Governments around the world are looking for all new ways to extort from their producers. Whether the reason is just more greed, surmounting debt obligations or preparing for something big, the end result is less money in your pocket if you’re not seeking professional assistance. If you’ve read our Panama journey you will already know this with their protest going on there.
We began writing this thinking that it would be easy to complete–it turns out the number of tax increases around the world are truly too many to cover in one post.We figured we’d post this anyway to inform you!
Austria
is pushing for the introduction of a carbon tax as an incentive to reduce climate-damaging behaviour in the future”
On 15 December 2022, the Council of the EU formally adopted the directive ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union. Austria and the other EU member states are obliged to implement the Pillar II rules as regards the effective tax rate of 15% for large-scale groups. The transposition is to be made until 31 December 2023, and the new rules are to be applied as of 1 January 2024.
Chile
On 29 January 2020, the Chilean Congress approved the so called ‘Modernisation Tax Bill’ after a year and a half of discussion. Regarding taxation of individuals, the major amendment introduced by the Tax Reform is the increase of the Global Complementary Tax and Employment Tax maximum rates from 35% to 40%, as of 1 January 2020.
Italy
In March 2023, the government approved a provision authorising the implementation of a review of the Italian tax system. This proposal is linked to the three-year period 2023-2025 Budget Law. The main objectives to be achieved are (i) the prevention and reduction of tax evasion and avoidance; (ii) the rationalisation and simplification of the tax system through the use of technologies; (iii) the review of the formalities with a reduction of administrative costs; (iv) the promotion of investments and capital transfers to Italy, in compliance with European legislation; and (v) the consistency with the Organisation for Economic Co-operation and Development
Malaysia
In Budget 2024, it is proposed that capital gains tax (CGT) will be imposed on companies, limited liability partnership (LLP), co-operatives and trust bodies, from 1 January 2024 on:
Gains from disposal of capital asset situated in Malaysia. Shares in unlisted companies incorporated in Malaysia. Shares in foreign incorporated company deriving value from real property in Malaysia. Gains from all types of capital assets situated outside Malaysia, remitted into Malaysia.
North Macedonia
The taxation of capital gains from sale of securities and shares released from investment will be applicable starting from 1 January 2023 onwards.
A new tax on vehicles was introduced, which is applicable as of 1 January 2020.
Singapore
Under the proposed Section 10L, in certain situations, capital gains from the sale or disposal of foreign assets are subject to tax, if such gains are received in Singapore.
As the non-taxation of capital gains is one of the cornerstones of the regime, the introduction of Section 10L would be a fundamental change. Under the proposed Section 10L, gains from the sale or disposal of any movable or immovable property situated outside Singapore (“foreign assets”) by a relevant entity that are received in Singapore from outside Singapore, on or after 1 January 2024, will be treated as income chargeable to tax.
Hong Kong
“…Hong Kong amended its FSIE scheme with effect from 1 January 2023 and will make further amendments with effect from 1 January 2024. The first amendment was making specified foreign sourced income in the form of (1) dividends; (2) interest; (3) intellectual property (IP) income, and (4) disposal gains in relation to shares or equity interests received in Hong Kong subject to tax unless certain additional (stringent economic substance) requirements are met. The second amendment will extend the scope of (5) disposal gains to cover even more asset classes.
Bahamas
The Bahamas Business Licence Bill, published alongside the country’s budget for 2023/24, will tax Bahamas-domiciled international business companies (IBCs) on their overseas revenues for the first time. As of 1 January 2024, a 0.25 per cent levy will be imposed on revenue attributable to operations outside the jurisdiction, starting at BSD2,500 on the first BSD1 million and rising to a maximum of BSD100,000. “The policy is driven by meeting commitments to the OECD and EU on preferential treatment for foreign entities”
Czech Republic
The CIT rate is 21% for tax periods starting in 2024 (19% for the previous tax periods) and applies to all business profits, including capital gains from the sale of shares.
In 2023 through 2025, a ’windfall tax‘ (60% CIT surcharge) applies to excess profits of large banks and companies within the energy sector. The excess profits are calculated on the basis of the average CIT base declared by the company in years 2018 through 2021, and this average CIT base is then increased by 20%. The part of the annual CIT base generated by the company in years 2023 through 2025 that exceeds this increased average CIT base for years 2018 through 2021 is subject not only to the standard CIT of 19% but also to the additional CIT surcharge of 60% (therefore, the total CIT applying to these excessive profits is 79%).
As of 2021, the Czech Republic returns to progressive taxation, with the introduction of a marginal rate of 23%
For sake of length of the article, please see my Bermuda article here
Norway
Pursuant to the proposal, net income from the production of wind power will be taxable both at the ordinary 22% corporate income tax (CIT) rate and, in addition, at a 40% effective rate of resource rent tax, resulting in an effective marginal tax rate of 62%.
