|
Below you will find extracts from our latest monthly newsletters. The complete newsletters are distributed to our clients every month together with the Comtax® System update.
Colombia
Foreign Tax Credit Rule Unconstitutional
Effective from 1 January 2011, the foreign tax credit rule for dividends was amended and introduced a minimum direct or indirect participation of 15% in the equity of the foreign company paying the dividends to be entitled to the foreign tax credit.
However, on 6 December 2011, through Decision C-914, the Constitutional Court decided on the constitutionality of the amendment. The Court ruled that the revision is unconstitutional since by requiring such minimum participation it establishes a restriction for the application of foreign tax credit which is against the constitutional principles of equity and progressivity.
As a result, the request of the foreign tax credit may only oblige the taxpayer a direct or indirect participation in the company paying the dividends.
France
Temporary Corporate Income Tax Surcharge
The Amending Finance Law for 2011, introduce a new corporate income tax surcharge of 5%. The surcharge is applicable on an intermediary period, i.e. to fiscal years ending on or after 31 December 2011 until 30 December 2013.
The 5% surcharge is valid to the income tax liability of companies that have a gross income exceeding EUR 250 million. For French fiscal unities, the gross income is calculated at the group level on an aggregated basis.
Thailand
Corporate Income Tax Reduction
According to Royal Decree No. 530 dated 14 December 2011, the corporate income tax rate in Thailand will be reduced for the next three accounting years. With effect from 1 January 2012, the previous tax rate of 30% is reduced to 23%. The tax will be further reduced to 20% on the net profits derived during the two consecutive accounting years, starting on or after 1 January 2013. However, it is still unclear what the applicable corporate income tax rate will be thereafter.
Belgium
Budget 2012
The political parties of the nominated new Government presented the budget for 2012. Once approved, the budget will take effect from 1 January 2012.
Among other proposals, the tax on capital gains on shares sold within the first year of acquisition will be reduced to 25%. Currently, those gains are taxed at the standard corporate tax rate of 33.99%.
The withholding tax on interest is proposed to be increased from the current rate of 15% to 21%.
Further, the notional interest deduction (NID) will be capped at 3% and no carry forward will be allowed. The current rules allow carry forward for seven years and these NID will remain deductible. However, a yearly cap will apply under which NID up to EUR 1 million will be fully deductible, while the excess will only be deductible for 60%.
The budget also includes a proposal to extend the scope of the thin capitalisation rule and introduce of a 5:1 debt/equity ratio.
El Salvador
Tax Reform Bill
The Government presented a tax reform bill to the National Assembly for approval on 29 November 2011. The tax reform is expected to enter into force as of 1 January 2012. Among others, the corporate income tax is proposed to be increased from the current rate of 25% to 30%.
Israel
Income Tax Increase
The Parliament approved changes to the Income Tax Ordinance on 6 December 2011. Among other amendments, the planned continuing reduction of corporate income tax rates from 2012 to 2016 is abolished. Instead, the corporate income tax rate is increased from the current rate of 24% to 25% with effect from 1 January 2012.
 Hungary
Proposed Tax Amendments
Amendments to tax laws, proposed by the Government on 14 October 2011, have been announced by the Parliament. Once adopted, the new tax laws will be effective from 1 January 2012.
Among other amendments, the use of tax losses carried forward is proposed to be limited to 50% of the calculated corporate income tax base. Further, in case of ownership changes, the legal successor company is only permitted to use the tax losses of the former company provided that
- it during the next two calendar years continues activities that are not materially different from the former companies activities, or
- the majority shareholders of the former company directly or indirectly acquire the majority of the shares of the successor company.
Further, amendments on the Controlled Foreign Company (CFC) legislation have been announced. When a company has a business relationship with a foreign company the burden of proof that the company is not a CFC is proposed to be shifted from the tax authority to the taxpayer.
Iceland
Budget 2012
The Minister of Finance announced proposed tax laws changes in the budget for 2012. Among other amendments, the withholding tax rate on interest payments to non-resident companies is proposed to be reduced from the current rate of 18% to 10%. Once adopted, the tax amendments will apply from 1 January 2012.
Romania
Budget 2012
The Ministry of Finance announced the budget for 2012 on 12 November 2011. Among other amendments, the taxable base for corporate income tax purposes will be increased. However, the flat corporate income tax rate will be maintained. We will report details of the budget as soon as they are available.
 Costa Rica
Tax Amendments
The Ministry of Finance has announced new corporate income tax brackets for taxable year 2011-2012. Companies with a taxable income up to CRC 45,500,000 are taxed at the rate of 10%. Companies with income between CRC 45,500,000 and 91,600,000 are taxed at the rate of 20%. Companies with income exceeding CRC 91,600,000 are taxed at the rate of 30%.
Germany
Municipal Trade Tax Update
The rates for the municipal trade tax have been updated. In addition, the municipality Hildesheim has been added to the list. The Comtax System lists the municipalities with at least 100,000 citizens.
Italy
New Regime for Losses Carry Forward
On 14 September 2011 the Parliament approved the austerity package including a new regime for the carrying forward of tax losses for entities subject to corporate income tax. Accordingly, losses may be carried forward indefinitely and off set against a maximum of 80% of the taxable income in subsequent years. However, if a loss is derived in the first 3 tax years from the beginning of the company´s business activity, the limitation is abolished. Companies with fiscal year coinciding with the calendar year are subject to the new law for losses derived in 2011. Companies may apply the old regime for losses derived before 2011. Consequently, losses may be carried forward for 5 years without the 80% limitation and if a loss was derived in the first 3 tax years from the beginning of the company's business activity; it may be carried forward indefinitely.
 Mexico
Budget 2012
The budget for 2012 was submitted to the Congress on 8 September 2011. Among other amendments, the withholding rate on interest paid to non-residents banks is proposed to be levied at the rate of 4.9%. Currently the withholding tax rate is 10% when the recipient is a non-resident bank and 4.9% if the beneficial owner of the interest is a bank resident of a country with which Mexico has a double tax treaty.
Portugal
Austerity Amendments Proposed
On 31 August 2011, the Ministry of Finance announced a proposal including an increase of the state surtax from currently 2.5% to 3% on income derived by resident entities exceeding EUR 1.5 million.
Venezuela
Sports Law Contribution
From 23 August 2011 a Sports Law contribution is applicable for companies with an annual net income exceeding VEF 1.520.000. The surtax is levied at the rate of 1% on the net income for companies performing activities in Venezuela and is not deductible for income tax purposes.
 Canada
Provincial Tax Rate Reduction
With effect from 1 July 2011 the provincial tax rate of New Brunswick is reduced from 11% to 10%. From the same date the provincial tax rate of Ontario is reduced from 12% to 11.5%. This rate will be further reduced to 11% effective 1 July 2012 and to 10% effective 1 July 2013.
Finland
Budget 2012
A press release on the budget for 2012 was published by the Ministry of Finance on 18 August 2011.The budget, which will apply from 1 January 2012, include a decrease in the corporate income tax rate from 26% to 25%.
Spain
Tax Amendments Approved
Royal Decree-Law 9/2011 of 19 August 2011 was approved by the Government on 19 August 2011 and came into effect on 20 August 2011. The law introduced new measures to reduce the public deficit. Among other measures, the loss carry forward period is extended from 15 to 18 years for all type of companies.
The authors assume no responsibility whatsover for any damage in connection with actions, whether undertaken or not, relating to the information set forth herein.
|
