1. 1. PKF Worldwide Tax Guide 2015 i Foreword 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 PKF 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 2015 (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of the worlds most significant trading countries. 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 & Personal Tax Advisory & Compliance Forensic Accounting Business Services IT Consulting Financial Planning/Wealth management Hotel Consulting Corporate Finance 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
2. 2. PKF Worldwide Tax Guide 2015ii important disclaimer All information contained herein is believed to be correct at the time of publication, 30April2015. The contents should not be used as a basis for action without further professional advice. While utmost care has been taken in the compilation of this publication, no responsibility will be accepted for any inaccuracies, errors or omissions. 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 LIMITED MAY 2015 PKF INTERNATIONAL LIMITED ALL RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION
3. 3. PKF Worldwide Tax Guide 2015 iii CONTENTS Foreword. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i Important Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii International Time Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vi Structure of Country Descriptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii Afghanistan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Algeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Angola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Bahamas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Bahrain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Bangladesh. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Belgium. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Belize. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Bermuda. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Bosnia and Herzegovina. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Botswana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Brazil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Bulgaria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Burundi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Cape Verde. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Cayman Islands. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Chile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Colombia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Costa Rica. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Cyprus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Czech Republic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Denmark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Dominican Republic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 Ecuador. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 Egypt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 El Salvador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Estonia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Finland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 France. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Gambia, The. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 Georgia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 Contents
4. 4. PKF Worldwide Tax Guide 2015iv Germany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 Ghana. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 Gibraltar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 Greece. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 Grenada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Guatemala. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 Guyana. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230 Hungary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 Indonesia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 Iraq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272 Ireland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274 Isle of Man . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 Israel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293 Italy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 Japan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310 Jordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 Kazakhstan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322 Kenya. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328 Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333 Kuwait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340 Latvia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343 Lebanon. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Lesotho. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353 Libya. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363 Luxembourg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366 Malaysia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 Malta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391 Mauritius. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402 Mexico. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406 Montenegro. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 Morocco. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419 Mozambique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 Namibia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431 Netherlands, The. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436 New Zealand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446 Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453 Norway. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461 Oman. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 Pakistan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472 Contents
5. 5. PKF Worldwide Tax Guide 2015 v Panama. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 Paraguay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484 Peru. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486 Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493 Poland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501 Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509 Qatar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516 Romania. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 Russia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 Rwanda. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536 Saudi Arabia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 Serbia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547 Sierra Leone. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 Singapore. