February 2024

The General Administration of Customs (GAC) released on January 24, 2024 the Measures for the Customs of the People's Republic of China to Levy Taxes on Domestic Sale of Value Added Goods Being Processed in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin (Hengqin Cooperation Zone), to be effective on the date when the Zone completes inspection and acceptance of regulatory facilities and starts to implement the tax policies.

Under the MOF, GAC and STA No.1 (2024) Document, for the goods produced by an enterprise in the Hengqin Cooperation Zone that contain imported materials or parts and create added value of 30 percent or above after being processed in the Zone, their entry into the mainland from the Zone would be waived from the import duties, but the import value added tax and consumption tax would be levied as required. The Measures refine the criteria for the implementation of the VAT exemption policy, clarifying that the policy applies to those enterprises that have registered at the Zone with independent legal entity. The Measures also make clarifications on the "creation of added value of 30 percent or above after being processed in the Zone" and the scope of "imported materials or parts".

The State Taxation Administration (STA) issued on February 1, 2024, the Announcement on Matters concerning the Settlement and Payment of Individual Income Tax ("IIT") on Comprehensive Incomes on a Consolidated Basis in 2023, which consists of a total of 12 articles.

Compared with the documents of previous years, the Announcement for 2023 has made four changes:

1. extending the confirmation time for settlement agents and no longer requiring them to confirm their entrustment relationship with entrusting entities before April 30;
2. specifying the method, venue and time of the consolidated declaration of multiple equity incentives;
3. clarifying the provisions on the service of relevant documents for settlement regarding taxpayers who have not fully declared and paid taxes; and
4. adjusting the starting time of making appointment for tax handling and settlement to February 21.

The Ministry of Finance (MOF) released on February 18, 2024 the Circular on the Pilot Implementation of Preferential Stamp Tax Policy on Offshore Trade in China (Shanghai) Pilot Free Trade Zone and Lin-gang Special Area (MOF and STA No.8 (2024) Document).

According to the Circular, during the period from April 1, 2024 to March 31, 2025, the contract note of offshore resale business carried out by the enterprises registered in China (Shanghai) Pilot Free Trade Zone and Lin-gang Special Area will be exempted from stamp duties, and the offshore resale business refers to the transaction in which a resident enterprise purchases goods from a nonresident enterprise and then resells them to another nonresident enterprise without making the goods enter or exit China's customs territory.

The General Administration of Customs (GAC) issued on February 6, 2024 the Measures of Customs of the People's Republic of China for the Administration of Duty Exemption on Import of Goods in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin (Hengqin Cooperation Zone) (GAC No.18 (2024) Announcement), which will take effect from the date when the Zone completes inspection and acceptance of regulatory facilities and starts to implement the tax policies.

The Circular on the Tax Policies for Entry and Exit of Goods in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin issued in January 2024 stipulates that importers of duty-free products in the Hengqin Cooperation Zone are exempt from import tariffs, import value-added tax, and consumption tax on the machines, equipment, molds, as well as spare parts and infrastructure materials used for repairing the abovementioned goods which they import for self-use.

The Measures further clarify the declaration and subsequent management details of the above duty exemption policy.

South Africa has proposed to implement global minimum tax rules with retroactive effect from 1 January 2024. This was announced by the Minister of Finance during his 2024 Budget Speech delivered on 21 February 2024. The government expects the implementation of this reform to yield an additional ZAR 8 billion in corporate tax revenue in 2026/27.

In line with this announcement, the National Treasury released the draft Global Minimum Tax Bill and the draft Global Minimum Tax Administration Bill for public comment. The draft Global Minimum Tax Bill is aimed at implementing the GloBE Model Rules in South Africa, imposing a top-up tax at a rate of 15% on the profits of in-scope multinational enterprise (MNE) groups (i.e. those with annual revenue exceeding EUR 750 million). The legislation proposes to introduce two measures to effect the change, namely an income inclusion rule (IIR) and a domestic minimum top-up tax (QDMTT). Meanwhile, the draft Global Minimum Tax Administration Bill focuses on the operational aspects and enforcement mechanisms of the proposed legislation.

The draft Global Minimum Tax Bill encompasses various provisions, most notable of which are the IIR which will enable the application of a top-up tax on profits reported by qualifying South African MNEs operating in other countries with effective tax rates under 15%, and the QDMTT which will enable SARS to collect a top-up tax for qualifying MNEs paying an effective tax rate of less than 15% in South Africa. Other provisions include but are not limited to:

• charge to tax for constituent entities;
• inapplicable articles of the GloBE Model Rules;
• charge to tax for domestic constituent entities;
• charge to tax for domestic joint ventures;
• calculation of the QDMTT;
• computation of adjusted covered taxes;
• computation of top-up tax;
• transitional rules; and
• imposition of and liability for top-up tax.

On the administrative side, the draft Global Minimum Tax Administration Bill addresses the:

• obligation to submit GloBE Information Return;
• due date for submission of GloBE Information Return;
• exception for returns provided under automatic exchange of information agreement;
• due date for payment;
• penalties and interest; and
• recordkeeping and expiry of periods of limitations.

US$6 billion
Potential economic contribution of Nigeria’s palm biomass industry within the next four years following an MoU between the West African country and Malaysia. According to officials, the palm tree, with its 90% biomass and 10% palm oil composition, presents an unexplored resource in Nigeria as various parts are currently being discarded as waste yet could be utilised for activities such as electricity generation, furniture material production, organic fertiliser manufacturing, and medicinal applications. This agreement will aim to replicate Malaysia’s palm biomass industry in Nigeria.
(Nairametrics)

11%
Of Kenya’s electricity supplies are being imported from Ethiopia, exceeding supply from local thermal generators and solar facilities. In addition to Ethiopia, Uganda is the only other nation to export into Kenya's grid. 
(The East African)

3
Additional berths are set to be developed in Tanzania as it engaged Egyptian investors to help ramp up Dar es Salaam port. Tanzania has seen an increase in the number of ships docking at the port, largely resulting from increased mining activity.
(The Citizen)

US$1 billion
In Chinese funds to refurbish a key railway line connecting Zambia’s copper belt region with the Tanzanian port of Dar es Salaam under its Belt and Road Initiative. This investment will be done through a Public-Private Partnership (PPP) and aims to strengthen cooperation between the three countries. 
(South China Morning Post)

21,000 acres
Of government land in Kenya have been opened for commercial lease in a bid to boost food security.  This is part of a wider campaign targeting 50,000 acres of land and more than US$450 million in private investments.
(Business Daily)

9
Early-stage African climate tech startups to receive US$1.8 million and acceleration support from Catalyst Fund’s second round of investment. Winners hail from Tanzania, Kenya, South Africa, Egypt, Nigeria and Senegal.
(Get Funded Africa)

US$150 million
Green bond launched by the IFC and Social Investment Managers and Advisors LLC (SIMA) to finance solar projects in Africa. The bond will offer short-term corporate financing and project financing of up to 10 years to support the growth of small and medium-sized local developers with a focus on manufacturing, services, education, healthcare, and agri-processing.
(IFC)

