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Hong Kong Intends to Join the OECD’s Multilateral Competent Authority Agreement

Published: 09/02/2018 | news

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#BEPS #Hong Kong

On February 2, 2018, the Hong Kong Special Administrative Region officially formalized the process of ratifying the OECD’s Multilateral Competent Authority Agreement (MCAA). That means that the jurisdiction will join soon the existing multilateral network of data exchange between the tax authorities of many countries and territories around the world. The Hong Kong Tax and Fees Department introduced the Ordinance on Automatic Exchange of Information on Financial Accounts (AEOI), which will optimize the process of obtaining information by the countries with which the jurisdiction agrees to exchange. This refers to the exchange both under the Common Reporting Standard (CRS) and the intercountry reporting exchange under the BEPS Plan. After joining of Hong Kong the Multilateral Agreement, the authorities of the country will be able to pass a rather formal procedure for finalizing the relations with other participants through the OECD secretariat. If we compare this process with the conclusion of separate bilateral agreements with a number of the countries, it is much faster and easier. It is important to note that until the end of this year, the old (bilateral) rules for...

Hong Kong Legislation on Significant Controllers Register Will Enter into Force in March 2018

Published: 05/02/2018 | news

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#Hong Kong #Legislation

On January 24, 2018, the Companies (Amendment) Bill 2017 was passed, which mandates incorporated companies of Hong Kong to keep a Significant Controllers Register (SCR). The new legislation will enter into force on March 1, 2018. The Hong Kong Companies Registry has set up a special section on SCR on its website containing, amongst others, a detailed Guideline on the Keeping of SCR and specific forms for the companies to use. The main requirements for the new SCR regime are listed below. Who are required to keep a SCR? All companies “formed and registered” in accordance with the the Hong Kong Companies Ordinance, including dormant companies, financial institutions, charitable organizations, companies limited by guarantee and any other types of companies incorporated in Hong Kong, except for the listed companies, and foreign companies registered under Part 16 of the Hong Kong Companies Ordinance, must keep a SCR. What should be contained in the SCR? The SCR must contain information on the significant controllers of the applicable company, namely registrable persons (i.e., a natural person or a specified entity such as a government and international organisation) and/or...

Cyprus Imposes 19% VAT on Building Land

Published: 19/01/2018 | news

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#Cyprus #Taxes #VAT

From January 2, 2018 in Cyprus, the new VAT Law has entered into force, providing for changes in the main VAT Law No.95(I)/2000. The document introduces VAT at a standard rate for the sale of building land, as well as leasing/rental of business premises on the conditions specified in the law. It also introduces the reverse charge mechanism for VAT-subject supplies of land and property under a loan restructuring/force-sale arrangement, which will mostly influence financial institutions. Imposition of VAT at the standard rate of 19% on building land The standard VAT rate of 19% will be applied in the following cases: transfer of ownership; transfer of indivisible land portion; transfer of ownership via contract or sale agreement or agreement which specifies that the ownership will be transferred in the future or leasing agreement with buyout option. The above shall apply to non-developed building land which is meant for the construction of one or more structures in the course of carrying out a business activity. More clarifications are still needed for the application of the law, such as the circumstances whereby a transfer is not considered to be a part of a person’s...

Ministry of Finance Reforms Institution of Financial Liability for Tax Violations

Published: 30/11/2017 | news

Tags:

#Cyprus #VAT

Recently the Ministry of Finances of Ukraine, together with the experts from the interactive tax platform TaxLink, has developed a bill “On Amendments to the Tax Code of Ukraine regarding the improvement of the prosecution system for violation of tax laws”. The essence of the document is to reform the liability for tax violations provided by the current legislation. First of all, the bill introduces more effective mechanisms for the settlement of tax disputes in cases when the violation of tax law happened not due to the fault of the payer. In addition, it is proposed to introduce the principle of fault liability of taxpayers which is inherent in all branches of Ukrainian legislation, in contrast to the current liability of the payer without fault. Therefore, the last one will be considered guilty if found guilty that he was able to comply with the relevant rules and regulations, but did not take the necessary measures for this. In this regard, when considering the verification materials by the supervisory authority, the documents of the taxpayer may be subject to the examination that show his due diligence. Another significant innovation is the introduction of the system of...

Undistributed profit in Latvia is exempt from CIT

Published: 01/09/2017 | news

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#CIT #CIT #Dividends

On the 4th and 11th of July, 2017 the Cabinet of Ministers of Latvia approved a number of draft laws providing for the significant changes in the tax legislation of the country which will enter into force on January 1, 2018. The most significant of them will be the application of the CIT 0% rate for the reinvested profits. In other words, the enterprise will be subject to the corporate income tax only if it pays dividends or other payments for the purpose of actual distribution of the profits (conditionally distributed profit). Therefore since 2018, the company's profits are exempted from CIT, but it has to pay 20% of the income tax from the amount of dividends. At the same time, the shareholders will not have to pay personal income tax (PIT). Although, according to the bill, the CIT rate is 20%, and the tax base should be divided by a factor of 0.8, the effective tax rate actually equals 25%. It is notably that CIT will be applied not only to the dividends in the traditional sense, but also to the "deemed dividends", which are considered a new concept in Latvian tax legislation, and comparable with the dividends to the costs. Here it is important to note that the last ones...

