Capital/Property Taxes

Hong Kong: IRD releases tax obligations of property owners

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On 15 June 2017, the Hong Kong Inland Revenue Department (IRD) issued a notice on the property tax obligations of property owners. Property tax is charged on property owners by reference to the actual rent receivable (including lease premium) in the relevant year of assessment. Owners in receipt of rental income must inform the tax department in writing if they are liable to tax and supply the particulars of the property not later than 4 months after the end of the basis period for the year of assessment (e.g. on or before 31 July 2017 for the year of assessment 2016/17), unless they have already received the appropriate tax returns.

A return issued by the IRD should be completed and furnished to the IRD within the stipulated time limit for official record updating purposes even if no rental was received in respect of the property concerned. Owners chargeable to property tax must keep sufficient rent records, such as lease agreements and duplicates of rental receipts for at least 7 years. They must inform the Department of any change of address in writing within one month.

Where a corporation has been exempted from property tax and there is a change in the ownership or use of the property, or in any other circumstances which may affect such exemption, the corporation must notify the Department in writing of the change within 30 days after the event. Heavy penalties may be incurred for failure to comply with the requirements of the Inland Revenue Ordinance.

Ireland amends Capital Acquisitions Tax manual

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On 12 June 2017, Irish Revenue has published the amended Capital Acquisitions Tax manual that dealing with business relief Part 12 to incorporate material from Tax Briefing No. 33 (September 1998) in relation to the treatment of debts attributable to assets that are not used for the purposes of the business concerned.

France: New tax plans by the newly elected president

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French newly elected president has committed to reduce 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.

The tax credit on research, innovation and the start-up status would be kept. However, it has not yet been clarified whether the scope or rate of those “special schemes” would be reduced.

Also, dividends, capital gains on securities and interest are expected to be taxed around at flat rate of 30% from January 2018, including social contributions, which are currently taxed at the marginal rate of 63.5% (45% with respect to income tax, 4% with respect to high income tax and 15.5% with respect to social contributions).

Wealth tax, known in France as ISF is largely perceived as a competitive disadvantage by individuals, businesses and investors in comparison to other European countries. It is therefore planned to have it abolished

The wealth tax also known as ISF of France is highly considered as disadvantage by individuals, businesses and investors compared to other European countries and therefore it is planned to be abolished.

However, ISF would be replaced property wealth tax (IFI) or property income tax (IRI) and this would not include the market value of securities held in companies.

Australia: Improving the small business capital gains tax concessions

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On 9 May 2017, the Australian Government announced that it would amend the small business capital gains tax (CGT) concessions to ensure that they can only be accessed in relation to assets used in a small business or ownership interests in a small business.

The concessions assist owners of small businesses by providing relief from CGT on assets related to their business, as well as contribute to their retirement savings through the sale of the business. However, some taxpayers are able to access these concessions for assets which are unrelated to their small business, for instance through arranging their affairs so that their ownership interests in larger businesses do not count towards the tests for determining eligibility for the concessions.

The small business CGT concessions will continue to be available to small business taxpayers with aggregated turnover of less than $2 million or business assets less than $6 million. The measure will apply from 1 July 2017.

UK: Penalties Relating to Offshore Matters and Offshore Transfers (Additional Information) Regulations 2017

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The Penalties Relating to Offshore Matters and Offshore Transfers (Additional Information) Regulations 2017 (S.I. 2017/345) were made on 9 March 2017 and that stipulate the additional information that is required to be furnished when requesting for a reduction of penalties for tax inaccuracies or failures involving offshore matters or offshore transfers.

The Regulations will come into force on 1 April 2017.

UK: Asset-based Penalty for Offshore Inaccuracies and Failures (Reductions for Disclosure and Co-operation) Regulations 2017

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On 9 March 2017, the Asset-based Penalty for Offshore Inaccuracies and Failures (Reductions for Disclosure and Co-operation) Regulations 2017 (S.I. 2017/334) were made. These Regulations come into force on 1st April 2017. It specify the maximum amount by which the standard amount of an asset-based penalty imposed in accordance with Schedule 22 to the Finance Act 2016 (c. 24) may be reduced as required by paragraph 8 of that Schedule. For a person to be liable to the asset-based penalty, that person must also be liable to a penalty under Schedule 24 to the Finance Act 2007 (c. 11), Schedule 41 to the Finance Act 2008 (c. 9) or Schedule 55 to the Finance Act 2009 (c. 10) involving an offshore matter or an offshore transfer.

The standard amount of the asset-based penalty may be reduced by up to 50% where the person liable to the penalty has made only unprompted disclosures of information etc. relating to the person’s tax affairs. In a case where person’s disclosure was made after being prompted to do so, the standard amount of the penalty may only be reduced by up to 20%.

UK: Capital Gains Tax (Annual Exempt Amount) Order 2017

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On 13 March 2017, the Capital Gains Tax (Annual Exempt Amount) Order 2017 (S.I. 2017/377) was made and for tax year 2017-18, the annual capital gains tax exemption is GBP 11,300 for individuals.