February 2023

  • Bulgaria
    • Bulgaria Increases Thresholds for VAT Refunds to Non-EU Taxable Persons

      On 17 January 2023, Bulgaria gazetted changes to several thresholds for VAT refunds to non-EU taxable persons. The main changes are the following:
      • the minimum amount of VAT requested for refund for the annual period is increased from BGN 50 to BGN 100;
      • the minimum amount of VAT requested for refund for a period of less than 1 year but not less than 3 months is increased from BGN 400 to BGN 800;
      • the persons requesting VAT refunds will have to declare the ratio between the performed supplies with the right to a tax credit and the performed supplies without the right to a tax credit; and
      • various administrative simplifications have been introduced, i.e. persons are allowed to provide relevant electronic certificates issued by other tax administrations as well as copies of the documents related to the incurred VAT (instead of the original copies).
      The changes were introduced by amendments to the Ministry of Finance's Ordinance No. Н-10 dated 24 August 2006 on the refund of paid VAT to foreign persons who are not established on the territory of the European Union. The official text of the amendments is available here (in Bulgarian only).
    • Bulgaria Publishes 2023 Thresholds for Social Security and Health Insurance Contributions

      On 16 January 2023, the National Revenue Agency clarified the application of the social security and health insurance legislation for 2023. The written clarification states that the applicable thresholds for social security and health insurance contributions are as follows:

      • minimum monthly income – BGN 710; and
      • maximum monthly income – BGN 3,400.

      Although the minimum income for social security contributions remains the same as in 2022, as of 1 January 2023, the minimum salary was increased from BGN 710 to BGN 780. Therefore, the minimum income for social security contributions of employees who receive the minimum salary should be BGN 780 instead of BGN 710. In addition, the written clarification states that, in 2023, the social security and health insurance contribution rates remain the same as those applied in 2022. For example, the health insurance contribution rate remains unchanged at 8%.

      The written clarification is available here (in Bulgarian only).

    • Tax Authority Publishes 2023 Personal Income Tax Filing Dates

      On 6 January 2023, the Bulgarian tax authority and the National Revenue Agency published the dates of personal income tax (PIT) filings regarding income earned in 2022. More specifically:

      • from 10 January 2023, individuals will be able to submit to the tax authority their personal income tax returns for 2022;
      • the deadline for early declaration and payment of the annual PIT with 5% discount is 31 March 2023;
      • the deadline for submission of the 2022 PIT return is 2 May 2023 (as 30 April 2023 is Sunday, i.e. a non-working day); and
      • the individuals acting as traders and agricultural producers should submit their 2022 PIT returns during the period between 1 March 2023 and 30 June 2023.

      The notification on the tax authority's website is available here (in Bulgarian only).

  • China
    • China Offers Tax Relief for Returned Cross-border E-commerce Exports

      The Ministry of Finance ("MOF") released on February 1, 2023 the Announcement on the Tax Policy for Returned Cross-border E-commerce Exports (No.4 (2023) of the MOF, the General Administration of Customs and the State Taxation Administration), in an effort to support the development of new forms of foreign trade.

      Import duties, import value-added tax ("VAT") and consumption tax would be exempted for goods (excluding food) of which exporters declare export under the cross-border e-commerce Customs supervision codes (1210, 9610, 9710 and 9810) within one year from January 30, 2023, and that are returned within six months from the date of export due to dull sale or return, export duties levied at the time of export can be refunded, VAT and consumption tax levied at the time of export would be subject to the applicable tax rules for the return of goods sold domestically, and export tax rebate that has been made should be paid back according to existing rules, according to the Announcement.

    • STA Unveils Arrangements for Consolidated Settlement and Payment of IIT on Comprehensive Income

      The State Taxation Administration ("STA") released on February 6, 2023 the Announcement on Matters concerning the Settlement and Payment of Individual Income Tax ("IIT") on Comprehensive Income on a Consolidated Basis in 2022, which generally continues the basic framework and main contents of the previous three announcements while highlighting changes in three aspects.

      First, it added the provision that allows additional deduction of expenses for care of children under three years old, deduction of private pensions, and other deductions in the final settlement of IIT for comprehensive income according to the provisions of the State Council No.8 Document and the MOF and the STA No.34 (2022) Announcement. Second, it fine-tuned the appointment-based tax handling system, extending the appointment expiry date to March 20, 2023 while keeping the appointment starting date (February 16, 2023) unchanged. Third, it added the provision that gives priority to taxpayers with heavier burdens in refunds of taxes. The Announcement also opened services such as providing intelligent codes for taxpayers to scan to file returns for pre-tax deduction of private pensions.

    • China’s petrochemical industry sees increased revenue in 2022

      China's petrochemical industry saw an increase in revenues and a decline in profits in 2022, according to the China Petroleum and Chemical Industry Federation (CPCIF).

      The country's petrochemical industry registered a total revenue of 16.56 trillion yuan (about 2.41 trillion U.S. dollars) in 2022, climbing 14.4 percent year on year, while its total profit eased 2.8 percent to 1.13 trillion yuan.

      In 2022, the import and export volume of petrochemical products rose 21.7 percent year on year to 1.05 trillion dollars.

      According to the CPCIF, China's crude oil output stood at 205 million tonnes in 2022, a year-on-year increase of 2.9 percent, in a fourth consecutive year of growth.

      In the period, the country's natural gas output was 217.79 billion cubic meters, a year-on-year increase of 6.4 percent.

    • China’s furniture industry sees higher profits in 2022

      China's furniture industry reported profit growth in 2022, data from the Ministry of Industry and Information Technology showed.

      Total profits of enterprises with annual revenue of at least 20 million yuan (2.91 million U.S. dollars) stood at 47.12 billion yuan, according to the ministry.

      This represented a year-on-year increase of 7.9 percent, the ministry's data revealed.

      These firms reported combined operating revenue of 762.41 billion yuan, down 8.1 percent year on year.

    • China remains an investment paradise for foreign capital

      Foreign enterprises remain adamant in ramping up investment in the Chinese market, as the immense potential in economic vitality and consumption backed by an optimized COVID response strengthened their confidence in the world's second-largest economy.

      In mid-January, French multinational Schneider Electric's secure power innovation lab was officially launched in Shanghai. The lab will shoulder the research and development responsibilities concerning key power supply and energy storage for the Chinese market and the rest of the world.

      Yin Zheng, executive vice president of Schneider Electric's China & East Asia Operations, noted that China is not only a huge market but also a driving force for development and a source of innovation.

      "Through continuous investment, China has become one of Schneider Electric's four R&D bases in the world, with more than 2,000 R&D staff and over 2,800 patents. At present, Schneider Electric has built five R&D centers in China, namely Beijing, Shanghai, Wuxi, Xi'an, and Shenzhen," Yin said.

      Yin added that China's high-quality development direction and policies related to the "dual carbon" goals have opened up a huge space for the company's development.

      "Facing the challenges of digitalization and decarbonization transformation, Chinese industries have an increasingly strong demand for green products and digital solutions. Schneider Electric's technical expertise is highly consistent with the direction of dual transformation, which brings a lot of opportunities for the development of Schneider Electric in China," Yin said, adding the company will continue to enhance its overall strength in China.

      Swiss tech giant ABB also expressed a willingness to increase long-term investments in China, propelled by the confidence that the Chinese market will generate appealing opportunities in the years to come, according to James Zhao, senior vice president of ABB China, adding that China now is ABB's second largest market.

      "Therefore, our investments in innovation and R&D in this market have always been sustainable and long-term. On the one hand, our products and industrial chain need to be upgraded so that our innovative technologies can better serve the Chinese market. On the other hand, in the field of manufacturing, we are working on further improving our manufacturing capacity, efficiency, and product quality," he noted.

      Data released by the Ministry of Commerce shows that foreign direct investment in the Chinese mainland, in actual use, expanded 6.3 percent year on year to 1.23 trillion yuan in 2022. In U.S. dollar terms, the FDI inflow went up 8 percent year on year to 189.13 billion U.S. dollars.

      Li Peigong, a professor at Shanghai Lixin University of Accounting and Finance, noted that at present, China's economic growth is positively projected, providing new opportunities for the development of foreign enterprises.

