June 2023

  • Bulgaria
    • Bulgaria Clarifies Rules on Bad Debt Relief and Zero-Rated Supplies

      Bulgaria has gazetted amendments to the Rules for the Implementation of the VAT Act, including the introduction of the right to reduce the tax payable on uncollectable supplies and zero-rated supplies.

      Rules for the practical application of the provisions of the law introduce the right to reduce the tax base and the tax payable on supplies where there is a total or partial non-payment that may become definitively uncollectible. These rules govern:

      • the type and content of the credit note and debit note, and of the report to be drawn up for the procedure of reducing the tax base and of the tax due in case of an irrecoverable debt;
      • the method for determining the reduction of the tax chargeable in cases of total non-payment of the supply, where the recipient of the supply was an unregistered person at the time of supply;
      • a formula to determine the reduction of the tax charged in case of partial non-payment of the supply; and
      • a procedure established for declaring and accounting for the documents issued in case of reduction of the tax base and tax charged on uncollectible debts.

      The amendments also revise the provisions on the required proof of zero-rated supplies, such as the clarification on documentation required to prove the right to zero-rating by a non-EU supplier when goods are dispatched or transported to a third country by a non-EU supplier. The rules also clarify the documents necessary for tax exemption and for the import of goods into the territory of Bulgaria by armed forces of other Member States or other organizations of the European Union.

      The rules also implement a number of technical changes to facilitate the application of the Value Added Tax Act, such as amending the formula for determining the tax due in cases of the supply of a common tourist service. The amendments also clarify that where recipients of supplies of goods or services with the place of supply in Bulgaria are natural persons permanently residing in other Member States, who habitually reside within the territory of the country, will be certifiable by documents other than identity documents.

      The full text of the gazetted legislation, published in State Gazette No. 55 of 27 June 2023, is available here (in Bulgarian only).

  • China
    • Qianhai Clarifies the Criteria of “Substantive Operation” for the Access to the Preferential CIT Policies

      The Shenzhen Tax Service and the Authority of Shenzhen-Hong Kong Modern Service Industry Cooperation in Qianhai jointly released on June 5, 2023 the Announcement on Clarifying the Issues concerning the Application of Preferential Corporate Income Tax Policies in the Shenzhen-Hong Kong Modern Service Industry Cooperation in Qianhai ("Qianhai Cooperation Zone"), which took effect on January 1, 2023.

      Under the MOF and STA No.30 (2021) document, qualified companies established in the Qianhai Cooperation Zone are eligible for the reduced 15 percent corporate income tax ("CIT") rate. The Announcement further clarified that those resident enterprises that are registered in the Qianhai Cooperation Zone would be considered meeting the criteria of "substantive operation" if they are engaged in the industries that meet the requirements and have their production and operation, personnel, accounting, and property in the Zone, while those resident enterprises that are just registered in the Zone and do not have their production and operation, personnel, accounting or property in the Zone would not be considered meeting the criteria and would not be eligible for the preferential CIT policies.

    • Nansha Unveils Criteria for the Recognition of Substantive Operation Required for the Entitlement to the Reduced CIT Rate of 15 Percent

      The Tax Bureau of Nansha District, Guangzhou and other three authorities have jointly released the Announcement on Issues concerning Substantive Operation of Enterprises in Encouraged Industries in Nansha of Guangzhou, with effective from January 1, 2022 to December 31, 2026.

      It is clarified in the MOF and STA No.40 (2022) document that enterprises should meet two conditions to be eligible for the reduced corporate income tax ("CIT") rate of 15 percent in Nansha, including conducting "substantive operation". Compared with the Exposure Draft, the Announcement has improved the statement of the requirements for "substantive operation" relating to production and operation, personnel, accounts, and properties. It is stated that those resident enterprises that are just registered in Nansha district and do not have their production and operation, personnel, accounting or property in the district would not be considered meeting the criteria for substantive operation, and would not be eligible for the preferential CIT policies.

    • Shanghai Consults Public on Substantial Production Criteria for Preferential Corporate Income Tax in Lin-gang Special Area

      The Shanghai Municipal Tax Service, State Taxation Administration and other three departments jointly released on May 19, 2023 the Announcement on Issues Concerning Substantive Production or R&D Activities of Key Industrial Enterprises in the Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone (Exposure Draft) for public comment.

      Under the MOF and STA No.38 (2020) document, those qualified incorporated enterprises that are engaged in business revolving around products (technologies) in key areas such as integrated circuits, artificial intelligence, biomedicine and civil aviation in the Lin-gang Special Area and conduct substantive production or R&D activities would be eligible for a reduced corporate income tax rate of 15 percent within five years from the date of their establishment. According to the Announcement, an enterprise that would be deemed as conducting substantive production or R&D activities in the special area must have fixed production and operation premises and fixed staff members, meet the required software and hardware conditions in the area, and carry out related business on this basis.

    • Qualified Taxpayers Can Enjoy Additional Deduction of R&D Expenses in July

      The State Taxation Administration ("STA") and the Ministry of Finance ("MOF") released on June 21, 2023 the Announcement on Issues concerning Improving the Policy of Allowing Additional Deduction of R&D Expenses in Prepayment Declaration (No.11 document in 2023).

      Starting from 2023, qualified companies are eligible for additional deduction of its R&D expenses incurred in the first half of the year in July, meaning that they can enjoy the policy three months earlier than they enjoy the same in October, according to the Announcement.

