- Article
- March 7, 2015
Anthony Cheung Bing-leung, Hong Kong’s Secretary for Transport and Housing, has disclosed that the Government will next month present the findings of a review into the impact of stamp duty measures to the Legislative Council’s Panel on Housing.
In addition to the increased Special Stamp Duty (SSD) rate (from 10 percent to 20 percent on properties held for less than 36 months) and the 15 percent Buyer’s Stamp Duty (BSD) on purchases of residential properties that were introduced in 2012, the Government also doubled, in February 2013, the rates of the existing ad valorem stamp duty (AVD) applicable to both residential and non-residential properties.
These measures, Cheung said, “aim to combat speculative activities, ensure healthy and stable development of the property market, and accord priority to the home ownership needs of Hong Kong permanent residents in the midst of the present tight housing supply.”
He stated that the increase in property prices was moderated after the introduction of the doubled AVD in February 2013, with price rises, between the period March 2013 to April 2014, of just 0.1 percent on average. However, he noted that prices in Hong Kong have gradually picked up again since that date. Overall property prices rose by 13 percent in 2014.
Cheung pointed out that if demand-side management measures had not been introduced at the end of 2012 and early 2013, real estate prices “might have been even more exuberant, affecting our economic and financial stability.” He said “the Government closely monitors developments, and will continue to adopt necessary measures to stabilize the property market.”
Monitoring is being carried out “with reference to a series of indicators, including property prices, home purchase affordability, transaction volume, the supply of residential properties, as well as changes in the local and external economic situations,” he said.
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- Article
- March 2, 2015
NEW DELHI: The Economic Survey for the year 2014-2015 expects the Indian economy to grow at over 8 percent for the coming fiscal year. “Indian economy is looking-up with brighter prospects amongst the world’s major economies today,” the survey says.
The survey taking into consideration the change of base year by the Central Statistics Office of the National Accounts series from 2004-05 to 2011-12, states that growth at market prices for 2015-16 is expected to be 8.1-to 8.5 per cent.
The survey indicates that a clear political mandate for reform and a benign external environment is expected to propel India on to a double digit trajectory. It states that Indian economy appears to have now gone past the economic slowdown, persistent inflation, elevated fiscal deficit, slackening domestic demand, external account imbalances and oscillating value of the rupee.
The Economic Survey says that expectation for such a growth rate is also due to a number of reforms that have already been undertaken and more that are being planned for. The survey enlist various reform measures like de-regulation of diesel price, taxing energy products, replacing cooking gas subsidy by direct transfer on national scale, passing an Ordinance to reform the coal sector via auctions, increasing the FDI caps in defence, etc.
The expected high growth rate in the coming year in the favourable economic environment has created a historic movement of opportunity to propel India into a double-digit growth trajectory to attain the fundamental objective of “wiping every tear from every eye” of the vulnerable and poor people of the country, the survey says. It also gives an opportunity to the increasingly young, middle-class and aspirational India to realize its full potential. As the new Government is to present its first full year budget, the Economic Survey states that it appears that India has reached a sweet spot and that there is a scope for Big Bang reforms now.
The Economic Survey was tabled in the Parliament on Friday.
Meanwhile, international rating agency Standard & Poor’s has sharply revised India’s growth forecast upwards to 7.9% for 2015-16 and 8.2% in the year after, crediting the move to rising investment and fall in oil prices as it singled out the country in the region while trimming its forecasts for China, Japan and the four Asian Tigers.
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- Article
- March 2, 2015
On February 25, South Africa’s Minister of Finance, Nhlanhla Nene, presented a 2015 Budget that was said to be constrained by a slowing economy and lower-than-expected tax revenues.
Nene indicated that the Government now has to rebalance its fiscal policy to reduce the “structural gap” that exists between spending on investment and economic development and the amount of tax it expects to collect.
South African economic growth for 2015 is projected to total only two percent, down from indications of 2.5 percent growth in October last year. The Government is aiming for three percent growth in 2017, Nene said, and so “it is now clear that we can no longer postpone consideration of additional revenue measures.”
The main tax proposals include a one percent increase to PIT rates for all taxpayers earning more than ZAR181,900 (USD15,900) a year. Under the changes, the rates above this threshold will range from 26 percent rate, for taxable incomes between ZAR181,901 and ZAR284,100, to 41 percent rate, on annual earnings above ZAR701,300.
