Corporate Taxation

Vietnam: National Assembly passes law on supporting SMEs

Posted on Updated on

On 12 June, the National Assembly passed 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. These companies must also meet one of the following two criteria:

  • Total investment capital of a maximum of US $ 10 billion (US $ 4.4 million) and a total annual turnover of US $ 100 billion; or
  • Companies must be operating in the fields of agriculture, forestry, fisheries, industry, construction, trade and services.

SMEs that meet these requirements can be eligible for various incentives, such as assistance with credit access, support for tax and accounting or support for the acquisition of production areas, among others. In addition, the new measures provide for specific support measures for innovative start-up companies and SMEs involved in industrial interconnection clusters and value chains in the area of production and processing.

The law will take effect from January 1, 2018.

Tanzania: 2017 Budget effective from July 1, 2017

Posted on Updated on

The Minister for Finance and Planning (MoFP) on 8 June 2017, issued to the National Assembly the estimates of government revenue and expenditure for 2017. The government plans to organise and spend TZS 31,712.0 billion in the 2017/18 budget.

The Budget reflects priorities to speed up economic growth to achieve middle income status, keep back revenue leakage and resource wastage, develop infrastructure, and reform government bureaucracy to boost service delivery. The Budget Bill 2017 has been published, pending tabling before the National Assembly for debate and approval. It is assumed that this Bill will be enacted into law later in the year. It will be effective from 1st of July 2017 as specified in the Bill. The overview of tax proposals contained in Budget 2017 are given below:

  • A 5% withholding tax (WHT) on payment made for specified minerals (minerals that a licenced dealer is authorized to deal with) or minerals supplied by a resident person.
  • A reduction of the corporate income tax rate (from 30 per cent to 10 per cent) applicable for new plants to assemble vehicles, tractors and fishing boats or outboard engines for those who have a performance agreement with the Government for the first five years from commencement of operations.
  • The bill provides for a rise in the threshold from TZS 15 million to TZS 30 million  to apply for tax relief on non-commercial motor vehicles.
  • A zero VAT rate is proposed for ancillary transport services in relation to goods in transit in Tanzania. This will reduce costs of transporting goods through Tanzania and will ultimately make Tanzanian ports more competitive.
  • An extension of time to submit VAT returns to the first working day following a weekend or public holiday when the due date falls on a Saturday, Sunday or a public holiday.
  • Tax exemption is proposed on machinery and plant used in textile, edible oil, leather and pharmaceutical (including veterinary) industries. It is geared towards promoting investments in small and medium scale industries.
  • The Bill also includes some amendments to the Excise (Management and Tariff) Act. A 5% excise duty increase is proposed on specific non-petroleum products, including alcohol, soft drinks and tobacco (except locally produced water, fruit juices and spirits).
  • A decrease of excise duty is proposed on locally produced fruit juices and wines.
  • An increase in excise duty on petrol, diesel and kerosene by TZS 40 per litre.
  • The Minister has proposed an increase of TZS 40 per litre in the excise duty on fuel.
  • An increase of 5% or 3,481 per litre in excise duty is proposed for imported spirits.

Ireland: Revenue assessment in the absence of a return

Posted on Updated on

On 19 June 2017, the Irish Revenue published the Tax and Duty Manual Part 41A-05-02 that has been amended in paragraph 1 in relation to the pursuit of outstanding returns and in paragraph 4 in relation to appeal provisions.

According to this manual, where a taxpayer has failed to submit a Form 11, CG1 or CT1, as appropriate, section 959O of the TCA 1997 provides that penalties under section 1052 and 1054 may arise. In addition, a surcharge under section 1084 may apply (refer to Part 47-06-01 of the Tax and Duty Manual). Notwithstanding the provisions of sections 1052, 1054 and 1084, outstanding returns are pursued under the Return Non Filer Programme and, where appropriate, prosecution is considered under section 1078.

Furthermore, where a taxpayer has not filed a return (be that a Form 11, CG1 or CT1), then a Revenue Officer may, under section 959AC, make a Revenue Assessment on that person for the amount of tax, which in the best of the officer’s judgment, is due.

