October 2023

Rispetto a 107 città in tutto il mondo, Sofia è riuscita a classificarsi al nono posto in termini di crescita più rapida dei prezzi delle case nel secondo trimestre, secondo il Global Residential Cities Index di Knight Frank. Questo risultato significativo sottolinea la crescita dinamica del mercato immobiliare nella Capitale e nel Paese nel suo complesso. Con un valore di crescita dell'8,8% su base annua, Sofia supera alcune capitali europee e mondiali, come la capitale islandese Reykjavik e si colloca dopo Budapest.

I risultati più impressionanti sono stati raggiunti ad Ankara e Istanbul, che sono in cima alla classifica con una crescita dei prezzi delle case rispettivamente del 105,9% e dell'85,1%. Questo tasso di crescita accelerato li rende leader in globale nel mercato immobiliare. Con una crescita costante dei prezzi delle case, anche città come Dubai, Vilnius, Zagabria, Gerusalemme e Atene mostrano cifre impressionanti, che le collocano nella top 10 delle città in più rapida crescita per prezzi delle abitazioni nel secondo trimestre.

Gli investimenti diretti esteri (IDE) in Bulgaria per i primi otto mesi dell'anno hanno raggiunto i 2,2 miliardi di euro, in aumento del 33% rispetto allo stesso periodo dell’anno precedente. Questi sono i nuovi dati pubblicati dalla Banca Nazionale Bulgara (BNB). La BNB ha stimato che solo ad agosto il flusso di investimenti sia stato positivo per 171 milioni di euro, in aumento rispetto i 113 milioni registrati nel mese di agosto 2022.

Il capitale sociale è aumentato di 355,8 milioni di euro, mentre alla voce “reinvestimento dell’utile” il positivo è stato di 1,7 miliardi di euro.

I maggiori flussi netti di investimenti diretti positivi nel Paese da gennaio ad agosto 2023 sono arrivati dai Paesi Bassi (576,6 milioni di euro), dal Belgio (273,7 milioni di euro) e dalla Germania (219,4 milioni di euro), mentre i maggiori flussi netti negativi sono stati verso la Svizzera (42,4 milioni di euro) e la Romania (30,1 milioni di euro).

Fonte: Confindustria Bulgaria

Four authorities including the Ministry of Finance released the Announcement on Raising the Additional Deduction Proportion of R&D Expenses for Integrated Circuit Enterprises and Industrial Machine Tool Enterprises, with retroactive effect on January 1, 2023.

For actual R&D expenses incurred by integrated circuit ("IC") enterprises and industrial machine tool enterprises in their R&D activities, if they have not generated intangible assets or included the same in the current profits and losses, the expenses can be deducted before tax as per 120 percent of the actually incurred costs during the period from January 1, 2023 to December 31, 2027 on the basis of the actual deduction. In the case that they have generated intangible assets, the expenses can be amortized before tax as per 220 percent of the costs of the intangible assets during the said period, said the Announcement, which also clarifies the scopes of IC enterprises and industrial machine tool enterprises, requiring implementation of the relevant provisions of the MOF and STA No.119 (2015) and MOF and STA No.64 (2018) documents for other policy requirements.

The Ministry of Finance ("MOF") released the Announcement on the Policy for Add-up Deductions of Value-added Tax ("VAT") for Advanced Manufacturing Enterprises, with retroactive effect from January 1, 2023.

According to the document, advanced manufacturing enterprises are eligible for add-up deductions of their payable VAT at 5% of their deductible input VAT during the period from January 1, 2023 to December 31, 2027. For the purpose of the document, advanced manufacturing enterprises refer to manufacturing general taxpayers among high-tech enterprises (including their affiliated unincorporated branches). High-tech enterprises are recognized in accordance with the Guo Ke Fa Huo (2016) No.32 rules, while the list of advanced manufacturing enterprises is determined by the relevant authorities.

It is further clarified that input VAT that cannot be deducted from output VAT under current rules shall not be accrued for add-up deductions, and for input VAT that has been accrued for add-up deductions, the add-up VAT shall be lowered accordingly in the transfer-out period of the input VAT.

The Chinese government released on its website the Circular of the State Council on Raising Some Thresholds for Additional Deductions in Individual Income Tax, deciding to raise three thresholds for additional deductions in individual income tax with effect from January 1, 2023.

First, it raises the threshold for special additional deductions in individual income tax for taking care of children under age 3 from 1,000 yuan to 2,000 yuan monthly.

