WTA Newsletter

Chile

Main corporate tax rates:

Under the Law 20,780A, 20% of tax rate applies in 2014 to Chilean companies or permanent establishments of foreign companies. Under legislation enacted in September 2014 the corporate income tax rate will rise to 22.5% in 2015 and 24% in 2016. From 2017 an attributed regime and a distributed regime will be available. Under the attributed tax regime a 25% rate would apply to corporations, and foreign shareholders would be subject to an additional tax (a withholding tax) on their income from certain entities for the relevant period. Under the distributed regime a rate of 25.5% would apply, plus a 10% withholding tax on dividends distributed by the company. The tax rate under the distributed regime would rise to 27% by 2018.

Spain

Main corporate tax rates:

With effect from 1 January 2015 the tax rate is reduced to 28% (previously 30%) and will decrease to 25% from 1 January 2016. The tax rate for SMEs is 25%. A 20% rate applies to micro-enterprises (with turnover under EUR 5 million) for the years 2011 to 2013. A rate of 15% will apply to companies newly formed in 2014 and 2015 for the first two years after their formation. Surcharge from 0.01% – 0.75% may apply.

Withholding tax:

Current rate is 21% (under draft legislation this would be reduced to 20% from 1 January 2015 and to 19% in 2016).

Singapore

Other Incentives:

Incentives are available for certain designated investments. Lower tax rates of 5% or 10% are available under the enhanced headquarters incentive regime. This may apply to an operational headquarters, business headquarters, global headquarters or manufacturing headquarters located in Singapore.

Hungary

Treatment of losses:

Under the Proposal No. /1705, From 2015 there is a five year limit on losses carried forward. Up to 2014 losses could be carried forward indefinitely.

Mexico           

Withholding rates on Interest:

Interest paid by Mexican banks and broker dealers to Mexican residents is taxed at 0.60% in 2015. With effect from 1 January 2015 interest paid to foreign banks may be subject to a 4% withholding tax rather than 10% if the beneficial owner resides in a treaty partner country and the treaty requirements are met.

Penalties for Late payments of tax due:

Penalty interest for late payment of tax is assessed at 0.75% per month for 2014 and 2015. In the case of authorized installment payments the interest rates are 1%, 1.25% and 1.5% depending on the number of installments authorized. Penalty rates are adjusted monthly.

Italy

Main corporate tax rates:

The rate of corporate income tax (IRES) is 27.5%. The rate of the regional tax on productive activities (IRAP) is 3.5% from 1 January 2014 (previously 3.9%).

Withholding tax for Dividends:

  26% from 1 July 2014 (previously 20%).

Withholding rates on Interest:

 26% applies to loan interest from 1 July 2014 (previously 20%) and to interest on bonds accrued after 1 July 2014. Interest on government bonds and other bonds issued by public authorities is subject to withholding tax of 12.5%. Interest on loans from lenders qualifying under the EU interest and royalties directive is subject to Nil withholding tax but a 5% withholding tax applies where the beneficial owner uses the loan proceeds to pay interest to bondholders.

Others Withholding Tax rates:

Withholding tax of 26% applies from 1 July 2014 to capital gains from the disposal of non-qualified shareholdings (i.e. shareholdings that are not substantial shareholdings), however if these relate to publicly traded shares the withholding tax is Nil. Capital gains on the disposal of qualified shareholdings (substantial shareholdings) are subject to withholding tax of 13.67%). A qualified shareholding is a shareholding of more than 2% of voting rights or 5% of equity in the case of publicly traded companies, and 20% of voting rights or 25% of equity for other companies.

Portugal        

Dividends:

Under Portugal’s participation exemption, dividends received by a resident company from another resident company are exempt from tax provided the recipient is not considered a transparent entity and has held directly at least 10% of the capital of the payer company for one year before the distribution takes place. Proposed changes for 2015 include a provision that the participation exemption will not apply if (i) the distribution allows for a tax deduction in the subsidiary; or (ii) if the distribution is made by an entity that is not subject to tax or tax exempt and the dividends do not derive from profits that were subject to tax (and not tax exempt) at the sub-affiliate level. The second condition would not apply to eligible distributions by EU or EEA companies.

Russia

Thin capitalization rules:

On 19 November 2014 the Federal Council adopted a law on controlled foreign companies. This law will enter into force on 1 January 2015 subject to signature by the President. Under the CFC law a Russian individual or company owning 25% or more of a foreign entity would be regarded as controlling the foreign entity and subject to Russian tax on the share of income. If the shareholding of Russian tax residents in the foreign company is more than 50%, the threshold at which an individual or company is regarded as a controlling entity drops to 10%. An exemption applies if the company receives mainly active income, with passive income constituting 20% or less of total income. An exemption also applies where the company is located within the Eurasian Economic Union; the other country has an agreement with Russia for the exchange of tax information; or the effective tax rate in the country is at least 75% of the Russian tax rate.

Taiwan

Incentives for Small business:

Under proposed amendments corporate income tax relief will be available to small and medium enterprises (SMEs) who raise the wages of their lower level employees. For periods when Taiwan’s unemployment rate is above a certain level, a 130% tax deduction will be available to SMEs for the increase in payroll spending for existing domestic entry-level employees.

Nigeria

Tax base of Non Resident companies:

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.

Uruguay

Tax Compliance:

From now on the holders’ information return must be filed with the Uruguayan Central Bank by nonresident entities that have participations in the capital of other entities. Any changes in participations should be reported to the companies in which the shares are held within 15 days of the change, and should be reported to the Uruguayan Central Bank within 30 days using the holders’ informative return. The return should be filed by nonresidents that operate in Uruguay through a permanent establishment and that have their effective headquarters in Uruguay to develop business activities in Uruguay or abroad. The requirement to submit a return also applies to holders of quotas of foreign investment funds whose administrators are resident in Uruguay. For 2014 the return deadline has been extended up to 31 December 2014.