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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.
France’s vision for a greener and more sustainable future has taken a significant step forward with the release of the French Finance Bill for 2024, unveiled on 27 September 2023.
One of the headline features of this bill is the introduction of a Tax Credit for Investments in Green Industries, known as the Crédit d’impôt “Investissement Industries Vertes” (C3IV).
This tax credit is designed to reinvigorate the country’s industrial sector and reduce the carbon footprint of French industries, setting a promising course towards environmental sustainability.
The C3IV tax credit is poised to make a substantial impact on the development of green industries in France.
It is available to companies based in France that make tangible and intangible investments in the production of specific green products, with a strong emphasis on sustainability and carbon reduction.
The eligible products encompass cutting-edge technologies that are vital for a greener future, including new-generation batteries and their key components, solar panels, wind turbines, and heat pumps.
Companies can claim the tax credit for tangible investments, which include land, buildings, facilities, equipment, and machinery, as well as intangible investments such as patent rights, licenses, knowledge, or other intellectual property rights.
The tax credit’s value varies, ranging from 20% to 60% of the investments made, depending on factors like the location of the investment and the size of the investing entity.
Importantly, this incentivizes both small and large companies to contribute to the green industry.
The tax credit comes with a maximum limit, which ranges from €150 million to €350 million, determined by the location of the investment.
This ensures that the benefits are distributed across various regions.
The tax credit is applied against the corporate income tax due by the company for the fiscal year in which the investments are made.
If the credit exceeds the tax liability, the excess will be reimbursed to the company.
The C3IV tax credit is expected to not only boost environmental sustainability but also stimulate the French economy.
According to the French government, this initiative has the potential to generate approximately EUR 23 billion in investments and create around 40,000 jobs in France by 2030, showcasing the power of green industry growth.
To be eligible for this tax credit, companies must align with certain criteria, subject to approval by the Ministry of Finance and authorization by the European Commission.
Eligible expenditures include:
It’s important to note that the C3IV tax credit will apply to projects approved by the Ministry of Finance and subject to prior approval by the Agency for Ecological Transition (ADEME).
The eligibility window extends until December 31, 2025, with applications accepted from September 27, 2023, onward.
France’s 2024 Finance Bill and the introduction of the C3IV tax credit signify a resolute commitment to a sustainable and environmentally responsible future.
This innovative approach not only promotes the growth of green industries but also aims to strengthen the nation’s industrial base.
With the potential to drive billions in investments and create thousands of jobs, this tax credit is a bold step towards a cleaner, greener, and more prosperous France.
As the world grapples with environmental challenges, France’s vision for green investments sets a powerful example for the global community.
If you have any queries about this article, or tax matters more generally, then please get in touch.
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 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.
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.”
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.
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%.
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.
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.
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.
The EU is currently in discussion regarding the Schengen Agreement. As part of recent developments, certain financial adjustments are set to take place.
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.
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.
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.
To maintain competitiveness, Singapore will extend and enhance various tax schemes, including:
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.
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.
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.
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.
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%.
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.
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%.
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.
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.
The timeline of the securities transaction tax reduction has been adjusted.
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 – 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.