PKF Worldwide Tax Guide 2014

WorldwideTax Guide

2014www.pkf.com

Worldw

ide Tax Guide 2014

PKF Worldwide Tax Guide 2014 i

Fore

wor

d

foreword

A countrys tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed?

Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions.

As you will appreciate, the production of the WWTG is a huge team effort and we would like to thank all tax experts within PFK member firms who gave up their time to contribute the vital information on their countrys taxes that forms the heart of this publication.

The PKF Worldwide Tax Guide 2014 (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of the worlds most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current on 1 January 2014, while also noting imminent changes where necessary.

On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the countrys personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments.

While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice.

Services provided by member firms include:

Assurance & Advisory Insolvency Corporate & PersonalFinancial Planning/Wealth management TaxationCorporate Finance Forensic AccountingManagement Consultancy Hotel ConsultancyIT Consultancy

In addition to the printed version of the WWTG, individual country taxation guides are available in PDF format which can be downloaded from the PKF website at www.pkf.com

important disclaimer

This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication.This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication.

The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.

Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.

PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms.

PKF INTERNATIONAL LIMITEDJUNE 2014

PKF INTERNATIONAL LIMITEDALL RIGHTS RESERVEDUSE APPROVED WITH ATTRIBUTION

PKF Worldwide Tax Guide 2014ii

contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i

International Time Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Structure of Country Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi

Algeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Angola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Bahamas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Bahrain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Belize . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Bermuda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Brazil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Bulgaria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Cayman Islands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Cyprus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

Dominican Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Ecuador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Egypt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

El Salvador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

Estonia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

Finland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

France. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

Gambia, The . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

Ghana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Greece . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

Grenada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

Guatemala . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

Guyana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

Contents

PKF Worldwide Tax Guide 2014 iii

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Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

Hungary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194

Indonesia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211

Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220

Isle of Man . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235

Israel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256

Jordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263

Kenya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268

Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272

Kuwait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278

Latvia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281

Lebanon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288

Luxembourg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291

Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304

Malta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314

Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325

Morocco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332

Mozambique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339

Namibia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344

Netherlands, The . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348

New Zealand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358

Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364

Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372

Oman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378

Panama. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382

Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387

Poland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394

Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401

Qatar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408

Romania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411

Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425

Rwanda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431

Serbia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436

Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442

PKF Worldwide Tax Guide 2014iv

Slovak Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449

Slovenia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456

South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467

Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477

St Lucia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484

Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487

Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493

Taiwan (Republic of China) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501

Tanzania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516

Trinidad & Tobago . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 526

Tunisia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 528

Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533

Uganda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541

Ukraine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545

United Arab Emirates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569

Uruguay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578

Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581

Zimbabwe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587

Contents

PKF Worldwide Tax Guide 2014 v

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e Zo

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AAlgeria . . . . . . . . . . . . . . . . . . . .1 pmAngola . . . . . . . . . . . . . . . . . . . .1 pmArgentina . . . . . . . . . . . . . . . . . .9 amAustralia - Melbourne . . . . . . . . . . . . .10 pm Sydney . . . . . . . . . . . . . . .10 pm Adelaide . . . . . . . . . . . . 9.30 pm Perth . . . . . . . . . . . . . . . . . .8 pmAustria . . . . . . . . . . . . . . . . . . . .1 pm

BBahamas . . . . . . . . . . . . . . . . . . .7 amBahrain . . . . . . . . . . . . . . . . . . . .3 pmBelgium . . . . . . . . . . . . . . . . . . . .1 pmBelize . . . . . . . . . . . . . . . . . . . . .6 amBermuda . . . . . . . . . . . . . . . . . . .8 amBrazil. . . . . . . . . . . . . . . . . . . . . .7 amBulgaria. . . . . . . . . . . . . . . . . . . . 3pm

CCanada - Toronto . . . . . . . . . . . . . . . .7 am Winnipeg . . . . . . . . . . . . . . .6 am Calgary . . . . . . . . . . . . . . . .5 am Vancouver . . . . . . . . . . . . . .4 amCayman Islands . . . . . . . . . . . . . .7 amChile . . . . . . . . . . . . . . . . . . . . . .8 amChina - Beijing . . . . . . . . . . . . . .10 pmCyprus . . . . . . . . . . . . . . . . . . . .2 pmCzech Republic . . . . . . . . . . . . . .1 pm

DDenmark . . . . . . . . . . . . . . . . . . .1 pmDominican Republic . . . . . . . . . . .7 am

EEcuador . . . . . . . . . . . . . . . . . . . .7 amEgypt . . . . . . . . . . . . . . . . . . . . .2 pmEl Salvador . . . . . . . . . . . . . . . . .6 amEstonia . . . . . . . . . . . . . . . . . . . .2 pm

FFinland . . . . . . . . . . . . . . . . . . . .2 pmFrance. . . . . . . . . . . . . . . . . . . . .1 pm

GGambia (The) . . . . . . . . . . . . . 12 noonGermany . . . . . . . . . . . . . . . . . . .1 pmGhana . . . . . . . . . . . . . . . . . . 12 noonGreece . . . . . . . . . . . . . . . . . . . .2 pmGrenada . . . . . . . . . . . . . . . . . . .8 amGuatemala . . . . . . . . . . . . . . . . . .6 amGuyana . . . . . . . . . . . . . . . . . . . .7 am

HHong Kong . . . . . . . . . . . . . . . . .8 pmHungary . . . . . . . . . . . . . . . . . . .1 pm

IIndia . . . . . . . . . . . . . . . . . . . 5.30 pmIndonesia. . . . . . . . . . . . . . . . . . .7 pmIreland . . . . . . . . . . . . . . . . . . 12 noonIsle of Man . . . . . . . . . . . . . . 12 noonIsrael . . . . . . . . . . . . . . . . . . . . . .2 pmItaly . . . . . . . . . . . . . . . . . . . . . .1 pm

JJapan . . . . . . . . . . . . . . . . . . . . .9 pmJordan . . . . . . . . . . . . . . . . . . . .2 pm

KKenya . . . . . . . . . . . . . . . . . . . . .3 pmKorea . . . . . . . . . . . . . . . . . . . . . 9pmKuwait . . . . . . . . . . . . . . . . . . . . . 3pm

LLatvia . . . . . . . . . . . . . . . . . . . . .2 pmLebanon . . . . . . . . . . . . . . . . . . .2 pmLuxembourg . . . . . . . . . . . . . . . .1 pm

MMalaysia . . . . . . . . . . . . . . . . . . .8 pmMalta . . . . . . . . . . . . . . . . . . . . .1 pmMexico . . . . . . . . . . . . . . . . . . . .6 amMorocco . . . . . . . . . . . . . . . . 12 noonMozambique . . . . . . . . . . . . . . . . 2pm

NNamibia. . . . . . . . . . . . . . . . . . . .2 pmNetherlands (The) . . . . . . . . . . . . .1 pmNew Zealand . . . . . . . . . . .12 midnightNigeria . . . . . . . . . . . . . . . . . . . .1 pmNorway . . . . . . . . . . . . . . . . . . . .1 pm

OOman . . . . . . . . . . . . . . . . . . . . .4 pm

PPanama. . . . . . . . . . . . . . . . . . . .7 amPeru . . . . . . . . . . . . . . . . . . . . . .7 amPoland. . . . . . . . . . . . . . . . . . . . .1 pmPortugal . . . . . . . . . . . . . . . . . . .1 pm

QQatar. . . . . . . . . . . . . . . . . . . . . .8 am

RRomania . . . . . . . . . . . . . . . . . . .2 pmRussia - Moscow . . . . . . . . . . . . . . .3 pm St Petersburg . . . . . . . . . . . .3 pmRwanda . . . . . . . . . . . . . . . . . . . . 2pm

