June 2020

  • Bulgaria
    • COVID-19 Pandemic: Reduced 9% VAT Rate for Books and Restaurant Services – Clarifications Published

      As a result of the COVID-19 pandemic, from 1 July, 2020 a temporary reduced 9% VAT rate for books and restaurant services will apply until 31 December, 2021. The National Revenue Agency has published the following clarifications for the application of the 9% rate for restaurant services:
      • food zones in commercial centers will be allowed to apply the 9% VAT rate for food unless it is ordered for take away;
      • catering services may also apply the 9% VAT rate when the supply of food is accompanied by other services; and
      • supplies of food in shops and vending machines will remain subject to the standard 20% VAT rate.
  • China
    • China Unveils Master Plan for Construction of Hainan Free Trade Port

      The Central Committee of the Communist Party of China and the State Council on June 1st released a master plan for the Hainan island free trade port (“FTP”), which aims to build the whole Hainan province into a globally-influential high-level free trade port by the middle of the century. A FTP system focusing on trade and investment liberalization and facilitation will be "basically established" in Hainan by 2025 and become "more mature" by 2035. Precisely Hainan shall: ➢ open up to capital projects in a phased manner to facilitate foreign capital flows in the Hainan FTP; ➢ further facilitate cross-border trade in goods and services with new type of international trade settlements and lighten the current inbound and outbound payments procedure as required by SAFE; ➢ vigorously develop tourism, modernize the service industries and the new and high technology industries. Tax beneficial policies shall be adopted, including: 1. Zero-Tariff a. A good list shall be published and when entering in Hainan FTP, not listed goods - in principle - shall be exempted from import duties (tariff, import VAT, consumption tax); b. Zero-tariff shall apply on production equipment imported by enterprises for their own use; c. Zero-tariff shall apply on raw materials and auxiliary materials imported into Hainan for production and processing purposes (or in service trade) in order to be exported overseas; d. People in Hainan can enjoy duty-free when they purchase import commodities within Hainan; e. Extend the quota for duty-free shopping to CNY 100,000 per person/per year and expand the categories of duty-free goods. The contents of the lists above mentioned shall be dynamically adjusted by relevant departments according to the actual needs and regulatory conditions of Hainan. 2. Lower Tax Rate, effective from the date of publication a. Enterprises registered in Hainan and engaged in encouraged sectors – not specified yet - shall enjoy a lower corporate income tax rate of 15%; b. Foreign invested enterprises operating in tourism, modern services and/or high-tech technology, shall be exempted from corporate income tax until 2025; c. The individual income tax rate for high-end talents or talents in short supply working in the port, shall have a rate of 15% maximum; Detailed management measures for the above-mentioned preferential policies shall be formulated by the Hainan’s main authorities of commerce and taxation. By developing Hainan FTP, China aims to emulate the success of Hong Kong and Singapore, both of which are renowned world trading and financial centers. However, while it is important to learn experiences from these two cities, Hainan will also have its own unique designs that suit its own conditions rather than imitating every policy from these two cities.
    • MOF and STA Extend Some Preferential Tax & Fee Policies to Year End

      The Ministry of Finance and the State Taxation Administration recently released the Announcement about Extending the Deadline for Preferential Tax & Fee Policies to Maintain Medical Supplies. According to the announcement, some preferential policies will continue to be implemented until December 31, 2020. These preferential policies include that refund of value-added tax credits and loss carryover period will be extended to eight years , corporate donations can be fully deducted before tax, as well as some administrative fees and government funds will not be charged on a provisional basis.
    • PBOC Launches Two-year Pilot Program on Large-sum Cash Management

      The People's Bank of China recently issued the Circular about Pilot Launch of Large-sum Cash Management. The pilot program will last two years and will be implemented in Hebei before expanding to Zhejiang and Shenzhen. The pilot program will begin in Hebei from July 2020 and expand to Zhejiang and Shenzhen from October 2020. The circular said large-sum cash threshold should be set at a reasonable level, so that a large majority of cash transactions in the everyday life are below the cash threshold; appropriate measures should be taken to enhance large-sum cash management. The circular explained that large-sum cash management would not have any significant impact on citizens' everyday economic activities, and customers would not face any cash withdraw restrictions as long as they make appropriate registrations.
    • Eight Authorities Issue Guidelines to Strengthen Financial Services for SMEs and Micro Enterprises

