WTA Briefs

World Tax Brief: July 2017

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Belgium Corporate income tax rate: The federal government of Belgium announced the budget for 2018. The budget has reduced the corporate income tax rate. Currently, the normal rate is 33.99%, will be reduced to 29% in 2018 and in 2019, and will further reduce to 25% in 2020. Small and medium-sized enterprises will entitle a reduced tax rate of 20% will apply as of 2018 on that part of the taxable profit not exceeding 100,000 EUR.
Taxation of capital gains: Under the Budget, if certain conditions are fulfilled, companies benefit from a full tax exemption on capital gains realised on shares of which they are the legal owner. This tax exemption will apply if share participation held at least 1 year and amounts at least 10% or has a value of at least 2.5 million EUR.
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Denmark Incentives: The Danish Ministry of Taxation published the draft bill on 26 June 2017 regarding the tax incentives for the Danish hydrocarbon activities. The draft law will be subject to a public hearing period until 14 August 2017 after that it will be submitted to the Danish Parliament, presumably at the beginning of October 2017.
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France Corporate income tax rate: The Prime Minister of France has confirmed that the Government would cut the corporate tax from 33% to 25% by 2022 with the hope of attracting Businesses so that they set up and develop in France rather than any other country.
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Incentives: The French Government is also planning to remove the competitiveness and employment (CICE) tax credit and reduce social security contributions. As an approach on this, the CICE tax credit will be converted into a reduction in payroll charges beginning on 1 January 2019.
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Hong Kong SME: Hong Kong plans to introduce a new tax relief for small and medium enterprises and providing additional tax deductions for research and development. The Government has stated that a new tax policy unit has been instructed to consider the proposals. In addition, the Chief Executive would be required to introduce a two-tier profit tax system and reduce the profit tax rate for the first HKD2m (USD 256,000) of the profit from the current 16.5 percent to 10 percent; As well as to provide additional tax deductions for business expenses for research and development activities.
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India PE rules:  A recent decision of the Bengaluru Bench of the Income-tax Appellate Tribunal in the case of: ABB FZ-LLC v. DCIT [ITA(TP) No. 1103/Bang/2013 held that Physical presence in the source state is not necessary to constitute a service permanent establishment (PE), and services can be rendered through virtual presence. With current technology services, information, consultancy, management, etc. can be provided through various virtual modes such as email, the internet, video conferencing, remote monitoring, remote access to the desktop, etc. The Service PE is not dependent upon a fixed place of business as it is only dependent upon the continuation of the activity. As a result, the ruling was in favour of the Indian Revenue Service and the Tribunal held that the consideration for providing services is taxable in India.
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Ireland Incentives: The Government published its annual summer economic statement on 12 July 2017. It revolves six key principles: ensuring sound and sustainable public finances; managing public expenditure carefully; targeted increases in investment; a tax system that is growth friendly and fair; ensuring inclusive growth; and facilitating access to SMEs.
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Italy  Taxation of capital gains: The Italian Ministry of Finance on 26 May 2017, approved a Decree which establishes a new percentage of capital gains and losses achieved by non-resident taxpayers from the transfer of ‘qualifying’ shares in Italian companies and included in taxable income of the seller for the purposes of the Italian corporate income tax (IRES).
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Japan CFC rule: The 2017 tax reform bills were passed by the 193rd ordinary session of the Japanese National Diet on 27 March 2017. Accordingly, the Japanese regulations on controlled foreign companies (CFC) have been fundamentally revised, taking into account the recommendations of Action 3 of the BEPS Final Reports in October 2015. The new rules are scheduled to apply with respect to fiscal years of foreign subsidiaries beginning on or after April 1, 2018.
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Korea Tax base: Recently the Korean government has introduced various tax development for new growth in industries and facilitating corporate restructuring. With this development, the foreign tax included in gross income for purposes of calculating a corporate tax base, by selecting the tax credit method under the corporate income tax law, cannot be deducted from the tax base of the local income tax. In addition, foreign corporate branches in Korea shall be added to the scope of companies subject to the restriction of net operating loss deductions.
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Netherlands Thin capitalisation rules: The Dutch Ministry of Finance on 10 July 2017 published a consultation document for implementing adjustments to the Dutch Corporate Income Tax Act (CITA) in respect of the first EU Anti-Tax Avoidance Directive (ATAD) as agreed by the EU Member States in June 2016. According to the draft bill, the (excessive) interest expenses are only deductible up until 30% of the corrected Dutch taxable profit, or tax available EBITDA.
CFC rules: According to the draft bill, the CFC rule targets taxpayers that directly or indirectly hold more than 50% of capital or voting rights or are entitled to receive more than 50% of the profits of low-taxed foreign entities and low-taxed PEs.
