Argentina

Argentina increases threshold to ARS 225,937 per month from ARS 175,000 per month for the year 2022 for increased special deduction/ special tax allowance

Argentine Government has increased the special tax allowance (increased special deduction) for the year 2022. This special tax allowance (increased special deduction) was introduced in 2021 as a relief for the employees belonging to lower-income groups by exempting income upto a specified threshold. A special deduction is calculated whereby the total taxable net profit amounts to zero where the salary is not exceeding specified threshold. For 2022, the exemption threshold stands increased to ARS 225,937 (previously was ARS 175,000). Accordingly, employees with monthly salary settled during the period January 1 to December 31, 2022, or the average of the gross monthly salary for the same period, whichever is lower, not exceeding ARS 225,937 (ARS 175,000 till December 2021), are exempt from income tax, effective January 1, 2022.

Gross amounts which are used for calculating additional special deduction for income derived from performance of i) public service, labor employment and ii) retirements or pensions are increased from ARS 175,000 to ARS 225,937 and from ARS 203,000 to ARS 260,580 respectively.

Implication:

Companies can consider the latest thresholds for calculating the tax liability of employees.

Minimum and maximum basis for employee social security contributions increased to ARS 10,989.91 and ARS 357,166.98 respectively with effect from March 2022

With effect from March 1, 2022, the minimum basis for employee social security contributions is increased to ARS 10,989.91 from ARS 9787.95 and maximum basis is increased to ARS 357,166.98 from ARS 318,103.83. These bases are used for computation of employee’s portion of social security contributions.

Implication:

Employers will need to consider the revised bases for calculating employee’s social security contributions.

Argentina to increase minimum wages in 4 phases starting April 1, 2022

In accordance with Resolution 04/2022 dated March 22, 2022, the monthly minimum wage in Argentina will be increased in 4 phases during the year 2022, which are as follows:

• From April 1, 2022 – ARS 38,940 (previously ARS 33,000 till March 31, 2022)
• From June 1, 2022 – ARS 42,240
• From August 1, 2022 – ARS 45,540
• From December 1, 2022 – ARS 47,850

The monthly minimum wage applies to workers/ employees covered under Labour Contract Regime.

Implication:

The employers need to consider the minimum wages, as applicable, while processing payroll in 2022.

Argentina amends Employment Contract Law making provision of childcare spaces mandatory for companies having 100 or more employees for children between 45 days and 3 years of age

Decree 144/2022 dated March 23, 2022, has brought some amendments to Article 179 of Employment Contract Law. The amendments include:

• Companies with 100 or more employees are required to have day-care facility for taking care of children between the age 45 days to 3 years during the working hours of employees.
• One or more employers located in an industrial park situated within 2 kms from each other can make arrangement of day-care spaces on consortium basis.
• Alternatively, companies can make non-taxable reimbursements of full/ partial cost of day-care services. The monthly reimbursement can be lesser of 40% of the monthly minimum wage for caregivers (i.e., ARS 37,973 from March 1, 2022) or actual monthly day-care expenses.

The provisions are effective from March 23, 2022, and the companies have one year to comply with the new requirements.

Failure to comply with this provision will be treated as serious contravention and will be dealt with accordingly.

Implication:

The companies having 100 or more employees shall need to make arrangements within one year of this Decree, for providing childcare facility.

Argentina extends payment facility regime for outstanding tax payments and social security contributions for small and medium taxpayers from March 31 to May 31, 2022

The Argentine Government through General Resolution No. 5178/2022 dated March 30, 2022, extended the payment facility regime for small and medium enterprises (“SME”). The regime provides for preferential instalment terms and interest rates for payment of pending tax and social security contributions. The payment facility regime was to expire on March 31, 2022, but is now extended till May 31, 2022, due to the COVID-19 pandemic.

Implication:

Small and medium entities can avail this relief measure and make full payment of its pending tax and social security amounts till May 31, 2022.

Australia

Australian Government allows electronic execution/ signing/ sharing of company documents, holding of virtual meetings on a permanent basis

The Corporations Amendment (Meetings and Documents) Act 2022 dated February 22, 2022, amended the Corporations Act 2001 (Corporations Act) making certain changes permanently in force which were introduced as relief measures on a temporary basis during the COVID-19 pandemic.

Now the companies are allowed to:

• Electronically execute/ sign any company documents,
• Share documents related to company’s meetings by an electronic mode, and
• Conduct meetings either in physical mode, or hybrid mode (i.e., physical as well as the virtual mode) or in only virtual mode.

Implication:

The companies can now electronically execute, sign, and share any company-documents and can conduct virtual meetings to ensure the smooth functioning of their activities.

Cessation of employment will no longer be treated as a taxing point in Australia with respect to Employee Share Schemes (“ESS”) interests with effect from July 1, 2022.

In accordance with the Corporate Collective Investment Vehicle Framework and Other Measures Act, 2022 dated February 22, 2022, cessation/ termination of employment will not be considered a taxing point for calculating Employee Share Scheme interests (ESS interests) for tax-deferred schemes.

It applies from July 1, 2022, to new and also to existing ESS interests, which have not reached an ESS taxing point before July 1, 2022.

As per ESS rules, a discount on shares, rights, and options (ESS interests) given to employees in respect of their employment is taxed at the time of grant or on a deferred basis. If the ESS interest is taxed on a deferred basis, tax is deferred until the earliest of:

• Removal of or no sale/ disposal restrictions in case of shares and in case of options, exercising of options and no disposal restrictions.
• Cessation of employment (this is removed effective from July 1, 2022).
• 15 years from the grant.

Implication:

Australian companies will be able to conserve and acquire more talent by revising the Employee Share Schemes (“ESS”) considering the changes.

Australia proposes gradual implementation of e-invoicing, starting with B2G in July 2022 and B2B as of July 2023

The Australian Government has proposed implementation of e-invoicing in a phased manner giving businesses a “Business e-Invoicing Right” (“BER”). As per the BER, the businesses can request their suppliers to issue an electronic invoice instead of paper invoice. The proposal will be gradually implemented in stages starting July 1, 2022, for Business to Government (B2G)/ public sector. The proposal is in consultation phase.

In 2019, Australia has adopted Pan European Public Procurement Online (“PEPPOL”) framework for transmitting (i.e., sending and receiving) e-invoices. PEPPOL makes possible cross-border digital exchange of documents and exchange of invoices with registered trading partners.

The implementation stages are as under:

• B2G/ Public Sector by July 1, 2022: The e-invoicing will be adopted in the public sector from July 1, 2022.
• Large businesses by July 1, 2023: Companies may request large trading partners to send e-invoices through PEPPOL framework from July 1, 2023, onwards.
• Medium businesses by July 1, 2024: Companies may request medium to large trading partners to send e-invoices through PEPPOL framework from July 1, 2024, onwards; and
• Small businesses by July 1, 2025: All companies will be required to exchange e-invoices through PEPPOL framework from July 1, 2025, onwards.

Implication:

Australian businesses need to register with the PEPPOL network through access points, start using it for transmitting e-invoices uniformly and minimize the use of paper invoices.

Australia removes monthly minimum salary/ wage threshold for superannuation guarantee contributions by employers with effect from July 1, 2022

The Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Act 2022 dated February 22, 2022, removed the monthly minimum threshold for salary/wages for calculating superannuation guarantee.

In Australia, every employee (irrespective of full-time, part-time or casual) is entitled to compulsory superannuation (super) contributions from the employer, if following conditions are met:

• Employee is 18 years of age or more, and
• paid AUD 450 or more in a month (This condition is removed effective from July 1, 2022).

