Angola’s legislative body has taken significant steps to refine its tax framework, enacting Law no. 14/23 on 28 December, which revises the VAT Code, and Law no. 15/23, reintroducing the Special Contribution for Foreign Exchange Operations (CEOC).
These measures aim to optimize the VAT system, making it more adaptable, efficient, and equitable for both taxpayers and the Tax Administration, while also addressing specific foreign exchange transactions.
The newly amended VAT Code introduces several critical changes designed to alleviate the tax burden on certain goods and transactions, improve the refund process for taxpayers, and enhance compliance and administrative efficiency:
The general VAT rate remains at 14%, but new reduced rates have been incorporated, including 7% for the Simplified VAT Regime, 5% for the import and supply of widely consumed foodstuffs and agricultural inputs, and 1% for imports and supplies within the Special Regime applicable to Cabinda Province.
The threshold for VAT refund requests has been increased from AOA 299,992.00 to AOA 700,000.00, facilitating greater recovery of VAT credits for businesses.
The non-submission or late submission of VAT returns now incurs a penalty of AOA 600,00.00 per infringement, aiming to improve compliance rates.
Non-resident entities engaging in taxable activities in Angola can now register in the General Taxpayers Register without appointing a tax representative, subject to forthcoming regulatory conditions and obligations.
Banks are required to electronically report quarterly summaries of transactions processed through automatic payment terminals to the Tax Administration, enhancing transparency and oversight.
Alongside the VAT modifications, Law no. 15/23 reintroduces the CEOC, targeting transfers in foreign currency outside Angola.
This levy applies to transactions such as technical assistance, service provision, consultancy, management, or unilateral transactions, with rates set at 2.5% for individuals and 10% for legal entities.
Exemptions from the CEOC include payments for health and education expenses (if paid directly to the institutions’ bank accounts), transfers of dividends, and repayments of loan capital and associated interest.
The CEOC aims to regulate foreign exchange operations more tightly, ensuring a fair contribution from transactions impacting Angola’s financial reserves.
These legislative updates signify Angola’s commitment to refining its tax system to support economic growth, enhance tax compliance, and maintain a balanced approach to foreign exchange transactions.
Businesses operating within Angola, particularly those involved in importation, supply of goods, and cross-border transactions, will need to adjust to these changes to ensure compliance and optimize their tax positions.
Meanwhile, the reintroduction of the CEOC underscores the importance of careful planning for international payments and financial operations involving Angola.
If you have any queries on this article titled ‘Angola amends VAT System’, or any Angolan tax matters, then please get in touch.
Ghana has embarked on a comprehensive overhaul of its tax regime with a series of amendments aimed at fostering economic development, supporting local industries, and promoting environmental sustainability.
These changes, spanning from income tax adjustments to the introduction of an emissions levy, reflect the government’s commitment to creating a conducive environment for businesses and individuals alike.
An important change under the Income Tax, 2015 (Act 896) is the revision of the annual graduated tax scale for resident individuals.
The tax-free threshold has been elevated from GH¢4,824.00 to GH¢5,880.00, providing a slight relief to the tax burden on individuals and potentially increasing disposable income for households.
The amendments to the VAT Act are particularly notable for their emphasis on supporting local manufacturing and sustainable transportation solutions. Key highlights include:
Furthermore, the amendment has refined the scope of exempt supplies, notably excluding imported textbooks, exercise books, and non-life insurance from VAT exemptions.
The government has revisited the Stamp Duty Act, 2005 (Act 689), adjusting stamp duty rates upwards for various instruments, signifying a move to increase revenue from transactions involving legal documents.
In the area of excise duty, adjustments aim to harmonize the treatment of similar products and extend the duty’s coverage to include imported plastic packaging, reflecting an effort to address environmental concerns and promote local industries.
The Exemptions Act now includes provisions to exempt customs duties and taxes on fishing gear imported for agricultural purposes, pending certification by the minister responsible for Fisheries and Aquaculture Development.
This measure is designed to support the fishing industry, a vital sector for Ghana’s economy.
