FRANCE ANNOUNCES DRAFT 2014 BUDGET – LIGHTER  TAX BURDEN FOR BUSINESSES

France’s draft budget law for 2014 was presented to Parliament on September 25 and is now under discussion in the National Assembly and Senate.

It proposes reforms to rekindle France’s sluggish economy and fix the record-high deficit and unemployment rate, including a lighter tax burden on businesses, €15 billion in public spending cuts, a higher VAT and higher taxes on households.

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CORPORATE TAX REFORM IS COMING TO SWITZERLAND

Tax experts in Switzerland now predict that certain Swiss tax regimes – the cantonal tax regime, the holding regime and, in particular, the auxiliary company regime, will ultimately need to be repealed.

A repeal of these regimes will trigger the need for reform of Switzerland’s corporate tax system. Such a reform may include a redefinition of the tax base.

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CHINA LAUNCHES PILOT FREE TRADE ZONE IN SHANGHAI

Foreign investors in certain industry sectors can look forward to further reforms and liberalizations in China’s newly approved Free Trade Pilot Zone in Shanghai.

While the full text of the Free Trade Pilot Zone Plan will not be released for a few more days, reports already indicate that its attractions will include highly preferential tax policies. The Shanghai government is reportedly striving to implement a lower preferential enterprise income rate applicable to qualified enterprises within the FTPZ – various sources have reported a possible rate of 15 percent.

Other favorable tax policies within the FTPZ that have been in discussion include payment of income taxes on proceeds generated from outbound investment by installments, and lower tax rates for offshore trading and financing.

Many expect that other liberalized policies will address customs supervision, capital flow and market access. For instance, in China’s existing bonded zones, the entry and exit of goods are under customs supervision. In contrast, the FTPZ is intended to be a real free trade zone, whereby customs recordal for goods shipped from overseas into the FTPZ will no longer be required. Customs supervision will also be streamlined.

The liberalization of policies regarding taxation, customs supervision, capital flow and market access has the potential to significantly cut down operating costs for multinationals and may be conducive to efficient internal resource allocation.

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EU VAT PLACE-SUPPLY RULES EVOLVE AGAIN – GET READY TO TACKLE THE CHANGE

The European Union VAT rules regarding place of supply will once again change. EU-based businesses involved in providing electronically supplied services (including telecommunications, broadcasting and other electronic services) to non-business consumers will need to be aware, and change their relevant procedures.

The change is part of the extension of the EU “mini one-stop shop” system to EU-based businesses. The system aims reduce administrative burdens by allowing suppliers to declare and account for VAT in one EU member state.

Although the change is more than a year off, affected businesses should be preparing to make the relevant changes, which concern such issues as pricing structures, customer location, whether your business should relocate, and the knock-on effect that your IT systems will experience.

Find out more about key points to making these changes.


CHINA TO FURTHER SIMPLIFY FOREIGN EXCHANGE ADMINISTRATION

China’s State Administration of Taxation and State Administration of Foreign Exchange have jointly promulgated new rules that aim to facilitate cross-border payments and receipts of foreign exchange regarding service trade items by simplifying administrative procedures and documentation requirements.

These new rules relax the historical foreign exchange controls on inbound and outbound remittances for non-trade transactions. It is expected that payment settlements will become significantly more efficient as a result of these new rules.

Find out more about these changes.


AUSTRALIA: GOODS AND SERVICE TAX CLAUSE  HELD TO BE VOID FOR UNCERTAINTY

A recent decision of Australia’s Victorian Supreme Court highlights the need for suppliers to ensure that all of their transaction documents (including contracts, agreements and deeds) include adequately drafted pricing provisions and goods and service tax (GST) clauses.

While the case involved a real estate transaction, the issues raised are relevant for all transaction documents under which a supplier intends that the consideration be expressed GST-exclusive, with GST (where applicable) being payable as an additional amount pursuant to a GST clause.

Find out more about this decision.