| Puerto Rico | Incentives-Industry/manufacturing: On 14 May 2019, Governor of Puerto Rico signed the Senate Bill 1147 (the Opportunity Zones Development Act), offering tax incentives for investments in qualifying Opportunity Zones. The act permits the investors a maximum investment credit of 25% transferable; a credit preference system for priority projects in Opportunity Zones and capital gains tax deferral for profits invested in a qualified opportunity fund on the Island under rules similar to those passed in the federal legislation. See the story in Regfollower |
| Peru | GAAR rule: On 6 May 2019, the Peruvian Minister of Economic issued a Supreme Decree 145-2019-EF, which contains the conditions and procedures to implement General Tax Avoidance Scheme (GAAR) for tax purposes, which allow the Peruvian tax administration to prevent tax avoidance, including tax evasion, cross-border transactions. This Decree 145-2019-EF effective from 7 May 2019 and applies to audits of all transactions, including transactions between related parties. The Peruvian commission will remain as a competent stakeholder to review any tax audit related to tax avoidance and the correct application of the GAAR. See the story in Regfollower |
| Austria | Main corporate tax rate: On 8 May 2019, the Austrian Ministry of Finance published a tax reform bill for the period 2019-2020. The bill proposed a reduction of the corporation tax rate from 25% to 23% in 2022 and to 21% in 2023. Incentive for small business: On 8 May 2019, the Austrian Ministry of Finance published a draft bill regarding tax reform for 2019-2020. The bill introduced a simplified scheme for small entrepreneurs (annual turnover of less than EUR 35,000) for the computation of taxable net business income with lump-sum deductions for business expenses in the amount of up to 60% of the gross business income. See the story in Regfollower |
| Belgium | Filing return: The tax authority of Belgium has declared corporate income tax (CIT) return filing deadlines for the 2019 tax year, with a concession for those with a deadline prior to 26 September 2019. If the filing deadline falls on a Saturday, Sunday, or bank holiday, the deadline is the next working day. When the filing deadline falls on December 31, 2019, a complementary period up to and including 15 January 2020, is automatically granted. See the story in Regfollower Withholding tax rates: On 6 May 2019, Belgium published in the Official Gazette a various tax provisions along with the amendment of Article 264 of the Income Tax Code, which provides for an exemption from withholding tax on dividends in certain cases. The exemption is effective from 1 January 2019 and applies to dividends paid or credited from that date. See the story in Regfollower |
| Portugal | CFC rule: On 3 May 2019, Portugal published Law n. 32/2019 in the Official Journal which introduced amendments to the Portuguese Tax Law in line with the European Union (EU) Anti-Tax Avoidance Directive (ATAD) provisions. Accordingly, criteria to define a “CFC” based on its effective tax rate are introduced. A “CFC” is considered any non-resident entity whose effective tax rate is below 50% of the tax that would be due in Portugal. Until now such qualification would arise if the nominal tax rate applicable to such entity was below 60% of the Portuguese nominal CIT rate, i.e., 12.6% (21% x 60%). Entities domiciled or resident in a blacklist jurisdiction continue to be considered CFCs, regardless of other conditions. GAAR rule: On 3 May 2019, Portugal published Law n. 32/2019 in the Official Journal which introduced amendments to the Portuguese Tax Law in line with the European Union (EU) Anti-Tax Avoidance Directive (ATAD) provisions. The new GAAR rule provides that an arrangement or a series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the objective or purpose of the applicable tax law which are not genuine considering all relevant facts and circumstances should be disregarded and the tax advantages should not be granted. The Law generally entered into force on 4 May 2019. See the story in Regfollower |
| Colombia | Thin capitalization rule: On 5 April 2019, the tax Authority (DIAN) of Colombia published an opinion No. 8159, concerning the scope of the thin capitalization rule. Accordingly, as from taxable year 2019, the thin capitalization rule will apply only to debts with resident or nonresident related parties that are incurred by Colombian taxpayers either directly or indirectly via an unrelated third party. See the story in Regfollower |
| Italy | Incentives: On 30 April 2019, Italy publishes a decree regarding “urgent economic growth measures” which entered into force on 1 May 2019. The law includes a bonus depreciation regime for certain tangible assets a benefit equal to 30% of the costs of investments in new tangible assets when purchased between 1 April 2019 and 31 December 2019, with the deadline extended to 30 June 2020 if at least 20% of the cost is paid in advance by the end of 2019. A reduced rate for reinvested profits from 24% to 22.5% for FY 2019 and further reduced to 20.5% for FY 2022, subject to conditions that profits are reinvested in the company and the net equity of the year exceeds that recorded in fiscal year 2018. See the story in Regfollower |
| Ukraine | PE Rules: On 19 April 2019, the State Fiscal Service (SFS) of Ukraine published a guidance letter on the treatment of transactions between a non-resident and its permanent establishment (PE) in Ukraine as controlled for transfer pricing purposes, as well as the determination of taxable profits. Under the guideline, PEs of non-residents are regarded as taxpayers in Ukraine if it receive income from a Ukraine source or that perform agency and other functions related to such non-residents or their founders. As such, any transactions including internal settlement carried out between a non-resident and its Ukraine PE that may affect the taxable income of the PE as a taxpayer would fall under the definition of controlled transactions. See the story in Regfollower |
| Greece | Thin capitalization rule: On 24 April 2019, Greece published Law 4607/2019 in the Official Journal and legislates the EU ATAD into domestic law. Accordingly, the deduction of net interest expense (borrowing costs) is limited to 30% of EBITDA. The 30% limitation does not apply to exceeding borrowing costs up to the amount of Euro 3M. Taxpayers are entitled to carry forward indefinitely, exceeding borrowing costs above the 30% limitation. The new rule excludes several types of financial undertakings such as credit institutions, insurance companies, and specific institutions for occupational retirement. In addition the new law does not include the ATAD rules exempting stand-alone companies or the group ratio rules because Greece does not allow for group tax consolidation. The new ATAD rules apply to tax years beginning on or after 1 January 2019. CFC rule: On 24 April 2019, Greece published Law 4607/2019 in the Official Journal and legislates the EU ATAD into domestic law. The controlled foreign company (CFC) rules, including that a foreign entity or permanent establishment (PE) will be considered a CFC, and its non-distributed passive income included in the taxable income of a Greek taxpayer if some specified conditions are met. The new ATAD rules apply to tax years beginning on or after 1 January 2019. GAAR rule: On 24 April 2019, Greece published Law 4607/2019 in the Official Journal and legislates the EU ATAD into domestic law. The general anti-abuse rule (GAAR), including that an arrangement or a series of arrangements may be disregarded if they have been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of the tax law, and not for valid commercial reasons that reflect economic reality. The revised rule adopts the main purpose test in place of the essential purpose test under the previous tax law; thus it is not triggered by genuine tax-efficient structures. The new ATAD rules apply to tax years beginning on or after 1 January 2019. See the story in Regfollower |
| Indonesia | PE rules: On April 1, 2019, the Indonesian Minister of Finance (MoF) published Regulation No. 35 / PMK.03 / 2019 on certain conditions that should be considered permanent establishment (PE) in Indonesia. Additionally, if a double tax treaty with Indonesia applies, preparatory or auxiliary activities are not considered a PE. Preparatory activities are preliminary, and allow essential and significant activities to be carried out. Auxiliary activities are additional activities, which facilitate essential and significant activities. See the story in Regfollower |
World Tax Brief: June 2019
June 12, 2019
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