AFRICA
Ghana
Transfer pricing updates
The Federal Inland Revenue Service (FIRS) recently issued a revised transfer pricing (TP) declaration and disclosure forms. These forms will be effective from January 2017 and taxpayers should submit their transfer pricing returns using the revised TP forms which now include new disclosures.
Rwanda
Social security agreement with Congo Brazzaville
As per the recent update, a Memorandum of Understanding (MOU) has been signed between the Governments of Rwanda and Congo Brazzaville. The MOU will enable an employee to be covered by social security of his country of origin. For more information, click here.
AMERICAS
Argentina
Increase in the income tax deduction Allowance
Argentina Revenue Services provided a one-off ARS 15,000 increase in the individual income tax deduction. This increase aims to partially or totally offset the second instalment of the 13th month salary. Under the Argentina labour law, a 13th month salary is paid in two instalments. The second instalment is due at the end of the calendar year.
The increase is applicable on employees and pensioners whose monthly gross salary did not exceed ARS 55,000 between July and December 2016.
Business visa exemption for Canadian Citizens
Recently, the National Immigration Office of Argentina announced that Canadian nationals with valid passports are exempt from consular Argentine visas when entering Argentina for business purposes.
The exemption is granted based on transitory matters for 90 days, which is renewable for the same period.
Effective date: 1 December 2016
Change in the VAT tax law for non-residents
Recently, the Argentina Revenue Services introduced a change in the Argentina VAT law for non-resident individuals rendering services and construction-related activities within the Argentine territory.
As per the current tax law, when a non-resident renders services and construction-related activities within the Argentine territory, they are not subject to VAT.
As per the recent change, a VAT taxpayer also includes clients or beneficiaries of such services, as well as agents or intermediaries, who are residents in Argentina, including the national government, the provinces, the city of Buenos Aires, and entities exempted by the Income Tax Law.
Brazil
Municipal service tax changes
Recently, a legislative bill (SCD 15/2015) regarding changes in the municipal service tax (ISS) has been approved by the Brazil Senate and has been submitted for the president's approval. Following are some of the points mentioned in new bill:
- Clarification on the exemption from ISS
- Minimum ISS rate would be 2%
- Clarification on the ISS collection mechanism for certain activities
- Changes in list of services covered
Canada
Income tax treaty signed with Madagascar
On 24 November 2016, Canada signed an income tax treaty with Madagascar. The treaty includes provisions that limit the rate of withholding tax to:
- 5% for dividends paid to a company that holds directly or indirectly at least 25% of the voting power of the company that pays the dividends
- 15% for dividends paid in all other cases
- 10% for payments of interest and royalties
The treaty exempts withholding tax, certain payments of interest and limits the rate of withholding tax to 5% on certain payments of royalties. It also includes provisions reflecting the standard developed by the Organisation for Economic Cooperation and Development (OECD) for the exchange of information for tax purposes.
Effective Date: The treaty will be enforced once the signatories notified each other that the procedures required by their laws to bringing the treaty into force have been completed.
For more information, click here.
2017 indexation amounts for personal income tax and benefit amounts
Recently, the Canada Revenue Agency (CRA) released the 2017 indexation adjustments for personal income tax and benefit amounts. The indexation has increased from 1.3% in 2016 to 1.4% in 2017.
The increase in the tax bracket thresholds, amounts relating to non-refundable credits and most other amounts will take effect on 1 January 2017. Increase in the GST credit will be effective from 1 July 2017.
Effective date: 1 January 2017
For more information, click here.
Automobile deduction limits and expense benefit rates for 2017
Recently, the Finance Minister announced the income tax deduction limits and expense benefit rates applicable in 2017 when using an automobile for business purposes. Most of the limits and rates that were applicable in 2016 will continue to apply in 2017. However, there is one change taking effect in 2017.
The general prescribed rate that is used to determine the taxable benefits of employees relating to the personal portion of automobile operating expenses paid by their employers will be reduced by 1 cent, to 25 cents per kilometre. For the taxpayers who are employed principally in selling or leasing automobiles, the prescribed rate used to determine the employee's taxable benefit will be reduced by 1 cent, to 22 cents per kilometre. The amount of this benefit is intended to reflect the cost of operating an automobile. The other limits will remain in place for 2017.
For more information, click here.
Mexico
Increase in the daily minimum wage
As per the recent update, the increases proposed in the minimum wage have been unanimously approved by the National Minimum Wages Commission (Comisión Nacional de los Salarios Mínimos (CONASAMI)). The daily minimum wage will increase from USD 73.04 in 2016 to USD 80.04.