      Eight authorities including the People's Bank of China and China Banking and Insurance Regulatory Commission recently released the Guidelines about Further Strengthening Financial Services for SMEs and Micro Enterprises. The document proposed 30 policy measures from such aspects as implementing loan support policies to facilitate resumption of work and production and enhancing commercial banks' financial service capacity for SMEs and micro firms. According to the document, large banks with national branch networks should play the leading role and offer an interest rate discount of at least 50 basis points; five large state-owned banks should increase loans to small and micro firms by at least 40% from a year ago, while development and policy banks should grant 350 billion yuan in special credit loans; insurance companies are encouraged to develop guaranteed insurance products against the risk of loan defaults. The document also set objectives to improve external policy environment for the banking industry and strengthen the role of the capital market in providing financing channels.
    • Xinhua News Agency Publishes Full Text of Civil Code

      The Civil Code of the People's Republic of China was adopted on May 28, 2020 at the third session of the 13th National People's Congress. Chinese President Xi Jinping issued a decree to authorize Xinhua News Agency to make public the full text of the law on June 1, 2020. The Civil Code has 1,260 articles on seven parts of general provisions, property rights, contracts, personality rights, marriage and family, inheritance and tort liabilities, and supplementary provisions. The Civil Code will be implemented from January 1, 2021, when the marriage law, inheritance law, general provisions of civil law, adoption law, guarantee law, contract law, property rights law, and tort liability law will be revoked. The Civil Code is the first law to carry the title "code" since New China was founded in 1949, and it's a landmark law in the country's legislation history.
    • China Encourages Financial Institutions to Make 1.5 Trillion Yuan in Interest Concessions

      Premier Li Keqiang chaired a State Council executive meeting on June 17, 2020. The meeting decided that China will encourage its financial institutions to make interest concessions as appropriate to businesses to help keep economic fundamentals stable and ensure that all fee-cutting measures are fully executed to ease corporate burdens. The meeting urged stronger efforts to bring down the lending and corporate bond rates, make concessional-rate loans, defer loan repayments for micro, small and medium enterprises, and support the issuance of no-collateral loans to small and micro companies, and reduce fee-charging from banks. These efforts combined are expected to bring benefits amounting to 1.5 trillion yuan to companies of all types this year.
    • China Updates Negative Lists for Foreign Investment

      The National Development and Reform Commission and the Ministry of Commerce released on June 23, 2020 the Special Administrative Measures (Negative List) for the Access of Foreign Investment (2020) and the Special Administrative Measures (Negative List) for the Access of Foreign Investment in Pilot Free Trade Zones. The two documents will be implemented from July 23, 2020. The revisions have continued to curtail the negative lists for foreign investment. There are now only 33 items on the national negative list for foreign investment, and 30 items on the negative list for foreign investment at free trade zones. Among the significant changes, China will scrap foreign shareholding limits in securities companies, fund houses, futures companies and life insurance firms; China will ease market access restrictions in manufacturing and agricultural sectors, and scrap a ban on foreign investment into companies that smelt and process radioactive resources and produce nuclear fuel. Besides, opening-up policies will continue to be implemented at free trade zones.
  • Focus Africa
    • Rwanda unveils $11bn climate action plan

      Rwanda has become the first African country to submit a new national climate plan, whose implementation requires $11 billion (10.2 trillion), as an essential tool to implement the Paris Agreement.
      The Paris Agreement, signed in 2015, aims to limit global warming to 2 degrees Celsius with an ambition to contain any increase at below 1.5 degrees.
      The updated pledges to fight climate change are being submitted ahead of COP-26. The 26th session of the Conference of the Parties (COP 26) to the United Nations Framework Convention on Climate Change (UNFCCC) was planned to take place from 9-19 November 2020, in Glasgow, UK but it has been postponed to 2021. According to the submitted new climate plan to fight climate change through 2030, the total estimated cost for mitigation measures is estimated at around $5.7 billion, and over $5.3 billion for adaptation priorities, representing a combined funding requirement of around $11 billion. Rwanda’s mitigation contribution seeks a 38 percent reduction in gas emissions equivalent to 4.6 million tonnes of carbon dioxide in 2030. The emissions that include gases carbon dioxide, methane nitrous oxide, and hydrofluorocarbons are from the sectors of energy, industrial processes and product use, waste, and agriculture, forestry and other land use and others. And 24 adaptation interventions are proposed in eight sectors of water, agriculture, land, and forestry, human settlement, health, transport, and mining. “The Government of Rwanda will continue to commit significant resources to climate change relevant strategies. Rwandan communities, the private sector, and NGOs can also contribute significantly to these climate change-related activities through public-private partnerships” reads part of the new climate plan. It also says that the Rwanda Green Fund (FONERWA), will continue to play a vital role in financing low carbon projects and programs. However, the full implementation of the strategic mitigation actions are conditional on the support of international stakeholders. “The implementation of the prioritized policies and actions assume the continued use of existing and planned national and international financial sources. Rwanda intends to meet its conditional contribution through the use of climate finance and international market mechanisms where appropriate, building upon the experience of the Clean Development Mechanism (CDM) and other existing market mechanisms,” says the report. These, it says, include the potential involvement in international cooperative approaches under Article 6 of the Paris Agreement. The Agreement is a comprehensive framework for action on climate change, guiding the steps all nations will take to reduce their contribution to global warming. The Agreement also includes the provision for the US $100 billion per year of climate finance and technology transfer to support developing nations to deal with the impacts of climate change and make the transition to a green economy. Rwanda is already experiencing the impacts of a warming planet, including increased and longer droughts and more frequent and severe floods leading to landslides and therefore needs climate finance for mitigation and adaptation. Since the 1970s, the average temperature in Rwanda has increased by 1.4°C. If no substantive action is taken to mitigate global climate change, it is predicted that the average temperature in Rwanda will rise by 2.5°C by the middle of the century.  
    • African Telecommunications Union and Ericsson sign MoU to accelerate ICT growth in Africa