1 million
Nigerian SMEs to benefit from an accelerator programme sponsored by Proparco and the African Development Bank, deployed through First City Monument Bank (FMCB). This programme will particularly support female-led initiatives which remain disproportionately underfunded across the continent.
(Punch)

14,000 megawatts
Hydropower capacity to be added by 2040 as Mozambique aims to position itself as Africa's biggest hydropower producer and launch a green hydrogen industry. Alongside DRC and Ethiopia, Mozambique possesses among the continent's richest reserves of hydropower, wind, solar and natural gas resources.
(Business Insider Africa)

US$6 billion
In funding made available by Italy in a bid to strengthen its partnership with the region. The funding plan was unveiled at the Italy-Africa Summit to bolster economic links and create an energy hub for Europe.
(African Development Bank)

100,000 barrels
of daily capacity projected for Ghana's first-ever private-owned oil refinery. The US$2 billion Chinese-owned refinery has an initial capacity of 40,000 barrels and is expected to be completed this year.
(GhanaWeb)

100%
Transition towards clean energy in Kenya following an endorsement of US$70 million by the Trust Fund Committee of the Climate Investment Funds (CIF) in order to advance the integration and utilisation of renewable energy in the Kenyan grid. Currently, the share of renewable energy in Kenya is almost 90 per cent – including 45 per cent geothermal and 26 per cent hydropower.
(Africa Business Community)

In his Budget delivered on February 28, the Financial Secretary proposed the following tax measures. A one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2023/24 by 100 per cent, subject to a ceiling of $3,000 per case. This measure will cost the Government $5.5 billion, benefitting 2.06 million taxpayers liable to salaries tax and tax under personal assessment and 160 000 businesses.

The tax reduction will reduce the amount of tax payable by taxpayers for the year of assessment 2023/24. Taxpayers should file their profits tax returns and tax returns for individuals for the year of assessment 2023/24 as usual. Upon enactment of the relevant legislation, the Inland Revenue Department will effect the reduction in the final assessment.

The proposed tax reduction will only be applicable to the final tax for the year of assessment 2023/24, but not to the provisional tax of the same year. Therefore, taxpayers are still required to pay the provisional tax on time as stipulated in the demand notes that have been issued to them. The provisional tax paid will, in accordance with the Inland Revenue Ordinance, be applied in payment of the final tax for the year of assessment 2023/24 and provisional tax for the year of assessment 2024/25. The excess balance, if any, will be refunded.

The proposed tax reduction is not applicable to property tax. Nevertheless, individuals with rental income, if eligible for personal assessment, may be able to enjoy such a reduction under personal assessment.

A taxpayer who is separately chargeable to salaries tax and profits tax can enjoy a tax reduction under each of the tax types. For a taxpayer having business profits or rental income and electing for personal assessment, the reduction will be based on the tax payable under personal assessment. It might be different from the amount of tax reduction he or she would get if he or she was not assessed under personal assessment. The exact amount will need to be evaluated case by case. Individuals having business profits or rental income may elect for personal assessment in their tax returns for the year of assessment 2023/24.

In addition, the Financial Secretary proposed to implement a two-tiered standard rates regime for salaries tax and tax under personal assessment starting from the year of assessment 2024/25. In calculating the amount of tax for taxpayers whose net income (before deduction of allowances) exceeds $5 million and whose salaries tax or tax under personal assessment is to be charged at a standard rate, the first $5 million of their net income will continue to be subject to the standard rate of 15 per cent while the portion of their net income exceeding $5 million will be subject to the standard rate of 16 per cent. After enactment of the relevant legislation, the Inland Revenue Department will apply the two-tiered standard rates in calculating the provisional salaries tax for the year of assessment 2024/25.

On profits tax, the Financial Secretary proposed to provide tax deduction for expenses incurred in reinstating the condition of the leased premises to their original condition and to remove the time limit for claiming industrial and commercial building allowances commencing from the year of assessment 2024/25.

On other duties and charges, the Financial Secretary proposed to increase business registration fees by $200 to $2,200 per annum with effect from April 1, 2024. To relieve the relevant impact, it is proposed to waive the business registration levy of $150 for two years. Besides, the Financial Secretary proposed to resume the collection of the hotel accommodation tax at a rate of 3 per cent with effect from January 1, 2025.

The Financial Secretary also proposed to waive stamp duties payable on the transfer of real estate investment trust units and the jobbing business of option market-makers.

The above measures will be implemented upon completion of the relevant legislative procedures.

In respect of stamp duty on property transactions, the Financial Secretary proposed to cancel all demand-side management measures for residential properties with immediate effect, that is, no Special Stamp Duty (SSD), Buyer's Stamp Duty (BSD) or Ad Valorem Stamp Duty (AVD) at 7.5 per cent under Part 1 of Scale 1 needs to be paid for any residential property transactions starting from today. The Government will introduce the Stamp Duty (Amendment) Bill 2024 (the Bill) into the Legislative Council to take forward the initiative. To enable property purchasers to benefit from the measures as soon as possible, the Chief Executive has also made the Public Revenue Protection (Stamp Duty) Order 2024 under the Public Revenue Protection Ordinance (Cap. 120) to give full force and effect of law to the Bill before its enactment. Subject to the eventual enactment of the Bill, any instrument executed on or after February 28, 2024 for the sale and purchase or transfer of residential properties are no longer subject to SSD and BSD. The AVD rate of 7.5 per cent under Part 1 of Scale 1 is to be amended to the same as those of AVD at Scale 2.

Source: Ird.gov.hk

The Finance Act, 2024 (the Act) received the Indian President's assent on 15 February 2024 with no change in tax rates under income tax and goods and services tax (GST).

Other direct and indirect tax proposals enacted are set out below.

Income Tax

The Act extends the sunset clause for tax deduction under section 80-IAC of the Income Tax Act, 1961 for start-ups incorporated up to and including 31 March 2025 (currently, 31 March 2024).

Furthermore, the Act extends the deadline for claiming tax exemption/deduction up to and including 31 March 2025 (currently, 31 March 2024) for the purpose of:

• the commencement of operations of specific International Financial Services Centre (IFSC) units, including investment divisions of an offshore banking unit, as well as other units earning income from leasing or transfer of aircrafts and ships; and
• making of investments by specified persons such as sovereign wealth funds or foreign pension funds.

Goods and Services Tax

The Act amends the definition of "input service distributor" (ISD) and the manner of distribution of input tax credit by an ISD.

The full text of the Finance Act, 2024 is available here.

India's Interim Budget 2024, presented by Hon’ble Finance Minister Smt Nirmala Sitharaman, lays out the government's spending plans for the first half of the upcoming fiscal year. This summary delves into the key highlights across various sectors, offering insights for both the public and investors.

