- 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).
On 17 January 2023, Bulgaria gazetted changes to several thresholds for VAT refunds to non-EU taxable persons. The main changes are the following:
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).
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).
Following a new roadmap for judicial, procuratorial and public security work in 2023, China is gearing up to modernize these areas further on its new journey toward a modern socialist country.
Below are highlights of the roadmap drawn at a central conference for judicial, procuratorial and public security work held in Beijing from Jan. 7 to 8.
-- Advancing the impartial administration of justice
The central conference urged dedicated efforts to focus on issues of public concern and to properly handle details relevant to people's vital interests.
Cases related to people's livelihoods, such as education, employment, medical care, housing, marriage, family affairs and social security, should be processed in accordance with the law, per the conference.
-- Pushing rule-based government administration, law enforcement
The conference also outlined efforts to advance the system of law-based government administration that balances powers with responsibilities, and that is both authoritative and effective.
It urged public security organs to redouble their law enforcement efforts in crucial areas related to people's well-being, comprehensively implement the benchmark standard system for administrative discretion, and boost the quality and efficiency of case-handling and law enforcement branches.
According to the Ministry of Public Security, efforts are being made to improve the supervision of law enforcement, boost the coverage of digitalized case-handling, and implement the recording mechanism throughout the entire process of law enforcement.
-- Offering sound lawmaking, legislation advice for emerging sectors
The conference called on relevant authorities to enhance their awareness of legislation, offer legislation advice promptly, and round out judicial interpretations related to emerging sectors such as the digital economy, artificial intelligence and autonomous driving.
Through their handling of cases in such sectors, judicial, procuratorial and public security authorities will be able to identify issues in a timely manner and grasp certain patterns, which lays a solid basis for the implementation of relevant legislation work, said Ma Huaide, president of the China University of Political Science and Law.
-- Tackling prominent public security issues
The conference put forward specific objectives and measures to tackle prominent public security problems. It called for efforts to crack down on gang crime on a regular basis and develop new anti-crime mechanisms and approaches.
In particular, it urged intensified efforts to combat wire and cyber fraud, as well as illegal online activities such as gambling, drug dealing and pyramid schemes.
-- Improving urban and rural community governance system
The conference specified efforts to improve the urban and rural community governance system further, with a combination of self-governance, the rule of law and the rule of virtue.
It delineated the responsibility for judicial, procuratorial and public security in primary-level governance, and urged carrying out troubleshooting campaigns and constructing a joint work system to solve disputes and conflicts through mediation, arbitration, administrative adjudication, administrative reconsideration and litigation.
As restaurants resume indoor dining and shopping malls reopen following the implementation of China's optimized COVID response measures, cities across China have returned to their usual hustle and bustle.
Yang Xiulong, board chairman of the Beijing Yan Restaurant, a high-end restaurant chain with 30 branches in the Chinese capital, said he felt the same. "I thought it would take some time for the catering industry to recover. But, given the current situation, I believe this recovery process will definitely be accelerated," he said.
Popular travel destinations like the resort city of Sanya or Zhangjiakou, where snow and ice sports flourish, welcomed an influx of tourists during the three-day New Year holiday, with many hotels fully booked. Staff at Pullman Resort Xishuangbanna in Yunnan Province said that popular rooms were booked out a week before the holiday kicked off.
Economic vitality has also been demonstrated in packed shopping centers and department stores. A monitoring system developed by Baidu Maps shows that the congestion index of shopping malls in cities like Chongqing, Xi'an, Beijing and Shenzhen increased significantly on Jan. 1.
According to the Consumer Market Big Data Laboratory (Shanghai), Shanghai's total offline consumption hit 12.01 billion yuan (about 1.74 billion U.S. dollars) from Dec. 31, 2022, to Jan. 1, 2023.
Businesses in many cities have issued consumption coupons to attract shoppers. In late December, Hohhot in north China's Inner Mongolia Autonomous Region issued vouchers worth a total of 38 million yuan, covering consumption in sectors such as retail, catering, home appliances, automobiles and e-commerce.
Guo Hongtu, an official of the bureau of commerce of Hohhot, said that customer flows in the city's shopping malls, supermarkets and restaurants have returned to 70 percent of their normal levels.
China will maintain credit support for the real economy and step up financial support for the development of the domestic supply and demand system, according to the country's central bank and its banking and insurance regulator on Tuesday.
China will ensure proper financial services for infrastructure, small and micro enterprises, and other key spheres. It will also ensure that the real estate financing runs smoothly and in an orderly fashion to prompt an overall economic upturn, according to a meeting jointly held by the People's Bank of China and the China Banking and Insurance Regulatory Commission.
The two authorities urged major banks to front-load loans moderately, optimize their credit structure, and precisely underpin the key areas and weak links in national economic and social development.
Favorable policies such as inclusive loans for micro and small businesses should be thoroughly leveraged to meet the reasonable capital demand of companies related to the production and supply of medical resources, the two authorities said.
While reiterating the principle that "housing is for living in, not for speculation," they also pledged comprehensive measures to boost the operating and financing cash flows of high-quality property developers, and efforts to improve their balance sheets.
The State Taxation Administration ("STA") released on January 6, 2023 the Circular on Matters concerning Optimizing Several Tax Collection and Administration Services, to be effective on April 1, 2023.
The Circular optimized four items of tax collection and administration services, including streamlining the process for registration of changed information, fine-tuning the tax services for trans-provincial relocation, optimizing the duties for management of tax sources, and stepping up coordination of registration business with market regulators. Specifically, starting from April 1, 2023, taxpayers that have registered changed information with the market regulators according to law will not need to report the changes to the tax authorities, and the provincial tax authorities will, based on the changed information shared by the market regulators, automatically update the changes of registered information in the core tax collection and administration system.
The Ministry of Finance ("MOF") and the State Taxation Administration ("STA") jointly released on January 9, 2023 the Announcement of the Policies for Exemption and Reduction of Valued-added Tax ('VAT") on Small-scale VAT Taxpayers, which clarified the additional VAT deduction policy for 2023.
From January 1, 2023 to December 31, 2023, taxpayers in producer services are eligible for a 5 percent additional deduction of creditable input VAT in the current period from the tax amount payable, and taxpayers in life services are eligible for a 10 percent additional deduction of creditable input VAT in the current period from the tax amount payable, according to the Announcement, which also clarified that the measuring standards on taxpayers in producer services and life services are consistent with the previous rules, and other matters related to the additional VAT deduction policy would be subject to the No. 39 (2019) Announcement and the No.87 (2019) Announcement.
The STA released on the same day the Announcement of the Matters concerning the Tax Collection and Administration under the Policies for Exemption and Reduction of VAT on Small-scale VAT Taxpayers, as well as the new templates of the Statement for Applying a 5 Percent Additional VAT Deduction and the Statement for Applying a 10 Percent Additional VAT Deduction.
The Ministry of Finance ("MOF") and the State Taxation Administration ("STA") jointly released on January 9, 2023 the Announcement of the Policies for Exemption and Reduction of Valued-added Tax ("VAT") on Small-scale VAT Taxpayers.
