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Taxand's Take - Your regular update on the latest issues affecting multinationals
Welcome to the latest edition of Taxand's Take - your regular update on the topical tax issues affecting multinationals. Accessible online this newsletter is sent to you every two months. And Taxand's Take will give you just that - informed opinion on the latest tax changes and how they affect you.
BRAZIL / NETHERLANDS / LUXEMBOURG / SPAIN - Tax Havens Listed by Brazil - Is Your Jurisdiction Impacted?
The list of countries and locations deemed to be "tax haven jurisdictions" has been a long debated theme not only at an international level, but also in Brazil. Restrictions against "tax haven jurisdictions" were first introduced in Brazil in 1996 when the concept of a Tax Favourable Jurisdiction was first enacted. Until recently, the countries and locations embraced by this concept were identified in a list. From 1 January 2009, however, a new Law extended the Tax Favourable Jurisdictions criteria and created a new concept called the Privileged Tax Regime. This new regime prompted the Brazilian Revenue Service to issue a new set of regulations The impact of being placed in a 'list' means there will be tax consequences and this has become a discussion point worldwide. Taxand Brazil, Taxand Luxembourg, Taxand Netherlands and Taxand Spain discuss the main impacts, consequences of being on a 'list' and areas of concern for multinationals.
FINLAND / NETHERLANDS / LUXEMBOURG / UK - European Commission Removes Tax Obstacles to Cross-Border Venture Capital Investments
Venture capital is a vital source of growth for small and medium enterprises (SMEs). Active Venture Capital markets are important drivers for a competitive, entrepreneurial, innovative and dynamic European economy. Facilitating venture capital investment within the EU is crucial for good economic growth. Currently, the EU Venture Capital market still works below its potential. One of the main reasons is the lack of cohesion between tax systems across the EU that can lead to double taxation, tax treatment uncertainties and administrative obstacles. Consequently Venture Capital investments tend to be restricted to domestic markets rather than extending across European markets. Taxand Finland examines the recommendations behind the European Commission's move to improve cross-border venture capital investments. Taxand Luxembourg, Taxand Netherlands and Taxand UK also comment on these recommendations.
CHINA - China Enforces Anti-Avoidance
China's anti-avoidance enforcement has historically been focused on the transfer pricing of contract manufacturing operations, which predominantly involves tangible goods transactions. This year, according to a State Administration of Taxation ("SAT") senior official, "Closer attention will be paid this year to related-party transactions such as intangible asset transfer or share transfers." Taxand China investigates recent case law with a well known multinational and what businesses should be looking out for when investing in China.
ROMANIA - Surprising VAT Rate Increase to 24%
From 1 July 2010 the standard Romanian VAT rate increased to 24%. This move took most businesses by surprise. Although rumoured in the past to be an alternative to cutting public pensions by 15%, which has been ruled as unconstitutional, the Government Emergency Ordinance only published the increase in VAT on 28 June 2010, just three days before coming into effect.
The Government also introduced additional measures aimed at reducing tax fraud, which introduce further administrative burdens for taxable persons registered for Romanian VAT purposes. Those taxable persons who intend to continue (or start) to carry out intra-Community trades after 1 August 2010 will need to register in the new Register of Intra-Community Operators in order to preserve validity of their Romanian VAT numbers in the VIES system. Taxand Romania assesses the effects of these sudden changes.
UK - UK Takes a Bold Step by Introducing a Banking Levy
A bank levy was announced in the UK Emergency Budget and will be introduced from 1 January 2011. The levy will be based on a balance sheet approach and will apply to all major banks and building societies in the UK regardless of nationality.
Given prevailing UK public opinion and the imposition of the Bank Payroll Tax in December 2009, further levies on large banks were widely expected.
The G20 countries recently rejected a universal banking levy, instead opting for a soft agreement on opt-in bank levies. This creates a very uneven playing field whereby banks are likely to be levied in some countries and not in others. Some banks could be forced to review operational structures, for example relocation of head and branch offices from one jurisdiction to another. Taxand UK reviews the bold move made by the UK Coalition Government.
HUNGARY - Hungary Deserves a Second Chance
On 7 June 2010 the new Hungarian government, one week after having entered into power announced a 29-Step Action Plan. The plan is designed to mitigate any disastrous effects that might arise from the communication gaffe recently made by high ranking government members, in which they compared Hungary's financial situation to that of Greece, i.e. that the county may default due to its high budget deficit. According to the government's new rhetoric, they are now strictly committed to maintain the budget deficit at 3.8% of GDP for 2010 (as agreed with the IMF) whilst also simultaneously boosting economic growth. This move has helped to calm the IMF. It has also positively surprised investors and the Hungarian tax profession. Taxand Hungary examines the new action plan, outlines the radical changes proposed and how foreign investors can take advantage.
The information contained in this document is intended only to be a guide. It must not be relied on in, or applied to, specific situations without previously seeking proper professional advice. Even though all reasonable care has been taken in its preparation, Taxand and all the members of this network do not accept any liability for any errors that it may contain or lack of update before going to press, whether caused by negligence or otherwise, or for any losses, however caused, or sustained by any person. Descriptions of, or references or access to, other publications within this publication do not imply endorsement of them. As provided in the US Treasury Department Circular 230, this tax newsletter is not intended, or written by any Taxand member firm, to be used, and cannot be used, by a client or any other person or entity for the purpose of avoiding tax penalties that may be imposed on any taxpayer.
Taxand member firms have produced this tax newsletter in connection with the marketing of our tax services relating to matters discussed therein. Each taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. Taxand is a global network of tax advisory member firms. Each member firm is a separate and independent legal entity responsible for delivering client services.
(C) Taxand Economic Interest Grouping 2010