      The partnership will promote regional coordination and harmonisation of spectrum usage to decrease cost of technology by increasing economies of scale and maximising affordability in Africa.   The African Telecommunications Union (ATU) has signed a Memorandum of Understanding (MoU) with Ericsson to help fast track the roll out of technology across the continent. According to ATU, a specialised agency of the African Union in fostering the growth of ICT in Africa, The MoU will support the growth of ICT as a critical infrastructure for the 21st century and help set the foundation for social and economic progress in the continent. In the understanding, the two organisations look towards promoting global and regional coordination and harmonisation of spectrum usage to encourage economies of scale and maximise the affordability for all users in Africa. “Our collaboration with Ericsson is geared towards connecting, innovating and transforming the continent into a knowledge economy,” commented John Omo, Secretary General of the ATU. Omo, who spoke during the signing of the MoU in Nairobi, Kenya further noted that it is imperative for economies across the continent to become more competitive, agile, open and innovative in order to leverage on ICT innovations to transform African nations into smart economies. Lauding the partnership with ATU, Fadi Pharaon, President of Ericsson Middle East and Africa, added: “Our collaboration with the African Telecommunications Union (ATU) will focus on spectrum management strategies. Leveraging our global experience working on spectrum management, we aim to share global best practices that will ensure efficient use of scarce resources and allocation of new spectrum. This will yield societal benefits that will enable a more connected and knowledge-based society in Africa.” This move comes at a time when Africa continues to experience an unprecedented growth in mobile broadband, with traffic, subscriptions, and ownership of devices growing at exponential rates. The continent has emerged as one of the strongest adopters of innovation, with a rapid rise in usage of technology and smartphones. According to a November 2019 Ericsson Mobility Report, by 2025, Sub-Saharan Africa mobile broadband subscriptions will increase to about 70% of mobile subscriptions, with increased 4G coverage and uptake being the main engine. Driving factors behind this shift include a young and growing population and availability of lower priced smart and feature phones. Developing countries today face the prospect of robust economic development given that mobile communications users now greatly outnumber those using fixed line telecommunication services. With radio spectrum a limited resource, the number of services and users that can be accommodated in any given part of the spectrum, remains limited, even in the digital world. Therefore, the harmonised and globally aligned frameworks as envisaged in the partnership between ATU and Ericsson will assist African countries in spectrum management activities that will facilitate cost efficient roll out of ICT.
    • Kenya – First public road by private investors to open in Kajiado

      Kenya is set to complete its first annuity road this year after nearly one decade of false starts, easing demand for foreign debt.
      The annuity financing model allows private contractors to design, build and maintain public roads using their own resources with the Treasury reimbursing lenders at uniform rate for cash advanced for the projects.
      Transport Secretary James Macharia said the 91km road project in Kajiado County will be opened for use before the year ends.
      The State had planned to build 10,000km of paved roads under the annuity model and laid out plans to raise the reimbursement cash from the fuel levy.
      At one point, however, the Roads ministry threatened to drop the model, citing inflated costs and the slow pace of project approvals.
      On Wednesday, Mr Macharia said the road in Kajiado, comprising 48km through Ngong, Kiserian and Isinya townships, and joining the 43km Kajiado-Imaroro road, will serve industrial establishments, colleges and homes.
      10,000KM TARGET
      “We have tarmacked 8,000 kilometres and on the way to fulfilling the 10,000 kilometre pledge made in 2013 and that will be achieved within the next two years,” he said.
      The annuity model also reduces Kenya’s reliance on foreign loans to fund projects, thereby easing public debt standing at Sh6.3 trillion as at end of March.
      Mr Macharia said the planned expansion of the Nairobi-Mombasa highway was also lined up under the public private partnerships where users will pay toll.
      The Treasury has lined up 80 projects worth Sh1.1 trillion to be executed via the PPP model cutting across sectors with the bulk in transport and infrastructure, energy, health and education.
      The projects include projects for second Nyali Bridge, Nairobi-Nakuru-Mau-Sumit road as well as maintenance of Thika Road, Nairobi Southern Bypass and Nairobi-Mombasa highway.
    • KIFC affirms Rwanda’s position on becoming Africa’s financial hub