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562 Slovak Republic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 Slovenia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575 Somaliland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 586 South Africa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 South Sudan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598 Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599 St Lucia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606 Swaziland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609 Sweden. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617 Switzerland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623 Taiwan (Republic of China). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632 Tanzania. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640 Thailand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641 Trinidad & Tobago . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651 Tunisia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653 Turkey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 658 Uganda. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666 Ukraine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 671 United Arab Emirates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 683 United Kingdom. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685 United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 696 Uruguay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 706 Uzbekistan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 709 Venezuela. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715 Vietnam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721 Zambia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728 Zimbabwe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737 Contents
6. 6. PKF Worldwide Tax Guide 2015vi A Afghanistan. . . . . . . . . . . . . . . 4.30 pm Algeria . . . . . . . . . . . . . . . . . . . . 1 pm Angola . . . . . . . . . . . . . . . . . . . . 1 pm Argentina . . . . . . . . . . . . . . . . . . 9 am Australia - Melbourne. . . . . . . . . . . . . 10 pm Sydney. . . . . . . . . . . . . . . 10 pm Adelaide. . . . . . . . . . . . . 9.30 pm Perth. . . . . . . . . . . . . . . . . . 8 pm Austria . . . . . . . . . . . . . . . . . . . . 1 pm B Bahamas. . . . . . . . . . . . . . . . . . . 7 am Bahrain. . . . . . . . . . . . . . . . . . . . 3 pm Bangladesh. . . . . . . . . . . . . . . . . 6 pm Belgium. . . . . . . . . . . . . . . . . . . . 1 pm Belize. . . . . . . . . . . . . . . . . . . . . 6 am Bermuda. . . . . . . . . . . . . . . . . . . 8 am Bosnia and Herzegovina. . . . . . . . 2 pm Brazil. . . . . . . . . . . . . . . . . . . . . .7 am Bulgaria. . . . . . . . . . . . . . . . . . . . 3pm Burundi. . . . . . . . . . . . . . . . . . . . 2 pm C Canada - Toronto. . . . . . . . . . . . . . . . 7 am Winnipeg. . . . . . . . . . . . . . . 6 am Calgary. . . . . . . . . . . . . . . . 5 am Vancouver. . . . . . . . . . . . . . 4 am Cape Verde. . . . . . . . . . . . . . . . 11 am Cayman Islands. . . . . . . . . . . . . . 7 am Chile. . . . . . . . . . . . . . . . . . . . . . 8 am China - Beijing. . . . . . . . . . . . . . 10 pm Colombia. . . . . . . . . . . . . . . . . . . 7 am Costa Rica. . . . . . . . . . . . . . . . . . 6 am Cyprus . . . . . . . . . . . . . . . . . . . . 2 pm Czech Republic. . . . . . . . . . . . . . 1 pm D Denmark. . . . . . . . . . . . . . . . . . . 1 pm Dominican Republic. . . . . . . . . . . 7 am E Ecuador. . . . . . . . . . . . . . . . . . . . 7 am Egypt . . . . . . . . . . . . . . . . . . . . . 2 pm El Salvador . . . . . . . . . . . . . . . . . 6 am Estonia. . . . . . . . . . . . . . . . . . . . 2 pm F Finland. . . . . . . . . . . . . . . . . . . . 2 pm France. . . . . . . . . . . . . . . . . . . . .1 pm G Gambia (The). . . . . . . . . . . . . . 12 noon Georgia. . . . . . . . . . . . . . . . . . . . 4 pm Germany. . . . . . . . . . . . . . . . . . . 1 pm Ghana. . . . . . . . . . . . . . . . . . . 12 noon Gibraltar. . . . . . . . . . . . . . . . . . . 2 pm Greece. . . . . . . . . . . . . . . . . . . . 2 pm Grenada. . . . . . . . . . . . . . . . . . . 8 am Guatemala. . . . . . . . . . . . . . . . . . 6 am Guyana. . . . . . . . . . . . . . . . . . . . 7 am H Hong Kong . . . . . . . . . . . . . . . . . 8 pm Hungary . . . . . . . . . . . . . . . . . . . 1 pm I India. . . . . . . . . . . . . . . . . . . . 5.30 pm Indonesia. . . . . . . . . . . . . . . . . . .7 pm Iraq. . . . . . . . . . . . . . . . . . . . . . . 3 pm Ireland. . . . . . . . . . . . . . . . . . . 12 noon Isle of Man . . . . . . . . . . . . . . . 12 noon Israel. . . . . . . . . . . . . . . . . . . . . . 2 pm Italy . . . . . . . . . . . . . . . . . . . . . . 1 pm J Japan. . . . . . . . . . . . . . . . . . . . . 9 pm Jordan . . . . . . . . . . . . . . . . . . . . 2 pm K Kazakhstan. . . . . . . . . . . . . . . . . 6 pm Kenya. . . . . . . . . . . . . . . . . . . . . 3 pm Korea. . . . . . . . . . . . . . . . . . . . . . 9pm Kuwait. . . . . . . . . . . . . . . . . . . . . . 3pm L Latvia. . . . . . . . . . . . . . . . . . . . . 2 pm Lebanon. . . . . . . . . . . . . . . . . . . 2 pm Lesotho . . . . . . . . . . . . . . . . . . . 2 pm Libya. . . . . . . . . . . . . . . . . . . . . . 2 pm Luxembourg . . . . . . . . . . . . . . . . 1 pm M Malaysia. . . . . . . . . . . . . . . . . . . 8 pm Malta . . . . . . . . . . . . . . . . . . . . . 1 pm Mauritius. . . . . . . . . . . . . . . . . . . 4 pm Mexico . . . . . . . . . . . . . . . . . . . . 6 am Montenegro. . . . . . . . . . . . . . . . . 2 pm Morocco. . . . . . . . . . . . . . . . . 12 noon Mozambique. . . . . . . . . . . . . . . . . 2pm N Namibia. . . . . . . . . . . . . . . . . . . .2 pm Netherlands (The). . . . . . . . . . . . . 1 pm New Zealand. . . . . . . . . . . 12 midnight Nigeria . . . . . . . . . . . . . . . . . . . . 1 pm Norway. . . . . . . . . . . . . . . . . . . . 1 pm O Oman. . . . . . . . . . . . . . . . . . . . . 4 pm P Pakistan. . . . . . . . . . . . . . . . . . . 5 pm Panama. . . . . . . . . . . . . . . . . . . .7 am Paraguay. . . . . . . . . . . . . . . . . . . 8 am Peru. . . . . . . . . . . . . . . . . . . . . . 7 am Philippines. . . . . . . . . . . . . . . . . . 8 pm Poland. . . . . . . . . . . . . . . . . . . . .1 pm INTERNATIONAL TIME ZONES At 12 noon, Greenwich Mean Time, the standard time elsewhere is: TimeZones
