Global Employment Taxes Newsletter - PwC · 2019. 2. 11. · Introduction We are pleased to present...

Global EmploymentTaxes Newsletter

www.pwc.com

January 2019

http://www.pwc.com/

Introduction

We are pleased to present the latest edition of the Global Employment Taxes newsletter, bringing youupdates on what’s happening to employment tax regimes in various countries across the PwC network asof to date.

This edition brings the latest updates in changes to employment tax administration, particularly in France and Finland as well as details changes to the immigration rules in several countries, including Ireland, Hong Kong and India. An inevitable and increasingly common thread we're seeing across all regions is the introduction of electronic based systems in every area, be that Real Time Reporting for Employer Withholding, E filing of tax and other returns or electronic visa applications. This will drive companies to review and assess their systems to cater for this.

We hope you find this interesting and insightful. Please contact us, or any of your PwC Employment Tax colleagues, if you have any queries or would like to discuss anything further.

Tom GeppelGlobal Employment Tax andPayroll Lead

E: [email protected]

Ken O’BrienGlobal Employment Tax andPayroll Lead


January

2019

2

Global Employment Taxes Newsletter

mailto:[email protected]


PwC

Eurasia

Africa

APAC

LATAM

NORAM

Europe and the Middle East

Contents


LATAM

NORAM

APAC

Africa

1

2

3

4

5


6

Eurasia

January

2019

3


Belgium

Belgian social security taxes on equity awards

January

20194

The position of the Belgian National Security Office (NSSO) on benefits granted by a parent company to employees of a Belgian entity of the group has been “clarified”. This position applies for both the future (i.e. as from 1st July 2018) and the past, with a statute of limitation of three years. In the case of an audit costs of potential regularization can only be borne by the company. Social security contributions (employee and employer) cannot be recovered from the employees.

As far as GSUs are concerned, social security contributions are due at vesting for individuals subject to Belgium social security. For stock options, social security contributions are due at exercise. This corresponds with the “tax point” for income tax purposes.

Fiscal reporting and withholding obligation for benefits attributed by a foreign company

As previously announced, a new fiscal reporting obligation will likely apply for benefits provided by foreign group companies directly to the employees of a Belgian company/entity of the group. In addition to that reporting obligation, the Belgian company should, as from income year 2019, apply wage withholding taxes on the benefit granted by foreign group companies to their employees.

Nevertheless, no legislative amendments have been issued yet in that respect. Official communication from Belgian authorities is still expected which should provide further information on current practical reporting questions, as well as the format to be used for that reporting.

A draft law is pending at the Belgian Parliament to allow companies to grant a mobility budget instead or in combination with an environmentally friendlier company car. This budget can be used tax free for all most business allowable mobility purposes (public transport, shared cars, bikes and steps, ride hailing, etc.) by the beneficiary and the remainder in cash, if any, is taxed at a reduced rate.

This budget would be however, only applicable for employees who already have the right to a company car.

New mobility budget



Finland

A summary of the main changes in Finnish payroll taxation and individual taxation for 2019; Social Security contribution rates for 2019

Almost all statutory social security contribution rates for 2019 have been confirmed. The applicable rates are:

• Employee’s employment pension insurancecontribution; for employees under 53 years/over 62years : 6,75 %; for employees in the age of 53- 62 years: 8,25 %;

• Employee’s unemployment insurance contributions1,50 %

• Employee’s health insurance contribution 1,54 %• Employer’s employment pension insurance

contribution amounts to on average; for employeesunder 53 years/over 62 years : 17,65 %; for employeesin the age of 53- 62 years : 16,15 %

• Employer’s unemployment insurance contribution0,50 % up to the amount of salaries of 2 086 500 eurosand 2,05 % on any exceeding portion

• Employer’s social security contribution 0,77 %.

The employment related Statutory Accident Insurance premium is determined based on the employer’s branch or risk category. Risk classification is typically based on the occupation or industry. The average Statutory Accident Insurance rate is in average 0,80 % of the wage sum.

The employment related Statutory Group Life insurance premium is determined annually according to the grounds confirmed by the Board of the Employees' Group Life Insurance Pool in Finland. In 2019 the average Statutory Group Life premium is 0,07 % of the wage sum.

January

2019

5

Possibility of applying for an additional prepayment

Finnish Tax Administration has confirmed the amounts of tax-exempt allowances in 2019 for business travel. Tax-exempt kilometer allowance by private car (0.43 euros per kilometer), daily allowance (42 euros) and half-day allowance (19 euros) remain unchanged. Instead some adjustments have been made to tax-exempt daily allowance for business trips abroad.

Decision of the Finnish Tax Administration on the valuation of taxable in-kind benefits to be applied in 2019 Finnish Tax Administration has also confirmed the principles and valuation to be followed for calculation the taxable value of in-kind benefits in 2019.

Tax-exempt allowances confirmed by Finish Tax Administration for 2019

Tax payers are able to pay a voluntary supplementary tax prepayment with no interest or a lower rate of interest applying to overdue payments before their final tax assessment. As of November 1, 2018 supplementary tax prepayments are not in use anymore. Instead tax payers need to apply for an additional advance tax from Finnish Tax Administration either via MyTax online service (OmaVero) or by sending a paper form.

Late filing penalties applicable in National Incomes Register

The National Income Register will commence operation on January 1, 2019. If employer obligations are neglected, penalties can be imposed. It was confirmed that 2019 will be considered a transitional period during which no penalty fees will be imposed. However, in cases of obvious negligence of the reporting obligation penalty fees may be imposed during the 2019 transition period.

Salary information must be submitted within five calendar days of the payment date, however, the Finnish Tax Administration will begin to impose penalty fees if mandatory payment submissions are reported later than on the 8th day of the calendar month following the payment date. The penalty will accumulate based on the number of days the payment is outstanding following this payment date. The penalty is EUR 3 per day. After 45 days when the penalty reaches EUR 135, an additional penalty of 1 % of the taxable salaries or salaries subject to pension insurance declared will also apply, based on whichever is the larger amount.



January

2019

6

Social Security

France

The “Career Development” Bill, published on September 6, 2018, provides for the simplification ofrules relating to the posting of workers to France, in particular, foreign employers are exempt from filing a posting declaration and from designating a representative in France if they post employees for the purpose of prospecting for business. The conditions of this are to be defined by a ministerial order that has yet to be published.

In addition, employers posting employees for a “short period” or on a regular basis may benefit from arrangements regarding the obligation to present documents in French in case of inspection. A decree of the Conseil d’Etat shall set out the conditions of this simplified regime.

Although this bill creates these business-friendly exemptions the Career Development Bill has also rendered the posting declaration regime more severe in terms of sanctions for non-compliance which have been reinforced: the maximum administrative fines incurred in case of failure to comply with the required formalities or the regulations applicable to posted workers are now 4000 euros (instead of 2000 euros) per posted worker and per violation, or 8000 euros (instead of 4000 euros) in case of repeated offense within two years (instead of one year).

As of January 1, 2019, the Tax Credit for Competitiveness and Employment (“CICE”) shall be transformed and be replaced by a tax relief of 6 percentage points for employer health coverage contributions for remunerations below 3746 EUR (per month for 2018) (2.5 the legal minimum wage as of the date of print). For remunerations below 2397 EUR (per month for 2018) (1.6 times the legal minimum wage), a digressive reduction provided for by Article L.241-3 of the French social security code (“reduction Fillon”) shall be extended to employer contributions for complementary pension coverage as of January 1, 2019. As of October 1, 2019, this reduction shall be extended to employer unemployment contributions.

Finally, as of September 1, 2019, overtime worked hours shall be exempt from social security contributions. In response to the “Yellow Vest” protests, the government is also studying the implementation of an exemption from income tax for overtime work wages.

As from January 1st, 2019, a revised withholding tax system will apply to remuneration. The applicable withholding tax rate is determined by the French tax authorities based on the last tax data provided and will be communicated to employers. However, for the new taxpayers for whom no tax data is available, a neutral withholding tax rate will apply (rate determined as if the employee was single with no dependent).

Therefore, the French tax authorities have issued a special tax form (2043-SD) to request a tax number and a personalized withholding tax rate. Once calculated by the French tax authorities (within a maximum 3 months period in principle), the personalized withholding tax rate is put at the employer disposal. The information to enclose to the form 2043 SD would notably include a copy of the I.D./passports of all the members of the tax householdand evidence of the employer reporting the estimatednet annual taxable remuneration.

Withholding Tax



France

Inbound Tax regime

An amendment to the draft Finance Bill for 2019 aiming at enhancing the tax regime for “inbound expatriates”; (Article 155 B of the General Tax Code) is about to be adopted. The provision extends the 30% flat exemption of the net taxable remuneration, currently reserved to employees recruited directly abroad for third parties, to all modes of recruitment, including intra-group mobility transfers. Indeed, individuals transferring their tax residency to France in the context of an intra-group mobility could not currently benefit from this flat 30%. They could only benefit from the exemption of the contractual salary supplements.