      "China's market potential is being released at an accelerated pace, and foreign enterprises are actively tapping the market trends and speeding up their investment layout, which reflect their confidence and determination to cultivate the Chinese market," said Li.

      Source: scio.gov

  • Focus Africa
    • Africa in Review by the Numbers (February 2023)

      $55 million Five-year loan issued by FinDev Canada to ETG, an African agribusiness that contributes to food security by helping smallholder farmers in Africa access international markets. (Africa Market Trends)

      98,000 ounces Gold yielded by Nigeria's first industrial gold mine in 2022, giving the West African country a new opportunity to scale up production as it looks to pivot away from oil. The project is being touted as proof of concept for formal production in what has historically been an artisanal sector. (Mining.com)

      14,000 Jobs expected to be created by South Africa's hydrogen corridor, which has been considered a strategic integrated project. This initiative follows global trends that have seen hydrogen emerge as a future clean universal energy source. (Africa Energy Portal)

      $310 million Loan expected to be secured by British mining company Emmerson from a syndicate of Moroccan and European banks to fund its potash mining operations in northern Morocco. Emmerson holds a 19-year potash exploration license through which it expects to invest some $2.5 billion in the country. (Morocco World News)

      3,900 Service stations operated by one of Africa's largest energy distribution firms after Vivo acquires a majority stake in Engen from Malaysia's Petronas. The combined group will also have 2 billion litres of storage capacity across 27 African countries. (The Citizen)

      280,000 tonnes Sugar produced in South Africa, meeting 93% of the 300,000 tonnes targeted by the country's Sugarcane Master Plan. The ambitious strategy has sought to ensure that 95% of sugar is locally procured as part of its wider objectives to restore local market off-take, retain jobs, and support small-scale growers. (Food Business Africa)

      $1.6 billion Investment by Tingo Foods for an agri-food processing unit in Delta State, Nigeria. Construction will take 18-24 months and once operational the facility will serve as a centre for the development and distribution of new food products. (Food Business Africa)

      2000 Fossil-fuel powered vehicles to be converted into electric vehicles by Kenya Power. The company also said it's planning to construct three electric vehicle-charging stations in Nairobi to support the switch. (Tech Trends Kenya)

      40% Increase in value of exports reported by Rwanda in 2022. This strong performance in was driven by increase in volume of exports alongside high prices in the international market. (The New Times)

      $30 billion Financing issued by development partners in Africa to boost agricultural activity in the region. This commitment was issued during the Second Dakar Summit to help the continent's over-reliance on food imports. (Food Africa Business)

      80% Electricity generated in Angola through renewable sources by 2025. The country currently generates 55% of electricity from the renewable sources and hopes to invest in and increase in solar capacity. (Africa Energy Portal)

      260K Retail investors in Kenya with holdings in collective investment schemes, triple the number reported a decade ago. This growth has coincided with a 379% increase in assets under management by the schemes. Individual investors continue to be a larger market segment on the exchange, closing in on 2 million. (Business Daily)

    • Budget 2023-24: South Africa Announces Various Tax Proposals Aimed at Raising Revenue and Increasing Compliance

      South Africa has announced the tax proposals to form part of the budget review process as set out in the Budget 2023-24. These include the strengthening of the anti-tax avoidance rules, revenue raising and other tax proposals aimed at providing tax relief as follows:

      • strengthening anti-tax avoidance rules dealing with third-party backed shares and rules relating to the definition of contributed tax capital and converting contributed tax capital from foreign currency to rands;
      • clarifying anti-tax avoidance rules for low–interest or interest-free loans to trusts;
      • apportioning the tax-free investment contribution limitation and limiting the retirement funds contributions deduction when an individual ceases to be a tax resident;
      • refining the rules applicable to unbundling transactions;
      • clarifying the interest limitation rules;
      • clarifying the treatment of exchange gains and loses;
      • refining the provisions dealing with the impact of International Financial Reporting Standard 17 insurance contracts on taxation of insurers;
      • reviewing the Sharia-compliant financing arrangements;
      • introducing ZAR 4 billion relief for individuals that install solar panels, and ZAR 5 billion to companies through the expansion of the renewable energy tax incentive;
      • clarifying the interaction of the provisions on the acquisition of assets in exchange for shares;
      • increasing excise duties on alcohol and tobacco in line with expected inflation of 4.9%;
      • reviewing the value added tax (VAT) treatment of specific supplies in the short-term insurance industry;
      • clarifying the VAT treatment of the prepaid vouchers in the telecommunications industry;
      • extending the utilization period in the Carbon Offsets Regulations;
      • aligning tax registration requirements for non-resident employers; and
      • aligning with anti-money laundering and combating the financing of terrorism developments.

      The Minister of Finance unveiled the 2023-24 National Budget on 22 February 2023.

  • Hong Kong
    • HKSAR Government continues to refine regime against cross-border tax avoidance

      The Hong Kong Special Administrative Region (HKSAR) Government welcomes the European Union (EU)'s positive feedback yesterday (February 14) on the efforts made by Hong Kong in putting in place a new foreign-sourced income exemption (FSIE) regime with effect from January 1, 2023.

      At the same time, the HKSAR Government will continue to refine the FSIE regime with regard to foreign-sourced disposal gain in relation to assets other than shares or equity interests in the light of the EU's recent update to its Guidance on Foreign Source Income Exemption Regimes.

      A Government spokesman said, "Hong Kong has all along been supporting international tax co-operation and anti-money laundering, and working with the EU and other international organisations in various initiatives, including the countering of cross-border tax avoidance."

      In response to the EU's inclusion of Hong Kong in its watchlist on tax co-operation in 2021, the HKSAR Government enacted the Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Ordinance 2022 last December to put in place a new FSIE regime for foreign-sourced dividend, interest, intellectual property income and disposal gain in relation to shares or equity interests received in Hong Kong.

      "This regime has come into effect on January 1 this year. It seeks to address possible exploitation of Hong Kong's tax arrangement by multinational enterprise entities (MNE entities) without substantial economic substance in Hong Kong to bring about 'double non-taxation' of such income. We are pleased to note that the EU welcomes this positive development and confirms that Hong Kong's FSIE regime is fully in compliance with its Guidance on FSIE Regimes originally published in 2019 with regard to dividend, interest and intellectual property income," a spokesman said.

      In December last year, the EU promulgated another Guidance, explicitly requiring capital gains, as a general class of income covered by an FSIE regime, to be subject to the economic substance requirement. Jurisdictions with ongoing FSIE reforms, such as Hong Kong, will therefore be kept in the watchlist by the EU until necessary legislative amendments are made by these jurisdictions with regard to the treatment of foreign-sourced capital gains by the end of this year for implementation with effect from January next year.

      From time to time, the EU issues or updates its guidance on different aspects of tax issues. It has all along been Hong Kong's position that if and when new or updated guidance is formally promulgated by the EU and consistently applied to all relevant jurisdictions for implementation at the same timing, Hong Kong will stand ready to explore further legislative amendments and consult stakeholders with a view to demonstrating that Hong Kong is a co-operative player in international taxation while safeguarding Hong Kong's tax competitiveness. The retention of Hong Kong on the watchlist will not result in any adverse impact on Hong Kong enterprises.

      "In formulating the refined FSIE regime, Hong Kong will observe several key principles, i.e. the territorial source principle of taxation will be maintained, while due regard will be given to Hong Kong's tax competitiveness and minimisation of the compliance burden," the spokesman said.

      "Under the to-be-formulated refined regime, foreign-sourced capital gains in relation to assets, regardless of their financial or non-financial nature, received by MNE entities in Hong Kong will remain exempt from tax provided that the economic substance requirement is complied with.

      "Individuals, standalone local companies and purely local groups will not be affected."

      The spokesman said, "We have already communicated with the EU to ascertain the specific requirements entailed by the Updated Guidance and explore options to refine the FSIE regime with regard to the treatment of foreign-sourced capital gains.

      "The Government will conduct a consultation exercise to seek stakeholders' comments on the proposed refinements to the FSIE regime. We will request the EU to swiftly remove Hong Kong from the watchlist after making the necessary legislative amendments."