SSerbia . . . . . . . . . . . . . . . . . . . . . 2pmSingapore . . . . . . . . . . . . . . . . . .7 pmSlovak Republic . . . . . . . . . . . . . .1 pmSlovenia . . . . . . . . . . . . . . . . . . .1 pmSouth Africa . . . . . . . . . . . . . . . . .2 pmSpain . . . . . . . . . . . . . . . . . . . . .1 pmSt Lucia . . . . . . . . . . . . . . . . . . . . 8amSweden . . . . . . . . . . . . . . . . . . . .1 pmSwitzerland . . . . . . . . . . . . . . . . .1 pm

TTaiwan . . . . . . . . . . . . . . . . . . . .8 pmThailand . . . . . . . . . . . . . . . . . . .8 pmTrinidad & Tobago . . . . . . . . . . . . 8amTunisia . . . . . . . . . . . . . . . . . 12 noonTurkey . . . . . . . . . . . . . . . . . . . . .2 pm

UUganda . . . . . . . . . . . . . . . . . . . .3 pm

international time Zones

AT 12 NOON, GREENwICH MEAN TIME, THE STANDARD TIME ELSEwHERE IS:

PKF Worldwide Tax Guide 2014vi

Time Zones

Ukraine . . . . . . . . . . . . . . . . . . . .2 pmUnited Arab Emirates . . . . . . . . . .4 pmUnited Kingdom . . . . . . .(GMT) 12 noonUnited States of America - New York City . . . . . . . . . . . .7 am Washington, D.C. . . . . . . . . .7 am Chicago . . . . . . . . . . . . . . . .6 am Houston . . . . . . . . . . . . . . . .6 am Denver . . . . . . . . . . . . . . . .5 am Los Angeles . . . . . . . . . . . . .4 am San Francisco . . . . . . . . . . .4 amUruguay . . . . . . . . . . . . . . . . . . .9 am

VVenezuela . . . . . . . . . . . . . . . . . .8 am

ZZimbabwe . . . . . . . . . . . . . . . . . .2 pm

structure of country descriptions

a. taXes payaBle

FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX/VALUE ADDED TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES

B. determination of taXaBle income

CAPITAL ALLOWANCES DEPRECIATION STOCK/INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES

c. foreiGn taX relief

d. corporate Groups

e. related party transactions

f. witHHoldinG taX

G. eXcHanGe control

H. personal taX

i. treaty and non-treaty witHHoldinG taX rates

Structure

PKF Worldwide Tax Guide 2014 1

A

alGeria

MEMBER FIRM

Please email Oliver Grosse-Brauckmann, PKFI EMEI Regional Director at

[email protected] for further information.

BASIC FACTS

Full name: Peoples Democratic Republic of Algeria

Population: 38,289,500 (2013 PRB)

Capital: Alger

Major languages: Arabic

Major religion: Islam

Monetary unit: Algerian Dinar (DZD)

Internet domain: .dz

International dialling code: +213Ministry of Finance website: www.mf.gov.dz/

KEy TAx POINTS All companies, except partnerships and joint ventures under the Commercial

Code, are liable for corporate income tax on their profits arising from any business they carry on in Algeria.

Alleconomicactivitiesconducted inAlgeria, including industrialandhandicraftactivities and liberal or commercial professions, are subject to VAT.

Dividends paid by anAlgerian company to anotherAlgerian company are notsubject to withholding tax and are exempt from tax in the hands of the recipient. Dividends and distributions of profit paid to a nonresident company are subject to a 15% withholding tax unless the rate is reduced under a tax treaty.

RelieffromforeignTaxesinAlgeriadependsonwhetherthecountryinquestionhas agreed a double tax treaty with Algeria.

Withholdingtaxappliestodividends,royaltiesandtechnicalservicefees.

a. taXes payaBle

FEDERAL TAxES AND LEVIESCOMPANyTAx

All companies, except partnerships and joint ventures under the Commercial Code, are liable for corporate income tax on their profits arising from any business they carry on in Algeria. Companies are liable for corporate income tax at the rate of 25% on trade activities and services and 19% on the production of goods, construction and public works and tourism activities.

Foreign companies not established in Algeria and foreign companies with no permanent establishment in Algeria are subject to the company tax (common law) or withholding tax of 24% on their turn over realized in Algeria.

SALES TAx/VALUE ADDED TAx (VAT)VAT is an indirect tax, in that the tax is collected from someone who does not bear the entire cost of the tax. All economic activities conducted in Algeria, including industrial and handicraft activities and liberal or commercial professions, are subject to VAT. Exports by definition are consumed abroad and usually are not subject to VAT. Any VAT charged under such circumstances is usually refundable. This avoids downward pressure on exports.

(1) Rates Two different VAT rates apply in Algeria: A special reduced rate of 7% applies to products, commodities, wares,

merchandise and operations related to printing, materials for agriculture, products of traditional crafts, plants and domestic animals ( aquaculture products), excluding fish and other edible products of sea and various other items

17%foroperationsrelatedtoservicesandgoodsnotsubjecttoanotherrate.(2) Registration Registration generally is required for entities that have annual turnover of DZD

100,000. a business must register within 30 days of becoming liable.(3) Filing and payment Monthly returns and the tax payable are due by the 20th of the following month.

Algeria

PKF Worldwide Tax Guide 20142

FRINGE BENEFITS TAxAs fringe benefits are considered to be a part of the salary paid to an employee, they are subject to social security and income taxes. Taxable fringe benefits are evaluated on the basis of their market value.

OTHER TAxES AND LEVIESVOCATIONAL TRAINING TAxCompanies that employ more than 6 permanent employees are subject to a tax of 1% of annual payroll for vocational training and an additional tax of 1% for learning for all companies that employ more than 20 permanent employees. The government is not subject to these taxes.

BRANCH TAxIntroduced by the Finance Act 2009 (Section 6), the tax is applicable to profits transferred to a non-resident by the branch or permanent establishment of a foreign company.

The tax is payable on the profit after IBS (company tax) at 15%.

TAx LUxURy VEHICLE:

Vehicles registered in the category of passenger cars (PC) of less than five (5) age, in the balance sheet of the companies years or rented by these companies for a cumulative period equal to or greater than three (3) months during a tax by companies established in Algeria period are subject to a tax Annual whose amount is determined as follows:

Between 2,500,000 DA and 5,000,000 DA : 300,000 DA

Over 5,000,000 DA: 500,000 DA.

However, the tax does not apply to vehicles intended exclusively or sale, either to rent or to execute a transport service available to the public, when these operations correspond to the normal activity of the owning company.


Taxable income is determined on the basis of regular accounting results. When there are discrepancies between fiscal rules and accounting principles, adjustments are made to the accounting results. Profits are habitually considered to be gross revenue less production, salary and wages and rental expenses.

Generally, all expenses generated by the conduct of business are deductible if they are incurred in gaining or producing assessable income.

DEPRECIATIONFixed assets owned by the company are normally written off over their normal useful life. For tax purposes, the straight-line method is normally adopted but other methods may be used in certain circumstances and with authorization of tax authorities after a request.

STOCK/INVENTORyFor the determination of net income, inventories must be evaluated at their cost price. If, at the end of the year, the market or realisable value is lower, the company must set up reserves for depreciation of inventories.

DIVIDENDSDividends paid by an Algerian company to another Algerian company are not subject to withholding tax and are exempt from tax in the hands of the recipient.Dividends and distributions of profit paid to a nonresident company are subject to a 15% withholding tax unless the rate is reduced under a tax treaty.

LOSSESLosses may be carried forward for four years. The carry back of losses is not permitted.

FOREIGN SOURCED INCOMERevenues from a foreign source that are subject to tax payment in the country of origin are not subject to tax in Algeria.

Non-resident legal entities are taxable on their Algerian source income and on the gain from the disposal of buildings and the disposal of shares in real estate companies. The taxable capital gain is the difference between the sale price and the purchase cost. Relief from foreign taxes in Algeria depends on whether a double tax treaty has been

A

Algeria


concluded by Algeria.

INCENTIVESThe Algerian tax legislation has established a number of incentives to investment and creation of projects in certain sectors that are aimed at accelerating growth rate and job creation within activities related to fields determined by the specific legislation. Major incentives are available for investments made by enterprises located in areas that need development.