From January 1, 2023 to December 31, 2023, small-scale VAT taxpayers with monthly sales of less than 100,000 yuan (inclusive) will be exempted from VAT. During the same period, small-scale VAT taxpayers can pay VAT at a rate of 1 percent on sales subject to a 3 percent VAT levy, and prepay VAT at a rate of 1 percent on items subject to a pre-levy VAT rate of 3 percent, according to the Announcement.
The STA released on the same day the Announcement of the Matters concerning the Tax Collection and Administration under the Policies for Exemption and Reduction of VAT on Small-scale VAT Taxpayers to clarify the rules on the tax collection and administration.
From January 20th 2023, the newly registered taxpayers in Shanghai are included in the digital electronic invoice issuing pilot scope. Taxpayers shall no longer receive VAT electronic special invoice and VAT electronic ordinary invoice from the date of inclusion in the pilot project of digital electronic invoice invoicing. Taxpayers who have special circumstances and cannot be included in the trial of digital electronic invoice shall apply to the competent tax authorities for the use of other invoices according to the current regulations on invoice management.
$7.5 billion The total amount Nigeria is likely to spend on petrol subsidy by mid-2023. This represents an increase of 6.4% compared to the $7 billion spent between January and September 2022. (Zawya) 350,000 Farmers in Zimbabwe have been contracted to cotton under a new scheme which distributed 5100 tonnes of seed and 24,000 tonnes of fertliser to boost local production. (The Herald) 148 MW Solar power plant launched by Voltari in South Africa. The 20-year contract in partnership with Richards Bay Minerals will supply approximately 300 GWh of renewable energy each year to South Africa's largest mineral sands producer's facility in KwaZulu-Natal. (Africa Business Communities) $30 billion Investment announced by Sonatrech in exploration and production activities over the next five years. The Algerian oil company plans to invest more than $7 billion of this total in refining, petrochemical and and gas liquefaction projects. (Arabian Gulf Business Insight) 3,400 Farmers to be recruited for a rice project in Zambia that will supply them with inputs and links to available market to sell their produce. By 2025, the Market Oriented Rice Development Project aims to empower 12,700 farmers. (Lusaka Times) 950 hectares Land obtained by Mozambique's energy company Ncondezi Energy for the implementation of its 300-MWp solar power project. Based in the western province of Tete, the plant set to be the country's largest solar facility. (Afrik21) $3.5 billion Approved for the construction of oil pipeline in Uganda to transport the country's crude to international markets. The construction will be overseen by a company controlled by TotalEnergies. (CGTN) 50,000 Households in Madagascar to get access to power through a $20.6 million project by off-grid solar company WeLight. The project is targeting 90% of rural population without access to power. (Business Live) 165 Cows have been imported by Cameroon from France to boost milk production in the country. This initiative aims to to provide national producers with high-performance breeding stock. (Food Business Africa) $65 billion Annual financing required by African farmers to produce enough food to curb imports and cushion their economies from external shocks. With the right investment and removal of barriers, of which access to finance is key, the AfDB, expects Africa’s food and agriculture market value could rise from $280 billion to $1 trillion a year by 2030. (Business Mirror) 100,000 Small-scale shop owners in Kenya to benefit from partnership between digital insurance platform mTek, Kyosk.app and Fin Africa to provide coverage in the informal sector. This partnership aims to expand insurance penetration, which currently stands at just over 2% given the large informal market. (Africa Business Communities) 15.3% Increase in production by Renault Group's Tangier and Casablanca plants in 2022, bringing the total number of vehicles to 35,000. Renault cars produced in Morocco are largely slated for export, with 70% shipped abroad. (Morocco World News)
The government has enacted the effective date for the reduced corporate income tax rates, from 28% to 27%, through the Rates and Monetary Amounts and Amendment Revenue Laws Act 19 of 2022 published in the Government Gazette on 5 January 2023. For the years of assessment ending on 31 March 2023 and later the rate of corporate income tax payable is 27%. Further, the government has enacted various changes to rates and monetary thresholds for personal income tax tables, and an increase in excise duties on alcohol. The details of these changes are summarized below.
Personal income tax tables have been increased as follows:
- a primary rebate, from ZAR 15,714 to ZAR 16,425;
- a secondary rebate, from ZAR 8,613 to ZAR 9,000; and
- a tertiary rebate from ZAR 2,871 to ZAR 2,997.
With effect from 23 February 2022, excise duty rates for tobacco and alcohol have been increased as follows:
- per 1 litre bottle of beer or cider from ZAR 115.08 to ZAR 121.41;
- per 1 litre bottle of fortified wine from ZAR 7.92 to ZAR 8.36;
- per 1 litre bottle of sparkling wine from ZAR 15.51 to ZAR 16.52;
- per 1 litre bottle of spirits, including whisky, gin or vodka from ZAR 230.18 to ZAR 245.15;
- per packet of 20 cigarettes from ZAR 18.79 to ZAR19.82; and
- per 25 grams of piped tobacco from ZAR 6.26 to ZAR 6.63.
The rate of carbon tax on greenhouse gas emissions has been increased from ZAR 134 to ZAR 144 per ton of carbon dioxide equivalent of the greenhouse gas emissions of a taxpayer. This amendment is deemed to have come into operation on 1 January 2022.
Medical scheme fees tax credits have been increased as follows:
- from ZAR 332 to ZAR 347 if the person is not a member of a medical scheme or fund in respect of benefits to a dependant who is a member of a medical scheme or fund, or a dependant of a member of a medical scheme or fund;
- from ZAR 664 to ZAR 694 in respect of benefits to the person and one dependant;
- from ZAR 664 to ZAR 694 in respect of benefits to two dependants; and
- from ZAR 224 to ZAR 234 in respect of benefits to each additional dependant.
These amendments were promulgated as the Rates and Monetary Amounts and Amendment of Revenue Laws Act, 19 of 2022 on 5 January 2023, in line with the announcement in the 2022/2023 Budget Review. The amendments, unless stated otherwise, are deemed to have come into effect on 1 March 2022.
On 1 January 2023, the Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Ordinance 2022 (the Amendment Ordinance), which amended the provisions in relation to the FSIE regime under the Inland Revenue Ordinance (Cap. 112) (IRO), came into operation. Under the new FSIE regime, certain foreign-sourced income accrued to a member of an MNE group (MNE entity) carrying on a trade, profession or business in Hong Kong is to be regarded as arising in or derived from Hong Kong and chargeable to profits tax when it is received in Hong Kong. Also, the Amendment Ordinance amended the IRO to provide for relief against double taxation in respect of certain foreign-sourced income and transitional matters.
Specified foreign-sourced income means any of the following income arising in or derived from a territory outside Hong Kong:
- disposal gain from the sale of equity interests in an entity (disposal gain)
- intellectual property (IP) income
The Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented the Union Budget 2023-24 in Parliament today. The highlights of the Budget are as follows:
- Per capita income has more than doubled to ₹1.97 lakh in around nine years.