GAAR: The Ministry of Finance further specifies that the current exit tax provision in the CITA is broadly in line with the proposed exit tax provision of ATAD. However, the option for deferral of the recovery of exit taxes from 10 years to 5 years shall be adjusted. In the preliminary proposal, it is indicated that the GAAR is already sufficiently embedded in Dutch case law ‘’fraus legis’’ and that, as such, no specific provision is proposed.
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Nigeria Mitigation of penalties: According to an announcement from the Finance Ministry, a new tax amnesty called the Voluntary Assets and Income Declaration Scheme (VAIDS), entered into force on 1 July 2017, for both individuals and corporations. It provides a nine-month timeline for taxpayers to regularize their tax position with the federal and state governments without being liable to any tax penalty or facing prosecution for default. The amnesty also offers a waiver of penalties, no prosecution of tax offences and no tax audit. The tax amnesty continues from 1 July 2017 to 31 March 2018.
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Pakistan Corporate income tax rate: The National Assembly on 13 June 2017 passed the Finance Bill 2017 by majority vote to give effect to measures announced in the annual budget proposals for the fiscal year 2017-18. Accordingly, the corporate tax rate is reduced from 32% to 31% for the tax year 2017 and will fall to 30% for the tax year 2018 onwards.
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Romania  Corporate tax rates: The Government of Romania is planning to replace the flat tax on corporate income with a tax on turnover and this could be effective as early as 2018. The company revenues in Romania are currently taxed at a rate of 16%, but this could be replaced by a progressive tax on company turnover of 1 to 3%. The Government is also planning to delay the reduction of the standard rate of value-added tax by 1% until 2019, which is currently taxed at 19%.
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UK Incentives: HMRC’s Corporate Intangibles and Research and Development (CIRD) manual has been updated to reflect a temporary extension to the available period in which to amend an R&D claim. The extension relates only to businesses which have previously restricted ‘reimbursed expenses’ as part of qualifying staff costs as a result of an HMRC R&D Consultative Committee note that stated that these expenses could not be claimed.
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Others incentives: On 20 July 2017 HMRC published updated statistics on claims for creative industries tax relief. The statistics include data for film tax relief, high end television tax relief, animation tax relief and video games tax relief, children’s television tax relief and theatre tax relief for periods up to 2016/17. In the case of children’s television tax relief and theatre tax relief, this is the first time that statistics have been published.
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Vietnam Incentives: The National Assembly of Vietnam on 19 June 2017 approved the Law on Technology Transfer and the new law (LTT 2017) comes into force on 1 July 2018. According to the new law tax incentives are introduced for various items.
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Poland CFC rule: Polish Ministry of Finance on 12th July 2017, publishes a draft bill proposing significant changes to corporate income tax. The bill changes the specification for applying the CFC rule which may widen the scope of foreign subsidiaries that meet CFC criteria. After the introduction of the planned changes, a company that pays tax at a rate 50 percent lower than the rate it would pay in Poland will be considered as a CFC. The Bill also introduces a new catalogue of types of income that are subject to CFC regulations.
Thin capitalization rules: The draft bill also introduces a new restriction in the thin capitalization rules, which limits the deduction of financing costs to 30% of an adjusted tax base. The restriction also applies to the financing of non-affiliated companies. Additionally, a safe harbour is proposed for financing costs up to US $ 32000 yearly. The planned change is highly significant for entities that incur substantial advisory and management costs, as well as for those that pay substantial royalty fees.
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Argentina Taxation of capital gains tax: The Federal Tax Authority (FTA), on July 18, 2017, published the General Resolution 4094-E on the Official Gazette establishing the mechanism for withholding and paying capital gains tax incurred by non-residents, which had been introduced into the Income Tax in 2013.  The Resolution establishes that the applicable Income Tax withholding rate will be 15%, calculated (i) over 90% of the amounts paid for the acquisition of the previously mentioned elements, or (ii) over the net income determined in accordance with section 93 of Income Tax Law.
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Cyprus Submission of returns: In Cyprus, all resident companies are required to submit a temporary tax return Form T.D.6 by 31 July 2017. Temporary tax for 2017 is also payable in two equal instalments: on 31st of July 2017 and 31st of December 2017. The final tax for the tax year 2017 should be settled by 1st August 2018.
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Estonia Dividend payments: Estonia has passed the Income Tax Act for consultation on 19 June 2017 and consequently, a lower income tax rate of 14% ( previously was 20%) will be available for regular profit distributions. Profit distributions will be considered as regular if the amount of the distribution does not exceed the company’s last three years’ average profit distributions in Estonia.  For all amounts exceeding the last three years’ average profit distribution, the previous rate of 20% will apply.