However, to benefit from this flat exemption the employee’s remuneration should be at least equivalent to the “reference” remuneration. This reference remuneration corresponds to the amount paid to a non-expatriate employee for similar functions within the company or, where applicable, within similar companies based in France. If definitely adopted it will apply to remuneration paid as from 1st January 2019, for transfers to France that took place as from 16 November 2018.

January

2019

7

Germany

Tax incentives for electro-mobility

This provides for significantly more favourable taxation of private use for electric and hybrid electric vehicles.The new regulation applies to self-employed persons and tradespeople as well as to employees with company cars. The new regulation applies to vehicles purchased, leased or rented in the period from 1 January 2019 to 31 December 2021, regardless of whether they are new or used vehicles.

The monetary benefit from the private use of a company car will in future be set at 1% of half of the list price instead of 1% of the full list price. This applies regardless of how high the list price actually is in individual cases.The tax advantage is also taken into account under the application of the so-called driver's logbook regulation where the taxable benefit is calculated taking into consideration costs allocable to private use of a car.

The previous subsidy for electric and hybrid electric vehicles, which was limited to the battery, will be suspended for vehicles benefiting from the new regulation which are subject to the new ruling. The new subsidy also applies to e-bikes that are classified as motor vehicles under traffic law. The subsidy does not apply for the period 1

January 2019 to 31 December 2021, but for the entire useful life of the subsidized vehicles purchased, leased or rented after 31 December 2018 and before 1 January 2022.

The provision of company bicycles for private use

The current pecuniary advantage arising from employer provided bicycles and pedelecs, in addition to the wages already owed and which cannot be classified as motor vehicles under traffic law, will be expressly made tax-free from 1 January 2019 (Sec. 3 No. 37 of the Income Tax Act; new Version). The tax exemption only applies to the transfer for use, but not to the transfer of ownership of the bicycles/pedelecs to the employee. Since the pecuniary advantage is granted in addition to the wages owed anyway, a salary conversion does not lead to the tax exemption of the pecuniary advantage from the private use of the bicycle/pedelec. In these cases, the pecuniary advantage must continue to be determined in accordance with the nationwide regulation on the tax treatment of the transfer of (electric) bicycles. The tax exemption is limited to wage payment periods ending before 1 January 2022. The private use of a bicycle or pedelec that is not a motor vehicle under traffic law will also not be taken into account until 31 December 2021.


PwC


Germany

Workplace health promotion

Benefits provided by the employer to improve the general state of health and occupational health promotion are tax-free, provided they do not exceed € 500 per calendar year. The legal framework for health promotion, prevention and occupational health care was changed by the Prevention Act of 2015.

Among other things, it introduced a certification procedure for the eligible measures by the central association of the Federation of Health Insurance Funds. In future, this certification will be mandatory for the recognition of tax exemptions for individual measures. However, in order to adapt the procedures in companies, certification for the tax exemption of non-certified health measures started before 1 January 2019 will only be required for non-cash benefits granted after 31 December 2019.

January

2019

8

Jobticket

From 1 January 2019, a so-called Jobticket will be tax-free. A Jobticket enables the use of public transport.This applies to benefits in kind such as time tickets and employer subsidies, which are paid in addition to the employee’s wages and the employee’s expenses for local public transport.

Private use of the job ticket also remains tax-free. However, the tax exemption does not apply to the conversion of wages into a Jobticket, but the Jobticket must be granted in addition to the wages.

Social Security & Tax updates

Research centres will only need to withhold half the rate of employee social tax for employees working in the field of research and development. Therefore, the wage cost of these research centres may decrease by as much as 10% from 2019.

Secondly, the package contains incentives in connection with dismissed senior state employees. Namely, a business hiring an employee who used to work for the government previously and who is over 60 years of age, will not have to pay social tax on income up to four times the minimum wage for these individuals. Thus the employment of formal government employees could save employers some HUF 110 000 – 120 000 per month.

Thirdly, the regulation adopted in the summer has not changed concerning the employment of retired persons. It means that pensioners and their employers will not have to pay social security charges if they entered into an employment relationship. A minimal change is that in case the old age pension is suspended– which can happen in the case of employment by the government – the retired person still does not have to pay social security contributions. As a result of this provision, employers may provide a 45% higher net salary to retired persons from 2019 from an unchanged budget.

Hungary

Changes to the Hungarian fringe benefit system

Generally called ‘cafeteria’, these changes, adopted in the summer, will remain in effect. However, a few types of fringe benefits will remain tax exempt, so the employer will be able to provide tax exempt tickets to sport and cultural events, such as concerts.

Microbusinesses’ Tax

Based on the planned new regulations of the micro businesses’ tax, students will only have to pay a max monthly tax of HUF 25,000 – instead of the normal rate of HUF 50,000 – even if they suspended their education provided that they did not reach the age of 25.


PwC


January

2019

9

Ireland

Real Time Reporting – Employer’s Guide to going live from 1 January 2019

RTR for employment tax and payroll compliance will affect all companies with an Irish employer PAYE tax registration. It went live on 1 January 2019.

Revenue eBrief No. 210/18 provides a new employers’ guide to reforming and making changes to the employer reporting obligations contained in a new Tax and Duty Manual Part 42-04-35A, “The Employers’ Guide to PAYE”. The revised procedures, which are detailed throughout the new guide, are summarised below:

Revenue Payroll Notification (RPN): The RPN replaces the P2C (the employer copy of the tax credit certificate). Employers must use the latest RPN when calculating employees’ statutory deductions. If an RPN is not available, emergency tax should apply.

Making a Payroll Submission to Revenue: Information outlining how employers notify new employees (Chap 15), how to make a payroll submissions (Chap 19), how to correct errors in submission (Chapter 7) and procedures for cessation of employment (Chapter 16) are included in the Tax and Duty manual.

Monthly Statements and Payment Methods: Monthly statements will be made available to employers based on submissions in the relevant month. Payment methods in chapter 18.

Key Messages: Employers must ensure that they have:- Registered all employees with Revenue.- Correct, up-to-date PPS number for all employees.- Logged into to ROS to review their ROS digital certificate permissions and ensure it is active.- A ROS Digital certificate on the computer they run their payroll.

Previous thought leadership is included at the PwC Ireland website.


https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-2102018.aspx

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-42/42-04-35a.pdf

https://www.pwc.ie/payemod

PwC


January

2019

10

Ireland

Immigration – Review of Economic Migration Policy to lead changes in Employment Permits System

The first major review of Ireland's economic migration policy since 2012 has been undertaken. Ireland's economic migration policy is to promote the sourcing of labour and skills needs from within Ireland and the wider EEA. In cases where key skills cannot be sourced through existing talent pools in the EEA, the employment permits system facilitates attracting and retaining skilled personnel from further afield.

The objective of the review was to examine the current employment permits system in line with continuing economic and employment growth. The need for additional measures to be implemented to address more recent labour market pressures in the context of strong employment growth was noted. A key recommendation of the report is the introduction of a more flexible system to allow for changes to be implemented to meet the needs of the labour market at all stages of the economic life cycle, as well as;

• A review of salary thresholds, and other qualifying criteria, in line with changing skills and labour marketneeds;

• An option for sectors experiencing severe labour shortages to submit an evidence based business case forconsideration on an ad-hoc basis in conjunction with a revamped, bi-annual review of Highly Skilled andIneligible Occupations lists;

• The introduction of a Seasonal Employment Permit to facilitate certain categories of short-term workers;• Modernisation and extension of the existing Labour Market Needs Test;• Changes to the existing 50/50 rule, which requires that at least 50% of employees of the Irish entity are EEA

nationals, to meet a broader range of enterprise needs.

Israel

Clarification of deductible expenses

There has been a recent clarification with respect to the definition of "Light Refreshment" which could beserved to employees by a company. The Israeli Tax Authorities (ITA) regulations state that 80% of the expenses incurred in providing "Light Refreshment" (hold/cold beverages, cookies, etc.) to employees could be deductible for tax purposes.

On July 3rd, the ITA has published a clarification, following inquiries from the general public, stating that the definition of "Light Refreshment" also includes fresh fruits and vegetables.



January

2019

11

Reimbursement of newspaper subscriptions

Newspaper subscription reimbursed by an employer is tax free provided that there is a need for this in connection with the employment. The requirement that the employee should hold a private subscription in addition is now removed (applicable as from 1.1.2019).

Lithuania

Changes to the rates of Social Security contribution

Starting from 2019, the rates of social security contributions will change for all income types and social security contributions caps will be introduced to certain income types. Employer’s social security contributions will be transferred to employees. As a result, employers will be required to change employment agreements and gross-up the current employees’ gross salaries by multiplying them by 1.289 and withhold higher payroll taxes at higher rates. Net income should not decrease and employer’s costs should remain unchanged due to such a change.

Also, changes related to the contributions payable to the second tier pension funds will come into force as of 2019.

Norway

Overtime food

As from 1.1.2019 the employer is able to provide overtime food or reimburse expenses to overtime food provided that the employee works at least 10 hours. Previously, the requirement was that the employees spent more than 12 hours away from home. For 2019 the suggested limit is NOK 200.