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

      $20 million Equity investment approved by African Development Bank in the Africa50 Infrastructure Acceleration Fund I. The investment will support Africa50's target of mobilising $500 million private capital for strategic infrastructure across the continent. (Africa Market Trends)

      50 MW Solar power plant to be constructed in Tanzania, making it the largest in the East African country. The deal between Tanzania Electronic Supply Company Limited and Total Energies aims to optimise the energy sector and strengthen the availability of electrical power in the country. (Africa Energy Portal)

      300  Businesses from 22 countries in Africa have joined the single market trade hub launched by Ecobank Group. The launched trade hub connects traders across Africa and serves as an exchange and information repository to respond to the evolving trading needs of SMEs. (Africa Global Funds)

      $129 million Funding issued by African Development Bank to expand healthcare access in Morocco. The financing aims to improve access to primary and secondary healthcare infrastructure and modernise services by deploying innovative solutions that improve connectivity. (Morocco World News)

      1000 Electric motorcycles operating on Rwandan and Kenyan roads for commercial use sold by Kigali-based electric motorcycle startup Ampersand. This is more than any other electric motorcycle company in Africa, as the company plans to reach 3000 by the end of 2023. (Africa Business Communities)

      89 MW Wind farm in South Africa set to begin construction after a financial close by African Infrastructure Investment Managers. The Castle Wind project will play a key role in reducing carbon emissions, mitigating climate change and providing energy security in South Africa. (Afrik21)

      5,500 MW 

      Additional renewable energy expected to be added to the grid in South Africa by 2026 to offset the electricity crisis. The country has 66,000 MW of wind and solar projects under development to help reduce the intensity of load shedding. (Zawya)

      123 Cities across Africa to be built should the deal between African Union and a unit of Singapore's Temasek go through. The $202 billion construction plan aims to meet the housing deficit in Africa and is expected to last for two decades. (The Straits Times)

      $107 million Loan issued by the African Development Bank to Tanzania to drive sustainable recovery from the effects of Covid-19 and the Russian invasion on Ukraine. The budget support loan will have three components that will help enhance domestic resource mobilisation, strengthen the management of environment resources and improve livelihoods. (Africa Market Trends)

      $500 million Financing promised for the Alliance for Green Infrastructure in Africa (AGIA) at the Summit for a New Global Financing Pact in Paris last week. The alliance will mobilise $100 million in grants for projects preparation and $400 million in blended financing for project development. (The Sun)

      500 Agribusinesses in the East Africa Community set to benefit from increased trade opportunities with the European Union under the MARKUP programme, which aims to promote access to the $2.4 billion EU market through training and other support. (Monitor)

      40% Senegal's targeted renewable energy generation capacity by 2030, up from 31% currently. This week, the West African nation secured financing commitments of $2.7 billion from European countries to help achieve this goal as part of the Senegal Just Energy Transition Partnership (JETP). (Reuters)

      Review by Kili Partners . Powered by Asoko Insight

    • African Countries Reiterate Intention to Protect Tax Revenues In Light of Pillar Two

      The Sub-Committee on Tax and Illicit Financial Flows of the Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration recently concluded its meeting focusing on the design and implementation of the global tax rules in Africa to improve tax collection methods for African countries. The meeting was organized by the African Union, according to a 2 June statement.

      Implications related to Pillar Two

      The African Tax Administration Forum (ATAF) has already indicated that the Pillar Two system mainly benefits the resident states that are, in most cases, developed countries to the detriment of developing countries. Also, African countries have fewer resident ultimate parent entities leading to limited options for tax collection under Pillar Two. For previous coverage.

      Accordingly, the Sub-Committee reiterated its stance that the qualified domestic minimum top-up taxes might support African countries in protecting their tax revenues under Pillar Two. This means that African countries should impose a top-up tax on the low-taxed income of their constituent entities.

      Raymond Nazar, Head of the Policy Unit at the Ministry of Finance of the Republic of Ghana and the Chair of Experts of the Sub-Committee, stated that "enacting legislation to protect tax bases could result in a revenue of around USD 220 billion".

      Revenue collection from a VAT perspective

      The participants also addressed revenue collection from a VAT perspective. Since the consumption of digital goods and services, delivered across borders and intangible in nature has increased in the past years, it is often challenging to apply an appropriate tax collection method. This might require the implementation of simplified VAT regimes. Accordingly, participants of the meeting also adopted recommendations to use the VAT toolkit the ATAF prepared for improved revenue collection on cross-border supplies.

      In terms of expected revenue, Nazar stated that "cross-border transactions and e-commerce have the potential to generate approximately USD 40 billion in revenue for the African industry by 2023".

  • Hong Kong
    • Hong Kong – Interest on Tax Reserve Certificates

      The Government Gazette published today (June 2) contains a Legal Notice to the effect that the Secretary for Financial Services and the Treasury has authorised a change in the rate of interest payable on Tax Reserve Certificates. From June 5, 2023, the new annual rate of interest will be 0.8083 per cent against the current rate of 0.7667 per cent, i.e. the new rate will be $0.0674 per month per $100.

      Tax Reserve Certificates bear simple interest, and interest is calculated monthly (including part of a month) from the date of purchase to the date of payment of tax.

      Interest is only credited when certificates are used to pay tax and no interest is due where the principal value of a certificate is repaid to its holder.

      The rate of interest payable on Tax Reserve Certificates is periodically revised in line with the market trend. Currently, it is reviewed every month based on the average prevailing interest rate for the 12-month time deposit for $100,000 to $499,999 offered by the three note-issuing banks.