Welfare

• With the pursuit of ‘Sabka Saath’ in these 10 years, the Government has assisted 25 Cr people to get freedom from multi-dimensional poverty.
• ‘Direct Benefit Transfer’ of 34 Lakh Cr from the Government using PM-Jan Dhan accounts has led to savings of 2.7 Lakh Cr for the Government.
• PM-SVANidhi has provided credit assistance to 78 Lakh street vendors. From that total, 2.3 Lakh have received credit for the third time.
• PM-JANMAN Yojana reaches out to the particularly vulnerable tribal groups, who have remained outside the realm of development so far.
• PM-Vishwakarma Yojana provides end-to-end support to artisans and craftspeople engaged in 18 trades.
• Every year, under PM-KISAN SAMMAN Yojana, direct financial assistance is provided to 11.8 Cr farmers, including marginal and small farmers. Crop insurance is given to 4 Cr farmers under PM Fasal Bima Yojana.
• Electronic National Agriculture Market has integrated 1361 mandis, and is providing services to 1.8 Cr farmers with a trading volume of INR 3 Lakh Cr.

Empowering Youth

• The National Education Policy 2020 is ushering in transformational reforms. PM Schools for Rising India (PM SHRI) are delivering quality teaching, and nurturing holistic and well-rounded individuals.
• The Skill India Mission has trained 1.4 Cr youth, upskilled and reskilled 54 Lakh youth, and established 3000 new ITIs.
• A large number of new institutions of higher learning, namely 7 IITs, 16 IIITs, 7 IIMs, 15 AIIMS and 390 universities have been set up.
• PM Mudra Yojana has sanctioned 43 Cr loans aggregating to 22.5 Lakh Cr for the entrepreneurial aspirations of our youth. Besides that, Fund of Funds, Start-Up India, and Start-Up Credit Guarantee schemes are assisting our youth.

Women Empowerment

• Thirty Cr Mudra Yojana loans have been given to women entrepreneurs. Female enrolment in higher education has gone up by twenty-eight per cent in ten years. In STEM courses, girls and women constitute forty-three per cent of enrolment - one of the highest in the world.

Geopolitics

• The recently announced India-Middle East-Europe Economic Corridor is a strategic and economic game changer for India and others.

Vision for Viksit Bharat

• Our vision for ‘Viksit Bharat’ is that of “Prosperous Bharat in harmony with nature, with modern infrastructure, and providing opportunities for all citizens and all regions to reach their potential”.
• In the full budget in July, Government will present a detailed roadmap for our pursuit of ‘Viksit Bharat’.

Strategy for ‘Amrit Kaal’

• Government will adopt economic policies that foster and sustain growth, facilitate inclusive and sustainable development, improve productivity, create opportunities for all, help them enhance their capabilities, and contribute to the generation of resources to power investments and fulfil aspirations.
• Guided by the principle ‘Reform, Perform, and Transform’, the Government will take up next generation reforms, and build consensus with the states and stakeholders for effective implementation.
• Government to ensure timely and adequate finances, relevant technologies and appropriate training for the MSMEs to grow and also compete globally. Orienting the regulatory environment to facilitate their growth will be an important element of this policy mix.
• Government will facilitate sustaining high and more resource-efficient economic growth. This will work towards energy security in terms of availability, accessibility and affordability.
• For meeting the investment needs our Government will prepare the financial sector in terms of size, capacity, skills and regulatory framework.

Aspirational Districts Programme

• Government stands ready to assist the states in the faster development of aspirational districts and blocks, including the generation of ample economic opportunities.

Development of the East

• Government will pay utmost attention to making the eastern region and its people a powerful driver of India’s growth.

PM Awas Yojana (Grameen)

• India is close to achieving the target of three crore houses. Two crore more houses will be taken up in the next five years to meet the requirement arising from an increase in the number of families.

Rooftop Solarization and Muft Bijli

• Through rooftop solarization, one crore households will be enabled to obtain up to 300 units of free electricity every month. The following benefits are expected:
  • ​​​​​Savings of up to fifteen to eighteen thousand rupees annually for households from free solar electricity and selling the surplus to the distribution companies
  • Charging of electric vehicles
  • Entrepreneurship opportunities for a large number of vendors for supply and installation
  • Employment opportunities for the youth with technical skills in manufacturing, installation and maintenance

Housing for Middle Class

• Government will launch a scheme to help deserving sections of the middle class “living in rented houses, or slums, or chawls and unauthorized colonies” to buy or build their own houses.

Health

• Government plans to set up more medical colleges by utilizing the existing hospital infrastructure under various departments. A committee for this purpose will be set up to examine the issues and make relevant recommendations.
• Government will encourage vaccination for girls in the age group of 9 to 14 years for the prevention of cervical cancer.
• Various schemes for maternal and child care will be brought under one comprehensive programme for synergy in implementation. Upgradation of anganwadi centres under “Saksham Anganwadi and Poshan 2.0” will be expedited for improved nutrition delivery, early childhood care and development.
• The newly designed U-WIN platform for managing immunization and intensified efforts of Mission Indradhanush will be rolled out expeditiously throughout the country.
• Healthcare cover under Ayushman Bharat scheme will be extended to all ASHA workers, Anganwadi Workers and Helpers.

Agriculture and Food Processing

• The efforts for value addition in agricultural sector and boosting farmers’ income will be stepped up.
• Pradhan Mantri Kisan Sampada Yojana has benefitted 38 Lakh farmers and generated 10 Lakh employment.
• Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana has assisted 2.4 Lakh SHGs and sixty thousand individuals with credit linkages.
• Other schemes are complementing the efforts for reducing postharvest losses and improving productivity and incomes.
• For ensuring faster growth of the sector, Government will further promote private and public investment in post-harvest activities including aggregation, modern storage, efficient supply chains, primary and secondary processing and marketing and branding.
• Application of Nano DAP on various crops will be expanded in all agro-climatic zones.
• A strategy will be formulated to achieve ‘Atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower. This will cover research for high-yielding varieties, widespread adoption of modern farming techniques, market linkages, procurement, value addition, and crop insurance.
• A comprehensive programme for supporting dairy farmers will be formulated. Efforts are already on to control foot and mouth disease. India is the world’s largest milk producer but with low productivity of milch animals. The programme will be built on the success of existing schemes such Rashtriya Gokul Mission, National Livestock Mission, and Infrastructure Development Funds for dairy processing and animal husbandry.
• Implementation of Pradhan Mantri Matsya Sampada Yojana (PMMSY) will be stepped up to:
  • Enhance aquaculture productivity from existing 3 to 5 Tonnes per hectare
  • Double exports to INR 1 Lakh Cr and
  • Generate 55 Lakh employment opportunities in the near future
• Five integrated aquaparks will be set up

SHGs

• Eighty-three Lakh SHGs with nine crore women are transforming the rural socio-economic landscape with empowerment and self-reliance. Their success has assisted nearly one crore women to become Lakhpati Didi already. They are an inspiration to others. Their achievements will be recognized through honouring them. Buoyed by the success, it has been decided to enhance the target for Lakhpati Didi from 2 Cr to 3 Cr.

