United Kingdom | Main Corporate tax Rate: The main rate of Corporation Tax for 2015 is 20% (With the exception of oil and gas companies with ring fence profits) from 1 April 2015. The Corporation Tax will be charged at a single rate known as the main rate. The small profit rate was abolished with effect from 1 April 2015 when it was unified with the main rate. Interest Rate: The rate of tax is 25% of the diverted profits plus “true-up” interest. The “true-up interest” ensures fairness between cases in which HMRC charging notices are issued soon after the end of the accounting period and cases where notices are delayed. Interest received-Banks: The rate at which the bank levy is charged will rise to 0.21% from 1 April 2015. The reduced rate of levy that applies to longer maturity wholesale funding (where there is more than one year left to maturity), and which is charged at half the main rate, will therefore rise proportionately to 0.105% from 1 April 2015. Banks will also be affected by the restriction on carry forward and offset of tax losses from prior periods as already announced. |
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Russia | Dividend rates: The Finance Ministry (MoF) has issued Letter No. 03-03-06/1/885 on 19th January 2015 for describing the application of the participation exemption by a tax agent giving dividends to a Russian company. In accordance with article 284 (3) of the Tax Code, the MoF noticed that the parent company has to satisfy the following requirements to qualify for the participation exemption: Minimum 365 days holding period from the decision date to distribute dividends is approved not less than 50% capital share of the company paying dividends equal to at least 50% of the whole amount of the paid dividends. |
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Peru | Withholding tax rates: In Peru changes have been made to the income tax regulations regarding financial derivatives and the tax basis on indirect transfers of Peruvian shares through Supreme Decree No. 088-2015-EF on 18 April 2015. The changes became effective as from 19 April 2015. According to the new rule income obtained from financial derivatives of nonresidents will be considered as sourced in Peru only if the settlement date of the derivative occurs within three calendar days from the date of the contract given that the underlying asset is based on the exchange rate of the Peruvian currency (PEN) against any other foreign currency. Also, those financial derivatives will be subject to a withholding tax rate of 30%. |
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Austria | Withholding tax rates: Increase of the withholding tax on investment income from 25% to 27.5%. However, the withholding tax rate on savings income will remain at 25%. Increase of the capital gains tax rate on the sale of real estate from 25% to 30%. Introduction of a single depreciation rate of 2.5% for buildings. Increase of the invention premium from 10% to 12%. Changes to the real estate transfer tax rate by introducing a different rate structure. Instead of the single rate of 3.5%, transfers of property with a value of up to EUR 250,000 will be subject to a rate of 0.5%, transfers with a value of up to EUR 400,000 will be subject to a rate of 2% and transfers with a value of more than EUR 400,000 will be subject to a rate of 3.5%. |
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Poland | Thin Capitalization rules: With effect from 1 January 2015, the thin capitalization threshold of 3:1 is lowered to a debt-to-equity ratio of 1:1. However, the amount of the debt is compared to the amount of the borrower’s equity instead of the share capital, as it was provided under the previous rules. The application of the thin capitalization rules is extended to include indirectly related parties. As such, interest is also not deductible when the loans are granted by indirect shareholders owning at least 25% of the share capital. Previously, the deductibility limitation applied only to direct shareholders. Controlled Foreign Company Rules: With effect from 1 January 2015, a special tax regime applicable to a controlled foreign company. The concept of the CFC regime is regulated by article 24a of the Corporate Income Tax Law. The new CFC rules are to apply if the following criteria are satisfied: The subsidiary is considered as CFC if its registered seat or place of management is located in a “blacklisted” country (a country applying harmful tax competition) or in a country with which Poland/ the European Union has not concluded an agreement containing an exchange of information clause (e.g. a double tax treaty). At least 50% of the revenues of the foreign subsidiary is derived from passive income. At least one kind of passive income generated by the foreign subsidiary is subject to a CIT rate lower than 14.25% or is CIT-exempt or falls out of scope of CIT. The Polish taxpayer holds at least a 25% direct or indirect shareholding in the foreign subsidiary for the period not shorter than 30 days. |
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Canada | Incentives for small business: The small business tax rate will be dropped gradually from 11% to 9% in 2019. The rate will be 10.5% effective from 1st January 2016, 10% from 1st January 2017, 9.5% from 1st January 2018 and 9% from 1st January 2019. Manufacturers will receive a 10 year tax incentive to boost productivity and there will be an extension of the 50% capital cost allowance (CCA) rate for manufacturing and processing machinery and equipment. Main corporate tax rate: The main corporate tax rate remains 15%. |
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Namibia | Main Corporate tax rate: In the budget it was proposed to reduce the corporate income tax rate for non-mining companies from 33% to 32%. There will be no change in the corporate tax rate for mining companies and companies providing services related to mining on behalf of a person licensed to conduct mining operations. Withholding tax rates on service fees: The withholding tax rate on service fees for non-residents are to be reduced from 25% to 10%. The withholding tax rate on royalty applicable to non-residents would be reduced to 9.6% from 9.9% after the 32% tax rate becomes effective for companies. Also the threshold for VAT registration will be increased from N$200,000 to N$500,000. |
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Egypt | Main corporate tax rates: The standard corporate tax rate and the top marginal rate for individual tax purposes will be reduced to 22.5%. The 5% additional surcharge will be abolished for assessment years 2015 and 2016. Surcharge: The 5% surcharge is, in principle, applicable on net profits and income exceeding EGP 1 million for both corporate and individual taxpayer’s. In addition, the tax rates will be maintained for a 10-year period. Dividend: For corporate entities, the dividend tax applies at a rate of 10%, with no deductions. Also a lower dividend tax rate of 5% applies when ownership in the distributing entity exceeds 25% of the share capital or voting rights, provided the participation is held for minimum two-year period. |
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India | Main corporate tax rate: The Budget announcements include an unprecedented corporate tax cut. Corporate tax is to be cut by 25% over next four years. India will grow at a rate of more than 8% during 2015-16, a key economic report said ahead of the budget. |
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Vietnam | Incentives on Industry/manufacturing: Corporate income tax incentives on new investment projects in the manufacturing sector are entitled to be taxed at 10% for 15 years subject to certain conditions. Decree 12 clarifies that major manufacturing projects with an investment capital of at least VND 6 trillion and which have either an annual revenue of VND 10 trillion or 3,000 employees, would be eligible for the incentive. |
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World Tax Brief : March & April 2015
06 May, 2015