Individual Taxation

Ireland: Interaction of PAYE and Self Assessment Procedures

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On 12 June 2017, Irish Revenue published the amended Part 42-04-13 of the Income Tax, Capital Gains Tax and Corporation Tax Manual. The amendments reflect the changes to the income thresholds which are applied in determining whether an individual with sources of PAYE and non-PAYE income is a chargeable person for self-assessment purposes.

The changes, which apply for the tax year 2016 and subsequent years are as follows:

  • The income threshold in section 959B(1)(a) of the TCA 1997 has been increased from €3,174 to €5,000.
  • The gross income threshold has been reduced from €50,000 to €30,000.

Bangladesh: Budget 2017-18

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On 1 June 2017, the Finance Minister Mr. Abul Maal Abdul Muhith presented the annual national budget of an outlay of TK 4 trillion for the fiscal year 2017-18. In the proposed budget, the finance minister has targeted a GDP growth rate of 7.4 per cent.

“GDP growth rate will be 7.4 percent in FY 2017-18 and inflation will come down to 5.5 percent by the end of the fiscal year,” Muhith told the parliament.

The government’s move to keep tax-free income threshold and the tax rates on individuals and firms unchanged in the next fiscal year is likely to affect many low and middle income people who would be new to income taxes.

Personal Income Tax

Minimum tax for Dhaka and Chittagong City Corporation is TK 5000; other City Corporation is 4000 and other areas TK 3000. Tax free income limit for women and more than 65 years citizen is TK 300,000, challenged persons TK 400,000 and wounded freedom fighters TK 425,000.

Thresholds Rate
Up to TK 250,000 No Tax
TK 250,001-TK 650,000 10%
TK 650,001- TK 1,150,000 15%
TK 1,150,001- TK 1,750,000 20%
TK 1,750,001- TK 4,750,000 25%
TK 4,750,001- Above 30%

Corporate Tax

Readymade Garments: Readymade garments sector is playing a vital role in the economic development and employment generation in Bangladesh. Considering the contribution of this sector in the economic growth and employment generation government has been providing various incentives and tax benefits as withholding tax rate on readymade garments export is currently 0.70 percent and enjoying reduced corporate tax rate of 20%. According to current proposal this sector may enjoy further reduced corporate tax rate to 15% from 20%.

Tax benefit for green factory: In line with environment issues, government proposed to reduce the tax rate of a readymade garments company to 14 percent if the factory of such company has an internationally recognized green building certification.

Core Infrastructure: In order to attract investment in infrastructure, government proposed conditional tax exemption for infrastructure sector such as tolled national highways, expressways, flyovers, elevated and at-grade expressways, subway constructed under public-private partnership (PPP).

Other proposals: For facilitating growth and business and for ease of doing business government proposed to allow a branch office, liaison office or a subsidiary office (including a subsidiary thereof) of a foreign parent company to maintain an income year uniform to its parent company; grant tax exemption to alternative investment fund; and expand the tax exemption list of information and communication technology sector.

Surcharge: Government proposed to maintain minimum surcharge of Taka 3000 if the net wealth exceeds Taka 2 crore and 25 lakh and also proposed to impose a surcharge of 2.5 percent on the income from the business of producing cigarette, bidi, zarda, gul and other tobacco items.

The proposed tax rate for company taxpayers has been presented in the following table:

Listed Companies 25%
Non listed Companies 35%
Listed Banks, Insurance and NBFIs 40%
Non listed Banks, Insurance and NBFIs 42.5%
Merchant Banks 37.5%
Tobacco Companies 45%
Listed Mobile phone operators 40%
Non listed Mobile phone operators 45%
Dividend Income 20%

Value Added Tax (VAT)

Effective Implementation of VAT Act: The revenue department is fully prepared to implement the Value Added Tax and Supplementary Duty Act, 2012 from 1st of July, 2017. Previously the implementation of this new Act was deferred twice for providing adequate time to the business community to prepare and acquaint themselves with the accounting and record keeping procedures under this new VAT Act.

VAT rate: Finance minister turned down business people’s demand for dropping the Value Added Tax (VAT) rate and declared in his budget speech keeping a single and uniform 15% VAT rate for the next 3 years.