Research and Innovation

• A corpus of INR 1 Lakh Cr will be established with a fifty-year interest-free loan. The corpus will provide long-term financing or refinancing with long tenors and low or nil interest rates. This will encourage the private sector to scale up research and innovation significantly in sunrise domains.
• A new scheme will be launched for strengthening deep-tech technologies for defence purposes and expediting ‘Atmanirbharta’.

Infrastructure

• The outlay for the next year is being increased by 11.1% to eleven lakh, eleven thousand, one hundred and eleven crore rupees (INR 11,11,111 Cr). This would be 3.4% of the GDP.

Railways

• Three major economic railway corridor programmes will be implemented. These are:
  • Energy, mineral and cement corridors
  • Port connectivity corridors
  • High-traffic density corridors
• The projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity. They will improve logistics efficiency and reduce costs.
• Together with dedicated freight corridors, these three economic corridor programmes will accelerate our GDP growth and reduce logistic costs.
• Forty thousand normal rail bogies will be converted to the Vande Bharat standards to enhance the safety, convenience and comfort of passengers.
• Metro Rail and NaMo Bharat can be the catalyst for the required urban transformation. Expansion of these systems will be supported in large cities focusing on transit-oriented development.

Aviation

• Number of airports has doubled to 149. The rollout of air connectivity to tier-two and tier-three cities under the UDAN 19 scheme has been widespread. Five hundred and seventeen new routes are carrying 1.3 Cr passengers.
• Indian carriers have proactively placed orders for over 1000 new aircrafts.
• Expansion of existing airports and development of new airports will continue expeditiously.

Green Energy

• Towards meeting our commitment for ‘net-zero’ by 2070, the following measures will be taken.
  • Viability gap funding will be provided for harnessing offshore wind energy potential for an initial capacity of one giga-watt.
  • Coal gasification and liquefaction capacity of 100 MT will be set up by 2030. This will also help in reducing imports of natural gas, methanol, and ammonia.
  • Phased mandatory blending of Compressed Biogas (CBG) in Compressed Natural Gas (CNG) for transport and piped natural gas (PNG) for domestic purposes will be mandated.
  • Financial assistance will be provided for the procurement of biomass aggregation machinery to support collection.

Electric Vehicle

• Government will expand and strengthen the e-vehicle ecosystem by supporting manufacturing and charging infrastructure.
• Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanisms.

Bio-manufacturing and Bio-foundry

• A new scheme of bio-manufacturing and bio-foundry will be launched. This will provide environment friendly alternatives such as biodegradable polymers, bio-plastics, bio-pharmaceuticals and bio-agri-inputs. This scheme will also help in transforming today’s consumptive manufacturing paradigm to one based on regenerative principles.

Blue Economy 2.0

• For promoting climate resilient activities for Blue Economy 2.0, a scheme for restoration and adaptation measures, and coastal aquaculture and mariculture with an integrated and multi-sectoral approach will be launched.

Tourism

• States will be encouraged to take up comprehensive development of iconic tourist centres, branding and marketing them at a global scale.
• A framework for rating of the centres based on the quality of facilities and services will be established.
• Long-term interest free loans will be provided to States for financing such development on a matching basis.
• To address the emerging fervour for domestic tourism, projects for port connectivity, tourism infrastructure, and amenities will be taken up on our islands, including Lakshadweep. This will help in generating employment also.

Promoting Investments

• The FDI inflow during 2014-23 was $596 Bn marking a golden era. That is twice the inflow during 2005-14.
• For encouraging sustained foreign investment, we are negotiating bilateral investment treaties with our foreign partners, in the spirit of ‘First Develop India’.

Reforms in the States for ‘Viksit Bharat’

• A provision of INR 75,000 Cr as a fifty-year interest free loan is proposed this year to support those milestone-linked reforms by the State Governments.

Societal Changes

• The Government will form a high-powered committee for an extensive consideration of the challenges arising from fast population growth and demographic changes.

Launched in 2015, the Digital India program has become a transformative force, altering the pace of India’s growth story while transforming the country into a digitally empowered society and a knowledge-based economy. This vision is being realised through three key pillars: robust digital infrastructure, accessible government services, and empowered citizens.

The foundation of India’s digital transformation lies in building a ubiquitous digital infrastructure to ensure ease of living. The Digital India initiative has been instrumental in achieving this goal, and it has been extended with a total budget of ~INR 14,903 Cr from 2021-22 to 2025-26.

New Digital Services: An era of accessible governance 

Governance has undergone a major revamp, transitioning from cumbersome analogue processes to seamless online platforms. The National e-Governance Division (NeGD) has been playing a pivotal role in this, supporting the Ministry of Electronics and Information Technology (MeitY) in areas such as programme management, project development, technology management, capacity building, awareness and communications-related activities under the flagship Digital India Programme. NeGD has developed and is managing several National Public Digital Platforms such as DigiLocker, UMANG, Rapid Assessment System, OpenForge, API Setu, Poshan Tracker, National AI Portal, MyScheme, India Stack Global and many others.

To bring transparency in government procurement, the Government has come up with e-Marketplace (GeM), a dedicated platform for different goods & services procured by government organisations/departments/PSUs, offering 11,900 product categories and 321 service categories. Similarly, initiatives like MyGov and UMANG empower citizens with direct access to many government services, streamlining interactions and increasing accountability. Back-end digitisation fosters data-driven decision-making, driving efficient policy formulation and resource allocation.

Strengthening the digital revolution, initiatives like Aadhaar, the unique digital identity program, have empowered millions with access to essential services and financial inclusion. Aadhaar holders executed ~2 Bn authentication transactions in April 2023, a jump of more than ~19% over April 2022, indicating the growth of the digital economy and usage of Aadhaar in India.

In order to enable citizens to use digital services, high-speed internet connectivity is being extended to even the most remote parts of the country. There are over 888 Mn broadband users in India as of October 31, 2023. With 5,90,020 Common Service Centres (CSCs), including 4,68,773 CSCs in rural areas, India is working on a mission mode to bridge the digital divide. This connectivity underpins a thriving digital economy, fostering innovation and entrepreneurship.

Empowering citizens is at the heart of Digital India. Initiatives like Digilocker provide secure document management, while regional language email services like DataMail bridge the linguistic gap. Pradhan Mantri Grameen Digital Saksharta Abhiyan (PMGDisha), the world's largest digital literacy program, equips rural communities with essential digital skills like marketing, e-commerce, finance, and cybersecurity, enabling them to participate fully in the digital economy. Under the scheme, 4,38,570 PMGDisha training centres in India have certified ~47 Mn trainees.