The register of data on beneficiaries of Hong Kong companies will be non-public

Published: 01/09/2017 | news

Tags:

#Corporate law #Hong Kong

On June 23, 2017, the official government publication of Hong Kong published a draft amendment in the Ordinance on the companies (Companies (Amendment) Bill 2017). One of the changes it covered was the introduction of a requirement for the companies registered in Hong Kong to collect, store and provide up-to-date information on their beneficiaries for the verification. This refers to the so-called "Registers of people with significant control over the companies". This innovation was adopted within the framework of the international policy on combating money laundering and financing of terrorism and it is designed to bring the corporate jurisdiction legislation in the line with the standards of the Financial Action Task Force on Money Laundering. By analogy with the definition given by the FATF, in anti-laundering legislation of Hong Kong, "significant controllers" are defined as individuals and legal entities that: directly or indirectly own more than 25% of the company's shares; directly or indirectly have more than 25% of the voting rights of the company; directly or indirectly have the right to appoint or remove the majority of the members of the company's board of...

Hong Kong has adopted amendments in Ordinance on companies

Published: 01/09/2017 | news

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#Hong Kong

On June 23, 2017, the official Hong Kong government publication published a draft amendment in the Ordinance on the Companies (Companies (Amendment) Bill 2017). The changes were adopted as the additional measures in combating with money laundering and financing of terrorism, and they are designed to bring the corporate legislation of jurisdiction in compliance with the international standards of the FATF (Financial Action Task Force on Money Laundering). The project provides for the introduction of two requirements for Hong Kong companies, one of which is the maintenance of public registries of the beneficiaries or "persons with significant control over the companies" (Register of People with Significant control). "Significant controllers" refer to the persons owning directly or indirectly of more than 25% of the company's assets, as well as entitled to exercise significant influence over its activities. The second change concerns the introduction of the mandatory licensing for the providers of trust and corporate services. The license, which has validity for 3 years, will need to be received within 90 days, starting from January 1, 2018. The administrative liability will be...

DTA entered into force between Russia and Hong Kong

Published: 08/08/2016 | news

Tags:

#Double taxation #Exchange of tax information #Hong Kong #Russia

Comprehensive agreement for the avoidance of double taxation (CDTA) was signed in January of this year between Hong Kong and Russia, which came into force on 29 July 2016. According to the sources, this agreement shall remain in force for Hong Kong each year since its signing to double taxation, which took place on or after April 1, 2017. The CDTA is informed about what is required to support efforts to expand the tax obligations undertaken by the two countries in the framework of the «Belt and Road», which is a project of the Chinese government for the economic development aiming at the integration of trade and investment between the approximately 60 countries in Eurasia. In the absence of the CDTA program, of Hong Kong companies income, which conduct their entrepreneurial activities with the help of permanent missions in Russia and taxed in both places if their earnings was received in Hong Kong. On this basis, in the new agreement, double taxation is eliminated, and now any Russian tax paid by the companies on their earnings, will be allowed to tax payable in Hong Kong. Besides, in accordance with this agreement, the rate in Russia on income tax on royalties,...

Hong Kong: a new tax benefit for companies

Published: 09/06/2016 | news

Tags:

#Hong Kong #Tax exemptions

June 3, 2016 in the official government publication in Hong Kong were published changes in the tax law, introducing a tax break for companies that perform the function of the treasury center. The changes were adopted by the Legislative Council of Hong Kong on May 26, 2016. Now, the company engaged in Hong Kong treasury activities (namely intra-group financing business, the provision of treasury services and conducting treasury operations), under certain conditions, are able to take into account the the interest paid by them on loans as an expense for tax purposes. Under the changes, the Hong Kong companies, which meet the criteria of corporate treasury center will pay income tax at a reduced rate, in the amount of 8.25% (the standard corporate tax rate in Hong Kong is 16.5% rate). The reduced rate of corporation may be applied against to income from treasury activity, obtained from April 1, 2016 and later. The new rules on percent accounting in the composition of expenditure of companies involved intragroup funding, will also be applied in respect of amounts accrued for payment on April 1, 2016 or later. By introducing new benefits Hong Kong trying to increase...

Changes in order payment of dividends by joint stock companies

Published: 03/06/2016 | news

Tags:

#Dividends #Ukraine

May 27, 2016 came into force The order payment of dividends by joint stock company, which is approved by the National Commission on securities and stock market from 12.04.2016 number 391. In particular, on the relevant general meeting of shareholders is defined by a specific method of payment of dividends concerning the entire issue of shares - through the depository system of Ukraine or directly to shareholders. Implementation of dividend payments by joint stock company is going through the payment of the entire amount in full or in part, certainly if it is provided by the general meeting of shareholders or the supervisory board of the company. At the same time, in the case of decision-making by the joint stock company to pay dividends to shares, the payment could made proportionally and simultaneously to all persons who are entitled to receive dividends. Regarding the payment of dividends directly to shareholders. Payment of dividends to shareholders who are entitled, namely the transfer of the amounts of funds to all shareholders shall be effected by the transfer of funds to the shareholders during the relevant time and date that does not exceed six...

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