      The new rate will apply to all certificates purchased on or after June 5, 2023. Certificates purchased before June 5, 2023, will continue to earn interest at the rates prevailing on their respective purchase dates. Below is a summary of the interest rates for the past periods:

      For certificates purchased on or after October 3, 2022 and before      November 7, 2022: 0.1750 per cent per annum
      For certificates purchased on or after November 7, 2022, and before December  5, 2022:  0.3167 per cent per annum
      For certificates purchased on or after December 5, 2022, and before    January 3, 2023:  0.4000 per cent per annum
      For certificates purchased on or after January 3, 2023, and before          March 6, 2023: 0.5833 per cent per annum
      For certificates purchased on or after March 6, 2023, and before                April 3,  2023: 0.7500 per cent per annum
      For certificates purchased on or after April 3, 2023, and before                  June 5, 2023: 0.7667 per cent per annum
      For certificates purchased on or after June 5, 2023, until further notice:  0.8083 per cent per annum
      This is always subject to the general rule that interest ceases to accrue after 36 complete months.   Source: IRD.gov.hk
    • Government welcomes passage of Stamp Duty (Amendment) (No. 2) Bill 2023

      The Government welcomes the passage of the Stamp Duty (Amendment) (No. 2) Bill 2023 by the Legislative Council today (June 21), which implements a measure to trawl for talent as announced in the 2022 Policy Address by introducing a refund mechanism under the Buyer's Stamp Duty (BSD) and the New Residential Stamp Duty (NRSD) regimes to attract talent from around the world to stay in Hong Kong for long-term development, thereby enriching the talent pool of Hong Kong. The Deputy Chief Secretary for Administration, Mr Cheuk Wing-hing, said, "The refund mechanism will bring the overall stamp duty charged on eligible incoming talents on par with that charged on first-time home buyers who are Hong Kong permanent residents (HKPRs), hence reducing the cost of home purchase for those incoming talents who are able and wish to buy residential properties in Hong Kong. We believe that this measure will help incentivise incoming talents to purchase homes and reside in Hong Kong in the long run, which would inject impetus to the growth of Hong Kong." Under the refund mechanism, for an eligible incoming talent who has entered Hong Kong under a designated talent admission scheme, acquired a residential property in Hong Kong on or after October 19, 2022 (i.e. the date of announcement of the 2022 Policy Address), and subsequently becomes an HKPR, he/she can apply for a refund of the BSD and the NRSD paid for the residential property which, at the time it was purchased, was the applicant's only residential property (save for replacing property) and the applicant still holds on the date of the application for refund. The Ad Valorem Stamp Duty at Scale 2 rates (i.e. the rates applicable to first-time home buyers who are HKPRs) will still be payable.

      Source: ird.gov.hk

  • India
    • India Sets Cost Inflation Index for FY 2023-24 for Capital Gains Purposes

      On 12 June 2023, the Central Board of Direct Taxes (CBDT) issued notification 39/2023 determining the cost inflation index at 348 for the financial year (FY) 2023-24. The notification will come into force from 1 April 2024. The cost inflation index for FY 2022-23 is 331.

      The cost inflation index is used to calculate capital gains on sales of long-term capital assets to account for inflation between the year of acquisition of the asset and its sale. Certain assets or taxpayers may not be eligible for the benefit of the cost inflation index.

    • Extension for submission of TDS returns

      Due date to file TDS returns for 1st quarter of F.Y. 2023-24 for Form 26Q and 27Q has been extended from 31st July 2023 to 30th September 2023 and for Form 27EQ due date has been extended from 15th July 2023 to 30th September 2023 vide Circular no. 09/2023 dated 28th June 2023.

      The full circular can be read here

    • Digital India is a global success story

      Embracing the Digital Era

      In recent years, India has witnessed a remarkable transformation in its digital landscape. Government services have gradually been integrated into digital platforms, allowing for quick and efficient delivery at the grassroots level. Today, citizens can access these services with a simple click, receiving the assistance they need within seconds. As part of the Government of India's vision to digitize the financial sector and economy, there has been consistent growth in digital payment transactions. Additionally, significant efforts have been made to prioritize financial inclusion as a crucial national goal, ensuring that every individual has access to financial services.

      Digital India has set a significant goal of attaining a status characterized by "Presence-less, Paperless, Cashless, backed with Consent" transactions. The Government of India has placed utmost importance on promoting digital payments, aiming to include every segment of the country's population within the formal framework of digital payment services. The ultimate vision is to ensure that all Indian citizens can access seamless digital payment facilities conveniently, affordably, quickly, and securely.

      Why transition to a Digital Economy

      Digital payments offer a faster and more convenient alternative to traditional methods. By using digital mediums, individuals can avoid the inconvenience of long queues at banks or ATMs to withdraw cash. It also reduces the need to carry physical currency, minimizing the risks associated with handling cash. With just a smartphone and a stable internet connection, transactions can be completed with a single click, making it a convenient option for users.

      Moreover, digital transactions help in controlling the circulation of black money by allowing the government to track and monitor all financial activities. This enables the elimination of counterfeit notes and facilitates better regulation of income taxes.

      Digital payments have emerged as a significant advantage during the pandemic. They enable contactless and safe transactions, eliminating the need for physical contact during monetary exchanges.

      Rise of Digital Transactions

      Over the past few years, India has witnessed an unprecedented surge in digital payment transactions. User-friendly and convenient digital payment methods such as Bharat Interface for Money-Unified Payments Interface (BHIM-UPI), Immediate Payment Service (IMPS), pre-paid payment instruments (PPIs), NACH, AePS and National Electronic Toll Collection (NETC) have experienced substantial growth, revolutionizing the digital payment landscape by facilitating both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments.

      Simultaneously, traditional payment modes such as debit cards, credit cards, NEFT, and RTGS have also experienced rapid expansion.