Technologies Catalysing Digitalisation 

Emerging technologies have played a key role in fuelling the growth of the Indian economy. Technologies like cloud computing and artificial intelligence have helped businesses in India become more efficient and productive. By harnessing these technologies, they gain access to predictive analytics that identify trends and customer preferences. An insight into some emerging trends in this field:

Artificial Intelligence

Integrating AI offers automation in governance and enhanced protection against evolving threats, safeguarding both government and businesses. The Government has also established the IndiaAI initiative to leverage transformative technologies to foster inclusion, innovation, and adoption for social impact. The FY 2022-23 Union Budget also outlined plans to set up three AI centres of excellence in premier educational institutions, a significant step towards making ‘Make AI in India and Make AI work for India’. The initiative aims to foster interdisciplinary research to develop cutting-edge applications and scalable problem solutions in the areas of agriculture, health, and sustainable cities, which will galvanise an effective AI ecosystem and nurture quality human resources in the field. In September 2023, the Government of India, in collaboration with the EKstep Foundation, launched an AI chatbot with PM-Kisan, India’s direct benefit transfer program for farmers, to extend financial help to farmers who own their land. This farmer-friendly bot helps check eligibility and payment status and solve grievances, all with voice commands. Over 5 Lakh farmers used it on day one, depicting the level of penetration and acceptance AI is receiving in India. The demand and supply gap for digital tech talent is expected to increase by 3.5 times by 2026, making the next 25 years a watershed moment for India to establish itself as a technological and economic powerhouse. Addressing the growing demand for tech talent, MeitY has also set up FutureSkills Prime, in association with the National Association of Software and Service Companies (NASSCOM), to provide cutting-edge skills essential in today's rapidly evolving digital landscape. Owing to the above initiatives and policies, the Stanford AI Index report 2023 ranked India 1st in terms of AI skill penetration rate.

Blockchain 

Blockchain is a fast-growing technology that presents exciting possibilities to revolutionise the tech landscape in India. It helps secure, inclusive, and transparent transactions for KYC authentication, supply chain, identity management, document verification, record management, healthcare and validation of financial transactions. The emergence of blockchain technology holds promise for the government to foster trust and greater transparency about certain data activities and provide frictionless transactions with the citizens. The Centre of Excellence in Blockchain Technology is an initiative by the government in this direction to operate as a coordinated, interoperable blockchain ecosystem around the nation. The CoE runs five live chains, including certificate, judiciary, document, logistics, and property blockchains, onboarding 20 centre and state departments, providing seamless digital services to the citizens.

Internet of Things

The Internet of Things (IoT), a technological platform that integrates several machines with built-in sensors that record real-time data like images, videos, motion, acceleration, and temperature, provides valuable information for businesses and helps small enterprises grow rapidly in India. IoT is weaving a web of connectivity, offering solutions in healthcare, agriculture, disaster relief, supply chain management, and urban management, such as using IoT-enabled sensors to record the quality of air, water, and soil, using IoT in manufacturing to enable connectivity across machines to ensure higher operational efficiency, connecting multiple devices like cameras, GPS trackers, and mobile devices for a higher influx of real-time data, and more. The ‘Centre Of Excellence for IoT and AI’ is an initiative by MeitY & NASSCOM in collaboration with the state governments of Karnataka, Haryana, Andhra Pradesh and Gujarat, helping deep-tech startups to grow in India by assisting them with funding, incubation, acceleration, mentoring support and enterprise connect. The ‘Centre of Excellence (CoE) in Intelligent Internet of Things (IIoT) Sensors’ at Maker Village, Kochi, is working to catalyse the development of sensors within the realm of Intelligent IoT systems covering a broad spectrum of applications of intelligent sensors in networks, devices and sensor systems. Tech giants are recognising the immense potential of India’s digital market. Google, under the Google for India Digitization Fund, will invest $10 Bn by 2025 to help MSMEs digitise their business operations. Microsoft will skill 1 Lakh developers in India in the latest AI technologies and tools under its AI Odyssey initiative. The company will also invest INR 16,000 Cr to set up 3 more data centres in Telangana, in addition to its first captive data centre of three campuses in early 2022 - taking the number of proposed Microsoft data centres in India to 6. Anchored in growing digitisation needs, skilled tech talent, enabling policy framework and world-class infrastructure, India’s digital journey is poised to make giant strides with these collaborations that bring global expertise and resources.

Conclusion

The fruits of Digital India are evident in numerous success stories. MyGov’s UMANG app empowers more than 50 Mn users with access to over 1700 government services, while e-Hospital simplifies healthcare access for over 380 Mn registered patients. PMGDisha has transformed rural communities, with over 50 Mn individuals trained and certified in digital skills. Aadhaar, with its 2 Bn authentication transactions per month, stands as a testament to its role in streamlining welfare delivery and promoting financial inclusion. The record-breaking 118 Bn UPI transactions in 2023 highlight the digital transformation of the financial landscape.

These diverse examples paint a vivid picture of Digital India’s revolutionary impact. From improved governance and empowered citizens to a thriving digital economy and a future brimming with technological possibilities, Digital India is paving the way for a more inclusive, prosperous, and digitally connected India.

Source: Investindia.gov.in

India's journey towards becoming a developed nation by 2047 hinges significantly on improving its infrastructure, a cornerstone for fostering liveable, climate-resilient, and inclusive cities that drive economic growth. The government's commitment is evident through its allocation of 3.3% of GDP to the infrastructure sector in the fiscal year 2024, with particular focus on the transport and logistics segments.

Roads & Highways account for the highest share, followed by Railways and Urban Public Transport. The government has set ambitious targets for the transport sector, including development of 2 lakh-km national highway network by 2025 and expanding airports to 220. Additionally, plans include operationalizing 23 waterways by 2030 and developing 35 Multi-Modal Logistics Parks (MMLPs). The total budgetary outlay for infrastructure-related ministries increased from around INR 3.7 Lakh Cr in FY23 to INR 5 Lakh Cr in FY24, offering investment prospects for the private sector across various transport sub-segments. As the transport sector gears up to address sustainability challenges, the private sector stands poised to capitalize on the conducive policy environment to accelerate infrastructure investments. Public-Private Partnerships (PPPs) have served as a vital mechanism for private sector engagement across various infrastructure domains, notably in the construction of airports, ports, highways, and logistics parks throughout India. Besides support from the central government and states across various schemes, India needs a significant push from Public-Private Partnerships to achieve its goal of reaching a $5 Trillion economy by 2025.

In 2021, the government launched the PM Gatishakti National Master Plan (NMP) with a focus on major transport sectors to enhance multimodal connectivity infrastructure in various economic zones. It aims to bring together the infrastructure schemes such as Bharatmala, Sagarmala, UDAN etc. under a digital platform. The NMP offers a detailed database of trunk and utility infrastructure, ongoing and future projects from different ministries/departments of both the Central Government and States/UTs. Integrated with the GIS-enabled PM Gatishakti platform, this allows for streamlined planning, design, and monitoring of next-generation infrastructure projects on a single portal. As per the India Investment Grid (IIG) database, there are currently 15,580 projects worth $2388.93 Bn at various stages of development.

Alongside this, the National Logistics Policy, addresses the development of integrated infrastructure and efficiency in services, including processes and regulatory frameworks, through its Comprehensive Logistics Action Plan (CLAP). Together, the NMP and the National Logistics Policy provide a framework for creating a data-driven decision support mechanism to enhance logistics efficiency and reduce costs in the country's logistics ecosystem.