      Source: Inland Revenue Department

    • Government to launch trade consultation on initiative about taxation treatment of onshore gains on disposal of equity interests next month

      The Financial Services and the Treasury Bureau announced today (February 13) that the Government will propose an initiative to enhance tax certainty of onshore gains on disposal of equity interests (the Gains) and launch a trade consultation on the initiative in mid-March.

      Hong Kong, as an appealing world-class business city, has been practising a simple and low tax regime. To increase the attractiveness of Hong Kong as an international investment and business hub, the Government will propose an enhancement initiative to provide clearer guidance as to whether the Gains are subject to tax. The initiative will not only facilitate businesses in expansion and restructuring through disposal of equity interests, but also provide more tax transparency, lower the compliance cost of businesses, and increase the competitiveness of Hong Kong's tax system.

      During the earlier legislative exercise on the Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Bill 2022 (the Bill), the Government put forward that it would look into appropriate measures to enhance tax certainty for the onshore gains made from transactions in respect of disposal of equity interests. This is in line with the views of the trade, which were gathered during the consultation period of the Bill.

      A two-month trade consultation will start in mid-March. Community views on the initiative are welcomed.

      Source: Inland Revenue Department

  • India
    • India to Further Simplify Individual Income Tax Regime, Increase Tax Exempt Limit in Union Budget 2023

      On 1 February 2023, the Finance Minister presented the Union Budget 2023/24 before the parliament. Key tax measures include proposed revisions to the alternative income tax rate slabs for individuals and Hindu Undivided Families (HUFs) introduced in Finance Act 2020, and new incentives for micro, small and medium-sized enterprises, cooperatives and start-ups.

      Individual taxation

      Individual income taxation will be further simplified through the following measures:

      • the alternative tax scheme for individuals and HUFs introduced in Finance Act 2020 will be revised and will become the default regime. Under this regime, the number of slabs will be decreased from seven to five slabs. The exemption limit will be increased to INR 300,000 (from INR 250,000). Further, the income tax rebate limit will be increased from INR 500,000 to INR 700,000;
      • the highest surcharge rate on income above INR 50 million will be reduced from 37% to 25% under the new regime;
      • the standard deduction will be extended to the new regime for taxpayers on salaries and pensioners; and
      • the tax exemption limit on leave encashment on retirement for non-government salaried employees will be increased to INR 2.5 million.

      Incentives for industries

      • For cooperatives, the 15% corporate tax benefit will be extended to new cooperatives that commence manufacturing by 31 March 2024. A higher limit of INR 30 million on cash withdrawals for the purpose of exemption from tax deducted at source (TDS) is also proposed.
      • The date of incorporation for start-ups for the purpose of availing income tax benefits will be extended by 1 year (i.e. until 31 March 2024). The benefit of the carry-forward of losses on the change of shareholding will be extended to 10 years from incorporation (currently, 7 years).
      • For micro, small and medium-sized enterprises, the limit for micro enterprises and professionals to avail of benefits of presumptive taxation will be enhanced. Deductions on payments made to MSMEs will be allowed only when payment is made.
      • The income of authorities, boards and commissions set up by statutes of the Union or states will be exempted from income tax in certain sectors.
      • The tax benefits to funds relocating to the International Financial Services Centre - Gujarat International Finance Tech City (IFSC – GIFT City) will be extended until 31 March 2025.

      Indirect taxation

      • Exemptions and reductions in customs duties on certain imports are proposed, such as an exemption for imports of parts and inputs in mobile phone production.
      • The customs duty exemption on lithium-ion batteries will be extended by 1 year.
      • Import duties on silver bars and articles will be increased.

      Further details of the proposed tax measures in Budget 2023/24 will be reported in due course.

    • Union Budget 2023: India Proposes GST Amendments to Scope of Online Information and Database Access Retrieval, Penalty for Offences by E-Commerce Operators

      The Finance Minister of India presented the Union Budget 2023-24 to the parliament on 1 February 2023. Key indirect tax measures include amendments to the scope of the online information and database access retrieval (OIDAR), penalties on offences by e-commerce operators, and various changes in customs duty rates and exemptions.

      Goods and services tax (GST)

      • Input tax credit will be restricted on goods and services in relation to:
        • the supply of warehoused goods to any person (as referred to under Schedule III of the Central Goods and Services Tax Act), which will be considered as an exempt supply; and
        • corporate social responsibility expenses as referred to in the Companies Act, 2013.
      • Registration will not be required if a supply relates exclusively to exempted business.
      • The coverage of the OIDAR will be expanded to:
        • include services in relation to business and commerce to unregistered recipients; and
        • exclude the condition for a service being essentially automated and involving minimal human intervention.
      • The key GST amendments for e-commerce operators are:
        • suppliers of goods through e-commerce operators can opt for the Composition Scheme for GST payment; and
        • penal provisions will be introduced on e-commerce operators for the supply of goods and services made through them by unregistered persons, inter-state supply by persons not eligible to carry such supplies, and failure to furnish correct details in tax collected at source (TCS) returns for the supply of goods by unregistered persons.
      • The place of supply of services by way of transportation of goods to a place outside India, in case both the supplier and recipient are in India, will be amended to be the location of the registered recipient or the location of handing over of goods in case of an unregistered recipient.
      • The following offences will be decriminalized:
        • obstructing or preventing officers from performing duties,
        • tampering with evidence or documents,
        • failing to supply information or providing false information.
      • Specified offences involving a value less than INR 20 million (except for offences relating to the issuance of invoice without supply) will be decriminalized.
      • In terms of the compounding of offences:
        • there will be no compounding benefit in the case of an offence relating to the issuance of invoice without supply; and
        • the amounts of compounding benefit will be rationalized, such that the minimum will be reduced from INR 10,000 or 50% to 25% of the tax amount involved and the maximum will be reduced from INR 30,000 or 150% to 100% of the tax amount involved.
      • A new provision will be inserted to enable the Common Portal to share specified information furnished by registered persons with such other systems (as may be notified), in form and manner as may be prescribed, with the consent of the recipient/supplier.

      Customs duty

      • The government will continue to incentivize domestic value addition by:
        • reducing the effective customs duty rates on camera lenses and components used in mobile phones and parts of open cells of TV panels;
        • increasing the effective customs duty rates of motor vehicles in semi knocked down (SKD) form (including electric vehicles) and completely built unit (CBU) form; and
        • immediately increasing duties on finished goods, such as chimneys, bicycles and toys.
      • Separate classifications will be introduced to align products under international standards with Indian standards for chemicals; specific entries for flat panel display modules will be created.
      • Over 150 exemptions will be extended under Notification No. 50/2017 and standalone exemption notifications. About 30 exemptions will be discontinued.
      • Solar power plants and solar power projects will be excluded from power project import benefits that allow imports under a concessional customs duty rate.

      Amendments to indirect taxes now subsumed under the GST Act

      Central excise

      The proposed changes to central excise, which apply to certain products manufactured in India that are outside the purview of GST, are the following:

      • the National Calamity Contingent Duty (a form of excise duty) on specified cigarettes will be increased by 16%; and
      • an excise duty exemption will be provided to blended compressed natural gas (CNG) to the extent of the GST paid on the biogas or compressed biogas contained in the blended CNG.

      Central sales tax (CST)

      The Central Sales Tax Appellate Authority (a body constituted under the CST Act) will no longer be functional. Pending cases will be transferred to the Central Excise Service Tax Appellate Tribunal (CESTAT). The CESTAT will have jurisdiction over any disputes relating to the inter-state sale of goods.

  • Singapore
    • Overview of Tax Changes – Singapore Budget 2023


      Enhance the Double Tax Deduction for Internationalisation (DTDi) Scheme

      E-commerce is an increasingly important and relevant mode of overseas expansion for businesses. To support businesses in their efforts to overcome initial challenges and build up capabilities in internationalising via e-commerce, the scope of the DTDi scheme will be enhanced to include a new qualifying activity "e-commerce campaign" and cover the following e-commerce campaign startup expenses paid to e-commerce platform/service providers:

      • Business advisory: Advisory on market promotion and execution plans (e.g., choice of suitable e-commerce platforms);
      • Account creation: Assistance with setting up accounts on e-commerce platforms, and the right to sell on e-commerce platforms;
      • Content creation: Design of e-commerce campaign publicity materials (e.g., e-store banners, online product images); and
      • Product listing and placement: Uploading content on products/services to e-commerce platforms, and selection of suitable frequency and timing to display content on products/services.

