Australia: On 10 February 2022, the government introduced a bill into parliament to create Australia’s first patent box, under which income earned from relating to new medical and biomedical patents developed in Australia will be taxed at a concessional rate of 17%. The patent box—originally announced as part of the 2021-22 budget and designed to be compliance with principles outlined by the OECD—aims to drive investment and incentivize Australian businesses. Following a consultation, the government expanded the scope of the regime to include patents issued by the U.S. Patent and Trademark Office or granted under the European Patent Convention.
Brazil: The government announced on 28 January 2022 that Brazil intends to gradually phase out the tax on financial transactions, which currently is imposed on various transactions at different rates. The repeal of the IOF is one of the requirements for Brazil to join the OECD, with the phase-out starting in 2022 and ending by 2029.
Canada: One 4 February 2022, the Department of Finance released for public comment draft legislative proposals that would implement the budget 2021 tax proposals.
China: The Ministry of Finance and the State Taxation Administration released a notice on 29 January 2022, which confirms that several tax reliefs/exemptions will continue to apply through 31 December 2023. These include the preferential enterprise income tax rate of 15% for enterprises operating and maintaining equipment used for protection of the environment; certain exemptions from the house property tax and urban land use tax.
European Union: The Court of Justice of the European Union (CJEU) published a decisionon 27 January 2022 concluding that Spanish legislation requiring tax residents to declare and provide information on overseas assets is contrary to EU law—specifically, the free movement of capital—because the penalties for noncompliance are excessive and disproportionate. The law requires taxpayers to declare in Form 720 accounts held in foreign institutions, certain securities and rights, life or disability insurance, life annuities and overseas real estate property or rights on such property; the form must be submitted by 31 March each year and is based on the taxpayer’s assets held on 31 December of the previous year. This different treatment of Spanish residents based on the location of the relevant assets potentially can deter, prevent or restrict opportunities for residents to invest in other EU member states and hence constitutes a restriction on the free movement of capital.
France: The 2022 finance law was published in the official journal on 31 December 2021 and therefore, became effective on 1 January 2022 (for a discussion of the measures in the finance law, see the articlein the November 2021 issue of Corporate Tax News.)
Ireland: In a 22 January 2022 letterto the Irish Fiscal Advisory Council, the finance minister stated that numerous issues still need to be addressed and negotiated with respect to the impact of the OECD global tax agreement on a 15% minimum tax, and that updated estimates should be available by summer 2022. The finance minister previously indicated that he expects corporate tax receipts to decrease following the implementation of the global minimum tax.
Italy: The tax authorities published a circular on 26 January 2022 that sets out the final rules on hybrid mismatch arrangements, following a public consultation held in the fall of 2021. The rules implement the EU anti-tax avoidance directives and take into account Action 2 of the OECD BEPS initiative.
Kosovo: The tax authorities announcedon 21 January 2022 that effective 1 February, tax returns for all taxes and contributions must be submitted electronically through the EDI system.
Malta: Legislation published on 8 February 2022 to enact the 2022 budget includes a scheme that will grant a tax benefit for businesses that reinvest a percentage of their retained profits in the same or another business, provided the reinvestment takes place within two years from 1 January 2022.
Netherlands: As from 1 January 2022, the first bracket of the corporate income tax is increased from EUR 245,000 to EUR 395,000, and the tax rate for income exceeding EUR 395,000 is increased from 25% to 25.8% (see also the article in this issue).
OECD: On 25 January 2022, the OECD announced it has opened accession discussions with Argentina, Brazil, Bulgaria, Croatia, Peru and Romania. Additionally, on 24 January, the OECD released the eighth batch of Stage 2 peer review reports relating to the implementation of Action 14 of the BEPS project (dispute resolution). The jurisdictions covered are Brunei Darussalam, Curaçao, Guernsey, Isle of Man, Jersey, Monaco, San Marino and Serbia with the report looking at changes the jurisdictions have made to their systems since the release of the Stage 1 report in 2020. The report states that six of the jurisdictions—Curaçao, Guernsey, Jersey, Monaco, San Marino and Serbia—have addressed most or all of the deficiencies identified in 2020, and that Brunei and Isle of Man have dealt with some deficiencies.
Poland: The package of tax measures designed to help the country recover from the economic effects of the COVID-19 pandemic, attract investment and close loopholes in the tax law were published in the official journal and apply as from 1 January 2022 (for an overview of the package, see the article in the November 2021 issue of Corporate Tax News and the article in the December 2021 issue of Transfer Pricing News).
Russia: The government announced on February 10, 2022 that a temporary preferential tax regime will be introduced under which qualifying taxpayers will be granted an income tax exemption for income derived from the results of intangible assets, provided certain requirements are met. Large companies will be entitled to the exemption for three years and small and medium-sized companies will benefit for five years.
South Africa: Changes to the tax law included in the 2021/2022 budget were enacted on 19 January 2022. The amendments to the rules governing the deductibility of corporate interest expense are expected to come into effect for years of assessment commencing on or after 1 April 2022, since the effective date of these amendments are linked to the date from which the rate of corporate taxation is reduced. In the 2021 National Budget speech, the Minister of Finance proposed that the corporate tax would be reduced from 1 April 2022. ((For a discussion of the changes, see the article in the November 2021 issue of Corporate Tax News).
Turkey: The standard corporate income tax rate reduced from 25% to 23% on 1 January 2022.
United Kingdom: The 2021-2022 Finance Bill was presented to the House of Commons on 2 November 2021 and passed its first reading (for an overview of the 2021 UK autumn budget, see the article in the November 2021 issue of Corporate Tax News).
A public consultation launched on 11 January 2022 requests input on the UK implementation and administration of the model rules on the Pillar Two global anti-base erosion (GloBE) proposal. Comments are requested on the introduction of a UK domestic minimum tax and a broader reform to the existing UK BEPS legal framework. Comments must be submitted by 4 April 2022.
United States: The last major piece of legislation the Biden administration sought to enact in 2021 was the Build Back Better Act (BBBA), but due to opposition, the BBBA was not passed by the end of 2021. The path forward for the bill is currently unclear.