The Finance Act of 2012 has removed the debit tax (3%) on the operations of reinsurance and the exemption from the TAP (tax on professional activities) of the promoters of activities or projects eligible for support from the National Fund to support micro-loans.


Relief from foreign Taxes in Algeria depends on whether the country in question has agreed a double tax treaty with Algeria.

Algeria has concluded more than 20 non-double imposition treaties. The treaty must be ratified to be applicable.

d. corporate Groups

When an Algerian company holds 90% or more of the shares of one or more Algerian companies, the group may choose to be taxed as a single entity. Hence, the subsidiaries are treated as branches of the parent company and corporate tax is payable only by the parent company.

To benefit from the results integrating scheme, the parent company must make the commitment to list its shares on the stock market before the end of the year. Under this system, the profits and losses of all controlled branches, subsidiaries and partnerships in Algeria and abroad are consolidated.

e. witHHoldinG taX

For certain categories of income, the payer of income has to withhold tax at source, file tax returns and submit the amount of tax withheld to the financial authorities. Dividends:Dividendspaidtonon-residentshareholdersaresubjectedtoa15%

withholding tax which may be reduced under a tax treaty. Royalties:Thewithholdingtaxonroyaltiesis24%whichmaybereducedundera

tax treaty. Technical service fees: The withholding tax is 24% and applies to the gross

income derived from any service fee paid abroad by a local company to a foreign company.

f. personal taX

With respect to the international taxation agreements, personal income tax is a direct tax levied on the income of an individual. Taxpayers are classified into residents and non-residents.

Income subject to tax is called assessable income and is divided into seven categories:

(1) Industrial profits, commerce and craft(2) Professional non-profit business(3) Income from agriculture(4) Income from rental properties (built and unbuilt)(5) Income from movable capital(6) Wages, salaries, pensions and life annuities(7) Gains from transfer for value of buildings or undeveloped and related rights.

For each category of income, certain deductions and allowances are allowed in the calculation of the taxable income. Taxpayers shall keep the books in compliance with the accounting legislation in order to benefit from these deductions.

In general, a person liable to personal income tax has to compute his tax liability, file tax return and pay tax, if any, on a calendar year basis.

Married couples file tax returns as separate individuals. Income of children is reported on the tax return of the head of the family. A spouse can report income of the children on his/her tax return in certain circumstances.

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Algeria


income taX rates

Through 2013 Rate (%)

0 to 120,000 DZD 0

120,000,001 to 360,000 DZD 20%Through 2013 Rate (%)

360,000,001 to 1440,000 DZD 30%

Over 1,440,000 DZD 35%

Since 2011, a flat 25% rate has applied to professionals and small business whose turnover is between 5 and 10 million DZD.

G. treaty and non-treaty witHHoldinG taX rates

Tax treaties in Algeria:

Germany, South Africa, Austria, Belgium, Bahrain, Bulgaria, Canada, China, South Korea, Spain, Egypt, UAE, France, Italy, Indonesia, Jordan, Kuwait, Lebanon, Portugal, Romania, Russia, Sultanate Oman, Syria, Switzerland, Turkey, UMA, Ukraine, Yemen

anGola

MEMBER FIRM

City Name Contact Information

Luanda Henrique CamesSerra 222 334 [email protected]

BASIC FACTS

Full name: Republic of Angola

Population: 21.6 million (2013 PRB)

Capital: Luanda

Major languages: Portuguese (official), Umbundu, Kimbundu, Kikongo and othersMajor religion: Christianity

Monetary unit: Kwanza (AOA)

Internet domain: .ao

International dialling code: +244Angola Ministry of Finance website: www.minfin.gov.ao

KEy TAx POINTS CompaniescarryingoutindustrialandcommercialactivitiesinAngolaaresubject

to industrial tax on all profits derived from Angola. Those companies are divided into three groups, each group having different tax payment deadlines.

Corporate taxable income, determined on the basis of accounting profits, istaxable at a rate of 35%.

Angolan resident companies are taxable on their worldwide income and theincome attributable to the Angolan branch of a non-resident company is subject to industrial tax.

Consumptiontaxisleviedonthesupplyofgoodsandservicesandtheimportofgoods into Angola, at rates between 2% and 30%.

Dividends paid betweenAngolan resident companies are exempt from tax incertain circumstances, otherwise tax is withheld at 10%.

Therearenotaxregulationsgoverninggroupsofcompanies,althoughthereareprovisions which allow the tax authorities to adjust the taxable income of any taxpayer, due the existence of a special relationship.

Specialtaxregimesexistforoilandminingcompanies. Angolahasnotconcludeddoubletaxagreementswithanyotherjurisdiction. Personal income tax is payable by all Angolan residents, and non-residents

earning income in Angola, at rates on a sliding scale from 0% to 15%.

a. taXes payaBle

CORPORATE INCOME TAx: GENERAL REGIMEProfits of Angolan corporations are taxed under Industrial Tax (Imposto Industrial).

Taxpayers liable for Industrial Tax are divided into three groups: A, B and C. Taxpayers

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Algeria - Angola


included in Group A are subject to Industrial Tax on the income effectively obtained, determined in accordance with the accounting records; Group B and C taxpayers are taxed based on deemed profits.

In general, commercial companies as well as branches of non-resident companies are mandatorily included in Group A.CORPORATE INCOME TAx RATE AND TAx RETURNSCorporate taxable income, determined on the basis of accounting profits, is taxable at a rate of 35%. In case there is no positive taxable income, a company must pay a minimum tax based on a deemed amount of minimum profits (currently AOA 100,000, approximately USD 1,000).

An annual corporate income tax return (Model 1) must be submitted until the 31st May of the following year, together with the set of documentation that forms part of the technical report.

Resident companies are subject to taxation on their worldwide income.

wITHHOLDING TAx ON CONSTRUCTION SERVICES AND ON TECHNICAL SERVICES (LAw 7(/97)Certain types of services are subject to withholding tax. Such services are: Constructionservices(contratosdeempreitada),whicharesubjecttotaxata

3.5% rate Servicesoftechnicalnature,suchasconsultancy,accountingandlegaladvisory

services, which are subject to a 5.25% withholding tax.

Being the service provided by an Angolan taxpayer, the tax withheld may be recovered as a tax credit in the corporate income tax return (Model 1).

CAPITAL GAINS TAxWorldwide capital gains obtained by resident companies are included in taxable income and taxed under the Industrial Tax at the standard flat rate of 35%.

BRANCH PROFITS TAxForeign companies with a permanent establishment in Angola are subject to Industrial Tax in respect of:(a) Profits imputable to a permanent establishment located in Angola; and(b) Profits derived from sales of the head-office in Angola of goods similar to goods

sold by the permanent establishment in that territory; and(c) Profits of other entrepreneurial activities carried out by the head office in Angola,

with the same nature of the activities carried out by the permanent establishment in that territory.

CONSUMPTION TAx In the context of the Angolan Tax Reform, the Consumption Tax Code was substantially amended on 30 December 2011, and a wide range of services become subject to this tax.

TAx BASE AND TAx RATESThe sale of goods as well as the services listed in a table enclosed to the Consumption Tax Code are subject to Consumption Tax, at rates varying from 2% (basic products) to 30% (luxury products), but the standard tax rate is 10%. As far as services are concerned, tax rates are 5% or 10%, depending of the type of service, as shown in the following table:

PAyMENT OF THE TAxThe consumption tax is a cost of the acquirer of the entity/person acquiring the service or good.

In case of services provided by an entity domiciled in Angola, the tax must be included in the invoice by the provider of the service. Services charged by non-resident taxpayers will be taxed by reverse charge by the acquirer of the service.

In either case, when the acquirer of the service is a company of the oil industry, the tax must be paid directly to the Government by the acquirer of the service.