A groundbreaking introduction is the emissions levy, targeting sectors and activities contributing significantly to greenhouse gas emissions.
This levy is part of Ghana’s broader strategy to mitigate environmental impact and promote sustainability.
It applies to specified sectors and motor vehicle owners, with the rates varying according to the emissions’ carbon dioxide equivalent and the vehicle’s engine capacity.
These tax law amendments reflect Ghana’s strategic approach to addressing contemporary economic challenges, promoting sustainable development, and enhancing the competitiveness of local industries.
By incentivizing the adoption of environmentally friendly practices and providing tax relief in targeted areas, Ghana aims to stimulate growth, support local manufacturing, and encourage responsible environmental stewardship.
As these changes take effect, they are expected to have wide-ranging implications for businesses, individuals, and the economy at large, positioning Ghana for a more sustainable and prosperous future.
If you have any queries about this article titled Ghana Implements Significant Tax Law Amendments, or Ghana tax matters in general, then please get in touch.
In its 2024 budget, Zambia sets forth a series of tax measures designed to stimulate economic growth, enhance policy consistency, and ensure equitable development across various sectors.
With a projected growth increase from 4% in 2023 to 4.8% in 2024, and amid a backdrop of contained external debt and decreasing inflation, these reforms aim to unlock Zambia’s economic potential through both incentives and tightened tax administration.
A reduction in income tax by 20% for five years for investments in rural areas, applicable to all sectors except mining, encourages businesses to contribute to rural economic development.
Tax exemptions for up to 10 years for profits derived from the cotton value chain promote the agriculture sector’s diversification and competitiveness.
Immediate 100% tax write-offs for new equipment for both developers and investors in MFEZs aim to spur significant investment in these special economic zones.
Aligning with incentives for other crops, this measure encourages the production and processing of sorghum and millet, supporting agricultural diversification.
The law now acknowledges the final ruling date in disputes as the official date for assessment, ensuring fairness in transfer pricing adjustments.
Removing the six-year limit on assessing transfer pricing issues enhances the tax authority’s flexibility in managing complex audits.
This measure ensures that related-party transactions employing non-OECD methods meet the Commissioner’s standards, aligning Zambia with international best practices.
The redefinition of terms to match OECD standards demonstrates Zambia’s commitment to maintaining coherence with global tax norms.
The introduction of agents to manage royalty withholding aims to improve compliance among small-scale miners, ensuring a level playing field in the mining sector.
Harmonizing penalties across the mining sector, including artisanal and small-scale activities, deters tax evasion and fosters fair competition.
Enhancing the Commissioner General’s authority to request information from various professionals and regulators strengthens the tax administration’s capacity to enforce compliance.
By incentivizing investment in key sectors, adjusting direct tax measures for individuals and industries, and tightening tax administration, Zambia is poised to harness its full economic potential while ensuring fairness and transparency in its tax system.
If you have any queries about this article on Zambia’s 2024 tax reforms, or other related tax matters, then please get in touch.
In an ambitious stride towards enhancing self-reliance, Zimbabwe has unveiled a comprehensive set of tax measures for 2024 aimed at bolstering domestic resources.
This initiative reflects the nation’s commitment to unlocking the full potential of its development while diminishing its dependency on external funding sources.
The tax reforms introduced encompass a variety of sectors, each tailored to maximize revenue generation without stifling economic growth:
A levy of 0.02 cents per gram on beverages with added sugar, promoting healthier consumption while generating revenue.
A 1% tax on outbound payments made in foreign currency, leveraging transactions within the Reserve Bank of Zimbabwe (RBZ) auction or interbank market.
Implementing a 1% levy on the gross sales of specific minerals and quarry products, targeting lucrative sectors with minimal impact on production costs.
A modest hike from 24% to 25%, balancing the need for revenue with the importance of corporate investment.
A 1% tax on the value of residential properties exceeding USD 250,000, encouraging equitable wealth distribution.
Reduction of the VAT registration threshold and revision of VAT exemptions aim to broaden the tax base and ensure essential goods remain accessible.
A 20% tax on the transfer of mining titles, ensuring that the nation benefits from its natural resource wealth.