However, with tax brackets, rebates, and medical scheme contribution credits also being adjusted for inflation, the net effect is that there will be tax relief for those earning below ZAR450,000 a year. Those with higher incomes will pay more tax.
There will also be an increase in the general fuel levy and excise duties on alcoholic beverages and tobacco products from April. The rates and brackets for transfer duties on the sale of property will be adjusted to provide relief to middle-income households. Transfer duty will be eliminated on properties below ZAR750,000, and the rate on properties worth more than ZAR2.2m will increase.
Based on the recommendations of the Davis Tax Committee, a more generous tax regime is proposed for businesses whose annual turnover is below ZAR1m. Qualifying businesses with a turnover below ZAR335,000 a year will pay no tax, and the maximum rate is to be reduced from six percent to three percent.
Nene also added that the Government is to take further steps to combat revenue leakages “through erosion of the tax base, profit shifting, and illicit money flows. … Drawing on advice of the Davis Tax Committee, amendments will be proposed to improve transfer pricing documentation and revise the rules for controlled foreign companies and the digital economy.”
It was stressed that these proposals will be in line with the work of the Organisation for Economic Co-operation and Development on base erosion and profit shifting (BEPS). Tax returns may also be changed to allow the collection of more information to help better identify BEPS risks.
The measures are expected to reduce the consolidated deficit to 3.9 percent of gross domestic product for 2015/16, and to 2.5 percent in 2017/18.
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- Article
- March 2, 2015
On February 25, 2015, China and South Korea initialed the text of their free trade agreement, negotiations towards which began in May 2012 and were completed in November last year during a meeting in Beijing.
A statement at that time from China’s Ministry of Commerce (MOFCOM) revealed that the two countries have agreed to eliminate import tariffs on over 90 percent of all products traded between them and over 85 percent of their annual trade by value. Import duties on non-sensitive products will be cancelled either immediately or within ten years, and those on sensitive products will be abolished within 10-20 years of the FTA becoming effective.
However, the two sides have also decided to exclude certain ultra-sensitive items from the agreement. There had been particular concerns in China regarding opening its manufacturing sector to South Korean imports, and in South Korea on the effect of Chinese exports on its agricultural markets.
South Korea has agreed to a part-opening of its agricultural sector, while continuing to exclude such products as rice, pork, and beef. Meanwhile, it sought access to Chinese industrial sectors with the most opportunities for its small- and medium-sized enterprises. Trade barriers for their automotive industries have been maintained however.
The FTA covers not only trade in goods and services, but also e-commerce, competition policy, and government procurement, while both sides have committed to further talks on financial services and investment in the future.
According to the South Korean Ministry of Trade, Industry, and Energy, the two governments have agreed to work towards an official signing of the FTA within the first half of this year.
China is already South Korea’s primary trading partner, receiving over a quarter of its exports. According to MOFCOM figures, total trade between South Korea and China reached over USD270bn in 2013 and is expected to reach USD300bn in 2015.
The FTA will be the most substantial deal South Korea has ever signed. When it comes into effect, it is to expand the value of the country’s trade outflows covered by trade treaties from the current 60.9 percent to about 73.2 percent.
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- Article
- March 2, 2015
On February 24, Seychelles became the 85th signatory of the Organisation for Economic Co-operation and Development’s (OECD’s) Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
The Convention is described as a comprehensive multilateral instrument to tackle tax evasion and increase transparency. In a statement, the OECD confirmed that its signing therefore represents another important step in Seychelles’ efforts to improve its legal framework and practices in the field of the exchange of information for tax purposes.
The Convention provides for all forms of administrative assistance, in tax matters, including the exchange of information on request and automatically; in tax examinations abroad and in plurilateral investigations; and in tax collection. It will therefore allow the Seychelles’ Revenue Commission to request information from other tax authorities and seek assistance in collecting outstanding tax debts on a reciprocal basis.
The OECD added that it has repeatedly called on all jurisdictions to sign the Convention and has asked the Global Forum on Transparency and Exchange of Information for Tax Purposes to report on progress made by its members in that respect.
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- Article
- March 2, 2015
The Dominican Republic and the United States have begun negotiations on an intergovernmental agreement (IGA) to implement the Foreign Account Tax Compliance Act (FATCA) between the two countries.