Turnover Tax Exemption Threshold: Government proposed to raise the VAT free annual turnover ceiling from Tk 30 Lakh to Tk 36 Lakh. The firms with this annual turnover will be completely out of the scope of tax. This kind of benefit was not there in the 1991 VAT Act.

In addition, Government proposed to raise threshold for registration under VAT from Tk 80 Lakh to 1 crore 50 Lakh. In other words, businesses having a total yearly turnover up to Tk 1 crore 50 Lakh will be able to avail the opportunity to pay only 4% tax on their turnover.

VAT Exemption: Government proposed to provide VAT exemptions on 536 primary food items such as rice, lentils, fish, meat, vegetables, sugar, honey, puffed rice, maize, wheat, liquid milk, barley, salt etc. same as before. In addition, VAT exemptions are available to 93 items of life saving drugs. Public transport services, public health and medical services, education and training services will also enjoy VAT exemption. Government also proposed VAT exemption for 404 items of the agriculture; livestock and fisheries sector same as before. Furthermore, non commercial activities of charitable and cultural organizations will also enjoy VAT exemption facility.

Other Indirect Tax

Excise duty on Airline Tickets: Revision of existing excise duty on airline tickets as follows except for domestic travels and travel to the SAARC countries which is proposed to keep the same as present:

  • Taka 2,000 Excise Duty on airline tickets instead of existing Taka 1,000 for travel to any Asian countries except the SAARC countries;
  • Taka 3,000 Excise duty on airline tickets instead of existing Taka 1,500 for travel to Europe, USA and other countries of the world;
  • In order to avoid any inconvenience of travelers, this Excise Duty will be collected at the time of purchasing air tickets.

Excise Duty on Bank Account: Government proposed to impose Taka 800 Excise Duty instead of existing Taka 500 in cases where the balance, whether debit or credit exceeds Taka 1 Lakh but does not exceed the limit of Taka 10 Lakh at any point of time during a year. Similarly, Taka 2,500 will be imposed instead of existing Taka 1,500 in cases where the balance exceeds Taka 10 Lakh but does not exceed the limit of Taka 1 crore; Taka 12,000 will be imposed instead of existing Taka 7,500 in cases where the balance exceeds Taka 1 crore but does not exceed the limit of Taka 5 crore and Taka 25,000 will be imposed instead of existing Taka 15,000 in cases where the balance exceeds Taka 5 crore.

Duty and Tax on Cigarette and Bidi: Considering the present scenario, Government proposed to fix the price of the low segment for every 10 sticks of local brand cigarette at Tk. 27 from existing Tk. 23 and increase the Supplementary Duty rate to 52% from existing 50%. At the same time, fix the price of the low segment for every 10 sticks of international brand cigarette at Tk. 35 and the Supplementary Duty rate at 55%.

The existing Supplementary Duty rate for non-filter bidi and filter bidi will remain unchanged at 30% and 35% respectively. These rates will be effective from 1 June 2017.

Currently there is only 10 percent duty applicable on e-cigarette and on its refill pack. For this reason, Government proposed to introduce two separate H.S. Codes for these two items and impose 25% customs duty for both the items along with impose 100% Supplementary Duty on these two items.

Supplementary Duty on fast food: The Government had committed to impose additional taxes on fast food also known as “junk food” considering the health risk. For this reason, Government proposed to impose 10% Supplementary Duty at local supply stage on fast food in addition to applicable 15% VAT.

Greece: Reform Law 4472/2017 published

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The Government published Law 4472 on 19th of May 2017 in the Official Gazette. It includes several reform measures concerning the medium-term fiscal targets for 2018-2021 and tax cuts. In accordance with Article 14 of Law 4472/2017, the corporate income tax rate was reduced to twenty six per cent (26%) from twenty nine per cent (29%). The corporate rate for credit institutions is remain twenty nine per cent (29%) rate. There are some changes to the individual income tax brackets and special solidarity tax brackets. The changes on individual income tax brackets and special solidarity tax brackets are given below:

Individual income tax brackets:

Thresholds Rate
Less than or equal to EUR 20,000 20%
Over EUR 20,000 up to 30,000 29%
Over EUR 30,000 up to 40,000 37%
Over EUR 40,000 45%

Special solidarity tax brackets:

Thresholds Rate
Up to EUR 30,000 0%
More than EUR 30,000 up to 40,000 2%
Over EUR 40,000 up to 65,000 5%
Over EUR 65,000 up to 220,000 9%
More than EUR 220,000 10%

From 1st January 2020, the personal income tax and special solidarity tax amendments will be applied. The new corporate tax rate (26%) will be applicable from 1st of January 2019. The law also gives other measures regarding public pension, social security, employment law, and others.