Major plans of Indian Infrastructure: 

• Roads: The Bharatmala Pariyojana is progressing with Phase I focusing on developing 34,800 km of National Highways. It emphasizes corridor-based development and is set to conclude by 2027-2028, covering 31 States/UTs and over 550 districts. Additionally, the government targets building 22 new greenfield expressways, signalling significant advancements in India's transportation infrastructure.
• Airports: The Ministry of Civil Aviation's flagship Regional Connectivity Scheme UDAN (Ude Desh Ka Aam Nagarik) aims to enhance air connectivity to regional airports in small towns. Launched in 2016, UDAN focuses on making flight services accessible to common citizens by developing infrastructure and air connectivity. In its first 5 years, UDAN served over one crore passengers, inaugurating 425 new routes and 58 airports. The Budget for 2023–24 allocated INR 1,244.07 Cr to UDAN, doubling the previous year's budget, with plans to revive 22 airports. Additionally, the government outlined the revival of 50 additional airports, heliports, water aerodromes, and advanced landing grounds.
• Railways: India's railway sector is undertaking ambitious projects such as the Mumbai-Ahmedabad Speed Rail Corridor, the world's highest pier bridge under construction, and the Chenab bridge in Jammu & Kashmir - the world's highest railway bridge. With a total Broad Gauge network of 61,508 km electrified as of December 2023, the sector has also introduced 35 indigenously designed Vande Bharat Express trains, with six more set to launch soon. These trains serve up to 247 districts across the country. Indian Railways aims to become a Net Zero Carbon Emitter by 2030, with 211 MW of solar plants and 103 MW of wind power plants commissioned as of October 2023, along with 2150 MW of renewable capacity tied up.
• Ports: Indian Ports "Turn Around Time" has reached 0.9 days which is better than USA (1.5 days), Australia (1.7 days) and Singapore (1.0 days), as per the World Bank's Logistics Performance Index (LPI) Report 2023. Sagarmala, the flagship Central Sector Scheme of the Ministry of Ports, Shipping and Waterways, promotes port-led development in the country through harnessing India’s 7,500 km long coastline, 14,500 km of potentially navigable waterways and strategic location on key international maritime trade routes. The Union Minister for Ports, Shipping and Waterways said that the country’s total port capacity will increase from the existing 2,600 MTPA (Mn Tonnes per annum) to more than 10,000 MTPA in 2047. From April to November 2023, cargo of 86.47 MMT moved through Waterways as compared to 80.44 MMT during April to November 2022, i.e. an increase of 7.49%. The government also aims to operationalise 23 waterways by 2030.

Private sector participation is vital for financing key infrastructure projects in India, given the government's fiscal constraints and the need for prudent spending. India launched the National Infrastructure Pipeline (NIP), in 2020 which envisages an investment of INR 111 Lakh Cr over 2020 to 2025 i.e., an annual average investment of almost INR 22 Lakh Cr. Public Private Partnerships (PPP) have been identified as a valuable instrument to speed up infrastructure development and investments envisaged under NIP. Involving the private sector promotes industry competitiveness, enabling access to a wider talent pool and enhanced resource utilization. There are several PPP projects currently in pipeline across sectors such as the development of Pune metro line 3, Hyderabad and Bengaluru metro extensions, development of multi modal logistics park in Chennai, and more.

It is essential for India to prioritize the development of both urban and rural areas to ensure overall national progress. By 2030, it is projected that 40% of India's population will reside in urban areas, contributing significantly to the country's GDP. However, rapid urbanization poses challenges in managing infrastructure and delivering services effectively. The Smart Cities Mission is a key initiative aimed at addressing these challenges efficiently. As of February 2024, 6,753 projects out of a total of 7,991 have been completed under the Smart Cities Mission, showcasing tangible progress. Moreover, India has made significant strides in digital infrastructure development, with rural areas expected to contribute significantly to new internet user growth, with around 56% of total new internet users coming from rural India by 2025, according to a report by TransUnion CIBIL. This trend underscores the increasing connectivity between rural and urban regions in the country.

Conclusion 

The infrastructure sector plays a pivotal role in driving India's economic growth and overall development. As the country continues on its path towards becoming a global economic powerhouse, the need for robust infrastructure becomes increasingly apparent. Private sector partnerships have emerged as crucial enablers in this endeavour, bringing in much-needed investment, innovation, and efficiency. By leveraging public-private partnerships (PPPs), India can accelerate infrastructure development while ensuring sustainability and inclusivity. These partnerships not only help bridge the financing gap but also foster competition, encourage technological advancements, and promote best practices in project execution. Ultimately, the collaboration between the government and the private sector is essential for creating resilient, future-ready infrastructure that paves the way for a prosperous and sustainable future for all citizens of India.

Source: investindia.gov.in

Singapore is taking proactive steps to enhance its attractiveness for investments with the introduction of the Refundable Investment Credit (RIC) scheme announced in Budget 2024.

The RIC scheme aims to support high-value economic activities, such as:

• Investing in new productive capacity (e.g., new manufacturing plant, production of low-carbon energy);
• Expanding or establishing the scope of activities in digital services, professional services, and supply chain management;
• Expanding or establishing headquarter activities, or Centres of Excellence;
• Setting up or expansion of activities by commodity trading firms;
• Carrying out R&D and innovation activities; and
• Implementing solutions with decarbonisation objectives.

Administered by the Singapore Economic Development Board (EDB) and Enterprise Singapore (EnterpriseSG), the RIC will be awarded based on qualifying expenditures incurred by companies during a period of up to 10 years.

Qualifying expenditures cover a range of categories such as capital expenditure, manpower costs, training costs, professional fees, intangible asset costs, fees for work outsourced in Singapore, consumables, freight, and logistics costs.

Companies can receive up to 50% support on each qualifying expenditure category, with the total quantum of RIC determined by EDB or EnterpriseSG.

The credits will be offset against corporate income tax payable, and any unused credits will be refunded to the company in cash within four years.

The measures announced in Budget 2024 are broadly focused on addressing bread-and-butter priorities, ranging from cost-of-living-related concerns, the need for the Singapore workforce to reskill and upskill in anticipation of the advent of artificial intelligence and other nascent technologies, and environmental and energy sustainability, the need to also keep pace with international tax developments and other global trends for Singapore to stay relevant and competitive in the new economy.

The key tax measures announced in Budget 2024 relate to the following fields of taxation:

• corporate income tax;
• tax incentives;
• individual income tax; and
• indirect taxes and other measures.

With Budget 2024, the Singapore government says it is taking a decisive step to align its tax system with the global minimum corporate taxation framework under Pillar Two of the OECD Base Erosion and Profit Shifting (BEPS) 2.0 project.

This sends a clear signal that, as with tax transparency through an exchange of information and country-by-country reporting previously, the Singapore tax regime will continue to be consistent with international standards. Even as the scope for tax competition narrows, Singapore is working hard to strengthen its competitiveness and is intensifying efforts to attract and retain quality investments, particularly in key sectors such as semiconductors, artificial intelligence and green technology.