Second, it raises the threshold for special additional deductions for education of each child from 1,000 yuan to 2,000 yuan monthly.

Third, it raises the threshold for special additional deductions for taking care of the elderly from 2,000 yuan to 3,000 yuan monthly. Specifically, if the applicant is the only child who care the elderly, an amount of 3,000 yuan can be deducted on a monthly basis. If the applicant has siblings, a monthly deduction quota of 3,000 should be allocated among the siblings and capped at 1,500 yuan for each person.

 

The Ministry of Finance ("MOF") and the State Taxation Administration ("STA") released the Announcement on Continuing the Policy for Deduction of Corporate Income Tax for Purchase of New Equipment and Instruments, clarifying that the policy will continue to be implemented from January 1, 2024 to December 31, 2027.

According to the Announcement, enterprises that purchase new equipment and instruments worth of no more than 5 million yuan during the period from January 1, 2024 to December 31, 2027 are allowed to include the full purchase cost in the cost and expense for the current period and make one-off deduction in calculation of their taxable income, and depreciation of the cost on a yearly basis will be cancelled. Where the purchase is worth of over 5 million yuan, the pre-tax deduction shall still be subject to the Regulations for the Implementation of the Corporate Income Tax Law, the MOF and STA No.75 (2014) document, and the MOF and STA No.106 (2015) document.

  Source: Announcement of the State Taxation Administration

The Egyptian Tax Authority (ETA) has authorized e-commerce taxpayers to deduct certain expenses from annual income. This authorization is set out in a directive in which the following items are listed as deductible:

• 25% of rental costs;
• 75% of Internet invoices; and
• 20% of electricity invoices.

The directive also specifies that taxpayers can benefit from this deduction if they carry on e-commerce activities from their homes.

The Egyptian Tax Authority (ETA) has urged taxpayers to apply withholding tax to their purchases. The reminder is in line with Article 59 of Income Tax Law No. 91 of 2005, which stipulates that tax authorities may directly email or WhatsApp certain taxpayers to apply withholding tax rates to their purchases. The taxpayer should present the following documents when visiting the tax authority:

• tax identification number;
• commercial Register;
• company agreement (single company);
• corporate agreement;
• proof of ownership/lease of the business premises; and
• receipt from utility company.

€150 billion Financing allocated to African countries by the European Union under its Global Gateway Initiative to boost infrastructure development in the region. The four-year programme will enhance connectivity and sustainable development, support SMEs, boost the digital and improve energy infrastructure in Africa. (Business Insider Africa)

40% Reduction in carbon emissions expected from the implementation of Nigeria's Gas Flare Commercialisation Scheme, which recently awarded contracts to 42 indigenous firms operating 49 sites. As well as curbing emissions, the programme is expected to raise between $70 million and $100 million in annual revenues from gas flare sales, according to the upstream regulator. (Arise Nigeria)

7 Recent graduates of the 6th cohort of the Women in Tech programme in Kenya who will benefit from the $70,000 seed funding allocated by Standard Chartered Bank in partnership with iBizAfrica Incubation Centre. To date, 32 women-led startups have been awarded seed funding worth a total $320,000 from the initiative, which has received over 2,250 applicants. (Africa Business Communities)

$150 million Investment to be made by Kuramo Capital Management to empower female-led enterprises over the next 10 years. The financing will be made under the Moremi Platform and will involve a three-pillar initiative involving an accelerator programme, a warehousing or lending facility and a Fund of funds. (Africa Business Communities)

400 MW Large-scale solar power plant to be installed in Mozambique by the IFC and Cahora Bassa Hydroelectric Plant (HCB). The project will increase access to affordable renewable energy in the country and raise the production capacity of HCB to 4,000 MW by 2032. (Club of Mozambique)

47,800 tonnes First batch of fertilisers arrived at the port of Mombasa in Kenya for distribution to over 650,000 small-scale tea farmers. The consignment is part of a 92,737-tonne order that the tea management agency placed for the 2023/24 season to be delivered through their respective factory companies in an effort to keep down transport costs and reduce the end-price to farmers. (Food Business Africa)

$100 million Dual line of credit comprising €50 million each from the African Development Bank and ECOWAS Bank of Investment and Development (EBID) to support agriculture enterprises in West Africa. The credit supports EBID's strategic goal of assisting small and medium-sized firms, regional business cooperatives and farmers to promote food security. (TechEconomy)