New PAYE scheme

As from 1.1.2019 new employees coming to Norway can choose a flat tax rate taxation. The new scheme will not be applicable for employees already resident in Norway. The tax rate is suggested to 25% and will apply if the income during the year do not exceed NOK 617 500. For employees with a valid social security exemption (A1 / CoC) the tax rate will be reduced with 8.2% (fully exempted) or 3.1% (partly exempted). Employees choosing the new PAYE scheme will be exempted from filing a personal tax return.


PwC


Changes to PIT provisions, in force from January 1 2019

January

2019

12

Poland

Important changes from an employer’s perspectiveAmended PIT provisions provide for a shorter deadline for submitting PIT - 11 and PIT - 8C information to the relevant tax office. The tax remitter will be obliged to submit information by the end of January of the following year, not by the end of February as was done in previous years. However, the deadline for delivery of these forms to the tax paying employee remains the end of February following the tax year in question.

Another adopted change relates to the method for withholding the monthly tax advances. Until now, the tax advance payment, according to the 32% higher tax rate, was to be withheld starting from the month following the month in which the taxpayer exceeded the relevant threshold. From January 2020, the tax remitter is to withhold the tax advance at the rate of 32% in the month in which it will exceed the threshold.

Important changes from a Taxpayer’s perspectiveAn important change for the taxpayers includes the possibility of completing the tax return forms by the tax authorities. The taxpayer will have the possibility to revise their input data. These such prepared tax return forms will be considered as filed within the statutory deadline. This will also reduce the risk of exceeding the deadline for filing.Moreover, there will be a shorter deadline for refunding tax overpayments for PITs submitted electronically. The deadline is now 45 days instead of 3 months.

A further important change is a modification of the rules for the possibility of submission of joint married tax returns after the filing deadline. Currently, spouses who submit their annual PIT form after the deadline lost their right to joint assessment. This situation has changed and the right is no longer forfeited.

The current deadline for submitting annual tax returns is the end of January following the tax year. An extension is available until February 15. Furthermore, individuals who receive rental income and pay tax according to the flat rate on that income should inform the tax authorities of this fact by making a tax payment on the day of submitting the annual tax return, if they had rental income for the month of December only.

BitcoinProfits from trading in Bitcoin will be treated as capital gain income.



Portugal

Employment and self-employment income obtained by non-residentsIt is proposed that the employment income and self-employment income earned by non-residents, where the monthly amount does not exceed the national minimum wage (EUR 580), is not subjected to taxation at the higher withholding tax rate provided that the income is derived from a single entity.

Remuneration for supplementary work and in respect of previous yearsIt is envisaged that remuneration forsupplementary work and the remuneration paid or made available in respect of prior years shall be subject to withholding taxes at an autonomous rate. This should not be added on to any other income earned in the month in question for the purposes of determining the withholding tax rate to be applied.

Holiday and Christmas allowancesIt is also established that, when holiday and Christmas allowances due in respect of previous years are paid or made available, the tax to be withheld is made independently for each year in respect of which the allowances are paid.

Withholding Taxes

January

2019

13

Tax Regime applicable for former tax residents

This is a new tax regime to encourage the return of emigrants to Portugal, which consists of 50% relief fromtaxation of employment or self-employment income received after their return to Portugal, namely for individuals who: i) have become Portuguese tax resident in 2019 or 2020; ii) have not been qualified as tax resident during the three years prior to the return to Portugal; iii) have been qualified as tax resident in Portugal prior to 31 December 2015; iv) have a regularised tax situation; v) have not applied for the special tax regime for non-habitual residents. This regime is applicable in the year of return to Portugal and in the following 4 years and the withholding tax is applicable only on 50% of the employment or self-employment income obtained by the individual eligible for the tax regime.

Personal Income Tax Return

The deadline for filing the PIT return shall be extended to 30 June of the year following the tax year concerned(Currently the 31 May).


PwC


January

2019

14

Russia

Lawmakers determine criminal liability for the fraudulent migration registration of migrants at non-residential premises

Law No. 420-FZ introduces criminal liability for the fraudulent registration of migrants at non-residential premises. According to the changes, The following are now considered fraudulent:

• Migration registration of a foreign national or stateless person as registered at a place of temporary residence in Russia bymeans of issuing deliberate misrepresentations or unreliable documents;

• the registration of a foreign national or stateless person at a place of temporary residence at the premises where suchforeign national has no actual intention to stay either permanently or temporarily;

• the registration of a foreign national at a place of temporary residence at the address of a company where they do notperform job duties or any other activities classified by Russian law as eligible under the duly prescribed procedure for thatcompany.

Reminder of new taxation rules for proceeds from sale of securities by individuals

Effective from 1 January 2019, only the amounts that had already been taxed at the time of securities acquisition(Including by way of donation, partial payment, gift or inheritance) will be deemed deductible for the purposes of calculating the taxable proceeds. The amount of previously paid Personal Income Tax will be non-deductible.

New tax opportunities for individuals

The tax exemption for income from the sale of immovable property and equity interests therein, which is conditional on a minimum period of ownership, is now extended to non-residents (clause 17.1 of Article 217). The exemption for income received by individuals from the sale of immovable property and equity interests in such property (conditional on a minimum period of ownership) would apply to all individuals rather than only Russian tax residents as is currently the case.


PwC


January

2019

15

Slovakia

Change in the Social Security rate of fines

There were some significant changes in the rate of fines determined by the Slovak Social security authority, which became effective from the 1st August 2018. Some employer related changes are as follows:

• The maximum fine for the late registration / de-registration of the employee increased to EUR16.60 for every delayed day ( till 31 July 2018 themaximum fine was EUR 3.32 ).

• If the employer did not register / de-registeremployee with the Social security authority andinspections have begun, the maximum fineincreased to EUR 33.20 for every delayed day ( till31 July 2018 this was EUR 6.60 ).

• If employees permanent residence changes werenot reported to the Social security authority, thisfine can be a maximum EUR 1,659.70.

Switzerland

2019 changes to the legal framework of payroll

The turn of the calendar year brought with it various changes to the legal framework conditions, which are relevant to payroll operations. Below are the most important tax, social insurance and miscellaneous updates – please contact us for further information.

• Salary Certificate - New Questions, New Answers;• Salary Certificate Guideline;• Source Tax;• New Source Tax Regime in France;• OASU (Old Age) and DI (Disability) pensions;• Guidelines OASI/DI and eligible salary;• Occupational benefit minimum interest rate;• Maternity Allowance;• Family Allowance;• Data Protection, Switzerland and the EU;• Mass Immigration;• Military Service Exemption Tax;• Outsourcing of payroll services.


Turkey

Protection of Turkish currency

The Decree no.85 was published and became effective on November 13th 2018. A new paragraph, was added to the Article 4 of the decree No.32 on the "Protection of the Value of Turkish Currency" available here.

The Turkish local legislation prohibits agreements concluded in foreign currency between Turkish entities. Based on this, it is no longer possible for Turkey entities to invoice services, for Turkish inbound assignees, directly to Turkish Banks in foreign currency.

https://drive.google.com/file/d/0B7GJPvv_vpXocFpzd3BvUzV5bTVMYm1rcHBNM1IwTmcwcVFJ/view?usp=sharing

PwC


January

2019

16

U.K.Autumn Budget 2018

The Chancellor delivered the 2018 Budget on the 29th of October. Key developments include:

• Off-payroll working in the private sector – current public sector rules will be extended to the private sector witheffect from April 2020, although small businesses will be exempt.

• The ‘Check Employment Status for Tax’ (CEST) service is available to help businesses determine whether the off-payroll working rules apply

• NIC Employment Allowance will be restricted to those employers who paid less than £100,000 of employer NIC inthe previous tax year

• NIC on Termination Payments - the levy of Employer Class 1A NICs will be postponed to April 2020• Increase in the benefit in kind charge for private fuel provided for company cars and vans• Increase of Apprenticeship Levy cap from 10% to 25%

PwC commentary on the Autumn Budget changes can be found here:

Impact of Net Settlement

For UK companies, the net settlement of share awards is a relatively new phenomenon, following new accounting rules that entered into force beginning in January 2018. It describes the process of a company settling an employee share award party in shares and party in cash. Many companies meet the conditions to claim a specific statutory corporate tax deduction for employee share plans. However, many are finding the move to net settlement to be challenging from a tax perspective, potentially presenting compliance challenges.

Guidance on disguised remuneration schemes

HMRC has published further guidance on ‘disguised remuneration’ schemes, setting out how loan schemes are used to avoid paying tax, what the loan charge is and who it affects, and the support HMRC can give to people to get their tax affairs in order. The charge comes into effect on 5 April 2019, meaning that companies still have time to settle with HMRC before then.


https://thesuite.pwc.com/insights/autumn-budget-2018-pwc-comments-on-employment-tax

https://www.gov.uk/government/publications/loan-schemes-and-the-loan-charge-an-overview/tax-avoidance-loan-schemes-and-the-loan-charge

PwC


January

2019

17

U.K.Reform of apprenticeship levy

The HM Treasury has announced that additional funding of £90m will be allocated to help employers to spread apprenticeship funds to businesses throughout their supply chain. In addition, £5m funds will be allocated to implement updated apprenticeship standards by 2020. These changes are aimed at providing flexibility with respect to the levy, and to help as many people as possible to find the right training to equip them for the new economy.