Effective date: 1 January 2017
The United States of America
The IRS releases the interest rates on tax payments for 2017
The US Internal Revenue Service (IRS) announced that there is no change in the interest rates on tax overpayments and tax underpayments for the calendar quarter beginning 1 January 2017. The interest rates, which apply to amounts bearing interest during that calendar quarter, are as follows:
- 4% for non-corporate overpayments;
- 3% for corporate overpayments up to USD 10,000;
- 1.5% for corporate overpayments to the extent in excess of USD 10,000;
- 4% for non-corporate and corporate (other than large corporate) underpayments; and
- 6% for large corporate underpayments (i.e. underpayments in excess of USD 100,000).
For more information, click here.
The due date to submit the tax returns is 18 April 2017
The IRS announced that the due date to submit 2016 tax returns has been extended from 15 April 2017 to 18 April 2017. This is because of the weekend falling on that date and Emancipation Day, which is a legal holiday in the District of Columbia. The legal holidays in the District of Columbia will affect the filing deadline across the nation as per the law.
For more information, click here.
Columbia: First reading of the Universal Paid Leave Amendment Act of 2016
Recently, the Council of the District of Columbia passed the first reading of the ground-breaking Universal Paid Leave Amendment Act of 2016.
In order to be covered by the Act, an employee must have worked for 52 weeks prior to the qualifying event, and must have spent at least 50% of their working time in the District. Both full-timers and part-timers will be eligible. The Act would apply to all private employers in Washington, D.C. regardless of their size.
The Bill will provide the private-sector employees eight weeks of paid leave after the birth or adoption of a child. The Act would also provide up to six weeks of paid leave to the workers in the District of Columbia to take care of a covered family member who is experiencing a serious health condition, and up to two weeks for a personal serious health condition.
For more information, click here.
Pennsylvania: Payment of wages via payroll debit cards
Earlier, the Pennsylvania Superior Court held that the mandatory payment of wages by payroll debit card does not satisfy the requirements of the state's Wage Payment and Collection Law (WPCL).
In November 2016, the Pennsylvania General Assembly enacted the legislation amending the WPCL to expressly include payroll debit cards as a permissible form of payment, as long as their use is voluntary. An employer may pay his employees via payroll debit card accounts as long as certain conditions are met. Employers should ensure that their current or anticipated payroll card program complies with the new requirements.
Without Employee's written or electronic request to change the method of payment (of receiving wages from payroll card account to direct deposit or negotiable check), the employer is not allowed to pay any remuneration, benefit or compensation by means of a payroll card. An employer must honour an employee's written or electronic request to change the method of receiving wages from a payroll card account to a direct deposit or negotiable check. The change takes effect as soon as possible, but no later than the first payday after 14 days from the employer's receipt of the request.
Effective date: 5 May 2017
Extension to FBAR filing
As per the recent update, the deadline for fling the Report of Foreign Bank and Financial Accounts (FBAR) has been extended by the Treasury Department's Financial Crimes Enforcement Network (FinCEN). The new filing date for individuals who have signature authority over foreign financial accounts is 15 April 2018.
For more information, click here.
Introduction of a new Illinois leave Laws
As per the recent update, four new leave laws for retailers who have employees in Illinois have been introduced. They are given below:
- Illinois Employee Sick Leave Act: The act is for absences related to illnesses, injuries or medical appointments of certain family members.
Effective date: 1 January 2017
- Illinois Child Bereavement Leave Act: As per the act, Illinois employers are required to allow their employees to take up to ten working days off per year as unpaid bereavement leave following the death of their child.
Effective date: 29 July 2016
- Chicago Paid Sick Leave Ordinance: As per the act, workers in Chicago are allowed to earn up to 40 hours of paid sick time per year.
Effective date: 1 July 2017
- Cook County Earned Sick Leave Ordinance: As per the act, workers in Cook County are allowed to earn up to 40 hours of paid sick time per year.
Effective date: 1 July 2017
New version of Form N-400
United States Citizenship and Immigration Services (USCIS) released a new version of Form N-400, Application for Naturalisation. The new version must be used in all applications filed or postmarked from the effective date. USCIS will not accept the old version of Form N-400 henceforth.
Effective Date: 22 December 2016
Introduction of the Cures Act for small Employers
Recently, the US President signed the 21st Century Cures Act. As per the Cures Act, small employers can offer Health Reimbursement Arrangements (HRA) to their employees.
The Cures Act once again makes HRAs permissible for small employers as provided below:
- Employers who have 50 or less than 50 full-time employees, qualify as a small employer.
- The HRA must be provided by the employer only.
- Expenses incurred by the employee or one of the employee's family members that constitute as medical care, including the health insurance premiums, can be reimbursed by HRA.
- Maximum benefit for an employee with an employee-only HRA coverage is USD 4,950 per year and for employees with at least one dependent up to USD 10,000 per year.
Effective date: 1 January 2017
Increase in the minimum wage rate
As per the recent update, minimum wage rates of 17 states and the District of Columbia have been increased. Minimum wage rate in Alaska, Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Florida, Hawaii, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, New Jersey, New York, Ohio, Oregon, South Dakota, Vermont, and Washington has been changed. There will be no change in the federal minimum wage for 2017 i.e. USD 7.25 per hour for non-tipped employees and USD 2.13 per hour for tipped employees.