Accordingly, from July 1, 2022, employers will be required to make super guarantee contributions to super fund of eligible employees irrespective of how much they are paid, though the employees are still required to satisfy other super guarantee eligibility requirements.

Implication:

Employers are now required to update their payroll and accounting systems for super payments to be made with effect from July 1, 2022.

Australian government increases the maximum superannuation guarantee contribution base to AUD 60,220 per quarter for income year 2022-23 and increases the superannuation guarantee contribution rate from 10% to 10.5% with effect from July 1, 2022

The Australian Taxation Office (“ATO”) has announced the latest superannuation guarantee contribution rate and threshold for income year 2022-23.

For income year 2022-23 starting from July 1, 2022, the maximum superannuation contributions base is set at AUD 60,220 per quarter (previously AUD 58,920 per quarter), and the superannuation contribution rate is increased to 10.5% (previously 10%).

The superannuation guarantee contribution is the percentage contribution which an employer makes into super fund, with the percentage currently set at 10%. The rate will further increase by 0.5% per year, until it reaches 12% from July 1, 2025, onwards. The contribution is made at the prescribed rate (i.e., currently 10%) of employee’s earnings up to a certain limit, which is the maximum super contribution base. If the employee earns exceeding the limit for each quarter, then the employer is not required to make contributions for the part of earnings exceeding the limit. The maximum super contribution base is indexed each year in line with average weekly ordinary time earnings (AWOTE).

Implication:

Employers will need to update their payroll and accounting software systems considering the revised contribution base and rate.

Canada

Canada introduces changes in federal income tax slabs for 2022; tax rates remain unchanged

Individual residents in Canada are subject to Canadian income tax on worldwide income. The government recently introduced changes in slabs for personal income tax for the year 2022, though there is no change in the “tax rates”. The ‘changes in slabs’ are as follows:

Income tax slabs for 2022	Income tax slabs for 2021	Federal Tax Rates (%) for 2022 & 2021
0 to CAD 50,197	0 to CAD 49,020	15
CAD 50,198 to CAD 100,392	CAD 49,021 to CAD 98,040	20.5
CAD 100,393 to CAD 155,625	CAD 98,041 to CAD 151,978	26
CAD 155,626 to CAD 221,708	CAD 151,979 to CAD 216,511	29
CAD 221,709 and above	CAD 216,512 and above	33

Further, the basic personal tax credit amount for 2022 has been increased to CAD 14,398 from CAD 13,808 for 2021. The personal tax credit amount is included in the total amount of tax credits, 15% of which are deducted from the total tax payable.

Implication:

The employers should consider the above slab changes while calculating the tax liability of employees.

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Federal minimum wage in Canada increased from CAD 15.00 to CAD 15.55 per hour from April 1, 2022

Effective from April 1, 2022, Canada has increased the minimum wages rate from CAD 15.00 per hour to CAD 15.55per hour. Every year on April 1, the federal minimum wage is adjusted based on an average annual increase of the Consumer Price Index (“CPI”), to ensure that the minimum wage rate is in line with inflation.

The federal minimum wage applies to employees working in federally regulated industries, such as banks, postal services, interprovincial transportation, and federal Crown corporations. In case of employees working in ‘industries not regulated by the federal government’, the provincial minimum wage applies. If the general minimum wage rate is higher in provinces or territories, the higher rate will continue to apply.

Implication:

Employers should factor in the increase in minimum wages while taking decisions related to payroll.

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Ontario requires employers to implement a ‘right to disconnect’ policy, prohibits certain non-compete agreements

On December 2, 2021, the Ontario government passed ‘Bill 27 – Working for Workers Act, 2021’, which amends Ontario’s Employment Standards Act, 2000 (“ESA”). The new act covers the provisions to help the employees disconnect from the office, prohibits certain non-compete agreements, and introduces a licensing regime for temporary help agencies and recruiters. The new provisions include:

• The employers employing 25 or more employees are required to have a written policy in place on ‘disconnecting from work’, which is also to be provided to all employees. The requirement is applicable as follows:
• For employers employing 25 or more employees on January 1, 2022 – A written policy on disconnecting from work is required to be in place until June 2, 2022.
• From the year 2023 onwards, for employers that employ 25 or more employees on January 1 of any year – A written policy on disconnecting from work is required to be in place before March 1 of that year.

The term “disconnecting from work” as defined in the ESA means not engaging in work-related communications, including emails, telephone calls, video calls, or sending or reviewing other messages, to be free from the performance of work.

• The new act amends the ESA to prohibit employers/ prospective employers from entering into an employment contract or other agreement with an employee that includes a ‘non-compete’ provision/ agreement. A ‘non-compete provision/ agreement’ prohibits the employees, post-termination of their employment, from engaging in any business, work, occupation, profession, project, or other activity which competes with the employer’s business.

The act provides for two exceptions to the prohibition against non-compete agreements viz. I) non-compete agreement after sale/ lease of business, and ii) if the employee is an “executive,” i.e., any person who holds the office of chief executive officer, president, chief administrative officer, chief operating officer, chief financial officer, chief information officer, chief legal officer, chief human resources officer or chief corporate development officer, or holds any other chief executive position. The prohibition against the non-compete agreement is in force effective from October 25, 2021.

• The new act requires recruiting and temporary help agencies to now obtain a license for operating. Employers can now hire only from such licensed agencies.

Implications:

• The employers are required to prepare the ‘disconnecting from work’ policy and circulate the same amongst employees.
• The employers will have to remove the non-compete provision from the employment contracts / cancel the non-compete agreement unless covered by the specified exceptions.
• Employers taking help of recruiting and temporary help agencies for hiring, will need to ensure compliance with licensing requirements.

Employers will have to revise employment agreements to implement these new legislative change.

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Ontario introduces significant beneficial ownership register requirements for private corporations effective January 1, 2023

Aiming towards more transparency in the corporate sector, the Ontario Government has made amendments to the business corporations act related to the recording of significant beneficial ownership information.

The amendments will require the private corporations operating in Ontario to prepare and maintain a register of individuals with significant control over the corporation (“ISC register”) with effect from January 1, 2023. The reporting is to be done annually, at least once every financial year, and within 15 days of becoming aware of the change in the information provided.

For the purposes, “an Individual with significant control over a corporation” includes a shareholder or beneficial owner of, or who directly or indirectly controls either 25% or more of voting shares or shares worth 25% or more of the fair market value of all the corporation’s outstanding shares.

The ISC Register of the corporation must contain the following information related to each significant beneficial owner:

• Name, date of birth, and last known address;
• The date on which they became the significant beneficial owner or ceased having significant control.
• Jurisdiction of residence (for tax purposes);
• Description of how they have significant control, including a description of any interests and rights in the corporation’s shares.

Any failure or contraventions of the above provisions, such as not maintaining the register or providing incorrect information, will attract a monetary fine of up to CAD 200,000 as well as confinement for up to 6 months on the director, officer, corporation, and/or the shareholder.

Implication:

Corporations will have to identify and record their beneficial owners as well as, report any change in the beneficial ownership within the timeline.

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British Columbia introduces five days of mandatory paid sick leave annually for employees effective from January 1, 2022

Starting from January 1, 2022, under the Employment Standards Act (“ESA”) of British Columbia, all eligible employees, irrespective of part-time or full-time, are entitled to five days of mandatory paid sick leave annually. The employees should be covered under ESA and must be employed for at least 90 days with the employer. Certain types of employees are not covered by ESA, such as employees of federally regulated sectors, self-employed workers or independent contractors, and employees in certain professions and occupations.