STAMP DUTyStamp Duty is levied in a wide range of operations and contracts. Both the operations on which the tax is levied and the applicable rate are listed in the table annex to the Stamp Duty Code.

Tax rates vary from 0.2% to 1%. Certain items are taxed at a determined fixed amount.

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Angola


Some examples are:

Loans: 0.3% to 0.5% on the principal amount of the loan depending on the loan contracted period

Notary acts: AOA 2,000

Amounts collected by a company from its customers: 1%This last item is normally the most important for commercial companies. Companies are obliged to pay, on a monthly basis, 1% from all amounts collected from its customers.

Please note that in the particular case of loans granted by foreign entities as well as in the case interest charged by a foreign bank, the tax must be self-assessed (by reverse charge) and paid by the borrower.

CAPITAL APPLICATION TAxThis tax applies to investment income, such as interest, dividends and royalties being the tax rate 10% or 15%.

In case of loan contracts, the Tax Authorities may deem that the principal is remunerated at a 6% interest rate.

URBAN REAL ESTATE INCOME TAxThis tax is levied on rented as well as non-rented urban real estate.In case of rented real estate, the tenant is required to withhold 15% tax on the rents paid to the landlord.

REAL ESTATE TRANSFER TAxThis tax is levied on the acquisition of real estate at a rate of 2%.

SOCIAL SECURITy CONTRIBUTIONSRemunerations paid by employees are subject to social security contributions at the following rates: 8%fortheemployer 3%fortheemployee(tobewithholdbytheemployer)

SPECIAL TAx REGIMES

PETROLEUM INDUSTRy TAx REGIMEOil companies are subject to a specific tax regime.

MINING INDUSTRy TAxATIONMining companies are subject to a specific tax regime.


GENERAL REGIMEThe calculation of net or taxable income is arrived at by adjusting the accounting profits for non-taxed income and non-deductible expenses. As a general principle, costs are only deductible when necessarily incurred for the purpose of producing income.

DEPRECIATION OF FIxED ASSETSFixed assets can be depreciated for tax purposes. The depreciation rates are set by specific legislation. The normal method of calculation is the straight-line basis.

STOCK/INVENTORyInventory must normally be valued at the effective cost of acquisition or production (historic cost).

DIVIDENDSCompanies are generally subject to tax on the gross amount of dividends received. Dividends received from Angolan companies subject to industrial tax are exempt from tax if, at the time of the distribution, the recipient owns at least 25% of the capital of the paying company and has held the shares for at least two years or since the incorporation of this company. Dividends received from a foreign company are considered to be normal business income and taxed at an effective rate of 35%.

LOSSESOperating losses incurred by resident companies, or by a branch of a non-resident company, may be carried forward to set off against taxable profits for three years.

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Angola


FOREIGN SOURCED INCOMETaxation of resident companies takes into account their worldwide income.

INCENTIVESInvestments in Angola are ruled by the Private Investment Law. In the incorporation process, companies can apply for temporary tax exemptions / reduction of tax rates, which are negotiable, on a case by case basis, according to the type, amount and location of the investment.Incentives under Angolan tax legislation include investment incentives:(i) for projects of national interest or projects located in special development zones

total exemption from corporate income tax from three up to five years and also the reduction of 50% of corporate income tax for up to ten years. The incentives are granted by the Minister of Finance.

(ii) for investment in agriculture, farming, transformative industries, transportation, education and health. These can benefit from an eight to 15 year corporate income tax holiday, depending on the investments geographical location.


A group special regime has been recently introduced to Angolan tax law. Companies which are classified as Large Taxpayers might opt to be taxed by the sum of the taxable profits and losses of the group.

d. corporate GroupsThere is no special regime for the taxation of groups of companies.

e. related party transactions

There is a general provision that allows the tax authorities to adjust the taxable income of any taxpayer as a result of a special relationship.

Furthermore, adjustment of the assessable income is also allowed for the case of a foreign operating entity declaring a taxable profit which will be different from the taxable profit that would be obtained by an Angolan entity under the same conditions.

The recently published Statute of Large Taxpayers introduced new transfer pricing rules. Companies listed as Large Taxpayer with an annual turnover above AOA 7 billion (approximately 70 million USD) are required to prepare transfer pricing documentations.

f. eXcHanGe control

There are no exchange controls in effect.

G. personal income taX

Individuals receiving employment income for work performed in Angola are subject to personal income tax. EMPLOyMENT INCOMEEmployment income is taxed by withholding tax (final tax) levied on the monthly remuneration paid, at the following progressive rates:

Salaries in Kwanzas Tax rates

Up to 25,000 Exempt

From 25,001 up to 30,000 5% of the amount exceeding 25,001

From 30,001 up to 35,000 250 + 6% of the amount exceeding 30,001



From 45,001 up to 50,000 1,300 + 9% of the amount exceeding 45,001








A

Angola


Above 230,001 25,750 + 17% of the amount exceeding 230,001

INDEPENDENT PROFESSIONALSFees paid to independent professionals are subject to withholding tax at a flat rate of 15% on 70% of their total income (being the effective rate 10.5%).

H. treaty and non-treaty witHHoldinG taX rates

Angola has not concluded tax treaties with any other jurisdiction.

arGentina

MEMBER FIRM


Buenos Aires Sergio Villagarcia 11 5235 [email protected]

BASIC FACTS

Full name: Argentine Republic


Capital: Buenos Aires

Major language: Spanish

Major religion: Christianity

Monetary unit: 1 peso = 100 centavos

Internet domain: .ar

International dialling code: +54

Argentina tax information website: www.mecon.gov.ar

KEy TAx POINTS CompaniesdomiciledinArgentinaaresubjecttoincometaxonalltheirincome.

Non-resident companies are subject to tax on Argentina-source income. There isnoseparatecapitalgainstax leviedoncapitalgainsofcompaniesas

they fall under the scope of income tax. Valueaddedtaxisappliedatallstagesoftheproductionandsellingprocesses

(output tax). Tax suffered in the immediately preceding stage is deductible (input tax).

Any foreign taxes paid on foreign-accrued income may be credited againstArgentine income tax up to the limit of the Argentine tax on the same income.

TransactionsbetweenArgentinecompaniesandrelatedpartiesaredeemedtotake place at arms length rates for tax purposes. For income tax assessment purposes, Argentine Law provides for the traditional methods generally used for transfer pricing (comparable uncontrolled price, resale price, cost plus, profit split, transaction net margin) to demonstrate that an arms length price has been used.

Argentine-source income paid to foreign recipients not having a permanentestablishment in Argentina is subject to 35% withholding tax. However, for each activity, the law establishes a percentage of presumptive net income on which 35% withholding tax is applicable, thereby reducing the effective tax rate.

IncometaxisleviedonincomeearnedbyIndividualsinArgentinaandabroadbyindividuals residing in Argentina.

Personal assets tax (wealth tax) is levied on all assets, wherever situated, ofArgentine domiciliaries, Argentine assets of non-domiciliaries and shares issued by an Argentine company (the company pays the tax on behalf of the shareholders). In the case of trusts (excluding financial trusts), the trustee pays the tax on behalf of the beneficiaries.

a. taXes payaBle

FEDERAL TAxES AND LEVIES

COMPANy TAxCompanies domiciled in Argentina are subject to income tax on all their income, whether sourced in Argentina or in a foreign country. Non-resident companies are subject to tax on Argentine source income. Income from export of goods situated in Argentina is deemed to be fully taxable and, for other specific international activities (eg news agencies, insurance, commercial use of films produced abroad, international transport etc), the tax law establishes a certain percentage as presumed income.

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Angola - Argentina


The tax rate for corporations (Sociedades Annimas, Sociedad de Responsabilidad Limitada Limited Liability Corporation en Comandita) and branches of foreign companies domiciled in Argentina is 35%. For other partnerships, the tax is charged to each partner according to a progressive tax rate scale ranging from 9% to 35% depending on the amount of the taxable income.