- Indian economy has increased in size from being 10th to 5th largest in the world in the past nine years.
- EPFO membership has more than doubled to 27 crore.
- 7,400 crore digital payments of ₹126 lakh crore has taken place through UPI in 2022.
- 11.7 crore household toilets constructed under Swachh Bharat Mission.
- 9.6 crore LPG connections provided under Ujjwala.
- 220 crore covid vaccination of 102 crore persons.
- 47.8 crore PM Jan Dhan bank accounts.
- Insurance cover for 44.6 crore persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana.
- Cash transfer of ₹2.2 lakh crore to over 11.4 crore farmers under PM Kisan Samman Nidhi.
- Seven priorities of the budget ‘Saptarishi’ are inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and financial sector.
- Atmanirbhar Clean Plant Program with an outlay of ₹2200 crore to be launched to boost availability of disease-free, quality planting material for high value horticultural crops.
- 157 new nursing colleges to be established in co-location with the existing 157 medical colleges established since 2014.
- Centre to recruit 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal students over the next three years.
- Outlay for PM Awas Yojana is being enhanced by 66% to over Rs. 79,000 crore.
- Capital outlay of Rs. 2.40 lakh crore has been provided for the Railways, which is the highest ever outlay and about nine times the outlay made in 2013-14.
- Urban Infrastructure Development Fund (UIDF) will be established through use of priority Sector Lending shortfall, which will be managed by the national Housing Bank, and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities.
- Entity DigiLocker to be setup for use by MSMEs, large business and charitable trusts to store and share documents online securely.
- 100 labs to be setup for 5G services based application development to realize a new range of opportunities, business models, and employment potential.
- 500 new ‘waste to wealth’ plants under GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme to be established for promoting circular economy at total investment of Rs 10,000 crore. 5 per cent compressed biogas mandate to be introduced for all organizations marketing natural and bio gas.
- Centre to facilitate one crore farmers to adopt natural farming over the next three years. For this, 10,000 Bio-Input Resource Centres to be set-up, creating a national-level distributed micro-fertilizer and pesticide manufacturing network.
- Pradhan Mantri Kaushal Vikas Yojana 4.0, to be launched to skill lakhs of youth within the next three years covering new age courses for Industry 4.0 like coding, AI, robotics, mechatronics, IOT, 3D printing, drones, and soft skills.
- 30 Skill India International Centres to be set up across different States to skill youth for international opportunities.
- Revamped credit guarantee scheme for MSMEs to take effect from 1st April 2023 through infusion of Rs 9,000 crore in the corpus. This scheme would enable additional collateral-free guaranteed credit of Rs 2 lakh crore and also reduce the cost of the credit by about 1 per cent.
- Central Processing Centre to be setup for faster response to companies through centralized handling of various forms filed with field offices under the Companies Act.
- The maximum deposit limit for Senior Citizen Savings Scheme to be enhanced from Rs 15 lakh to Rs 30 lakh.
- Targeted Fiscal Deficit to be below 4.5% by 2025-26.
- Agriculture Accelerator Fund to be set-up to encourage agri-startups by young entrepreneurs in rural areas.
- To make India a global hub for 'Shree Anna', the Indian Institute of Millet Research, Hyderabad will be supported as the Centre of Excellence for sharing best practices, research and technologies at the international level.
- ₹20 lakh crore agricultural credit targeted at animal husbandry, dairy and fisheries
- A new sub-scheme of PM Matsya Sampada Yojana with targeted investment of ₹6,000 crore to be launched to further enable activities of fishermen, fish vendors, and micro & small enterprises, improve value chain efficiencies, and expand the market.
- Digital public infrastructure for agriculture to be built as an open source, open standard and inter operable public good to enable inclusive farmer centric solutions and support for growth of agri-tech industry and start-ups.
- Computerisation of 63,000 Primary Agricultural Credit Societies (PACS) with an investment of ₹2,516 crore initiated.
- Massive decentralised storage capacity to be set up to help farmers store their produce and realize remunerative prices through sale at appropriate times.
- Sickle Cell Anaemia elimination mission to be launched.
- Joint public and Private Medical research to be encouraged via select ICMR labs for encouraging collaborative research and innovation.
- New Programme to promote research in Pharmaceuticals to be launched.
- Rs. 10 lakh crore capital investment, a steep increase of 33% for third year in a row, to enhance growth potential and job creation, crowd-in private investments, and provide a cushion against global headwinds.
- Aspirational Blocks Programme covering 500 blocks launched for saturation of essential government services across multiple domains such as health, nutrition, education, agriculture, water resources, financial inclusion, skill development, and basic infrastructure.
- Rs. 15,000 crore for implementation of Pradhan Mantri PVTG Development Missionover the next three years under the Development Action Plan for the Scheduled Tribes.
- Investment of Rs. 75,000 crore, including Rs. 15,000 crore from private sources, for one hundred critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer, and food grains sectors.
- New Infrastructure Finance Secretariat established to enhance opportunities for private investment in infrastructure.
- District Institutes of Education and Training to be developed as vibrant institutes of excellence for Teachers’ Training.
- A National Digital Library for Children and Adolescents to be set-up for facilitating availability of quality books across geographies, languages, genres and levels, and device agnostic accessibility.
- Rs. 5,300 crore to be given as central assistance to Upper Bhadra Project to provide sustainable micro irrigation and filling up of surface tanks for drinking water.
- ‘Bharat Shared Repository of Inscriptions’ to be set up in a digital epigraphy museum, with digitization of one lakh ancient inscriptions in the first stage.
- ‘Effective Capital Expenditure’ of Centre to be Rs. 13.7 lakh crore.
- Continuation of 50-year interest free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions.
- Encouragement to states and cities to undertake urban planning reforms and actions to transform our cities into ‘sustainable cities of tomorrow’.
- Transition from manhole to machine-hole mode by enabling all cities and towns to undertake 100 percent mechanical desludging of septic tanks and sewers.
- iGOT Karmayogi, an integrated online training platform, launched to provide continuous learning opportunities for lakhs ofgovernment employees to upgrade their skills and facilitate people-centric approach.
- More than 39,000 compliances reduced and more than 3,400 legal provisions decriminalized to enhance Ease Of Doing Business.
- Jan Vishwas Bill to amend 42 Central Acts have been introduced to further trust-based governance.
- Three centres of excellence for Artificial Intelligence to be set-up in top educational institutions to realise the vision of“Make AI in India and Make AI work for India”.
- National Data Governance Policy to be brought out to unleash innovation and research by start-ups and academia.
- One stop solution for reconciliation and updation of identity and address of individuals to be established using DigiLocker service and Aadhaar as foundational identity.
- PAN will be used as the common identifier for all digital systems of specified government agencies to bring in Ease of Doing Business.
- 95 per cent of the forfeited amount relating to bid or performance security, will be returned to MSME’s by government and government undertakings in cases the MSME’s failed to execute contracts during Covid period.