7. 7. PKF Worldwide Tax Guide 2015 vii TimeZones Portugal . . . . . . . . . . . . . . . . . . . 1 pm Q Qatar. . . . . . . . . . . . . . . . . . . . . .8 am R Romania. . . . . . . . . . . . . . . . . . . 2 pm Russia - Moscow . . . . . . . . . . . . . . . 3 pm St Petersburg. . . . . . . . . . . . 3 pm Rwanda. . . . . . . . . . . . . . . . . . . . . 2pm S Saudi Arabia. . . . . . . . . . . . . . . . 3 pm Serbia. . . . . . . . . . . . . . . . . . . . . . 2pm Sierra Leone. . . . . . . . . . . . . . 12 noon Singapore. . . . . . . . . . . . . . . . . . 7 pm Slovak Republic. . . . . . . . . . . . . . 1 pm Slovenia . . . . . . . . . . . . . . . . . . . 1 pm Somaliland . . . . . . . . . . . . . . . . . 3 pm South Africa. . . . . . . . . . . . . . . . . 2 pm South Sudan. . . . . . . . . . . . . . . . 3 pm Spain . . . . . . . . . . . . . . . . . . . . . 1 pm St Lucia. . . . . . . . . . . . . . . . . . . . . 8am Swaziland. . . . . . . . . . . . . . . . . . 2 pm Sweden. . . . . . . . . . . . . . . . . . . . 1 pm Switzerland. . . . . . . . . . . . . . . . . 1 pm T Taiwan . . . . . . . . . . . . . . . . . . . . 8 pm Tanzania. . . . . . . . . . . . . . . . . . . 3 pm Thailand. . . . . . . . . . . . . . . . . . . 8 pm Trinidad & Tobago . . . . . . . . . . . . . 8am Tunisia . . . . . . . . . . . . . . . . . . 12 noon Turkey. . . . . . . . . . . . . . . . . . . . . 2 pm U Uganda. . . . . . . . . . . . . . . . . . . . 3 pm Ukraine. . . . . . . . . . . . . . . . . . . . 2 pm United Arab Emirates. . . . . . . . . . 4 pm United Kingdom. . . . . . . (GMT) 12 noon United 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 am Uruguay . . . . . . . . . . . . . . . . . . . 9 am Uzbekistan. . . . . . . . . . . . . . . . . . 5 pm V Venezuela. . . . . . . . . . . . . . . . . . 8 am Vietnam. . . . . . . . . . . . . . . . . . . . 7 pm Z Zambia. . . . . . . . . . . . . . . . . . . . 2 pm Zimbabwe. . . . . . . . . . . . . . . . . . 2 pm
8. 8. PKF Worldwide Tax Guide 2015viii 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
9. 9. PKF Worldwide Tax Guide 2015 1 A AFGANISTAN Member Firm City Name Contact Information Kabul Qamar Ali Mumtaz +93 799 195344 qamar@frants.pk Basic facts Full name: Islamic Republic of Afghanistan Capital: Kabul Main languages: Pashto, Dari Population: 31,822,848 (2014 estimate) Major religion: Islam Monetary units: Afghani (AFN) Internet domain: .af Int. dialling code: +93 KEY TAX POINTS All businesses irrespective of the legal status of the organization are subject to 20% tax on income under Article 4 of the Income Tax law in Afghanistan. Capital gains from the sale, exchange, or transfer of certain assets is treated as taxable income. Capital gains include the sale of a trade or business (including goodwill), a factory (including equipment, machinery, buildings and land, or any part of such assets), equipment used in the business of transporting persons and property, and shares of stock in corporations or limited liability companies. The calculation of tax on the taxable profits of branch offices of international organizations is the same as other business. The tax is calculated at 20% of income after allowing all admissible expenses. The Government of Afghanistan is now planning to levy VAT from 21 March 2015 however, the detailed content of the said law are not yet available as of reporting date. Individuals are subject to tax at progressive rates. The monthly maximum limit is 20% + AFN 8,900 fixed amount. Any income tax paid to the government of a foreign country may be taken as credit on the principle of reciprocity. A.TAXES PAYABLE FEDERAL TAXES AND LEVIES CORPORATE TAX All businesses irrespective of the legal status of the organization are subject to 20% tax on income under Article 4 of the Income Tax law in Afghanistan. Business Receipt tax (BRT) is also applicable on gross revenue of business at rates given below. BRT is treated as an admissible expense and is deducted from revenue. Description Applicable Rate Automobile and the spare parts 2/7% The travelling agents 2% Revenue from the public entertainment, exhibition and support events 2% Sale form the merchandise and services 2% Restaurant earning per quarter less than 750,000 per quarter 2% Guest house, restaurant and hotel earning 750,000 per quarter 5% Club hall subject to without any threshold 5% CAPITAL GAINS TAX Capital gain are considered in case of the following cases (Article 23): Gain from the sale, exchange, or transfer of the following assets is taxable income: 1. a trade or business, including goodwill; 2. a factory including equipment, machinery, buildings and land, or any part of such assets; 3. equipment used in the business of transporting persons and property; and 4. shares of stock in corporations or limited liability companies. Gain from the sale or transfer of movable or immovable property acquired by inheritance is excluded from the provisions of paragraph (1) of this Article. Afghanistan
10. 10. PKF Worldwide Tax Guide 20152 Method of calculation of Capital Gain Gain (receipts less allowable expenses) arising from capital asset transaction, is divided by number of years of usage of the said asset. The average rate so obtained shall than be applied to the total income of the person (natural or legal) for the year. The rate so calculated shall not be less than 2%. BRANCH PROFITS TAX Calculation of tax on branch offices of international organizations is the same as other business. The tax is calculated @ 20% of income after allowing all admissible expenses. The only exception to the rule is that any amount remitted outside Afghanistan to principal office or any other branch office shall be regarded as dividend and shall be subject to withholding tax @ 20% SALES TAX / VALUE ADDED TAX VAT is levied on only very few items and services such as hotel services etc and no separate comprehensive regulation exist for VAT. Government of Afghanistan is now planning to levy VAT from March 21, 2015 however, detailed contents of the said law are not available as of reporting date. LOCAL TAXES No local taxes are payable in respect of income of companies. OTHER TAXES Other important levies in Afghanistan include customs duty and various import duties. B. DETERMINATION OF TAXABLE INCOME Taxable income is calculated as follows: Revenue for the year from all sources less following admissible expenses: 1. Any expense related to the cost of production or trade and business, such as insurance and freight expenses, etc.; 2. The cost of supplies, materials, fuel, electricity, water, and ordinary and necessary expenses used in the production of income, or in a trade or business; 3. Wages, salaries, commissions, and fees paid for services rendered by employees in trade or business; 4. Interest paid on business loans; 5. Rent paid on property necessary to and used in trade or business; 6. Cost of repairs and maintenance of properties and equipment necessary to and used for purposes of the business or trade; 7. Depreciation of movable and immovable property at rates mentioned below: No. Assets Useful Life (in Years) Annual Percentage Allowed 1 Bricks or stone structures 50 2 2 Loam structure 20 5 3 Wooden structures 10 10 4 Machinery and Equipment not otherwise specified below 10 10 5 Mining Equipment 6.5 15 6 Tools 4 25 7 Printing Equipment and Machines 2 50 8 Handicraft machines 3 33 9 Metallurgical machines 10 10 10 Carpets 10 10 11 Rugs and other furnishings 4 25 12 Chairs, seats, and sofas 4 25 13 Desks, Tables, and cabinets 10 10 14 Office equipment (calculators, typewriters, telephone, etc.) 6.5 15 15 Bicycles 5 20 16 Trucks 2 50 17 Cars 2 25 18 Tires and tubes 2 50 A Afghanistan