Foreign recipients not qualifying as a permanent establishment in Argentina are subject to withholding tax at source. The rate is 35% on the applicable presumptive net income percent, depending on the type of payment made (ie interest, fees, royalties, rentals, etc).

For companies organised or incorporated in Argentina, any income tax (or similar tax) paid abroad on a foreign source income is creditable against Argentine income tax, up to a limit (see paragraph C).

Company income is taxed on an accrued basis during the companys business year. The tax is assessed annually within five months after fiscal year end. Advanced payments must be paid monthly on the basis of the tax amount paid the previous year. Moreover, the AFIP (Tax Authority) has enforced several withholding tax regulations that involve almost all kind of activities. The income tax withheld during the fiscal year is creditable against the income tax assessed, as well as the advanced payments. The balance can be paid at due date or filing an instalment plan (up to six instalments) accruing interest at a monthly 2% rate.

CAPITAL GAINS TAxThere is no separate tax levied on capital gains for companies organised in the country or for branches as they fall under the scope of income tax. For foreign corporations, capital gains are also included under withholding at source income tax regime at the time payment is made.

For foreign resident companies and individuals, capital gains derived from the sale of shares, stocks, bonds and other securities (whether listed or unlisted on the Stock Exchange) are levied on income tax at a 15% rate.

Foreign resident taxpayers can elect to be taxed on the gross sales price. In this case, 90% on the gross sales price will be deemed to be the amount of capital gains that will be levied at a 15% rate. Therefore, the effective tax rate on gross sales price will be 13.50%.

VALUE ADDED TAx (VAT)This tax is applied to all stages of the production and sales processes (output tax), and the tax amount of the immediately preceding stage is deductible (input tax).The tax is imposed on the following transactions: saleofpersonalpropertysituatedinArgentina leasesandservices,includingfinancialandinsuranceservices realestateleases workperformedonthird-partyrealproperty workperformedonownedrealproperty,inthecaseofconstructors productionofpersonalpropertycommissionedbyathirdparty procurementofnaturalgoodscommissionedbyathirdparty permanentimportofpersonalproperty servicesprovidedfromabroadandusedinArgentina(includinginterest).Inthis

case, input tax must be paid by the local company and it automatically becomes input tax for VAT purposes in the following month.

VAT is assessed on a monthly basis. The inception of the taxable event is to issue the invoice, deliver the goods, render the service or the receipt, whichever is the earliest.The standard tax rate, currently 21%, is charged on the net price of the transaction. There are some leases and services levied at 27% (electricity, telecommunications, etc). Some goods and services are levied at 10.50% (bovine meat, fresh vegetables, lodgings, interests on loans received from Argentine financial institutions, property plant and equipment as specified in a list provided, newspapers and magazines, transportation for individuals etc).

Exports are levied at a zero rate (destination country method). Exporters can apply input tax (incurred in making exports) against output tax arising from other taxable transactions. In case of a net input tax (internal charge), exporters are entitled to a refund (under a special procedure established by the tax authority). Foreign tourists are also entitled to a VAT refund (cash or in credit card account) included in personal property purchases and lodging services in some tourist areas.There are several withholding and collection at source regimes in force. The VAT withheld or collected at source is creditable against the internal charge. In case of a reminding tax credit, it can be offset against any other federal tax liability.

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Argentina


FRINGE BENEFITSNo tax is levied specifically on fringe benefits, since they are levied with income tax and social security contributions.

MINIMUM PRESUMPTIVE INCOME TAx (MPIT)This tax is levied on all assets located in Argentina or in foreign countries owned by companies domiciled in Argentina or branches of foreign companies located in Argentina.

The Tax Act sets out how to value the assets to which, in general, the current market value must be given. Some assets are not levied, e.g. shares of other companies domiciled in Argentina, dividends earned, investment in construction (for two years), and new personal property purchases (for two years). Companies having less than $200,000 of assets are not levied. Field Real Estate property is levied allowing a special deduction of up to $200,000.

The tax rate is 1%. Financial institutions and insurance companies, subject to the control of state entities, are subject to MPIT on 20% of their assets value.

Although this is an assets tax, the spirit of the law is to set a companys minimum income tax liability (for example, in the case of tax losses). Income tax assessed by the company may be creditable against MPIT for the same fiscal year.

If, in the same fiscal year, the income tax assessed is higher than the MPIT assessed, the net will not generate a tax credit. On the other hand, if in the same fiscal year the MPIT assessed is higher than the income tax assessed, the net of the MPIT may be carried forward and offset against income tax in the following ten fiscal years. Despite this tax credit, the company must pay effectively at least the amount of MPIT assessed every fiscal year. Therefore, every year the company must assess both taxes, yet pay either income tax or MPIT, whichever is the higher.

PERSONAL ASSETS TAx PAID ON BEHALF OF SHAREHOLDERSCompanies residing in Argentina are levied on Personal Assets Tax on behalf of its shareholders. See section H paragraph Personal Assets Tax.

SINGLE SIMPLIFIED TAxSingle simplified tax is a volunteer tax applicable to individuals and small partnership that perform little activity and where income does not exceed a threshold set by the Act. The taxpayer can choose whether to pay income tax and VAT or substitute both by paying a monthly single simplified tax. The tax is determined considering a scale of income.

LOCAL TAxESThe different Provinces and Jurisdictions within the territory of Argentina apply local taxes. A brief description is provided as follows:

Turnover tax: This is a provincial tax levied on the various stages of production and selling processes but no input tax is deductible from the tax amount of the immediately preceding stage (waterfall effect).

In general, it applies to gross revenues accrued during each fiscal period (month). The tax rate is approximately 3% to 5% for commercial activities, 1.5% to 4% for industrial activities, and 1% - 3% for primary activities, according to the taxpayer turnover and other regulations enforced by each provincial Tax Act.

Under an agreement signed between the National Administration and the Provincial Administrations, several exemptions to some productive activities have been established and the tax scheme will be reshaped gradually until this tax becomes ineffective and replaced by a neutral tax. In general, small industrial activities are not levied in the jurisdiction where the factory is located.

Stamp tax: The duty is levied in each of the countrys jurisdictions on juristic acts and instruments entailing a flow of wealth between the parties involved in the legal relationship. Thus, stamp tax is applicable inter alia to acts whereby for profit transactions on Real Estate, personal property, services rendered and civil, commercial or financial obligations are documented. Rates vary according to the jurisdiction and the type of instrument involved, the most common one being 1.00% of the contract value. Under the aforesaid fiscal agreement, stamp tax is also to be phased out in the future but it currently is still in effect.Land and car taxes: These taxes, typically ad valorem, are levied on land and automobiles located or registered within any of the countrys 24 provinces. The fiscal assessment value of the assets and the applicable tax rate vary according to each jurisdiction.

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Rates: These are municipal levies applied on a range of taxable bases in the various jurisdictions, in consideration of services provided by each township. The taxable event is the performance of an activity for profit in a town. The tax rate, set by each Municipal Act, is applicable on the turnover and depends on the activity performed.

OTHER TAxESExcise tax: This is a federal tax on specific goods and services, levied on a variety of items such as cigarettes, tobacco, alcoholic beverages (whisky, other spirits, liquor, etc), soft drinks, beer, automobiles, ships and aircraft, mobile phone services, insurance premiums, luxury items (jewellery, stones, pearls, furs, etc), some electronic products (microwave oven, television set, radio, several home appliances, etc). Excise tax is levied on the sale price. The tax rate varies depending on the item. This tax is generally levied on the production or importing stage (first stage).

Furthermore, a fuel and gas tax is levied on the sales of some of these products.

Social security contributions: These are federal taxes levied on both employers and employees. The taxable base is the salary. The employer assesses the tax and files the tax return with the official authority on behalf of both, including self-assessment, plus the tax withheld to employees.

Employee contributions on salaries are 17% of salary and employers contributions are set at 23% for small and medium-sized companies and 27% (for large companies.

Employers social security contributions can be partially considered an input tax for VAT purposes in some provinces. The amount that can be offset depends on the employers location, ranging from nil in Buenos Aires up to 10.75%.