- Result Based Financing to better allocate scarce resources for competing development needs.
- Phase-3 of the E-Courts project to be launched with an outlay of Rs. 7,000 crore for efficient administration of justice.
- R & D grant for Lab Grown Diamonds (LGD) sector to encourage indigenous production of LGD seeds and machines and to reduce import dependency.
- Annual production of 5 MMT under Green Hydrogen Mission to be targeted by 2030 to facilitate transition of the economy to low carbon intensity and to reduce dependence on fossil fuel imports.
- ₹35000 crore outlay for energy security, energy transition and net zero objectives.
- Battery energy storage systems to be promoted to steer the economy on the sustainable development path.
- 20,700 crore outlay provided for renewable energy grid integration and evacuation from Ladakh.
- “PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth” (PM-PRANAM) to be launched to incentivize States and Union Territories to promote alternative fertilizers and balanced use of chemical fertilizers.
- ‘Mangrove Initiative for Shoreline Habitats & Tangible Incomes’, MISHTI, to be taken up for mangrove plantation along the coastline and on salt pan lands, through convergence between MGNREGS, CAMPA Fund and other sources.
- Green Credit Programme to be notified under the Environment (Protection) Act to incentivize and mobilize additional resources for environmentally sustainable and responsive actions.
- Amrit Dharohar scheme to be implemented over the next three years to encourage optimal use of wetlands, enhance bio-diversity, carbon stock, eco-tourism opportunities and income generation for local communities.
- Aunified Skill India Digital platform to be launched for enabling demand-based formal skilling, linking with employers including MSMEs, and facilitating access to entrepreneurship schemes.
- Direct Benefit Transfer under a pan-India National Apprenticeship Promotion Scheme to be rolled out to provide stipend support to 47 lakh youth in three years.
- At least 50 tourist destinations to be selected through challenge mode; to be developed as a complete package for domestic and foreign tourists.
- Sector specific skilling and entrepreneurship development to be dovetailed to achieve the objectives of the ‘Dekho Apna Desh’ initiative.
- Tourism infrastructure and amenities to be facilitated in border villages through the Vibrant Villages Programme.
- States to be encouraged to set up a Unity Mall for promotion and sale of their own and also all others states’ ODOPs (One District, One Product), GI products and handicrafts.
- National Financial Information Registry to be set up to serve as the central repository of financial and ancillary information for facilitating efficient flow of credit, promoting financial inclusion, and fostering financial stability. A new legislative framework to be designed in consultation with RBI to govern this credit public infrastructure.
- Financial sector regulators to carry out a comprehensive review of existing regulations in consultation with public and regulated entities. Time limits to decide the applications under various regulations would also be laid down.
- To enhance business activities in GIFT IFSC, the following measures to be taken.
- Delegating powers under the SEZ Act to IFSCA to avoid dual regulation.
- Setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI.
- Permitting acquisition financing by IFSC Banking Units of foreign bank.
- Establishing a subsidiary of EXIM Bank for trade re-financing.
- Amending IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act
- Recognizing offshore derivative instruments as valid contracts.
- Amendments proposed to the Banking Regulation Act, the Banking Companies Act and the Reserve of India Act to improve bank governance and enhance investors’ protection.
- Countries looking for digital continuity solutions would be facilitated for setting up of their Data Embassies in GIFT IFSC.
- SEBI to be empowered to develop, regulate, maintain and enforce norms and standards for education in the National Institute of Securities Markets and to recognize award of degrees, diplomas and certificates.
- Integrated IT portal to be established to enable investors to easily reclaim the unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority.
- To commemorate Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings Certificate to be launched. It will offer deposit facility upto Rs 2 lakh in the name of women or girls for tenure of 2 years (up to March 2025) at fixed interest rate of 7.5 per cent with partial withdrawal option.
- The maximum deposit limit for Monthly Income Account Scheme to be enhanced from Rs 4.5 lakh to Rs 9 lakh for single account and from Rs 9 lakh to Rs 15 lakh for joint account.
- The entire fifty-year interest free loan to states to be spent on capital expenditure within 2023-24. Part of the loan is conditional on States increasing actual Capital expenditure and parts of outlay will be linked to States undertaking specific loans.
- Fiscal Deficit of 3.5% of GSDP allowed for States of which 0.5% is tied to Power sector reforms.
- Revised Estimates 2022-23:
- The total receipts other than borrowings is Rs 24.3 lakh crore, of which the net tax receipts are Rs 20.9 lakh crore.
- The total expenditure is Rs 41.9 lakh crore, of which the capital expenditure is about Rs 7.3 lakh crore.
- The fiscal deficit is 6.4 per cent of GDP, adhering to the Budget Estimate.
- Budget Estimates 2023-24:
- The total receipts other than borrowings is estimated at Rs 27.2 lakh crore and the total expenditure is estimated at Rs 45 lakh crore.
- The net tax receipts are estimated at Rs 23.3 lakh crore.
- The fiscal deficit is estimated to be 5.9 per cent of GDP.
- To finance the fiscal deficit in 2023-24, the net market borrowings from dated securities are estimated at Rs 11.8 lakh crore.
- The gross market borrowings are estimated at Rs 15.4 lakh crore.
PART – B
- Direct Tax proposals aim to maintain continuity and stability of taxation, further simplify and rationalise various provisions to reduce the compliance burden, promote the entrepreneurial spirit and provide tax relief to citizens.
- Constant endeavour of the Income Tax Department to improve Tax Payers Services by making compliance easy and smooth.
- To further improve tax payer services, proposal to roll out a next-generation Common IT Return Form for tax payer convenience, along with plans to strengthen the grievance redressal mechanism.
- Rebate limit of Personal Income Tax to be increased to Rs. 7 lakh from the current Rs. 5 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs. 7 lakh to not pay any tax.
- Tax structure in new personal income tax regime, introduced in 2020 with six income slabs, to change by reducing the number of slabs to five and increasing the tax exemption limit to Rs. 3 lakh. Change to provide major relief to all tax payers in the new regime.
New tax rates
Total Income (Rs) Rate (per cent) Up to 3,00,000 Nil From 3,00,001 to 6,00,000 5 From 6,00,001 to 9,00,000 10 From 9,00,001 to 12,00,000 15 From 12,00,001 to 15,00,000 20 Above 15,00,000 30
- Proposal to extend the benefit of standard deduction of Rs. 50,000 to salaried individual, and deduction from family pension up to Rs. 15,000, in the new tax regime.
- Highest surcharge rate to reduce from 37 per cent to 25 per cent in the new tax regime. This to further result in reduction of the maximum personal income tax rate to 39 per cent.
- The limit for tax exemption on leave encashment on retirement of non-government salaried employees to increase to Rs. 25 lakh.
- The new income tax regime to be made the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime.
- Enhanced limits for micro enterprises and certain professionals for availing the benefit of presumptive taxation proposed. Increased limit to apply only in case the amount or aggregate of the amounts received during the year, in cash, does not exceed five per cent of the total gross receipts/turnover.
