International Tax Treaty Developments
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France-Moldova: The new income tax treaty entered into force on April 23, 2024, replacing the 2006 treaty that never entered into force. The treaty provides reduced withholding tax rates, a mutual agreement procedure with arbitration, and an entitlement to benefits provision.
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Azerbaijan-Turkey: Azerbaijan’s National Assembly approved the law for the ratification of the new income tax treaty with Turkey, which will replace the 1994 tax treaty once in force and effective.
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Bangladesh-Qatar: Officials from Bangladesh and Qatar signed an income tax treaty, the first of its kind between the two countries, which will enter into force after the ratification instruments are exchanged.
Incentives for Energy Efficiency and Electric Vehicles
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Cyprus: Increased capital allowance rates have been introduced for expenditure on improving energy efficiency and electric vehicles, including a 7% rate for improving building energy efficiency, a 20% rate for technical building energy efficiency systems and renewable energy systems, and a 33.33% rate for electric vehicles.
Tax Compliance Simplification Measures and Guidance
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Italy: The Italian Revenue Agency provided guidance on the recent simplification of tax return compliance for income tax, VAT, IRAP, and income tax withholding, including amendments to the annual return calendar with new return deadlines.
- United States: The IRS issued a notice providing penalty relief for the underpayment of estimated income tax to the extent attributable to a portion of a corporation’s corporate alternative minimum tax (CAMT) liability.
- Saudi Arabia: The Zakat, Tax, and Customs Authority issued guidelines on the country’s new Regional Headquarters (RHQ) Program, providing details on qualifying criteria, tax incentives, economic substance requirements, and tax procedures applicable to RHQs.
Updates to Tax Reporting Requirements
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Austria: The National Council is considering a draft law for the introduction of public Country-by-Country (CbC) reporting as required by Directive (EU) 2021/2101, with reporting thresholds and requirements in line with the Directive.
VAT Relief and Registration Threshold Changes
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United Kingdom: HM Treasury announced an upcoming consultation on VAT relief for charitable donations of low-value household goods, aimed at encouraging donations and alleviating the administrative burden on businesses.
- Belgium: The Federal Public Service Finance issued a notice on opting for the VAT exemption for small businesses, clarifying that businesses with a turnover not exceeding EUR 25,000 in the past calendar year may apply for the exemption by June 1, 2024.
Insights:
This week’s tax policy updates highlight the ongoing efforts by governments to streamline tax compliance procedures, encourage energy efficiency and sustainability, and align their tax systems with international standards.
The international tax treaty developments between France and Moldova, Azerbaijan and Turkey, and Bangladesh and Qatar demonstrate the importance of bilateral agreements in fostering cross-border trade and investment while preventing double taxation.
The introduction of increased capital allowances for energy efficiency and electric vehicles in Cyprus reflects the growing global focus on sustainability and the role of tax incentives in promoting environmentally friendly practices.
The tax compliance simplification measures in Italy and the United States underscore the need to reduce the administrative burden on taxpayers while ensuring the proper collection of tax revenues.
Updates to tax reporting requirements in Austria emphasize the increasing emphasis on transparency and the prevention of tax avoidance, particularly in the context of multinational enterprises.
Finally, the VAT relief and registration threshold changes in the United Kingdom and Belgium illustrate the efforts by governments to support charitable activities and small businesses, especially in the post-pandemic economic recovery.
