BDO Corporate Tax News

International - Corporate tax bytes

  • Aruba: As from the 2023 tax year, income tax returns are distributed only in electronic format and hard copy returns are no longer accepted.
  • Australia: The Australian Taxation Office (ATO) released a discussion paper on 17 April 2024 on the attribution of risk-weighted assets of Australian branches of foreign banks for purposes of the thin cap rules. The comment period is open until 31 May. In another consultation announced on 12 February, the government released a revised exposure draft that proposes public country-by-country reporting requirements for certain multinational enterprises operating in Australia. The measures are intended to amend the Australian system to align more closely with the EU’s public CbC reporting regime. That consultation ended 5 March.
  • Colombia: The requirements for a taxpayer to act as a self-withholding agent for income tax purposes have been revised. Based on a resolution dated 26 February, the taxpayer may not have net operating losses for the three-year period before the date of a request to act as a self-withholding agent and the taxpayer must be fully compliant with its tax obligations. A self-withholding authorisation will be suspended if the taxpayer has outstanding tax or customs duty debts for more than two months.
  • Costa Rica: A public consultation is being held during the period 26 April-13 May on a draft resolution relating to the automatic exchange of information of sellers operating through digital platforms. Under the resolution, which includes definitions, due diligence procedures, formats and deadlines that operators would be obligated to follow, platform operators would be required to identify sellers operating through their platforms.
  • Cyprus: The government has abolished the annual EUR 350 corporate levy as from 2024. Companies that already paid the fee for 2024 will be entitled to a refund. The corporate levy for 2011-2023 still is in effect.
The Shipping Deputy Ministry released an order on 11 April 2024 that implements tonnage tax incentives for vessels that demonstrate effective emissions reductions. The order, which applies retroactively as from 1 January 2024, reduces the annual tonnage tax by up to 30% for each vessel that demonstrates proactive measures to reduce its environmental impact and sets out the requirements to apply for the incentive.
  • Czech Republic: The government published a draft bill on 26 April that would amend the legislation transposing the EU global minimum tax directive into domestic law to incorporate the OECD administrative guidance into Czech legislation. The draft still must be approved by both chambers of parliament, signed by the president and published in the official gazette.
  • Denmark: On 30 April, the government presented a legislative proposal to parliament to add the OECD administrative guidelines on the global minimum taxation rules to the Danish Minimum Taxation Act. If adopted, the proposed measures would apply as from 1 July. On the same day, the government also proposed changes to the CO2 tax, specifically to levy a new tax on companies EU Emissions Trading System (ETS) and increase the CO2 tax on companies outside the ETS, with these measures phased in over a five-year period. A new CO2 tax on fisheries, domestic ferries and domestic aviation also would be introduced.
  • Estonia: Parliament adopted a law on 10 April that amends the Income Tax Law to implement elements of the EU global tax directive into domestic law. Estonia has elected to delay application of the IIR and UTPR until 2030 based on article 50 of the directive.
  • Finland: On 17 April, the government proposed the 2025-2028 Public Finance Plan, which includes the following tax measures to bolster public finances: (i) introduction of a temporary tax credit for large industrial investments supporting the transition to a net-zero economy; (ii) raising the standard VAT and insurance premium tax rates from 24% to 25.5%; (iii) increasing the VAT rate on certain sugary items from 14% to 25.5%; (iv) extending the tax subsidy for zero-emission company cars and increasing vehicle taxation for electric cars and plug-in hybrids; and (vi) increasing the taxes on mineral mining, tobacco and soft drinks.
  • France: Updates to France’s list of non-cooperative states and territories was published on 17 February to bring the list in line with the EU list of non-cooperative jurisdictions in tax matters (for prior coverage, see the item in the Corporate Tax Bytes column in the November 2023 issue of Corporate Tax News). Antigua and Barbuda, Belize and Russia are added to the list starting on 1 May 2024. The British Virgin Islands was removed from the list, effective 17 February 2024.
  • Greece: The legislation implementing the EU global minimum tax directive was published in the official gazette on 4 April. The legislation includes an IIR and UTPR and Greece has opted to adopt a QDMTT as provided in the directive to ensure a 15% minimum tax on Greek resident entities on a consolidated basis. The IIR and QDMTT apply for fiscal years starting on or after 31 December 2023 and the UTPR will apply for fiscal years starting on or after 31 December 2024.
  • Hong Kong: The Legislative Council is considering a bill that would introduce a patent box regime to encourage enterprises to engage in research and development activities and promote intellectual property trading, thus enhancing Hong Kong's competitiveness as a regional IP trading centre. Qualifying income from intellectual property would be taxed at a concessionary rate of 5% (compared to the normal 16.5% profits tax rate).
  • Iceland: The Fiscal Strategy Plan for 2025-2029 includes plans to introduce the global minimum tax by the end of 2024 and that will apply as from 2025.
  • India: The Mumbai Tax Tribunal has ruled that a taxpayer may set off short-term capital losses against short-term capital gains that are taxed at a higher rate (click here for an analysis of the decision by BDO in India).
In a decision issued on 28 February 2024, the Supreme Court held that cellular mobile service providers are not required to deduct withholding tax on discounts provided to franchisees on prepaid SIM cards and recharge coupon vouchers. At issue was whether agreements between telecom operators and distributors/franchisees for the sale of the SIM cards and vouchers to end customers establish a principal-agent relationship so that tax must be deducted at source (click here for an analysis of the decision by BDO in India).