Aligning with global efforts to ensure multinational enterprises contribute fairly to local economies.
To support these measures, Zimbabwe’s tax administration system, under the Zimbabwe Revenue Authority (ZIMRA), will see significant enhancements.
These include expanded enforcement powers, stricter compliance mechanisms for manufacturers, and innovative approaches to incorporating the informal sector into the tax system.
Furthermore, the integration of customs and excise systems with financial institutions aims to streamline processes and reduce evasion.
Zimbabwe’s tax reforms for 2024 represent more than a fiscal adjustment; they signify a transformative shift towards sustainable development and self-sufficiency.
By tapping into domestic resources, the nation seeks to lessen its reliance on external financing, fostering a resilient economy poised for growth.
For businesses and individuals alike, these changes offer both challenges and opportunities.
Adapting to the new tax environment will require flexibility and innovation, but it also opens the door to participating in Zimbabwe’s journey towards a more self-reliant and prosperous future.
If you have any queries relating to Zimbabwe 2024 Tax Strategy, or tax matters in Zimbabwe generally, then please get in touch.
In the dying days of 2023, specifically on December 29th, Montenegro‘s National Assembly passed significant amendments to the Corporate Income Tax (CIT) Law.
This marks a key moment in the country’s tax legislation history.
These amendments, effective from January 1, 2024, are set to modernize Montenegro’s tax system, bringing it into closer alignment with European Union (EU) standards.
This move is particularly aimed at harmonizing with the EU Council’s Directive 2009/133/EC, a cornerstone directive that establishes a common system of taxation applicable to mergers, divisions, transfers of assets, and exchanges of shares involving companies from different EU member states.
It also covers the transfer of registered offices of companies within the EU. The application of these rules will be activated upon Montenegro’s accession to the EU.
The recent legislative overhaul goes beyond mere compliance with EU directives. It introduces a series of substantive changes to the CIT regime, reflecting Montenegro’s commitment to fostering a transparent, EU-compatible tax environment.
Here’s a breakdown of the key amendments and their implications for businesses:
The revised CIT Law specifies the calculation of the CIT base, incorporating profit before taxation, as reported in the balance sheet.
This calculation must now adhere strictly to International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). A significant addition is the treatment of accounting policy changes.
Any income or expense arising from such changes will be recognized in the tax period of correction and spread evenly over five tax periods.
Furthermore, the amendments clarify that income from the liquidation of other legal entities will be excluded from the CIT base, alongside refining the conditions for write-offs.
The amendments have introduced precise guidelines for determining the acquisition value of assets.
In a notable shift towards market transparency, the tax authorities are now empowered to adjust the sale price of assets to reflect market value in transactions between both related and unrelated parties.
This adjustment is mandatory if the sale price is below the market rate, ensuring fair market practices and preventing tax evasion.
A significant change is the expansion of the withholding tax’s scope, now encompassing a wider range of legal entities.
The definition of taxpayers subject to withholding tax has been broadened, with the new law also taxing the distribution of liquidation surplus.
Moreover, permanent establishments must now withhold tax on dividends, profits, and liquidation surplus, among other payments, marking a considerable extension of tax obligations.
The amendments have ushered in new amortization rates designed to reflect the current economic realities more accurately.
These include reduced rates for buildings, roads, bridges, and similar assets, now set at 2.5%, and adjustments in rates for other asset groups to ensure a more equitable depreciation schedule.
In an effort to streamline tax benefits, the amendments eliminate the subsidy for newly employed individuals from the CIT Law, as these incentives are already encapsulated within the Personal Income Tax Law.
These amendments represent Montenegro’s proactive steps towards integrating with the European tax framework, signaling its readiness for future EU membership.
By aligning its tax laws with EU standards, Montenegro not only enhances its business environment but also strengthens its commitment to international compliance and transparency.
For businesses operating within Montenegro, these changes necessitate a thorough review of tax planning and compliance strategies, ensuring alignment with the new legislative landscape. For further details, then please get in touch.