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World Tax Brief: June 2017

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Pakistan Corporate income tax rate: Pakistan’s Federal Board of Revenue (FBR) on 26 May 2017, submitted the budget for 2017/2018 to Parliament. With the policy of reducing corporation tax rates, the rate has been reduced further from 31% to 30% for the Tax Year 2018.
Incentives: In order to promote innovation and entrepreneurship in Information Technology the concept of start–up has been introduced with the new budget. A start-up has been defined as a business set-up by an individual, AOP or a company having turnover up to Rs.100 Million, registered and certified by the Pakistan Software Export Board (PSEB) as an information technology entity engaged in offering technology-driven products or services to any sector of the economy.
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Bangladesh Corporate income tax rate: On 29 June 2017, the Parliament of Bangladesh adopted the budget for 2017. The budget has reduced the corporate tax on garments to 12 percent from 20 percent. The income tax for green garments factories was set at 10 per cent and that of the other garments factories at 12 per cent.
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China Corporate income tax: China recently introduced a range of tax reduction measures to facilitate the development of the Chinese economy. Accordingly, From 1 January 2017 to 31 December 2019, eligible small enterprises whose taxable income falls under RMB500,000, may pay Corporate Income Tax (CIT) on 50% of their whole income at a rate of 20% (i.e., effective rate is 10%).
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Incentives: From 1 January 2017 to 31 December 2019, research and development costs for science and technology-related small and medium-sized enterprises will increase. In addition, a 70% tax deduction is introduced for venture capital companies to invest in non-listed small and medium-sized and new technology companies through investments.
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Tanzania Corporate income tax rate: The Minister of Finance on 8 June 2017, presented the budget for 2017/18 to the National Assembly. The budget has proposed to reduce Corporate Income Tax from 30% to 10% for the first five years from the commencement of operations, for new assemblers of vehicles, tractors and fishing boats.
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Sweden Corporate income tax rate: The Swedish Government on 20 June 2017 issued a statement proposing important changes in the area of corporate taxation. According to the announcement, the corporate income tax rate for legal entities would be reduced from 22% to 20%.
Tax Losses: The law also proposed that there will be a temporary restriction during two (EBIT-rule) or three years (EBITDA-rule) in respect of the utilisation of tax losses carry forward. Only 50% of the taxable profit will be possible to set off against losses. Any unused losses may be carried forward indefinitely.
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Greece Corporate income tax rate: According to Law 4472/2017 published in the Official Gazette on 19th May 2017, the corporate income tax rate will be reduced from 29% to 26% from 1 January 2019. However, the corporate rate for credit institutions will remain twenty-nine percent (29%) rate.
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Hungary Corporate income tax rate: The Hungarian government approved the Budget Bill for 2017/18 and the Budget targets a GDP growth of 4.3 percent, with 4.1 percent projected for 2017. Accordingly, the tax rate will be cut down by one percentage point to 13 percent for small business, as per the approved Budget Bill.
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Switzerland  Dividends: The Federal Steering Committee has submitted recommendations on a balanced corporate tax reform proposal 2017 for the attention of the Federal Council. One of the most significant components of the proposed package is the change in the partial taxation of dividends from qualified participations.
Incentives: The Steering Committee also proposes the introduction of a mandatory Patent Box that is fully compliant with the modified nexus approach of the OECD. The patent box will only be available at the cantonal level and the maximum tax relief for income related to the patent box will be 90%.
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India Liability to Tax: The Ministry of Finance on 15 June 2017 published a draft for the transfer of transitional provisions for foreign companies in the first year of the acquisition on the basis of their place of effective management. The notification has clarified that the tax on foreign companies qualified as a resident company on the basis of their proper management (POEM) is the same as for any foreign company and is imposed at a rate of 40%.
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Brazil Tax Payment procedures: On 31st May 2017 the Federal Government published Provisional Measure No. 783, which established the Special Tax Regularisation Program (PERT). Under the program’s rules, taxpayers may settle debts with the Federal Revenue Service and the Attorney-General of the National Treasury, due by April 30, 2017.
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Guatemala  Sanctions for non-compliance: Public Finance Ministry of Guatemala published Governmental Agreement No. 82-2017 on 4 May 2017, which terminated tax fines, penalties and surcharges for three months starting from 20 May 2017.
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Vietnam Incentives for SME: The National Assembly on 12 June, approved the Law on the support of small and medium-sized enterprises (SMEs). The measure will help to improve the quality of growth and change the nation’s economic growth model. Under the new law, SMEs include micro-enterprises and small- and medium-sized enterprises whose average number of employees with social insurance is less than 200 in the year. The law will take effect on January 1, 2018.