Onshore wind power is already subject to certain excise duties. First, as of 1 January 2023, income from electricity sold at prices exceeding 0.70 Norwegian kroner (NOK) per kWh is subject to an excise duty of 23% (‘high-price contribution‘)
(Petroleum Tax Regime) Taxation is based on net income at a marginal tax rate of 78%, which comprises the ordinary 22% CIT rate and a 56% special tax. All income is subject to 22% CIT, while only income from offshore production and pipeline transportation of petroleum on the NCS (offshore tax regime) is subject to the additional 56% special tax.
Following the 2022 shift to a ‘sequential’ tax system, tax on upstream petroleum tax activities is calculated in two steps. Firstly, the tax in the ordinary 22% tax base is calculated. The resulting tax amount is then deducted from the special tax base, on which a ‘technical special tax rate’ of 71.8% is applied in order for the overall effective tax rate to remain 78%:
Portugal
–> Portugal removed their NHR tax program and their golden visa program, a major revenue source for the nation.
Armenia
This [capital gains tax] exemption has positioned Armenia as an appealing destination for foreign capital, encouraging investors to engage in various industries and sectors within the country without the burden of taxation on income from the sale of shares or similar investments.
However, the impending legislative amendments, effective from January 1st of 2024, make a shift in the tax policy framework, the purpose of which is to broaden the tax base and ensure that non-resident organizations contribute to increasing the tax revenue generated from their investment activities in Armenia.
1. Deductibility of Payments to Related Parties is Limited. From 2023, Kazakhstani companies will no longer be able to claim a corporate income tax deduction for certain payments (i.e., for management, consulting, auditing, design, legal, accounting, advertising, marketing, franchising, financing (except for interest on loans), engineering, agency services, and payments for the use of IP rights) made to their related parties. Instead, these payments will only reduce up to 3% of the “taxable income” (i.e., revenues minus allowable deductions). The change is aimed at preventing aggressive intra-group tax planning, but has sparkled a lot of criticism from the investment community.
2. Dividend Exemption is replaced with Preferential Rate. Previously, foreign shareholders were exempt from dividend withholding tax if (subject to certain exceptions) they have owned their shares in local companies for more than three years. From 2023, this exemption will be replaced with a preferential tax rate (10% vs. 15%) if the previous conditions (including the three-year holding period) are satisfied.
3. Income on Listed Securities is Exempt only if Active Trades. Previously, foreign companies owning locally listed securities were exempt from income tax on dividends and interest. From 2023, the exemption will apply only if there are active trades in such securities according to criteria specified by Government regulations. As of the date of this publication, no such regulations had been enacted.
Guernsey
the long tax neutral country has tried three times to initiate a 5% GST sales tax–thankfully the residents there have their wits about them and they continue to reject the proposal. Other taxes remain in discussion.
Anguilla
Please check out our Anguilla article for a thorough, honest review of the territory. Anguilla has upped their exit and entry taxes (hell of a thing for a country that relies on tourism) but perhaps the most noticeable tax change has been the initiation of a 13% GST on virtually all areas of the economy (of course, the services industry is not exempt). We already figured the prices alone were about 15-20% overvalued, plus if you’re dealing with restaurants an assumed 15% service fee–now add 13% onto this figure. You’ll find more in the article but this is an obvious form of looting while you still can in my estimation.
Montenegro upped taxes
Please see our Montenegro article for the details
Happy New Year? If you’re the Thai State.
Thailand has become the low-tax jurisdiction in Southeast Asia–proving to be superior against Singapore in terms of freedom by a long-shot. Their system was simple. Thai-income produced outside of Thailand was not taxed in Thailand as long as it was not brought into the country in the year of tax filing, after this, it could be brought into Thailand and remain tax exempt. In other words, there was a 1 year grace period which made it easy for to live off of savings until then OR to send the earnings to an offshore bank account not in Thailand.
As of January 1st, 2024 this is changing. A person is living in Thailand for more than 180 days a year but receives income outside of Thailand since the last 10 years and transfers this money into Thailand. This income will be subject to tax regardless of when it was earned. Due to the new clarification, the taxation does not apply to income he is transferring into Thailand, if he/she can prove that the income was earned before 2024, however. In short, any income brought into Thailand is now taxable.
Of course these examples are specific to one form of tax but do not delve into the new regulations, permits, miscellaneous fees and additional indirect taxes that all countries and territories have created recently–they all add up and not in your favour. I wish I could make this post much longer but you’d be at it all day.
Closing
This is part of a larger crackdown by governments to extort as much as they can from the people amid screaming high debts, inflation, weakening currency support, weak collateral in the financial system and high counter party risk. If you were unsure how you felt about the European Union and the OECD know that they are responsible for much of the tax increases as well as being 100% responsible for the economic substance requirements they bully nations and territories into enforcing. Emerging markets are quite literally starving for dollars and they are extorting as much as they can to meet their debts or, they are preparing for something worse, war.
If you want help finding a place where there’s low tax for your company or personal tax regime. Contact us at either [email protected] or our subsidiary at [email protected] We look forward to hearing from you
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