WTA Newsletter

China

Incentives on Industry/manufacturing-Circular Cai Shui [2014] no 59 has extended the 15% tax rate to Technologically Advanced Service Enterprises (TASEs) in 21 trial cities until 31 December 2018.  These must provide qualifying services and 50% of employees must have an associate degree or above. Revenue from technologically advanced services must be more than 50% of total revenue in the year and revenue from qualifying offshore technologically advanced outsourcing services must be at least 35% of total revenue for the year.

Malta

Withholding rates on other income-Under the 2014 budget provisions a withholding tax replaces the previous capital gains tax charge on the transfer of property from 1 January 2015. The transfer of property will be subject to a withholding tax of 8% for both trading and non-trading taxpayers. In the case of non-traders who acquired the property before 2004 the withholding tax is increased to 10%. Property acquired less than 5 years before the transfer is subject to a reduced withholding tax of 5%.

Peru

Main corporate tax rates-The corporate tax rate in 2014 is 30%. Under draft Law 4007/2014-CR the corporate tax rate will be reduced to 28% for 2015 and 2016; 27% for 2017 and 2018; and 26% in 2019.

Withholding rates on Dividends-Under draft Law 4007/2014-CR this is to increase to 6.8% in 2015 and 2016; to 8% in 2017 and 2018; and to 9.3% in 2019.

Venezuela

Treatment of losses-With effect from 1 January 2015 losses offset cannot exceed 25% of the taxable income of the period. Losses derived from adjustments for inflation may no longer be carried forward (for periods up to 31 December 2014 losses could be carried forward for 1 year).

Other Incentives-A new Foreign Investment Law was introduced by Decree 1438 of 28 November 2014. Under this law the National Centre of Foreign Trade (CEMCOEX) and the Ministry of Commerce are responsible for regulating foreign investments, except for some sectors such as mining and insurance that is dealt with by the relevant Ministries. To obtain registration foreign investments must be above USD 1 million and at least 75% of the foreign investment must be represented by equipment, raw materials and other tangible goods required for the start of production operations. The investment must remain in Venezuela for five years but dividends up to 80% of profits may be remitted abroad.

Spain

Treatment of losses-With effect from 1 January 2015 net operating losses can be carried forward indefinitely (previously losses could be carried forward for up to 18 years).

Incentives-Incentives are available for export activities and research and development. A number of tax credits (including the environmental, investment and profit reinvestment credits) are abolished from 1 January 2015 and replaced by the capitalization reserve. This allows a 10% tax deduction for an increase in net equity in a year provided that the net equity increase continues each year for the following five years, excluding years when there is an accounting loss, and that an undistributable reserve is increased by the same amount. The maximum deduction is 10% of the taxable base before this deduction, adjustments for deferred tax assets and the offset of losses. Any excess may be carried forward for two years.

Croatia

Taxability of other income-Taxable in principle, however dividends and shares of profit are not included in taxable income if the payer of the dividend is subject to the corporate profits tax or an equivalent type of tax, has a legal form similar to that of a corporate entity or other entity subject to corporate profits tax, and was not permitted to treat the distribution as a tax deductible expense in the home jurisdiction.

Nigeria

Tax base for Non -resident companies-Companies registered in a foreign jurisdiction with a fixed base or PE in Nigeria are taxed only on Nigerian-source income. For the year 2014 onwards non-resident companies operating in Nigeria through a permanent establishment must send in audited financial statements, tax computations and other relevant information with the tax return in their tax filings.

Withholding rates on Dividends-The Tax Appeal Tribunal in Lagos issued a decision in December 2014 holding that dividends paid by a gas exploration and production company out of profits from the company’s gas operations in Nigeria are subject to withholding tax.

Tax Compliance-For the year 2014 onwards non-resident companies operating in Nigeria through a permanent establishment must send in audited financial statements, tax computations and other relevant information with the tax return in their tax filings.

Norway

Capital Gains-In December 2014 a government appointed panel recommended that there should be an exemption from capital gains tax on the sale of shares in foreign companies by Norwegian companies but this has not yet been implemented.

Main corporate Tax-A report entitled Capital Taxation in an International Economy presented by a government appointed panel in December 2014 recommended that the corporate taxation rate should be reduced to 20%, but no measures have yet been taken to implement the recommendation.

Withholding rates on Dividends-A government-appointed panel recommended in December 2014 that withholding tax should be abolished on dividend payments to non-residents, except for distributions to recipients in low tax jurisdictions outside the EU/EEA, but this has not yet been implemented

Russia

Tax base for Non -resident companies-Tax Code Article 307; Letter 52359 of 17 October 2014 provides, under domestic law a permanent establishment includes a branch, representative office, division, bureau, agency, other subdivision or any place through which a non-resident regularly carries on business activities in Russia.

Singapore

Incentives:

Incentives are available under the productivity and innovation credit (PIC) scheme for investments in research and development, IT equipment, training, IP rights and registrations, research and development expenditure and design projects; and incentives are also available for pioneer status corporations; and post-pioneer corporations. The extra 50% tax deduction available for research and development expenses has been extended until 2025.

Incentives are also available for the financial services sector. Tax incentives available to qualifying funds include exemptions from tax on specified income from designated investments and withholding tax incentives for interest and qualifying payments made to non-residents (apart from PEs) in Singapore.

The tax rate for small Singapore companies is reduced significantly. Also the productivity and innovation (PIC) Plus incentive provides support for SMEs making investments in research and development up to a maximum of SGD 600,000 per qualifying activity per year.