700 MW Generation capacity of the Zungera hydropower plant commissioned in Nigeria, which is expected to meet 10% of the country's total domestic electricity requirements. The four 175-MW-unit plant is the second-largest hydropower plant in Nigeria, after receiving investment support from the Export-Import Bank of China. (ESI Africa) 3% Annual growth of African exports projected over the next decade to take the value of the continent's outbound sales to $1 trillion by 2035, according to a new report by Standard Chartered on the future of trade in Africa. In this period, Intra-African trade is expected to account for 15% of the total, or some $140 billion. (Africa Business Communities)

$60 million Trade finance facility issued to Access Bank by British International Investment (BII) to boost trade in Nigeria and five of its African subsidiaries. The loan programme, which is expected to stimulate African trade volumes by $90 million, reflects BII's commitment to bolstering financing environments in fragile countries and supports Access Bank's strategy to strengthen African trade.

(The Guardian Nigeria)

5% Available grid capacity in South Africa to be funded by Standard Bank, which is financing projects expected to add 1500 MW of generation by 2024. The new generation will help to close the shortfall in power demand and supply the country faces. (Reuters) 1000 Technology companies in Africa to benefit from Baobab Network between now and 2033. The early-stage investor is scaling up its investment target of its accelerator programme, which offers a 12-week course and $100,000 to support business development. (Africa Business Community)

$6 billion Financial initiative launched by United Bank of Africa (UBA) in partnership with the African Continental Free Trade Agreement secretariat to boost small and medium-sized enterprises (SMEs) across Africa. The funding will support and facilitate the expansion of SMEs in the agro-processing, pharmaceutical, automotive and transport and logistics sectors. (Business Insider Africa)

7.6%  Increase in earnings for Kenyan tea farmers after a $298 million bonus from Kenya Tea Development Agency, leading to record income of $457 million for 600,000 smallholder farmers. The payout comes on the back of increased sales and a favourable foreign exchange rate. (Food Business Africa)

874,000 Informal businesses Uganda expects to register in its formalisation drive by 2026/27. The move, spearheaded by the Uganda Services Registration Bureau, aims to eliminate informality, encourage growth of small businesses and widen the tax base, earning $24 million in the next four years. (Monitor)

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The Inland Revenue (Amendment) (Disposal Gain by Holder of Qualifying Equity Interests) Bill 2023 will be gazetted on October 20 and introduced into the Legislative Council on November 1. The Bill seeks to introduce a tax certainty enhancement scheme to provide greater certainty of non-taxation of onshore gains on disposal of equity interests (the gains) that are of capital nature. The scheme will help enhance the attractiveness of Hong Kong as a premier international investment and business hub, in particular with regard to facilitating business expansion and restructuring as acquisition and disposal of equity interests are common in this process. To determine the nature of the gains, the Inland Revenue Department (IRD) presently adopts a "badges of trade" approach where considerations are given to the relevant facts and circumstances of the case. The scheme will provide upfront certainty on the non-taxation of the gains which meet certain specified criteria. Specifically, the gains will be treated as capital in nature and not chargeable to profits tax if the investor entity concerned has held certain equity interests in the investee entity throughout the continuous period of 24 months immediately before the date of disposal and those equity interests having been held amount to at least 15 per cent of the total equity interests in the investee entity. To strike a balance between facilitating businesses and upholding the integrity of the tax system, the scheme excludes certain gains which are not normally considered as capital in nature and those arising in circumstances where the risk of abuse is relatively high. Where the gains are not eligible for the scheme or taxpayers do not make an election for the scheme, the IRD will continue to use the "badges of trade" approach as it does at present to consider the tax treatment of the gains.

A Government spokesman said, "Hong Kong is renowned for its simple and competitive tax system which does not tax gains on disposal of equity interests of capital nature. The scheme will further increase the competitiveness of our tax regime through greater upfront tax certainty of non-taxation of the gains based on simple and clear rules, faster tax determination and lower compliance cost of businesses." Going further, as compared to similar schemes in other tax jurisdictions, the scheme will be more competitive in that it has a wider coverage of businesses and equity interests, as well as lower equity holding threshold. It also provides more flexible arrangements such as allowing the minimum equity holding percentage of 15 per cent to be met on a corporate group basis, and covering disposal of equity interests in tranches subject to certain restrictions. The scheme also does not specify an expiry date.