The launch of the refundable investment credit (RIC) scheme, in particular, is a timely and strategic move designed to boost Singapore's appeal to foreign investors and spur multinational enterprises already based in Singapore to expand their business activities and seek new areas of growth in Singapore. Budget 2024, states the Minister, attempts to strike a right balance between maintaining Singapore's competitive edge and adhering to its BEPS 2.0 commitments, against the backdrop of mounting geopolitical risks, climate change, a rapidly aging population and inflationary pressures.

The Budget Statement is available here

Source: IBFD Tax Research Platform News

The Thailand Board of Investment (BOI) announced today that applications for investment promotion in 2023 reached a five-year high of 848.3 billion baht in combined value (ca. USD 24 billion), an increase of 43% from the previous year’s adjusted number, led by large foreign investments in the five priority sectors in the BOI’s new Investment Promotion Strategy, which represented more than half of the combined pledges.

The relocation trend in key industrial sectors driven by ongoing geopolitical issues and the Thai Government’s aggressive investment promotion policy accelerated a huge growth of Thailand’s FDI to 663.2 billion baht, representing a 72% increase in the FDI value compared to 2022.

“Thailand’s potential and readiness, together with the new 5-year investment promotion strategy and measures, have attracted large investment by companies seeking to relocate to a safe and resilient long-term base for their investments. Moreover, the fact that the Prime Minister Srettha Thavisin, himself, led several investment promotion roadshows, has significantly raised investors’ confidence and put Thailand on the radars of key investment communities.” Mr. Narit Therdsteerasukdi, Secretary General of the BOI, told reporters at a press conference held after a Board meeting at Government House in Bangkok. “Looking forward to 2024, it is predicted that the Thai economy will expand, supported by the expansion of exports and tourism revenue. We also believe investments are likely to grow due to the continued flow of FDI, especially in our priority sectors.”

The Board meeting, chaired by H.E. Mr. Parnpree Bahiddha-Nukara, Deputy Prime Minister and Chairman of the BOI, also approved four investment promotion applications worth a combined 29.7 billion baht for projects comprising two data centers, the production of steel wire for the tyre industry, and the production of steam for industrial use.

2023 Investment Pledges up 43%

The total number of applications for investment promotion filed last year by investors, both local and foreign, increased 16% to 2,307 projects, worth a combined 848.3 billion baht investment, up 43% from a revised 591.5 billion baht in 2022. The rise in total value reflects the growing number of large projects, mostly from overseas.

The five priority sectors defined by the new strategy the BOI enacted last year, namely BCG (Bio-Circular-Green), electric vehicles (EV), smart electronics, digital and creative, together attracted 759 applications, worth a combined 492.5 billion baht of investment, or 58% of the total value of investment pledges.

FDI Applications

The year 2023 saw foreign investors file a total of 1,394 applications for investment promotion, an increase of 38% from the previous year, and an increase of 72% in combined investment value to 663.24 million baht, due to a significant number of large projects.

Like in the previous year, investment applications from the People's Republic of China came first in the ranking of FDI sources by investment value, with 430 projects worth a combined investment of 159.39 billion baht, or 24% of the total value of FDI applications in the period, boosted by Chinese investments in the electronics industry, and the automotive supply chain, including EV.

Singapore came in second with 194 projects worth a combined 123.39 billion baht of investment, boosted by large projects applications from Singapore-based affiliates of international companies in sectors including solar cells and electronics.

Investments from the U.S. ranked third with 40 projects worth a combined 83.95 billion baht.

Japan came in fourth with 264 projects representing a combined value of 79.15 billion baht, a 60% increase from the previous year.

Taiwan ranked in fifth position with 54.6 billion baht from a total of 94 projects.

In terms of the regional distribution of investment, the Eastern Economic Corridor (EEC), Thailand’s prime industrial area comprising Chonburi, Rayong, and Chachoengsao provinces, again led the ranking with 460.5 billion baht worth of investment, accounting for 54% of the total pledges. It was followed by the country’s central region which attracted around 262 billion baht worth of investment, or 31% of the total.

Project Approvals

The investment applications approved by the board include the following projects:

- NextDC, a leading Australian data center operator, received approval for a 13.76 billion baht investment in a new hyperscale data center which will be located in Bangkok.

- CtrlS Datacentres (Thailand) Co., Ltd., a unit of CtrlS Datacenters LTD, a global data center operator based in India, received approval for a 5.04 billion baht investment in a new hyperscale data center which will be located in the Digital Industry and Innovation Promotion Zone (EECd) in Chonburi province.

- Xingda Steel Cord (Thailand) Co., Ltd. received approval for a 6.66 billion baht investment in a new factory to produce steel cord, bead wire and steel wire mainly for use in the manufacturing of tyres, with an annual production capacity of 260,000 tons. The plant, which will be located in Chonburi province, is expected to export 50% of its output, and will further strengthen Thailand’s automotive sector supply chain.

- TPI Polene Power PCL received approval for a 4.24 billion baht investment in the production of steam for distribution to power and cement production plants. The facility, to be located in Saraburi province, will have a production capacity of 480 tons of steam per hour, and will run on power generated from waste (refuse-derived fuel, or RDF).

Source: BOI News

The U.S. Department of Commerce today announced that the Indo-Pacific Economic Framework for Prosperity (IPEF) Agreement Relating to Supply Chain Resilience, generally referred to as the Supply Chain Agreement, will enter into force on February 24, 2024. This is a critical step in bringing the landmark, first-of-its kind agreement into action and promoting coordination among the IPEF partners on building resilient, efficient, productive, sustainable, transparent, diversified, secure, fair, and inclusive supply chains.

The 14 IPEF partners – the United States, Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam – negotiated the IPEF Supply Chain Agreement to establish a framework for deeper collaboration to prevent, mitigate, and prepare for supply chain disruptions, such as those experienced in recent years from the COVID-19 pandemic.

“I am thrilled to see the continued commitment and enthusiasm of the IPEF partners to make concrete progress and deliver tangible outcomes in record time,” said U.S. Secretary of Commerce Gina Raimondo. “With the IPEF Supply Chain Agreement shortly entering into force, we will now move forward and work collaboratively through this innovative framework with the goal of strengthening our supply chains and preventing potential disruptions before they arise for the collective benefit of our countries’ workers and businesses.”

Since the signing of the IPEF Supply Chain Agreement in November 2023, five IPEF partners – Fiji, India, Japan, Singapore and the United States – have deposited their instruments of ratification, acceptance, or approval, triggering the Agreement’s entry into force provision. With the Agreement’s entry into force on February 24, 2024, the focus in the coming months will turn to various milestones set out in the Agreement related to establishing three supply chain bodies – the Supply Chain Council, Crisis Response Network, and Labor Rights Advisory Board, including:

• Identifying the representatives to the Agreement’s three supply chain bodies by no later than March 25;
• Selecting the Chair of each of the supply chain bodies by no later than April 24;
• Each body adopting the terms of reference by no later than June 23;
• Identifying and notifying partners of each country’s list of critical sectors and key goods for cooperation under the Agreement by no later than 120 days after the date of the entry into force for each country; and
• Developing the guidelines for the facility-specific reporting mechanism on labor rights inconsistencies in IPEF supply chains by no later than August 22.