- Deduction for expenditure incurred on payments made to MSMEs to be allowed only when payment is actually made in order to support MSMEs in timely receipt of payments.
- New co-operatives that commence manufacturing activities till 31.3.2024 to get the benefit of a lower tax rate of 15 per cent, as presently available to new manufacturing companies.
- Opportunity provided to sugar co-operatives to claim payments made to sugarcane farmers for the period prior to assessment year 2016-17 as expenditure. This expected to provide them a relief of almost Rs. 10,000 crore.
- Provision of a higher limit of Rs. 2 lakh per member for cash deposits to and loans in cash by Primary Agricultural Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs).
- A higher limit of Rs. 3 crore for TDS on cash withdrawal to be provided to co-operative societies.
- Date of incorporation for income tax benefits to start-ups to be extended from 31.03.23 to 31.3.24.
- Proposal to provide the benefit of carry forward of losses on change of shareholding of start-ups from seven years of incorporation to ten years.
- Deduction from capital gains on investment in residential house under sections 54 and 54F to be capped at Rs. 10 crore for better targeting of tax concessions and exemptions.
- Proposal to limit income tax exemption from proceeds of insurance policies with very high value. Where aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April, 2023 is above Rs. 5 lakh, income from only those policies with aggregate premium up to Rs. 5 lakh shall be exempt.
- Income of authorities, boards and commissions set up by statutes of the Union or State for the purpose of housing, development of cities, towns and villages, and regulating, or regulating and developing an activity or matter, proposed to be exempted from income tax.
- Minimum threshold of Rs. 10,000/- for TDS to be removed and taxability relating to online gaming to be clarified. Proposal to provide for TDS and taxability on net winnings at the time of withdrawal or at the end of the financial year.
- Conversion of gold into electronic gold receipt and vice versa not to be treated as capital gain.
- TDS rate to be reduced from 30 per cent to 20 per cent on taxable portion of EPF withdrawal in non-PAN cases.
- Income from Market Linked Debentures to be taxed.
- Deployment of about 100 Joint Commissioners for disposal of small appeals in order to reduce the pendency of appeals at Commissioner level.
- Increased selectivity in taking up appeal cases for scrutiny of returns already received this year.
- Period of tax benefits to funds relocating to IFSC, GIFT City extended till 31.03.2025.
- Certain acts of omission of liquidators under section 276A of the Income Tax Act to be decriminalized with effect from 1st April, 2023.
- Carry forward of losses on strategic disinvestment including that of IDBI Bank to be allowed.
- Agniveer Fund to be provided EEE status. The payment received from the Agniveer Corpus Fund by the Agniveers enrolled in Agnipath Scheme, 2022 proposed to be exempt from taxes. Deduction in the computation of total income is proposed to be allowed to the Agniveer on the contribution made by him or the Central Government to his Seva Nidhi account.
- Number of basic customs duty rates on goods, other than textiles and agriculture, reduced to 13 from 21.
- Minor changes in the basic custom duties, cesses and surcharges on some items including toys, bicycles, automobiles and naphtha.
- Excise duty exempted on GST-paid compressed bio gas contained in blended compressed natural gas.
- Customs Duty on specified capital goods/machinery for manufacture of lithium-ion cell for use in battery of electrically operated vehicle (EVs) extended to 31.03.2024
- Customs duty exempted on vehicles, specified automobile parts/components, sub-systems and tyres when imported by notified testing agencies, for the purpose of testing and/ or certification, subject to conditions.
- Customs duty on camera lens and its inputs/parts for use in manufacture of camera module of cellular mobile phone reduced to zero and concessional duty on lithium-ion cells for batteries extended for another year.
- Basic customs duty reduced on parts of open cells of TV panels to 2.5 per cent.
- Basic customs duty on electric kitchen chimney increased to 15 per cent from 7.5 per cent.
- Basic customs duty on heat coil for manufacture of electric kitchen chimneys reduced to 15 per cent from 20 per cent.
- Denatured ethyl alcohol used in chemical industry exempted from basic customs duty.
- Basic customs duty reduced on acid grade fluorspar (containing by weight more than 97 per cent of calcium fluoride) to 2.5 per cent from 5 per cent.
- Basic customs duty on crude glycerin for use in manufacture of epicholorhydrin reduced to 2.5 per cent from 7.5 per cent.
- Duty reduced on key inputs for domestic manufacture of shrimp feed.
- Basic customs duty reduced on seeds used in the manufacture of lab grown diamonds.
- Duties on articles made from dore and bars of gold and platinum increased.
- Import duty on silver dore, bars and articles increased.
- Basic Customs Duty exemption on raw materials for manufacture of CRGO Steel, ferrous scrap and nickel cathode continued.
- Concessional BCD of 2.5 per cent on copper scrap is continued.
- Basic customs duty rate on compounded rubber increased to 25 per cent from 10 per cent or 30 per kg whichever is lower.
- National Calamity Contingent Duty (NCCD) on specified cigarettes revised upwards by about 16 per cent.
Legislative Changes in Customs Laws
- Customs Act, 1962 to be amended to specify a time limit of nine months from date of filing application for passing final order by Settlement Commission.
- Customs Tariff Act to be amended to clarify the intent and scope of provisions relating to Anti-Dumping Duty (ADD), Countervailing Duty (CVD), and Safeguard Measures.
- CGST Act to be amended
- to raise the minimum threshold of tax amount for launching prosecution under GST from one crore to two crore;
- to reduce the compounding amount from the present range of 50 to 150 per cent of tax amount to the range of 25 to 100 per cent;
- decriminalise certain offences;
- to restrict filing of returns/statements to a maximum period of three years from the due date of filing of the relevant return/statement; and
- to enable unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs).
The Government recognises that businesses may adjust prices due to factors such as increase in operating costs including wages, utilities, rental and materials. While the Government does not regulate the pricing decisions of individual businesses, it is not acceptable for businesses to use the GST increase as the pretext for any increase in prices beyond the GST rate change. Where there is a need to raise prices, businesses should be transparent in communicating the actual reasons for the price increases to consumers, and not misrepresent the situation by attributing the price increases primarily or solely to the GST increase.
The Government has been working with industry stakeholders on initiatives such as the Price Kaki mobile app to raise awareness on price transparency and facilitate price comparisons. Price Kaki allows consumers to compare prices of over 10,000 items sold at supermarkets and 37,000 cooked items sold at food courts, hawker centres and coffee shops, and is a useful resource for consumers to get the best deals or a basic pricing benchmark. We urge consumers to do such price comparisons when making purchasing decisions.
To ensure that businesses comply with GST regulations relating to rate change, the Inland Revenue Authority of Singapore (IRAS) will conduct audits to check that the correct GST rate is applied and that GST-registered businesses display GST-inclusive prices. It will also look into consumers’ specific feedback on non-compliance with GST rate change rules.