The scheme will be applicable to the gains where the disposal occurs on or after January 1, 2024, and the gains accrued in the basis period for a year of assessment beginning on or after April 1, 2023.

Source: www.ird.gov.hk

The Inland Revenue (Amendment) (Taxation on Foreign-sourced Disposal Gains) Bill 2023 (the Bill) will be gazetted on October 13 and introduced into the Legislative Council on October 18. The Bill seeks to refine Hong Kong's foreign-sourced income exemption (FSIE) regime by expanding the scope of assets in relation to foreign-sourced disposal gains to cover assets other than shares or equity interests. A Government spokesman said, "As a staunch supporter of international tax co-operation, Hong Kong has been working closely with the European Union (EU) and other international organisations in countering cross-border tax avoidance. The legislative proposal will align our FSIE regime with the international tax standard of requiring a corporate taxpayer to have substantial economic substance in Hong Kong in enjoying tax exemption with regard to foreign-sourced disposal gains, and prevent shell companies from deriving tax benefits through 'double non-taxation' of foreign-sourced disposal gains. After the proposed refinements are made to the FSIE regime, Hong Kong's tax system will continue to maintain a competitive edge, and our territorial source principle of taxation will be upheld. The majority of taxpayers including individuals, standalone local companies and pure local groups will not be affected."

In response to the EU's inclusion of Hong Kong on its watchlist on tax co-operation in 2021, the Hong Kong Special Administrative Region Government enacted the Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Ordinance 2022 last December to put in place a new FSIE regime for foreign-sourced dividend, interest, intellectual property income and disposal gain in relation to shares or equity interests received in Hong Kong by multinational enterprise (MNE) entities. Through the Bill, Hong Kong's tax regime will be brought in line with the latest requirement of the Guidance on Foreign Source Income Exemption Regimes updated by the EU in December 2022 that disposal gains, as a general class of income covered by the FSIE regime, should be subject to the economic substance requirement. Hong Kong and other jurisdictions with ongoing FSIE reforms have been requested by the EU to further amend the legislation on the FSIE regime by the end of 2023 and implement the refined regime with effect from January 2024. Hong Kong is kept on the EU watchlist pending completion of the necessary legislative amendments. "We will request the EU to swiftly remove Hong Kong from the watchlist upon completion of the legislative amendments," the spokesman said. Extensive consultations with tax professionals, local and foreign chambers of commerce, trade and professional bodies and representatives of the financial services sector in respect of the proposed refinements have been held since April 2023. Stakeholders' comments have been largely taken on board as appropriate. The refined FSIE regime will continue to cover only four types of foreign-sourced passive income received by MNE entities in Hong Kong, leaving foreign-sourced active income unaffected. Under the refined FSIE regime, exemption and relief will continue to be provided to minimise the compliance burden of the affected MNE entities. Foreign-sourced non-intellectual property (IP) disposal gains will be exempt from tax if the MNE entity has adequate economic substance in Hong Kong. For foreign-sourced IP disposal gains, the extent of the tax exemption will be determined by the nexus approach promulgated by the Organisation for Economic Co-operation and Development.

Foreign-sourced non-IP disposal gains derived from, or incidental to, the business of a trader or a regulated financial entity, or the profit-producing activities of a taxpayer benefitting from an existing preferential tax regime will fall outside the scope of the refined FSIE regime. To ease the compliance burden of covered taxpayers and facilitate corporate restructuring, a new intra-group transfer relief applicable to disposal gains will be introduced through the Bill. Any tax charged on disposal gains will be deferred if the asset concerned is transferred between associated entities, subject to specific anti-abuse rules. In addition, double taxation relief will continue to be available under the refined FSIE regime to mitigate possible double taxation. The Government will continue to provide a series of business-facilitating measures, including simplified reporting procedures, availability of advance rulings, administrative guidance and technical support from the Inland Revenue Department to facilitate tax compliance, with a view to reducing compliance burden, enhancing tax certainty and ensuring tax transparency.

Source: www.ird.gov.hk

The Central Board of Direct Taxes (CBDT) has issued a notification that a tax registration number or permanent account number (PAN) is not required for non-resident taxpayers and foreign companies opening accounts in the International Financial Services Centres (IFSC) banking units, provided they file Form 60 and do not have any other taxable income in India.

