| Costa Rica | Main corporate tax rate: Costa Rica Publishes Corporate Income new income tax brackets for the 2017-2018 tax year on 27 September 2017. Although the brackets are adjusted, the rates remain the same (30%). Consequently, small enterprises with gross income up to CRC 53,113,000 are subject to a 10% reduced rate; income from CRC 53,113,000 to CRC 106,835,000 is subject to a 20% reduced rate and over CRC 106,835,000 is subject to a 30% rate. See the story in Regfollower |
| France | Main corporate tax rate: On 27 September 2017, the French Government adopted the draft Finance Bill for 2018. Accordingly, the corporate income tax rate will be progressively reduced from the current 33.33% to 28% over the period 2017 to 2020. The 28% rate will apply to the first EUR 500,000 of profits for all companies. Further, this ordinary rate would then be decreased to 26.5% and then to 25% for the financial years opened as from 1 January 2021 and from 1 January 2022, respectively.
Dividends: On 27 September 2017, the French Government adopted the draft Finance Bill for 2018. Under the draft bills, the government has announced that it intends to abolish the 3% surtax for dividends paid as from 1 January 2018. On 17 May 2017, the Court of Justice of the European Union issued a judgment and ruling that the 3% contribution on distributed profits is not compatible with article 4-1 of the European Union (EU) Parent-Subsidiary Directive (PSD) when the parent company redistributes the dividends received from its subsidiaries. |
| US | Main corporate tax rate: On 27 September 2017, President Donald Trump proposed a new tax reform plan for US corporations. The plan still must be turned into legislation, which is not expected until after Congress makes progress on the fiscal 2018 budget. The proposals come in a “framework” for tax reform with the following changes: -Reducing the corporate tax rate to 20%; -Setting a 25% top tax rate for pass-through entities; and -Introducing a reduced repatriation tax rate in the range of 3.5% to 8.75% payable over a period of eight years. See the story in Regfollower |
| Zambia | Residence rules: On 29th September 2017, the Finance Minister presented the 2018 National Budget for the year 1 January to 31 December 2018 to the National Assembly. Accordingly, from 1 January 2018, it is proposed to amend the definition of residence for persons other than individuals under section 4 of the Income Tax Ac. The term “residence” for corporation tax by replacing the reference to “central administration and control” by “place of effective management” administration”. The business is resident in Zambia if the place of effective management of the person’s business or affairs is in Zambia for that year.
Incentive on industry/manufacturing: From 1 January 2018, the 5-year income tax holiday under the Zambia Development Agency Incentives to be discontinued and replaced with accelerated depreciation allowances on qualifying investments in the priority sectors. Taxability of management fees: From 1 January 2018, it is proposed to revise the definition for management or consultant fee for persons other than individuals. The definition of “Management or consultancy fees” is amended to clarify that the creation, design, development, installation, and maintenance of any information technology solution or the system will fall within the meaning of management or consultancy fees. |
| Singapore | Main corporate tax rate: The Income Tax (Amendment) Bill 2017 was passed in Parliament on 2 October 2017. Accordingly, the existing corporate income tax rebate for 2017 will be enhanced by raising the cap from SGD20, 000 to SGD25, 000. The rebate rate of 50% of tax payable remains unchanged. The rebate is also extended to the year of assessment 2018 (the income year 2017), at a reduced rate of 20% of tax payable, subject to a cap of SGD 10,000.