New entitlement to Parental Bereavement Leave and Pay

The Government is introducing a new right to Parental Bereavement Leave and Pay for parents who lose a child under the age of 18, including those who suffer a stillbirth from 24 weeks of pregnancy. It is intended that these rules will apply from 6 April 2020. Affected parents will be entitled to 2 weeks of Parental Bereavement Leave and those with at least 26 weeks of continuous service and earnings above the Lower Earnings Limit will also be entitled to Parental Bereavement Pay at the statutory flat weekly rate.

HMRC will be introducing a facility to notify employers if there is a discrepancy between the tax code they are operating for a given employee versus the one held on HMRC’s systems. This new trigger will help ensure that more employees are on the correct tax code and therefore paying the right tax at the right time, thereby minimising unexpected tax bills at the end of the year. Regular PAYE RTI submissions will continue unaffected.

New PAYE trigger for real time adjustment to tax codes

Increase of Student Loan Plan thresholds

Student Loan Plan 1 and Plan 2 thresholds will increase effective 6 April 2019 to £18,935 and £25,725 respectively. The starter checklist for new employees will be updated to ask new joiners whether they have both Plan 1 and Plan 2 loans. In addition, repayments for Postgraduate Loans will begin in April 2019, concurrent to any undergraduate student loans. There will be new start and stop notices for these Postgraduate Loans. HMRC encourages employers to ask new joiners to complete the new starter checklist to ensure deductions are being taken under the correct plan or loan type.


PwC


January

2019

18

Coordinated HMRC activity

After a period of relative inactivity, it seems in the last year or so that HMRC has started to re-focus on Employer Compliance, PAYE reviews, audits and inspections. Whichever term it goes by, this recent increase in HMRC scrutiny of employers and their approach to managing employment tax risks has a much more co-ordinated and joined-up feel to it.

At the large business level, this cross-tax thinking has been around for some time, with CRMs (now CCMs) overseeing and directing a team of specialists looking at specific areas of tax compliance and risk management. The Business Risk Review approach, itself undergoing change at the moment, has been followed for a number of years by HMRC in its dealings with large businesses, but we have also been seeing collaboration across taxes at the smaller and mid-sized end of the scale.

Simplification of tax return amendment process

The government is planning to review the process for amending tax returns to make it more transparent and easier for taxpayers to use, with a possible move to a single digital tax amendment service. The consultation aims to improve the current process while recognising the move towards complete digitisation of the tax process. There is no consistency in the current approach to amending returns – there are different rules for income tax, corporation tax and VAT, for example. The different methods vary according to tax, value, accounting period and turnover, with different time scales and methods of reporting amendments.

The consultation asks for feedback from stakeholders on the type of tax returns submitted, the current amendment process used and opinions on the level of complexity to the amount of time it takes to deal with an amendment, response times and service levels from HMRC, and any difficulties experienced with the current system.

The consultation closes for comment on 6 February 2019.


In November 2018 HMRC wrote to over 2m customers with a main residence in Wales telling them about Welsh rates of Income Tax. This includes people living in Wales with an active record of employment (regardless of where they work).

In February/March, these individuals will receive ‘C’ PAYE codes where HMRC’s records show they are resident in Wales. These tax codes should be used from 6 April 2019. HMRC will continue to administer WRIT as part of UK Income Tax system.

Visa costs for prospective and existing employees

Under current rules, migrants outside of the European Economic Area (EEA) or Switzerland who wish to come to the UK to take up employment need to apply for a visa. Where a non-domiciled individual comes to the UK to take up employment and an employer covers these costs there will be no liability to income tax and NICs. This is because the visa application costs are considered to be travel-related and therefore covered as a deduction under s.373 ITEPA 2003 as “provision of travel facilities”.

However, these payments will be liable to income tax and NICs when the applicant is already in the UK, because such costs cannot be regarded as “provision of travel facilities”. They also do not meet the general deduction rules under s.336 ITEPA 2003 because such costs are not incurred “in the performance of the duties of the employment” as they merely put an employee in a position to eventually perform those duties.

U.K.Welsh rates of Income Tax (WRIT)

https://www.gov.uk/government/consultations/amendments-to-tax-returns

PwC

APAC

Individual Tax

The ATO has announced an exemption from STP reporting for globally mobile employees who are inbound to Australia. The exemption allows an employer to defer STP reporting until July 1, 2019 where the employee satisfies the exemption definition.

To qualify for the exemption, the following criteria must be satisfied:

• The employee is employed by an offshore entity,for example, an entity that is a non-resident forAustralian taxation purposes.

• The employee is seconded to Australia.• All or part of the employee’s base salary and

other remuneration is paid by an offshore entity.• The employer maintains a shadow payroll

arrangement.

This is an automatic exemption and does not require written confirmation with the ATO. It is important to note that the exemption only applies to reporting and does not apply to defer an employer’s PAYG withholding requirements. Please see here for a PwC publication.

January

2019

19

Australia

There have been legislative updates that seek to address the potential for the black economy

• Expansion of the taxable payment reporting system(TPRS)

• Removal of tax deductions for certain wages andcontractor payments has been passed -

Single Touch Payroll (STP) reporting for mobile employees

The Government has announced that it proposes to simplify and extend the current employee share scheme (ESS) regime, please find a summary of the proposal here:

Employee Share Scheme Updates


The New South Wales (NSW) Government has announced that it will implement all of the recommendations made by the NSW Productivity Commission following its review of the payroll tax system. PwC assisted the Productivity Commission and compiled a detailed report for its review. Although there will be no change to the payroll tax rate or thresholds, the reforms will reduce the compliance burden for many NSW businesses. The reforms include the following:

i. From July 2019, small businesses witha payroll tax liability under AUD20,000 will have the option of payingtheir payroll tax just once a year, with asingle annual return. Businesses with aliability under AUD 150,000 will beable to submit just one annual returnand make pre-set monthly instalmentpayments, based on the previous year’sliability.

ii. From mid-2019, businesses whichbecome payroll tax compliant withinthree months of being notified willreceive a 50 per cent reduction in theirpenalty, saving businesses aroundAUD 400,000 in total each year.

iii. Businesses will also be given an extraweek to complete their annualreconciliation requirements, startingwith this financial year.

Please see here for the NSW announcement.

NSW Payroll Tax updates

https://www.pwc.com/gx/en/services/people-organisation/publications/assets/pwc-australia-intro-of-single-touch-payroll-with-reporting-exemption.pdf?elq_mid=13793&elq_cid=1086053

https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Black-Economy-Taskforce--extension-of-the-taxable-payments-reporting-system-(TPRS)/

https://www.ato.gov.au/General/Gen/Removing-tax-deductibility-of-non-compliant-payments/

http://jaf.ministers.treasury.gov.au/media-release/048-2018/?utm_source=wysija&utm_medium=email&utm_campaign=Media+Release+%E2%80%93+Government+proposes+to+double+the+value+limit+available+under+employee+share+schemes

https://www.treasury.nsw.gov.au/sites/default/files/2018-11/20181122 - Media Release - Perrottet - NSW Productivity Commission delivers on payroll tax.pdf

PwC

APAC

The PRC Ministry of Finance and State Administration of Taxation (SAT) jointly released the Consultation Draft on the Detailed Implementation Rules of the PRC Individual Income Tax (IIT) Law (DIRs Draft) and the Provisional Implementation Measures of Additional Itemized Deductible Items (Provisional Measures) on October 20, 2018. Public comments on the DIRs Draft and Provisional Measures were solicited for two weeks.

Both the DIRs Draft and the Provisional Measures are an integral foundation for additional IIT implementation rules and interpretation going forward, and there has been a high level of public attention since their release.

The increase of standard monthly deduction and the introduction of additional itemized deductions will increase the deductible amounts claimed by taxpayers. The DIRs Draft specifies the amount of taxable income that can be decreased by deductible items and also mentions that there will be no carry-forward of unused deductions. Foreign nationals cannot enjoy double benefits from expenses incurred of the same nature under both the non-taxable benefits rules and the additional itemized deductions rules.

January

2019

20

New individual income tax law: Solicitation of comments on implementation rules and itemised deductions


State Council: Enterprises without lay-offs, or with fewer lay-offs, can receive a refund of 50% of unemployment insurance paid for in the last year

On December 5, 2018, signed by the Prime Minister Li Ke Qiang, the State Council issued "Opinions on Promoting Employment in the Current and Future Period". The "Opinions" indicated that in order to support the stability of enterprises, insured enterprises that do not lay-off employees or lay-off fewer employees can receive a refund of 50% of the actual unemployment insurance premiums paid in the last year.

