Worldwide: Global Expansion Update

Last Updated: 11 June 2018
Article by SKP  

AFRICA

NIGERIA

Extension to VAIDS

The Federal Government of Nigeria has announced the extension of the deadline for filing returns under the Voluntary Assets and Income Declaration Scheme (VAIDS). The scheme, which was to originally run from 1 July 2017 to 31 March 2018, has now been extended up to 30 June 2018.

The scheme provides relief from penalties and interest on outstanding tax liabilities on previously undeclared income and assets for the assessment period of 2011 to 2016, as well as immunity from prosecution. This includes all federal and state taxes, including Companies' Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, and Tertiary Education Tax.

For more details click here.

SOUTH AFRICA

Increased VAT Rate in South Africa

South Africa increased its Value-Added Tax (VAT) rate to 15 % from 14 % with effect from 1 April 2018.

The South Africa Revenue Service released guidance on the impact of the hike, in the form of a 'Pocket Guide on the VAT rate increase on 1 April 2018.'

The guide sets out how to determine the taxable event for transactions. Generally, most transactions occurring on or after 1 April 2018 will be subject to VAT at the new rate unless a special time of supply rule or a rate specific rule applies. The guide is neither 'official publications' as defined in the Act, nor is it binding on SARS. It is merely intended to assist taxpayers in the practical interpretation and application of the requirements set by law.

For more details, click here.

Taxability Changed for Reimbursed Travel Allowances

As from 1 March 2018, where the rate of reimbursement of travel allowances exceeds the prescribed rate, irrespective of the business kilometres travelled, there is an inclusion in remuneration for Pay As You Earn (PAYE) purposes. The full inclusion amount is subject to PAYE, unlike the fixed travel allowance where only 80% of the amount is subject to PAYE.

Where any of the following are applicable:

  • If the business kilometres travelled exceed 12,000 (2017: 8,000) kilometres per year; or
  • if the reimbursed rate per kilometre exceeds the prescribed rate; or
  • if other compensation is paid to the employee.

SARS announces prosecution of taxpayers for outstanding returns

The South African Revenue Service (SARS) issued a media release on 16 April 2018 where they together with the National Prosecuting Authority (NPA) announced to prosecute the non-compliant tax payers with respect to non-submission of return.

 This is applicable to all types of tax returns including income tax returns, VAT and PAYE and even a nil return is applicable to a taxpayer. For more details click here

ZAMBIA

New Transfer Pricing Regulations

Zambian Transfer Pricing (Amendment) Regulations, 2018 has been introduced and published in the Government Gazette on 6 April 2018. These regulations govern transfer-pricing transactions between related entities as well as documentation requirements.

 According to the draft regulation, following are the notable changes:

  • Taxpayers whose annual net turnover and other income have exceeded ZMW 20 million in the previous year of assessment must submit a transfer pricing documentation.
  • The threshold of ZMW 20 million is not applicable to multinational enterprises (MNEs) and all MNEs are subject to transfer pricing requirements.
  • Furthermore, there is new requirement has been introduced to submit certified translations of all transfer pricing documentation that is not prepared in English.
  • Additional documentation must be prepared by the taxpayers before the tax return deadline, that includes the components of the Master file and Local file as developed as part of BEPS Action 13.

AMERICAS

ARGENTINA

Regulated Withholding Tax Rules for Capital Gain and Income Derived by Non-Residents from Financial Assets

Recently, a general resolution has been published in the official gazette to provide procedures for the payment of taxes by non-residents with respect to income and capital gains from financial assets. Following are some important points to note:

  • The Taxpayer is required to act as withholding agent for the respective type of income or capital gain and for each case in which withholding tax rate is applicable.
  • The resolution also provides deadlines for withholding agents to pay the tax to authority (Administración Federal de Ingresos Públicos, AFIP), and explained about the information to be provided to the tax authority regarding each collection.

Effective date: 25 April 2018

Tax Reform - Individuals and Employers' Social Contributions

Important tax reforms have been made and a comprehensive tax reform was adopted in Argentina in December 2017, with its impact felt in the fiscal year 2018 and beyond.

Following are the significant changes made in Income Tax Levied on Individuals:

  • Transactions with crypto currencies are to be taxed at a rate of 15 %.
  • Exemption has been removed from financial operations generating Argentine-sourced income.
  • 15 % tax is to be levied on the sale of real estate , except in cases where the real estate sold is a permanent place of abode (the real estate that is being sold is acquired in or after 2018).
  • Financial transactions with respect to time deposits, bonds, mutual funds, and other instruments are to
    be taxed at 5 % if the operation is denominated in Argentine pesos and at 15 % in case the transaction is made in foreign currency or with an adjustment clause.
  • Severance payments to high-level executives that exceed the amounts set forth by law will be taxable to the terminated executive.
  • New 'transparency' regulations are to be applicable on shareholders of companies incorporated in tax havens or corporations where more than 50 % of their income is portfolio income. They are required to report income/loss derived from the operations conducted by the company (disclosed in the annual financial statements) as if such operations were conducted directly by them.