11. 11. PKF Worldwide Tax Guide 2015 3 No. Assets Useful Life (in Years) Annual Percentage Allowed 19 Sacks 2 50 20 Impure iron stoves and pipes 10 10 21 Iron stoves 2 50 22 Carriages, animal carts, and handcarts 3 33 23 Construction machines, rollers and mixers 5 20 24 Computers and computer related equipment 3 33 25 Televisions, radios, and cellular phones 3 33 26 Telecommunication equipment/ cell towers 7 14 8. Any tax or charge that is necessary expense of doing business, holding property for income, or of producing income, if paid or accrued during the taxable year. Taxes imposed by this Law and taxes not qualifying as necessary business expense are not deductible, except as otherwise provided by this Law; 9. Damages to movable or immovable property caused by fire, earthquake, and by casualty or disaster of any kind, over a three year period, to the extent that the cost is determined and substantiated by records and the loss was not recovered by insurance; 10. Losses in business or trade from bad debts according to the Income Tax Manual; 11. Dividends paid in money by a legal entity organized under the laws ofAfghanistan; and 12. Other expenses of doing business and of holding movable or immovable property for the production of income under relevant legislative documents. Non admissible Deductions 1. Expenses incurred to provide entertainment or advertising that are not connected to economical or commercial activities; 2. Dividends, interest, royalties, rent, commissions, wages, salaries, in case the tax has not been withheld as required by the law; 3. In case of a branch in Afghanistan of a non-resident person, any expenses paid or incurred to the non-resident person or any person connected to the non-resident person. 4. Personal expenses are not deductible; 5. Capital expenditure that are subject to depreciation; 6. Taxes paid to foreign countries by non-resident persons on income from sources within Afghanistan, if the bilateral treaty is not made with the country. C.FOREIGN TAX RELIEF Any income tax paid to the government of a foreign country may be taken as credit on the principle of reciprocity. Tax credit on the foreign tax payment is calculated as per following formula: Tax credit on Foreign tax paid = Afghanistan tax on global taxable income x Foreign country income Total global taxable income D. RELATED PARTY TRANSACTIONS Tax authorities have the power in respect of a transaction between associates to distribute, apportion, or allocate income, deductions, or tax credits between such associates to reflect the income that would have been realized in an arms-length transaction. E. EXCHANGE CONTROL For the purpose of tax calculations, official rates issued by Central Bank in Afghanistan (DAB) must be used. F. PERSONAL INCOME TAX Following are the rates at which natural persons are subject to tax: Income slab per month Applicable Rate From Afs.0 to Afs.5,000 monthly 0% From Afs.5,001 to Afs.12,500 2% From Afs. 12,501 to Afs. 100,000 10% + Afs. 150 fixed amount From Afs. 100,000 above 20% + Afs.8,900 fixed amount A Afghanistan
12. 12. PKF Worldwide Tax Guide 20154 G. WITHHOLDING TAX RATES Individuals and organizations are subject to following withholding taxes: Type of income Applicable Rate Salary At rates discussed in preceding paragraph Interest 20% Dividends 20% Royalties 20% Prizes 20% Rewards 20% Lotteries 20% Bonuses 20% Service charges 20% Rent If the monthly rent is more than Afs.10,000 and less than Afs.100000 - 10 percent. 2. If the monthly rent is more than Afs.100,000 -15 percent Contractors for Supplies of Goods, Services, Contractions. 7% for contractors without business License & 2% for contractors having business license Algeria Member Firm Please email Oliver Grosse-Brauckmann, PKFI EMEI Regional Director at oliver.grosse-brauckmann@pkf.com 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: +213 Ministry of Finance website: www.mf.gov.dz/ KEY TAX POINTS All companies who realize a turnover exceeding 30 million dinars are liable for corporate income tax on their profits arising from any business they carry on in Algeria, except of certain categories restricted quoted by the tax code. All economic activities conducted in Algeria, including industrial and handicraft activities and liberal or commercial professions, are subject to VAT. Dividends paid to shareholders or partners Algerians are subject to a withholding tax of 10%; however, if the shareholder or the shareholder is a corporation, the profit from such distribution is not subject to income tax. Relief from foreign Taxes in Algeria depends on whether the country in question has agreed a double tax treaty with Algeria. Withholding tax applies to wages, dividends, royalties and technical service fees. A. TAXES PAYABLE TAX ON PROFESSIONAL ACTIVITY This tax is applied to the turnover excluding VAT of natural or legal person. The rate of tax is set at 2%. The tax base consists of the total revenues raw professional or excluding VAT turnover when it comes of taxpayers subject to this tax, made in Algeria during the year. A Afghanistan - Algeria
13. 13. PKF Worldwide Tax Guide 2015 5 FEDERAL TAXES AND LEVIES COMPANY TAX All companies, except partnerships and joint ventures under the Commercial Code, are liable for corporate income tax on their profits arising from any business carried on in Algeria. Companies are liable for corporate income tax at the rate of 23% for all kinds of activities Foreign companies not established in Algeria and foreign companies with no permanent establishment in Algeria are subject to withholding tax of 24% on their turnover realized in Algeria or they can be taxed according to the general scheme following a request. TAX ON TOTAL INCOME: It is a tax that applies on the income of individuals (natural person) and those of partnerships. The overall net income is the total net income of the following categories: - The industrial, commercial and craft; - Benefits for non-commercial professions; - Income from agriculture; - Income from the rental of developed and undeveloped properties. - Income from movable capital; - Wages, salaries, pensions and annuities The rate of this tax is illustrated below: Through 2010 DZD Rate % 0 to 120,000 0 120,001 to 360,000 20 360,001 to 1,440,000 30 Over 1,440,000 DZD 35 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; and, 17% for operations related to services and goods not subject to another rate. (2) Registration Registration generally is required for entities that have an annual turnover of DZD 100,000 for sales of goods and DZD 130,000 for the service. A business must register within 30 days of becoming liable. (3) Filing and payment Monthly returns and any tax payable are due by the 20th day of the following month. SINGLE FLAT TAX It is a tax that replaces taxes (TOTAL INCOME TAXE or INCOME TAX , VAT and TAX ON PROFESSIONAL ACTIVITY) that is applied to taxpayers whose turnover does not exceed 30 million dinars. The rate of this tax are: - 12%: applicable to the service delivery activity; - 6%: applicable to sales activity. STAMP DUTY It is a tax that applies to the documents listed by the law, among them there are: - Contracts subject to the registration fee, court documents, negotiable instruments (bills of exchange, promissory notes, bills and non-marketable bonds) trade register. PROPERTY TAX It is a tax that applies to developed and undeveloped properties. The rate of PT vary A Algeria