      The UK’s development finance institution and impact investor, CDC Group, has signed a partnership agreement with Rwanda Finance to support the development of a new international financial capital for Africa. The Kigali International Financial Centre (KIFC) is intended to be a world-class financial hub, designed to promote inward investment and the creation of thousands of highly skilled financial sector jobs for the benefit of Rwanda and the African continent. The finance centre is modelled on Luxembourg and Singapore in the way it will provide a wide range of services for both regional and international clients. Rwanda Finance is mandated by the Government of Rwanda to develop effective frameworks for regulations, tax and capacity-building in the country. The organisation is also set out to promote the KIFC as a jurisdiction which provides a range of professional, business and financial services to international clients. This partnership will see CDC provide expertise that will help shape a strong legal and regulatory framework, which is designed to attract institutional investors seeking to finance African businesses through a world class financial centre. During the virtual signing of the partnership, Rwanda Finance’s CEO, Nick Barigye, said: “This partnership is a major milestone for our nascent International Financial Centre. It will ensure that we have an optimal legal, regulatory and institutional framework that is in line with international norms and standards.” He added that Rwanda already has a strict compliance framework, which makes the country an ideal conduit for multinational investment deals. Nick O’Donohoe, Chief Executive of CDC Group, also commented: “The African continent needs a vibrant and stable financial services industry to foster inward investment and nurture a professional and technical skills base to support wider economic development. “It is still very early days in Kigali’s development as a financial hub, but we are confident it will deliver on its early potential. And if it does, then I see no reason why we wouldn’t look to use it ourselves.” The KIFC will only support transactions that have a substantial business and economic purpose, rather than those that are designed for managing tax liabilities. Rwanda has already made great strides to ensure that the new KIFC initiative thrives. The country has a stable and resilient economy with a 10-year average growth rate of 8.6%. It has also been ratedthe number one country in Africa for government transparency according to the 2019 Transparency International Report. Rwanda is ranked second for the rule of law in Africa according to the WJP Rule of Law Index 2020. Rwanda also has established trading relationships with other African markets and is a key player in the creation of the African Continental Free Trade Agreement (AfCFTA).    
    • Mozambique offers $2.25 bln funding guarantee to LNG project, says report

      Partners in Mozambique LNG, the $20 billion gas project led by Total, have received a $2.25 billion guarantee from the government that it will pay the state oil company’s equity share if required, Portugal’s Lusa news agency said. Carlos Zacarias, president of Mozambique’s regulator, the National Petroleum Institute (INP), said state financing had been secured, the news agency reported late last week. Partners agreed to accept a $2.25 billion government guarantee in lieu of an immediate equity contribution from state-run National Hydrocarbon Company (ENH), Zacarias said in Cabo Delgado, the northern province where the project is sited. Zacarias said the guarantee was valid for five years. A spokesman for ENH did not immediately respond to a request for comment and INP could not immediately be reached. A Total spokesman in Mozambique said he had no information on the report. Each partner in the project, one of several LNG developments in the region following a massive gas find off Mozambique’s coast, is required to make a minimum capital contribution. ENH has a 15% interest in the project that is expected to start production in 2024, while Total owns 26.5% after acquiring its stake from Anadarko for $3.9 billion in 2019. The French energy major has secured $15 billion in funding for the project. Signing for the financing is due to take place on June 30, a source with knowledge of the project said.  
    • Ghana signs agreement with China’s Dongfang Electric International Corporation for locomotives

