| Denmark | PE rules: On 6 November 2019, the Danish Minister of Taxation published a bill L.48 on international taxation. The bill proposed to change the domestic PE definition in order to align with the new definition in Article 5. CFC rules: The bill also intends to implement the CFC rules of the European Union’s (EU’s) Anti-Tax Avoidance directive (Council directives (EU) 2016/1164 and (EU) 2017/952) (the ATAD) into Danish law. The CFC proposal is expected to enter into force on 1 January 2020. See the story in Regfollower |
| Ecuador | Main corporate tax rates: On 21 November 2019, the Ecuadorian National Assembly presented a new draft of the Tax Reform Bill. The bill proposed a temporary corporation tax for companies whose taxable income exceeded USD 1 million in fiscal year 2018. These companies will apply a progressive tax rate of 0.1%, 0.15% and 0.2%, respectively, for the years 2020, 2021 and 2022. Incentives for small business: According to the draft bill, entrepreneurs and micro-enterprises whose annual net turnover does not exceed USD 300,000 are subject to a simplified tax regime. Such entrepreneurs are also subject to a flat tax rate of 2% on gross income. Tax payment procedures: The bill proposed to repeal the rules on compulsory advance income tax payments. Taxability of dividends income: The bill also proposed dividends paid to non-resident companies are subject to income tax. See the story in Regfollower |
| France | Main corporate tax rates: On 19 November 2019, the National Assembly adopted the first reading of the Finance Bill for the year 2020. The bill proposed the reduction of the corporate tax rate for all companies, including those with a turnover of € 250 million or more, while smoothing the impact of this decline on public accounts. The rate is subject to 28% on the first EUR 500,000 and 31% on the excess for the year 1 January to 31 December 2020. And, as of 1 January 2021 to 31 December 2021, the rate will be 27.5%; for fiscal years starting on or after 1 January 2022, the standard rate of corporate income tax will be 25% for all companies and all taxable income. Withholding tax on dividends: The bill also proposed the amendment of dividend withholding tax rules. The new rules permits for a refund of dividend withholding tax for non-resident loss-making companies. Incentives on industry/manufacturing: The draft Bill provides an adjustment of the research and development (R&D) tax credit by decreasing staff expenses from 50% to 43% taken into account as qualifying expenses to assess the lump-sum running costs referred to in Article 244 quarter B, II, c of the French Tax Code (FTC). This measure would apply to expenses earned during fiscal years beginning on or after 1 January 2020. See the story in Regfollower |
| India | Main corporate tax rates: On 25 November 2019, the Finance minister introduced the Taxation Laws (Amendment) Bill, 2019 in the lower house of Parliament, which will replace Taxation Laws (Amendment) Ordinance, 2019. The bill proposed to reduce the corporate tax rate 22% from 30% without incentives. Reduced rate: The Bill also proposed a 15% rate for the new domestic manufacturing companies, as long as they do not claim certain deductions. The new domestic manufacturing companies must be set up and registered after 30 September 2019 and start manufacturing before 1 April 2023. See the story in Regfollower |
| Germany | Surcharge: On 14 November 2019, the lower house of the parliament adopted the draft bill on the reduction of the solidarity surcharge. The aim of the draft bill is the reduction of the 5.5% solidarity surcharge on corporate income tax liabilities that was implemented in 1995 to finance Germany’s reconsolidation with effect from the year 2021. The draft bill would result in an effective abolition of the solidarity surcharge for approximately 90% of the taxpayers. However, the bill is still subject to the approval of the Bundesrat (Federal Council). See the story in Regfollower Incentives on industry/manufacturing: On 7 November 2019, the Federal Parliament passed the Annual Tax Act 2019. Accordingly, the Research Allowance Act is introduced to increase the attractiveness of Germany as a research location. According to this bill, a research allowance may be credited against the corporate income tax payable or in the case of a loss situation paid directly to the taxpayer. See the story in Regfollower |
| Kenya | Reduced rate: On 7 November 2019, the Kenyan president approved the Finance Act of 2019. Under the Act, companies operating a plastics recycling plant will be considered to a reduced corporate income tax rate of 15% for the first 5 years upon commencement of its operations. Computation of taxable income: The Act has clarified that income that is exempt under the Income Tax Act will not be subject to any further tax if dividends are distributed from such income. Thin capitalization: The Income Tax Act has been amended in Section 16(2)(j) by introducing a provision that excludes companies implementing projects under the affordable housing scheme from the interest deductibility restrictions because of thin capitalization. This provision will be applicable from 1 January 2020. Late payments of tax due: According to the Act, a penalty of 20% on late payment of tax (section 72D of Income Tax Act) has been repealed. See the story in Regfollower |
| Greece | Main corporate tax rates: On 26 November 2019, the government submitted its second tax bill to Parliament. The bill proposed the reduction of corporate tax rate from 28% to 24%. Withholding rates on dividends: The bill also proposed the reduction of dividend withholding tax rate from 10% to 5%. See the story in Regfollower |