The president assented to the Finance Act, 2024 on 15 February 2024 (for prior coverage, see the article in the February 2024 issue of Corporate Tax News).
  • Ireland: In a press release dated 28 March, the Minister of Finance announced an increase in the film tax credit project cap to EUR 125 million (from EUR 70 million) and the extension of the credit to the end of 2028 (from the end of 2024), following approval of the changes by the European Commission.
  • Isle of Man: The treasury minister announced the 2024-25 budget on 20 February, which contains two notable proposals affecting companies:
    • As part of the transition to the implementation of Pillar Two, the income tax rate on banking businesses and large retailers whose profits would be subject to the global minimum tax would be temporarily increased from 10% to 15%. The rate increase would apply to tax year of assessment 2024-25 and only to banks and retailers whose profits would otherwise be subject to a top-up tax outside the Isle of Man under a Pillar Two IIR in 2024. The change would not impact banks or large retailers that are not part of in-scope groups from 2024 or other businesses that are taxable at the standard 0% rate, regardless of whether they fall within the scope of Pillar Two.
    • The tax rate on corporate taxpayers deriving income from petroleum extraction activities or rights would increase from 0% to 20%.
If approved, the new measures would generally become effective on 6 April 2024. The tax authorities have published a practice note on the budget measures.
  • Israel: Starting on 1 January 2026, Israeli companies will be required to submit to the tax authorities the identities of their controlling owners up to the level of individuals and specify their tax residence. The beneficial ownership information will not be made public but the tax authorities will be able to request information from financial entities and share that information if requested by another country.
  • Japan: On 26 April, the tax authorities released the explanatory notes on the global minimum tax and changes to existing rules were published on 12 April to add a tax return for the global minimum tax.
  • Luxembourg: The tax authorities published FAQs on 25 March that clarify various aspects of the Pillar Two legislation, such as deferred tax assets and liabilities and transitional rules.
  • Malaysia: On 27 March 2024, the Inland Revenue Board issued guidelines on the taxation of capital gains derived from the disposal of assets held outside of Malaysia, including gains from disposals of foreign capital assets at the rates in effect as from 1 January 2024 and the exemption for profits from the disposal of qualifying foreign capital assets during the period 2024-2026 (for prior coverage, see the article in the January 2024 issue of Corporate Tax News and the article in this issue).
  • Namibia: The 2024 budget presented on 28 February 2024 includes the following changes affecting businesses:
    • Reduction of the non-mining corporate tax rate from 32% to 31% as from 1 January 2024 and to 30% on 1 January 2025;
    • Reduction of the corporate tax rate from 32% to 20% for small and medium-sized enterprises, subject to an annual turnover threshold;
    • Introduction of a 10% withholding tax on dividends paid to individuals starting 1 January 2026;
    • Elimination of the exemption for nonresident shareholders on dividends paid by insurance companies for the 2024/25 fiscal year;
    • Limitation of loss carryforwards to 10 years for companies operating in the natural resources sector and five years for companies in other sectors;
    • Replacement of the thin capitalisation rules with a 30% net interest deduction rule; and
    • Introduction of a special economic zone regime under which zone participants would be subject to a lower corporate tax of 20% and would benefit from normal deductions for corporate tax purposes.
  • Netherlands: Starting on 1 July 2024, dividends withholding tax returns will only be able to be filed electronically.
  • Poland: The draft bill implementing the EU minimum taxation directive was released for public consultation on 25 April, with the consultation running until 17 May. The draft includes the introduction of an income inclusion rule and an undertaxed payments rule and Poland has opted to adopt a QDMTT and safe harbours. If adopted, the rules would apply as from 1 January 2025.
  • Saudi Arabia: The Zakat, Tax and Customs Authority published revised Real Estate Transaction Tax Implementing Regulations following the issuance of a ministerial resolution by the Ministry of Finance in which the ministry approved the rules. The amended regulations are effective as from 3 May 2024.
  • Singapore: Budget 2024 announced on 16 February 2024 aims to address immediate challenges for businesses and households, create better growth and jobs, and initiatives to secure a strong fiscal position for Singapore and attract investment. Included in the measures affecting businesses are the implementation of Pillar Two via two components: first, the IIR followed by the domestic top-up tax (DTT). The IIR and DTT will apply to large multinational enterprise groups with global revenue of at least EUR 750 million annually. The Pillar Two rules will impose a minimum effective tax rate of 15% on businesses’ profits from financial years starting on or after 1 January 2025. BDO in Singapore has prepared a comprehensive analysis of Budget 2024.
  • South Africa: In an Interpretation Note published on 29 April 2024, the South African Tax Service provided clarifying guidance on the tax exemption (normal tax, dividend tax, interest withholding tax and capital gains tax) of income relating to South African ships used in international shipping.
On 21 February, the government released an explanatory memorandum on the Global Minimum Tax Bill, which would implement the Pillar Two rules into domestic law. Feedback on the draft had to be submitted by 31 March. If enacted, the rules would apply retroactively as from 1 January 2024, with an 18-month period granted for filing the first returns and payment.
  • Sweden: The Ministry of Finance announced a public consultation on 19 March that runs through 20 May on rules that would be added to Sweden’s domestic measures on Pillar Two. The proposed additions to the law would address the treatment of artificial arrangements in the calculation of the temporary simplification rule, the deferred application of the supplementary rule and a new currency rule, as well as changes to other domestic legislation. If adopted the new measures would apply as from 1 January 2025.
  • United Arab Emirates: The Federal Tax Authority (FTA) has published a Corporate Tax General Guide, which provides information on the applicability of the UAE corporate tax to investment funds, investors and investment managers
The FTA announced a public consultation on 19 April on the potential introduction of R&D incentives and is requesting comments from stakeholders on the design process for the incentives. Comments must be submitted by 14 May.