      Prior approval is required from EnterpriseSG to enjoy DTDi on the new qualifying activity. For each business, EnterpriseSG will only approve DTDi support for e-commerce campaigns for a maximum period of one year applied on a per-country basis.

      The above enhancement will take effect for qualifying e-commerce campaign startup expenses incurred on or after 15 February 2023. EnterpriseSG will provide further details of the changes by 28 February 2023.

      Implement the Global Anti-Base Erosion (GloBE) Rules (i.e., Income Inclusion Rule and Undertaxed Profits Rule) and Domestic Top-up Tax (DTT)

      Singapore plans to implement the GloBE rules and DTT from the financial year starting on or after 1 January 2025. The Government will continue to monitor international developments and adjust the implementation timeline as needed if there are delays internationally. The Government will also continue to engage businesses and provide them with sufficient notice ahead of any rules becoming effective.

      Introduce the Enterprise Innovation Scheme (EIS)

      To encourage businesses to engage in R&D, innovation and capability development activities, the following suite of tax measures will be enhanced or introduced under the EIS:

      • Enhance the tax deduction to 400% for the first SGD 400,000 of staff costs and consumables incurred on qualifying R&D projects conducted in Singapore for each Year of Assessment (YA) from YA2024 to YA2028.
      • Enhance the tax deduction to 400% for the first SGD 400,000 of qualifying IP registration costs incurred per YA from YA2024 to YA2028.
      • Enhance the tax allowance/deduction to 400% for the first SGD 400,000 (combined cap) of qualifying expenditure incurred on the acquisition and licensing of IP rights per YA from YA2024 to YA2028. This enhancement will only be available to businesses that generate less than SGD 500 million in revenue in the relevant YA.
      • Enhance the tax deduction to 400% for the first SGD 400,000 of qualifying training expenditure incurred on qualifying courses (i.e. courses that are eligible for SkillsFuture Singapore (SSG) funding and aligned with the Skills Framework) per YA from YA2024 to YA2028.
      • Introduce a 400% tax deduction for up to SGD 50,000 of qualifying innovation expenditure incurred on qualifying innovation projects carried out with polytechnics, the Institute of Technical Education, and other qualified partners per YA from YA2024 to YA2028.
      • Allow businesses to, in lieu of tax deductions/allowances, opt for a non-taxable cash payout at a cash conversion ratio of 20% on up to SGD 100,000 of total qualifying expenditure across all qualifying activities in the above points per YA. The cash payout option will be capped at SGD 20,000 per YA, and will only be available to businesses that have at least three full-time local employees (Singapore Citizens or Permanent Residents with CPF contributions) earning a gross monthly salary of at least SGD 1,400 in employment for six months or more in the basis period of the relevant YA.
      • The sunset dates for section 14A (Deduction for costs of protecting IP), section 14C (Deduction for qualifying expenditure on R&D), section 14D (Enhanced deduction for qualifying expenditure on R&D), section 14U (Enhanced deduction for expenditure on licensing IP rights) and section 19B (Writing-down allowance for capital expenditure on acquiring IP rights) of the Income Tax Act 1947 (ITA) will be extended till YA2028, in line with the above enhancements.

      Provide an Option to Accelerate the Write-off of the Cost of Acquiring Plant and Machinery (P&M)

      In the basis period for YA2024 (i.e., financial year ending in 2023), businesses will have an option to accelerate the write-off of the cost of acquiring P&M over two years. This option, if exercised, is irrevocable.

      The rates of accelerated capital allowance (CA) allowed are as follows:

      • 75% of the cost incurred to be written off in the first year (i.e., YA2024); and
      • 25% of the cost incurred to be written off in the second year (i.e., YA2025).

      The above option will be in addition to the options currently available under sections 19 and 19A of the ITA.

      No deferment of CA claims is allowed under the option. This means that if a business opts for the accelerated write-off option, it needs to claim the capital expenditure incurred for acquiring P&M based on the rates of 75% (in YA2024) and 25% (in YA2025) over the two consecutive YAs.

      Provide an Option to Accelerate the Deduction for Renovation or Refurbishment (R&R) Expenditure

      To provide temporary broad-based support to businesses during this period of restructuring, businesses that incur qualifying expenditure on R&R during the basis period for YA2024 (i.e., financial year ending in 2023) will have an option to claim R&R deduction in one YA (i.e., accelerated R&R deduction). The cap of SGD 300,000 for every relevant period of three consecutive YAs will still apply. This option, if exercised, is irrevocable. This option will be in addition to the existing option currently available under section 14N of the ITA.

      Extend the Investment Allowance (IA) Scheme

      To continue encouraging businesses to make capital investments in plant and productive equipment in Singapore, the IA scheme will be extended till 31 December 2028.

      Extend the IA-100% Scheme for Automation Projects

      To continue to encourage businesses to transform through automation, the IA-100% scheme will be extended till 31 March 2026, with the same parameters.

      Extend the Pioneer Certificate Incentive (PC) and Development and Expansion Incentive (DEI)

      To continue encouraging companies to anchor and grow strategic high value-added manufacturing and services activities in Singapore, the PC and DEI will be extended till 31 December 2028.

      Extend the IP Development Incentive (IDI)

      To continue supporting the use and commercialisation of IP rights arising from R&D activities in Singapore, the IDI will be extended till 31 December 2028.

      Extend and Refine the Qualifying Debt Securities (QDS) Scheme

      To continue supporting the development of Singapore's debt market, the QDS scheme will be extended till 31 December 2028. The scope of qualifying income under the QDS scheme will be streamlined and clarified such that it includes all payments in relation to the early redemption of a QDS. To ensure continued relevance, the requirement that the QDS has to be substantially arranged in Singapore will be rationalised, as follows:

      • For all debt securities that are issued on or after 15 February 2023, they must be substantially arranged in Singapore by a financial institution holding a specified licence (instead of a Financial Sector Incentive (FSI) company).
      • For insurance-linked securities (ILS) that are issued on or after 1 January 2024, if they are unable to meet the condition in (a) above, at least 30% of the ILS issuance costs incurred by the issuer must be paid to Singapore businesses.

      All other conditions of the scheme remain the same. The Monetary Authority of Singapore (MAS) will provide further details by 31 May 2023.

      Extend the Tax Exemption on Income Derived by Primary Dealers from Trading in Singapore Government Securities (SGS)

      To continue supporting primary dealers and encourage trading in SGS, the tax exemption on income derived by primary dealers from trading in SGS will be extended till 31 December 2028. All other conditions of the scheme remain the same.

      Extend and Refine the Tax Incentive Scheme for Approved Special Purpose Vehicle (ASPV) Engaged in Asset Securitisation Transactions (ASPV scheme) and Introduce a New Sub-scheme to Support Covered Bonds

      To continue developing the structured debt market, the ASPV scheme will be extended till 31 December 2028. Instead of a fixed rate of 76%, the GST recovery rate will be the prevailing GST recovery rate/methodology accorded to licensed full banks under MAS for the specific year in question. All other tax concessions and conditions of the ASPV scheme remain the same. Further, to support the issuance of covered bonds in Singapore, a new sub-scheme named ASPV (Covered Bonds) will be introduced for the special purpose vehicle holding the "cover pool" in relation to the covered bonds as defined in MAS Notice 648. The ASPV (Covered Bonds) scheme will take effect from 15 February 2023 to 31 December 2028 and will be administered by MAS. MAS will provide further details by 31 May 2023.

      Extend and Refine the Financial Sector Incentive (FSI) Scheme

      To continue supporting the growth of financial sector activities in Singapore, the FSI scheme will be extended and refined as follows:

      • The FSI scheme will be extended till 31 December 2028.
      • The existing concessionary tax rates will be streamlined to two tiers of 10% and 13.5% for new and renewal awards approved on or after 1 January 2024, as follows:
        • FSI-Capital Market, FSI-Derivatives Market and FSI-Credit Facilities Syndication – from 5% to 10%;
        • FSI-Fund Management and FSI-Headquarter Services – remain at 10%;
        • FSI-Trustee Companies – from 12% to 13.5%; and
        • FSI-Standard Tier – remain at 13.5%.
      • The qualifying activities will be updated to ensure continued relevance.