      Ghana has signed a contract agreement with China’s Dongfang Electric International Corporation for the supply of Locomotives and Rolling Stock, which makes up a total of 35 standard gauge trains for passenger and freight services in Ghana. The quantities and categories of rolling stock which would be delivered include nine Passenger Locomotives with capacity of 4500HP and 160km/hr speed and15 Freight Locomotives with capacity of 4500HP and 100km/hr speed. Others are 11 Shunting Locomotives with capacity of 1000HP, 48 Passenger Coaches and 330 Wagons made up of 230 box wagons and 100 flat wagons. This forms a total of 35 new standard gauge trains to be imported into the country for the first time in the history of the country. The Contract would be implemented in two phases. In the first phase, Ghana is expected to take delivery of two trains within 12 months with an additional seven trains within the following six months bring the total to nine trains in the first phase. The remaining twenty-six trains would be delivered in the second phase within 18 months from a date to be agreed by the parties. Speaking at the signing ceremony in Accra, Mr Joe Ghartey, the Minister of Railways Development, said the Ministry, as part of its mandate to revamp and modernize Ghana’s railway sector was undertaking the construction of a number of standard gauge railway lines. He said the new standard gauge lines were currently on-going on the Western line from the Port of Takoradi through Kojokrom and Manso to Huni Valley which makes a track length of approximately 134 km. “Currently on-going is also the construction of the Tema to Mpakadan standard gauge railway line which is also approximately 100km, Mr Joe Ghartey said. “The development of these standard gauge lines is in line with Government policy, as contained in the Railway Master Plan, for all new railway lines to be developed with the standard gauge.” He said in view of the need to obtain standard gauge rolling stock in time for testing and commissioning of the works, the subsequent operation of the lines, as well as, the minimum duration required for the delivery of Rolling Stock, it was imperative, the Ministry considered the urgent procurement of Rolling Stock. He recalled that Dongfang Electric International Corporation submitted a financing offer in the form of a Supplier’s Credit facility to the Ministry in January, 2019 for consideration. He said the financing offer received a favourable response and was approved by the Ministry of Finance who then gave them the concurrence to go through the necessary statutory approval processes including obtaining Cabinet and Parliamentary approvals. He said in order to successfully execute this project, Dongfang Electric International has formed a partnership with CRRC Dalian Company Limited (CRRC Dalian) and CRRC Qiqihar Rolling Stock Company Limited (QRRS). The Minister said CRRC Dalian and QRRS were subsidiaries of the giant Chinese Rolling Stock Manufacturer CRRC, a Chinese publicly traded rolling stock manufacturer and one of the largest rolling stock manufacturers in the world. He said a Committee was constituted to undertake a due diligence exercise and independently assess the capabilities, experience and the track record of the Supplier to deliver the rolling stock. He said the Committee was made up of officials from the Ministry of Railways Development, the Ministry of Finance, the Office of the Attorney General and Ministry of Justice, the Ghana Railway Development Authority, Ghana Railway Company Limited, as well as Parliament’s Select Committee on Roads and Transport. He said a due diligence mission was undertaken from 27th April -1st May 2019 in China; adding that it included site visits to the manufacturing plants and offices, as well as, technical meetings with the supplier and its partners. He said based on the observations and findings made after the inspection of the plant and facilities of the manufacturers in China, as well as, the outcome of the technical meetings, it was established by the Committee that, the Supplier had the experience, track record and the capacity to manufacture the locomotives and rolling stock required by the Government. “We remain committed to the process and we are going to work hard to complete the remaining steps in the statutory approval processes by obtaining approvals from Cabinet, Parliament and also the Public Procurement Authority,” the Minister said.
    • Botswana grants first ever generation licenses to IPPs

      Botswana Energy Regulatory Authority (BERA) has allotted generation licenses to three Independent Power Producers (IPPs) for the construction of power plants with a 827MW generation capacity.   The licence has a term of 15 years, the three IPPs include the Gaborone based Energy & Natural Resource Corporation and Sese Power, which is based in Francistown, as well as listed stock exchange company, Tlou Energy.   Energy & Natural Resource Corporation has been granted authority to construct a 600MW coal-fired power station north of Morupule Colliery in the Central District. According to Botswana Daily News, the company is expected to export the generated electricity to the Southern African Power Pool, ZESA and Eskom. Sese Power will construct a 225MW coal-fired power station east of Makomoto village, near Tonota, and is expected to export electricity to mining companies in Zambia. Lastly, Tlou Energy will generate 2MW of coal bed methane gas and solar power at the Lesedi project to Botswana Power Corporation (BPC) at the approved BPC tariff, as well as a series of standard conditions.

      Botswana opens energy sector to IPPs

      It is reported that the three companies have agreed to build their own transmission lines from the proposed power stations and connect to the BPC transmission network. Speaking during a handing over of the licenses in Lobatse, BERA chief executive officer, Rose Seretse, said it was encouraging to see the three companies enter the electricity-producing sector. Seretse appreciated the prospect of Botswana becoming an exporter of power. “It has been a journey to arrive where we are today. But we (BERA) are here to ensure that organisations such as yours add impetus to the economy of this nation. The work that you do is very important because electricity is very essential,” she said. BERA chief operations officer Duncan Morotsi explained that the three companies were the first IPPs in Botswana to be licensed to generate electricity. Morotsi said: “These are big projects and we believe that you will succeed. We don’t only want you to produce for Batswana, we also want you to export to make this one of the revenues earning industries for Botswana,” he said. Gabaake Gabaake of Tlou Energy expressed gratitude for the guidance and facilitation BERA gave the companies during the process of applying for the licenses. He said the development was a significant milestone for the energy sector in this country.      
  • Hong Kong
    • Inland Revenue Department Updates Departmental Interpretation and Practice Notes on Profits Tax