China

The Tax Authority will be responsible for the collection of China Social Security contributions from January 1 2019

The National Tax and Tax Administration System Reform Plan clearly stated that from January 1 2019, the China social security insurance premiums such as pension insurance, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance will be uniformly collected by the tax authorities. It will change the contradiction of the current "double collection" system, improve the efficiency of collection, reduce the cost of collection, and expand the coverage of social security insurance. In the long run, it will help to narrow the difference on social security rates and payment bases across cities in China.

Indonesia

Personal Tax: Updated Certificate of Domicile for foreign tax residents

On 21 November 2018, the Director General of Tax (DGT) has issued regulation No PER-25/PJ/2018 (“PER-25”) which will apply from 1 January 2019. PER-25 provides a new Certificate of Domicile template which merges the existing DGT-1 Form and DGT-2 Form into a single DGT Form.

The new DGT Form consists of seven sections to be completed by foreign tax residents depending on their status and valid for a maximum of 12 months period (cover 12 month period crossing different fiscal years).

The tax withholder is now required to submit the relevant information on the DGT Form through the DGT electronic system. Upon submission, a receipt will be issued and the tax withholder should forward this receipt the foreign tax resident.

For subsequent tax withholders, the foreign tax resident is only required to provide the receipt of the existing DGT Form. The original DGT Form should be kept by the tax withholder and copy of the receipt of the DGT Form should be attached to the Monthly Article 26 Income Tax Return when the tax is due.

Please refer here for more details.

APAC

January

2019

21

The Hong Kong Immigration Department has revised the policy on applications for entry of non-local same-sex dependents with effect from 19 September 2018. Under the revised policy, a person who has entered into the following outside Hong Kong with an eligible sponsor, in accordance with the local law in force of the place of celebration and with such status being legally and officially recognized by the local authorities of the place of celebration, will become eligible to apply for a dependent visa/entry permit for entry into Hong Kong.

Immigration

The Ministry of Home Affairs (MHA) has taken several measures to liberalise the visa process for foreigners coming to India. These measures have focused on simplifying processes, reducing in-person interactions with authorities and delegation of authority to jurisdictional officers.

The MHA has recently issued a press release summarising the various measures taken towards liberalisation of the visa regime. The key changes introduced have been outlined below:

(i) E-visa facility has been extended to 166 countries(ii) In addition to the existing categories, e-visa facility hasnow been extended to conference and medical attendant visas(iii) E-FRRO (Foreigners Regional Registration Office)services is now operational across India. The requirement ofpersonal visits has been dispensed with(iv) E-visa issued with an initial validity of 60 days may nowbe extended to 90 days by the FRRO(v) The FRRO may grant in-country visa extension forbusiness/employment visa holders for up to 10 years(vi) The FRRO may convert the existing visa of a foreignnational married to an Indian citizen/ Person of IndianOrigin/ Overseas Citizenship of India card holder to an entryvisa.(vii) Provisions for issuance of visas to foreign interns hasbeen liberalised. The minimum remuneration for interns hasbeen reduced to INR 360,000 per annum from INR 780,000

You may refer to the PwC Newsletter for more information.

Hong Kong

Immigration

India


https://www.pwc.com/id/en/taxflash/assets/taxflash-2018-13.pdf

https://www.pwc.in/assets/pdfs/news-alert-tax/2018/pwc_news_alert_23_november_2018_liberalisation_of_visa_processes_in_india.pdf

APAC

Individual Tax

Continued from the topics we covered last quarter on the tax reform proposals, here are some important changes that can affect the 2019 year-end settlement if the government’s bill is approved by the National Assembly. The proposed amendments are expected to come into effect from January 1, 2019 and will be applied from the 2019 year-end settlement.

Tax Credit for Post-natal Care Centre CostsCurrently the medical expenses eligible for tax credit is limited to the cost of examination, treatment, prevention, cost of medicine for cure or care. Under the proposal, the expense for Post-natal Care Centre Cost would be eligible for medical tax credit. The qualifications would be employees whose annual wage does not exceed KRW 70,000,000 or compliant business operators whose business income is less than KRW 60,000,000. The credit limitation is KRW 2,000,000.

Expansion of Tax Credit for DonationsCurrently an individual taxpayer is entitled to a 15% tax credit on the first contribution worth KRW 20 million or less and a 30% tax credit on the contribution amount in excess of KRW 20 million. According to proposed changes, a 15% tax credit will be granted to the first credit to the contribution amount in excess of KRW 10 million and a 30% tax credit to the contribution amount in excess of KRW 10 million.

Expansion of Carry-over Period for DonationsCurrently the amount contributed by an individual or corporate taxpayer in excess of a deductible limit prescribed under the tax laws is carried forward to the five (5) succeeding taxable years. Under the proposal, the carryover period will be extended from 5 years to 10 years.

Deduction for Museum and Library Admission FeesCurrently the 15% on credit card spending, 30% on debit card/cash receipt spending, 40% on public transportation/traditional market spending, 30% on books/performances would be deductible if the total spending exceeds 25% of the gross salary where the gross salary should not exceed KRW 70,000,000. Under the proposal, the museum/library admission fee is additionally subject to the 30% deduction.

Expansion of Child Tax CreditCurrently the 2019 child tax credit is allowed for the 6 ~ 20 years old dependent children. Under the proposal, the child tax credit for a dependent child younger than 6 years old is also allowed if the taxpayer is not eligible for a child subsidyor had never received the subsidy previously.

Korea

January

2019

22


APAC

January

2019

23

Special Income Tax Disclosure Program

The IRBM has initiated a Special Programme for Voluntary Disclosure from 3 November 2018 to 30 June 2019 to offer an opportunity for taxpayers to come forward and voluntarily disclose prior years’ under-reported income, including income received and remitted into offshore bank accounts.

Unexplained extraordinary wealth

The IRBM will investigate any unexplained extraordinary wealth displayed by possession of luxury goods, jewellery, handbags or property. Additional taxes, penalties or fine would be imposed as appropriate.

Contributions to social enterprise

Contributions from individuals to any social enterprise would be eligible for tax deduction, restricted to 7% of the aggregate income of the individual (effective 1 January 2019).

Tax Relief - Payments of life insurance premium and contributions to EPF

Combined tax relieves for EPF contributions and life insurance premiums/ takaful contribution would be increased w.e.f Y/A 2019 from RM6,000 to RM7,000 per year ofassessment, broken down as follows:-

• EPF - RM4,000• Takaful & life insurance premium - RM3,000

Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) loan paid by employers

Companies that help the PTPTN loans of their full-time employees are eligible for tax deduction on the repayment amount (w.e.f. 1 January 2019 to 31 December 2019). Employee's PTPTN loan settled by the employer is deemed as a perquisite and hence, subject to tax.

Reduction in Employee's Provident Fund (EPF) contribution rates for employees aged 60 and above

Employer's portion of EPF contributions will be reduced to 4% from the current 6% for employees aged 60 and above w.e.f 1 January 2019. The employee is not required to contribute.

MalaysiaIndividual Tax


APAC

Continuing from last quarter's update, majority of the recent tax updates continue to stem from the IR's business transformation, which involves rethinking how NZ's tax administration system can be modernised and simplified for businesses, individuals and social policy recipients. A key change would be the shift to payday reporting (effective 1 April 2019).

Another upcoming change would be in relation to real time reporting for investment income from 1 April 2020. Key changes include:

• Payers of interest, dividends, taxable Maoriauthority distributions to provide investmentincome information to IR by the 20th of themonth following the month in which theincome was paid

• Multi-rate Portfolio Investment Entities (PIE)that are not a superannuation fund orretirement savings scheme will be required toreport investment income information to IRyearly by 15 May after the end of the tax year

• Transitional measure: payers of income subjectto RWT and NRWT to report the required year-end information by 15 May, instead of 31 Mayfor the years ending 31 March 2019 and 31March 2020.

• An investment income payer paying more than$5,000 of interest will only need to withholdRWT and report monthly on payments ofinterest where the payments relating to ataxable activity exceed $5,000,notwithstanding if total interest paymentsmade by the payer exceed $5,000

New Zealand

Individual Tax

NZ Tax Working Group (TWG) released their Interim Report, providing insight on the general direction of their final recommendations to the Government.

Key highlights include: • Detailed design for extending the taxation of capital

income (capital gains tax)• Ruling out the introduction of land tax or wealth

taxes• Desire to retain current GST regime, meaning no

further exemptions to be introduced and• Largely maintaining the current framework for

taxing businesses

See here for the PwC Tax Alert.

New Zealand Tax Working Group Interim Report

January

2019

24


https://www.pwc.co.nz/pdfs/2018pdfs/tax-tips-alert-september-2018.pdf

On 9 October 2018 and 14 November 2018, the Senate and the House of Representative, respectively, approved the respective bill regarding the tax amnesty program that would cover estate tax amnesty, general tax amnesty and amnesty for delinquencies. This program covers unpaid internal revenue taxes due for taxable year 2017 and prior years.

Further, the proposed amnesty will also be granted to all national internal revenue taxes and value-added tax and excise taxes collected by the Bureau of Customs.

The program seeks to 1) raise the government’s revenue to help fund the government’s infrastructure program and 2) give the opportunity to erring taxpayer to have a fresh start and being diligent on their tax obligations.