| Nigeria | Reduced rate: On 21 November 2019, the Senate passed the Finance Bill 2019, which proposed a lower 20% corporate income tax rate (CIT) applies for companies with turnover between NGN25 million and NGN100 million. However, businesses with a turnover below NGN25million are to be exempted from CIT rate. Incentives: The bill proposed that extra dividend other than profits are exempted from tax and franked investment income only to un-taxed distributions and allowing a 2% bonus tax payable to medium-sized companies and 1% bonus to large companies for the early payment of companies income tax. Thin capitalization: The bill proposed to introduce thin-capitalization requirements of an interest deduction is equivalent to 30% of EBITDA for loans received from non-resident associated parties, with any additional interest expense allowed to be carried forward until five years. Withholding tax rates: The bill stated that non-residents taxpayers who are engaged to import technical and management services are subject to a 10% final withholding tax rate. See the story in Regfollower |
| Cyprus | Late returns: On 1 November 2019, the Registrar of Companies published a notice regarding the penalties for late filing of annual returns. The notice also stated that as of 18 December 2019, an administrative penalty will also apply. See the story in Regfollower |
| Bulgaria | Thin capitalization: On 12 November 2019, a proposal was submitted to Parliament, which proposed to amendments the thin capitalization rules in order to increase the level of expenditure that is not considered as interest expense for the application the rules. CFC rule: The proposal also proposed to amend the CFC rules, specifies the criteria for determining the persons to whom these rules apply. See the story in Regfollower |
| Russia | CFC rule: On 5 November 2019, the Russian Ministry of Finance (MOF) issued a letter concerning the profits of controlled foreign companies (CFC) in cases where a controlling person has an indirect participation in a CFC through legal entities that are also controlling persons of that CFC and are recognized as Russian tax residents. See the story in Regfollower |
| Peru | Incentives on industry/manufacturing: On 31 October 2019, Peru published a Decree in the official gazette. Under the Decree, the tax benefits are extended for an additional three years, until 31 December 2022 which will be effective from 1 January 2020. See the story in Regfollower |
| Slovenia | Main corporate tax rates: On 5 November 2019, the Slovenian government published the amendments to the Corporate Income Tax Act. Accordingly, as of 1 January 2020, the corporate tax rate will be increased from 19% to 20%. The Act also introduced a minimum corporate tax at a rate of 7%, which includes limitations on the application of tax reliefs and tax losses. See the story in Regfollower |
| Colombia | PE rules: On 29 October 2019, the Ministry of Finance and Public Credit has issued a Decree. In the Decree it was determined that the permanent establishments of foreign individuals, societies or entities located in Colombia, regardless of their nature, will be taxed on the income and occasional earnings from national and foreign sources that are attributable to them. See the story in Regfollower |
| Mexico | PE rules: On 30 October 2019, Mexico’s Congress has approved the Tax Reform for 2020. The Reform extended the existing definition of permanent establishment rule. CFC rules: The reform also proposed changing the criteria for the application of CFC rules. The Mexican taxpayer will be subject to the CFC provisions that must control the foreign entity deemed to exist if the resident owns more than 50% of the votes or value of the investment or has a right to more than 50% of the dividends or assets or has more than 50% of the combined assets and profits of the entity. GAAR: The tax reform introduced GAAR, through which the Mexican tax authorities will be re-characterize or disregard a transaction for tax purposes, if the transaction lacked a business purpose. See the story in Regfollower |
| South Africa | Taxability of other income: On 30 October 2019, Finance Minister introduced Taxation Laws Amendment Bill 2019 in the National Assembly, which amends the definition of rental income under section 25BB of the Income Tax Act, 1962. See the story in Regfollower |
| Ukraine | Late payments of tax due: On 24 October 2019, the National Bank of Ukraine decided to lower its key policy rate to from 16.5% to 15.5% per annum with effect from 25 October 2019. The interest rate has a tax effect on the late tax payment interest and penalties. See the story in Regfollower |
| Malaysia | Incentives on industry/manufacturing: On 8 October 2019, the Malaysian Investment Development Authority announced developments to the Principal Hub incentive. Under the announcement, authority issued new guidelines for Principal Hub incentive, which are applicable to Principal Hub applications received by Malaysian Investment Development Authority as of 1 January 2019 to 31 December 2020. See the story in Regfollower |
| Italy | Sanctions for tax evasion: On 26 October 2019, a Law Decree was published in the Official Gazette. Under the decree, the Government increased criminal penalties for tax violations provisions applicable to the adjustment of an Italian income tax. See the story in Regfollower |
World Tax Brief: December 2019
December 11, 2019
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