      On 12 June 2020, the Inland Revenue Department has updated the Departmental Interpretation and Practice Notes No.42 clarifying the taxation on financial instruments and foreign exchange differences. The main content of the DIPN No.42 (revised) is summarized as follows:
      • an overview of the tax treatment of gains or losses in respect of financial instruments to which Hong Kong Financial Reporting Standard 9 Financial Instruments applies;
      • an introduction of accounting treatment of financial instruments;
      • realization basis and fair value basis for profits tax assessment on the taxable profits from financial instruments;
      • conditions for adopting fair value basis and assessment measures;
      • the accounting treatment of foreign currency transactions carried out in Hong Kong; and
      • tax treatment of unrealized exchange differences.
      The text of the DIPN No.42 (revised) is available here.
  • India
    • Great Places for Manufacturing in India

      Great Places for Manufacturing in India by Invest India, wherein facts, figures, and investor activity have been captured for various industrial ecosystems that exist in India. 18% share of Global Population, 31% Urban Population, world's 6th Largest Consumer Market, 72% Population Working Age, world’s 2nd Largest Network of Roads, Largest Copper Reserve and 3rd Largest Tech Start Hub, after US and China. Dividend Distribution Tax abolished in 2020, One Country One tax through GST and Ease of Doing Business Ranking by World Bank from 142 in 2015 to 63 in 2019. Some insights to investors interested in Doing Business in India.   Invest India_ Full Report_Lighter10 June
    • COVID 19 Pandemic: India Further Extends Filing and Other Compliance Deadlines

      The Central Board of Direct Taxes has extended various deadlines under the Direct Tax laws in response to the COVID-19 outbreak in the country. The key announcements of Notification No. 35/2020 and the relevant press release are summarized below.

      Extensions to Deadlines under the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020

      • The extended time limit for the completion of or compliance with actions specified therein is 31 December 2020 (from 30 June 2020).
      • The end date to which the time limit for completion of or compliance with such action will be extended is 31 March 2021.

      Extensions to Deadlines under the Income-tax Act, 1961

      • The extended due date for filing the income tax return for financial year (FY) 2018-19 is 31 July 2020 (from 30 June 2020).
      • The extended due date for filing income tax returns for FY 2019-20 is 30 November 2020 (from 31 July and 31 October 2020). Consequently, the extended due date for filing a tax audit report is 31 October 2020.
      • The extended date for furnishing the statements of deduction of tax at source (TDS)/collection of tax at source (TCS) for the month of February or March 2020, or for the quarter ended 31 March 2020 is 31 July 2020. The extended date of issuance of TDS / TCS certificates for FY 2019-20 is 15 August 2020.
      • The extended deadline of making investments/purchases for the purpose of claiming benefits for capital gains under the provisions of section 54 and section 54GB of the Act is 30 September 2020.
      • The extended deadline of making various payments/investments for the deduction under chapter VIA-B of the Act, including sections 80C (contributions to life insurance, provident fund, subscription to certain equity shares), 80D (health insurance) and 80G (donations to certain funds and charitable institutions), is 31 July 2020.
      • The extended date for commencement of operation for the Special Economic Zones units for claiming deduction under section 10AA of the Act is 30 September 2020 (from 30 June 2020) for the units that received approval by 31 March 2020.
      • Under the "Vivad Se Vishwas" Scheme, the extended deadlines for the completion of or compliance with actions is 30 December 2020; the end date for making the said completion or compliance is 31 December 2020 (from 30 June 2020).
      • The extended deadline for the payment of self-assessment tax for small and medium-sized taxpayers with tax liabilities of up to INR 100,000 is 30 November 2020.
      • The extended deadline for the Aadhar – PAN linking date is 31 March 2021 (from 30 June 2020).
      • The extended deadlines for implementation of new procedures under sections 10(23C), 12AA, 35 and 80G of the Act is 1 October 2020 (from 1 June 2020).
      • The reduced interest rate of 9% for late payment of taxes, levies, etc. will not be applicable after 30 June 2020.
  • Switzerland
    • COVID-19 Pandemic: Italy and Switzerland Sign Agreement on Taxation of Frontier Workers