14. 14. PKF Worldwide Tax Guide 20156 between 3 and 10%. FRINGE BENEFITS TAX As 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 LEVIES VOCATIONAL TRAINING TAX Companies that employ more than six (6) permanent employees are subject to a tax of 1% of the annual payroll for vocational training. An additional tax of 1% of the annual payroll is also payable (for learning) for all companies that employ more than 20 permanent employees, taxpayers may be exempt from paying this tax on condition to initiate training and learning. BRANCH TAX Introduced by the Finance Act 2009 (Section 6), branch 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 company tax at 15%. LUXURY VEHICLE TAX Vehicles registered in the category of passenger cars (PC) which are less than five (5) years old and disclosed in the Balance Sheet of a company established in Algeria, or rented by the company tor a cumulative period equal to or greater than three (3) months during a tax period, are subject to an annual tax determined as follows: Between DZD 2,500,000 and DZD 5,000,000: DZD 300,000 Over DZD 5,000,000: DZD 500,000. However, the tax does not apply to vehicles intended exclusively for 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. B. DETERMINATION OF TAXABLE INCOME 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 in the conduct of business are deductible if they are incurred in gaining or producing assessable income. DEPRECIATION Fixed assets owned by a 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 the authorisation of the tax authorities following a request. For 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 the inventories.The tax authority is very strict regarding the deductibility of provisions, it requires that provisions be documented DIVIDENDS Dividends received from Algerian subsidiaries are not taxable LOSSES Losses may be carried forward for four years.The carry back of losses is not permitted. FOREIGN SOURCED INCOME Revenues from a foreign source that are subject to tax at source on the payment in the country of origin are not subject to tax in Algeria in case of existence of bilateral agreement Non-resident legal entities are taxable on their Algerian source income and on gains 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 concluded by Algeria. A Algeria
15. 15. PKF Worldwide Tax Guide 2015 7 INCENTIVES The Algerian tax legislation has established a number of incentives to facilitate investment and the creation of projects in certain sectors. Incentives are aimed at accelerating the 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 require development. Investment project can be tax advantages in the launch phase, and three years during the operational phase. C. FOREIGN TAX RELIEF 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: Dividends paid to non-resident shareholders are subjected to a 15% withholding tax which may be reduced under a tax treaty. Royalties:The withholding tax on royalties is 24% which may be reduced under a tax treaty. Technical service fees: The withholding tax on technical service fees 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; and, (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 should keep their books of account 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 a 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 the income of their children on his/her tax return in certain circumstances. G. TREATY AND NON-TREATY WITHHOLDING TAX RATES Algeria has tax treaties with the following countries: Germany, South Africa, Austria, Belgium, Bahrain, Bulgaria, Canada, China, South Korea, Spain, Egypt, UAE, France, Italy, Indonesia, Jordan, Kuwait, Lebanon, Portugal, A Algeria
16. 16. PKF Worldwide Tax Guide 20158 Romania, Russia, Sultanate Oman, Syria, Switzerland, Turkey, UMA, Ukraine, Yemen. Angola Member Firm City Name Contact Information Luanda Henrique Cames Serra +93 222 334332 pkf_angola@snet.co.ao Basic facts Full name: Republic of Angola Population: 21.6 million (2013 PRB) Capital: Luanda Major languages: Portuguese (official), Umbundu, Kimbundu, Kikongo and others Major religion: Christianity Monetary unit: Kwanza (AOA) Internet domain: .ao International dialling code: +244 Angola Ministry of Finance website: www.minfin.gov.ao KEY TAX POINTS Companies carrying out industrial and commercial activities in Angola are subject to corporate tax on all Angolan source income. Taxpayers are divided into two groups, each group having different tax payment deadlines. Angolan resident companies are taxed on their worldwide income. Non-resident companies are liable to corporate tax if they carry on a trade in Angola trough a permanent establishment. Double taxation relief is not available in Angola. Angola has not concluded double tax agreements with any jurisdiction. The Large Taxpayers Statute regulates the criteria for large taxpayers classification, their rights and obligations. This regime allows for tax group taxation (tax consolidation) and introduces Transfer Pricing Regulations, including the obligation to prepare the transfer pricing documentation for taxpayers with a turnover exceeding AOA 7,000,000,000.00, Consumption tax is levied on the production and on the import of goods as well on the provision of services, at rates comprised between 2% and 30%. Special tax regimes exist for oil and mining companies. Personal income tax is payable by all Angolan residents and non-residents earning income in Angola at rates based on a sliding scale from 0% to 17%. A. TAXES PAYABLE NATIONAL TAXES AND LEVIES COMPANY TAX Angolan resident companies are liable to corporate tax on all its sources of income and capital gains. A non-resident company carrying on a trade in Angola through a permanent establishment located in Angola is liable to corporate tax on all income and gains attributed to that establishment. Resident companies are subject to taxation on their worldwide income. Income from Angolan companies is taxed under Industrial Tax (Imposto Industrial ). Taxpayers liable for Industrial Tax are divided into two groups: A and B. Taxpayers included in Group A as well as Group B taxpayers that opt for keeping organized accounts, are subject to Industrial Tax on the income effectively obtained and determined in accordance with the accounting records. Group B taxpayers that do not keep organized accounts are subject to tax on the basis of their turnover. In general, commercial companies, as well as permanent establishments of non- resident companies, are mandatorily included in Group A. Group B is applicable to the companies with a share capital of less than AOA 2,000,000.00 and with a turnover not exceeding AOA 500,000,000.00. CORPORATE INCOME TAX RATE AND TAX RETURNS Corporate taxable income, determined on the basis of accounting profits, is taxable at a rate of 30%. A Algeria - Angola
