Worldwide: SKP Global Expansion Updates - February 2017 | Issue 12

Last Updated: 31 March 2017
Article by SKP  

Africa

Mauritius

VAT on the supply of services received from abroad by non-VAT registered persons

The requirement to account for Value Added Tax (VAT) on services received from abroad has been deferred until further notice. This requirement, which was supposed to come into effect from 2 February 2017, was applicable to those individuals who own businesses and are not registered under the amended Section 14 of the VAT Act.

For more information, click here.

South Africa

SARS issued a ruling on taxes which are applicable to DTAs

Recently, the South African Revenue Service (SARS) has issued a revised Binding General Ruling (BGR) that identifies taxes administered by the agencies that constitute taxes on income for the purposes of South Africa's Double Taxation Agreements (DTAs).

The ruling enumerates the taxes qualifying for treaty relief under South Africa's DTAs. The SARS has also given a non-exhaustive list of taxes that do not qualify for treaty relief.

Changes made to PAYE, applicable from 1 March 2017

Some of the important Pay As You Earn (PAYE) related amendments made in 2016 that are effective from 1 March 2017 are given below.

  • The deemed remuneration rules are scrapped, removing the PAYE timing conflict. This affords private companies the flexibility to structure performance based remuneration without the obstacle of PAYE on deemed remuneration.
  • The Remuneration for PAYE purposes has been widened by the addition of dividends that do not qualify for exemption, based on its close linkage to employment (paragraph (g) of this definition). This means that PAYE must be withheld by employers from such dividends.

Americas

Argentina

Increase in the threshold for net worth reporting

The Federal Tax Authority of Argentina has a requirement for the employees and pensioners to file an affidavit reporting their net worth if it exceeds ARS 200,000. This threshold has increased from ARS 200,000 to ARS 500,000 for tax year 2016.

Canada

Northwest Territories: 2017-18 Budget highlights

The Budget for Northwest Territories was presented for 2017-18 in early February 2017. A few highlights of the Budget are as follows:

  • No change in the corporate income tax rate. Currently, it is 11.5%.
  • No change in small-business tax rate. Currently, it is 4%.
  • No changes proposed to the personal income tax rate.

For more information, click here.

New Brunswick: 2017-18 Budget highlights

The New Brunswick Budget was presented for 2017-18 in early February 2017. Some of the important measures introduced in provincial tax are given below.

  • Decrease in the small-business tax rate from 3.5% to 3% from 1 April 2017.
  • No change in corporate income tax rate. Currently, it is 14%.
  • No changes proposed to the personal income tax rate.
  • Increase in the minimum wage to CAD 11 per hour, effective from 1 April 2017.

For more information, click here.

The United States

Fixed-indemnity health plan benefits can be included in gross income

Recently, a memorandum has been issued by the Internal Revenue Service (IRS) to the office of Chief Counsel stating that employers can include payments under the fixed-indemnity health plan in the gross income of an employee.

It excludes employees who pay premium on an after-tax basis and coverage/premiums which are paid on a pre-tax basis through a cafeteria plan by the employer.

Extension for Self-Identification of Disability form

The office of Management and Budget (OMB) has approved the Self-Identification (Self-ID) of Disability form for another three years, up to 31 January 2020. The validity of the current Self-ID form has expired as on 31 January 2017.

Employers having the electronic version of the form can update or download the same from the Department of Labor's website to reflect the new expiry date.

For more information, click here.

The IRS set a deadline to correct the 403(b) plan document retroactively

Recently, the Internal Revenue Service (IRS) has issued a guidance relating to 403(b) plans. As per the guidance, sponsors of 403(b) plans can correct document defects from 1 January 2010 or the original effective date of the plan retroactively without any IRS penalties. The deadline to correct the plan document is

31 March 2020. After the deadline, if an employer wants to make corrections in the plan documents, they have to do it through the IRS's Employee Plans Compliance Resolution System (EPCRS).

Regulation proposed to clarify the definition of 'dependent'

The IRS has issued the proposed regulations regarding the definition of a dependent under the Internal Revenue Code. As per the amended definition, a dependent is either a taxpayer's qualifying child or qualifying relative. The proposed regulations provide guidance on the meaning of 'qualifying child' or 'qualifying relative'.

These definitions are relevant for employers who sponsor:

  • Group health plans, if such plans provide coverage for an employee's dependent who is not his or her spouse or child under the age of 27, but who is the employee's federal income tax dependent; and
  • Dependent care assistance programs, which reimburse covered employees for qualifying dependent care expenses of qualifying children and certain other federal income tax dependents.

The interest rate on corporate tax overpayments announced

Recently, the Franchise Tax Board (FTB), California announced the interest on corporate tax overpayments (i.e. refunds) at the rate of 1% from the period of 1 July 2017 to 31 December 2017.

Extension for the renewal of work card for foreign workers

For the renewal of Employment Authorisation Documents (known as work cards), new regulations have been introduced.

Under the old rules, an actual work card 'in hand' is required in order to be work authorised. The US Citizenship and Immigration Services (USCIS) failed to process work card applications within 90 days and hence, foreign workers were without work authorisation. In addition, individuals could not renew their work cards 120 days before the expiration date.

Under the new rules, an individual can apply for an extension up to 180 days before the expiration date.

There are certain categories of work cards for which the applicant will automatically receive a 180-day extension, provided that the applicant has properly filed for an extension before the current work card expires.

The IRS announces changes to individual mandate enforcement

Recently, the IRS has announced that it will accept individual tax returns that do not report health insurance coverage details which are mandatory under the Affordable Care Act.

Earlier, the IRS software that processes tax returns automatically rejected those returns in which health insurance coverage sections were not completed and were treated as not filed. Now, those returns will be treated as filed and the IRS will update the missing information.

Also, a taxpayer who does not complete the Affordable Care Act sections may receive requests for more information and penalty notices for failing to provide the required information.

Employers not required to track hours worked on itemised wage statements for exempt employees

As per the Labor Code, employers in California have to submit written wage statements to employees identifying the total hours worked during each period. The Labor Code gives an exception to this requirement for those employees who are paid a salary and are exempt from overtime.

Recently, the legislature amended the Labor Code to expand exceptions and employers are no longer required to provide a written wage statement disclosing the total hours worked for the following employees:

  • Executive, administrative or professional employees;
  • External salespersons;
  • Salaried computer professionals;
  • Parents, spouses, children, or legally-adopted children of the employer as provided by the applicable wage orders;
  • Directors, staff, and participants in a live-in alternative to incarceration rehabilitation program for substance abuse;
  • Crew members employed on commercial passenger fishing boats; and
  • Participants in national service programmes.

To view the full report please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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