In a significant move, the Malaysian government, through the Finance (No. 2) Act 2023 and the Income Tax (Exemption) (No. 7) Order 2023, has deferred the commencement of capital gains tax on the disposal of shares in unlisted Malaysian companies to March 1, 2024.
This exemption is effective from 1 January 2024, to 29 February 2024.
The Exemption Order offers a temporary reprieve from capital gains tax.
It applies for companies, limited liability partnerships, trust bodies, and co-operative societies on profits gained from the disposal of unlisted Malaysian company shares within the specified period.
The shares must be disposed of between 1 January 2024, and 29 February 2024 to qualify for the exemption.
This order does not apply to disposals where gains are considered business income under the Income Tax Act 1967.
Following this order, the capital gains tax will commence on 1 March 2024, aligning with the original announcement in the Malaysian Budget 2024.
The imposition of capital gains tax on disposals of shares in controlled companies outside Malaysia (owning real property in Malaysia or shares in another controlled company) still commences on 1 January 2024.
Disposals from 1 January 2024, to 29 February 2024, are not subject to the Real Property Gains Tax Act 1976 or capital gains tax.
This strategic deferment allows a window for entities to plan and adjust to the impending tax changes.
Businesses and investors involved in the Malaysian market must be aware of these updates to optimise their tax strategies and compliance.
This deferment represents an important transitional period in Malaysia’s tax landscape, especially for stakeholders in unlisted companies.
It reflects the government’s efforts to streamline tax policies while considering the impact on businesses.
If you have any queries around this article on Malaysia Defers Capital Gains Tax or Malaysian tax matters in general, then please get in touch.
On 19 December 2023, the Upper House of the Dutch parliament approved the 2024 Tax Package.
This included the Tax Plan and various other proposals, set to be effective from 1 January 2024.
This approval, coming exactly three months post-publication, marks a pivotal step in the Netherlands’ fiscal policy.
However, it’s noteworthy that the Industry and Electricity Tax Climate Measures Act was not adopted.
The tax relief for share redemption for listed companies will be abolished from 1 January 2025.
This change significantly alters the dynamics of share redemptions, impacting both companies and shareholders.
The statutory minimum wage is set to rise by 1.2%, prompting an increase in certain tax rates.
Notably, the top rate in box 2 will go up from 31% to 33%, and Box 3 tax rate to 36% from 2024.
The scope of this scheme will be limited to EUR 216,000. Over the five-year period, the applicable rate will gradually decrease from 30% to 10%.
The partial foreign taxpayer status for expats using the 30% ruling will be abolished, with transitional rules in place until the end of 2026.
Changes include provisions for open limited partnerships facing withholding tax obligations due to hybrid provisions in the Conditional Withholding Tax Act 2021.
Detailed guidance on classification tests and comparisons to Dutch entities is expected in Q1 of 2024.
These amendments incorporate elements from the OECD’s model rules, including definitions and safe harbor rules.
This exemption will be limited from 1 January 2025, with transitional rules respecting certain agreements signed before 19 September 2023.
The Netherlands has adopted the EU Directive for transparency in profit tax reporting, affecting multinational groups with revenues exceeding EUR 750 million.
The reporting obligation starts for financial years commencing on or after June 22, 2024.
The 2024 Tax Package represents a notable change in the Dutch fiscal regime, aiming for greater transparency and adjustment to global economic shifts.
While some of these changes, like the abolition of tax relief for share redemption and the amended 30% payroll tax scheme, bring about substantial shifts in tax strategies for businesses and individuals, the overall approach is geared towards a more equitable and transparent tax system.
Entities that affected by these changes should carefully assess the impact and prepare for the administrative requirements imposed by the new regulations.
If you have any thoughts on the Dutch 2024 Tax Pacakge, or Netherlands taxation at all, then please get in touch.
The Scottish Government Budget 2024/25 was recently unveiled by Shona Robison.
In this short article, we summarise some of the changes that are, to be honest, pretty bold
In a move that was more foreshadowed than a plot twist in a detective novel, a new Scottish income tax rate has emerged.
It targets income between £75,001 and £125,140 at a 45% rate. Named “Advanced” – because, just like in school, “Advanced” here means “Higher.”