17. 17. PKF Worldwide Tax Guide 2015 9 For Group A taxpayers an annual corporate income tax return (Modelo 1) must be submitted by 31 May of the following year, together with a documentation set that forms part of the technical report. For Group B taxpayers that voluntarily prepare accounting records, an annual corporate income tax return (Modelo 1) must be submitted 30 April of the following year, together with a documentation set that forms part of the technical report. For Group B taxpayers that do not prepare accounting records, an annual corporate income tax return (Modelo 2) must be submitted by 30April of the following year, signed by an accountant and with the description of the sales and services provided. WITHHOLDING TAX ON SERVICES Most types of services are subject to withholding tax at rate of 6.5%. The types of services provided by resident companies that are not subject to withholding tax are the following: Educational Services Medical Services Hospitality Services Transportation Services, including passengers Rental of Equipment subject to Capital Application Tax Telecommunications Services Financial Broker and Insurance Services Recharges with no mark-up, conducted between related companies, defined under the Statute of the Large Taxpayers This withholding tax should be withheld by the payer of the service, and may be deducted on the corporate income tax return (Modelo 1) as an advance payment, up to the amount of the tax assessed. The excess of the amount of tax withheld over the amount of tax assessed, it may be carried forward and set-off against the corporate tax liability of the following 5 years. Likewise the payment of services to non-resident companies is subject to a withholding tax rate of 6,5%, except for the following services: Educational Services Medical Services Transportation Services, including passengers Rental of Equipment subject to Capital Application Tax The provision of services up to a total of AOA 20,000 is exempt from withholding tax. PERMANENT ESTABLISHMENT In accordance with the Angolan General Tax Code (CGT), a fixed place of business from which the company exercises the whole or a part of its activity, namely an office, a branch, a factory is deemed as a permanent establishment. The continued provision of services for periods longer than 90 days within any 12 months period may also be deemed as a permanent establishment. BRANCH PROFITS TAX Foreign 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 of business activities carried out by the head office in Angola, with the same nature of the activities carried out by a permanent establishment of the head office in that territory An Angolan branch of a non-resident company is taxed on its profits and capital gains in the same way as a resident Angolan company. The repatriation of Angolan branch profits to foreign companies is subject to Industrial Tax at rate of 10%. CAPITAL GAINS TAX Capital gains obtained by resident companies are included in their taxable income and taxed under the Industrial Tax at the standard flat rate of 30%. Capital gains on shares or other instruments not subject to Industrial Tax are taxed under Capital Application Tax at a rate of 10%. CONSUMPTION TAX There is no value-added tax (VAT) or sales tax in Angola. However, a consumption tax exists, which is levied on the production and import of goods as well as on the provision of services listed in the Consumption Tax Code. The tax rates vary between 2% (basic products) to 30% (luxury products) for the products. A Angola
18. 18. PKF Worldwide Tax Guide 201510 As far as services are concerned, a standard tax rate of 5% applies (e.g. water and energy consumption, communication services, car rental, consultancy services, namely legal, tax, financial, accounting, IT, engineering, architecture, economics, real estate, audit services, and legal services) except for the hospitality business services which are taxed at a 10% rate. The tax payment should be made by: The manufacturer of the goods, if the goods are produced in Angola The customs office at the importation of goods The company providing the services The consumption tax is to be borne by the acquirer of the goods or services. Services charged by non-resident taxpayers will be taxed by reverse charge by the acquirer of the service. STAMP DUTY Stamp 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 0.1% to 1%. Certain items are taxed at a determined fixed amount. Some examples are: Loans: 0.1% 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%. In the particular case of loans granted by foreign companies 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 TAX Capital Application Tax applies to investment income, such as interest, dividends and royalties and capital gains.The tax rates vary from 5% (e.g dividends and loan interest with maturity over 3 years, dividends from listed companies) 10% (e.g. dividends, royalties, capital gains, bank deposits interest) or 15% (e.g. gambling and lotteries prizes, loan agreements interest). In the case of loan contracts, the tax authorities may deem that the principal is remunerated at a 6% interest rate. Dividends paid between Angolan resident companies are exempt from tax if a participation of 25% has been held for a 1 year period prior to the dividend distribution, otherwise a tax of 10% must be withheld. URBAN REAL ESTATE INCOME TAX (IPU) This tax is levied on rented as well as non-rented urban real estate. In the case of rented real estate, the tenant is required to withhold 15% tax on the rents paid to the landlord. In non-rented urban real estate the owner of the real estate is subject to tax at rate of 0,5% of the asset tax value and exempt if the tax value is below AOA 5,000,000. REAL ESTATE TRANSFER TAX (SISA) This tax is levied on all acts that involve the sale of real estate at a rate of 2% and payable by the acquirer. SPECIAL TAX REGIMES: PETROLEUM INDUSTRY TAX REGIME Income from oil industry is subject to a specific tax regime. This tax regime is applied to all companies that perform activities of search, development, production, storage, treatment and sales of oil and its components. Oil Corporate Income Tax Rates: Production or sharing agreement 50% Other types of joint-ventures 65,75% Angolan companies members of the national concessionaire 30% MINING INDUSTRY TAXATION Mining companies are subject to a specific tax regime. The general rate applied in this tax regime is 25%. A Angola