The Committee Against Profiteering (CAP) takes a serious view when a business uses the GST increase as a cover to raise prices. If there are grounds to suspect profiteering on the pretext of the GST increase, the CAP will work with partners including the Competition and Consumer Commission of Singapore, People’s Association, and Consumers Association of Singapore, to engage the relevant businesses to find out the reasons for the price increases. The CAP will not hesitate to make public errant businesses. Members of the public can report such cases via the CAP’s online and offline channels.
Consumers and service buyers are now better able to identify and support companies that pay Progressive Wages to their lower-wage workers following the unveiling of the new Progressive Wage (PW) Mark. The PW Mark is an accreditation scheme that recognises such companies, which can then use the Mark to profile themselves as businesses that support better wages for lower-wage workers. This is part of a whole-of-society effort to uplift lower-wage workers. This scheme was recommended by the Tripartite Workgroup on Lower-Wage Workers in August 2021, and is administered by the Singapore Business Federation on behalf of the tripartite partners (Ministry of Manpower, National Trades Union Congress and Singapore National Employers Federation). The PW Mark was launched on January, 2nd by Mr Zaqy Mohamad, Senior Minister of State for Manpower, at a visit to Uniqlo, a PW Mark-accredited company.
PW Mark & PW Mark Plus
- All employers who hire at least one local worker covered by Sectoral or Occupational Progressive Wages are eligible to apply for the PW Mark. To receive PW Mark accreditation, employers must (i) pay the relevant workers Progressive Wages, and (ii) pay all other local workers at least the Local Qualifying Salary.
- Additionally, employers who go one step further in adopting the Tripartite Standard on Advancing Well-being of Lower-Wage Workers (TS-LWW) will be accredited with the PW Mark Plus. The TS-LWW outlines progressive practices that provide better support for our lower-wage workers in workplace safety and health, training and career development, and rest area provision. Please refer to the Annex for logos which accredited companies can use to display in their stores or websites.
PW Mark required for eligible Government suppliers
- For new tenders called from 1 March 2023, the Government will require eligible suppliers and their subcontractors to be accredited with the PW Mark for the duration of the contract period. This requirement will extend to procurement done via quotations from 1 March 2024.
Application for PW Mark via GoBusiness
- Employers who wish to apply for the PW Mark can do so through GoBusiness. Upon approval of accreditation, employers will be able to download a digital certificate that can be used to profile their companies to consumers. Since applications opened in December 2022, about 1,900 companies have been accredited with the PW Mark.
Whole-of-society effort to uplift lower-wage workers
- We encourage employers to do their part by paying Progressive Wages and getting their companies accredited with the PW Mark. Consumers and service buyers can also contribute by supporting PW Mark-accredited companies. The list of accredited companies can be found at go.gov.sg/pwmarklist.
- Tripartite partners are progressively implementing the expansion of Progressive Wages to cover more lower-wage workers. From 1 March 2023, the Food Services Progressive Wage Model (PWM) and Occupational Progressive Wages for Administrators and Drivers will take effect. The Waste Management PWM will also be implemented from 1 July 2023. To support employers as they adjust to the Progressive Wage requirements, the Government provides co-funding support through the Progressive Wage Credit Scheme.
- These milestones are part of a broad range of Progressive Wage moves to refresh our social compact and help uplift our lower-wage workers.
COVID-19 Pandemic: Italy and Switzerland Sign Final Extension on Mutual Agreement on Frontier Workers
On 22 December 2022, Italy and Switzerland signed a final extension to the mutual agreement, concluded on 18 and 19 June 2020, regarding the taxation of frontier workers during the COVID-19 pandemic, under the Italy - Switzerland Income and Capital Tax Treaty (1976), as amended by the 1978 and 2015 protocols.
The mutual agreement is prolonged until 31 January 2023 and will cease to have effect on 1 February 2023.
Withholding tax: amendments to the notification procedure in a group of companies as of the 1st of January 2023
The notification procedure in a group will be allowed as of 1 January 2023 for shareholdings of 10% or more and will be extended to all legal entities. The authorisation to carry out the notification procedure in an international context will be valid for five years.
As of the 1st of January 2023, the scope of the notification procedure will be extended. Hence, the group notification procedure will be permitted for shareholdings of 10% (currently 20%) or more and for all legal entities holding such a qualifying shareholding. Furthermore, the authorisation required in the international context to apply the notification procedure will be valid for five years, instead of three years.
Reminder of general principles
According to article 1 paragraph 1 of the Swiss Federal Law of 13 October 1965 on withholding tax, the Confederation levies a withholding tax on capital gains, on winnings from gambling, on winnings from games of skill or lotteries for sales promotion and on insurance benefits.
In the case of capital gains subject to withholding tax, the tax claim arises at the time the taxable payment falls due. According to Art. 16 para. 1 lit. c WHTL, withholding tax is due 30 days after the tax claim arises.
A characteristic feature of the withholding tax system is that the withholding tax is levied on an anonymous basis; the identity of the recipient is not disclosed to the tax authorities until the application for reimbursement of the withholding tax is filed by the recipient of the taxable benefit.
In the case of benefits (dividends and their equivalent) paid in a group, the taxpayer may be allowed to fulfil his tax obligation by notifying the taxable benefit instead of paying the tax. If the taxpayer fulfils the necessary requirements to apply this procedure, he must declare the taxable payment to the Federal Tax Administration (FTA) within 30 days after the tax liability has arisen.
The notification procedure is possible both domestically and at the international level.
Reminder of certain practical elements related to the notification procedure
According to established jurisprudence, the notification procedure is allowed at the Swiss level if there is no doubt as to the right to reimbursement. If there is no entitlement to a reimbursement - or if there is a doubt as to the entitlement - the declaration procedure must be rejected and the withholding tax must be collected according to the ordinary procedure (i.e. by paying the tax). In this case, the debtor of the taxable benefit will be charged interest on default on the tax due from the due date until payment.
A late notification of a benefit subject to withholding tax does not entail the loss of the right to request the application of the notification procedure if the requirements for its granting are met. Nevertheless, failure to comply with the legal deadline may be sanctioned with a fine in accordance with Article 64 of the LIA.
For future changes in the notification procedure (national and international), the text of the ordinance is binding. Consequently, the former law still applies to requests (forms) submitted up to and including 31 December 2022.
In this case, the legislator provides for the date of filing of the request as the relevant factor for the application of the previous or the new legislation. The date of the postmark is therefore decisive.
The possibility of filing an online notification via the FTA portal is not yet available. The range of digital processes is constantly evolving and it is planned that in future it will also be possible to submit notifications online. The FTA will inform the public as soon as this feature is available.
United Arab Emirates
Pursuant to UAE Cabinet Decision No. (38) of 2022 on the attestation fees of commercial invoices and certificates of origin for importers into the United Arab Emirates, all imports into the country from 1 February 2023 must be accompanied by an invoice attested by the Ministry of Foreign Affairs and International Cooperation (MOFAIC).