      Italy and Switzerland have signed an agreement on the taxation of frontier workers who are currently e-working at home due to the COVID-19 pandemic. The mutual agreement stipulates that, for purposes of the application of article 15(1) and (4) of the Italy - Switzerland Income and Capital Tax Treaty (1976) (as amended through 2015), and article 1 of the Italy - Switzerland Agreement on the Taxation of Frontier Workers and the Financial Compensation for Italian Frontier Municipalities of 3 October 1974, days spent working from home due to the COVID-19 pandemic measures will be deemed to be spent in the state where the frontier workers would have carried out the work without such measures. The mutual agreement is applicable during the period between 24 February 2020 and 30 June 2020 and is automatically extended until the end of the following calendar month, until the rules limiting or discouraging the regular free movement of workers in both states introduced due to the COVID-19 pandemic cease to exist or the agreement is jointly terminated by the competent authorities of both states. The agreement was signed in Bern on 18 June 2020 and in Rome on 19 June 2020, and entered into force on 20 June 2020.
    • (ITA) Il Rappresentante Fiscale in Svizzera

      Da più di due anni è obbligatoria per tutte le imprese straniere che forniscono beni e servizi sul territorio elvetico - con fatturato superiore ai 100'000 Franchi - la nomina del rappresentante fiscale. Questa regola è quindi particolarmente rilevante soprattutto per le imprese che operano nelle rispettive regioni di confine e che non hanno intenzione di stabilirsi con società ad hoc in territorio svizzero. L’obbligo è previsto sia per le aziende che superano i 100.000 franchi fatturati sul territorio della Confederazione, sia per le imprese straniere che superano la medesima soglia, a prescindere dal paese nel quale tale fatturato sia stato generato. Nei suddetti casi il rappresentante fiscale è obbligatorio anche se vi sia un solo franco svizzero di fatturato che ecceda le suddette soglie, pena il divieto di operare sul territorio elvetico. Per questo motivo anche le piccole e medie imprese italiane che forniscono prestazioni in territorio svizzero (ad es. piccoli lavori edili, servizi di sviluppo software, manifattura, arredamento, ecc.) dovranno premurarsi di nominare un rappresentante fiscale in Svizzera. Il rappresentante fiscale si occuperà in sintesi di: • Rispettare per conto dell’azienda tutte le prescrizioni riguardanti l’IVA in Svizzera; • Effettuare le necessarie rendicontazioni periodica; • Segnalare al cliente l’importo dei pagamenti IVA da effettuare; • Svolgere le scritturazioni contabili necessarie; • Curare il rapporto tra l’azienda e l’AFC, l’Amministrazione Federale delle Contribuzioni. È necessario precisare che l’assoggettamento al regime dell’IVA in Svizzera interessa solo chi svolge attività d’impresa, quindi un’attività di tipo indipendente, professionale o commerciale, in nome proprio e con lo scopo di generare profitti. Non saranno quindi interessati dall’obbligo di nomina di un rappresentante né dell’iscrizione al registro dell’IVA coloro che, ad esempio, si limitano alla consegna di un prodotto acquistato da un cliente svizzero in Italia o altro Paese: in questo caso sarà il cliente svizzero a dover versare l’IVA svizzera nel momento in cui la merce viene importata nel territorio elvetico. Tuttavia, qualora il fornitore italiano esegua una prestazione in Svizzera, ad esempio l’installazione di quanto acquistato, e se le condizioni relative al fatturato siano verificate, ebbene l’obbligo di dotarsi di un rappresentante fiscale riprende effetto e sarà dovere del fornitore farsi carico dell’IVA e dei relativi obblighi attraverso un rappresentante. La rappresentanza fiscale può essere esercitata sia da una persona fisica che giuridica, a condizione che tale persona disponga di un domicilio o di una sede in Svizzera. Il rappresentante fiscale deve essere inserito nel formulario di iscrizione all’IVA. Tra i numerosi servizi offerti in ambito contabile, fiscale e societario, Diacron Suisse SA offre anche la possibilità di agire come rappresentante fiscale in Svizzera, garantendo ai suoi clienti un servizio puntuale e preciso, competenza ultraventennale e consulenza sulle tutte le tematiche legate all’IVA.   Per maggiori informazioni contattattateci al +41 (0) 91 210 5832 oppure via email a m.dotti@diacrongroup.com o a.re@diacrongroup.com   Rappresentante Fiscale in Svizzera
  • United Arab Emirates
    • Economic Substance Regulations in the UAE – Latest Notification Deadlines

      Economic Substance Notification deadlines as of publication date are:
      • Abu Dhabi Global Market: 30th June 2020
      • Ajman Free Zone: 30th June 2020
      • RAS Al Khaimah Economic Zone: 30th June 2020
      • Abu Dhabi Global Market: 30th June 2020
      • Creative City Fujairah Free Zone: 31st July 2020
      • Dubai Airport Free Zone: 31st May 2020
      • Dubai Development Authority: 30th June 2020
      • Dubai Health Care City: 30th June 2020
      • Dubai International Financial Centre: 30th June 2020
      • Dubai Multi Commodities Centre: 30th June 2020
      • Dubai South: 23rd June 2020
      • Dubai World Trade Centre: 30th June 2020
      • Masdar City Free Zone: 28th June 2020
      • Ministry of Economy: 30th June 2020
      • Khalifa Industrial Zone Abu Dhabi: 30th June 2020
      • Sharjah International Airport Free Zone: 30th June 2020
      • Jebel Ali Free Zone: 30th June 2020
      • Umm Al Quwain Free Zone: 30th June 2020
  • United Kingdom
    • Job Retention Scheme Updates