      MAS will provide further details of the changes by 31 May 2023.

      Under the FSI-Headquarter Services, Withholding Tax exemption is granted on interest payments made to qualifying non-residents during the award tenure on qualifying loans. The Withholding Tax exemption will similarly be extended till 31 December 2028.

      Extend the Insurance Business Development – Insurance Broking Business (IBD-IBB) Scheme

      To further strengthen Singapore's position as a leading insurance and reinsurance centre, the IBD-IBB scheme will be extended till 31 December 2028. All other conditions of the scheme remain the same.

      Extend the Tax Concession for Deduction of General Provisions for Doubtful Debts and Regulatory Loss Allowances Made in Respect of Noncredit-impaired Financial Instruments for Banks (Including Merchant Banks) and Qualifying Finance Companies

      To continue to promote the overall robustness and stability of the Singapore financial system, the tax deduction under section 14G of the ITA will be extended till YA2029 (for banks, merchant banks, and qualifying finance companies with a 31-December FYE) or YA2030 (for banks, merchant banks, and qualifying finance companies with a non-31-December FYE).

      Extend Three Tax Measures Relating to Submarine Cable Systems

      Currently, there are three tax measures relating to submarine cable systems:

      • Withholding Tax exemption on payments made to non-residents for use of international telecommunications submarine cable capacity under indefeasible right to use (IRU) agreements. This is scheduled to lapse after 31 December 2023.
      • Writing-down allowance for the acquisition of an IRU over its useful life. This is scheduled to lapse after 31 December 2025.
      • IA for the construction and operation of submarine cable systems in Singapore. This is scheduled to lapse after 31 December 2023.

      To maintain and enhance Singapore's international connectivity, all three tax measures will be extended till 31 December 2028, with the same parameters.

      Withdraw the Tax Deduction for Expenditure Incurred on Building Modifications for Benefit of Disabled Employees

      The scheme will be withdrawn from 15 February 2023. Introduced in Budget 1989, the scheme has become less relevant over the years. Since then, other support schemes (e.g., the Open Door Programme Job Redesign Grant) have been introduced to help employers recruit and retain disabled employees, or to support employers for accommodations beyond (and including) physical modifications of the workplace. Section 14N on tax deductions for Renovation and Refurbishment, introduced in Budget 2008, can also be tapped upon for workplace modifications without the need for prior approval from government agencies.

      Income Tax Changes for Businesses, Individuals and Bodies of Persons

      Extend the 250% Tax Deduction for Qualifying Donations to Institutions of Public Character (IPCs) and Eligible Institutions

      To continue encouraging Singaporeans to give back to the community, we will extend the 250% tax deduction to qualifying donations made from 1 January 2024 to 31 December 2026. All other conditions of the scheme remain the same.

      Extend and Enhance the Corporate Volunteer Scheme (CVS)

      • To continue supporting corporate volunteering, we will extend the 250% tax deduction on qualifying expenditure incurred under the CVS until 31 December 2026.
      • The scope of qualifying volunteering activities will be expanded to include activities that are conducted virtually (e.g., online mentoring and tuition support for youths/children) or outside of the IPCs' premises (e.g., refurbishment of rental flats).
      • The cap on qualifying expenditure per IPC per calendar year has been doubled to SGD 100,000. The above enhancements will take effect from 1 January 2024. All other conditions of the scheme remain the same.

      With effect from 1 April 2023, the scheme will be renamed from the Business and IPC Partnership Scheme (BIPS) to CVS.

        Source: IRAS.gov.sg  
    • Singapore – Individual Income Tax Rate

      The Inland Revenue Authority of Singapore (IRAS) has updated its guidance on individual income tax rates, by increasing marginal rates for both resident and non-resident individuals starting from income year 2023 (YA 2024).

      For resident tax rates please refer to the following table, which includes the two new top rates of:

      • 23% on income of SGD 500,000;
      • 24% on income over SGD 1,000,000.

      Resident tax rates from YA 2024 onwards

      Non-resident tax rates from YA 2024 onwards

      Employment income of non-residents is taxed at the flat rate of 15% or the progressive resident tax rates (see table above), whichever is the higher tax amount. 

      Taxes on director's fee, consultation fees and all other income

      The tax rate for non-resident individuals is currently at 22%. It applies to all income including rental income from properties, pension and director's fees, except employment income and certain income taxable at reduced withholding rates (please see Withholding taxes on income of non-resident individuals below).

      From YA 2024, the income tax rate for non-resident individuals (except on employment income and certain income taxable at reduced withholding rates) will be raised from 22% to 24%.

      Withholding taxes on income of non-resident individuals

      Certain income of non-resident individuals is subject to withholding tax when they are due and receivable. For further details regarding which withholding tax rate is applicable, based on the type of income derived and the YA involved, please refer to the table below:

      Tax residency definition

      Income tax rates depend on a person's tax residency status. Individuals treated as tax residents for a given assessment year (YA) will be:

      1. Singapore Citizen or Singapore Permanent Resident who resides in Singapore except for temporary absences; or
      2. Foreigner who has stayed/worked in Singapore:
        • For at least 183 days in the previous calendar year; or
        • Continuously for 3 consecutive years, even if the period of stay in Singapore may be less than 183 days in the first year and/or third year; or
      3. Foreigner who has worked in Singapore for a continuous period straddling 2 calendar years and the total period of stay is at least 183 days. This applies to employees who entered Singapore but excludes directors of a company, public entertainers, or professionals.
        Source: IRAS.gov.sg
    • EFTA and Singapore Launch Negotiations for Digital Economy Agreement

      According to a press release of 16 February 2023, published by the EFTA, officials from the EFTA states (Iceland, Liechtenstein, Norway and Switzerland) and Singapore launched negotiations on a digital economy agreement (DEA) between them, during a meeting held virtually on the same date.

      The DEA will create new opportunities for companies and individuals, provide a clear and secure framework that will foster trade in goods and services. The agreement will complement other international processes and initiatives including the ongoing negotiations in the context of the WTO Joint Statement Initiative on E-Commerce.

  • Switzerland
    • Italian Senate Approves Agreement on Taxation of Frontier Workers and Protocol and Exchange of Letters Under Tax Treaty with Switzerland

      On 1 February 2023, the Italian Senate approved a draft law ratifying the Italy – Switzerland Tax Agreement (Frontier Workers) (2020), its final protocol and the exchange of letters, all signed on 23 December 2020, under the Italy – Switzerland Income and Capital Tax Treaty (1976), as amended by the 1978 and 2015 protocols. Once in force and effective, the new agreement will replace the agreement on taxation of frontier workers between Italy and Switzerland, signed on 3 October 1974.

    • EFTA and Singapore Launch Negotiations for Digital Economy Agreement

      According to a press release of 16 February 2023, published by the EFTA, officials from the EFTA states (Iceland, Liechtenstein, Norway and Switzerland) and Singapore launched negotiations on a digital economy agreement (DEA) between them, during a meeting held virtually on the same date.

      The DEA will create new opportunities for companies and individuals, provide a clear and secure framework that will foster trade in goods and services. The agreement will complement other international processes and initiatives including the ongoing negotiations in the context of the WTO Joint Statement Initiative on E-Commerce.

    • Swiss retail trade turnover increased by 0.7% in January 2023

      Turnover adjusted for sales days and holidays rose in the retail sector by 0.7% in nominal terms in January 2023 compared with the previous year. Seasonally adjusted, nominal turnover rose by 1.2% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO).

      Real turnover adjusted for sales days and holidays fell in the retail sector by 2.2% in January 2023 compared with the previous year. Real growth takes inflation into consideration. Compared with the previous month, real, seasonally adjusted retail trade turnover registered an increase of 0.6%.

      Retail sector excluding service stations

      Adjusted for sales days and holidays, the retail sector excluding service stations showed a 0.4% increase in nominal turnover in January 2023 compared with January 2022 (in real terms –2.4%). Retail sales of food, drinks and tobacco registered an increase in nominal turnover of 1.4% (in real terms –3.3%), whereas the non-food sector registered a nominal negative of 0.3% (in real terms –2.3%).