      India ranks #1 for Real-time payments globally, with 89.5 Bn payment transactions in 2022 (76.8% YoY growth (2021-2022)). India accounted for 46% of all real-time transactions worldwide in 2022

      BHIM-UPI has emerged as the preferred payment method among users. UPI has set a new record of processing over 9 Bn transactions (worth $ 179 Bn) in May’23 . UPI accounts for 75% of the total retail digital payments in India.

      Government initiatives promoting financial inclusion

      At the core of India's revolutionized digital payment landscape is the JAM Trinity - Jan Dhan, Aadhaar, and Mobile. Launched in August 2014, the Pradhan Mantri Jan-Dhan Yojana (PMJDY), the world’s largest financial inclusion initiative, was rolled out helping in new bank account enrolment of over 490 Mn beneficiaries till date for direct benefits transfer and accessibility to a host of financial services applications. Aadhaar, a flagship product of the Unique Identification Authority of India, serves as a straightforward yet effective means of verifying individuals and beneficiaries through their biometric information. Till date, 1.3+ Bn Aadhaar cards have been issued and 15 Bn Aadhaar based E-KYC verification has been done. Jan Dhan accounts, Aadhaar, and Mobile connections have laid the foundation for a Digital India, where a wide range of government services are directly accessible to citizens, greatly enhancing convenience and eliminating intermediaries.  In order to enhance accessibility, approximately 8.50 lakh Bank Mitras have been deployed to deliver banking services in a branchless manner, ensuring convenience for account holders.

      In 2021, the Indian government introduced e-RUPI to enhance the effectiveness of Direct Benefit Transfer (DBT) through digital transactions and revolutionize digital governance. This innovative system facilitates a seamless and secure two-step redemption process, eliminating the need for sharing personal information. Notably, e-Rupi can be utilized on basic mobile phones, enabling individuals without smartphones or in areas with limited internet connectivity to avail its benefits. 27,652 e-RUPI vouchers  were created in December 2021 and it is intended to enhance the efficiency of Direct Benefit Transfer (DBT) in the country.

      In 2022, the government launched UPI 123Pay, a quick and secure instant payment system designed specifically for feature phone users, enabling them to utilize UPI payment services effectively. UPI Lite, which was launched in the same year, on the other hand, is an on-device wallet feature that facilitates real-time, small-value payments for users and recorded 6.62 lakh transactions until 12th December 2022.

      Paving the Way to Global Leadership

      India has witnessed a significant transformation in its digital payment landscape. The government's initiatives have been well-received by the people, who have shown a remarkable willingness to embrace emerging technologies.

      With relentless efforts, the Government of India is dedicated to establishing the country as a global leader in the realm of digital payment systems. The aim is to position India as one of the most efficient and advanced payment markets worldwide and ensure widespread and affordable internet and digital accessibility for all its citizens, including those currently lacking access or underserved.

      By achieving this goal, India seeks to foster new digital ecosystems capable of addressing various economic and social challenges across different sectors. This endeavour holds the potential to establish a thriving digital economy, generating economic value of up to $ 1 Tn by 2025, and positioning India as a global hub for digital innovation and production.

      Source: investindia.gov.in

  • Singapore
    • Singapore Launches Consultation on Proposed Income Tax (Amendment) Bill 2023

      The Ministry of Finance has proposed a number of amendments to the Income Tax Act 1947 (ITA) comprising 14 amendments to revise existing policies, improve tax administration and align Singapore income tax laws with international tax developments, along with 19 amendments to give effect to tax measures previously announced in the 2023 Budget Statement. The proposed amendments are set out in the draft Income Tax (Amendment) Bill 2023 and a consultation exercise is currently underway (from 6 to 30 June 2023). The relevant documents for the public consultation are available here.

      The key non-Budget 2023-related amendments are summarized below:

      • to align the tax treatment of disposal gains derived from the sale of foreign assets (including movable and immovable property) with the European Union Code of Conduct Group guidance, a proposed new section 10L of the ITA will deem such gains received in Singapore on or after 1 January 2024 by entities of multinational enterprise (MNE) groups that lack economic substance in Singapore as taxable income under section 10(1)(g) of the ITA, regardless of whether the gains are capital in nature or not. This provision will not apply to such gains derived by:
        1. prescribed financial institutions;
        2. entities that qualify for certain prescribed incentive schemes under the ITA or the Economic Expansion Incentives (Relief from Income Tax) Act 1967;
        3. excluded entities (i.e. pure equity-holding entities or non-pure equity-holding entities that satisfy certain prescribed conditions); and
        4. individuals;
      • for a non-pure equity-holding entity to qualify as an excluded entity, it must carry out a trade, business or profession in Singapore, have its operations managed or performed in Singapore (by employees or third parties), and have "reasonable economic substance" in Singapore (taking into account the number, qualification and experience of the entity's employees, the amount of business expenditure incurred by the entity in Singapore, and whether its key business decisions are taken in Singapore);
      • under the proposed new section 68A of the ITA, certain prescribed classes of persons (intended to cover intermediaries such as commission-paying agencies and taxi or platform operators) must directly submit to the Comptroller of Income Tax the earnings information of self-employed persons (SEPs) with whom they have entered into an agreement or arrangement for carrying out any trade, business, vocation or profession;
      • with effect from year of assessment (YA) 2024, the fixed expense deduction ratio (FEDR) will be extended under the proposed new section 14ZH of the ITA to cover SEPs who are delivery workers earning gross annual revenue of up to SGD 50,000. Such SEPs will be allowed to deduct expenses incurred based on a fixed percentage of gross income earned depending on the delivery mode (i.e., by van, by personal mobility devices or motorcycles, or by bicycles or on foot);
      • the Comptroller (in addition to the Public Prosecutor) may exercise discretion to authorize:
        1. the commencement of prosecution of offences relating to the Automatic Exchange of Information (AEOI) provisions in the ITA; and
        2. officers to compound AEOI offences that are compoundable under the ITA; and
      • the income of an estate under administration (EUA) may be assessed at the beneficiary level if the income is distributed to the beneficiary within the same calendar year of receipt or any longer period allowed by the Comptroller (as the case may be). Additionally, the Amendment Bill will equalize the tax treatment of an EUA and an estate held in trust (EHT) by allowing a Singapore tax resident beneficiary of an EUA to enjoy the same concessionary tax rates, tax exemptions and foreign tax credits as those currently granted to a Singapore tax resident beneficiary of an EHT.