More specifically, the notification provides as follows:

• a non-resident (not being a company) or a foreign company, having no taxable income in India, is not required to quote a PAN or Aadhar number while making deposits, withdrawals or opening bank accounts with IFSC banking units; and
• a foreign company, having no PAN and no taxable income in India, can execute specific transactions with an IFSC banking unit by filing Form 60 (as amended in the same notification).

The full text of notification 88/2023, dated 10 October 2023 is available here.

As announced in Minister of Finance’s Budget 2022, the GST rate will increase from 8% to 9% on 1 January 2024. The rate change affects any GST-registered business that sells or purchases goods or services that are subject to the standard rate of GST. To ensure a smooth transition, businesses must follow some transactional rules to be prepared for the rate adjustment.

Update Price Display

All price displays with effect from 1 Jan 2024 must be inclusive of GST at 9%. This necessitates updating prices across all sales channels. Businesses have the option to present two prices:

• One applicable before 1 Jan 2024 showing prices inclusive of GST at 8%; and
• One applicable from 1 Jan 2024 showing prices inclusive of GST at 9%.

If prices remain unchanged, businesses are not required to revise displayed prices, but they must still account for GST (9/109) on sales from January 1, 2024, onwards. Update Accounting and Billing Systems 

To comply with the substantial changes associated with the GST rate adjustment, businesses should prepare the invoicing systems to accurately calculate taxes, issue invoices, and file GST returns in accordance with the new requirements.

Reverse Charge Business

GST-registered businesses subject to reverse charge (“RC business”), must account for GST at 9% on the services you procure from overseas suppliers (“imported services”) on or after 1 Jan 2024.

Diacron Assistance for a smooth Transition

Failure to account for GST on your supplies at the correct rate may attract penalties. Being prepared for GST rate change will help you avoid such increases to your business and compliance costs.

Diacron expertise can help you understand the implications and guide you through an efficient and effortless update to the new GST requirements, ensuring compliance.

For further information and assistance please contact us at info@diacrongroup.com

I debitori non devono potersi sottrarre ai loro obblighi finanziari abusando della procedura fallimentare. Nella seduta del 25 ottobre 2023 il Consiglio federale ha posto in vigore, con effetto dal 1° gennaio 2025, le necessarie modifiche di leggi e ordinanze. Questo termine garantisce alle autorità tempo sufficiente per adeguare le proprie procedure interne.

A marzo 2022, il Parlamento ha approvato la legge federale sulla lotta contro l'abuso del fallimento. In futuro sarà più difficile estinguere i propri debiti a scapito dei creditori. Ad esempio, per i crediti di diritto pubblico sarà avviata un'esecuzione in via di fallimento secondo le regole generali. I debitori non devono più poter abusare della procedura fallimentare per sottrarsi ai propri obblighi finanziari, come il pagamento dei salari o dei debiti, danneggiando quindi altre persone. Non sarà inoltre più possibile utilizzare la procedura di fallimento per fare una concorrenza sleale ad altre imprese.

La legge federale sulla lotta contro l'abuso del fallimento comporta la modifica di diversi atti normativi, segnatamente del Codice delle obbligazioni, della legge federale sulla esecuzione e sul fallimento, del Codice penale e della legge federale sull'imposta federale diretta. Il termine di referendum relativo alle nuove disposizioni è scaduto inutilizzato.

Queste modifiche legislative impongono di adeguare alcune disposizioni dell'ordinanza sul registro di commercio (ORC) e dell'ordinanza sul casellario giudiziale informatizzato VOSTRA. Nell'ambito della consultazione sono stati espressi prevalentemente pareri positivi, motivo per cui l'Esecutivo ha dovuto apportare soltanto piccoli accorgimenti. In particolare è stato accolto favorevolmente il fatto che gli indizi per sospettare un trasferimento nullo di azioni saranno elencati nell'ORC. Sono state approvate anche le precisazioni concernenti l'iscrizione della rinuncia a una revisione limitata.

Originariamente il Consiglio federale aveva proposto di introdurre già a inizio 2024 le nuove disposizioni sulle misure più severe nella lotta contro i fallimenti abusivi. Tuttavia, in sede di consultazione le autorità cantonali hanno auspicato un'entrata in vigore posticipata, in modo da concedere alle autorità il tempo sufficiente per adeguare le procedure interne e i sistemi informatici. Per questa ragione, il Consiglio federale ha posto in vigore le nuove disposizioni di legge e di ordinanza con effetto dal 1° gennaio 2025.

