CFE’s Global Tax Top 5

EU removes eight countries from the tax ‘blacklist’

The Council of the European Union removed eight jurisdictions from the EU list of                       non-cooperative jurisdictions for tax purposes at the ECOFIN meeting of 23 January. Following commitments made at high political level to remedy the EU concerns, the EU finance ministers agreed to move these countries to a separate list, where they will be subjected to close monitoring: Barbados, Grenada, Republic of Korea, Macao SAR, Mongolia, Panama, Tunisia and the United Arab Emirates. The decision leaves 9 countries on the list of 5 December 2017, initially comprising 17 jurisdictions.

EU Commissioner Moscovici urged the Member states to publish the content of the commitment letters sent to the EU by the jurisdictions that are now on the grey list. Moscovici stated that these letters must be made public, so that everyone can judge these commitments. It was further submitted by the Commissioner that the credibility of this process depends on such transparency, with the Member states bearing the onus of this responsibility.

Thailand releases second draft of proposed e-commerce law along with public consultation

The redraft of the proposed e-commerce tax, notably, removes the proposal for a withholding tax or corporate income tax but rather focuses on bringing service providers of e-commerce transactions within the scope of VAT. The new proposals include requiring foreign companies providing services via electronic media to a non-VAT registered person in Thailand to register for VAT if their income exceeds a certain threshold. The foreign VAT registered service provider will be subject to certain specific conditions. In addition, a non-VAT registered person who is subject to the service fee of the foreign company will not be required to self-assess for the VAT.

South Korea to tax cryptocurrency

The Ministry of Finance in South Korea has indicated its intention to introduce a tax on cryptocurrency exchanges such as the Bitcoin exchange. It is reported that the tax will be in the region of 22% corporate income tax and 2.2% local income taxes on the previous year’s earnings. The tax will be imposed if the annual income of the exchange exceeds the threshold of $18.8 during 2016.

In addition, it was indicated by the Finance Ministry that the exchange would be required to share transaction data with banks, in an effort to increase tax compliance.

Hong Kong introduces two-tiered profits tax regime

Hong Kong is set to introduce a new corporate tax regime targeted at encouraging growth of SMEs in 2018. Under the proposed new rules a lower rate of corporation tax of 8.25% will be introduced on the first $2 million of profits with the balance taxable at the standard rate of 16.5%.

New measures will also be introduced aimed at encouraging investment in research and development. The first $2 million of expenditure will be eligible for a 300% tax deduction with the remained expenditure subject to a 200% tax deduction.

Panama signs OECD Common Reporting Standard Multilateral Competent Authority Agreement

Panama has become the 98th jurisdiction to become a signatory. Signatories affirm their commitment to the automatic exchange of financial account information under the OECD/G20 Common Reporting Standard. The first set of exchanges are due to commence in September 2018. By becoming a signatory Panama will be in a position to activate bilateral exchange relationships with the other signatories.

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CFE’s Global Tax Top 5 is edited by Piergiorgio Valente

The selection of the remitted material is prepared by

Aleksandar Ivanovski/ Filipa Correia / Piergiorgio Valente/

Stella Raventós-Calvo / Wim Gohres