India: CBDT publishes a draft notice on special transitional provisions for a foreign company based in India

Posted on Updated on

The Finance Ministry on 15 June 2017, issued a draft notification of transitional provisions for foreign companies in the first year of becoming resident based on their place of effective management.

The notification has clarified that the tax on foreign companies qualifying as resident firms due to their place of effective management (POEM) will be the same as that for any foreign company and will be imposed at a rate of 40%.

The draft notification by the Central Board of Direct Taxes (CBDT) provides exceptions, modifications and adaptations for computation of total income, treatment of unabsorbed depreciation, set off or carry forward of losses, collection, recovery and special provisions for tax avoidance.

The notification, once finalised, will come into effect from April 1, 2017.

Canada: Minister announces consultations on changes to the Voluntary Disclosures Program

Posted on Updated on

The Canadians pay their tax shares and expect a responsive and fair tax system. Unfortunately, some rich Canadians continue to find ways to not pay what they owe, which places an unfair burden for this country.

The Canadian Government and the Canada Revenue Agency (CRA) have taken action by highlighting resources in the highest risky areas, both domestically and internationally. The Minister of National Revenue, Diane Lebouthillier, on 9th of June 2017, announced an online consultation to give Canadians a say about the CRA proposed changes to tighten its Voluntary Disclosures Program.

The proposed changes to the Voluntary Disclosures Program (VDP) follow an extensive review of the program that was completed over the past months in response to the recommendation by the Standing Finance Committee. The proposed changes to the Voluntary Disclosures Program contains:

  • narrowing the criteria of who is eligible;
  • confirming that severe cases of non-compliance do not benefit from the same level of penalty and interest relief;
  • ensuring that requests that reveal proceeds of crime are excluded from relief; and
  • requiring payment of the estimated taxes owing as a condition to qualify for the program.

Voluntary Disclosures Program applies to disclosures relating to income tax, excise tax, excise duties under the Excise Act, 2001, source deductions, GST/HST and charges under the Air Travelers Security Charge Act and the Softwood Lumber Products Export Charge Act, 2006. The CRA’s online consultations on the Voluntary Disclosures Program will be open for 60 days. The CRA will announce changes to the program in the fall of 2017. The Voluntary Disclosures Program gives taxpayers a chance to voluntarily come forward and correct preceding omissions in their dealings with the CRA.

A new guidelines was proposed by the Canada Revenue Agency (CRA) to limit voluntary disclosures program’s use. Large Canadian companies would no longer be allowed to qualify for the program regarding income tax matters according to these proposed changes. But, some relief remains present for GST/HST matters. Additionally, the CRA has proposed to give only reduced relief in some cases. To show the eligibility for the program, taxpayers would have to pay their estimated taxes at the time of submitting an application. The CRA is inviting public comments on its proposed changes on or before 8th of August 2017. The official announcement of the amendments to the voluntary disclosures program would be announced in the fall of 2017, with effect for 2018.

Ireland: Charges on income for corporation tax purposes

Posted on Updated on

On 12 June 2017, Irish Revenue published Tax and Duty Manual Part 08-02-01 dealing with charges on income for Corporation Tax purposes has been updated. 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.

The updated manual also addresses the availability of relief under section 247 where shares are acquired pursuant to a court-approved scheme of arrangement effected in accordance with Chapter 1 of Part 9 of the Companies Act 2014.

US: Interest rates on tax underpayments and overpayments for the third quarter of 2017

Posted on Updated on

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.

The rates will be:

  • four percent for overpayments (three percent in the case of a corporation);
  • one and one-half percent for the portion of a corporate overpayment exceeding $10,000;
  • four percent for underpayments; and
  • six percent for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest on tax underpayments and overpayments is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half of a percentage point.

The interest rates are computed from the federal short-term rate determined during April 2017 to take effect May 1, 2017, based on daily compounding. Revenue Ruling 2017-13, announcing the rates of interest, will appear in Internal Revenue Bulletin 2017-26, dated June 26, 2017.