- Article
- February 10, 2015
Italian Prime Minister Matteo Renzi has indicated that the new reduced tax regime introduced for Italian self-employed individuals with effect from January 1, 2015, will be improved, following protests concerning the lower benefits offered compared with the previous regime.
The new 15 percent fixed tax regime is available for self-employed individuals, including entrepreneurs and sole traders. Eligibility depends on a business’s annual turnover, with maximum turnover ranging from EUR15,000 to EUR40,000, depending on the sector in which the business is engaged. It replaces their liability to individual income tax (federal, regional, and local), value-added tax, and the regional tax on production.
The taxable amount, as a proportion of turnover, is predetermined by the authorities, depending on the industry in which the business is engaged. Under the system, the 15 percent rate applies to between 40 percent and 86 percent of a business’s turnover, depending on the sector.
The new regime has drawn criticism from those classified as professionals, as the EUR15,000 threshold is considered too low, and the pre-determined notional profit margin for this sector, on which the 15 percent rate applies, is the highest for professionals at 78 percent of turnover.
Major grumblings have also been heard when comparing the new regime with the tax rate of the previous system, which was fixed at five percent and based simply on individuals’ business turnover up to a maximum of EUR30,000. In addition, self-employed individuals that are already subject to that regime may elect to continue to be taxed under that regime – an option that is not available to those over 35 years of age.
Renzi has already called the new fixed rate regime “a resounding own goal” for his Government and has confirmed his willingness to change its terms. It appears that the first opportunity to do that will be within the framework of the draft tax reform law (delega fiscale), which is to be reissued by the Government after a Cabinet meeting on February 20.
In addition, during that meeting, it is expected that the Government will also look to reduce the incidence of the programmed hikes in self-employed social security contributions from the present 27 percent to 33 percent by 2018. Those substantial increases have also prompted protests.
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- Article
- February 10, 2015
In an effort to expand the taxpayer base, the Indonesian Government is expected to announce the introduction this year of an amnesty for those who have failed to make tax declarations.
In the context of low oil prices and continued global economic uncertainty, the Government has already announced that it will focus on improving tax compliance rates in a bid to raise Indonesia’s relatively low tax-to-GDP ratio to fund infrastructure and welfare spending policies.
Finance Minister Bambang Brodjonegoro has now confirmed, in a recent interview with The Jakarta Post, that the Directorate General of Taxation will look to increase the number of taxpayers in Indonesia by way of an amnesty.
It has been indicated that the amnesty, which would entail a legislative amendment, would not be available for those who have already been identified as non-payers, but would waive penalties and the risk of prosecution for those who declare and pay all their due taxes. It would also be accompanied by increased penalties for non-compliance discovered in the future.
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- Article
- February 10, 2015
Firms cut prices at steepest rate for nearly five years
London: The Eurozone private sector grew at its fastest pace in six months in January as firms slashed prices at the steepest rate in nearly five years, a business survey showed on Wednesday.
Data compiler Markit said the survey, carried out mostly before the European Central Bank announced a near-trillion euro quantitative easing programme to revive inflation and boost the economy, pointed to first-quarter growth of 0.3 per cent.
That matches the median forecast in a Reuters poll last month and, if realised, would be faster than the 0.1 per cent economists have pencilled in for the end of 2014.
Markit’s final January Composite Purchasing Managers’ Index (PMI), seen as a good indicator of growth, stood at 52.6, higher than a preliminary estimate of 52.2 and December’s 51.4.
“The Eurozone enjoyed a positive start to 2015, as growth of economic activity accelerated. Among the big-four nations, output expanded in Germany, Italy and Spain, but the downturn in the French economy extended into its ninth month,” Markit said.
Lowest reading
However, that growth came at a cost to margins. An index measuring output prices fell to 46.9 from December’s 48.1, its lowest reading since February 2010, suggesting firms were slashing prices to drum up trade.
Prices dropped a record-equalling 0.6 per cent last month as commodity prices, Brent crude in particular, tumbled.
