Costa Rica | Computation of taxable income: On 25 September 2019, the Costa Rican Ministry of Finance issued a Resolution No DGT-R-55-2019 on the list of non-cooperative jurisdictions for tax purposes. According to the list, all expenses incurred directly or indirectly in connection with transactions with legal persons in these countries in the list are treated as non-deductible expenditure for income tax purposes in Costa Rica, unless The taxpayer identifies this as an expense corresponds to an operation or transaction actually performed. See the story in Regfollower |
Egypt | Incentive for small business: On 21 September 2019, the Egyptian Ministry of Finance published the draft budget for the period 2019-2020. The draft budget provides for a tax exemption for small and medium-sized enterprises and sets corporation tax rates based on annual turnover. In addition, a simplified tax treatment has been proposed to encourage companies to join the formal sector by introducing a definitive tax. See the story in Regfollower |
India | Main corporate tax rate: On 20 September 2019, the Indian Minister of Finance introduced a substantial reduction in the corporate tax rate for domestic companies. Accordingly, the corporation tax rate will be reduced from 30% to 22% in the financial year 2019-20. These companies are also not obliged to pay the minimum alternative tax. Incentives on industry/manufacturing: For new manufacturing companies established after 1 October 2019, there is a possibility to pay a tax of 15%. See the story in Regfollower PE rules: On 17 September 2019, the Delhi Bench of the Income TaxAppellate Tribunal (ITAT) in the case of: Hitachi High Technologies Singapore Pte Ltd, held that a liaison office could be treated as a permanent establishment of a foreign entity in India. See the story in Regfollower |
Portugal | Withholding tax: On 18 September 2019, the Portuguese Government officially published the Law no.119/2019 and which will apply from 1 October 2019. The law includes a simplification of the procedure applicable to nonresident entities to waive or obtain a refund, totally or partially, of the withholding tax on Portuguese-sourced income. See the story in Regfollower |
Peru | International-GAAR: On 17 September 2019, the Peruvian Tax Administration issued a report clarifying the application of the General Anti-Avoidance Rule (GAAR). In the report, the Peruvian tax administration has expressly stated that, since the publication of Supreme Decree No. 145-2019-EF, the tax administration has been authorized to apply the GAAR to acts, events and situations created since the law entered into force of Legislative Decree 1121 including the period during which the GAAR was suspended (12 July 2014 to 7 May 2019). See the story in Regfollower |
Netherlands | Main corporate tax rate: On 17 September 2019, the Dutch Government published the Dutch budget proposals for fiscal year 2020. Accordingly, the higher corporate tax rate will remain at 25% in 2020 and will be reduced to 21.7% on 1 January 2021. The CIT rate for the first EUR 200,000 is expected to be gradually reduced to 16.5% by 2020 and 15% by 2021, in line with the 2019 budget. Thin capitalization rule: The Budget also proposed to limit interest deductions for banks and insurers. The proposal largely follows a public online consultation that took place earlier this year. CFC rule: Under the Dutch CFC rules, a subsidiary or PE in a low-taxed jurisdiction or country put on the EU list of non-cooperative jurisdictions shall not be considered a CFC if it performs substantive economic activities. This should for example be the case if specific substance requirements are met. For financial years starting on or after 1 January 2020, meeting these substance requirements shall no longer function as a safe harbor, but rather as a presumption of proof of substantive economic activities. PE rules: The Budget proposed that the domestic definition of PE and permanent representative shall be aligned with the respective bilateral tax treaty. Penalties for late return: Under the proposal, the Dutch tax authorities will no longer charge tax interest (an 8% penalty interest) if the CIT return is submitted on time and the CIT assessment is in line with the submitted return. See the story in Regfollower |
Panama | Sanctions for tax evasion: Recently, the Cabinet Council of Panama has approved a proposed legislative amendment to strengthen the penalty provision for repeated tax evasion. The law specified that those who evade tax of USD300, 000 or more can be imprisoned under the law for a period of 2 to 4 years, and must repay an amount equal or greater than the tax evaded. The proposal has been sent to the National Assembly for final approval. See the story in Regfollower |
Denmark | CFC rule: On 12 September 2019, the Ministry of Taxes published a draft bill on international taxation and submits it for public comments. The draft bill intends to implement the CFC (Controlled foreign company) 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. PE rule: In order to amend the domestic PE definition the draft law also proposed a number of adjustments and clarifications in line with OECD BEPS Action 7. See the story in Regfollower |
Mexico | PE rules: On 8 September 2019, the Mexican president presented the economic package for the financial year 2020 to Congress. The proposal extends the definition of Permanent Establishment (PE) in which a foreign resident constitutes a permanent establishment, in accordance with the recommendations of the Project to tackle Base Erosion and Profit Shifting (the “BEPS Project”) of the OECD. See the story in Regfollower |
Germany | Incentives on industry/manufacturing: On 10 September 2019, the Finance Minister presented the Government’s draft Budget for 2020 to the lower house of parliament. The budget proposed new incentives for expenditure on research and development activities. Following the government’s previous announcement on these proposals, the main points of the draft research and development law include an allowance equal to 25% of the tax base, which is subject to a EUR2m (USD2.2m) ceiling. This means that the allowance will be limited to EUR 500,000 per assessment year. See the story in Regfollower Incentive on small business: On 29 August 2019, the German Economy Minister announced the outline of a plan to reduce the tax and regulatory burden on small and medium-sized enterprises (SMEs) in Germany. See the story in Regfollower |
Russia | Computation of taxable income: On 6 September 2019, the Russian Central Bank reduced the key rate from 7.25% to 7.00% with effect from 9 September 2019. For tax purposes, the key rate is important in relation to the safe harbor rates for interest income and expense on controlled debt. See the story in Regfollower |
Indonesia | Main corporate tax rate: On 3 September 2019, the Minister of Finance announced the tax reform plan through a draft bill. Under the bill, corporate tax will be reduced from 25% to 20% from 2021 onwards. In addition, listed companies may be subject to a lower tax rate of 17% for a period of five years. Dividends: The tax on dividends received from both domestic and foreign companies will be exempted if the recipient of the dividend holds at least 25% of the share capital of these companies. In addition, exemptions are available for dividends that are re-invested in Indonesia. PE rules: The definition of a permanent establishment is amended and it can be assumed that digital companies without a physical presence have a permanent establishment in Indonesia. See the story in Regfollower |
Ukraine | CFC-rule: On 30 August 2019, the Ukrainian parliament passed a draft law. The law introduces a new term into the current legislation of the Controlled Foreign Company (CFC), which has a company registered outside Ukraine, but which is legally controlled by a company based in Ukraine. See the story in Regfollower |
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