The customs notice provides that the MOFAIC will charge a fixed service fee of AED 150 for attestation of each commercial invoice of imported goods valued AED 10,000 or more. Such fee must be paid within 14 days from the date of completing the customs declaration.
Exemptions for UAE import attestation fees include will be applicable for certain categories including Free Zone imports and GCC imports.
The documents attestation service of the MOFAIC can be accessed directly through Attestation of Official Documents, Certificates and Commercial Invoices.
The Customs notice was published on the official Dubai Customs website on 2 November 2022 and the decision will come into effect from 1 February 2023.
MoHRE extends deadline to rectify private sector’s unlimited-term employment contracts to fixed-termThe Ministry of Human Resources and Emiratisation (MoHRE) has announced the extension of the deadline for private sector employers to rectify unlimited-term employment contracts of their employees to fixed-term contracts. The new deadline now is 31st December 2023, instead of 2nd February 2023.
“The decision stems from our belief in enhancing flexibility, competitiveness and ease of business for private sector companies and safeguarding all parties’ rights,” the Ministry said.
“Providing enough time for companies to change the contracts supports labour market; our role is providing all the necessary tools for companies to succeed and flourish; ease of business is definitely an important approach that we adopt in the market. The private sector is a partner in the UAE’s development journey, we value its contributions to the UAE’s GDP. We have recently witnessed the private sector’s achievements in Emiratisation, which significantly helped to raise the overall rates of Emiratisation in the UAE," the Ministry explained.
This decision is based on the Ministry’s Resolution No. 27 of 2023 on the extension of the deadline for rectifying employment contracts, and it comes in implementation of the Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector.
The Decree-Law included amendments to some of its provisions, including fixed-term employment contracts, subject to renewal, based on what is agreed by both parties of the contractual relationship without specifying a limit for the duration of the contract, in line with international practices.
Source: News Agency
The Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses (hereinafter referred to as the “Corporate Tax Law”) was issued by the United Arab Emirates (“UAE”), on 09 December 2022.
The Corporate Tax Law provides the legislative basis for the introduction and implementation of a Federal Corporate Tax (“Corporate Income Tax”) in the UAE and is effective for financial years starting on or after 1 June 2023.
Corporate Tax applies to the following “Taxable Persons”:
- UAE companies and other juridical persons that are incorporated or effectively managed and controlled in the UAE;
- Natural persons (individuals) who conduct a Business or Business Activity in the UAE; and
- Non-resident juridical persons (foreign legal entities) that have a Permanent Establishment in the UAE.
Juridical persons established in a UAE Free Zone are also within the scope of Corporate Income Tax as “Taxable Persons” and will need to comply with the requirements set out in the Corporate Tax Law. However, a Free Zone Person that meets the conditions to be considered a Qualifying Free Zone Person can benefit from a Corporate Tax rate of 0% on their Qualifying Income.
In order to be considered a Qualifying Free Zone Person, the Free Zone Person must:
- maintain adequate substance in the UAE;
- derive ‘Qualifying Income’;
- not have made an election to be subject to Corporate Tax at the standard rates;
- comply with the transfer pricing requirements under the Corporate Tax Law; and
- meets any other conditions as may be prescribed by the Ministry of Finance.
Non-resident persons that do not have a Permanent Establishment in the UAE or that earn UAE sourced income that is not related to their Permanent Establishment may be subject to Withholding Tax (at the rate of 0%). Withholding Tax is a form of Corporate Tax collected at source by the payer on behalf of the recipient of the income. Withholding taxes exist in many tax systems and typically apply to the cross-border payment of dividends, interest, royalties and other types of income.
Calculation and payment of Corporate Tax is done through the filing of a Corporate Tax Return with the Federal Tax Authority by the Taxable Person on annual basis, starting from calculating Taxable Income (accounting income, i.e. net profit or loss before tax) as per financial statements. The Taxable Person will then need to make certain adjustments to determine their Taxable Income for the relevant Tax Period.
Taxable income below AED 375,000 is subject to a 0% corporate tax rate. A 9% corporate tax rate applies to any amount above this threshold as follows:
Resident Taxable Persons Taxable Income not exceeding AED 375,000 (this amount is to be confirmed in a Cabinet Decision) 0% Taxable Income exceeding AED 375,000 9% Qualifying Free Zone Persons Qualifying Income 0% Taxable Income that does not meet the Qualifying Income definition 9%
All Taxable Persons (including Free Zone Persons) will be required to register for Corporate Tax and obtain a Corporate Tax Registration Number. Taxable Persons are required to file a Corporate Tax return for each Tax Period within 9 month from the end of their financial year.
For business with a financial year ending on 31 December, the First Tax Period is 1 January 2024 - 31 December 2024 and the First Filing and Payment Due Date 30 September 2025.
Further updates are expected to be provided in the following months as the Cabinet Decisions are issued and clarifications provided by the Authorities on how the corporate tax laws shall be applied in a practical manner.
The Autumn 2022 Finance Bill has completed its passage through the House of Commons and the House of Lords and has received Royal Assent. The Bill is now known as the Finance Act 2023.
The legislation covers the following subjects:
- the energy (oil and gas) profits levy, including the rate of tax, the reduction in the amount of additional investment expenditure and the extension of the period for which tax has effect;
- corporation tax relief for expenditure on research and development;
- The income tax basic rate limit and personal allowance for 2026-27 and 2027-28;
- the threshold at which the additional rate of income tax is charged;
- the income tax dividend nil rate;
- the capital gains tax annual exempt amount;
- the inheritance tax rate bands for 2026-27 and 2027-28;
- the removal of the vehicle excise duty exemption for electrically propelled vehicles, etc.; and
- the taxable benefits percentage for cars with a CO2 emissions figure.
Another financial statement, the Budget, is expected in the spring and will be followed by a second Finance Bill.
The United Kingdom's tax authority, His Majesty's Revenue and Customs (HMRC), noted that a new regime for VAT penalties applies from 1 January 2023.
The implementation of the new rules had been postponed from April 2022. Now, for VAT accounting periods starting on or after 1 January 2023, a new points-based penalty system will apply for late returns and payments.
A penalty point will be given for every late return and a GBP 200 penalty will be levied once the penalty points threshold is reached and, again, for every subsequent late submission while at the threshold.
The penalty point threshold is set by the accounting period as follows:
Penalty points threshold
Annually 2 Quarterly 4 Monthly 5
Generally, penalty points will be removed after a 24-month period of compliance.
Penalties will also apply to late payment. A charge of 2% will apply for VAT outstanding after 15 days and again after 30 days. A further penalty will then be applied at a rate of 4% a year from the 31st day until payment is made. Penalties can be avoided by agreeing a time-to-pay arrangement with HMRC.
To allow a period of familiarization with the new system, HMRC will not charge a first late payment penalty until after 31 December 2023 as long as full payment or a time-to-pay arrangement is made within 30 days of the payment due date.
Finally, interest will be charged on the late payment of VAT at the Bank of England base rate plus 2.5%.