The data collected through the amnesty program would also be of help to the Bureau of Internal Revenue (BIR) to prevent loopholes on its collection efforts and fortify the prosecution of tax evaders.

The proposed tax amnesty bills will still undergo a bicameral conference deliberation which is scheduled on 5 December 2018.

APAC

Philippines

Individual Tax: Revenue Memorandum Circular (RMC) No. 96 - 2018

Due to questions raised from various stakeholders regarding the clarification of the BIR included in RMC No. 50 –2018, specifically group health insurance premiums (Q7/A7), and director’s fees (Q34/A34), the BIR through the issuance of RMC No. 96 – 2018 deleted the aforementioned items in the former RMC and highlighted the need to make further study regarding these items.

Subsequently, the BIR issued a tax advisory maintaining the status quo treatment regarding the deleted items on the RMC No. 50 – 2018.

Therefore, group insurance coverage for the employees’ premium shall remain tax-exempt but only for now and until such time that the BIR issue another clarification in the future about this specific matter.

Please see here for the communication from the BIR.

January

2019

25

Tax Amnesty Act of 2018 or Senate Bill 2059 and House Bill 8554

After the version of the Congress, the Senate held its first public hearing on 25 September 2018, which was attended by various stakeholders, representatives from the Department of Labour and Employment (DOLE) and Department of Finance (DOF), and various foreign commerce representatives.

One of the main topics was about job security of Filipinos, as they were seeing loss of employment, possible massive layoffs and foreign divestment.

Nonetheless, the DOF has remained on its stand that the second package will lead to growth of jobs and investments, and higher incentives on those firms who will invest on the countryside.

As a result of the division among the stakeholders involved about the real impact of the bill, the Senate Committee on Ways and Means is requiring economic managers and the Philippine labour department to present their joint study on the impact of the provisions of TRABAHO Bill, specifically on jobs, before proceeding with their deliberation.

While it is consistently reiterated that such project is a priority of the present administration, and is targeted to be implemented on 1 January 2019, Senators who support this program are not optimistic to meeting such target due to the lack of support from peers as well as the limited time involved.

House bill 8083 or Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) Bill


https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2018/RMC No 96-2018.pdf

APACSingapore

Employment Act: Amendment Bill

Briefly, the Singapore Ministry of Manpower has made significant changes to the Employment Act (EA) including:

• Removal of the salary cap for the coverage of core employment provisions.• Increased salary threshold for non-workmen.• Authorisation of the Employment Claims Tribunal to hear wrongful dismissal claims.

These changes have been legislated and are scheduled to take effect 1 April 2019. Employers will have to review the changes against their current policies and practices to ensure compliance and quantify the implication to the organisation and its employees. Employers may wish to begin assessing their operational readiness for the new rule by doing the following:

• Review the profile of employees to validate whether their current benefit provisions meet the proposed changesas a minimum.

• Check end to end HR processes and whether they are sufficiently fair and robust to minimise employeedisputes and implement any changes before 1 April 2019.

January

2019

26

Employees with Digital Tokens

Providing long term incentives to key executives is not a new idea, they can drive the success of the businesses and also attract, retain and motivate staff. Providing these in the form of tokens rather than deferred cash, or traditionally, company shares, may bring the following potential advantages. (Currently there is no legislation prohibiting Singapore employers from delivering discretionary incentives in the form of digital tokens).

a) Issuing tokens rather than company shares will notdilute the shareholding of founders or other investors;b) Issuing tokens can increase adoption and circulationof the “product” which may help take hold in themarket;c) Unlike case, tokens may provide the recipient with anopportunity to realise capital gains if the valueincreases.

However, most payroll systems are not set up to handle the necessary employer compensation reporting. Tokens may come in many different forms and it is not always clear how these should be treated or value for income tax or Central Provident Fund purposes (for example should a security token be subject to the “deemed vest” rule?).

Please refer here for our full publication on rewarding employees with digital tokens:


https://www.pwc.com/gx/en/services/people-organisation/publications/rewarding-employees-with-digital-tokens.html

APACThailand

Individual Tax: Additional allowance deduction for income earners with second or subsequent child born in year 2018 onwards

In November 2018, the Thai Revenue Code has been amended to allow an additional deduction of THB30,000 for each additional child born in year 2018 onwards (i.e. THB60,000 per child). There is no change in the deduction for the first child (i.e. taxpayers will continue to enjoy a deduction of THB30,000 for the first child).

**Note: Deduction is only applicable to dependent children who are not over the age of 20 years old or not over the age of 25 years old (for those who are studying).

January

2019

27

Shopping for Nation Deduction allowance

Taxpayers are allowed to claim a deduction of up to THB15,000 for spending made between 15 Dec 2018 to 16 Jan 2019 (i.e. tax years 2018 and 2019) for the following items:

1) Tyre, where documents from the Rubber Authority of Thailand is available2) OTOP products, which are registered with the community development department3) Book and E-Book (excluding magazine and newspaper)

Receipts have to be maintained for all spending made in order to claim a deduction and the deduction is capped at THB15,000 for two tax years.


LATAM

Argentina

New rules on Income Tax

On January 3rd, 2019, a new income tax regulation (R.G. 4396) was published in Argentina and some changes were made to the previous rules.

One of the main changes is that employers will now be required to report to the Argentine Tax Authority (AFIP) certain details in relation to employees who received gross income above ARS 1,000,000 in the fiscal year.

Another relevant change introduced by this regulation is in relation to life insurance. Deductions related to life insurance should be done on an annual basis (rather than monthly).

The changes also introduced new deductions, which include:

a) Contributions to private retirement insurance plansadministered by entities which meet certain requirements.

b) Work related expenses such as clothing and/orequipment which were acquired exclusively for use in theworkplace (where the costs were not reimbursed byemployer).

January

2019

28

Brazil

New law project aim to make the transfer of Brazilian employees abroad more variable and less costly

Currently, the Brazilian legislation is set in such way that Brazilian employers may incur high costs, from an employment taxes perspective, when having a Brazilian employee seconded to a foreign country.

The proposed changes are intended to facilitate the transfer or hiring of Brazilians abroad. The project states that the applicable labour legislation should be those of the place where services are provided, as it is done in most countries around the world. Companies must sign a compromise letter informing the worker about the working conditions and the main rights provided by the legislation of the transferring country.

This proposal has been approved by the Committee on Foreign Relations and National Defense (CRE) in November 2018, and is now being considered for further analysis by another committee (Committee of Social Matters).


Brazil

Update on the Brazilian Income Tax Regulation

An updated version of the Brazilian Income Tax Regulation was published on November 23rd, 2018. Although the main purpose of the publication was to consolidate in a single document a number of legislations which deal with tax matters, it also clarified some aspects that were previously unclear, and it introduced some changes.

Tax Agreement: Brazil and the UAE

Brazil and the UAE have signed an agreement which seeks to eliminate double taxation on income and prevent tax evasion and tax avoidance. The document was signed on November 12th, 2018 by Foreign Minister and the ambassador of the United Arab Emirates.

New regulation of Data Protection

In August 14th, 2018 a Federal Law in relation to personal data protection, also known as General Law on Data Protection, was enacted. This new regulation follows in many aspects the principles enshrined in the General Data Protection Regulation ("GDPR"), getting Brazil in line with the European standards.

The law will enter into force in Brazilian territory in February 2020, therefore it is important that companies perform reviews of internal processes, including payroll and HR systems, and make the necessary adjustments prior to this date. The penalties for non-compliance could be up to 2% of annual revenue, limited to BRL 50 million, per occurrence.

LATAM

January

2019

29

Social Security Contributions: Changes in the offset rules

Significant changes were made to the system used by companies to offset social security credits due on the remuneration paid or credited to employees, in addition to amounts withheld relating to the assignment of labour and contract projects.

From now on, companies enrolled in the eSocial that have social security credits, including those arising from unappealable court decisions, are allowed to offset these credits using electronic systems. In addition, the offset may include own liabilities, whether overdue or not yet due, that are related not only to own social security contributions, but also to other taxes administered by the Brazilian tax authorities.

One of the main changes brought by the new legislation is in relation to the social security offset rules, by establishing that companies that generate credits may use the credits to offset their own liabilities related to any RFB-administered taxes and contributions.

Regarding the offset of withholding social security contributions in the assignment of labour and contract projects, in certain circumstances, service providers will be allowed to deduct the amount withheld on an accrual basis.


Brazil

Colombia

Tax Law Reform Project

The Columbian Congress passed on December 28 tax reform legislation that includes major changes to Colombian tax law. Stay tuned for further details on the reform in the next edition.

Electronic Invoices obligation

Through a legislative decree issued on October 2018, the Peruvian Tax Administration (SUNAT) established the obligatory use of electronic service operator (see-OSE) and electronic emission system-Sunat operations Online (see-SOL). The companies that meet certain established criteria, will be required to used one of these systems from March 1st, 2019.

Peru

Updates on Tax Legislation

Some rules for individual taxes’ deductions have been introduced in Peru.