South Africa: SARS introduces improvements to the dispute management process

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On 15 May 2017 the South African Revenue Service (SARS) introduced important changes and improvements to its current dispute management process as part of its ongoing commitment to delivering a better service to taxpayers.

The following changes have taken place regarding the dispute management process;

Request for Reasons: SARS has, for the first time, implemented an electronic Request for Reasons via eFiling or via the SARS branches. The Request for Reasons automated functionality has been implemented for Personal Income Tax (PIT), Company Income Tax (CIT) and Value-Added Tax (VAT). 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.

Once the system has identified that a valid Request for Reasons has been submitted, the period within which an objection must be lodged will be automatically extended for the period permitted by the Dispute Resolution Rules. The Request for Reasons case management workflow further allows SARS to improve its tracking and management of the Request for Reason process.

Request to allow late submission of an objection or appeal for PIT, CIT and VAT: The new dispute management process introduces a separate workflow whereby the taxpayer is now allowed to submit the Request for Reasons, Notice of Objection (NOO) or Notice of Appeal (NOA) after the periods prescribed by the Dispute Resolution Rules have lapsed. Prior to the introduction of the separate workflow, this process was included in the actual dispute process. Where the request for late submission of a Request for Reasons, NOO or NOA was not successful, the previous dispute process caused confusion regarding the outcome of the dispute and regarding what would be the next available step in the dispute process.

The new automated process allows SARS to attend to the request for late submission before the Dispute or Request for Reasons case can be created and considered by SARS. If the Request for Reasons, NOO or NOA is submitted late, the taxpayer will be prompted to provide reasons for the late submission. The new process will ensure that the request for late submission is aligned with the legislation as SARS will now inform the taxpayer upfront that the submission is late instead of classifying the dispute as invalid.

Suspension of VAT payments: Taxpayers are now able to request suspension of payments pending the outcome of a VAT dispute via eFiling or at a SARS branch. This is in line with the suspension of payments that was already implemented for PIT and CIT in 2015.

e-Filing Guided Process (PIT, CIT and VAT): To assist taxpayers in following the correct dispute sequence and completing all the information required, eFiling has been made an entirely guided process. The eFiling guided process will ensure that the dispute is submitted according to legislative requirements thereby eliminating any invalid disputes from being submitted to SARS.

Greece: Parliament adopts a draft bill amending Income Tax Code and VAT Code

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The Parliament has adopted a draft bill on 11th of April 2017, which contains some amendments on income tax code and VAT code. The Corporate Income Tax payment needs to be completed by six installments instead of eight. Note that, the first installment needs to be paid on the last working day of the month following the filing deadline and the rest of five installments 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. Again, the individual income tax return has to be submitted by 30 June. The timeline has also been fixed on 12th of May 2017 for the farmers under the special farmers’ VAT regime who have to change to the standard VAT regime. So, late filing penalties will be cancelled or refunded to taxpayers. The provision applicable for 2016 regarding proportionate payment of road tax for vehicles has been extended to 2017. All these new provisions will effect from the 2016 financial year.

Pakistan: FBR publishes a guideline on the mechanism of ADR

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Recently, the Federal Board of Revenue (FBR) has issued a guideline on the mechanism of ADR. The FBR has motivated taxpayers to resolve their issues through the Alternate Dispute Resolution (ADR) mechanism, which will help taxpayers from unnecessary litigation. This procedure will save taxpayers not only from the unnecessary litigation but help FBR to get legitimate revenue in a friendly measure thus maximising the environment of trust between tax collectors and the taxpayer.

The guideline notes that ADR is a system that operates side by side with the existing appeals system but with simpler procedures and fewer technicalities. The taxpayer could therefore refer contentious issues for consideration by independent experts and arrive at an out of court settlement with the tax administration on the basis of the expert recommendations.

This guideline explains the provisions of the Income Tax, VAT, Customs and Federal Union Taxation Laws in the context of the Alternative Dispute Resolution (ADR) mechanism in a simple and general language. It is largely intended for those who have no professional knowledge/advice in dealing with their tax affairs.