Tax on checking account debits and credits: This tax is levied on financial transactions. The taxable event is not only each debit and credit in a checking account but also a large variety of financial transactions (money remittances, money orders, cheque deposit on saving accounts, etc). The law sets out several exceptions (i.e. saving accounts, stock exchange agents, non-profitable associations, etc), and provides for reduced rates for certain transactions such as time deposits.

To prevent tax avoidance, any amounts over $1,000 must be paid by cheque as a binding procedure.

The tax rate applicable is 0.60% on each debit and 0.60% on each credit on checking account. Thus the whole transaction is levied at a 1.2% rate. For specific activities performed by some taxpayers (who might use checking accounts to make payments on behalf of third party) a 0.075% rate is applicable.

17% of the tax amount paid each month is creditable against income tax or minimum presumptive income tax. The remaining 83% of the tax is a non-recoverable expense. The idea is that Financial Institutions act as withholding agents in order to ensure the revenue of the most important taxes.


Deductions for income tax assessment purposes include expenses incurred necessarily to obtain, maintain and preserve such income. The Income Tax Act lists specific regulations for dealing with the cost of products, fixed assets, real estate, or securities sold, as well as deductible bad debts, and property plant and equipment depreciation.

INVESTMENT ALLOwANCEAt present, there is no income tax incentive scheme in force allowing additional deductions, in whole or in part, for investment on facilities and equipment.

DEPRECIATION OF FIxED ASSETSFor real estate, the law establishes a depreciation rate of 2% annually on the portion attributable to the building. The Tax Act indicates that fixed assets may be depreciated over their estimated useful life on a straight-line basis. Assets subject to depletion (mines, quarries etc), may be depreciated, not on the straight-line method, but proportionally to the units extracted in each period.

STOCK/INVENTORyIn the case of resale goods and raw materials, inventories should be valued for tax purposes at the end of each business year at acquisition cost (last purchase value). For self-manufactured items, the inventory value is determined on the basis of the sales price at the end of the fiscal year after deducting any direct expenses

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associated with the sale and the net profit margin. In special cases, where cost accounting systems are maintained, own-production goods could be valued at their production cost.

CAPITAL GAINS AND LOSSESCapital losses are deductible, subject to the limitations noted in the paragraph under Losses below.

DIVIDENDSDividends and profit distributions are subject to tax at a 10% rate. This tax is in addition to the existing equalization tax.

In general, dividends between two Argentine resident companies are tax exempt in the hands of the recipient (an Argentine resident company).

Equalization tax applies to dividends paid to residents and non-residents when commercial profits (i.e. the profits before tax as reported in the companys financial statements) exceed taxable profits. If the dividend passed does not exceed the taxable profit, dividends are not levied, whoever their recipients are, provided that the dividend is distributed on nominative (registered) shares. If the dividends outnumber taxable profit, a withholding tax at 35% is payable on the difference (equalization tax). No tax credit is derived from the tax withheld because dividends are not levied as income for the recipient (the whole tax was withheld).

interest deductionInterest is generally deductible provided that it is incurred on loans taken out for business purposes. Otherwise the deduction is denied. Notwithstanding this, there is a threshold set on deductible interest. Under thin capitalization rules, interest is disallowed where all the following conditions take place all together: thecompanysfinancialdebt/equityratioexceeds2:1 the loan isgrantedbya foreign residentwhocontrols theArgentinecompany

(directly or indirectly) the withholding tax rate applicable on the interest paid abroad is reduced to

15.05% (that is 35% tax rate on 43% presumptive net income). See paragraph F.

Where the conditions do not apply simultaneously, no limitation is applied and interest is fully deductible. This is logical because when the withholding tax rate applicable is 35% (35% tax rate on 100% presumptive net income), the full tax was already withheld and the deduction is therefore allowed. (See paragraph F for more details about withholding tax on interest.) If the limit is applicable, interest is not deductible on the percentage of two times Net Worth over total liabilities. The remaining percentage of interest is deductible.

LOSSESIncome tax losses made in a given fiscal year may be carried forward for five years but taxpayers may only offset losses against the same kind of income. Thus, stocks and foreign-sourced losses may only be offset against income of the same kind.

FOREIGN CAPITAL INFLOwSNo special regulations exist to control incoming funds disclosed as capital contributions, as the current policy is designed to encourage inflows of foreign capital. However, foreign companies should pay personal assets tax (see below) because Argentine Law deems that the stock belongs to a resident individual. Other kind of incoming funds may be subject to a time deposit (see paragraph G).On the other hand, there are specific regulations in force to control outgoing funds set by the Central Bank.

INCENTIVESPromotional tax schemes are available for new investments in agricultural transactions and tourism in certain areas of Argentina. Approval of new industrial investment projects has been suspended.

CORPORATE MERGERSCorporate reorganisations (de-mergers and mergers/consolidations) are to be considered tax free provided that certain legal requirements and proceedings are met. These relate, in particular, to maintenance of the shareholders interest and continuance of the business activity carried out (two years after and before the reorganisation process). In such cases, any outstanding tax loss may be carried forward and other existing allowances and liabilities may be passed on to the successor companies.

SHARES AND BONDSFor corporations domiciled in Argentina, the income produced by share holding is

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levied when share alienation takes place (not just because of holding them). On the other hand, bonds must be valued at their current value. Therefore, the income produced by bond holding is levied whether they are sold or not. For foreign residents domiciled in any country but tax havens, the disposal of shares (issued by an Argentine Company) is not levied with Income Tax.


Any overseas income taxes paid on foreign-sourced income may be creditable against Argentine income tax up to the limit of the increase in the tax liability resulting from aggregating the foreign-sourced income.

d. corporate Groups

Companies belonging to the same group or holding, but having separate legal status, should pay their taxes separately and the transfer of losses from loss-making to profit-making members of the same group of companies is not permitted. Nevertheless, payment is waived in the case of taxes arising from corporate reorganisations (de-mergers and mergers/consolidations) which comply with established legal requirements (particularly, maintenance of the shareholders interest and continuance of the business activity carried out) for two years after and before the reorganisation process.

e. transfer pricinG and related party transactions

Under Argentine Law, transactions between Argentine companies and related parties domiciled abroad are deemed to take place at arms length rates for tax purposes.When the pricing used agrees with normal market practices as between non-related entities, no adjustment is required for tax purposes.

For income tax assessment purposes, Argentine law provides for the traditional methods generally used for transfer pricing (comparable uncontrolled price, resale price, cost plus, profit split, transaction net margin) to demonstrate that an arms length price has been used in transactions performed with related parties residing abroad, or any parties residing in tax havens. The related parties test is broad and includes not only transactions between a local subsidiary and its parent company but also other relationships, (e.g. local company and foreign subsidiary, local permanent establishment and foreign head office, local company and foreign permanent establishment, local company and related or not related party residing in a tax haven, among others).

f. witHHoldinG income taX for foreiGn transactions

When Argentine-source income is paid to foreign recipients who do not have a permanent establishment branch, office, etc - in Argentina, such income is subject to withholding tax of 35%.

For each activity, the law establishes a percentage of presumptive net income on which 35% withholding tax is applicable, thereby reducing the effective tax rate. The following chart shows the presumptive net income percentages:

Income Presumptive net income

% A

Effective withholding tax rate % 35% A

Interest on loans granted by overseas banks only on condition that the lender bank: a) is domiciled in a jurisdiction not considered a tax haven, and, b) has supervision on financial activity provided by the Central Bank (Federal Reserve). Offshore banks domiciled in any territory are not included in this category.

43% 15.05%

Income Presumptive net income

% A

Effective withholding tax rate % 35% A

Interest on debt arising the importation of property plant and equipment subject to depreciation (except cars) provided that the exporter is the creditor.

43% 15.05%

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Interest on time deposits made by foreign residents (either companies or individuals) in financial institutions located in Argentina, provided the interest is not chargeable to income tax in the country of residence.