The Office of Tax Simplification (OTS) has published its report, "Hybrid and distance working: exploring the tax implications of changing working practices" which, amongst others, notes that improved His Majesty's Revenue and Customs (HMRC) processes, turnaround times, more Pay As You Earn (PAYE) relaxations and better guidance are desired by many stakeholders in the United Kingdom in order to improve tax aspects of hybrid and distance working.
The OTS launched its review in autumn 2022 and asked for evidence from interested parties on the increasing trend for people to work in different ways, including across borders.
The report notes that during the pandemic, about 40% of the UK workforce worked at home for at least part of the week, supported by widely available technology. Many would like to retain this work pattern and employers have recognised this and its importance when recruiting.
The report looks at two aspects which are considered on a domestic and international basis:
- hybrid working where employees spend some of their working time in their employer's workplace and some elsewhere (at home or in a different country); and
- overseas distance or remote working where the employee works permanently in a different country to the business location.
On a domestic basis, the key findings relate to whether the present rules on tax deductions for expenses – such as for traveling and home working - are suitable for the new work environment and whether the rules on taxable benefits in kind require amendment. The report notes: "The pandemic may present an opportunity for government to re-evaluate longstanding rules and arrive at different approaches relevant to modern practices, without necessarily adding to exchequer costs."
The international issues include whether an employee working remotely from abroad might create a taxable presence for the employer in that other country. This is likely to require international agreement, however the UK could take steps to lead by example here.
Social security is also likely to be a complex area since it is not as well covered as tax, meaning an expansion of social security agreements is likely to be required. For those working in the UK for short periods, a policy that a limited time (say 60 days or less) would not result in a UK tax liability might be beneficial.
This is the final report by the OTS which will close when the Finance Bill 2023 receives Royal Assent.
On 4 January 2023, the US Internal Revenue Service (IRS) issued its fiscal year (FY) 2022 progress update, providing an overview into the agency's work over the past year and discussing the agency's goals for FY 2022 to FY 2026.
According to the progress update, during FY 2022, the IRS:
- completed delivery of the third round of Economic Impact Payments, bringing the total distributed by the IRS in three rounds to more than USD 830 billion;
- wrapped up disbursement of advance monthly payments of the Child Tax Credit;
- emphasized that filing electronically with direct deposit was more important than ever in 2022;
- continued efforts to enhance service for all taxpayers, including people in diverse and under-served communities by:
- taking steps to further improve the amount of assistance the agency provides to taxpayers in multiple languages;
- completing conversion of 34 Spanish notice inserts to Braille, text, audio and large print;
- converting Form 1040 and its main schedules, 1040 NR, 1040 SR, W-4 and six IRS publications into Spanish Braille, text and large print;
- worked to reduce paper correspondence inventory and process paper tax returns from 2021 and improve its response to an unprecedented level of phone demand;
- continued to develop and utilize innovative approaches to understand, detect and resolve potential noncompliance to maintain taxpayer confidence in the tax system; and
- created a new office to improve taxpayer experience and identify opportunities to make continuous improvements in real time for taxpayers and tax professionals.
The IRS also discussed its four goals for FY 2022 to 2026, as found in the strategic plan issued in July 2022.
IRS: Inflation Reduction Act Further Extends Limitation of Excess Business Losses of Non-Corporate Taxpayers
The Inflation Reduction Act enacted last year has further extended the limitation of excess business losses of non-corporate taxpayers, according to the US Internal Revenue Service (IRS)'s publication issued on 13 January 2023.
The excess business losses limitation under section 461 of Internal Revenue Code (IRC), which was enacted under the Tax Cuts and Jobs Act, caps the amount of business losses that non-corporate taxpayers may deduct from their non-business income. While the limitation had been originally slated to take effect in 2018 and expire in 2025, the Coronavirus Aid, Relief and Economic Security Act retroactively pushed its implementation to 2021.
Meanwhile, the American Rescue Plan Act of 2021 extended its effectivity until 2026. According to the guidance, the Inflation Reduction Act further extends the limitation through tax year 2028.
In addition to discussing the extension of the limitation, the 13 January 2023 publication provides guidance on net operating losses (NOLs) for individuals, estates and trusts filing their 2022 tax returns. Specifically, the publication discusses:
- how to figure an NOL;
- when to use an NOL;
- how to waive the carryback period;
- how to carry an NOL back or forward;
- how to claim an NOL deduction; and
- how to figure an NOL carryover.
Moreover, the publication provides that taxpayers who had an NOL deduction carried forward from a year before 2018 that resulted in having taxable income in their 2022 return of zero (or less than zero, if an estate or trust), must complete Worksheet 2 to help them figure their NOL to carry to 2023.
For tax years beginning in 2022, the maximum expense deduction allowed under section 179 of the US Internal Revenue Code (IRC) has increased to USD 1.08 million, according to Instructions for reporting depreciation and amortization on Form 4562 issued by the US Internal Revenue Service (IRS). The IRS published the 2022 Instructions on 6 January 2023.
IRC section 179 allows taxpayers to deduct the entire cost of certain property as an expense on their federal tax return in the year of purchase, rather than capitalizing the costs and deducting depreciation over multiple years.
Taxpayers use Form 4562 to:
- claim deductions for depreciation and amortization;
- make the election under section 179 of the Internal Revenue Code to expense certain property; and
- provide information on the business/investment use of automobiles and other listed property.
According to the updated instructions, for tax years beginning in 2022, the USD 1.08 million limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds USD 2.7 million (previously USD 2.62 million). In addition, the maximum section 179 expense deduction for sport utility vehicles (SUVs) placed in service in tax years beginning in 2022 has increased to USD 27,000 from USD 26,200.
The instructions also state that specified research and experimental costs paid or incurred in tax years beginning in 2022 must be capitalized and amortized over a 5-year period (a 15-year period for any expenditures related to foreign research).
Moreover, the instructions provide that certain qualified property (other than property with a long production period and certain aircraft) placed in service between 31 December 2022 and 1 January 2024, is limited to a special allowance of 80% of the depreciable basis of the property.
The US Internal Revenue Service (IRS) has issued guidance discussing types of income and explaining whether they are taxable or non-taxable income for purposes of filing 2022 tax returns.
According to the guidance, which the IRS issued on 4 January 2023, income is generally taxable unless it is specifically exempted by law. Taxpayers must report and pay taxes on taxable income and may be required to report non-taxable income on their tax returns.
The guidance discusses, among others:
- employee wages;
- fringe benefits,
- income from bartering;
- S corporations;
- disability pensions;
- life insurance proceeds; and
- welfare and other public assistance benefits.
In addition, the guidance highlights certain changes for tax year 2022. Specifically, for tax year 2022, taxpayers who participate in a 401(k), 403(b), or the federal government's Thrift Savings Plan (TSP), could annually contribute up to USD 20,500 (USD 27,000 if age 50 or older). Previously, the deferred compensation contribution limit was USD 19,500 in 2021.
Moreover, for tax years beginning in 2022, the dollar limitation under IRC section 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is USD 2,850.