Fonte: Admin.ch

Nella seduta del 25 ottobre 2023 il Consiglio federale ha avviato la procedura di consultazione relativa alla revisione parziale dell’ordinanza sull’IVA (OIVA). La revisione comprende segnatamente le disposizioni di esecuzione scaturite dalla revisione parziale della legge sull’IVA (LIVA), diverse semplificazioni nell’ambito del rendiconto secondo il metodo delle aliquote saldo e delle aliquote forfetarie e un rafforzamento dell’obbligo di utilizzo del portale elettronico.

La revisione parziale della LIVA approvata dal Parlamento a giugno ha dato attuazione in particolare a diverse mozioni. Alla modifica della legge consegue un adeguamento dell’OIVA, ad esempio nell’ambito dell’imposizione delle piattaforme online e del rendiconto annuale di nuova introduzione.

Il Consiglio federale coglie l’occasione per aggiornare e precisare l’OIVA anche in altri punti, ad esempio rielaborando completamente il metodo delle aliquote saldo e quello delle aliquote forfetarie. L’obiettivo è determinare in modo più preciso il debito fiscale e semplificare tali metodi nell’ambito del rendiconto IVA, a vantaggio delle piccole e medie imprese. Quale misura di contrasto alle frodi, la procedura di notifica dovrà d’ora in avanti essere applicata obbligatoriamente anche ai pagamenti in contanti superiori a 15 000 franchi per prestazioni imponibili eseguite tra contribuenti.

Il progetto prevede altresì l’utilizzo obbligatorio del portale elettronico per le richieste e le notifiche presentate nell’ambito dei metodi, tutti volontari, delle aliquote saldo, delle aliquote forfetarie, del rendiconto annuale e dell’imposizione di gruppo.

L’entrata in vigore è prevista per il 1° gennaio 2025. Per tale data è auspicata anche l’introduzione del rendiconto annuale, in vista della quale sono necessari ampi adeguamenti a livello informatico.

La consultazione terminerà l’8 febbraio 2024.

Fonte: Admin.ch

Le parti sociali firmatarie dei principali contratti collettivi di lavoro (CCL) della Svizzera hanno concordato per il 2023 un aumento nominale medio del 2,5% per i salari effettivi e dell’1,9% per i salari minimi. I salari effettivi sono aumentati dello 0,4% a titolo individuale e del 2,1% a titolo collettivo. Sono questi i principali risultati che emergono dall’indagine sugli accordi salariali conclusi nei settori convenzionali condotta dall’Ufficio federale di statistica (UST).

Fonte: Admin.ch

The Federal Tax Authority (FTA) has published the Tax Guide on Dividends and Participation Exemption Rules for Corporate Income Tax Purposes.

The Guide provides general guidance on the exemption of dividends and other profit distributions, as well as capital gains and certain income under the participation exemption rules, where a taxpayer holds a significant long-term interest in other legal entities. The Guide explains some of the terms and conditions in the Corporation Tax Law and covers the following:

• the definition of dividends and other profit distributions;
• the exemption of income and related expenses;
• the persons entitled to the exemption;
• the mechanisms of the participation exemption; and
• the effects of the exemption on tax groups.

The Guide was published in the Official Gazette in October 2023.

   

The Federal Tax Authority (FTA) has released the non-resident persons guide for corporate tax purposes.

The guide aims to provide general guidance to natural and tax persons that are not considered resident persons for corporate tax purposes and that derive income from the United Arab Emirates so as to inform them whether they are taxed as non-residents in the United Arab Emirates.

The guide includes information on:

• the concept of a "non-resident person" for corporate tax purposes in the United Arab Emirates;
• the corporate tax obligations of a non-resident person; and
• the income of a non-resident person subject to corporate tax in the United Arab Emirates.

 

The United Kingdom's tax authority, His Majesty's Revenue and Customs (HMRC), has published draft legislation to amend the stamp duty and stamp duty reserve tax (SDRT) legislation by removing the 1.5% charge on the issue of UK securities into depositary receipt systems and clearance services and on some related transfers (known as "transfers integral to capital raising"). It will also remove the 1.5% (or 0.2%) charge on the issue of bearer instruments.