      Excluding service stations, the retail sector showed a seasonally adjusted increase in nominal turnover of 1.1% compared with the previous month (in real terms +0.6%). Retail sales of food, drinks and tobacco registered a plus of 4.0% (in real terms +3.1%). The non-food sector showed a minus of 1.0% (in real terms –1.2%).

  • United Arab Emirates
    • Ministry of Human Resources announces amendments to mechanism of achieving Emiratisation targets

      The Ministry of Human Resources and Emiratisation (MoHRE) announced on Tuesday amendments to the mechanism of achieving Emiratisation targets in private sector companies with 50 employees or more, in line with the amendments of the provisions of Cabinet Resolution No. 5/19 for 2022.

      Companies will now be required to increase Emiratisation in skilled jobs by 1% every six months, while remaining on track to achieve the overall 2% target by the end of the year.

      This step supports the continuity of the Emiratisation pace in the private sector year-round, in line with the directives of the Government of the UAE, which prioritises Emiratisation in its national strategy and agenda.

      The amendments do not include any additional commitments on the companies, nor any amendments to the amounts of financial contributions imposed for non-compliance. However, these contributions will now be collected semi-annually, encouraging the private sector to continuously employ Emiratis to meet their targets, instead of waiting until the end of the year.

      At a media briefing organised today by MoHRE, Dr. Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, said, “This step aims to maintain employment and retention rates of Emiratis in the private sector at a time where we witnessed a 70% increase of Emiratis working in the private sector in 2022, compared to 2021.”

      Al Awar noted that the new mechanism does not amend the annual targets – companies with 50 employees or more are required to achieve a 2% increase in Emiratisation of skilled jobs. The new mechanism stipulates that companies need to achieve 1% increase in Emiratisation before the end of June 2023, and reach the targeted 2% by end of the year.

      He pointed out that “supporting Emirati talent is a priority, in line with the vision of the nation’s wise leadership to provide a decent living to its people, boost their quality of life, and enhance the job opportunities available to them. This is evident in the exemplary results achieved by Nafis in 2022, which through the amended mechanism, the Ministry aims to support in balancing the pace of job seekers registering and the job opportunities being offered via Nafis’ platform.”

      “The private sector has proven itself as a credible partner, and we are confident that the new amendments will reflect positively on the existing cooperation,” he added. The financial contributions on companies that do not meet the target for the first half of 2023 will begin in July 2023, and the contributions for non-compliance from 2022 will continue to be collected.

      Source: Emirates News Agency 

    • UAE foreign trade achieved AED2.233 trillion in 2022 with growth rate of 17%: Mohammed bin Rashid

       His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, chaired the UAE Cabinet meeting at Qasr Al Watan Abu Dhabi, in the presence of H.H. Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister, Minister of Finance; H.H. Lt. General Sheikh Saif bin Zayed Al Nahyan, Deputy Prime Minister and Minister of the Interior; and H.H. Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of the Presidential Court.

      His Highness Sheikh Mohammed bin Rashid said, "Today, I chaired the UAE cabinet meeting in Abu Dhabi. We expressed our sincere condolences and sympathy to Syrian and Turkish people, as well as the families of victims. Based on the directives of President His Highness Sheikh Mohamed bin Zayed Al Nahyan, all disaster relief work teams have been directed to coordinate with the two brotherly countries to provide all kinds of aid.”

      His Highness explained, “During the Cabinet meeting, we reviewed the results of the UAE's foreign trade in 2022. Our foreign trade achieved a historical record reaching more than AED2.2 trillion, a growth of 17 precent.”

      “Today, we approved the National Framework for Sustainable Development in the UAE. The goal is to preserve ecosystems and ensure the sustainability of our natural resources. We also assigned the Ministry of Climate Change and Environment to coordinate government efforts in preparation for hosting COP28," he added.

      His Highness Sheikh Mohammed bin Rashid stated, "We approved the executive decisions to establish the National Space Fund, which aims to support the implementation of ambitious national projects in the field of space, support youth capabilities and competencies, and attract the best space companies to the UAE market.”

      “We assigned the competent entities to submit an urgent study to the Cabinet on how to benefit from new AI technologies in government work, examine its future effects on the educational, health, media and other sectors, and how the government will deal positively and safely with these technologies," His Highness further said.

      UAE non-oil foreign trade

      The non-oil foreign trade of the UAE achieved record growth rates in 2022, reaching AED2 trillion and 233 billion, with a growth rate of 17 percent compared to 2021. The country has exceeded the AED2 trillion barrier for the first time in history. This achievement comes after the country's non-oil foreign trade achieved a growth of 12 percent in 2020, recording AED1,496 trillion, and recorded a jump of 28 percent in 2021 to reach AED1,911 trillion.

      The National Framework for Sustainable Development

      The UAE Cabinet approved the National Framework for Sustainable Development, which represents a comprehensive framework for all approved national strategies, policies and agendas concerned with organising environmental work in the country, and maintaining a sustainable environment that supports economic growth. The framework includes 5 main pillars: nature, environmental health, climate change, living organisms, and biosecurity.

      The National Framework aims to enhance the quality of life in the country, promote diversification and economic prosperity, preserve the UAE's ecosystems, sustain its ecological resources and services, and support the achievement of the 2030 Sustainable Development Goals.

      In 2022, the UAE topped the Yale University's 2022 Environmental Performance Index in six environmental indicators globally, becoming the first regionally, in the Arab world and in the Gulf.


      As part of the ongoing preparation for the UAE to host the 28th Conference of the Parties (COP28), the cabinet approved assigning the Ministry of Climate Change and Environment to coordinate with federal and local authorities to prepare the country's readiness plan for the event, and ensure the participation of federal government entities in organising this global event.

      UAE Green Agenda 2030

      The Cabinet was briefed on developments in the implementation of the UAE Green Agenda 2030, which aims to achieve the goals of sustainable development, and the objectives of the UAE Centennial 2071.

      During the coming period 2023-2030, the UAE will implement initiatives and projects to support the goals of green economy, including increasing GDP by 4 percent to 5 percent by 2030, increasing exports by about AED24 to 25 billion by 2030, and reducing emissions from 430 kilowatt-hours in 2013 to less than 100 kilowatt-hours by 2030.

      National Space Fund

      During the meeting, a resolution regarding the establishment of the National Space Fund was adopted. The Fund which will be managed and supervised by the UAE Space Agency, aims to build national capabilities and competencies, raise the economic contribution to diversifying the national economy, and consolidate the UAE’s position in the space sector.

      The Fund is set to develop the infrastructure supporting the space industry, and create an appropriate environment to attract startup companies in space. In addition, the National Space Fund aims at adopting governance systems to achieve leadership in the space sector, attracting specialised global companies, and building partnerships between national and international advanced technology companies.

      National policies for Cybersecurity

      The Cabinet meeting approved the National Policy for IoT security, the National Programme for Cybersecurity Accreditation, the National Policy for Cloud Security. In addition to a number of related policies aiming at providing solutions for current and future challenges related to cybersecurity.

      The meeting also approved the formation of a national committee to combat cyber-attacks.

      Advance Government work with AI technologies

      The Cabinet approved a policy to raise the efficiency of government work through the use of artificial intelligence technologies. The policy includes standards and guidelines that guarantee safe use of AI, and the scope of its use in government work.

      The policy aims at increasing the productivity and efficiency in various sectors, enhancing competitiveness and the quality of government services, and provides more training opportunities for employees.

      “Made in UAE”

      The Cabinet adopted a decision on updating the “Made in the UAE” unified national mark ecosystem, in order to support national products. The update includes simplifying the procedures for obtaining the mark, allowing industrial facilities in free zones to obtain it, and confirming the facility's commitment to product safety through the application of conformity standards.


      The Cabinet was briefed on the developments of Emiratisation programmes in the private sector, and issued a decision regarding the amendment of some provisions related to the goals of the “Nafis” initiatives, so that the annual target for Emiratisation is divided throughout the year by 1 percent in the first six months of the year and the other 1 percent in the second half of the year.

