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    New Tax Association in Gibraltar

    The Gibraltar Association of Tax Advisers (GATA) was formally launched in mid-February 2023. The main objective of GATA is to:

    Tax Advisers play an important role in the administration of the tax system and many taxpayers choose to use their services to assist them with their tax compliance and planning.

    GATA believes that it will be beneficial to the profession, and to Gibraltar as a whole, for there to be a professional organisation that represents and promotes this distinct profession.
    GATA will provide specialist tax support and a local voice for cross-border tax matters impacting Gibraltar.

    In achieving this, GATA aims to work with connected well-established organisations locally, along with building relations between Gibraltar’s tax profession and its international counterparts, most notably the UK’s Chartered Institute of Taxation (CIOT).

    The Chartered Institute of Taxation (CIOT)

    The CIOT is the leading body in the UK for tax professionals whose primary purpose is to promote tax education. One of its key aims is to achieve a more efficient and less complex tax system for all.

    GATA is looking to do something similar in Gibraltar. Its views and recommendations on tax matters will be made on this basis. GATA has met with Gibraltar’s Commissioner of Income Tax, and the CIOT, both resulting in encouraging outcomes.

    GATA is looking to promote education in a variety of ways, both on its own and in conjunction with the CIOT. As a starter, it would like to offer quarterly open tax training seminars.

    These seminars will be designed to cover a broad range of tax topics, from aspects which may be of interest to many taxpayers locally, to others which will focus on technical aspects of the tax regime which may be of more interest to relevant professionals.

    Therefore, GATA is looking to provide a tax education and tax discussion platform. Membership of GATA is open to anyone who:

    The founding members of GATA, whose specialisms cover the many aspects of tax, and represent a variety of local firms, include:

    GATA officers have been elected: the Chair, Grahame Jackson; Education Officer, John Azzopardi; GSA Liaison Officer, Darren Anton; Tax Technical Officer, Paul McGonigal; and Secretary, James Bossino and Marco De La Chica.

    In the first year of operation at least, there is no fee to join GATA. An open invitation stands to all those who meet the entry requirements and who are interested in joining.

    What did Gibraltar’s Chief Minister deliver in his July budget?

    On 11 July, Gibraltar’s Chief Minister, Fabian Picardo QC, delivered a budget that was said to “support the less well-off and the overall integrity of the nation’s finances in the short, medium, and long term.”

    But what did this include?

    Well, the budget for the year has brought about significant positive changes in revenue generation, surpassing even the Government’s initial projections. Notably, there has been a remarkable 24% increase in revenue from personal taxes and a 31% increase in revenue from corporate taxes within the last two years. These results have exceeded expectations and can be attributed to the 2% increase in personal tax rates across all income brackets that was implemented last year.

    There was also a commendable reduction in the net debt to GDP ratio, declining from 26% in the 21/22 fiscal year to a more manageable 22% in the 22/23 fiscal year, signalling a favourable economic outlook for the country.

    This budget also marks a crucial moment – it could potentially be the last one under the current Chief Minister, as an election looms later in the Autumn, making it even more important to achieve economic stability and continued growth.

    Furthermore, this year marks the seventh year since the Brexit referendum, and despite the challenges posed by the transition, the budget indicates no austerity measures or cuts to jobs and public services. This approach reflects the Government’s commitment to providing essential services and maintaining a positive environment for economic growth.

    It is also evident that fiscal responsibility remains a top priority, as the budget emphasises that annual expenditure shouldn’t exceed annual revenue. This approach aims to ensure sustainable financial management and long term economic stability for the nation.

    Changes related to taxes

    Last year, personal tax rates across all income bands saw a 2% increase but a welcome change is on the horizon. Those earning between £25,000 and £100,000 will soon benefit from a halving of the increased tax rate, bringing it down to 1%. As a consequence, the maximum personal tax rate for this group will be 26%, and this change will apply to all bands under GIBS or ABS.

    However, for those earning over £100,000 under ABS or GIBS, the maximum personal tax rate will remain at 27%. It’s important to note that this alteration is temporary and will last for two years, after which the maximum effective personal tax rate will return to 25%.