      It was previously announced during the Budget 2023 that Singapore intends to implement the Pillar Two Global Anti-Base Erosion (GloBE) rules of the OECD Base Erosion and Profit Shifting (BEPS) 2.0 project and a domestic tax to top-up the effective tax rate of large MNE groups operating in Singapore, from businesses' financial year commencing on or after 1 January 2025. The Amendment Bill, however, does not contain any amendments to give effect to the GloBE rules.

  • Switzerland
    • Il Consiglio federale pone in vigore la modifica dell’ordinanza sull’IVA concernente le procedure elettroniche

      Il 1° gennaio 2022 è entrato in vigore l’articolo 65a della legge sull’IVA (LIVA). Secondo questa disposizione, il Consiglio federale può prescrivere che le procedure previste dalla LIVA vengano svolte per via elettronica.

      Ad oggi una preponderante maggioranza dei contribuenti interagisce già con l’Amministrazione federale delle contribuzioni (AFC) per via elettronica. A fine 2022 praticamente il 100 per cento degli annunci e circa il 96 per cento dei rendiconti e il 70 per cento delle correzioni nell’ambito dell’IVA avveniva per via elettronica. Ciò dimostra che l’utilizzo del portale presenta più vantaggi dell’annuncio o del rendiconto cartaceo. Il Consiglio federale ha pertanto deciso di porre in vigore la modifica dell’ordinanza sull’IVA concernente le procedure elettroniche al 1° gennaio 2024.

      I pareri espressi in occasione della procedura di consultazione sono stati prevalentemente positivi. Singoli partecipanti hanno avanzato la richiesta di introdurre un periodo transitorio per il passaggio al rendiconto per via elettronica e un disciplinamento in caso di guasti al sistema oppure hanno respinto a priori l’utilizzo obbligatorio del portale elettronico.

      Pertanto, alle imprese che trasmettono all’AFC gli atti scritti ancora in forma cartacea l’ordinanza concede un periodo transitorio di un anno al fine di consentire loro il passaggio al trattamento elettronico. Nel commento all’ordinanza viene inoltre illustrata la procedura per i casi in cui l’accesso al portale sia temporaneamente bloccato per motivi imputabili al gestore del portale.

      Fonte: Admin.ch

  • United Arab Emirates
    • United Arab Emirates Clarifies Nexus for Non-Resident Legal Entities

      The United Arab Emirates has clarified that any non-resident legal entity is deemed to be connected to the United Arab Emirates if it derives income from immovable property situated in the United Arab Emirates.

      The taxable income attributable to the immovable property includes income derived from the right in rem, sale, disposal, assignment, direct use, leasing, including subletting, and any other form of exploitation.

      The decision also introduces an anti-fragmentation rule, which provides that if a non-resident person artificially transfers or otherwise disposes of his right in rem in immovable property in the United Arab Emirates to another person, and such transfer or disposal is not for a valid commercial or other non-fiscal reason that reflects economic reality, this would be considered an arrangement to obtain a corporate tax advantage under the general anti-avoidance rules.

      Immovable property means any of the following:

      • any area of land over which rights or interests or services may be created;
      • any building, structure or engineering work permanently affixed to the land or to the seabed; and
      • any fixture or equipment which forms a permanent part of the land or which is permanently attached to the building, structure or engineering work or which is attached to the seabed.

      Cabinet Decision No. 56 of 2023 determining the nexus of a non-resident person in the United Arab Emirates for the purpose of corporate tax was published on the official website on 1 June 2023.

    • United Arab Emirates Clarifies Regime for Activities of Free Zone Qualifying Persons for Corporate Income Tax

      The Minister of Finance (MoF) has clarified the qualifying and excluded activities carried out by Qualified Free Zone Persons (QFZPs) for corporate tax purposes.

      Qualifying activities

      The qualifying activities are as follows:

      • manufacture of goods or materials;
      • processing of goods or materials;
      • holding shares and other securities;
      • owning, managing and operating ships;
      • reinsurance services subject to regulatory supervision by the competent authority of the United Arab Emirates;
      • fund management services subject to regulatory supervision by the competent authority of the United Arab Emirates;
      • wealth and investment management services subject to regulatory supervision by the competent authority of the United Arab Emirates;
      • headquarters services to related parties;
      • treasury and financing services to related parties;
      • financing and leasing of aircraft, including engines and rotating components;
      • distribution of goods or materials in or from a designated area to a customer who resells such goods or materials, or parts thereof, or who processes or modifies such goods or materials, or parts thereof, for the purpose of sale or resale;
      • logistics services; and
      • any activity ancillary to those listed above.