43% 15.05%

Other interest. This category includes: a) interest on loans granted by overseas corporations or individuals; b) interest on loans granted by offshore banks domiciled in any territory considered a tax haven or whose Central Bank (Federal Reserve) does not apply supervision on financial activity.

100% 35.00%

Royalties arising from technical assistance or consulting not available in Argentina under specific regulations (the contract must be duly registered with the official authority).

60%80% 21%28%

Copyright (must be registered with the National Copyright Bureau) 35% 12.25%

Other royalties 90% 31.50%Salaries of technicians, professionals, sportsmen, and artists for temporary work in Argentina (individuals only not applicable when the provider is a corporation).

70% 24.50%

Personal property leases 40% 14.00%

Real Estate property leases 60% 21.00%

Disposal of assets situated in Argentina 50% 17.50%

Dividends and profit distributions not applicable

10.00% (rate

applicable directly on dividend)

Sale of shares, stocks, bonds and other securities, applicable on the gross sales price. (in this case, the taxpayer can elect to be taxed on the capital gain at a 15% rate on the gain).

90% x 15% tax rate 13.50%

Other incomes 90% 31.50%

G. eXcHanGe control

Exchange controls are currently in effect. Foreign currency can be transferred into Argentina provided that the sender files a disclosure with the official authority. In some cases, the transfer is subject to a one year time deposit (with no interest accrued) for the 30% of the amount transferred (especially financial loans). Capital contributions are not subject to the time deposit. To transfer out, the reason must be proved by filing forms with the Central Bank (i.e. dividends, loans, etc).

H. personal taX

Two taxes are currently levied on individuals: incometax personalassetstax(wealthtax).

INCOME TAx

The tax is levied on income earned in Argentina and abroad by individuals residing in Argentina.

It is payable on an annual basis with five advanced payments (every two months). Any expenses incurred in generating such income may be deducted from gross income. The law establishes fixed deductions: non-taxable minimum, special tax free amount, dependant allowance, etc.

Capital gains not related to income-generating activity are not subject to tax. In the case of the disposal of real property not assigned to such activity, a 1.5% real estate sales tax is charged on the selling value of the property, regardless of whether a loss or a profit is made.

Under the Income Tax Act, some exemptions are provided for the financial and capital markets, whereby interest on time deposits, government securities, and income from stocks and bonds that are quoted on the Stock Exchange are not subject to tax.

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Similarly, the sale of stocks (issued by an Argentine company) is not levied on income tax provided that the activity of buying and selling stocks is not performed on a regular (trading) basis.

Employees are subject to withholding tax at source, for which the employer is responsible (withholding agent).

Resident individuals are liable to the tax on the basis of a progressive tax rate scale ranging from 9% to 35% of annual taxable net income.

PERSONAL ASSETS TAx (wEALTH TAx)This tax is levied on: allassetslocatedinArgentinaorinforeigncountriesthatbelongtoindividuals

resident in Argentina all assets located in Argentina that belong to individuals resident in foreign

countries sharesissuedbyArgentinecompanies.Inthiscase,thecompanypaysthetaxon

behalf of the shareholders. trusts(excludingfinancialtrusts).Inthiscase,thetrusteepaysthetaxonbehalf

of the beneficiaries.

INDIVIDUALS RESIDING IN ARGENTINAThis tax is levied on all assets located in Argentina and in foreign countries. Similar tax paid arising overseas in respect of assets located in foreign countries is creditable against personal assets tax.

The only deduction allowed is the amount of liabilities arising from the purchase or construction of the taxpayers home.

Investments in shares issued by an Argentine company are not to be included in the taxable base because the company pays this tax on behalf of the shareholders (a situation that does not mean shares are exempted).

The tax is assessed on the value of property that exceeds the tax free amount of $305,000. If the taxable base is higher than $ 305,000, the tax is assessed on the total and it is calculated on a progressive tax-rate-scale basis. The applicable rate ranges from 0.5% to 1.25% on the taxable base.

INDIVIDUALS AND COMPANIES RESIDING IN A FOREIGN COUNTRyThe tax is also charged on assets located in Argentina and owned by individual foreign residents at a 1.25% rate. Neither deductions nor taxable minimum are allowed.

In the case of certain assets (i.e. securities, non-exploited real estate property, etc) located in Argentina and owned by foreign companies, these are deemed to belong to individuals and are levied with personal assets tax at a 2.50% rate.

Shareholders of an Argentine company who reside in foreign countries are liable to personal assets tax. The tax liability is not assessed directly but is paid by the company on behalf of its shareholders (see the next paragraph).

SHARES ISSUED By ARGENTINE COMPANIES OR TRUSTSShares whose holders are foreign resident companies are deemed to belong to foreign resident individuals and the tax is levied on those shares.

The taxable base is the Argentine companys equity value assessed in the companys last financial statements. The tax rate is 0.5%.

In all such cases, the tax is assessed and paid by the Argentine company on behalf of the shareholders. The tax paid is not deductible for income tax purposes because the company is allowed to claim the tax paid to the shareholders.

A foreign companys branch (a permanent establishment in Argentina) will be levied on personal assets tax in respect of the capital assigned to the branch.

For foreign companies shareholders of an Argentine company who reside in Treaty Countries (for the avoidance of double taxation), it is important to analyse each Tax Treaty to understand whether shares are levied in Argentina or in the country where the holder has their fiscal residence.

In the case of trusts (excluding financial trusts), the trustee pays the tax on behalf of the beneficiaries.

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i. treaty and non-treaty witHHoldinG taX rates

Dividends (%)

Interest (%)

Royalties (%)

Non-Treaty Countries 10 15.05359 2131.506

Treaty Countries

Australia 10/151 12 10/157

Austria10

Belgium 10/151 12 3/5/10/157

Bolivia * * *

Brazil * * *

Canada 10/151 12.50 3/5/10/157

Chile11

Denmark 10/151 12 3/5/10/157

Finland 10/151 153 5/108

France 151 203 185

Germany 151 102 15/153

Italy 151 203 10/185

Netherlands 10/151 12 3/5/10/157

Norway 10/151 12.50 3/5/10/157

Russia 10/151 15 15

Spain (tax treaty not yet in force)12 10/151 12 3/5/10/157

Sweden 10/151 12.50 3/5/10/157

Switzerland13

United Kingdom 10/151 12 3/5/10/157

Uruguay 4 4 4

1 This is the percentage ceiling set under the agreement. However, it is only applicable when the conditions set under (B) are met (Dividends).

2 The rate applies to interest loans associated with the sale of equipment, bank loans and public works financing.

3 This is the ceiling set by the treaty. However, when the effective rate for non-treaty countries is lower, this latter rate is applicable.

4 Under the agreement no ceilings were set but the jurisdiction where the tax should be levied was established. Therefore, applicable rates are those for non-treaty countries.

5 The 10% rate applies to copyright royalties.6 Varies according to contract purpose and terms.7 A 3% rate applies to the use of news, a 5% rate applies to copyright, a 10% rate

applies to trademarks, patents and technical assistance, and a 15% rate applies in other cases.

8 A 5% rate is appropriate only where the payment relates to copyright.9 See withholding taxes description at (F) above.10 The Treaty with Austria was rendered ineffective as of 01January 2009.11 The Treaty with Chile was rendered ineffective as of 01 July 2012.12 The Treaty with Spain was rendered ineffective as of 01 January 2013. The rates

in the chart are set in a new treaty signed, not effective yet.13 The Treaty with Switzerland was rendered ineffective as of 01 January 2013.

australia

MEMBER FIRM


Brisbane Tom Hackett 617 3839 [email protected]

Canberra Ross Di Bartolo 612 6257 7500 [email protected]

Gold Coast Mike Sheehy 617 5553 [email protected]

Hobart Daniel Rands 613 6231 [email protected]

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Melbourne Scott McKay 613 9679 [email protected]

Newcastle Darren Shone 612 4963 [email protected]

Perth Chris Roos 618 9426 [email protected]

Perth Malav Oza 618 6272 [email protected]

Sydney Steve Williams 612 9237 [email protected]

Tamworth Mark OConnor 612 6768 [email protected]

BASIC FACTS

Full name: Commonwealth of Australia


Capital: Canberra

Largest city: Sydney

Major language: English

Major religion: Christianity

Monetary unit: 1 Australian dollar = 100 cents

Internet domain: .au

International dialling code: +61

The Australian Taxation Office website: www.ato.gov.au

KEy TAx POINTS Australian resident companies are subject to company income tax on income

derived from all sources. Non-resident companies are required to pay income tax only on Australian-sourced income.

