Draft legislation

South Africa: SARS releases draft taxation amendment bill for public comment

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The National Treasury and the South African Revenue Service (SARS) published on 19 July 2017 for public comment the 2017 Draft Taxation Laws Amendment Bill (TLAB) and the 2017 Draft Tax Administration Laws Amendment Bill (TALAB). Together with the 2017 Draft Rates and Monetary Amounts and Amendment of Revenues Laws Bill (Rates Bill) published on 22 February 2017, these three draft Bills give effect to the tax proposals announced on Budget Day (22 February 2017), as published in the budget review.

The two draft Bills include most of the more complex and administrative tax proposals but exclude the proposals dealt with in the 2017 Draft Rates Bill, such as changes to the personal income tax brackets and rates and excise duties, and the introduction of the Health Promotion Levy.

Significant proposals contained in the 2017 TLAB include the removal of the foreign employment income tax exemption in respect of South African residents; measures to address the circumvention of anti-avoidance rules dealing with share buy backs, dividend stripping and contributed tax capital; measures to strengthen anti-avoidance rules relating to mining environmental rehabilitation funds; and the extension of controlled foreign company rules to interposed foreign trusts and foreign foundations.

Greece: Draft Bill on CbC reporting submitted to the Parliament

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The draft bill implementing EU Council Directives 2016/881 regarding mandatory automatic exchange of tax related information (EU CbC reporting) was submitted to the Greek parliament on July 21, 2017.

Greece: Draft law regarding TP documentation requirements for CbC reporting

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The Parliament of Greece introduced a draft Law 4484/2017 on July 20, 2017 that amends to the Corporate Income Tax Law L.4170 / 2013 and 4474/2017. The suggested amendments contain additional transfer pricing documentation requirements corresponding to the European Union (EU) Guidance 2016/881. In accordance with the draft law, the country-by-country (CbC) reporting will be applicable for business years beginning on or after January 1, 2016.

Greek tax resident entities those are members of a multinational enterprise (MNE) group, with a consolidated group turnover more than Euro 750 mil in the fiscal year previous the fiscal year to which the CbC report applies will have to file the report. The draft law requires that the reporting entity notification is made for domestic subsidiaries and permanent establishments of non-EU MNEs to the Greek tax authorities by December 31, 2017 (for those entities whose fiscal year ended December 31, 2016). The report is required to be provided to the tax authorities within 15 months after the last day of the tax year it refers to. However, the first CbC report will need to be submitted by June 30, 2018 for MNEs with a fiscal year ended on 31 December 2016. Also, CbC report should be prepared in Greek or any other official language of the EU. The report has to cover group revenue, earnings before income tax, income tax paid, Income tax accrued, Shared Capital, Accumulated earnings.

Failure to submit accurate CbC report is sanctioned with monetary penalty (apart from the consequence of the unfavorable risk assessment increasing the probability of a full scope tax audit). The penalty amounts Euro 10,000 is charged in case of non-filing and Euro 5,000 is imposed on late or inaccurate filing.

Czech Republic: Chamber of Deputies passes legislation to implement CbC reporting

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The chamber of deputies approved a legislation that implements a new information exchange duty, i.e. country-by-country (CbC) reporting into Czech legislation. The legislation will be effective when all legislative and processes are done. According to the legislation, companies those are members of a multinational enterprise (MNE) group, with a consolidated group turnover more than Euro 750 mil in the fiscal year have to file the CbC report. The report is required to be submitted within 12 months after the end of the period.

Tanzania: 2017 Budget effective from July 1, 2017

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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.
  • The government has proposed to reduce Corporate Income Tax from 30% to 10% for the first five years from commencement of operations, for new assemblers of
    vehicles, tractors and fishing boats.
  • 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.

Ethiopia: Budget for 2017/18

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The Minister of State for Finance and Economic Cooperation presented the draft budget to Parliament on 8 June 2017.

The Council of Ministers proposed to spend 320.8 birrs (USD 13.8 billion), which is a rise of 2.02 billion (16.9%) over the current financial year. Of this total, approximately $ 4.9 billion is allocated to investment spending, while some $ 3.55 billion is scheduled for regular spending.

Over $ 5.08 billion (around 36.6%) is allocated to subsidies to regional states. About 303 million US dollars are made available to implement the goals of sustainable development (SDGs).

The State Secretary said that the draft budget was designed to take into account socio-economic activities and the impact of the continental and global economic situation as well as the promises of the international donors.

After discussion, Parliament referred the draft budget to the committee for budgetary and financial matters for further consideration. It is expected to be approved by the end of June 2017.

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

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Although most Canadians pay their tax and expect a responsive and fair tax system, some net high wealth individuals are continuing to find ways to avoid paying the tax they owe, placing an unfair burden on the country.

The Canadian Government and the Canada Revenue Agency (CRA) have taken action by devoting resources to the highest risk areas, both domestically and internationally. The Minister of National Revenue, Diane Lebouthillier, on 9th of June 2017, announced an online consultation to enable Canadians to comment on the CRA’s proposed changes to its Voluntary Disclosures Program (VDP).

The proposed changes to the VDP follow an extensive review of the program in recent months in response to recommendations by the Standing Finance Committee. The proposed changes to the Voluntary Disclosures Program would involve:

  • 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 owed as a condition to qualify for the program.

The VDP 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 is inviting public comments on its proposed changes on or before 8th August 2017. The official announcement of the amendments to the voluntary disclosures program would be announced in the fall of 2017 and effective from 2018.