The Ruler of Dubai has issued a law on the taxation of foreign banks that applies to all foreign banks operating in Dubai, other than those located in the Dubai International Financial Centre. The banks affected must pay tax of 20% on their annual revenue. The amount payable can be reduced by deducting any tax that is separately payable under the federal corporate tax, which was introduced for all financial periods commencing on or after 1 June 2023. It should be noted that this is an Emirate level change and affects only Dubai-based banks. It is possible the other Emirates will update their tax laws relating to foreign banks in due course.

In early March, the FTA published a comprehensive guide on the tax treatment of partnerships. The guide provides a general understanding of how the UAE corporate tax law treats partnerships and how it applies to a partnership and its partners, as well as the interplay between the corporate tax law and the free zones, small business relief, etc.

An administrative penalty of AED 10,000 may be imposed for failure to comply with the tax registration deadline. The Ministry of Finance announced the new penalty in Cabinet Resolution No. (10) of 2024.
  • United States: The IRS released proposed regulations on 7 May that would revise the rules that provide guidance on information reporting of transactions with foreign trusts, receipt of large foreign gifts and regarding loans from, and uses of property of, foreign trusts, as well as changes to the regulations relating to foreign trusts having one or more U.S. beneficiaries.
On 25 April, the Department of the Treasury and the IRS released final regulations related to the transfer of certain credits under Internal Revenue Code section 6418, which describes rules for the election to transfer eligible credits in a taxable year. 

In March, the IRS released a final 2024 revision of Form W-9, “Request for Taxpayer Identification Number and Certification,” along with accompanying final instructions. The updated form, last revised in 2018, includes a new reporting line for some flow-through entities such as partnerships. Included in the changes is an additional box for entities that indicate that they are a partnership, trust/estate or LLC classified as a partnership for U.S. federal tax purposes. The form instructs these entities providing the Form W-9 to a partnership, trust or estate in which they have an ownership interest to check a box if they have any foreign partners, owners or beneficiaries. The change is intended to give these flow-through entities information regarding indirect foreign partners, owners or beneficiaries for purposes of complying with relevant reporting requirements (for an analysis of the changes, see the tax alert dated 15 March 2024).
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