There is no branch profits tax in Australia. However, Australian branches offoreign companies will generally only be taxed on Australian-sourced income at the prevailing company tax rate.

All entities that carry onanenterprise inAustralia are required to register forthe goods and services tax (GST) if their annual turnover meets the registration turnover threshold.

AustraliahasaCFCregimewhichisdesignedtoensurecertaintypesofpassiveand associated party income of a CFC is included in the controlling Australian residents taxable income each financial year. There is also a Foreign Investment Funds (FIF) regime, which seeks to tax Australian residents on an accruals basis where the Australian resident holds a non-controlling interest in a foreign company or trust engaged in producing passive income.

Whereforeignsourcedincomeisincludedinassessableincometaxcreditsareavailable equal to the lesser of the foreign tax paid and the Australian tax payable.

Wholly-ownedgroupsofAustraliancompaniesandtrustscanelecttohavetheirincome tax liability calculated on a consolidated basis.

Non-arms length international profit-shifting arrangements and otherinternational transactions between related parties are governed by transfer pricing rules which give the Commissioner of Taxation the power to calculate the income tax payable based on arms-length prices.

Withholdingtaxmustbedeductedfrominterest,royaltiesanddividends(totheextent they are not franked) paid to non-residents.

IncometaxispayablebyAustralianresidentindividualsonnon-exemptincomederived from worldwide sources. Non-resident individuals are only required to pay tax on Australian-sourced income.

Thereisnoseparatecapitalgainstax,butcapitalgainsareincludedintaxableincome. The tax treatment of capital gains and losses is generally the same for individuals and trustees as for companies, but there are some differences (eg individuals and trustees, unlike companies, can claim a 50% discount of capital gains on assets held for more than one year).

Thereisnonetwealthtax,realestatetaxorinheritanceorgifttax.

a. taXes payaBle

FEDERAL TAxES AND LEVIESCOMPANy TAxAustralian resident companies are subject to company income tax on their income

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derived from all sources. Non-resident companies are required to pay income tax only on Australian-sourced income.

Resident companies are those that are incorporated in Australia or those that carry on business in Australia and either have their central management and control in Australia or their voting power controlled by shareholders who are Australian residents.

The tax year runs from 1 July to 30 June. Companies financial years usually coincide with the tax year. A taxpayer can choose to have an accounting period different to the tax year if they wish but this will require additional costs of preparing another set of accounts based on the tax year. Alternatively, if a taxpayer has a good reason for having a financial year other than 1 July to 30 June they can apply to the Australian Tax Office to have a substituted accounting period (SAP) and align the tax year with their financial year. The Australian Tax Office will generally accept applications for an SAP where an Australian subsidiary wants to align its tax year with its foreign parent companys financial year.

The company tax rate for the 2013/2014 tax year is 30% of the companys taxable income.

Companies are generally required to self-assess their likely tax liability in a financial year and pay the tax by quarterly instalments with the final tax liability being reconciled in an annual tax return. Likely tax is the latest estimate of tax payable made by the company in a current financial year. If no estimate is made, likely tax is the tax assessed in the preceding year.

Company tax is payable on a quarterly basis (except for companies with a turnover of greater than $1 billion which are required to pay monthly). Companies that are not required to report their goods and services tax (GST) on a monthly basis and with income tax payable of less than AUD $8,000 for the most recent income year can elect to pay an annual instalment of tax rather than quarterly instalments. Generally, the annual payment date is 21 October when the income year ends on 30 June.

Quarterly company tax is payable within 21 days after the end of each quarter of the financial year. However, where taxpayers are eligible to pay other quarterly obligations on a deferred basis (namely those entities that are required to pay GST on a quarterly basis); the due date is the 28th day after the end of the quarter (except for the December quarter in which case payment date is 28 February).

There are two methods of working out the quarterly payment amount as follows: Instalment Income Option the quarterly payment amount is the amount of

gross assessable income earned for that quarter (less capital gains) multiplied by the instalment rate. The instalment rate is advised by the Tax Office and is based on the company tax paid on the most recent tax assessment divided by the companys turnover (less capital gains). This method is available to all taxpayers.

GDP adjustment notional tax option the quarterly payment income amountis based on the assessable income figure from the most recent tax return multiplied by a GDP factor. The income amount is advised by the Tax Office. This method is available for individual taxpayers or other entities where their most recent assessed taxable income was under AUD $1 million. Certain categories of taxpayers such as farmers, sportspeople and artists may meet their liability for these four instalments by making two payments per year.

BRANCH PROFITS TAxThere is no branch profits tax in Australia. However, Australian branches of foreign companies will generally only be taxed on Australian-sourced income at the prevailing company tax rate.

GOODS AND SERVICES TAxAll entities that carry on an enterprise in Australia are required to register for the goods and services tax (GST) if their annual turnover meets the registration turnover threshold of AUD $75,000 or AUD $150,000 for not-for-profit organisations.

Once registered, entities are required to charge 10% GST on all goods and services that they supply within Australia, unless the supplies are specifically excluded, such as education, health, child care services and certain types of food.

Registered entities are entitled to claim an input tax credit equal to the amount of GST paid on purchases, provided that those purchases were used for a creditable purpose in carrying on their enterprise. This means that the cost of the GST is effectively borne solely by the end user.

However, there are two exceptions to the general rule:

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(1) GST-free supplies (zero rated supplies): These supplies are provided by enterprises to their customers free of GST, and the enterprise is also allowed to claim input tax credits on its creditable business acquisitions. Examples include education and health providers and certain types of food.

(2) Input taxed supplies: These supplies are provided by enterprises to their customers free of GST, but the enterprise is not allowed to claim any input tax credits on its creditable business acquisitions, effectively treating the supplier as an end user. Examples include financial services providers and residential accommodation supplies.

The GST collected from customers is remitted to the Federal Government on a quarterly or monthly basis, depending on the size of the entitys annual turnover.

FRINGE BENEFITS TAx (FBT)Fringe benefits tax is a federal tax that is payable by resident and non-resident employers on certain benefits that are provided to their employees. The tax is levied at a rate of 46.5% on the grossed-up taxable value of each benefit that is provided to employees. FBT is separate from income tax.

In calculating the grossed-up taxable value of a fringe benefit, the provider must first determine whether they are entitled to a GST input tax credit on that benefit. If so entitled, the value of the benefit must be grossed up using a rate of 2.0647. In all other cases, the value of the benefit is grossed up using a rate of 1.8692.

The grossing up methodology effectively levies tax on the benefit at the rate of tax that an employee on the highest marginal tax rate would pay on the cash salary required for them to pay for the benefit out of after tax salary and taking into account any GST input tax credit the employer can claim on providing the benefit.

Employees can make non-tax deductible contributions towards the private use component of a benefit to reduce the taxable value, thereby reducing the FBT payable.

The FBT year runs from 1 April to 31 March. If the prior years FBT liability is AUD $3,000 or more, it is payable on a quarterly basis on the same payments dates as quarterly company tax (see above). If the total FBT liability is less than AUD $3,000, an annual payment is required instead. The annual FBT return is due for lodgement by 21 May of each year.

Any FBT paid in Australia by an employer is generally deductible for Australian income tax purposes.

SUPERANNUATION CONTRIBUTIONSEmployers are required to make supe

PKF Worldwide Tax Guide 2014

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