News from Panis

Key changes of the corporate income tax reform

For taxable periods starting on 1 January 2018 or after, several new measures with respect to corporate income tax are effective. The new measures are part of the law on corporate income tax reform of 25 December 2017.

Panis highlights the most important changes.

Withholding tax on paid-up capital reimbursements

As from 2018 onwards a reimbursement of paid-up capital will become proportionally taxable as a dividend distribution, in case the company has a balance in retained earnings.

A reduction of capital will be considered to be pro rata a reduction of capital and pro rata a distribution of retained earnings. On the distribution of retained earnings, a dividend withholding tax of 30% will be due – if no exemptions or reductions are applicable.

Dubai VAT registration is now open

The UAE Federal Tax Authority (FTA) announces that online registration for VAT is now open.

  • All businesses with a turnover exceeding AED 150m should apply for registration before 31 October 2017.
  • All businesses with a turnover exceeding AED 10m should apply for registration before 30 November 2017.
  • All businesses that must be registered by 1 January 2018 should submit their registration applications before 4 December 2017 to minimize the risk of not being registered in time for the beginning of the new year.

A business must register if:

Advance tax payments encouraged

The interest rate to calculate the penalty for insufficient prepayments will increase from 1% to 3%, leading to an average tax increase of 6,75% from income year 2018 (tax assessment year 2019) onwards. For such reason Panis strongly recommends you to make advance tax payments.

Belgian government announces corporate tax reform

The Belgian Government reached an agreement on a corporate tax reform. The reform will be implemented in two stages in 2018 and 2020. Panis highlights the key points of this plan that affect the diamond sector. Most important key point is a gradual drop of the company tax rate. For large companies, the general tax rate of 33,99% becomes 29,58% for income year 2018 (tax assessment year 2019), and 25% for income year 2020 (tax assessment year 2021).

Benefit of advance tax payments

By making advance tax payments, your company can avoid a tax surcharge on the corporate tax. If the advance tax payments are made on a regular basis and before specific dates, your tax position can be optimized.

Carat tax regime not applicable to diamond brokers

The carat tax regime is not applicable to diamond brokers.

The definition of a ‘broker’ can be found in the Q & A on the AWDC website, under Question 5.

A broker is an intermediary who sells diamonds in name and for account of a principal, and never becomes the legal owner of the merchandise. (S)he charges a commission fee and does not realize any turnover from diamond trading.

The broker must be able to proof that (s)he is acting for the account of a principal, and not trading from the own diamond stock. Following indications might prove this practice:

New european legislation regarding interest limitation

On 28 January 2016, the European Commission released the Anti-Tax Avoidance Directive that will be implemented in Belgium law before the end of 2018. Up to now the Belgian legislator has not taken any initiative, but since the implementation will have an in impact for all Belgian companies, Panis wants to inform you upfront.

Base erosion and profit shifting (BEPS) and transfer pricing (TP) regulations impose new reporting requirements

Last year Panis informed you about the implementation of the new Belgian law regarding transfer pricing.

Meanwhile the Belgian Government has issued the final forms and filing instructions.

The filing will have a significant impact on the workload for companies which are part of an international group. Depending on your structure, up to three reporting forms are applicable.

Update carat tax

Yesterday 15th of December Members of Parliament voted the carat tax law which is approved.

Panis will keep you updated on the exact content once the final text of the law is available.