      In the United Kingdom the Chancellor, Rishi Sunak, announced more details about the extension to the Coronavirus Job Retention Scheme (CJRS), with the key details outlined below. Flexible furloughing From 1 July 2020, you’ll have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work. You can decide the hours and shift patterns that your employees will work on their return and you will be responsible for paying their wages in full while working. This means that employees can work as much or as little as your business needs, with no minimum time that you can furlough staff for. Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer periods such as on monthly or two weekly cycles if you prefer. You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules. Employer contributions From August, the government grant provided through the job retention scheme will be slowly tapered. • in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work; • in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed • in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500; • in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500 • the cap on the furlough grant will be proportional to the hours not worked. If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance, so you should not be significantly impacted by that part of the tapering of the government contribution. Around a quarter of CJRS monthly claims relate to wages that are below the threshold where employer NICs and auto enrolment contributions are due, and so no employer contribution will be required for these furloughed employees in August. Important dates It’s important to note that the scheme will close to new entrants from 30 June. From this point onwards, you will only be able to furlough employees that you have furloughed for a full three-week period prior to 30 June. Also, Government has established that it is possible to furlough an employee for the first time by the 10th June for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.   For more details and support please contact: Jalal Nasri: j.nasri@diacrongroup.com Stefano Palmerini: s.palmerini@diacrongroup.com
  • United States
    • COVID-19 Pandemic: IRS Expands Relief for Non-Residents and Foreign Corporations Engaged in Business in United States and Facing Travel Disruptions

      The US Internal Revenue Service (IRS) has updated frequently asked questions (FAQs) that provide relief for non-resident individuals and foreign corporations providing services or performing other activities in the United States. Where those services or activities are provided by individuals who are temporarily in the United States solely due to travel disruptions caused by the COVID-19 pandemic those actions will under certain circumstances be ignored for purposes of determining whether a non-resident individual or foreign corporation will be deemed to be engaged in a US trade or business (USTB), or as having a US permanent establishment under US income tax treaties.   The updated FAQs expand this relief by providing that the income earned from the activities in question will not be subject to the 30% gross basis tax imposed under section 871(a) or section 881(a) of the US Internal Revenue Code, solely because the non-resident individual or foreign corporation is not treated as having a USTB or permanent establishment under the relief provided in the FAQs.   The FAQs were last reviewed or updated on 12 June 2020. The IRS notes that it may update these FAQs based on the evolving effects of the COVID-19 emergency.
    • COVID-19 Pandemic: IRS Provides Guidance on Retirement Plan Distribution Waivers

      The US Internal Revenue Service (IRS) has provided guidance on the waiver of required minimum distributions (RMDs) under certain retirement plans, i.e. withdrawals that are required to taken by plan participants after they reach a maximum retirement age.   Notice 2020-51 allows taxpayers who receive certain plan distributions to roll them into an eligible retirement plan, provides a 60-day extension of the roll-over period to 31 August 2020, answers a number of related questions regarding the waiver of 2020 RMDs, and provides a sample plan amendment under which participants and beneficiaries can choose whether or not to receive distributions.   The roll-over relief is being provided in order to align with the intent of the CARES Act that permitted taxpayers to waive such distributions in 2020, according to the notice. This notice follows recent guidance on relief provided under the CARES Act for early distributions and loans from retirement plans.
    • COVID-19 Pandemic: Factsheet Issued on Payment of Deferred Federal Income Tax

      The US Internal Revenue Service (IRS) has issued a factsheet (FS-2020-08) providing information on the scheduling and electronic payment of federal taxes due by 15 July. A variety of federal tax filing and payment deadlines falling on or after 1 April 2020, and before 15 July 2020, have been postponed until 15 July 2020 in response to the ongoing Coronavirus (COVID-19) emergency. The factsheet notes that this automatic filing and payment relief applies to all taxpayers and that they do not need to file any additional forms or call the IRS to qualify for the relief. The factsheet provides information on how to schedule or reschedule and electronically pay taxes due, including estimated tax payments, as well as procedures for taxpayers who cannot pay the full amount or who want more time to file. The IRS had previously published answers to frequently asked questions (FAQ) related to the relief.