19. 19. PKF Worldwide Tax Guide 2015 11 B. DETERMINATION OF TAXABLE INCOME GENERAL REGIME Taxable income is calculated by adjusting the accounting profits from non-taxable income and non-deductible expenses.As a general principle, costs are only deductible when necessarily incurred tor the purpose of producing income. DEPRECIATION OF FIXED ASSETS Fixed assets can be depreciated for tax purposes. The depreciation rates are set by specific legislation. The normal method of calculation is the straight-line method. STOCK / INVENTORY Inventory must normally be valued at the effective cost of acquisition or production (historic cost). DIVIDENDS Dividends when subject to Capital Application Tax are excluded from the tax basis for CIT proposes. The same applies for other income subject to Capital Application Tax. INTEREST DEDUCTION Interest charges related to shareholder loans are not tax deductible for corporate income tax purposes. Interest on loans contracted with other parties are eligible as tax deductible. LOSSES Operating losses incurred by resident companies or by a branch of a non-resident company, may be carried forward and set off against taxable profits for the following three years. FOREIGN SOURCED INCOME Angolan companies are taxed on their worldwide income, including any foreign branch income. INCENTIVES Foreign private investment in Angola requires a minimum capital of 1 million USD. Depending on the investment project area of implementation, it may be possible to contract with the Angola Government certain tax benefits namely: (a) Customs Duty (except Stamp Duty, emoluments and statistical fees) exemption or rate reduction for up to six years. (b) Corporate Tax Temporary exemption or rate reduction (up to 50%), for up to ten years. (c) Withholding tax on dividends Temporary exemption or rate reduction for up to 9 years. (d) Real Estate transfer tax exemption or rate reduction. Additionally Micro, small and medium-sized companies may benefit from a reduced corporate income tax rate, a consumption tax exemption on raw materials and from a Stamp Duty exemption. C. FOREIGN TAX RELIEF There is no tax relief on foreign taxes paid by Angolan companies. D. CORPORATE GROUPS A group special regime has been recently introduced by Angolan tax law. Companies which are classified as Large Taxpayers may opt to be taxed by the sum of the taxable profits and losses of the group. 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 non-arms length transfer pricing practices. The recently published Statute of Large Taxpayers introduced new transfer pricing rules.A company listed as a LargeTaxpayer with an annual turnover aboveAOA 7 billion (approximately 70 million USD) is required to prepare transfer pricing documentation. F. WITHHOLDING TAX Under domestic law, dividends paid to non-resident companies are subject to a 10% withholding tax. Dividends paid between Angolan resident companies may be exempt A Angola
20. 20. PKF Worldwide Tax Guide 201512 from withholding tax if a participation of at least 25% is held for a period longer than 1 year prior to the dividend distribution. Dividends paid to resident or non-resident companies with stocks traded on a recognized stock exchange market are subject to a reduced withholding tax rate of 5%, in respect of the 2015 to 2019 years. All royalties paid to resident or non-resident companies are subject to a 10% withholding tax. Interest paid to resident or non-resident companies are subject to withholding tax usually at a rate of 15%. However, certain interest, such as interest on shareholders loans, corporate bonds, bank deposits, treasury bills, treasury bonds and securities issued by the Angolan Central Bank (BNA), are subject to a 10% rate. Interest on treasury bonds and securities issued by the BNA is subject to a reduced rate of 5% if the maturity is of no less than three years. Service fees are usually subject to a 6,5% withholding tax regardless of whether it is paid to a resident or non-resident company. Some exemptions may apply depending on the type of service. G. EXCHANGE CONTROL There are exchange controls in Angola. H. PERSONAL INCOME TAX Individuals receiving employment income for work performed in Angola are subject to personal income tax.The individuals tax payers are divided in three groups: Group A Employment Income; Group B independent professionals (appeared in the list annex to the Personal Income Tax Code); Group C Industrial and Commercial Activities. EMPLOYMENT INCOME (Group A) Employment income is taxed by withholding tax (final tax) levied on the monthly remuneration paid, at the following progressive rates: Taxable Income Exceeding AOA Taxable Income Not Exceeding AOA Tax On Lower Amount AOA Rate On Excess % 0 34,450 0 0 34,451 35,000 Amount 34.451 exceeding 35,001 40,000 550 7 40,001 45,000 900 8 45,001 50,000 1,300 9 50,001 70,000 1,750 10 70,001 90,000 3,750 11 90,001 110,000 5,950 12 110,001 140,000 8,350 13 140,001 170,000 12,250 14 170,001 200,000 16,450 15 200,001 230,000 20,950 16 230,000 - 25,750 17 INDEPENDENT PROFESSIONALS (Group B) Fees paid to independent professionals are subject to withholding tax at a flat rate of 15% on 70% of their total income (being the effective tax rate of 10.5%). INDUSTRIALS AND COMMERCIALS ACTIVITIES (Group C) Income derived from industrial and commercial activities is subject to a rate of 30% determined according to the Minimum Profits table or a rate of 6.5% in other situations. A Angola
21. 21. PKF Worldwide Tax Guide 2015 13 MINIMUM WAGE In Angola, the minimum wage is determined according to the economic sector where the employee works: Commerce and extractive industry : 22,504.50 AOA Transports, services and processing industry: 18,754.00 AOA Agriculture: 15,003.00 AOA SOCIAL SECURITY CONTRIBUTIONS Remunerations paid by employer are subject to social security contributions at the following rates: 8% for the employer, and 3% for the employee (to be withheld by the employer). I. TREATY AND NON-TREATY WITHHOLDING TAX RATES Angola has not concluded a tax treaty with any jurisdiction. Argentina Member Firm City Name Contact Information Buenos Aires Julin Pablo Laski +54 11 52356393 pkf@pkfargentina.com.ar Basic facts Full name: Argentine Republic Population: 41.2 million (2013 PRB) 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 Companies domiciled in Argentina are subject to income tax on all their income. Non-resident companies are subject to tax on Argentina-source income. There is no separate capital gains tax levied on capital gains of companies as they fall under the scope of income tax. Value added tax is applied at all stages of the production and selling processes (output tax). Tax suffered in the immediately preceding stage is deductible (input tax). Any foreign taxes paid on foreign-accrued income may be credited against Argentine income tax up to the limit of the Argentine tax on the same income. Transactions between Argentine companies and related parties are deemed to take 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 permanent establishment 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. Income tax is levied on income earned by Individuals in Argentina and abroad by individuals residing in Argentina. Personal assets tax (wealth tax) is levied on all assets, wherever situated, of Argentine domiciliaries, Argentine assets of non-domicillaries 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 Angola - Argentina