The D.C. council approved the Paid Family Leave Law
As per the recent update, the Washington, D.C. Council passed the Universal Paid Leave Amendment Act of 2016.
It will establish a family and parental paid leave system for private sector employees spending more than 50% of their work time in Washington, D.C. (including residents of Maryland and Virginia who work in the District).
The Act provides the following benefits:
- Eight weeks of paid leave to new parents.
- Six weeks leave to take care of a family member who has been diagnosed with a serious health condition.
- Two weeks of personal sick time.
Effective date: 20 December 2016
New ordinance to ban salary history inquiries in Philadelphia
As per the recent update, the Philadelphia City Council passed a new ordinance banning employers from asking job applicants about their salary history. As per the ordinance, asking for a job applicant's wage history at any stage of the hiring process including during the negotiation or drafting of an employment contract is illegal. The ordinance ensures that employees do not get paid based on prior workings. Job applicants can voluntarily disclose information about fringe benefits, wage supplements, and other forms of compensation of their previous job.
Health insurance and premium tax Credit
As per the recent update, the USA treasury department and the IRS released the final regulations (T.D. 9804) concerning the premium tax credit related to health insurance. The final regulation affects:
- Individuals who enrol in qualified health plans through health insurance exchanges (or marketplaces) and claim the premium tax credit.
- Exchanges that make qualified health plans available to individuals and employers.
For more information, click here.
IRS updates Publication 54
The IRS revised its Publication 54 (Tax Guide for US Citizens and Resident Aliens Abroad).
Publication 54 provides explanation on the following topics given below:
- US tax return filing requirements
- US self-employment tax
- Withholding of US income, social security and Medicare taxes
- Tax treaty benefits
- Special rules for determining the US federal income tax for US citizens and residents whose income is sourced in foreign countries
- Internal Revenue Code (IRC) section 911 foreign earned income exclusion and foreign housing exclusion or deduction
- Other applicable exemptions, deductions and Credits
- How to obtain tax information and assistance from the IRS
It includes the 2016 amount for the foreign earned income exclusion (USD 101,300) and the housing expense base amount (USD 16,208) for the housing cost exclusion under section 911 of the US IRC. The limit for maximum amount that can be excluded and/or deducted under IRC section 911 are also discussed.
Effective date: 8 December 2016
For more information, click here.
IRS updates publication 80
The IRS updated their Publication 80, Circular SS (Federal Tax Guide for Employers in the US Virgin Islands, Guam, American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI)). It is intended for preparing the 2017 tax returns.
Employers who have their principal place of business in the US Virgin Islands, Guam, American Samoa and the CNMI, or who have employees subject to income tax withholding in these US possessions or territories are subject to US social security and Medicare taxes under the US Federal Insurance Contributions Act (FICA). The Publication also summarises the responsibilities of employer to collect, pay and report these taxes. In addition to that, the Publication provides employers in the US Virgin Islands with a summary of their responsibilities under the US Federal Unemployment Tax Act (FUTA).
The revised Publication 80 provides information on the new rules, few of which are given below:
- The social security tax rate remains 6.2% for the employer and employee.
- The social security wage base limit (ceiling) for 2017 is USD 127,200.
- The Medicare tax rate remains at 1.45% for the employer and employee.
Effective date: 21 December 2016
For more information, click here.
Ohio - Increase in minimum wage rate
For the employers in Ohio whose annual gross receipts exceed USD 297,000 per year (earlier it was USD 288,000), the minimum wage rate has been increased from USD 8.10 to USD 8.15 for non-tipped employees and from USD 4.05 per hour to USD 4.08 per hour for tipped employees. This applies to Ohio Exclusions from the Ohio Minimum Wage Law.
- Ohio employers whose 2016 annual gross receipts are less than USD 297,000 are still required to pay the federal minimum wage – USD 7.25 per hour.
- Employees under the age of 16 are also excluded and should be paid the federal minimum wage of USD 7.25 per hour.
Effective date: 1 January 2017
Texas City raised the minimum wage to USD 15 Dollars
Texas City raised the minimum wage to USD 15 dollars per hour for businesses applying for tax breaks and others incentives to build or expand in the city.
In addition to the higher wages, businesses must also offer all their employees and their dependents benefits equal to those offered to full-time employees. This new law applies only to future businesses seeking economic development incentives and not on companies already doing business in San Marcos.
The IRS launches new online tool to assist taxpayers with basic account information
The IRS launched an online application to assist taxpayers with straightforward balance inquiries.
It is available on their website – www.irs.gov. It allows taxpayers to:
- View their IRS account balance;
- View their penalties and interest;
- Make various online payments by Direct Pay, Pay
by Card and Online Payment Agreement. For more information, click here.
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