    Tax-free, one-time payment

    In September 2023, an exciting development awaits public sector employees as they will receive a tax-free, one-time payment that will amount to a total cost of £6.5 million. The amounts are as follows:

    Private sector employers may also choose to provide similar payments with the same tax-free terms, though they will not be part of the payroll and will not be deductible against company profits.

    The property sector

    Further adjustments are being made in the property sector, as the first-time buyer’s allowance for no stamp duty will be increased from £260,000 to £300,000. However, there will be an increase in stamp duty on property sales exceeding £800,000, going from 3.5% to 4.5%. Additionally, the implementation of stamp duty on the assignment of off-plan purchase agreements is under consideration.

    Tax credits

    New tax credits are also set to be introduced. Those who are registered with the Income Tax Office and are enrolled in a gym or contract a personal trainer will be eligible for a 10% tax credit on verified costs. Similarly, parents with children receiving private school tuition in Gibraltar will receive a 10% tax credit on the total tuition cost. Furthermore, single practitioner lawyers will enjoy a generous tax credit of 75% of the LSRA (Legal Services Regulatory Authority) fees. These aim to provide financial support and incentives to various sectors of the population.

    Other budget measures

    The EU is currently in discussion regarding the Schengen Agreement. As part of recent developments, certain financial adjustments are set to take place.

    Wages and benefits

    Those earning minimum wage, receiving old age pension, or disability benefits will see an increase in line with inflation estimates, approximately 6.2% rounded to 7%. The minimum wage will also be raised to £8.60 per hour from the previous £8.10. Additionally, occupational pensions will experience a 2% increase.

    When it comes to public sector employees, there will be a substantial 16% raise in the minimum wage, amounting to £21,674 per year, aligning the UK with parity standards.

    Changes are also coming to the Employment Benefit Trust (EBT) as the vacancy fee will be reduced from £18 to £8.60. Alongside this, the Dept of Employment will introduce a penalty for those who fail to adhere to the 10-day vacancy period.

    As of 1 August, all fees payable to the Government will be subject to increases in accordance with inflation rates. However, water and electricity bills will remain unaffected by these changes.

    Import duties

    Regarding import duties, the current measure of reducing import duties to alleviate the impact of high fuel prices will continue until 31 December 2023, and the vehicle duty cap pertaining to the importation of petrol and diesel cars will be raised from £25,000 to £35,000, with a new cap of £35,000 also imposed on the importation of pleasure vessels.

    Tobacco duty will also see an increase of 50p per carton or 5p per 20 pack. Additionally, vapes will be subjected to a duty rate equivalent to 50% of the rate of a 20 pack of cigarettes.

    Despite this, import duty will be waived for health and fitness-related items, including fitness trackers, bicycles, bicycle accessories or spare parts, treadmills, and all other gym or fitness equipment, aiming to encourage healthy lifestyles and fitness endeavours.

    Singapore Budget 2023

    Singapore Budget 2023 – Introduction

    The Singapore 2023 Budget was held on Valentine’s Day, the 14 February 2023.

    The aim of the 2023 Budget was to support businesses and households to overcome challenges caused by inflationary pressures and global uncertainty while upholding fiscal prudence.

    As part of this effort, the government intends to implement OECD Pillar 2 measures and a domestic top-up tax to ensure a minimum effective tax rate of 15% for multinational enterprise groups in Singapore starting from January 1, 2025.

    Maintaining competitive

    To maintain competitiveness, Singapore will extend and enhance various tax schemes, including:

    Enterprise Innovation Scheme

    Additionally, a new Enterprise Innovation Scheme will be introduced to incentivize businesses to engage in research and development, innovation, and capability development activities. Businesses can qualify for tax deductions or allowances of up to 400% of qualifying expenditure, subject to a cap of $400,000.

    They may also choose a non-taxable cash pay out of 20% on up to $100,000 of total qualifying expenditure across all qualifying activities per year of assessment, in lieu of tax deductions or allowances.

    Stamp duty

    Furthermore, higher marginal buyer’s stamp duty rates have been introduced for high-value residential and non-residential properties from February 15, 2023.

    The buyer’s stamp duty rates are up to 6% for residential properties and 5% for non-residential properties. These changes are consistent with enhancing the fairness and resilience of Singapore’s tax system.