Further, the mandatory annual paid sick leave is in addition to three days of unpaid sick leave under ESA, resulting into total of eight days of sick leave. It is not necessary for the employee to take this paid sick leave uninterruptedly.

Implication:

Employers will have to make necessary changes in employment contracts and policies considering the annual mandatory paid sick leave under ESA.

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Quebec increases minimum wages per hour from CAD 13.50 to CAD 14.25 effective May 1, 2022.

Quebec has increased the minimum wage rate effective from May 1, 2022, from CAD 13.50 per hour to CAD 14.25 per hour for the year 2022.

Implication:

Employers in Quebec must consider the revised minimum wage rate and align their payroll processes.

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China

China revises foreign investment Negative lists, provides additional relaxations

Foreign investment in China is governed though a negative lists, which set out restricted or prohibited business sectors with respect to investment by foreign entities.  On December 27, 2021, the “National Development and Reform Commission” (NDRC) and the “Ministry of Commerce” (“MOFCOM”) jointly released two negative lists, i.e., “Special Administrative Measures for Foreign Investment Access” (the “National Negative List 2021”) and the “Special Administrative Measures for Foreign Investment Access in the Free Trade Zone” (“FTZ Negative List 2021”). Both the lists are effective from January 1, 2022.

National Negative List 2021 has reduced the number of restricted/prohibited industry sectors from 33 to 31 while FTZ Negative List 2021 reduced the number from 30 to 27.

The following is the summary of key changes: –

Changes in Foreign Investment
List Name and Sector	Negative List 2020 (applicable for 2021)	Negative List 2021 (applicable for 2022)	Implications
National Negative List (Manufacturing)	Restrictions on foreign shareholding in the manufacturing of passenger cars (Chinese party must hold 50% of the shares); and a single foreign investor cannot establish more than two joint ventures to manufacture the same type of vehicle in China.	Removed	Foreign investors can have wholly owned subsidiaries which can manufacture passenger cars; and foreign investor may establish more than 2 joint ventures to manufacture the same type of vehicle.
Restriction on manufacturing of satellite television, ground receiving facilities and key components.	Foreign investors are allowed to invest in manufacturing of satellite television or its related components.
Free Trade Zone Negative List (Business Services)	Investment in market surveys is limited to joint ventures. For radio and television rating survey controlling stake shall be held by the Chinese party.	Restriction on Investment in market surveys only through joint ventures is removed (however, requirement of Chinese entity having controlling stake for radio /television rating survey remains the same)	Foreign investors are now permitted to invest in market survey services in China through wholly foreign-owned enterprises or through Chinese-foreign joint ventures in a free trade zone.
Prohibition on Investment in social survey services.	Foreign investors are now allowed to invest in social surveys in the form of Chinese-foreign joint ventures with 67% shareholding being held by Chinese party and a legal representative being Chinese national	Foreign investors are allowed to invest in social surveys in the form of Chinese-foreign joint ventures.

Minimum Wages raised for Shenzhen for 2022

Effective from January 1, 2022, Shenzhen has raised the monthly minimum wage standard for full-time employed workers from CNY 2,200 to CNY 2,360 (increase of 7.27%) and the hourly minimum wage standard for part time workers from CNY 20.3 to CNY 22.2 (increase of 9.36%).

Implication:

Employers in Shenzhen need to take note of new minimum wage standard and align their payroll accordingly.

China’s Government Work Report 2022: Highlights from the Two Sessions

Premier of the State Council of the People’s Republic of China (“PRC”) Li Keqiang delivered the “Government Work Report” (“GWR”) on March 5, 2022, at the fifth session of the 13th National People’s Congress and it was adopted on March 11, 2022. The report outlined various tax and other measures for the upcoming year, mainly for small taxpayers. To implement some of the proposals made in GWR, the Ministry of Finance (“MOF”) and the State Taxation Administration (“STA”) have made several announcements in March 2022 for preferential Income tax policies and VAT relief for small enterprises.

Key changes are as under:

Corporate tax

• MOF and STA vide Announcement dated March 18, 2022, further relaxed the preferential tax treatment (which was originally introduced in 2019) for small and thin-profit enterprises (STEs)* having an annual taxable income of more than CNY 1 million and less than CNY 3 million. Accordingly, for the period from January 1, 2022, to December 31, 2024, with respect to annual taxable income between CNY 1 million to CNY 3 million, CIT would be payable at 20% rate on 25% of the annual Taxable Income, resulting in effective CIT rate of 5%.

• Earlier announcement dated April 7, 2021, with respect to annual taxable income below CNY 1 million, whereby CIT rate of 20% on 12.5% of taxable income (effective tax rate of 2.5%) was made applicable will continue to apply up to December 31, 2022.

* Small and thin-profit enterprises (“STEs”) refer to enterprises engaged in industries that are not prohibited or restricted by the government and which satisfies the below conditions:

• The annual taxable income does not exceed CNY 3 million;
• The total number of employees is not more than 300; and
• Total assets do not exceed CNY 50 million.

Value-Added Tax (“VAT”)

• As per MOF and STA announcement No. 14 dated March 21, 2022, Qualifying taxpayers*, which include all types of entities small, medium, or enterprise engaged in software and information technology services, scientific research, technical services, and so on, will be able to receive a monthly refund for excess input VAT credits from April 2022 onwards.

* To be eligible for a refund for excess input VAT credit, a qualifying taxpayer must meet certain conditions, like the credit rating for tax compliance must be A or B, not have been involved in any fraudulent activities in the three years preceding the application for the refund, not have been penalised more than once in the last three years, etc.

• As per MOF and STA announcement No. 15 dated March 24, 2022, small taxpayers* to whom 3% VAT rate was applicable would be exempted from VAT for the period from April 1, 2022, to December 31, 2022, and would be exempt from prepayments.

Such small taxpayers who were subject to tax rate of 3% were allowed to pay VAT at 1% for the period April 1 ,2021 to March 31, 2022.

* Small-scale taxpayers normally refer to taxpayers whose annual VAT taxable sales do not exceed CNY 5 million. However, for the period starting from April 1, 2021, to December 31, 2022, only those small-scale VAT taxpayers whose monthly taxable sales do not exceed CNY 150,000 are exempted from the VAT.

Additional special deduction for the Individual Income Tax (“IIT”) introduced in China

Pursuant to proposals in Government Work Report, the State Council, vide notice dated March 28, 2022, has announced that effective from January 01, 2022, nursing expenses for children under the age of three shall be deducted from taxable income as special additional deductions (at CNY 1,000 per child per month).

The newly established deduction is applicable to both domestic and expatriate employees. Either parent can claim 100% of the deduction or both parents can claim 50% deduction.  The method chosen cannot be changed within a tax year.

In order to claim a special additional deduction, taxpayers are required to provide personal information and retain relevant documentation records for five years as evidence.

Implication:

The new deduction would have an impact on individual tax liability of employees.

Colombia

Colombia introduces amendments in the definition of reporting entity and changes in the due dates for filing ultimate beneficial ownership information.

In Colombia, the ultimate beneficial ownership information is to be submitted to the Single Registry of Final Beneficiaries (“RUB”). The Colombian tax authority (“DIAN”) through Resolution No. 000164 dated December 27, 2021, has published rules regarding reporting of ultimate beneficial owners (UBOs). Resolution No. 37 of 2022 dated January 15, 2022, amends Articles 4, 10 and 13 of the Resolution No. 000164 and makes following changes:

As per the amendments, reporting entities now include foreign legal persons that do not make investments in Colombia through i) legal entities, ii) permanent establishments and/or structures without legal personality/status. Hence, such foreign legal persons are now required to submit beneficiary ownership information. Previously, reporting of beneficial ownership information was applicable to foreign entities when more than 50% of the value of their assets were located in Colombia as per their financial statements.

