Friday, 12 January 2018 10:42

PRISM Tax Newsletter- 3rd and 4th Quarter 2017 issue

The latest issues of PRISM – the quarterly tax newsletter, which is part of Reanda’s effort to stay in touch with our clients by sharing updates and insights on the recent taxation changes and current hot topics. Read the publication online.


Measures of international tax environment

Under the strategic guidance of One Belt and One Road, step by step China has developed from a capital importing nation to a capital exporting nation with the increasing development of reform. In the reformation process, company needs to pay attention to the changing international tax environment to have better control of tax risk.

Cyprus signs off a Double Taxation Avoidance Agreement (DTAA) with Barbados

Cyprus and Barbados have concluded and signed a Double Taxation Avoidance Agreement (DTTA) on 3 May 2017 in London. The DTTA generally complies with the provisions of the OECD Model Convention and will come into force as from the 1st January next following the year in which each country completes the ratifications process.

Hong Kong
The Multilateral Convention to implement BEPS in Hong Kong has been signed!

On the 7th of June 2017, Mainland China on behalf of Hong Kong, signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. Corporate groups with cross-border business activities should carefully review their existing structures and assess the potential impacts.

BEPS - An Indian perspective

BEPS is a tax avoidance strategy used by multinational companies, wherein profits are shifted from jurisdictions with high taxes to those with lower (or no) taxes (so-called tax havens). Taxation is at the core of countries’ sovereignty, but the interaction of domestic tax rules in some cases leads to gaps and frictions. When designing the domestic tax rules, sovereign states may not sufficiently take into account the effect of other countries’ rules. The interaction of independent sets of rules enforced by sovereign countries creates frictions, including potential double taxation for corporations operating in several countries. It also creates gaps, in cases where corporate income is not taxed at all.

Increased penalty for Violation of Foreign Exchange Transactions Act

The upper limit of penalties imposed by foreign exchange transaction laws rose from 50 million won to 100 million won. Reduction rate for penalty will be increased from 20% to 50%; or up to 75%.. Penalty may be reduced for voluntary declaration, small and medium sized company, minor negligence etc.

Identify tax resident of other jurisdictions

Effective July 1 2017, Macao SAR financial institutions will request information from clients to identify if they are tax resident of other jurisdiction and supply the information of relevant accounts to Macao Financial Services Bureau (Macao Tax Authority DSF) in order to engage in automatic exchange of information.

Common Reporting Standard (CRS) for the automatic exchange of financial account information

The Organisation for Economic Co-operation and Development (OECD) has introduced Common Reporting Standard (CRS) to put a global model of automatic exchange of information into practice for the purpose of tax compliance. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be adhered by financial institutions.

Malta as a destination for expatriates

Malta is the smallest Member State in the European Union and is located in the Mediterranean Sea, between Sicily and North Africa. According to
the Wall Street Journal, Malta ranked as the third best country for expatriates to live in.

There are 3 types of residence programs:
a. IIP (Individual Investor Program)
b. MRVP (Malta Residence & Visa Program)
c. GRP (Global Residence Program)

Through these programs:
1. Tax is charged only on income remitted to Malta or arising in Malta
2. No tax is charged on money transferred to Malta
3. No tax is charged on Capital gains that arise outside Malta.
4. Tax on Maltese company profits can effectively vary from 0 to 10%.

Brief analysis on ‘Transfer Pricing’ and ‘Income Splitting’ provisions of Nepal

‘Transfer Pricing’ means any arrangement among the related parties or group of related companies/entities/persons or any enterprises while dealing in international transaction and any foreign branch of such enterprises or any foreign permanent establishment, with the objective to reduce tax liability. Any arrangement among the related parties with the objective of reducing tax incidence or planning of the transaction in such a way that the price of asset or service shifted to another related party resulting into tax liability, is ‘Transfer Pricing’.

Main changes to the tax legislation of the Russian Federation

1.1. The Tax Code of Russia is supplemented by provisions on the validity of the tax benefit.
1.2. The Federal Tax Service of Russia has established that additional data on companies operating in the territory of Russia will appear on its website beginning June 1, 2018.
1.3. The Russian government has updated the list of facilities and technologies with high energy efficiency.
1.4. Evasion of payment of insurance premiums has became a crime.

Important amendments made In 2017 in the Income Tax Ordinance, 2001

Finance Act 2017, has brought certain amendments in the Income Tax Ordinance, 2001. New concepts of start-ups and e-commerce market place model have been introduced to encourage and promote the start-up culture in Pakistan and potentially attract foreign and local investors. Previously these sectors were not part of any tax regulations. To prevent misuse of receipts/donations etc. received by NPOs, additional conditions have been introduced for NPOs to comply in order to be eligible to enjoy 100% tax credit.

UK residential property

The article outlines some major changes to UK tax legislation that affects owners of UK residential property which have been introduced within the last 24 months. These changes cover stamp duty land tax on the acquisition of UK residential properties, income tax on rental income and inheritance tax on the transfer of a UK residential property.
There are potentially tax efficient alternative ways to hold UK property investments, which include the use of a company and investing in commercial property. The tax benefit of these alternatives are briefly described in the remainder of the article.

A new tax regime in UAE from 1st January 2018 Value Added Tax (VAT)

It’s a beginning of the transition and transformation of a tax-free country by introduction of VAT in UAE. UAE is also going to embrace one tax and one country policy. Unequivocally this phase of indirect tax-VAT transfiguration will enlighten the economy of UAE and pave the path for the implementation of smooth tax system in UAE. It’s not beyond the knowledge that UAE is one of the most advanced and developed country but undoubtedly additional tax revenue to the Government of UAE will uplift the socio-economic environment and it would evenly place the country in line with the global transparent and regulatory framework.