      Excluded activities

      The following activities are excluded:

      • all transactions with natural persons, except for transactions relating to the following eligible activities:
        • the ownership, management and operation of ships;
        • fund management services subject to regulatory supervision by the competent UAE authority; and
        • asset management and investment services subject to regulatory supervision by the competent authority of the UAE;
      • financing and leasing of aircraft, including engines and rotating parts;
      • banking activities subject to regulatory supervision by the competent authority of the United Arab Emirates;
      • insurance activities subject to the supervision of the competent authority of the United Arab Emirates, except for reinsurance services subject to the supervision of the competent authority of the United Arab Emirates;
      • financing and leasing activities subject to regulatory supervision by the competent authority of the State, other than treasury and related party financing services and the financing and leasing of aircraft, including engines and rotating parts;
      • owning or operating real estate other than commercial real estate located in a free zone, provided that the transaction relating to such commercial real estate is carried out with other persons in the free zone;
      • the ownership or operation of intellectual property; and
      • any activity ancillary to the above (an activity is considered ancillary if it has no independent function but is necessary for the exercise of the main activity).

      In addition, the Ministry of Finance has confirmed that a QFZP must meet the following two conditions, in addition to those set out in the CIT Act:

      • its non-qualifying income must not exceed 5% of its total income during the tax period or AED 5 million whichever is less; and
      • it prepares audited financial statements in accordance with Ministerial Decision No. 82 of 2023.
      Decision No. 139 of 2023 on qualifying and excluded activities for the purposes of corporate income tax can be read on the official website of Ministry of Finance or be downloaded here
    • Dubai’s Department of Economy and Tourism launches ‘QR Code’ initiative for Holiday Homes in Dubai

      Dubai’s Department of Economy and Tourism (DET) today announced the launch of a new QR Code initiative for Holiday Homes in Dubai, as part of efforts to improve transparency and increase confidence among investors and visitors in the short-term rental market.

      Launched as part of Dubai's commitment to supporting the continuous growth of the hospitality industry, the initiative is closely aligned with the goals of the Dubai Economic Agenda (D33) to further consolidate Dubai's position as one of the top three global cities. Additionally, the initiative is in line with Dubai's digital transformation strategy, which seeks to establish the emirate as a leading global smart city.

      As part of the initiative, owners of Holiday Homes will now be required to display a QR code on the main entrances of their vacation properties in Dubai. This code enables visitors and guests to conveniently scan it and access essential information about the operator of the Holiday Home and the relevant contact details for DET. The initiative will also facilitate oversight and inspections conducted by the Dubai Corporation for Consumer Protection and Fair Trade, part of DET, ensuring strict compliance with procedures.

      DET’s Dubai Business License Corporation will oversee the implementation of the QR Code project, which will further enhance the city’s diverse hospitality infrastructure catering to the varied preferences and budgets of international travellers.

      Shaikha Al Mutawa, Director of Hospitality Affairs Department at Dubai’s Department of Economy & Tourism (DET) said: “As we continue to navigate the ever-changing landscape of the tourism industry, we recognise the importance of innovation and technology in further bolstering Dubai’s image as a must-visit destination. To ensure the effective governance of the Holiday Homes segment, we are introducing QR codes, as a part of the ongoing digital transformation process across customer and visitor touchpoints in the city. It is also a testament to our commitment to providing exceptional experiences for our guests in line with the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to make Dubai the best city to visit, live in and work. We are also continuously taking steps to offer flexible and multiple options year-round in the short-term rental market, thereby strengthening confidence among investors and potential guests.”

      According to DET data, the Holiday Homes segment has registered excellent growth, reaching 21,132 units (+45.5% YoY), with 32,794 rooms (+40.7 % YoY) by the end of March 2023, compared to the same period in 2022 (14,518 units and 23,299 rooms). Additionally, Holiday Homes hosted 137,144 guests in Q1 2023.

      Dubai’s Holiday Homes features a diverse range of residential units, including studios, apartments, and villas in gated communities, as well as properties in farms located in the Hatta area, providing privacy and ample space for families as well as a unique vacation opportunity for guests that transcends traditional hospitality experiences.

      The Dubai Business Licence Corporation (DBLC) offers licences and permits for licensed establishments to manage and document their activities based on the Holiday Homes classification system. Dubai’s Holiday Homes market undergoes a rigorous classification process, periodically categorised into tourist and luxury units and villas, based on the conditions set by DET, which conducts inspections to ensure that the units meet the approved classification criteria. Detailed information can be found by accessing a guide for operating vacation homes, available on DET’s website for Holiday Homes at https://hh.dtcm.gov.ae/holidayhomes/Welcome.aspx. The guide is updated regularly to align with updates in the sector and as per the needs of stakeholders.

      The Department also addresses complaints and disputes, offering solutions in a timely manner via ecomplaints@dubaitourism.ae. Non-compliance with the Holiday Home standards, rules and requirements will result in warnings for violators, and if there is any recurrence in violations it could lead to the imposition of penalties on the operator. The Department will also not issue a classification certificate to the Holiday Homes property unless all specified conditions, specifications, requirements, and technical equipment are met. For updates, procedures, and instructions on Holiday Homes, visit https://www.dubaitourism.gov.ae/en/legislative-news/holiday-homes-regulation-guide-2022

      Dubai has experienced remarkable growth in the hospitality industry, including significant demand from investors due to its sophisticated infrastructure, vast potential, and legislation on par with international standards. The emirate has also established itself as a top tourist destination, welcoming 4.67 million visitors in the first quarter of 2023, a 17% YoY growth, which is 98% of pre-pandemic levels, making Dubai the fastest recovering destination globally. The city has further consolidated its position as a must-visit destination after being chosen as the No.1 Global destination in the Tripadvisors Travellers’ Choice Awards 2023 for the second year in a row, becoming only the second city in history to have achieved this feat.