Catching us slightly off guard, the Scottish Top rate of tax has nudged up a notch to 48%. It’s edging ever closer to the half-century mark – that’s 50% for those who skipped math class.
Reminder: these rates are exclusively for Scottish taxpayers, focusing on income from jobs, self-employment, or property.
Scotland says “why stop at three?” and introduces a sixth income tax rate, making it a half-dozen compared to the rest of the UK’s trio.
Scottish taxpayers, brace yourselves for a marginal rate of 67.5% on incomes between £100,000 and £125,140.
Inflation’s not just for balloon animals. The Starter and Scottish Basic rate bands are inflating by 6.7%. The Starter band now encompasses income up to £14,876, and the Basic band stretches from £14,877 to £26,561.
The Council Tax freeze is more solid than a Scotsman’s resolve. It’s not only confirmed but also fully funded, giving councils a financial boost equivalent to a 5% tax increase.
The Basic Property Rate (poundage) is frozen faster at 49.8p per £1 of rateable value, mirroring the UK Government’s recent move.
Despite numerous pleas, the wider hospitality sector won’t see an extension in current reliefs.
However, island-based hospitality gets a 100% break, capped at £110,000.
The Scottish Government is also cooking up some targeted solutions and a new valuation method for the sector.
In the Land and Buildings Transaction Tax (LBTT) and Additional Dwelling Supplement (ADS) world, it’s status quo for both residential and non-residential dealings.
In sync with UK landfill tax increases, from April 2024, the Scottish Landfill Tax will see the standard rate climb to £103.70/tonne and the lower rate to £3.30/tonne.
Talk about trashy tax rates going up!
The Scottish Aggregates Tax (SAT) is set to make its grand debut in April 2026, replacing the UK-wide aggregates levy.
This new kid on the block was introduced to the Scottish Parliament back in November 2023.
If you have any queries about this article on the Scottish Budget, then please do get in touch
On 25 October 2023, the Zakat, Tax and Customs Authority (ZATCA) of Saudi Arabia unveiled a draft Income Tax Law (ITL) for public consultation, aiming to modernize and align the tax system with international standards.
This draft proposes significant changes, focusing on international and cross-border tax elements.
Here’s some more detail on the proposals.
The draft ITL introduces provisions targeting indirect share disposals, categorizing resulting gains as Saudi sourced income.
Additionally, income generated from remote services offered to Saudi residents through electronic means falls under Saudi sourced income, signaling a move towards taxing foreign service providers with Saudi clientele.
Beyond conventional Permanent Establishment (PE) rules, the draft ITL introduces a Services PE concept for non-resident entities rendering services in Saudi Arabia for over 30 days within a 12-month period.
However, these taxing rights under the proposed law may be subject to limitations outlined in Double Tax Treaties (DTTs) signed by Saudi Arabia.
Anti-avoidance Measures The draft ITL incorporates anti-tax avoidance measures, including a Principal Purpose Test (PPT) to deny tax benefits from arrangements designed primarily to attain tax advantages.
It also introduces special tax treatment for transactions involving jurisdictions with Preferential Tax Regimes (PTR), potentially impacting expense deductibility and withholding tax rates.
An encouraging provision is the proposed Participation Exemption, aiming to exempt qualifying dividends, capital gains, and liquidation proceeds from taxation for KSA shareholders meeting specific criteria.
Notably, exemptions won’t apply if the income is tax-exempt in the shareholder’s jurisdiction or benefits from a PTR.
Aligning with OECD BEPS Action 4, the draft ITL limits tax deductions for net interest expenses to 30% of the taxpayer’s adjusted earnings, aiming to curb excessive interest deductions.
A novel reinvestment reserve allows postponing taxation on asset disposal gains if reinvested within two years.
Anti-hybrid rules address tax discrepancies in cross-border financial instruments between related parties, potentially impacting tax deductions.
The draft ITL maintains various withholding tax rates, including 5% for dividends and interest payments.