Timelines for submission of information are as under:

Incorporation date of legal entities / creation date of structures without legal status	Timeline
Before September 30, 2022 (previously, January 15, 2022, as per old resolution)	Submit the information about their UBOs (and register in the SIESPJ, if applicable) before December 31, 2022 (previously September 30, 2022, as per old resolution)
On or after September 30, 2022 (previously, January 15, 2022, as per old resolution)	Should register in the SIESPJ within a month of incorporation and should submit the information about their UBOs within a month of their registration with SIESPJ (previously 2 months).

Implication:

The foreign legal entities are required to register with SIESPJ and submit UBO information, as applicable, in accordance with the revised timelines.

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Colombia enacts new law “Labor Disconnection Law” regulating the right to disconnect from work effective from January 6, 2022

Law 2191 of 2022 namely the “Labor Disconnection Law” came into force on January 6, 2022. This new law regulates and encourages disconnection from work for workers/ employees after working hours or during vacation/ break/ leave etc. The right to disconnect from work means not to contact workers/ employees, by any means or tools whether technological or not, for matters related to work activity after their working hours and during vacations and breaks.

Salient features of the new law are as follows:

The Law applies to the public as well as private employers and employees.

The employers need to formulate/devise an internal work disconnection policy detailing the exercise and protection of the right, complaint mechanism for any incidences of violation/ non-observance of the right and redressal of complaint mechanism.

Implication:

The employers need to adhere to the provisions of the law and protect the “right to disconnect from workplace” for all its employees.

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Colombia amends paternity leave provisions, introduces a shared parental leave, flexible part-time parental leave, and anti-discrimination provisions at the workplace.

Colombia enacted Law 2114 of 2021 effective from July 29, 2021, thereby amending leave related and other provisions for the employees. The amendments include the following:

Implication:

Employers need to assess and revise their leave policy, employment contracts as per the new provisions.

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Colombia issues decree setting deadlines for tax return filing and transfer pricing compliance for 2022

In Colombia, filing deadlines are issued at the end of the respective tax year by an annual decree. The due date depends on the last digit of the taxpayer’s tax identification number. Though the deadlines are set every year, they generally vary only by a few days each year. Accordingly, Colombian Ministry of Finance and Public Credit has issued Decree 1778 dated December 20, 2021, setting deadlines for filing income tax return, payment, and transfer pricing compliance, which are as under:

Income tax return filing and payment of tax:
Large Taxpayers (The taxpayers, viz. legal or natural persons are qualified as large taxpayers due to their volume of operations, income, assets, or importance in the collection as per the criteria set by the Government.)	1st payment instalment – February 8 to February 21, 2022 2nd payment instalment and return filing – April 7 to April 22, 2022 3rd payment instalment – June 7 to June 21, 2022
Other Taxpayers	1st payment instalment and return filing – April 7 to May 6, 2022 2nd payment instalment – July 8 to July 22, 2022
Transfer Pricing Compliance:
Transfer Pricing informative return	September 7 to September 20, 2022
Local file*	September 7 to September 20, 2022
Master file*	December 12 to December 23, 2022,
Country by Country Reports (“CbCr”)**	December 12 to December 26, 2022
Compliances	Due dates

*Threshold for filing Master and Local File – Requirement applies to multinational group companies having operations with related parties and having gross assets exceeding UVT 100,000 or gross income exceeding UVT 61,000 and having inter-company transactions exceeding UVT 45,000.

**Threshold for filing Country-By-Country Report (“CbCr”) – Requirement applies to multination entities with annual consolidated group revenue equal to or exceeding UVT 81,000,000 in previous year.

UVT 1 = COP 38,004

Implication:

The companies should adhere to the timelines and ensure timely compliance.

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Colombia issues decree on Binding Corporate Rules providing minimum standards for the protection of personal data

The Colombian Government through Decree 255 dated February 23, 2022, introduced Binding Corporate Rules for data protection.

The decree provides that the policies formulated by businesses with respect to protection of personal data must contain minimum standards for i) the transfer of personal data to third countries, as well as ii) obtaining a certification from the Superintendence of Industry and Commerce (“SIC”) regarding good practices followed by the businesses in the protection of personal data.

These rules ensure the following:

Businesses are required to obtain approval on their policy adopting ‘Binding Corporate Rules’ from SIC. The policy is effective once approved by SIC and businesses are required to publish such approved policy on their websites.

Implication:

Businesses are required to formulate their policy adopting ‘Binding Corporate Rules’ and get it approved from SIC.

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Croatia

Croatia increases the national minimum monthly wage rate from EUR 567.32 to EUR 623.70 effective from January 1, 2022

In 2022, the minimum wage in Croatia has increased from EUR 567.32 per month to EUR 623.70 per month with effect from January 1, 2022.

Implication:

Employers in Croatia must consider the revised minimum monthly wages rate and align their payroll processes.

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Czech Republic

Czech Republic extends the paternity leave period from 1 week to 2 weeks effective from January 1, 2022

Effective from January 1, 2022, the Czech Republic government has amended act no. 187/2006 via act no. 330/2021 making certain amendments in the provisions relating to paternity leave. The paternity leave is increased from one week to two weeks. Further, the period during which the paternity leave can be availed is also extended in cases where hospitalization is required for the mother or the child. A doctor’s certificate is required in such cases stating the health reasons for hospitalization.

Implication:

Employers are required to alter their employment policies in line with the amended regulations.

Czech Republic increases minimum wage limits from CZK 15,200 to CZK 16,200 in 2022 effective from January 1, 2022

Effective from January 1, 2022, the Czech Republic has increased the minimum wages for 2022 from CZK 15,200 to CZK 16,200.

Implication:

Employers in the Czech Republic need to take note of the changes and adjust their payroll policies accordingly.

Denmark

Denmark raises Intrastat Reporting thresholds for 2022 effective from January 1, 2022.

Effective from January 1, 2022, Denmark has raised Intrastat reporting thresholds for declarations for EU intra-community dispatches and arrivals for 2022 as under: –

• Arrivals DKK 13 million. (Previously DKK 6.9 million till December 31, 2021); and
• Dispatches DKK 10 million, (previously DKK 5.2 million DKK till December 31, 2021).

The declaration deadline for every month is the 10th weekday of the following month.

Intrastat declaration contains disclosure of goods description, commodity code, delivery terms, mode of transport, countries of destination and origin, weight and or quantity, and invoice amount. Starting from January 2022, companies with total dispatches/exports of DKK 10 million or more to EU countries and/or Northern Ireland in 2021 are required to report two new variables when reporting Intrastat Exports, which are 1) Country of Origin; 2) VAT Number of Partner.

Implication:

Entities must take into consideration revised thresholds for submission of Intrastat reports.

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Denmark amends Parental leave period to promote Work-life Balance and Gender Equality

The Danish Parliament amended the present Parental Leave Act on March 3, 2022, based on the EU directive on parental leave. The new rules apply specifically to children born after August 2, 2022. The amendments aim at encouraging equal sharing of leaves between the partners, which will achieve a better work-life balance and promote gender equality.

