excluding certain types of income. Other funds (open-ended investment funds (FIO), special open-ended investment funds (SFIO) and similar foreign investment funds) will still enjoy full exemption.
GAAR: The revised bill also introduces changes to the general anti-avoidance rules (GAAR) enacted in July 2016. In this respect, the amendment introduces a provision that tax rulings issued prior to the entrance of the GAAR into force will not offer protection if a tax benefit resulting from the ruling is obtained after 1 January 2017.
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Portugal Incentives: The tax authorities published Decree-Law No. 211/2016 on 3 November 2016, which introduces an optional tax regime for the revaluation of tangible fixed assets and investment properties. The Decree-Law creates a new tax incentive through the revaluation of tangible assets used in commercial, industrial or agricultural activities, as well as to investment properties and other tangible assets affected by concession contracts, aiming also to improve the equity of the companies.
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Russia Carry-forward of losses: Russia has adopted in the first hearing draft Law No. 11078-7 (the Law) on 2 November 2016, regarding changes to the Tax Code. Accordingly, the 10-year limitation period for carrying forward losses will be cancelled. The losses to be carried forward will be limited to 30% of the taxable base for the current tax period. The new rules will also affect the entities which are part of a consolidated group of taxpayers. The losses to be carried forward cannot be more than 30% of the taxable base of the profit-making entities which are part of the same consolidated group of taxpayers.
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Spain Tax payments: Royal Decree-Law 2/2016, of 30 September 2016, introducing tax measures aimed at reducing the public deficit, was published in the Official State Gazette of 30 September 2016. The new law is expected to increase the amount of the corporate income tax prepayment significantly for companies with turnover exceeding €10 million during the 12 months prior to the beginning of the tax period, and have an effective date of 30 September 2016. The new measures will Increase the tax rate from 17% to 24% of the taxable base or to 29% for taxpayers in certain industries such as the financial or banking sector, and the oil and gas sector.
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Sri Lanka Corporate income tax rate: The Budget for 2017 was presented to Parliament by the Sri Lankan Government on 10 November 2016. The main measures concerning corporate taxation and the corporate income tax rate are proposed to be revised to create a three-tier structure of 14% for small medium enterprises (SMEs), exporting goods or services, agriculture and education. SMEs will be defined with the specific criteria of having a maximum turnover limit of LKR 500 million per annum for this purpose; 28% for all other sectors including banking and finance, insurance, leasing and related activities; 40% for betting and gaming, liquor and tobacco and the tax rate applicable to funds, charitable institutions, dividends, treasury bonds, treasury bills and any other sector will be increased from 10% to 14%.
Capital Gain Tax: Capital Gain Tax will be introduced at a rate of 10 percent with effect from 1st April 2017.
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