Notably, it proposes a 10% rate for service payments, and a potential 20% rate for payments to jurisdictions with PTRs, highlighting the impact of the recipient’s location on withholding tax rates.
Saudi Arabia’s proposed ITL represents a significant shift towards tax reform and international alignment.
Its implications for local and international businesses necessitate careful consideration and monitoring of forthcoming changes.
As the consultation progresses, stakeholders must navigate this evolving landscape to capitalize on opportunities while mitigating challenges in the revised tax framework.
If you have any queries about Saudi Arabia’s Draft Income Tax Law, or Saudi tax matters more generally, then please get in touch.
The Finance Bill for 2023, published on 19 October, brings forth significant changes and updates in the Irish financial landscape.
This bill primarily focuses on implementing the Pillar 2 regime, setting a minimum effective tax rate of 15% into Irish law, among other noteworthy provisions.
Here’s a summary of some of the key changes and their implications.
As expected, the Finance Bill transposes the EU Directive on ensuring a global minimum level of taxation, often referred to as the “Pillar 2 Directive.”
This directive sets a minimum effective tax rate of 15% into Irish law.
This change will have a significant impact on large multinationals with a global turnover exceeding €750 million and wholly domestic groups within the EU.
It involves the introduction of “GloBE” rules, consisting of an income inclusion rule (IIR) and an Under Taxed Payment Rule (UTPR).
The IIR takes effect for fiscal years starting after 31 December 2023, and the UTPR will broadly apply for fiscal years starting after 31 December 2024.
The Finance Bill introduces transitional and indefinite safe harbors to alleviate the compliance burden.
The qualified domestic minimum top-up tax (QDMTT) is one such provision, which aims to allow Ireland to apply a domestic top-up tax for Irish constituent entities.
This will potentially reduce the tax calculation and payment obligations for in-scope groups.
Ireland has also adopted other safe harbors following the OECD’s guidance.
To prevent double non-taxation of income, the bill introduces measures denying withholding tax exemptions in certain situations.
These measures primarily apply to payments of interest, royalties, and distributions to associated entities in jurisdictions that are not EU Member States and appear on the EU list of non-cooperative or zero-tax jurisdictions.
New rules are introduced for interest deductibility for “qualifying financing companies” with specific criteria.
These rules generally apply when such companies own 75% or more of the ordinary share capital of a “qualifying subsidiary” and borrow money to on-lend to the subsidiary.
The R&D tax credit is enhanced by increasing the rate from 25% to 30% of qualifying expenditure for accounting periods beginning on or after 1 January 2024.
This change aims to maintain the credit’s net value for companies under the new Pillar 2 regime while providing a real increase in the credit for SMEs.
A pre-notification requirement and other information requirements for R&D claims are introduced as well.
Adjustments are made to the operation of the digital gaming credit to align with the new Pillar 2 definition of a non-refundable tax credit.
These changes affect the manner and timeline for credit payments.
From 1 January 2024, the mechanism for taxing gains from share options shifts from self-assessment by employees to being the responsibility of employers through the Pay As You Earn (PAYE) system.
The bill introduces capital gains tax relief for angel investors in innovative SME start-ups.
Detailed wording for this relief is expected to be included later.
The EIIS is amended to standardize the minimum holding period for relief at four years.
The limit on the amount that an investor can claim for such investments is increased from €250,000 to €500,000 per year of assessment within four years.
An exemption from Irish Stamp Duty for American depository receipts (ADRs) is extended to include transactions in DTC of US-listed shares.
This exemption streamlines the process and eliminates the need for Revenue clearance, making it more efficient.
The Finance Bill transposes EU Directive DAC 7, allowing for cross-border audits with other EU Member States.
It also clarifies Revenue’s authority to make inquiries under the Mandatory Disclosure Regime.
The Finance Bill 2023 introduces numerous significant changes in Irish tax and financial regulations.
Businesses should carefully assess and adapt to these changes to ensure compliance and minimize tax implications effectively.
As always, consulting with financial experts is crucial to navigating these complex tax reforms.
If you have any queries about Ireland Finance Bill 2023, or Irish tax matters in general, then please do get in touch.