• Leave eligibility –According to amendments now the government has permitted 24 weeks of leave for each parent out of 48 weeks of combined leaves and 13 weeks of leave is transferable while 11 weeks of leave will be earmarked to each parent. This does not change length of total maternity leave period of 52 weeks of which 48 weeks of leave to be availed after birth. Bifurcation of leave is as under

Sr. No	Number of weeks	Type of leave	Remarks
1	4 weeks	Pregnancy Leave prior to birth (The mother’s maternity leave entitlement is lowered by 4 weeks, compared to the present laws)	Mothers can avail the same provided that minimum 2 weeks of leave taken following the birth of a child
2	2 weeks	Earmarked maternal and paternal leave	Available to each partner
3	8 weeks	Transferable maternity and paternity leave	Available for each partner and must be utilised before the child’s 1st birthday
4	9 weeks	Earmarked parental leave	Available for each partner
5	5 weeks	Transferable parental leave	Available for each partner and must be utilised before the child’s 9th month birthday

• Payment During Leave –
• Under the current new guidelines, the allowance is distributed equally between the mother and the father/co-mother, implying that each partner (after the delivery) can receive an allowance for 24 weeks. In comparison to the current guidelines, the total amount of allowance remains unchanged.
• If both parents are employed, 11 weeks of allowance is reserved for each party, and these weeks cannot be transferred, however, the remaining 26 weeks can be freely divided between the mother and the father/co-mother.
• If one or both parents are not deemed “employees” (for example, self-employed or managers), only two weeks are set aside for the parent who is not a wage earner. As a result, 22 weeks can be transferred.

• For single parents -Any single parent, whether the mother or the father/co-mother, is entitled to 46 weeks of paid leave following the birth of their child. From January 1, 2024, a single mother, father, or co-mother can transfer a portion of their non-earmarked leave to a close family member. This could be a grandmother or a sibling. Before the kid reaches the age of one, the close family member to whom the leave was transferred must take the leave.
• For LGBT+ Families -From January 1, 2024, LGBT (Lesbian, Gay, Bisexual, and Transgender) + families’ leave options will be expanded, as the child’s “legal” parents will be able to transfer non-earmarked weeks of leave to the child’s “social” parents. Social parents include but are not limited to the legal parent’s spouse, a known donor, or the known donor’s spouse or cohabitant with a parental relationship to the child.

   Implication:

Employers must take cognisance of the said amendments and accordingly adapt their employment policies.

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Rates for tax-free mileage allowance for the year 2022 announced

With effect from January 1st, 2022, the tax-free mileage allowance for cars and motorcycles shall be DKK 3.51 per kilometre (earlier DKK 3.44 per kilometre) and DKK 0.55 per kilometre in the case of Mopeds and Bicycles. If the employee drives cars and motorcycles more than 20,000 kilometres per year, the additional kilometre charge reduces to DKK 1.98 per kilometre. This limit applies only in the case of Individual employers. 

Even though mileage allowances are tax-free for employees, it is an employer’s obligation to report all payments.

Denmark amends rules for Work from Home, effective from the end of April 2022.

On February 3, 2022, the Danish Ministry of Employment announced new/updated rules for employees working from home /remote locations. The amendments are expected to take effect at the end of April 2022. The following are key changes.

Employees are allowed to work from home using their own equipment if it meets certain standards. Employers are required to provide the appropriate infrastructure, such as furniture and equipment, if the equipment used by the employee does not satisfy the standards. The equipment includes computer, monitor, keyboard, mouse, chair, and lamp. However, this requirement would apply only if employees work from home or remote location for more than two days a week on an average over a month.

Implication:

Employers should assess the existing situation with their employees in order to ascertain the impact of the proposed amendment and make appropriate arrangement for compliance.

_________________________________________________________________________________

Denmark enhances Transfer Pricing Documentation requirements for year 2022.

On January 31, 2022, the Danish Ministry of Finance issued updated guidance – “CD11.13.1 Transfer pricing documentation obligation-rule and scope” regarding the transfer pricing documentation obligation for all Danish companies meeting certain criteria. The amendments require such companies to submit transfer pricing documentation within 60 days of the due date for filing the corporate income tax return. This means that the Transfer Pricing documentation for the Financial Year 2021 must be submitted to Danish Tax Authority by the end of August 2022 unless an extension is granted.

Additionally, if the master file for the relevant year is not ready by the deadline for submission, the master file for the previous income year can be filed as a temporary document subject to fulfilment of the following conditions:

• The provisional master file submitted is less than 1 year old at the submission deadline.
• It must be specified when the final Master File for the relevant income year will be submitted; and
• Brief disclosure of all important changes affecting the Danish taxpayer for year under consideration should be disclosed if they are not already disclosed in local file.

The taxpayer need not request for extension if the above conditions are met. The new transfer pricing documentation requirements apply for fiscal years beginning on or after January 1, 2021. Penalty for non-compliance can reach up to DKK 250,000 per company p.a.  Further, an additional liability at 10% of income adjustment can be imposed.

Implication:

Companies subject to TP provisions should assess the amended requirement and make themselves ready for compliance within the deadline failing which steep penalties are applicable.

France

The French Finance Law for 2022 enacted, changes in individual tax slabs/ CIT rates

On December 31, 2022, the French government published the Finance Law 2022 in the official gazette. The Finance Law 2022 includes several tax measures, including compliance with EU law regarding non-resident withholding taxes, changes in Corporate Income Tax (“CIT”) rates, accounting depreciation on goodwill, and so on.

Some of the important tax measures are detailed below:

The rates have not been changed since 2021, but there have been changes in the income bands to which the rates are applied. The table below explains the income bands and applicable tax rates for 2022.

Income Tax Rates	Income Bands (2022)	Income Bands (2021)
0%	Up to EUR 10,225	Up to EUR 10,084
11%	EUR 10,226 to EUR 26,070	EUR 10,085 to EUR 25,710
30%	EUR 26,071 to EUR 74,545	EUR 25,711 to EUR 73,516
41%	EUR 74,546 to EUR 160,366	EUR 73,517 to EUR 158,122
45%	From EUR 160,367 and above	From EUR 158,123 and above

As a part of the tax reforms initiated by the French Government in the year 2018, the CIT rate for 2022 and for years ahead shall be 25% for all the companies. Also, as long as the triggering event occurs on or after January 1, 2022, the withholding tax rate on certain income received by non-residents (e.g., dividends, substantial participation capital gains, or real estate capital gains), which is generally in line with the corporate income tax rate, is also 25%.

The Finance Law 2022 clarifies that goodwill amortization or depreciation is not deductible generally; however, it makes an exception viz. (i) for goodwill recorded in the account of small businesses as defined in French Commercial Code and (ii) other companies which can prove that benefit from goodwill is temporary and would not be available at certain date. Thus, such goodwill will be deductible for 10 years period (small business) or over useful life or 10 years when such useful life cannot be determined (for other companies). Such benefit is available only for goodwill acquired between January 1, 2022, and December 31, 2025.

Taxes would be withheld after allowing 10% deduction towards expenses while making payments to non-resident companies located in an EU/EEA country that receive French-source income within the scope of the article 182B of French Tax Code. Further, recipient of income can claim refund if tax liability would have been lower if all direct expenses for earning such income have been deducted. However, such benefit would be available only if French withholding tax cannot be deducted against such entity’s local CIT liability.

The “young innovative companies” (“JEI”) programme assists SMEs with high growth and innovation potential. A company must be less than 8 years old and R&D expenses must account for at least 15% of its tax-deductible expenses to qualify for tax benefits and social contribution exemptions under this plan.

The JEI status of a corporation is extended from 7 to 10 years under the 2022 finance law, i.e., till the JEI’s 11^th anniversary.