Through a legislative decree, issued on last August, the government unexpectedly eliminated the possibility of people using the interest paid in a mortgage loan to access a greater deduction in the payment of income tax.

Additionally, the Ministry of Economy and Finance (MEF) amended the Income Tax Regulation through a supreme decree to add deductions in the calculation of fourth and fifth category income tax. The regulations indicate that, as of January 1st, 2019, workers may apply as a deduction up to 15% of what was paid for services received in restaurants, hotels, bars and canteens, considering even the taxes implied in the payment (VAT).

NORAM

CanadaFederal

Canadian Pension Plan EnhancementStarting in 2019, the Canada Pension Plan (CPP) will be gradually enhanced. This means employees will receive higher benefits in exchange for making higher contributions. In 2019, the CPP will begin to grow to replace one third of their average work earnings (from one quarter prior to 2019). The maximum limit used to determine their average work earnings will also gradually increase by 14% by 2025.

The enhancement will increase CPP retirement, disability and survivor’s pensions.

From 2019 to 2023, the contribution rate for employees will gradually increase by one percentage point (from 4.95% to 5.95%) on earnings between $3,500 and the original earnings limit.

In 2024, employees will begin contributing 4% on an additional range of earnings. This range will start at the original earnings limit (estimated to be $69,700 in 2025) and go to the additional earnings limit, which will be 14% higher by 2025 (estimated to be $79,400).Employers will pay the same increase in contributions as their employees.

Employment Insurance (EI) ratesThe Federal government announced that, effective January 1st , 2019, the contribution rate for Employment Insurance will be reduced and the Maximum Insurable earnings increased as follows:

Outside Quebec• Maximum Insurable earning from $51,700 to $53,100• Employee premium rate from 1.66% to 1.62%• Employer premium rate from 2.324% to 2.268%

Quebec• Maximum Insurable earning from $51,700 to $53,100• Employee premium rate from 1.30% to 1.25%• Employer premium rate from 1.82% to 1.75%.

January

2019

30

New 5-week Parental Sharing Benefit Scheme to commenceOn September 26, 2018, the Honourable Jean-Yves Duclos, Minister of Families, Children and Social Development, announced that the Government of Canada intends to launch the new parental sharing benefit on March 17, 2019.

Originally anticipated for June 2019, this new measure will provide an additional five weeks of EI parental benefits when parents—including adoptive and same-sex parents—agree to share parental benefits, or an additional eight weeks for those who choose the extended parental benefit option. Parents with children born or placed for adoption on or after March 17, 2019, will be eligible.

The new benefits will provide the following enhancements:

• Parents selecting the standard duration of parentalbenefits could receive up to 40 weeks of parentalbenefits, an increase from the current 35 weeks.

• The sharing benefit would be available to eligiblebirth parents and adoptive parents, including bothopposite-sex and same-sex parents.

• Parents who qualify for EI would be eligible to accessthe sharing benefit based on:- the date of birth of their new-born child; or- the date that the child is placed with them for thepurpose of adoption.


NORAM

United States

Connecticut's Convenience rule takes effect for tax years beginning 1 January 2019

Connecticut’s legislature revised its Public Act 18-49, Sec. 20(2)(C) as follows:(C) For purposes of determining the compensation derived from or connected with sources within this state, a non-resident natural person shall include income from days worked outside this state for such person’s convenience ifsuch person’s state of domicile uses a similar test.

This provision only applies if the taxpayer’s home state applies the same test such that Connecticut income tax is imposed on convenience days if:

i. The state from which he/she performs such services is within Delaware, Nebraska, New York, or Pennsylvania(i.e., this new rule is invoked only when a Connecticut non-resident employee is a resident of a state alsoimposing a similar rule), and

ii. (2) The work is performed outside of Connecticut for other than a bona fide reason of the employer. Theconvenience rule will not apply to sources of income from a business, trade, profession, or occupation carriedon in Connecticut other than compensation for personal services rendered by a non-resident employee, anddoes not apply to sources of income derived by an athlete, entertainer or performing artist, including, but notlimited to, a member of an athletic team.

California StateThe EDD has released the 2019 Method A (Wage Bracket Table Method) and Method B (Exact Calculation Method) withholding tables. The 2019 annual standard deduction amount for withholding purposes will increase from $4,236 to $4,401 and the withholding allowance will increase from $125.40 to $129.80 in 2019. Instructions to Withholding Tables include a recommendation for married employees with spouses, who work, to avoid under-withholding of state income tax liability, by either: (1) using a single filing status to compute withholding for the employee and spouse; or (2) withholding an additional flat amount of tax.

Maryland State and LocalMaryland has issued its 2019 Withholding Tax Facts sheet. For 2019, there are 14 tax brackets as follows:1.75%, 2.25%, 2.40%, 2.50%, 2.60%, 2.65%, 2.80%, 2.85%, 2.90%, 3.00%, 3.05%, 3.10%, 3.15%, and 3.20%.

Employers should refer to the county listing in the facts sheet and use the table that agrees with, or is closest to one of the brackets, without going below the actual local tax rate. Local income tax rates remain the same in 2019 except for Caroline County (increases from 2.80% to 3.20% in 2019). Generally, non-residents do not have a local tax rate; instead, employers withhold additional state tax using the lowest local tax rate of 1.75%.

Employers should use $3,200 as the value of an exemption when using the withholding tables. There is no need to adjust for any reduction in the exemption amount, as employees are instructed to reduce / phase- out the number of exemptions being claimed on Form MW507, Employee’s Maryland Withholding Exemption Certificate.

The 2018 annual employer withholding reconciliation return is due on January 31.

State and Local Withholding Updates

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2019

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NORAM

United States

State and Local Withholding Updates continued

Ohio Local WithholdingEffective January 1, 2019, the Central Collection Agency (CCA) states that it will collect taxes from the following new municipalities:

1. Marble Cliff2. New Madison3. Obetz4. Prairie Obetz JEDZ.

In addition, effective January 1, 2019, the following localities are increasing their income tax rates:

(1) Mt. Orab Village (from 1% to 1.35%);(2) Middlefield Village (from 1% to 1.25%);(3) Woodlawn Village (from 2% to 2.3%);(4) Wellington Village (from 1% to 1.75%);(5) Germantown City (from 1.25% to 1.5%);(6) Columbus Grove Village (from 1.25% to 1.5%);(7) Macedonia City (from 2.25% to 2.5%); and(8) Marietta City (from 1.7% to 1.85%).

Further, effective January 1, 2019, school districts rate changes are as follows:

(1) St. Mary's City School District imposes anew 1% levy;(2) Granville Exempted Village School Districtimposes a new 0.75% levy;(3) James A. Garfield Local School Districtimposes a new 1.5% levy;(4) Norton City School District imposes a new0.5% levy; and(5) Green Local School District imposes a new0.5% levy.

Forward looking, effective January 1, 2020, the following school districts are decreasing their income tax rates:

(i) Evergreen Local School District (from 1.75% to1.5%); and(ii) Riverside Local School District (from 1.75% to1.5%).

Oregon LocalOregon’s Tri-County Metropolitan Transportation District (TriMet) tax rate will increase from 0.007537 to 0.007637, and the Lane Transit District (LTD) tax rate will increase from 0.0073 to 0.0074 in 2019

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Payroll deductions to fund the NY Paid Family Leave program will increase effective January 1, 2019. The maximum employee contribution is 0.153% of an employee’s weekly wage, and is capped at a maximum of $107.97. (The maximum employee contribution in 2018 was 0.126% of an employee’s weekly wage, and was capped at a maximum of $85.56.) Employees taking paid family leave will receive 55% of their average weekly wage (50% in 2018), up to a maximum of 55% of the state-wide average weekly wage, which is $1,357.11 in 2019 ($1,305.92 in 2018).

The maximum weekly benefit in 2019 will be $746.41. Leaves of absence under the PFL program will increase to a maximum of 10 weeks in 2019 (8 weeks in 2018).

Reminder: New York Paid Family Leave –2019 Increase for Payroll Deductions

Vermont Department of Taxes issued a reminder that it is no longer participating in the Combined Fed/State Program for submitting Forms W-2 and 1099 with the IRS. Taxpayers must file these forms with the Department. Electronic filing through MyVTAx is mandated for those who have 25 or more W-2s or 1099s to file, and for CPAs and payroll providers.

Reminder: Vermont no longer participates in the Combined Federal/State Program


Africa

January

2019

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Ghana

Amendment to the first schedule to the Income Tax Act, 2015 (Act 896)

The tax rates applicable to individuals have changed within the 2018 year of assessment. In August 2018, the flat tax rate of non-resident individuals was increased from 20% to 25%, whilst the income tax band for resident individuals was amended to include a new band whereby annual chargeable income in excess of GH¢120,000 (approximately US$ 24,406) is taxed at 35%.In the 2019 Budget Statement and Economic Policy laid before Parliament, the Finance Ministry proposed to parliament a new rate and the highest tax band rate reduced from 35% to 30% and highest chargeable income increased from GH¢120,000 (approximately US$ 24,406) to GH¢240,000 (approximately US$ 48,812).Additionally, a proposal has been made by the Minister for the tax free threshold of the income tax band to be aligned with the daily minimum wage. Recently, the daily minimum wage of GH¢9.68 (approximately US$ 1.97) was increased to GH¢10.65 (approximately US$ 2.17) and it will take effect on 1 January 2019. The proposed amendments are expected to be passed by the Parliament of Ghana by the end of 2018 and enforced from the beginning of 2019.