Incentive for industry/manufacturing: The Income Tax (Amendment) Bill 2017 was passed in Parliament on 2 October 2017. Accordingly, from 2018, taxpayers will also be able to claim a tax deduction for the full amount of payments made under Cost Sharing Agreements for qualifying research and development projects without the need to provide a cost breakdown. |
| Norway | Main corporate tax rate: The national budget for 2018 was presented on 12 October 2017. Accordingly, the standard corporate income tax rate will be reduced from 24% to 23% from 1 January 2018. For companies in the financial sector, the rate will remain 25%. There will be an increase of the special tax on petroleum income from 54% to 55% due to the reduction of the corporate income tax rate. See the story in Regfollower |
| Canada | Small business tax rate: From 2018, the federal government is reducing the small business tax rate. Therefore, the small business tax rate will drop to 10%, effective from 1 January 2018, and then to 9% effective from 1 January 2019. The reduced rate applies on the qualifying active business income of a Canadian-controlled private corporation (CCPC) up to CAD 500,000. See the story in Regfollower |
| Luxembourg | Main corporate tax rate: On 11 October 2017, the Luxembourg Finance Minister presented the budget law for 2018 to the Parliament. Under the budget proposal, as from 1 January 2018, the CIT rate will decrease from the current 19% to 18% (introduced through the last year’s tax reform).
Incentive for industry/manufacturing: On 11 October 2017, the Luxembourg Finance Minister presented the budget law for 2018 to the Parliament. Under the budget proposal, as from 2018, corporate business owners shall benefit from a tax credit for their “global” investments in software (i.e. 8% for the first portion until €150,000 and 2% for the portion of the investment exceeding €150,000). This tax credit shall, however, not exceed 10% of the income tax due for the tax year of acquisition. Self-created software and software acquired from an associated enterprise shall be excluded. The investment tax credit for companies would be applicable on the purchase of new electric cars with zero emission or hydrogen fuel cell cars with effect from the taxable year 2018 for all qualifying cars registered after 31 December 2017. The acquisition price (after deduction of possible subsidies) could be taken into account for the credit up to the amount of EUR 50,000 per eligible vehicle. |
| Turkey | Main corporate tax rate: On 13 October 2017, a parliamentary commission accepted a proposal to extend a planned corporate tax rise from 20% to 22% for all companies instead of just financial institutions. The increased corporation tax will set for the years 2018 to 2020. See the story in Regfollower |
| Saudi Arabia | Taxable income: The government of Saudi Arabia issued Royal Decree No. M/131 on 20 September 2017 modifying certain articles of the Income Tax Law (ITL). Accordingly, from 1 January 2017, shares in domestic corporations held directly or indirectly by persons in the hydrocarbon sector are now subject to income tax.
Special corporate income tax: From 1 January 2017, progressive tax rates are being introduced for oil and hydrocarbon producing companies based on the company’s capital assets. Group reporting: The Royal Decree No. M/131 of 20 September 2017, approves that the tax base of a capital company is determined independently from its shareholders, partners or subsidiaries and regardless of whether its accounts are consolidated. This only approves that group members should continue to file their tax return separately and not on a consolidated basis (Article 6 of the ITA). This amendment will be effective from the commencement of the first financial year following that of the issuance of the Royal Decree. Treatment of losses-Carry forward: The Royal Decree No. M/131 of 20 September 2017, approves that carry-forward of tax losses is now permitted even if a change in the ownership or control in the company occurs, provided the latter continues to undertake the same activity. Previously, loss carry-forward was denied if control or ownership of 50% or more in the company had changed. This amendment will be effective from the commencement of the first financial year following that of the issuance of the Royal Decree. |
| Malaysia | Withholding rates on fees for technical services: On 24 October 2017, the Income Tax (Exemption) (No. 9) Order 2017 was published in the Federal Gazette and provides that a non-resident shall be exempted from the payment of income tax on the fees if services are performed by the non-resident outside Malaysia.The Exemption Order is deemed to come into operation on 6 September 2017. Thus from this date, any form of service that is performed outside of Malaysia will not be liable to tax, and accordingly withholding tax no longer applies to such offshore services. See the story in Regfollower |
| Ecuador | Main corporate tax rate: On 11 October 2017, the Ecuadorian President announced the tax reform plan for 2018. Accordingly, the corporate income tax rate will increase from 22% to 25%.