HMRC had recognized that these 1.5% charges were incompatible with the Capital Duty Directive following the 2009 decision of the European Court of Justice in HSBC Holdings PLC and Vidacos Nominees Ltd v Commissioners for HM Revenue & Customs and the 2012 decision of the United Kingdom's First-Tier Tribunal in HSBC Holdings PLC and the Bank of New York Mellon Corporation v Commissioners for HM Revenue & Customs. However, because taxpayers could rely on the direct effect of EU law, no attempt was made to collect the 1.5% duty. Following Brexit, the effect of the Retained EU Law (Revocation and Reform) Act 2023 means that it is now necessary for the government to legislate the 0% charge and this will have effect from 1 January 2024.

The 1.5% charge is contained in:

• section 131 of Finance Act 1976;
• section 126 of Finance Act 1984;
• sections 67 to 72A of Finance Act 1986;
• section 79 of Finance Act 1986;
• sections 93 to 97C of Finance Act 1986;
• section 50 of Finance Act 1987;
• section 143 of Finance Act 1988; and
• schedule 15 of Finance Act 1999.

The legislation will also make consequential changes, including in respect of an anti-avoidance provision which was introduced after the 2009 court decision, but which became redundant following the 2012 court decision.

The Economic Crime and Corporate Transparency Act 2023 (the Act) received Royal Assent on 26 October 2023, but although parts of the Act are law immediately, others require a statutory instrument before they come into force. The Act follows on from the Economic Crime (Transparency and Enforcement) Act 2022 and together they aim to prevent the abuse of United Kingdom corporate structures and to tackle economic crime.

The Act has several key objectives:

• prevent organised criminals, fraudsters, kleptocrats and terrorists from using corporate entities to abuse the UK's open economy. The Act will reform the powers of the Registrar of Companies and the legal framework for limited partnerships to safeguard businesses, consumers and the UK's national security;
• strengthen the UK's broader response to economic crime, in particular by giving law enforcement new powers to seize cryptoassets and enabling businesses in the financial sector to share information more effectively to prevent and detect economic crime; and
• support enterprise by enabling Companies House to deliver a better service for UK companies as well as improving the reliability of its data to inform business transactions and lending decisions across the economy.

Among other measures, the Act gives more power to the Registrar of Companies; introduces new identity verification requirements for new and existing registered company directors, people with significant control, and those delivering documents to the Registrar; tackling the abuse of limited partnerships; amending the Register of Overseas Entities to maintain consistency with the Companies Act 2006; creating powers to quickly and more easily seize and recover cryptoassets; and amending money laundering legislation.

A relevant body would face criminal prosecution if someone associated with it commits fraud to benefit the body where there were not reasonable procedures to prevent the fraud. However, this will apply only to "large organisations", which are those with a turnover of more than GBP 36 million, total assets of more than GBP 18 million and more than 250 employees. At present, small and medium-sized businesses are exempt, although the corporate requirements may be modified or removed in future. By comparison, the Act introduces a new test for corporate liability which is not limited to large organisations. This will apply to senior managers involved in specific economic crimes.

The UK's Registrar of Companies welcomed the introduction of the Act as a significant moment giving new and enhanced powers to Companies House, changing it from a recipient of information to undertaking a more active role. While many of the measures will require system changes before introduction, it is expected that other measures – such as greater powers to query information, stronger checks on company names, new rules for registered office and email addresses – will come into force in early 2024.

The Internal Revenue Service (IRS) issued guidance to extend the wash sale relief to redemption of shares in money market funds (MMF). The IRS released Rev. Proc. 2023-35, which amplifies and supersedes Rev. Proc. 2014-45, which describes circumstances in which the IRS will not treat a redemption of shares in a MMF as part of a wash sale for purposes of section 1091. Specifically, Rev. Proc. 2023-35 extends wash sale relief to redemptions of shares in MMFs that maintain fixed share prices.

Generally, a wash sale occurs when a taxpayer sells a security (such as stocks or bonds) at a loss and then repurchases the same or substantially identical security within 30 days before or after the sale. Section 1091 contains rules governing wash sales and provides that if a taxpayer buys a substantially identical security within 30 days before or after selling it at a loss, the loss is not allowed for tax purposes. Instead, the taxpayer shall adjust the cost basis of the new security. This rule is designed to prevent taxpayers from engaging in tax-avoidance strategies by selling securities at a loss and then immediately repurchasing them.

The IRS granted the relief in Rev. Proc. 2023-35 in response to recent Securities Exchange Commission (SEC) rule changes for registered investment companies regarding liquidity fees that could result in losses on redemptions for most shareholders in stable net asset value (NAV) MMFs. The IRS noted that MMFs have historically tried to keep the prices at which their shares are distributed, redeemed and repurchased stable, without material fluctuations in the value of an MMF's portfolio on a per-share basis.