22. 22. PKF Worldwide Tax Guide 201514 A.TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX Companies 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 the 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. 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 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. 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 must be paid at due date. Small and Medium size companies can file an instalment plan (up to six instalments) accruing interest at a monthly 2% rate. CAPITAL GAINS TAX There 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 rate of 15%. 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 rate of 15%.Therefore, the effective tax rate on the 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: Sale of personal property situated in Argentina; Leases and services, including financial and insurance services; Real estate leases; Work performed on third-party real property; Work performed on owned real property, in the case of constructors; Production of personal property commissioned by a third party; Procurement of natural goods commissioned by a third party; Permanent import of personal property; Services provided from abroad and used in Argentina (including interest). In this 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 and 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, certain property plant and equipment, newspapers and magazines, A Argentina
23. 23. PKF Worldwide Tax Guide 2015 15 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. FRINGE BENEFITS No tax is levied specifically on fringe benefits, since they are levied with income tax and social security contributions. MINIMUM PRESUMPTIVE INCOME TAX (MPlT) 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 highest. PERSONAL ASSETS TAX PAID ON BEHALF OF SHAREHOLDERS Companies residing in Argentina are levied on Personal Assets Tax on behalf of its shareholders (see section H. Personal Assets Tax (Wealth Tax) below). SINGLE SIMPLIFIED TAX Single 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 TAXES The 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 A Argentina
24. 24. PKF Worldwide Tax Guide 201516 ineffective and replaced by a neutral tax. In general, small industrial activities are not levied in the jurisdiction where the factory is located. Stamp Duty: 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 Duty 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% of the contract value. Under the aforesaid fiscal agreement, Stamp Duty is also to be phased out in the future but currently it 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 varies according to each jurisdiction. 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 TAXES Excise 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 at the production or importing stage (first stage). Furthermore, a fuel and gas tax is levied on the sale of some of these products. Social Security Contributions: These are federal taxes levied on both employers and employees. The taxable base is the salary. An employer files the tax return with the official authority under self- assessment and pays the tax withheld from the employee together with his/her liability. 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 as 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. B. DETERMINATION OF TAXABLE INCOME Deductions for income tax assessment purposes include expenses incurred necessarily to obtain, maintain and preserve such income. The Income Tax Act lists specific A Argentina
25. 25. PKF Worldwide Tax Guide 2015 17 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 ALLOWANCE At present, there is no income tax incentive scheme in force allowing additional deductions, in whole or in part, tor investment on facilities and equipment. DEPRECIATION OF FIXED ASSETS For 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 / INVENTORY In the case of resale goods and raw materials, inventories should be valued for tax purposes at the end of each business year at their 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 associated with the sale and the net profit margin. In special cases, where cost accounting systems are maintained, own-production goods can be valued at their production cost. CAPITAL GAINS AND LOSSES Capital losses are deductible, subject to the limitations noted in the paragraph under Losses below. DIVIDENDS Dividends and profit distributions are subject to tax at a rate of 10%. 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, dividend tax is not levied, whoever their recipients are, provided that the dividend is distributed on nominative (registered) shares. If the dividends exceed 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 DEDUCTION Interest 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 capitalisation rules, interest is disallowed where all the following conditions take place all together: The companys financial debt/equity ratio exceeds 2:1 The loan is granted by a foreign resident who controls the Argentine company (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. LOSSES Income 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 INFLOWS No special regulations exist to control incoming funds disclosed as capital contributions, A Argentina
26. 26. PKF Worldwide Tax Guide 201518 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. INCENTIVES Promotional 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 MERGERS Corporate 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 BONDS For corporations domiciled in Argentina, the income produced by shareholding is 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. C. FOREIGN TAX RELIEF 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 lossmaking 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 A Argentina
27. 27. PKF Worldwide Tax Guide 2015 19 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% x 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% 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% 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 whos 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% (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). A Argentina
28. 28. PKF Worldwide Tax Guide 201520 H. PERSONAL TAX Two taxes are currently levied on individuals: Income tax; and, Personal assets tax (wealth tax). 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 est