For Small and Medium Sized Enterprises (“SMEs”) in the industrial, commercial, or agricultural sectors that incur specified innovation expenses (e.g., prototype development), a 30% (previously 20%) innovation tax credit (“CII”) shall be available, with a ceiling of EUR 400,000 per SME effective from January 1, 2023. The financial law of 2022 extends the credit until December 31, 2024. Further General and Administrative expenses within the CII base shall be excluded.

Implication:

Employers are required to modify their payroll tax calculation for changes in individual tax rates.  Companies should evaluate impact of reduction in tax rate and eligibility for incentives.

_______________________________________________________________________________

France mandates the application of VAT reverse charge mechanism from January 1, 2022

Effective from January 1, 2022, import VAT will be declared and paid directly in the French VAT return declaration instead of the customs declaration, i.e., as a reverse charge self-assessed by the taxpayer.  All businesses registered for VAT in France (including non-taxable persons with an intra-community VAT number) will be required to apply the reverse charge mechanism for import VAT, and no previous authorization will be necessary.

Implication:

The reverse charge procedure will allow businesses to self-assess and deduct import VAT in their VAT return and no physical payment at border would be required.

__________________________________________________________________________________

France increases minimum wage for the year 2022

Effective from January 1, 2022, the minimum hourly wages in France have increased to EUR 10.57 (previously EUR 10.48). Due to the aforesaid increase, the minimum monthly salary will increase to EUR 1,603.12 (previously EUR 1,589.47).

Implication:

Employers in France shall note the revised minimum wages rate and align their payroll processes accordingly.

Remote working no longer mandatory in France from February 2, 2022

On January 20, 2022, the French Prime Minister announced a progressive end to current COVID restrictions.

The deadline for businesses to organise 3 to 4 days of remote work per week for employees was extended until February 2, 2022. From February 2,2022, remote working is not mandatory but highly recommended to restrict the spread of COVID-19.

Implication:

Employers need to take a note of change in provisions related to remote working and adopt or amend the working policies accordingly.

_________________________________________________________________________________

Germany

Germany: The Insolvency Benefit Contribution decreases from 0.12% to 0.09% for 2022

The Insolvency contribution rate for 2022 is decreased from 0.12% to 0.09%

The Insolvency Benefit Contribution is solely paid by the Employers. This helps to compensate the employees’ wages in case of the sudden termination of business activities. Employees can make a claim to a centralised contribution system (‘Insolvenzumlage‘) in case of Insolvency.

Implication:

Employers need to take into consideration the change in Insolvency contribution rates and alter the payroll processing accordingly to accommodate changed rate.

__________________________________________________________________________________

Important changes in German Employment Law for 2022

Following are some of the important changes introduced in employment law for the year 2022:

Increase in Statutory Minimum Wage

Effective from July 01, 2022, the Statutory Minimum Wage per hour will increase to EUR 10.45 (currently the rate is EUR 9.82)

Digital sick notes

In the COVID-19 situations, the doctors/physicians in Germany were required to provide the Digital Sick Note to health insurer. With effect from July 01, 2022, employers would also get digital intimation from health insurer giving details about employee’s absence. But this does not absolve employees from informing their employers about their absence due to sickness.

Social Security Thresholds

The income threshold for contributions to the General Pension Insurance Scheme for 2022 are given below

Home-Office Allowance

The home allowance scheme will be extended until December 31, 2022.  The allowance is payable at EUR 5 per day (Max. EUR 600.00 considering 120 days per year) and was introduced in 2020.

Implication:

Employers should take note of changes in social security threshold as well as extension of home office allowance and make appropriate adjustment to their payroll processes.

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Germany: Tax advisors to get three more months to file the tax return i.e., May 31, 2022

As a part of tax relief measures announced by the government to tackle with COVID-19 difficulties, the tax advisors would get additional 3 months to file their clients’ tax returns of 2020. The deadlines for filing tax returns for 2021 and 2022 will also be extended, though the extended due dates have not been announced yet.

Implication:

Companies filing their tax return through advisors will benefit from extension of deadline for filing tax returns.

__________________________________________________________________________________

Germany: Work from home no more compulsory post May 25, 2022

The German government has made an announcement to end the compulsory remote working post May 25, 2022.The mandatory requirement to work from home, which was introduced during pandemic, was re-introduced in November 2021 due to increase in COVID-19 infection rate. As the situation is normalizing, the government on March 20, 2022, announced the end of mandatory remote working regulations with transitional period ending on May 25, 2022.

Further, the employers need to take all the necessary precautions before asking employees to come to workplace i.e., maintaining distance and hygiene, reducing operational personal contact, or offering COVID tests at workplace.

Implication:

Employers must ensure compliance with all covid measures before asking employees to come to workplace. Employers should conduct risk assessment and make appropriate changes.

__________________________________________________________________________________

Honduras

Honduras changes personal income tax brackets for 2022

The Honduras revenue administration (“SAR”) published the progressive individual income tax brackets and rates applicable for the year 2022 with effect from January 1, 2022:

The income tax slabs for 2022 are as under:

Tax Slabs for 2022 (Amounts in HNL)	Tax Slabs for 2021 (Amounts in HNL)	Tax Rates (For 2021 and 2022 unchanged)
0	181,274.56	0	172,117.89	0%
181,274.57	276,411.57	172,117.90	262,449.27	15%
276,411.58	642,817.63	262,449.28	610,347.16	20%
642,817.64	above	610,347.17	Above	25%

Implication:

Employers need to consider current income tax brackets and rates while calculating tax liability of employees.

Honduras increases monthly minimum wages with effect from January 1, 2022

On April 3, 2022, Honduras’s Tripartite Table (containing representatives of the Government, business sector and labor sector) has reached an agreement to increase the minimum wages in Honduras between 5.32% and 8% for years 2022 and 2023, depending on the workforce size. The increase is effective from January 1, 2022, and workers in the textile sector and Free Zone companies are excluded. The increase in minimum wages in percentage is as follows:

Number of employees	2022 (% increase)
1-10	5.32%
11-50	5.5%
51-150	6.5%
151 and more	7.5% (8% for year 2023)

The revised minimum wages for transportation, storage and communications sector are as follows:

Number of employees	2022 (Amounts in HNL)	2021 (Amounts in HNL)
1-10	10,354.05	9,831.04
11-50	10,682.86	10,125.94
51-150	12,474.26	11,712.92
151 and more	14,093.51	13,110.24

Implication:

The employers should consider the increased minimum wages for the payroll of employees.

Hong Kong

Hong Kong Budget 2022-23 Highlights

The Finance Secretary of Hong Kong, Paul Chan presented the Budget for 2022-23 on February 23, 2022. Hong Kong saw recovery of economy in the year 2021 with a growth of 6.4% and decline in unemployment rate from 7.2% early last year to 3.9% during November 2021 to January 2022. Forecast growth rate for Hong Kong economy for the year 2022 is 2% to 3.5% with inflation rate at around 2%.

The key proposals of the Budget 2022-23 are:

For Companies

For Individuals

Other Proposals

Under the property tax regulations (known as ‘Rating system’), a property tax (‘rate’) is payable at a specified percentage of the assessed rateable value of the property. Government considers, on an annual basis, granting of rates concession based on the prevailing circumstances. The Government has proposed the following measures:

• ‑2024 only eligible natural persons can apply for rates concession in respect of only one domestic property under their name; and
• ‑2025, introduction of progressive rates concession system for domestic properties (excluding public rental housing), replacing flat rate concession of 5% of rateable value. The progressive rates concessions will be in the range of 5% – 12% based on the annual rateable value of the property.