      The UAE Cabinet meeting approved a decision regarding the issuance of executive regulations for a number of federal laws and legislations, including the federal law regarding protecting witnesses and secret sources; the Federal Law regarding accessing genetic resources and their derivatives; the federal law regarding private health facilities, in accordance with the UAE’s policy regarding foreign investor ownership; the Federal Decree-Law regarding Electronic Transactions and Trust Services.

      The Cabinet approved a resolution regarding the structure of Islamic sukuk.

      The meeting has approved the establishment of a number of embassies in several countries, including Copenhagen, the Kingdom of Denmark; Prague, Czech Republic; Helsinki, the Republic of Finland; Ulaanbaatar, Mongolia.

      The Cabinet approved several international agreements with a number of friendly countries, including the Republic of Lithuania, the Federal Democratic Republic of Ethiopia, the Republic of Poland, the Russian Federation and Israel.

      Furthermore, during the meeting, the Cabinet reviewed a number of annual reports for the year 2022

      Source: Emirates News Agency

    • UAE launches ‘Industrial Technology Transformation Index’ to drive digitalisation and sustainability

      The UAE’s Ministry of Industry and Advanced Technology (MoIAT) and the Abu Dhabi Department of Economic Development (ADDED) today launched the Industrial Technology Transformation Index (ITTI), a comprehensive framework to measure the digital maturity and sustainability of factories, and formulate a roadmap for industrial transformation.

      As part of the Technology Transformation Programme, the ITTI was developed with leading industry players, consultancy firms, technology providers and subject-matter experts. MoIAT will also collaborate with UNIDO to internationalise ITTI.

      By using ITTI, manufacturers will be able to make data-driven decisions to allocate resources more effectively and unlock financial incentives. The index will promote the integration of 4IR applications and sustainability best practices and raise awareness about the benefits of advanced technology. The ITTI is the first of its kind to integrate 4IR fundamentals with sustainability in one comprehensive framework.

      Sarah Al Amiri, Minister of State for Public Education and Advanced Technology, announced ITTI at the World Government Summit 2023, which runs until 15th February under the theme “Shaping Future Governments”. The announcement happened in the presence of Zaki Nusseibeh, Cultural Adviser to the UAE President and Chancellor of the United Arab Emirates University (UAEU).

      “Technology and sustainability are at the heart of the UAE’s industrial transformation plans,” Al Amiri said. “We are progressing quickly on a path to digitise factories, make manufacturing smarter, greener and attract the most cutting-edge companies and human capital. It is a path supported by the Technology Transformation Programme, and Make it in the Emirates initiative.

      “In line with its commitment to supporting all UAE-based companies to join us in entering the Fourth Industrial Age, the ministry has developed the ITTI as a game-changing initiative that will help companies to take their first steps towards Industry 4.0, stay ahead of the curve, and unlock the potential of advanced technology. Sustainability is a core pillar in the ITTI which will support manufacturers in reducing emissions and boost our efforts to achieve carbon neutrality by 2050.”

      Ahmed Jasim Al Zaabi, Chairman of ADDED, said, “Forging ahead with our comprehensive plan for building a Falcon economy on both Abu Dhabi and Federal levels, we have introduced the indices for manufacturers and industrial partners to use as launching pads for their smart and digital transformation goals, empowering them to take a meaningful leap towards industry 4.0 transformation.”

      “The UAE and Abu Dhabi are on track with national goals and commitments relating to ‘Operation 300bn’, particularly in advancing sustainable economic growth and diversification, deploying clean energy solutions, innovation, and promoting responsible consumption and production. We are actively pursuing the adoption of Industry 4.0 programmes and technologies by all sectors sand industries, blending smart manufacturing, circular growth, and the reduction of waste and emissions," he explained.

      The index’s categories are aligned with the manufacturing value chain, and are comprised of 20 dimensions out of which 4 are sustainability related. The design ensures the index’s alignment with the functions of the factories making it simple and intuitive to understand and an effective and forward-looking planning tool for manufacturers.

      In order to validate the accuracy and effectiveness of the tool, the Ministry piloted the ITTI with 75 manufacturing plants in 8 priority sectors, around 60 of which are Small and Medium Enterprises (SMEs).

      During the pilot phase, ITTI inspired many to take the next step in their digitalisation journey, and most participants indicated that they highly recommend the assessment to industrial peers.

      To properly activate and scale the ITTI, a certification programme has been developed to qualify third party assessors to conduct 1-day assessments based on the ITTI framework. The tool enables certified assessors to evaluate current technology and processes of manufacturing plants across the manufacturing value chain. Based on the findings of the assessment, assessors develop a detailed report, providing recommendations on prioritised actions to help manufacturers identify business areas where improvements will generate the highest business impact.

      The Ministry and ADDED developed ITTI in collaboration with Siemens and other leading knowledge partners. MoIAT revealed 8 certifying bodies associated with the index, including Yokogawa, Siemens, Schneider Electric, Rockwell Automation, Future Factory, EGDE Group, Du, and Accenture.

      During her speech, Al amiri called on ecosystem partners to join the programme as Certified Assessing Bodies, and encouraged industrial stakeholders to undertake the ITTI assessment to support a smart and green industrial transformation in the UAE.

      Source: Emirates News Agency

  • United Kingdom
    • UK Mandatory Disclosure Rules (MDR)

      This measure addresses the UK’s implementation of the Organisation for Economic cooperation and Development’s (OECD) Model Mandatory Disclosure Rules for CRS Avoidance Arrangements and Opaque Offshore Structures. On 17 January 2023 the International Tax Enforcement (Disclosable Arrangements) Regulations 2023 were laid before the House of Commons. These regulations implement the Mandatory Disclosure Rules. The regulations come into force on 28 March 2023.

      Who is likely to be affected

      This measure will affect people who design, market, or advise on certain structures and arrangements that could be used to evade tax. This could include tax advisory and legal firms and financial institutions. The measure could also affect taxpayers who implement such arrangements.

      General description of the measure

      New rules will require promoters and advisors to disclose details of certain types of arrangements to HMRC. An arrangement will be reportable if it involves the use of opaque offshore structures or if it circumvents reporting under the Common Reporting Standard (CRS). The CRS involves the reporting and exchange between tax authorities of financial account information, to prevent people hiding money offshore. Arrangements which circumvent the CRS or involve the use of opaque offshore structures arrangements can be used to hide beneficial ownership of assets from the tax authorities.

      HMRC will share and exchange information on these arrangements with other tax authorities implementing the rules where the taxpayers involved in the arrangement are resident and will use the information received to identify and challenge potential cases of offshore tax non-compliance. These new disclosure rules are also expected to influence taxpayers to help ensure that any relevant structures they implement are reported correctly for tax purposes, with all tax due being declared.

      The measure will be implemented by Statutory Instrument. The government consulted on this measure from 30 November 2021 to 8 February 2022.

      Policy objective

      These new rules will help the government to tackle offshore tax evasion. Mandatory reporting will discourage people from entering into arrangements in the first place if they are intending to use the arrangements to evade tax. HMRC will use information received from these reports to help identify and challenge potential cases of offshore tax evasion.

      The Organisation for Economic Co-operation and Development (OECD) rules and exchange framework will replace the existing EU rules now that the UK has left the EU.

      Background to the measure

      The government worked with other jurisdictions and the OECD to develop the model Mandatory Disclosure Rules (MDR). These model rules allow jurisdictions to take a common approach to implementation and enable exchange of equivalent information between implementing jurisdictions.

      The government announced it would implement MDR at Budget 2021 and launched a consultation on draft implementing regulations on 30 November 2021. Following the MDR consultation, the government decided to implement MDR on 28 March 2023.

      MDR will replace EU-based DAC6 rules which the UK implemented prior to EU Exit. Now that the transition period has ended, the UK is transitioning to global rather than EU standards on tax transparency. The MDR implementing regulations will simultaneously revoke the EU-based rules in the UK.

      Detailed proposal

      Operative date

      The new rules are due to come into force on 28 March 2023. Existing reporting requirements under DAC6 will apply until the new rules come into force.

      Current law

      The current law on disclosing arrangements is contained in SI 2020/25, as amended by SI 2020/713 and SI 2020/1649.