Price-cutting helped drive service industry activity up at the fastest rate in five months. The services sector PMI rose to 52.7 from December’s 51.6, ahead of the flash 52.3 estimate.
Confidence about the ECB’s QE programme and signs of growth in new orders accelerating helped lift a gauge of optimism among service firms by the biggest one-month margin in over five years, to 63.9 from 59.7.
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- Article
- February 10, 2015
The US says it strengthened engagement with India through the US-India Trade Policy Forum and secured the historic Trade Facilitation Agreement (TFA) at the WTO after overcoming an impasse with India.
“In November, the United States with India and other WTO members overcame an impasse in the Bali Package to allow the full implementation of a Trade Facilitation Agreement (TFA),” the US Trade Representative said in its year-end review.
“The TFA is the first multilateral trade agreement in the WTO’s 20 year history, and will reform global customs practices and substantially reduce the costs and time associated with goods crossing borders,” it noted
“The efficiencies generated by customs reforms in the TFA will significantly reduce the costs of trading for WTO members, developed and developing countries alike,” the review said.
Some estimates, it noted, suggest the global economic value of the new WTO deal could be worth $1 trillion.
The US had also strengthened engagement with India through the TPF, the premier bilateral forum for discussion and resolution of US and India trade and investment issues.
In November, USTR Michael Froman led a US delegation to the TPF in Mumbai, the review noted.
Earlier, in February, the US challenged before WTO India’s domestic content requirements for it National Solar Mission affecting US solar product exports.
In addition to the WTO consultations, the US has engaged India on its concerns regarding the NSM over the last three years, including in bilateral fora such as the TPF and the US-India Energy Dialogue, and at the WTO in various committees, it said.
The review said it had also prevailed on numerous Indian challenges to US countervailing duties to address what it called India’s “unfair steel subsidies.”
In December, the WTO Appellate Body rejected the vast majority of India’s appeals seeking additional findings on US regulations and determinations, it said.
The US had in October also prevailed against Indian ban on US agriculture products – such as poultry meat, eggs, and live pigs – allegedly to protect against avian influenza.
The US poultry industry, which directly employs over 350,000 workers and consists of nearly 50,000 family farms – had been particularly affected by India’s restrictions, the review said.
The WTO has agreed the panel report will be adopted or appealed in January 2015.
The review noted USTR had concluded an Out-of-Cycle Review of India to evaluate progress toward achieving meaningful, sustained and effective engagement on IP issues.
India, it said had made useful commitments, including to institutionalise high-level engagement on IP issues, to pursue a specific work programme and to deepen cooperation and information exchange with the US on IP-related issues under the TPF.
The US, the review said, looks forward to the 2015 Special 301 Review process, which will provide the next formal opportunity for a thorough review of India’s environment for IP protection and enforcement.
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- Article
- February 10, 2015
Prime Minister Narendra Modi told leading global investors here on Tuesday that his priority for India is to establish global benchmarks in areas like governance, transparency and taxation.
At the ‘India Investor Summit’, organised by the world’s largest asset manager BlackRock, Modi said that the government’s priority is “growth and jobs” and added that there is rising interest in India and “we have to accept that responsibility”.
As many as 21 major global investors which manage more than $11 trillion worth investible assets participated in summit earlier in the day. The list of institutional investors included asset managers, insurers, pension funds, and official institutions-Abu Dhabi Investment Authority ($770 billion), Australian Government Future Fund ($95 billion), Temasek ($175 billion), Canadian Pension Plan Investment Board ($205 billion), Hong Kong Monetary Authority ($400 billion) and Saudi Arabian Monetary Agency ($755 billion).
Pitching the India growth story, Modi promised the investors a fair, predictable and consistent tax system and growthfocussed economic policies.
Modi said that infrastructure development is one of the best routes to create jobs for the youth. He told top honchos of leading equity firms and government funds such as Ace Limited, AIA Group, APG, GIC Singapore, PSP Investment Board and California State Teachers Retirement System that India needs to both expand and upgrade its infrastructure.