The IPEF Supply Chain Agreement was negotiated pursuant to the Ministerial Statement on Pillar II (Supply Chains) released during the IPEF Ministerial meeting in September 2022 in Los Angeles, California. Negotiations were substantially concluded in May 2023 after approximately six months of negotiations. The text of the agreement  was made public in September 2023. On November 14, 2023, Secretary of Commerce Gina Raimondo and her counterparts formally signed the landmark agreement in San Francisco, California.

Source: US Department of State

February 19, 2024, Government Spokesperson Chai Wacharonke disclosed that Prime Minister and Minister of Finance Srettha Thavisin has a policy to promote tangible international economic cooperation through the Free Trade Area (FTA), as part of the Government’s “proactive economic diplomacy”, in a bid to attract inward foreign trade and investment, expand markets for Thai agro products, and enhance the country’s competitiveness in the global market.

The Federal Tax Authority (FTA) has published the timeline for juridical persons to register for corporate tax purposes (the Decision).

According to the Decision, if a juridical person is a resident person, incorporated or otherwise established or recognised before the effective date of this Decision, the tax registration application should be submitted as per the table below.

The UK tax authority, His Majesty's Revenue and Customs (HMRC), has announced a consultation on draft guidance relating to changes to the research and development (R&D) tax reliefs, which will take effect from 1 April 2024.

The legislative changes follow a review of the R&D tax reliefs, which concluded in autumn 2023, when the Autumn Statement announced that the two R&D schemes would be merged.

Reforms have already been initiated to expand the scheme to cover data and cloud costs, to refocus support towards UK innovation, to target tax abuse and improve compliance. These changes and the overseas rules will apply from 1 April 2024.

As a precursor to these reforms, the new draft and updated guidance relates to:

• the restrictions on the extent to which R&D payments (contractor payments or payments to externally provided workers) can qualify for relief if the R&D activity takes place overseas; and
• the new rules for contracted-out R&D.

Full guidance on other changes is expected to be published later in 2024.

The UK tax authority, His Majesty's Revenue and Customs (HMRC) has updated its International Manual. The new guidance INTM485025 has been included in the section of the manual dealing with transfer pricing: operational guidance and relates to evidence gathering.

The new guidance addresses HMRC's application of the six-step process for analysing risk within Chapter I of the OECD Transfer Pricing Guidelines and seeks to clarify its interpretation of the process and how this aligns with a transfer pricing analysis. HMRC notes that "risk assumption is only one of several aspects which are relevant to accurate delineation, and it is important to view this guidance in that context."

The guidance identifies the following risk analysis parts:

• identification of economically significant risks.
• contractual assumption of risk.
• functional analysis to determine which entities control risk.
• consistency between contract, conduct and allocation of risk
• pricing the transaction, taking into account the allocation of risk.

The selection of the most appropriate transfer pricing method and the nature and amount of the reward will depend upon a range of factors. The guidance also notes other aspects and includes examples.

UK has published the Finance Act 2024, enacted on 22 February 2024. The Act provides for the implementation of the measures announced as part of the Autumn Statement 2023.

The Bill was presented to the House of Commons in November 2023. It has now completed its passage through Parliament and with Royal Assent being granted, it now becomes a law.

A link to the Finance Act 2024 can be found here

Kansas will continue to tax individuals based on graduated income tax brackets, as the state Legislature failed to override Governor Laura Kelly (D)'s veto of legislation, which would have adopted a flat income tax system with a rate of 5.25%

Voting 81-42 on 20 February 2024, the 125-member Kansas House of Representatives failed to secure a two-thirds majority vote, which is mandated by the state Constitution to override the Governor's veto. Had the House secured the necessary number of votes, HB 2284 would have returned to the state Senate, where it would also need a two-thirds majority vote.

Source: IBFD Tax Research Platform News

The UK Supreme Court has held that the withdrawal of the VAT low value consignment relief was not a customs duty charge and dismissed the taxpayer company's appeal.

(a) Facts. Jersey Choice Ltd (JCL), is a company registered in Jersey (one of the Channel Islands). JCL grows and maintains horticultural products in Jersey and exports these in small packets by mail order, mainly to consumers in the United Kingdom. VAT was not charged because low value consignment relief (LVC Relief) was applied, which exempted goods valued below GBP 15. Article 6(1) of the European Union (EU) VAT Directive specified territories forming part of the EU customs territory to which the directive did not apply and the Channel Islands were article 6(1) territories.

In 2012, the UK removed LVC relief on such mail order imports into the United Kingdom from the Channel Islands. This action was taken to combat "round tripping", where goods were exported from the United Kingdom to the Channel Islands and then re-imported into the United Kingdom without payment of VAT. JCL took legal action against the UK Treasury.

(b) Issue. JCL argued that when the United Kingdom removed LVC relief on goods from the Channel Islands, this equated to a customs duty being imposed, contrary to EU provisions on the free movement of goods. On the other hand, the UK Treasury argued that the VAT charge was UK tax and was subject to the EU fiscal regime rather than the EU customs regime.

(c) Decision. The Supreme Court noted that a customs duty had to satisfy two tests:

• it must apply only to imported products; and
• it must not be part of a general system of internal dues applicable systematically to categories of products according to objective criteria applied without regard to the origin of the products.

The Supreme Court held that the VAT charge on imports from the Channel Islands failed both tests. First, a charge would not be a customs duty simply because it was imposed when goods crossed a border. If that was true, all VAT on imports would qualify. The court noted: "Corresponding products supplied within the UK are subject to VAT in precisely the same way. It is, therefore, a charge applied to domestic and imported goods alike."

Secondly, the court considered that the charge was properly characterized as internal taxation. VAT is a recognized turnover tax applied across the European Union and the ability to grant the exemption and remove the charge were given by the Exemptions Directive, "which is undoubtedly a tax law".

Further, the principles of equal treatment and proportionality would also not apply. Consequently, JCL's appeal was dismissed.

The decision of the Supreme Court, dated 14 February 2024, can be found here.

Source: IBFD Tax Research Platform News

The US Treasury Department (Treasury) has reissued its list of countries that require cooperation with, or participation in, an international boycott as a condition of doing business. The Treasury published the list in the Federal Register on 16 February 2024.

The list, which is unchanged from the previous list published on 24 October 2023, includes the following eight countries:

• Iraq;
• Kuwait;
• Lebanon;
• Libya;
• Qatar;
• Saudi Arabia;
• Syria; and
• Yemen.

The listed countries are identified pursuant to section 999 of the US Internal Revenue Code (IRC), which requires US taxpayers to file reports with the Treasury concerning operations in the boycotting countries. Such taxpayers incur adverse consequences under the IRC, including denial of US foreign tax credits (FTCs) for taxes paid to those countries and income inclusion under subpart F of the IRC in the case of US shareholders of controlled foreign corporations (CFCs) that conduct operations in those countries.

Source: IBFD Tax Research Platform News