Canada

New Quebec Sales Tax (QST) Rules for Businesses Registered Outside Quebec

According to Quebec 2018 budget, businesses which are not registered for the QST purpose in Quebec, with no physical presence there, will be required to register and collect QST if they sell intangibles as well as services and certain goods to certain Quebec customers and earn CAD 30,000 revenue a year from such customers. Accordingly, those businesses which are digital platforms that help these suppliers to sale the taxable goods in Quebec will have to register and start collecting QST on such supplies.

Effective date: 1 January 2019

Prince Edward Island Budget 2018

In April 2018, Finance Minister delivered the budget for 2018. The key changes in the budget are:

  • There are no changes in corporate tax rates for the year. However, it proposes to reduce the small business tax rate from 4.5% to 4%.
  • Budget increases the basic personal amount from CAD 8,160 to CAD 8,660 for 1 January 2018 and it will further increase to CAD 9,160 for 1 January 2019.
  • A 15% rebate is announced on qualifying business investment of up to CAD 25,000. This will apply to direct investments by taxpayers to improve their businesses. Saskatchewan Budget 2018

In April 2018, the budget for 2018 was delivered. Relevant highlights are mentioned below:

  • The budget does not propose any changes in corporate tax rates.
  • The budget introduces new tax credit for qualifying investments made in small businesses by individuals and corporations. The tax credit is 45% or a maximum of CAD 140,000.
  • Non-eligible dividend tax credit rate will be reduced from 3.367% to 3.333% in 2018, and to 3.362% after 2018.

United States

Sales Tax and Use Tax update in Florida

Recently, new legislation has been enacted in Florida with respect to Sales and Use Tax.

Following are the significant changes in Sales and Use Tax:

  • Sales Tax rate on the rental of commercial real estate (business rent tax) has been reduced form 5.8% to 5.7% with effective from 1 January 2019.
  • Exemption has been provided through a refund of taxes already paid and purchases made between 10 September 2017 and 31 May 2018 of fencing material for repairing agriculture fencing which has been damaged by Hurricane Irma (available).
  • Purchase of Petrol which has been used in tractor, vehicle or other farm equipment that is used for the production , packing, or processing of aqua-culture products has been given exemption.
  • Exemption of USD 15,000 has been given to nursing homes or assisted living facilities who are using generators which are present or purchased between 1 July 2017 and 31 December 2018 for generating emergency electric energy.
  • Exemption of USD 15,000 has been given to nursing homes or assisted living facilities who are using generators which are present or purchased between 1 July 2017 and 31 December 2018 for generating emergency electric energy.
  • Exemption has been provided for electricity which is being used for aquaculture products or in packing house; along with that certain machinery and equipment purchased for use in aqua-cultural activities at fixed locations have been also covered under the exemption.

Asia-Pacific

Australia

Reportable Tax Position Schedule (RTPS) Scope Expansion

On 6 April 2018, the Australian Taxation Office (ATO) released an announcement stating an obligation to lodge the Reportable Tax Position Schedule (RTPS) to companies in economic groups with turnover greater than USD 250 million. This will come into effect from income years ending on or after 30 June 2018. Previously, only entities specifically selected by the ATO were required to file the RTPS regardless of the group turnover. The announcement states that the ATO will notify all taxpayers that are required to file the RTPS; those that are not notified are not required to file it. The schedule requires these companies to provide ATO with information on three types of positions:

  • Category A – uncertain tax positions in your income tax return
  • Category B – tax uncertainty in your financial statements
  • Category C – reportable arrangements identified in guidance material released by ATO (every 6 months)

For more details, click here.

Australia Provides Extension to Lodge Local File Administrative Solution

  • According to an email notice from the Australian Taxation Office (ATO), the ATO continues for the second year of the administrative solution that allows taxpayers to lodge Part A of the Local file with their tax return in lieu of answering questions 2 to 17 of the International Dealings Schedule (IDS).

The administrative solution is meant to avoid duplication of information in the Local file and IDS. Furthermore, the notice includes that for taxpayers who choose to take up the administrative solution, additional time will be provided to lodge Part A of their Local File. The tax return and relevant sections of the IDS must still be lodged by 16 July 2018 (standard
deadline for 2017 calendar year taxpayers), or the relevant due date, but Part A of the Local file can be lodged up until 14 September 2018. Part A of the Local file must be received by 14 September 2018 to qualify for the administrative solution.

Japan

Tax Reform Bill 2018 Enacted in Japan

Recently, Japan has published the tax reform bill along with the regulations for supplement tax law in the Official Gazette.

Following are the significant provisions with respect to corporate taxpayers:

  • Various restrictions have been levied on research and development (R&D) tax credit and other tax credits.
  • Changes in the definition of permanent establishment (PE) applicable from on or after 1 January 2019.
  • Tax credit for increase in wages and productivity improvement applicable from on or after 1 April 2018 and ending on or before 31 March 2021.

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