The PM said the goal of Affordable Housing for all by 2022 would in itself provide a huge boost to the economy. He pointed out that the government is focussing on skill development that would fulfil not just the Indian requirement, but also the global requirement.
Union ministers Arun Jaitley, Nitin Gadkari, Suresh Prabhu, Dharmendra Pradhan and Piyush Goyal were present at the dinner.
During his US visit, Modi held one-on-one meeting with BlackRock chief executive officer (CEO), Boeing chairman, IBM president and CEO, GE CEO, Goldman Sachs chairman and KKR CEO. A senior official disclosed that BlackRock CEO Larry Fink had promised Modi that he would visit India with a team of leading investors and explore the scope for new opportunities in the country.
Jaitley, along with other senior ministers, also pitched the India growth story before the investors and invited them to invest in the country.
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- Article
- February 10, 2015
PMI index shows business activity accelerated last month
Business activity growth in the UAE’s non-oil private sector hit a three-month high in January, a survey showed on Tuesday, indicating most of the economy is still showing no major impact from the plunge of oil prices.
The seasonally adjusted HSBC UAE Purchasing Managers’ Index, which measures the manufacturing and services sectors, was 59.3 points last month against 58.4 in December. The 50-point mark separates growth from contraction in the survey of 400 firms.
“The pick-up in activity at the start of the year is encouraging, but we continue to expect activity to lose speed into 2015 as low oil prices and weaker demand from key export markets in the Gulf weigh on momentum,” said HSBC Middle East’s chief economist Simon Williams.
Output growth accelerated slightly in January while growth in new orders rose sharply to 67.9 points from 65.4 points.
Output price inflation rose marginally to 50.3 points while input price inflation was flat at 54.2 points. Employment growth increased marginally to 53.2 points.
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- Article
- February 10, 2015
Thriving non-oil private sector coasts over impact of declining crude prices
Dubai
The UAE’s Purchasing Manager’s Index (PMI) for January showed strong improvement in business, indicating that the non-oil private sector continued to grow despite sharp decline in oil prices.
The UAE’s PMI is a composite indicator of non-oil economy based on data compiled from purchasing executives in approximately 400 private sector companies in the UAE.
The headline PMI for January was 59.1, up from 58.4, the highest in three months.
“The pick up in activity at the start of the year is encouraging, but we continue to expect activity to lose speed into 2015 as low oil prices and weaker demand from key export markets in the Gulf weigh on momentum,” said Simon Williams, Chief Economist for Middle East & North Africa at HSBC.
January data signalled a sharp increase in production in the UAE’s non-oil private sector economy. Stronger demand conditions, the launch of new products and a rise in new work were commonly reported as the main drivers of the latest increase. Subsequently, payroll numbers increased, with the rate of growth little-changed from the previous month. Meanwhile, input prices rose at a solid pace, while selling prices rose only fractionally.
Supporting overall sector growth was a strengthening in the rate of output expansion. Almost 37 per cent of panellists reported higher production in comparison to the previous month. New orders rose in January, continuing the trend observed since the survey began in August 2009.
Overall growth was also driven by further rises in new orders from both the domestic and international markets. Capacity remained under pressure over the survey period, with backlogs of work rising for the ninth successive month.
Responding to ongoing growth in new orders, firms hired additional staff over the month, continuing the trend observed since January 2012. Companies commented on higher production requirements and the launch of new products leading to the latest rise in employment.
“The latest PMI data underlines the resilience of the UAE’s non-oil sector in the face of significantly lower oil prices. We maintain our view that non-oil sector growth will remain robust this year, underpinning overall GDP growth of 4.3 per cent in the UAE and 4.7 per cent in Dubai,” said Khatija Haque, Head of MENA Research at Emirates NBD.
As part of efforts to sustain strong production growth, non-oil private sector firms continued to expand their purchasing activity in January. On the price front, overall input costs continued to rise. A solid increase in purchasing costs was recorded, which panellists attributed to stronger demand driving up raw material prices. Meanwhile, wages and salaries rose modestly.
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