Hong Kong extends deadline for 2021/22 Tax Returns and CbC notification

Tax Returns Extension

The Hong Kong Inland Revenue Department (“IRD”) has announced extension of due dates for 2021/22 profit tax returns as follows:

Accounting Date and Code	Extended Due Date	Electronic Due Date	Conditions
April 1, 2021 – November 30, 2021 (For N code returns)	June 30, 2022	July 14, 2022	N/A
December 1, 2021 – 31 December 31, 2021 (For D code returns)	August 31, 2022	September 14, 2022	N/A
January 1, 2022 – March 31, 2022 (For M code returns)	November 15, 2022	November 29, 2022	N/A
Current Year Loss Cases for the Tax Year 2021/22) (For M code returns)	January 31, 2023	January 31, 2023	Have allowable losses for the Tax Year 2021/22.

CbC Notification deadline extension

Vide press release dated March 18, 2022, IRD has also extended the country-by-country (“CbC”) notification deadline for the taxpayers with accounting period ending between December 31, 2021, and February 28, 2022. CBC notification is required to be filed within 3 months after the end of the relevant accounting period. However, in view of the pandemic, IRD has extended the deadline allowing the specified taxpayers to file the CbC notification by June 1, 2022.

Implication:

Companies are required to file relevant tax returns for 2021/22 and submit the CbC notification within the extended timeline.

Hungary

Introduction of “White Card Permit” for Residency for Digital Nomads in Hungary

The Government of Hungary has introduced a new residence permit type called the ‘white card’ for allowing foreign nationals to live in Hungary while working for a company outside of the country. The white card’s validity is limited to 1 year; however, it can be extended for an additional year. Digital nomads (digital nomads are generally remote workers who usually travel to different locations) will be able to apply for a “white card,” a special type of residence tailored for foreign nationals who meet the following criteria.

White card can be revoked if at any time such person does not continue to satisfy the requirements or there is a breach any of the regulations associated with holding a white card.

India

India: Finance Act – 2022 – Highlights

Indian Finance Minister Ms. Nirmala Sitharaman presented India’s budget for the year 2022–23 in the Parliament on February 1, 2022. The Finance Ministry has now notified the Finance Act, 2022 consequent to passing of Finance Bill, 2022 in the Parliament. Certain amendments were made when the Finance Bill was passed in Lok Sabha (the lower house of Indian Parliament).

The key provisions of Finance Act, 2022 are as under:

Direct Tax (Income Tax)

There are no changes made in Personal Income Tax slabs and rates in the Finance Act, 2022. The tax rates applicable for FY 2022-23 (to individuals less than 60 years of age) are same as applicable for FY 2021-22, which are as under:                       

Standard Tax Regime (The exemptions and deductions are available)	Optional Tax Regime (The exemptions and deductions are not available)
Annual Taxable Income (In INR)	Income Tax Rate	Annual Taxable Income (In INR)	Income Tax Rate
Up to 250,000	Nil	Up to 250,000	Nil
250,001 to 500,000*	5%	250,001 to 500,000*	5%
500,001 to 1,000,000	20%	500,001 to 750,000	10%
Above 1,000,000	30%	750,001 to 1,000,000	15%
		1,000,001 to 1,250,000	20%
		1,250,001 to 1,500,000	25%
		Above 1,500,000	30%

* Individual taxpayers having taxable income up to INR 500,000 get full tax rebate (INR 12,500) and are not required to pay income tax. Please note that taxable income exceeding INR 500,000 does not get any benefit from such tax rebate and hence individuals must pay income tax on full taxable income (exceeding INR 250,000).

The tax computed as above is to be further increased by surcharge at rates mentioned below and cess @ 4%.

There is no change in corporate income tax rates (“CIT”). The key CIT rates applicable to Indian companies are as under:

Category/ Condition for FY 2022-23	Income Tax Rate (Excluding surcharge and cess)
Domestic manufacturing companies incorporated on or after October 1, 2019, and which commence manufacturing on or before March 31, 2024 (extended from March 31, 2023) and have opted for special/ optional tax regime	15%
Companies opting for special/ optional tax regime where exemptions/deductions cannot be claimed	22%
Company with total turnover or gross receipt in the FY 2020-21 not exceeding INR 4 billion	25%
Any other domestic company	30%

The above tax is further increased by surcharge at rates mentioned below and cess @ 4%.

Other key changes

The tax amendments listed below are applicable for Financial Year (FY) 2022-23 corresponding to Assessment Year (AY) 2023-24, unless specified otherwise.

Direct Tax

Indirect Tax

Goods and Service Tax (“GST”)

Customs duties

Other

India: From January 1, 2022, onwards Non-filers of GSTR- 3B return are not allowed to file GSTR-1

From September 1, 2021, to December 31, 2021, non-filers of GSTR-3B returns for the 2 consecutive months were banned from filing Form GSTR-1 for the subsequent month. Form GSTR-1 is used for reporting details of all outward supplies of goods and services made during a particular month and it is required to be filed by the 11^th day of the subsequent month.  Form GSTR-3B is a monthly self-declaration to be filed, for furnishing summarised details of all outward supplies made, input tax credit claimed, tax liability ascertained, and taxes paid during the relevant month, and it is required to be filed between the 20th and 24th day of the succeeding month.

Central Board of Indirect Taxes and Customs (“CBIC”) tightened the above restriction further vide notification dated September 24, 2021, by reduced the period of default in filing of GSTR-3B from two months to one month. As a result, January 1, 2022, onwards, registered persons who have not furnished their Form GSTR-3B for the preceding month are not allowed to furnish Form GSTR-1 for the subsequent month until the previous month’s GSTR-3B is filed. Necessary changes have been made to GST portal to implement the above.

Implication:

To avoid ban on the filing of Form GSTR-1, companies should ensure that pending forms GSTR-3B are filed.

India: Certain provisions and rules of Companies Act, 2013 to apply to Limited Liability Partnerships (“LLP” s) including significant beneficial ownership (“SBO”) rules.

The Ministry of Corporate Affairs (“MCA”), vide notification dated February 11, 2022, has notified the application of certain provisions and rules of the Companies Act, 2013 to limited liability partnerships (LLPs) with some modifications (like company word shall be substituted by LLP, member with partner, director with designated partner, etc.).  The following rules have been made applicable to LLPs:

Implication:

Limited liability partnerships (“LLPs”), its partners and designated partners are advised to complete the UBO compliances and take note of other applicable provisions.

India: The Limited Liability Partnership (Amendment) Act, 2021, effective from April 1, 2022

The Limited Liability Partnership (“LLP”) (Amendment) Bill, 2021 was passed by the Lok Sabha on July 30, 2021, and by the Rajya Sabha on August 4, 2021, and has become a law after receiving the assent of the President on August 13, 2021. Further, vide notification dated February 11, 2022, the Ministry of Corporate Affairs (“MCA”) announced April 1, 2022, as an appointment date (effective date) from which the provisions of the LLP Amendment Act 2021 shall come into force.

Key Highlights of the amendment Act as follows:

Implication:

These amendments in the LLP Act would encourage businesses to consider formation of LLP or convert existing Partnership firm into LLP.

India: MCA amends LLP Rules on incorporation procedure, adjudication of penalties, etc.

Limited Liability Partnership (Amendment) Rules, 2022 – Key changes

Vide notification dated February 11, 2022, the Ministry of Corporate Affairs (“MCA”) made several amendments to Limited Liability Partnership Rules, 2009. The amendments are effective from April 1, 2022.

Key Amendments

A new name will be recorded by the ROC and a fresh incorporation certificate will be issued in Form 16A.