      Source: mediaoffice.ae

    • DMCC publishes latest “future of trade” report on gaming and esports

      Gaming revenues are expected to almost double by 2027 from 2021 in the Middle East and North Africa (MENA) region, reaching USD 6 billion, according to DMCC’s latest Future of Trade 2023 report titled ‘Gaming in the Middle East and North Africa (MENA): Geared for growth’. A young and digital-savvy population, high levels of digital connectivity, and government support are driving the region’s emergence as a consumer and creator hub.

      Gaming and esports are both fast growing consumer segments, benefiting from rapid advancements in technology as well as broader and more inclusive audiences. The UAE and Saudi Arabia lead the region, supported by high income levels, strong digital engagement, and public investment initiatives. Globally, Asia Pacific constitutes the largest market share and China, the US, and Japan are the largest individual markets.

      The report gathers contributions from key industry leaders including Jad El Mir, Partner at Strategy&, and Klaus Kajetski, CEO and Founder of YaLLa Esports, to establish the critical drivers of the industry’s accelerated growth in the MENA region and beyond. It also examines the impact on gaming and esports from a technology, culture, and business perspective, covering global consumer trends, the emergence of MENA as a gaming and esports hub, and the key challenges that the industry needs to address to increase revenues further.

      Guiding the global industry’s accelerated growth from nearly USD 200 billion in revenues in 2021 to USD 340 billion in 2027, the report outlines a set of key recommendations for governments and businesses, namely:

      • Diversify esports revenue streams from sponsorship to new direct-to-fan monetisation models – including digital merchandising, loyalty programmes and training platforms for amateur gamers – to boost revenues.
      • Develop appropriate regulatory safeguards to ensure privacy, security and safety online in the digital gaming ecosystem and provide a business-friendly environment – including smoother visa systems to allow esports professionals and audiences to attend live events – to attract talent into the region and elevate it into a global industry leader.

      Ahmed Bin Sulayem, Executive Chairman and Chief Executive Officer, DMCC, said: “Gaming has come to the fore of entertainment globally, driving rapid growth especially in the MENA region, which now constitutes 15% of the global player base. The rise of gamification in areas such as education, healthcare, and other sectors has demonstrated gaming’s role in facilitating economic activity more broadly. Ensuring the accelerated growth of the gaming sector will have a measurable impact on the future of markets around the world, as well as the future of trade. As DMCC seeks to solidify Dubai’s reputation as a global trade and economic hub, efficiently activating opportunities within the gaming sector will prove essential.”

      Among the most closely watched segments is esports, which is expected to post revenue growth of 23.3% between 2019 and 2024 in MENA. Fuelling this is the region’s young demographic, engagement from international broadcasters and sponsors, and government support. Tapping into this economic potential, DMCC partnered with YaLLa Esports, the Dubai-based professional esports organisation, to launch the DMCC Gaming Centre in December 2022. The Centre supports the growth of the industry in Dubai by providing gaming businesses with access to global capital, leading industry talent, and an ecosystem that allows them to operate efficiently and with confidence.

      Due to the UAE’s strong business environment and infrastructure, as well as its status as a gateway to the Middle East and Asia Pacific regions, various international gaming developers have set up their regional headquarters in the country. Ubisoft is based in Abu Dhabi, while the gaming giant Tencent set up its MENA HQ in Dubai along with Riot Games. In Saudi Arabia, the kingdom has included gaming as a core element of its Neom project and has already made investments worth over $1.7 billion on the gaming industry.

      This special edition of DMCC’s Future of Trade report follows the launch of its flagship biennial report in July 2022, which set out the key drivers of global trade over the next decade. The Future of Trade report series has been downloaded and viewed a total of 1.3 million times.

          Source: mediaoffice.ae
  • United Kingdom
    • Tax Authority Updates Double Taxation Treaty Passport Form

      The United Kingdom's tax authority, His Majesty's Revenue and Customs (HMRC) has published an updated form DTTP1, which overseas companies can use to apply for a Double Taxation Treaty passport or to renew it.

      The form can be used if the company or entity:

      • is resident in a country that has concluded a double taxation treaty with the UK; and
      • receives relief from UK income tax on interest gained in the UK.

      The double taxation treaty passport scheme allows overseas lenders to register with HMRC. Subject to approval, they can then provide their unique "passport number" to a UK borrower which can then be advised of the correct rate of withholding tax by HMRC.

      The form must be completed online and cannot be saved during the process hence all required information should be obtained before its completion.

      More information on the scheme can be found here.

    • New oil and gas tax changes set to protect energy security and British jobs

      The Energy Profits Levy, which puts a marginal tax rate of 75% on North Sea oil and gas production, will remain in place for the next five years while oil and gas prices remain higher than historic norms – but this will fall back to 40% when prices consistently return to normal levels for a sustained period.

      Put in place to tax extraordinary profits made by industry following record high prices of oil and gas driven by Putin’s invasion of Ukraine, the levy has raised around £2.8 billion to date and is expected to raise almost £26 billion by March 2028 – helping to fund the measures to help with the cost of living, such as the Energy Price Guarantee.

      While the levy included an investment allowance to encourage firms to continue to invest in oil and gas extraction in the UK, industry has warned that companies are cutting back on investment. This puts the long-term future of the UK’s domestic supply at risk, meaning we would be forced to import more from abroad at a time when reliable and affordable energy is a focus for families and businesses.