The IRS clarified in the recently released guidance that redemptions of shares occurring after 2 October 2023 in any MMF will not be treated as being part of a wash sale.

Tax preparers applying for or renewing their preparer tax identification number (PTIN) will pay a reduced fee of USD 11, plus a USD 8.75 third party contractor fee, starting 19 October 2023. The IRS announced the reduced rate in interim final regulations relating to the imposition and calculation of user fees on tax return preparers. Previously, the PTIN fee was USD 30.75.

Tax return preparers who prepare or assist in preparing all or substantially all of a tax return or claim for refund after 31 December 2010 must have a PTIN.

The IRS re-calculates the PTIN fee every few years using various cost models. The interim final regulations provide an explanation and breakdown of the IRS's newest cost model for re-determining costs that the government continues to incur for providing PTINs and administering the PTIN program. The reduced USD 11 fee is based on expected program costs for fiscal years 2024 through 2026 and the projected number of PTIN applications over the same period.

The IRS will continue to allocate funding from the Inflation Reduction Act (IRA) towards increased tax enforcement and has its eyes set on pursuing large corporations, high-income and high-wealth non-filers in the coming year according to a press release by the IRS. The press release additionally shares the IRS actions towards continued improvements to its customer service and modernization of its core technology infrastructure spotlighting the launch of the new business tax account.

The IRS intends on targeting transfer pricing activity linked to US subsidiaries of large foreign corporations that distribute goods in the United States claiming that they "do not pay their fair share of tax on the profit they earn of their U.S. activity." Asserting that these foreign companies make improper use of transfer pricing strategies and report losses or exceedingly low margins, it hopes to circumvent inaccurate reporting of US profits. The IRS will be sending compliance alerts, colloquially known as "soft letters," to roughly 150 subsidiaries of large foreign corporations to remind them of their US tax obligations and to incentivize self-correction. Experts indicate that the IRS has limited success challenging in transfer pricing in the past, however this move may indicate a more aggressive posture in this area in a low-cost manner.

In addition to a more aggressive position vis-à-vis transfer pricing, the IRS' Large Business & International Division's (LB&I) Large Corporate Compliance (LCC) program will also increase its headcount as previously announced to support targeted audits. With the increased headcount, it intends to make use of data analytics and artificial intelligence tools to select 60 corporate taxpayers with average assets of more than USD 24 billion and average taxable income of approximately USD 526 million per year for audit.

The IRS confirmed that it will concentrate its efforts on taxpayers with more than USD 1 million in income and more than USD 250,000 in recognized tax debt, noting that it has successfully collected USD 38 million from more than 175 high-income earners. It has announced that it will continue this effort and has begun contacting about 1,600 new taxpayers since September and has already collected USD 122 million in 100 of these cases.

The US Court of Federal Claims has published an opinion in Christensen v. United States, allowing a US citizen residing in France a foreign tax credit (FTC) against the net investment income tax (NIIT) under the France-United States Income and Capital Tax Treaty (1994).

Under the facts analysed by the Court, an American married couple living in France had US source and foreign source passive income, in addition to earned income. The couple paid French taxes, including tax on a capital gain credited against their US capital gains tax. The IRS disallowed the use of the remaining French taxes paid on the gain to offset the US taxpayers' NIIT (charged at a rate of 3.8%).

On their amended return, the US taxpayers took a treaty-based return position and claimed a refund for the NIIT paid related to their foreign source investment income, and subsequently filed a complaint with the Claims Court seeking a refund.

The Court first determined that deference is not afforded to the US interpretation provided in the IRS technical explanations regarding the interpretation of the France-United States Income and Capital Tax Treaty (1994) as those non-binding documents do not include the French government's interpretation. Further, the Court stated that there was no evidence substantiating a shared interpretation by the signatory governments.

The Court then proceeded to distinguish those FTCs that are statutory and those that are treaty based. Based on this distinction, the Court determined that, while under US statutory law an FTC is not allowed against the NIIT, as the NIIT is not within Chapter 1 of the Internal Revenue Code, paragraph 2(b) of article 24 of the France-United States Income and Capital Tax Treaty (1994) allows a FTC independent of the restrictions under Sections 27 and 901(a) of the IRC. Thus, the Court held that taxpayers may assert the treaty-based FTCs against US income taxes outside of Chapter 1, including for IRC Section 1411.