In addition, the registration form for ADR is linked to the manual.

Australia: Federal Budget 2017-18

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On 9 May 2017, the Treasurer of Australia handed down Budget 2017-18. The Government is focused on boosting the economy and helping households, to ensure all Australians can benefit from the nation’s growth story. This Budget is based on the principles of fairness, security and opportunity. It builds on the strength of the 2016-17 Budget and seeks to create more opportunities for Australians and businesses, to guarantee essential services and create more and better paying jobs.

Corporate taxation

  • The Government recognizes the importance of investing in affordable housing to meet the housing needs of Australians now and into the future. This is why the Government is introducing tax incentives to boost investment in affordable housing. From 1 January 2018, the Government will provide an additional 10 per cent capital gains tax (CGT) discount to resident individuals investing in qualifying affordable housing. This means investors in qualifying affordable housing will be entitled to a 60 per cent discount on capital gains tax.
  • Non-residents investing in eligible affordable housing through a Managed Investment Trust (MIT) will not receive the additional CGT discount. However, they will generally be subject to a 15 per cent final withholding tax rate on capital gains after a qualifying investment period of 10 years.
  • The government announced a reduction in the small business tax rate from 28.5 per cent to 27.5 per cent 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 per cent 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.
  • The corporate tax rate will then be cut to 27 per cent in the 2024–25 income year for corporate tax entities with less than $50 million aggregated annual turnover and by one percentage point in each subsequent year until it reaches 25 per cent for the 2026–27 income year.

Individual taxation

  • From 1 July 2018, the capital gains tax (CGT) discount for investments into affordable housing will be increased from 50% to 60%.
  • From 1 July 2019, the Medicare Levy will increase by 0.5 percentage points to 2.5 per cent of taxable income
  • The taxation of non-resident investors under the capital gains tax (CGT) regime will be strengthened by raising the CGT withholding tax rate for non-residents from 10% to 12.5%.

Other taxes

  • A tax of 0.06 per cent will be applied to the liabilities of banks meeting certain size criteria, with the effect that, initially, it will apply from 1 July 2017 to the five largest banks (ANZ, Commonwealth, NAB, Macquarie and Westpac).  The tax is expected to raise $6.2 billion over the forward estimates or around $1.5 billion annually. The tax will apply to: ‘corporate bonds, commercial paper, certificates of deposit, and Tier 2 capital instruments’.

Indirect taxation

The 2017–18 Budget increases excise and excise equivalent customs duties (‘excise’) for roll your own (RYO) tobacco and other tobacco products that are taxed on a per kilogram basis.

This increase is in addition to the decision taken in the 2016–17 Budget to increase tobacco excise on all tobacco products, including cigarettes and RYO tobacco, by an additional 12.5 per cent on 1 September of each year from 2017 to 2020. That measure was implemented by the Excise Tariff Amendment (Tobacco) Act 2016. It is also in addition to the biannual indexation of tobacco excise to average weekly ordinary time earnings on 1 March and 1 September each year.

The adjustment in per kilogram rate of excise under this measure will be phased in over four years and match the timing of the 12.5 per cent increases from the 2016–17 Budget. The measure is expected to increase revenue by $360.0 million over the budget forward estimates period (including an increase in GST revenue of $35.0 million which will be paid out to the states and territories). The measure will require legislation.

Budget aggregates and major economic parameters

Actual Estimates Projections
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Underlying cash balance ($b) -39.6 -37.6 -29.4 -21.4 -2.5 7.4
Per cent of GDP -2.4 -2.1 -1.6 -1.1 -0.1 0.4
Net operating balance ($b) -33.6 -38.7 -19.8 -10.8 7.6 17.5
Per cent of GDP -2 -2.2 -1.1 -0.6 0.4 0.8
Outcomes Forecasts Projections
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Real GDP 2.6 1 3/4 2 3/4 3 3 3
Employment 1.9 1 1 1/2 1 1/2 1 1/2 1 1/2
Unemployment rate 5.7 5 3/4 5 3/4 5 1/2 5 1/2 5 1/4
Consumer price index 1 2 2 2 1/4 2 1/2 2 1/2
Wage price index 2.1 2 2 1/2 3 3 1/2 3 3/4
Nominal GDP 2.3 6 4 4 4 1/2 4 3/4