    If you have any queries relating to the Singapore Budget, or Singaporean tax matters more generally, then please do not hesitate to get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.

    South Korea Budget – Some key points

    South Korea BudgetIntroduction

    The South Korean government passed a proposed bill in December 2022 that includes some changes to tax laws and enforcement decrees.

    Here are the key changes that may affect foreign businesses and investors in South Korea.

    Lower corporate income rate

    Starting on January 1, 2023, the tax rate for each of the four corporate income tax brackets is cut by 1% to promote investment and job creation by businesses.

    Wider consolidated tax return

    Starting on January 1, 2024, a parent company may consolidate its subsidiaries in Korea in its tax return if the parent directly and indirectly holds 90% of the issued and outstanding shares (excluding treasury shares). Before the amendment, the shareholding requirement was 100%.

    Longer flat income tax rate for foreign workers

    Starting on January 1, 2023, a foreign worker may elect to apply the flat 19% rate (20.9% including local income tax) on his/her personal income tax for 20 years from the date he/she first started working in Korea.

    Previously, it was limited to 5 years.

    Increased loss carry forward

    Starting on January 1, 2023, loss carry forward is increased to 80% of the net loss in a given fiscal year.

    For small and medium-sized enterprises, it remains the same at 100%.

    Income exclusion for dividends from subsidiaries

    Starting on January 1, 2023, any dividends received by a company from another domestic company may be excluded from its taxable income according to the rates provided in a table.

    In addition, any dividends received by a company from another foreign company may be excluded from its taxable income instead of getting a foreign tax credit if it meets certain criteria.

    Simplified and more generous employment tax credit system

    Starting on January 1, 2023, the five existing employment tax credits will consolidate into two employment tax credits.

    For a new regular hire, a higher tax credit is given for hiring the young, the old, the disabled and career-interrupted women.

    Foreign workers are excluded.

    Delayed securities transaction tax reduction

    The timeline of the securities transaction tax reduction has been adjusted.

    Delayed imposition of tax on digital assets

    The imposition of 20% tax on income from transferring or lending digital assets has been postponed by two years and is scheduled to begin on January 1, 2025.

    If you have any queries relating to the South Korea Budget, or Korean tax matters more generally, then please do not hesitate to get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.

    Canada: Federal Fall Update

    Canada Federal Fall Update Introduction

    Measures announced in the 2021 Federal Fall Economic Update will be implemented by Bill C-8. On 4 May 2022, this Bill passed its third reading in the House of Commons on 4 May 2022.

    Its contents will enact measures including:

    Other measures are also included.

    The first reading of the Bill took place on December 15, 2021.

    The temporary Small Businesses Air Quality Improvement Tax Credit

    The new Bill will include a refundable 25% tax credit for qualifying entities, which have qualifying expenditures for air quality improvements. This expenditure must have been incurred between 1 September 2021 and 31 December 2022.

    Qualifying entities will include both unincorporated sole proprietors and Canadian-controlled private corporations with taxable capital employed in Canada of less than $15 million in the tax year directly preceding it.

    A maximum of $10,000 is available in qualifying expenditures per qualifying location. The credit is capped at a maximum of $50,000 across all qualifying locations. It should be noted that these two ‘caps’ are shared amongst affiliated businesses.

    Refundable tax credit for farming businesses

    The contents of the bill also includes the new refundable tax credit to return fuel charge proceeds from pollution pricing directly to farming businesses in certain provinces.

    These provinces include Ontario, Manitoba, Saskatchewan and Alberta. The scheme started in 2021.

    The refundable tax credit is available to taxpayers who are actively engaged in either the management or day-to-day activities of farming. This includes farming enterprises that are carried out through a partnership.

    A qualifying farming business must incur total farming expenses of $25,000 and those expenses must be at least partly attributable to the provinces mentioned above.

    Underused Housing Tax Act

    The bill also includes the proposed legislation behind the Underused Housing Tax Act. This legislation will result in an annual tax of 1% on the value of vacant or underused Canadian residential real property.

    The property must be owned either directly or indirectly owned by non-resident non-Canadians.

    The new annual tax applies beginning in the 2022 calendar year.

    If you have any queries about this article, the Canada Federal Fall Update, or the matters discussed more generally, then please do not hesitate to get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.