Incentives for small business: On 11 October 2017, the Ecuadorian President announced tax reform plan for 2018. Under the proposal, newly established small and micro enterprises will no longer pay income tax in on their first USD 11,000 of profit while new micro-entrepreneurs will no longer pay income tax during the first two years upon the creation of their enterprise. Payment of tax: On 11 October 2017, Ecuadorian President announced tax reform plan for 2018. Accordingly, companies with revenue up to 300,000 USD will not be obliged to make corporate income tax advance payments. |
| India | Central management and control rules: On 23 October 2017, the CBDT issued Circular No. 25 of 2017 and clarified that regional headquarters, operating for group companies in a region within the general and objective principles of global policy of the group in certain fields would not alone be a basis for establishment of place of effective management (POEM) in India. Circular No. 25 also clarifies that the general anti-avoidance rules may be triggered if the clarifications provided by the circular are used for purposes of abusive/aggressive tax planning. See the story in Regfollower |
| Portugal | Taxation of capital gains: The Portuguese Budget Bill for 2018 was presented to the Parliament on 13 October 2017. The budget proposed, gains derived from the transfer of shares or rights of non-Portuguese entities, with more than 50% of their value being related to Portuguese immovable property, will be subject to corporate income tax. The proposed budget Bill will generally be applicable from 1 January 2018. See the story in Regfollower |
| Belgium | Main corporate tax rate: On 27 October 2017, the government approved the corporate tax reform proposal. The corporate tax reform process would take place in two phases, 2018 and 2020. Under the tax reform, the rate of corporate income tax for “large companies” would be 29% as from the income year 2018 (the assessment year 2019) and 25% as from the income year 2020 (the assessment year 2021). See the story in Regfollower |
| Ireland | Taxation of capital gains: On 10 October 2017, the Irish government presented details of the Budget 2018. Under the budget proposal, a share-based remuneration incentive is being introduced to facilitate the use of share-based remuneration by unquoted SME companies to attract key employees. Gains arising to employees on the exercise of KEEP share options will be liable to Capital Gains Tax on disposal of the shares, in place of the current liability to income tax, USC and PRSI on exercise. This incentive will be available for qualifying share options granted between 1 January 2018 and 31 December 2023. See the story in Regfollower |
| China | Tax incentives: Recently China introduced a series of measures to further boost foreign direct investment. Accordingly, the tax incentives for a technologically advanced service company (TASC) will be rolled out nationwide such as reduction in the CIT rate from 25% to 15%. Additionally, exemption of withholding tax on dividend income will be available if a foreign investor reinvests the dividend directly in encouraged projects in China. See the story in Regfollower |
| Taiwan | Corporate income tax rate: The Executive Yuan (Cabinet) has approved the draft amendments to the Income Tax Act on 12 October 2017. The draft bill proposes an increase of corporate income tax rate from 17% to 20%. See the story in Regfollower |
| Netherlands | Main corporate tax rate: On 10 October 2017, the newly formed Dutch government issued its policy paper including tax proposals. The corporate income tax rate currently is 20% on the first EUR 200,000 of taxable profits, and 25% of taxable profits above that amount. The reform proposes to lower the current standard corporate income tax rate from 25% to 24% in 2019, to 22.5% in 2020 and to 21% as from 2021 and also proposes to lower the step-up rate from 20% to 19% in 2019, to 17.5% in 2020 and to 16% as from 2021.
Withholding rates on dividends: On 10 October 2017, the newly formed Dutch government issued its policy paper including tax proposals. Accordingly, as from 1st January 2020, dividend withholding tax will be abolished. However, a withholding tax will apply in respect of dividend distributions to low-tax jurisdictions and in certain abusive situations. At the same time, a withholding tax will be introduced on outbound interest and royalty payments to low-tax jurisdictions. Losses carry forward: On 10 October 2017, the newly formed Dutch government issued its policy paper including tax proposals. Under the proposal, the carryforward of losses period will be reduced from nine years to six years. Incentives-Industry/manufacturing: On 10 October 2017, the newly formed Dutch government issued its policy paper including tax proposals. The government proposed to increase the effective innovation (IP) box regime tax rate from 5% to 7%. |
World Tax Brief: October 2017
05 November, 2017
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