      Proposed revisions

      This measure will replace the existing reporting obligations based on EU rules. The new regulations will implement with the Model Mandatory Disclosure Rules agreed at the OECD. The regulations will impose the reporting obligations, set deadlines for reports to be made, and provide for penalties for non-compliance, along with rights of appeal.

      Summary of impacts

      Exchequer impact (£m)

      2022 to 2023 2023 to 2024 2024 to 2025 2025 to 2026 2026 to 2027 2027 to 2028
      Empty Empty Empty Empty Empty Empty

      The final costing will be subject to scrutiny by the Office for Budget Responsibility and will be set out at the next fiscal event.

      Economic impact

      This measure is not expected to have any significant macroeconomic impacts.

      Impact on individuals, households, and families

      This measure is expected to have an impact on individuals who enter into arrangements which are reportable under the regulations. Individuals who are impacted may have to provide information on the arrangements to HMRC. However, in most cases intermediaries will have the reporting obligation so individuals would only have to report in very limited circumstances.

      Those individuals who do enter into reportable arrangements and have to report will need to use software to produce files that can be uploaded on the HMRC reporting portal. There is likely to be a cost to individuals in purchasing or developing the necessary software.

      Customer experience is expected to remain broadly the same as this measure does not significantly alter how individuals interact with HMRC.

      The measure is not expected to impact on family formation, stability, or breakdown.

      Equalities impacts

      It is not anticipated that there will be impacts for groups sharing protected characteristics.

      HMRC will explore any reasonable adjustments needed to allow a disabled individual to make a report.

      Impact on business including civil society organisations

      This measure will have a negligible impact on an estimated 5,500 businesses who, on behalf of their clients, undertake cross-border arrangements that could impact on the identification of beneficial ownership or on the automatic exchange of information between tax authorities.

      One-off costs will include familiarising themselves with the new regime. This will include upskilling some staff when the rules are first introduced. A small number of these businesses will have to report to HMRC under the regulations. These businesses will incur an additional one-off cost that could include making any necessary changes to IT systems to collect and report information.

      Continuing costs to businesses could include the preparation, checking and submission of reports to HMRC as well as the payment of subscription fees for software.

      Customer experience is expected to remain broadly the same as this measure does not significantly alter how businesses interact with HMRC. Businesses impacted would have been aware of the similar DAC6 measure which MDR is replacing.

      This measure is not expected to impact civil society organisations

      Operational impact (£m) (HMRC or other)

      HMRC will make changes to IT systems:

      • to allow customers to report information to HMRC
      • for HMRC to process the information, exchange it with other jurisdictions, and use it for compliance purposes

      There will also be some additional staff costs. Costs are still being finalised but are estimated to total approximately £16m.

      Other impacts

      A Data Protection Impact Assessment has been undertaken for the changes made by this measure. Other impacts have been considered and none have been identified.

      Monitoring and evaluation

      The measure will be monitored through reviewing the reports received under the new rules, and through communication with affected taxpayers and advisers.

    • United Kingdom Notes Outcome of Consultation on Abandoned Online Sales Tax

      The UK's Treasury has published the responses to its policy consultation on an online sales tax (OST).

      The idea of the OST was that such a tax would address concerns arising from the move to a more digital economy; for example, the burden and imbalance of business rates falling disproportionately on retailers with physical properties rather than on online retailers.

      Several themes arose from the consultation, such as:

      • concerns about business rates;
      • the high level of taxation in the retail sector;
      • the need for business rates reliefs;
      • the lack of a consensus on defining an OST and concerns about its complexity; and
      • whether the OST liability would be passed on to consumers.

      The conclusion of the response document states: "The central challenge identified by respondents was defining taxable revenue from online sales. All proposed definitions risked arbitrary outcomes and considerable complexity for businesses, particularly in light of rapidly evolving business models."

      In fact, since the consultation ended in May 2022, the UK government has considered the insights raised and announced at Autumn Statement 2022 that it had decided not to proceed with an OST. The government also announced some reforms to the business rates system.

      In deciding not to proceed with the tax, the government noted that the balance of responses suggested that an OST would be complex, distortive, and would not raise sufficient revenue to fund the scale of business rate relief called for. Nor was there widespread support from the retail sector or the public in general. Support was even less pronounced when considering the different forms of OST under review. None of the models discussed would raise sufficient revenue to replace the business rates system or remove business rates liability for the retail sector. However, the government remains committed to the reform of business rates, including a revaluation and support package.

    • United Kingdom Temporarily Increases Rates of Stamp Duty Land Tax

      The Stamp Duty Land Tax (Temporary Relief) Act 2023 received Royal Assent and became law on 8 February 2023. This legislation gives effect to the increased thresholds for stamp duty land tax on residential property from 23 September 2022 until 31 March 2025 that were announced in the mini-budget, when Kwasi Kwarteng was Chancellor of the Exchequer.  During the time above, the basic rates for residential property are as follows:
      Part of relevant consideration (GBP) Percentage (%)
      Up to 250,000 0
      250,000 – 925,000 5
      925,000 – 1,500,000 10
      Over 1,500,000 12
        The higher rates of stamp duty land tax for additional dwellings are:
      Part of relevant consideration (GBP) Percentage (%)
      Up to 250,000 3
      250,000 – 925,000 8
      925,000 – 1,500,000 13
      Over 1,500,000 15

      Rates of stamp duty land tax chargeable in respect of rent are:

      Rate bands (GBP) Percentage (%)
      0 – 250,000 0
      Over 250,000 1

      First-time buyers have an increased exemption from tax if the consideration does not exceed GBP 425,000 (previously GBP 300,000) and the 5% rate will apply above this, up to a threshold of GBP 625,000 (previously GBP 500,000).

      From 1 April 2025, the rates and thresholds will return to the previous levels.

  • United States
    • FinCEN to Tackle Beneficial Ownership Rules in 2023

      The Financial Crimes Enforcement Network (FinCEN) of the Department of Treasury plans to tackle beneficial ownership rules in 2023.

      More specifically, the FinCEN provides that it has completed final regulations on beneficial ownership information reporting requirements, which implement the 2021 enacted Corporate Transparency Act. The Act requires companies to disclose certain information about their beneficial owners, founders and registrants to the FinCEN, in an effort to prevent and combat tax fraud, money laundering, terrorist financing and other illicit activity. The FinCEN also stated that it is currently working on regulations on Beneficial Ownership Information Access and Safeguards, and Use of FinCEN Identifiers for Entities, which is now in the proposed rule state.

    • Overview of Inflation Reduction Act Investment Credit Changes, New Advanced Manufacturing Investment Credit in Updated Instructions

      The US Internal Revenue Service has provided an overview of investment credit changes enacted under the Inflation Reduction Act (IRA) in updated Instructions for filing Form 3468 - Investment Credit, issued by the US Internal Revenue Service (IRS) on 30 January 2023. The Instructions also highlight that the Creating Helpful Incentives To Produce Semiconductors (CHIPS) Act of 2022  enacted a new advanced manufacturing investment credit.

      IRA changes

      According to the updated Instructions, the IRA included several new or enhanced energy investment credits, which fiscal year filers may claim for periods in 2023. Specifically, the IRA established:

      • new credits for energy storage technology, qualified biogas property and microgrid controllers;
      • bonus credits for domestic content bonus credit, energy communities and certain solar and wind facilities in connection with low-income communities;
      • an election to treat clean hydrogen production facilities as energy properties;
      • new rules regarding prevailing wage requirements and apprenticeship requirements; and
      • new rules for certain filers to elect to treat credit amounts as deemed payments and rules related to the transfer of certain credits for tax years beginning in 2023, including short tax years beginning and ending in 2023.

      The IRA also enhanced rules regarding qualifying advanced energy project.

      Advanced manufacturing investment credit

      The Instructions also provide that the CHIPS Act of 2022 added a new investment credit equal to 25% of the qualified investment in any advanced manufacturing facility for the primary purpose of manufacturing of semiconductors or semiconductor manufacturing equipment. The credit applies to property placed in service after 2022 and, for any property the construction of which begins prior to 2023, only to the extent of the basis thereof attributable to the construction, reconstruction or erection after 9 August 2022.