Payment of professional fees on behalf of Ex-pats

It is the practice of many organisations, who second expatriate employees to South Africa, to settle the expatriate employee’s tax liability in South Africa to ensure that the employee is tax neutral and is no worse off as a result of their assignment to South Africa. Often the employer company will appoint a professional tax services firm to assist with the tax compliance of the expatriate employee with the professional consulting fees being funded by the employer. In a recent High Court Judgment, the Court has ruled that the payment of professional fees on behalf of expatriates is a taxable benefit in terms ofparagraph 2(e) of the Seventh Schedule. Employers who have implemented this practice should take note of this judgment as SARS is likely to claim any under deducted PAYE from the employer, together with associated interest and penalties. In addition, this could have an impact on the expatriate employee’s net take home pay as the professional fees would be treated as a taxable benefit in the hands of the expatriate employees. If the employee is tax equalised, however, this will result in anadditional cost to the employer. We understand that this judgement will be appealed by the taxpayer.

National Minimum Wage Act 9 of 2018

The National Minimum Wage Bill was signed into law on the 23 November 2018. Its effective date appears to be 1 January 2019, but this has yet to be confirmed. Essentially, the Act provides for a minimum wage of R20 for each hour worked. The Act distinguishes between farm workers, domestic workers and workers on an expanded public works programme and states that the hourly minimum wage for the abovementioned category of workers is R18, R15 and R11 respectively.

South Africa


Africa

Egypt

Electronic filing of Income Tax Returns

The Egyptian Tax Authority (ETA) has introduced a new electronic filing (“e-filing”) system for thesubmission of the income tax returns. Corporate taxpayers will be required to submit their income taxreturns electronically (through the ETA’s website), starting from this financial year (i.e. 2018).

Accordingly, manual filing will no longer be accepted as of this year.

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As of this financial year, the e-filing of income tax returns on the ETA’s website, has become mandatory.Accordingly, the taxpayer will be required to register on the ETA’s website to create an account andobtain a username and password, as well as a specific code to be provided to their tax advisor. Followingthe registration process, taxpayers shall prepare their annual income tax returns on the ETA’s website,and then have them reviewed/ verified by their tax advisor. Prior to electronically submitting the return,both the taxpayer and the tax advisor will be required to sign-off the return.Upon submission of the tax return, the taxpayer will be required to pay the tax due (as per the tax return)through one of the following methods:

● Bank transfer through the taxpayer’s own bank; or● Using smart card to pay/ transfer the tax due to the ETA; or● Through the banks or the National Post Authority with which the ETA has specific agreements, for taxpayersto settle the tax due and this is also through using smart cards.

As for individual taxpayers, they still have the option to pay their annual income taxes due, electronicallyor manually.

Summary of the key aspects of the new e-filing system


PwC

Africa

January

2019

35

Kenya

Tax amnesty on Foreign Income

The Finance Act, 2018 extended the deadline of filing for amnesty on foreign income and assets to 30 June 2019. The amnesty covers taxes, penalties and interest for repatriated foreign income earned on or before 31 December 2017 and which would have been subject to tax in Kenya. Subject to certain conditions, the declared funds are exempted from the provisions of the Proceeds of Crime and Anti-Money Laundering Act, 2009 and other Acts that relate to investigations of financial transactions.

Late payment penalty and interest

The Finance Act, 2018 introduced a late payment penalty of 5% of the tax due and has retained the 1% interest on late payments. There is a reprieve for individuals since the Act reduced the late filing penalty for individuals’ annual returns from twenty thousand shillings to the higher of 5% of the tax payable or two thousand shillings.

Tightening the noose on employers who delay pension contribution remittances

The Finance Act, 2018 amended the Retirement Benefits Act, 1997, to give powers to the Retirement Benefits Authority to compel non-compliant employers to pay the outstanding contributions and interest with a penalty of five percent of the unremitted contributions or a minimum of twenty thousand shillings. This is a welcome move to employees who previously did not have sufficient remedies for their non-compliant employers. The change was effected on 1 October 2018.

Proposed tax reforms: Introduction of a National Housing Development levy

Kenya is in the process of introducing a National Housing Development Fund (“NHDF”). Employers and employees will each be required to contribute 1.5% of the employee’s monthly basic salary to the fund but the combined contribution is capped at KES 5,000 per month. The NHDF is not yet operational as contributions will only be made once certain Regulations are in place.


PwC

Eurasia

January

2019

36

Kazakhstan

Electronic visa application in Kazakhstan

The Ministry of Foreign Affairs introduces a procedure for obtaining a single entry visa in electronic format.

Effective 1 January 2019, foreigners may apply for an electronic visa (business, tourist and medical treatment) on the website of the Visa and Migration Portal (www.vmp.gov.kz), based on a letter of invitation approved by the Ministry of Foreign Affairs.

Foreigners can enter/exit Kazakhstan using a valid electronic visa only at Astana and Almaty airports.

The tourist electronic visa applies to citizens of 117countries, business and medical treatment visas to citizens of 23 countries.

The electronic visa is valid only for the visa applicant (not to accompanying persons).These changes simplify the process of obtaining a single entry visa to Kazakhstan. The process of obtaining a letter of invitation remains the same.


The government of Mongolia revised regulations on matters of visas and residence permits (Regulations) on 23 May 2018 for purpose of easing the visa procedures. Under the Regulations, following major changes have been made:

• Some visa types can be changed while in Mongolia. Under the previous regulations, visa holders were required toleave the country in case of they need to change their visa types. However, under the new rule, short term tourist (Jvisa) or business visa (B visa) holders are permitted to change their visa type to investors (T visa) without leavingthe country.

• Waiting period for re-applying visas shortened. Short term visas (up to 90 days) can be extended only once for 30days. When this extension period finishes, those visa holders were required to leave the country and wait for at least180 days to re-apply the same visa again. However, under the new Regulations, this term is shortened to 90 days.

• Re-apply ban period reduced. Prior to the new Regulations, the visa holders who penalized for their non-compliances with the immigration regulation were subject to the ban for re-applying for a visa for 3 months fromthe penalty imposition date. But the period has been reduced to 1 month under the new Regulation.

Mongolia

Mongolian immigration regulations

http://www.vmp.gov.kz/

PwC

Eurasia

January

2019

37

Uzbekistan

Updates on Immigration


1) "Visa relief"Starting from 1 February of 2019 (15 January for German citizens), citizens from 45 more countries are eligible to visitUzbekistan without visa for a period of 30 days. Thus, number of visa-free countries has reached 64 in total. In addition, newtypes of visas (Vatandosh, Student visa, Academic visa, Medical visa, Piligrim visa) are introduced to stimulate tourists,investors, scientists and others to strengthen their ties with Uzbek culture, people and business communities. List of visa-freecountries and more information can be located here and here.

2) "New technologies implementation"As part of large effort from Uzbek Government towards liberalisation of visa issuance process, new electronic system waslaunched in July of 2018. Citizens from about 76 countries, beginning from the 1 February 2019, are eligible to get visa for 30days in few steps by using electronic application on the web site - www.e-visa.gov.uz . Special features of the new system areavailability to get double entry or multiple visa and make payment online through the web site. More information you can findhere.

3) "Liberalisation of border issues"New Presidential decree envisages more liberal approach towards breaching of visa regime by foreign citizens. Four leadinggovernmental agencies working under the project that is going propose much softer penalties for foreigners who fall in difficultsituation related to border control. Please see here for more information.

http://uzbektourism.uz/newnews/view?id=38


http://www.e-visa.gov.uz/


https://www.gazeta.uz/ru/2019/01/18/stay/

Contacts


Ken O’BrienE: [email protected]

Aoife ReidE: [email protected]

Julian SansumE: [email protected]

Mark GeerseE: [email protected]

Elmer Van LienenE: [email protected]

Ruth PunterE: [email protected]

Karen TooraE: [email protected] Karyn Amaro


Barry Knoetze


Africa

Gavin Duffy


January

2019

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Contacts (cont’d)

APAC

Rohan GeddesE: [email protected]

Sakaya Johns RaniE: [email protected]

Rebecca LaiE: [email protected]

Crystal LuE: [email protected]

NORAM

Tom GeppelE: [email protected]

Tina SchrobE: [email protected]

Grace HuangE: [email protected]

LATAM

Helena FontenelleE: [email protected]

Flavia FernandesE: [email protected]

Jerry AlbertonE: [email protected]

January

2019

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Contacts (cont’d)

Eurasia

NORAM

LATAM

41

Anar KhassenovaEmail: [email protected]

Alisher ZufarovEmail: Email: [email protected]

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

© 2019 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.Please see www.pwc.com/structure for further details.

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