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Ireland Computation of taxable income: The Irish Revenue on 12 June 2017, published updates to the Tax and Duty Manual Part 08-02-01 dealing with charges on income for Corporation Tax purposes. The principal updates are in relation to interest as a charge on income under section 247 Taxes Consolidation Act 1997. In particular, the revised manual contains information on the anti-avoidance provisions that apply in respect of section 247 and related exclusions.
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Reduced rates: On 12 June 2017, Irish Revenue published Tax and Duty Manual Part 02-02-03a that deals with the tax treatment of certain foreign dividends paid out of trading profits, which in accordance with section 21B Taxes Consolidation Act 1997, may be chargeable to corporation tax at the standard rate of 12.5% rather that at 25%.
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Singapore Incentives: The Monetary Authority of Singapore revised the financial sector incentive (FSI) schemes for improving the financial intermediation and to increase the capabilities of financial services and banking activities in Singapore. Within the framework of the latest revisions, the FSI systems are streamlined in order to eliminate currency, counterparty and investment instrument restrictions. The concession tax rate for certain FSI system holders (standard level) will also increase from 12% to 13.5%. The amendments apply to new and extended prices, which were approved on or after 1 June 2017.
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Australia Capital Gains Tax: The Treasury Laws Amendment (Foreign Resident Capital Gains Withholding Payments) Act 2017 received Royal Assent on 22 June 2017. This Act changes the Taxation Administration Act 1953 to modify the foreign resident capital gains withholding payments regime to: increase the withholding rate from 10 per cent to 12.5 per cent; and reduce the withholding threshold from $2 million to $750 000. For transactions entered into on 1 July 2017, the threshold and rate as stated in this Act will apply.
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Nigeria Late payments of tax due: The Federal Government announced on 22 May 2017 that it would apply an additional 5% charge from 1 July 2017 to companies that do not meet their tax obligations if they are involved in measures to sanction taxpayers and to voluntarily comply with them of the tax obligations.
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Taiwan CFC rule: The Finance Minister has issued a draft amendment to CFC rules on 6th June 2017, to explain the proposed controlled foreign company (CFC) regulations, issued on 9 November 2016. Under the amended rule, a Taiwanese company will be obliged to incorporate its proportionate share of the income of the CFC in its taxable income if the company and its related parties directly or indirectly hold more than 50% of the shares of a company in a small tax jurisdiction or control the operations of the CFC.
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Uganda Interest on late payment: The 2017 budget introduced a capping interest on late payment. Outline of interest capping so as not to exceed the aggregate of the principal and penal tax including waiver of any such outstanding interest due and payable as at 30th June 2017.
Sanctions for non-compliance: The 2017 budget also Introduced penalty of UGX 50M and 20M for failure to provide information in respect of transfer pricing (TP) within 30 days after request Interest on late payment of tax:  Introduction of interest capping so as not to exceed the aggregate of the principal and penal tax including waiver of any such outstanding interest due and payable as at 30th June 2017.
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Colombia CFC rule: The government of Colombia published Decree 939 of 2017 that removed previous errors from Law 1819 of 2016. In accordance with Law 1819, there are multiple provisions that were guided by the OECD’s base erosion and profit shifting (BEPS) project’s recommendations. Regarding the controlled foreign company (CFC) rules, the standards of OECD try to address base erosion when there are overseas companies controlled by resident shareholders in Colombia or there are companies that are located in low tax jurisdictions.
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Canada Tax Compliance: The Canada Revenue Agency (CRA) has proposed new guidelines to restrict the use of a voluntary disclosures program. As a result of these proposed changes, large Canadian companies would no longer be allowed to qualify for the program with respect to income tax matters although some relief appears to remain for indirect (GST/HST) matters.
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France Withholding taxes due: The newly elected Prime Minister of France delayed the implementation of withholding tax further by one year, which means this will now enter into force on 1 January 2019.
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US Interest due: The Internal Revenue Service on 9 June 2017 announced that interest rates for tax underpayments and overpayments will remain the same for the calendar quarter beginning July 1, 2017.
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Namibia Incentives: On 8 March 2017, the Minister of Finance presented the annual budget for 2017-18. The Minister confirmed the tax incentive program announced in January 2017, which will continue until 31 July 2017. The program is available to all taxpayers, including companies, close businesses, companies who have outstanding debts on any of the above tax accounts. As a result, all tax liabilities and 20% interest on these debts must be settled before the application for the program can be submitted. Payments must be made in a specific bank account. Once the principal amount and the 20% interest are paid, the full penalty and 80% of the interest on the debts will be written off on application to Inland Revenue.
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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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