      In response to this, the Government has today announced an Energy Security Investment Mechanism to give the oil and gas sector certainty to raise capital and invest in new and existing projects, securing affordable and reliable domestic energy supply and protecting some of the 215,000 British jobs the sector supports. It will mean that if prices fall to historically normal levels for a sustained period the tax rate for oil and gas companies will return to 40%, the rate before the Energy Profits Levy was introduced. Based on the independent Office for Budget Responsibility’s forecast the Energy Security Investment Mechanism won’t be triggered until before the tax’s planned end date in March 2028.

      In light of Putin’s weaponisation of energy, the UK government is taking concrete steps to accelerate home-grown sources of energy to reduce the UK’s reliance on foreign imports. In October 2022, the industry regulator the North Sea Transition Authority (NSTA) opened applications for oil and gas licences to explore and potentially develop 898 blocks and part-blocks in the North Sea which may lead to over 100 licences being awarded from later this year.

      Gareth Davies MP, Exchequer Secretary to the Treasury, said:

      “It is right that we recover excess profits resulting from Putin’s war and use the money to help people with their energy bills. Thanks to the revenue raised from windfall taxes on energy profits, we will have helped save the typical household £1,500 on their energy bill by July.

      “While we stepped into help, never again can our energy supplies be at the whim of petrostate despots like Putin. That’s why it’s so important that we secure investment in our own domestic supply, protecting the tens of thousands of British jobs that come with it.

      “It would be beyond irresponsible to turn off the North Sea taps overnight. Without oil and gas from British waters, we would be forced to import even more from overseas, putting our security of supply at risk.”

      This ‘windfall tax’ takes the total revenues from taxes on oil and gas companies to £50 billion over the next five years. These taxes will have helped the Government save the typical household over £1,500 to July. It also helped cut the energy bills of businesses from pubs to leisure centres, with just under £40 billion paid out across businesses and households to date.

      The tax rate for oil and gas companies will only return to 40% if both average oil and gas prices fall to, or below, $71.40 per barrel for oil and £0.54 per therm for gas, for two consecutive quarters. This level is based on 20-year historical averages. The Energy Security Investment Mechanism is not expected to impact receipts from the Energy Profits Levy, based on current market forecasts.

      Today the Government has also published the terms of reference for the oil and gas fiscal regime review that was announced at the Autumn Statement. The review will focus on how the tax regime can support the country’s energy security and our net-zero commitments, while ensuring the country retains a fair return in exchange for the use of its resources when responding to any future price shocks.

      Further information:

      • Offshore Energies UK estimate that 215,000 UK jobs are reliant on the upstream oil and gas sector and have warned that nine out of ten oil and gas companies operating in the North Sea are cutting back investment. If there was no investment in new fields, production could be a third lower than otherwise by 2035, putting the UK’s energy security, jobs, and economy at risk.
      • Projections by the North Sea Transition Authority suggest that stopping investment in new North Sea oil and gas fields would mean that by 2035 the proportion of UK oil and gas demand met by net imports could increase by around 10%, adding significantly to the trade deficit.
      • The Energy Security Investment Mechanism level is calculated from 20-year historic averages based on World Bank data for oil, and Independent Commodity Intelligence Services for gas. The last time monthly average prices were at or below this level was in March 2021 for gas and August 2021 for oil.
      • Based on the independent OBR’s forecast the Energy Security Investment Mechanism won’t be triggered until before the tax’s planned end date in March 2028.
      Source: Gov.uk
    • HMRC late payment interest rates to be revised after Bank of England increases base rate

      HMRC interest rates for late payments will be revised following the Bank of England interest rate rise to 5%.

      The Bank of England Monetary Policy Committee announced on 22 June 2023 to increase the Bank of England base rate to 5% from 4.5%.

      HMRC interest rates are linked to the Bank of England base rate.

      As a consequence of the change in the base rate, HMRC interest rates for late payment and repayment will increase.

      These changes will come into effect on:

      • 3 July 2023 for quarterly instalment payments
      • 11 July 2023 for non-quarterly instalments payments

      How HMRC interest rates are set

      HMRC interest rates are set in legislation and are linked to the Bank of England base rate.

      Late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit - or ‘minimum floor’ - of 0.5%.

      The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.

      The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay.

      Source: gov.uk 

  • United States
    • IRS Updates Practice Unit on Categorization of Foreign Income and Taxes for Foreign Tax Credit Purposes

      The Internal Revenue Service (IRS) has updated its International Practice Unit, which covers the appropriate identification of the types of foreign sourced income and taxes to determine assignment into their proper categories, to address changes from the implementation of the Tax Cuts and Jobs Act (TCJA).

      The IRS released the updated Practice Unit, entitled "Categorization of Income and Taxes Into Proper Basket" on 26 June 2023 (INT-C-054 (formerly FTC/C/10_02-01), revised 15 May 2023).

      According to the updated Practice Unit, the Foreign Tax Credit (FTC) calculation must be applied separately to each category of income, sometimes referred to as income baskets. To prevent averaging low-taxed income in one category with high-taxed income in another category, which could overstate the FTC, the foreign income and related taxes from one category cannot be combined with another category. The FTC limitation must be calculated separately for different categories of foreign source income according to section 904(d) of the Internal Revenue Code (IRC).

      The Practice Unit discusses the current seven categories of income, including:

      • IRC section 951A category income, which was added by the TCJA;
      • foreign branch category income, which was added by the TCJA;
      • passive category income;
      • general category income;
      • IRC 901(j) income;
      • certain income resourced by treaty; and
      • lump-sum distributions.