It is expected that the Dominican Republic will complete a Model 1A IGA to provide for the automatic exchange of tax information reciprocally between the Dominican Republic’s Directorate General of Internal Revenue (DGII) and the US Internal Revenue Service (IRS).
Meetings were held over two days in Santo Domingo between the Dominican Republic’s Ministry of Finance and the DGII, and the IRS’s International Cooperation Program, led by its senior manager Aziz Benbrahim.
An important part of their talks consisted of reviewing the strength of bilateral procedures and practices for the protection of confidential tax information, both in the US and the Dominican Republic, for when the IGA becomes operational.
FATCA, which took effect on July 1, 2014, is intended to ensure that the US obtains information on accounts held at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.
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- Article
- February 18, 2015
Five years after its ink, the free trade agreement (FTA) between the European Free Trade Association (EFTA) States – Liechtenstein, Iceland, Norway and Switzerland – and the Cooperation Council for the Arab States of the Gulf (GCC), comprising Bahrain, Oman, Kuwait , Saudi Arabia, Qatar and the United Arab Emirates, became into operation. Apart from their agreements with the European Union, the EFTA States have 25 FTAs with sum of 35 partner countries worldwide.
The deal also enhances market access and legal certainty, and provides EFTA states with greater access to public tenders. Industrial and fish products are to benefit from duty-free access to the markets of all parties, with some adjusting periods and exceptions applying on the GCC side.
Since the signing of the FTA, two-way merchandise trade between the EFTA and the GCC countries has increased by an annual average of 9%, reaching a value of USD9.2bn in 2013. Free trade discussion between the EFTA and the GCC were established in February 2006 and were concluded in April 2008. The deal was inked in Norway on June 2009.
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- Article
- February 18, 2015
The MoU on industrial parks is provides an enabling framework for Chinese companies to invest in industrial parks and zones. The MoU will ensure cooperation between Lal Bahadur Shastri National Academy of Administration, Mussoorie and China Executive Leadership Academy, Pudong, Shanghai.
India and China have agreed to cooperate to increase mutual investment in each other’s economies and this cooperation will be in accordance with the relevant domestic laws and regulations of each party and on the basis of equality and mutual benefit.
India provides money for maintenance of 3 hydrological centers on the Chinese country side.
The MoU on flood data sharing will provide India with 15 days more of hydrological information of river Brahmaputra. The information assist India in flood forecasting. The third MoU will help the two countries establish a framework for regular interactions between administrative officials to share experiences and learn from each other’s best practices. Specific programmes of collaboration will be worked out consequently.
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- Article
- February 18, 2015
UAE Signs Provisional FATCA Agreement
• Cyprus – Spain: Tax Treaty Enters Into Force
• South Africa, US Conclude FATCA signed an inter-governmental agreement
• Treaty Signed Between Ireland – Botswana
• Treaty Signed Between France – Andorra
• Treaty Signed Between Luxembourg – Morocco
• Treaty Signed Between Luxembourg – Japan
• Tax Treaty Signed between Sri Lanka – Poland
• Tax Treaty Signed between Italy – Luxembourg
• Tax Treaty Signed between Morocco – Guinea
• Tax Treaty Signed between Senegal – Portugal
• Switzerland approved a law to ratify the DTAs with Australia, China, and Hungary.
• Guernsey – Liechtenstein: Tax Treaty Signed
• South Africa – United States: FATCA Agreement Signed
• New Zealand – United States: FATCA Agreement Signed
• Luxembourg – Ukraine: Tax Treaty Signed
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- Article
- February 18, 2015
In two previous financial years India has grown below 5% mainly because of the global slowdown coupled with domestic economic sluggishness. Reserve Bank of India expects the economy to pick up and grow at over 5.5 per cent by March 2015. Moreover, the formation of a new government which reflected in the stock market surge and strengthening of the domestic currency.
CLIs (composite leading indicators) suggest “the growth momentum is weakening in most major emerging economies. As a whole for the OECD and for the United States and Canada, CLIs purpose to stable growth momentum.
The growth momentum is expected to stabilize at above-trend rates, while in Japan it points to an intermission in its growth momentum, in case of the United Kingdom. CLIs continue to indicate a positive change in momentum in the euro area as a whole and in Italy. CLIs point to a stable growth momentum in France and Germany.
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