Limited Liability Partnership (Second Amendment) Rules, 2022

Vide another notification dated March 4, 2022, MCA has made further amendments to LLP Rules as under which are effective from the date of its publication in the official gazette.

Key amendments

Implication:

LLPs should take note of various changes and should act accordingly.

India: MCA mandates compliance for CSR reporting, introduces Form CSR-2

The Ministry of Corporate Affairs (“MCA”), vide notification dated February 11, 2022, has mandated furnishing of corporate social responsibility report in a newly introduced “Form CSR-2” to the Registrar of Companies (“ROC”) for companies to whom the corporate social responsibility provisions are applicable under section 135 (1) of the Companies Act, 2013. The said provisions are applicable to company who in the preceding financial year, has net- worth of INR 5,000 million or more, or Turnover of INR 10,000 million or more or Net profit of INR 50 million or more.

For financial year 2020-21, separate web-based Form CSR-2 is to be filed by the extended due date of May 31, 2022, (the original date was March 31, 2022) after filing of financial statements in form AOC-4/Form AOC-4 XBRL/Form AOC-4 NBFC (IND-AS), as applicable. However, from FY 2021–22 onwards, Form CSR-2 is required to be filed as an “addendum” to Form AOC-4, as applicable, within the form AOC-4 filing timeline, i.e., within 30 days from the date of the annual general meeting (
“AGM”).

Implication:

Companies meeting the prescribed threshold should comply with the new requirement of web- based form CSR-2 by May 31, 2022.

From April 1, 2022, India lowers turnover threshold for applicability of e-invoicing from INR 500 million to INR 200 million

Indian Central Board of Indirect Taxes and Customs (“CBIC”) has lowered the aggregate turnover threshold for applicability of e-invoicing provisions under the Goods and Services Tax (“GST”) for all Business-to-Business (“B2B”) supplies, from INR 500 million to INR 200 million. The CBIC issued Notification No. 01/2022-Central Tax on February 25, 2022, lowering the threshold.

Accordingly, all businesses (other than those located in Special Economic Zone (“SEZ”), banking companies, financial institutions, certain travel agencies, etc.) whose aggregate turnover in any preceding financial year from 2017-18 onwards is more than INR 200 million, are required to comply with e-invoicing provisions for their B2B supplies to registered persons or for exports, with effect from April 1, 2022. E-invoicing provisions require registered persons to prepare invoices by uploading certain particulars of invoice (in Form GST INV-01) on invoice registration portal (IRP) and obtain the invoice reference number (“IRN”).

The e-invoicing provisions were first implemented with effect from January 1, 2020, on a voluntary basis.  Later, they were made mandatory for entities having a turnover of INR 5 billion w.e.f. October 1, 2020 (Phase 1). Aggregate turnover threshold was later reduced to INR 1 billion w.e.f. January 1, 2021(Phase 2), and to INR 500 million w.e.f. April 1, 2021 (Phase 2), which has now been reduced to INR 200 million w.e.f. April 1, 2022.

The term ‘aggregate turnover’ includes all taxable supplies (excluding inward supplies on which tax is payable on ‘reverse charge’ basis), exempt supplies, export of goods/ services as well as interstate supplies made under the same Permanent Account Number but excludes central/state/ union territory GST or cess.

Implications:

GST registered entities whose turnover exceeds INR 200 million (in financial year 2017-18 or onwards) are required to comply with e-invoicing provisions w.e.f. April 1, 2022. SEZ units have been exempted from these provisions, however e-invoicing provisions would apply to export transactions and to SEZ developers.

Indonesia

Indonesia revises the maximum pension contribution wage, increases retirement age 

The Indonesian government has recently updated the “maximum wage as the basis for calculating the pension contribution amount” and the “age of retirement” as follows: –

Pension Guarantee Program contribution rate:

Effective from March 1, 2022, the maximum wage used to calculate pension contributions increased from IDR 8,754,600.00 per month to IDR 9,077,600.00 per month. Revised contribution rates are as below:

Effective date	Maximum monthly wage (for pension purposes) In Indonesian rupiah (IDR)	Contribution by employer	Contribution by employees
Before March 1, 2022	8,754,600.00	2% up to maximum of IDR 175,092	1 % up to maximum of IDR 87,546
March 1, 2022, onwards	9,077,600.00	2% of wages up to maximum of IDR 181,552	1% of wages up to maximum of IDR 90,776

Retirement Age

Further, effective from January 1, 2022, the government has raised the retirement age from 57 years to 58 years.

Implication:

Employers should take note of revised contribution rates and retirement age and revise payroll policy and calculations accordingly.

Ireland

Irish Finance Act, 2021 enacted – Key highlights

The Finance Act 2021 (Act No. 45 of 2021) was approved by the Irish Parliament and signed by the President in December 2021. The highlights of the Finance Act 2021 are given below

There are changes to USC thresholds but no changes to USC rates.

Rates	Threshold (2022)	Threshold (2021)
0.5%	Upto EUR 12,012	Upto EUR 12,012
2%	EUR 12,013 to EUR 21,295	EUR 12,013 to EUR 20,687
4.5%	EUR 21,296 to EUR 70,044	EUR 20,688 to EUR 70,044
8%	EUR 70,045 and above	EUR 70,045 and above

Particulars	For 2022	For 2021
Single or widowed or surviving civil partner, without qualifying child	20% of EUR 36,800 40% on the balance	20% of EUR 35, 300 40% on the balance
Single or widowed or surviving civil partner, qualifying for single person child carer credit	20% of EUR 40,800 40% on the balance	20% of the EUR 39,300 40% on the balance
Married or in a civil partnership, one spouse or civil partner with income	20% of the EUR 45,800 40% on the balance	20% of the EUR 44,300 40% on the balance
Married or in a civil partnership, both spouses or civil partners with income	20% of the EUR 45,800 with increase of EUR 27,800 Max. 40% on the balance	20% of the EUR 44,300 with increase of EUR 16,300 max 40% on the balance

The changes in some of the tax credits for the year 2022 are outlined below.

Tax Credit	2022	2021
Single Person	EUR 1,650	EUR 1,700
Married or in a Civil Partnership	EUR 3,300	EUR 3,400
Employee Tax Credit	EUR 1,650	EUR 1,700
Earned Income Tax Credit (max)	EUR 1,650	EUR 1,700
Widowed Person or Surviving Civil Partner (without qualifying child)	EUR 2,190	EUR 2,240

The current tax arrangements for working from home will formalized with enhancement from 2022 onwards. An Income Tax deduction amounting to 30% of the cost of billed expenses for electricity, heating and internet services for those days spent working from home can be claimed by remote workers.

The EWSS provides a wage subsidy to eligible employers in respect of qualifying employees. EWSS is closed to new employer registrations from January 1, 2022 and will end on April 30, 2022. Eligibility for the scheme will continue to require a 30% reduction in turnover in the full year 2021 as compared to the full year 2019.

Businesses that qualify for entry to the scheme as at the last day of December 2021 may continue to avail of the EWSS until April 30, 2022.

EWSS would be available at EUR 100 when gross weekly pay is between 151/5 to EUR1,462.

The relief for certain start-up companies is extended for five years until December 31, 2026. This measure allows corporate tax relief on trading income of start-up companies. Now companies can avail advantage of it within the first five years (earlier 3 years) of starting qualifying trade.

Certain other measures like tax credit for companies developing digital games, anti-avoidance measures like interest limitation rule, anti-reverse hybrid rules etc. have been introduced.

Implication:

Businesses should take into consideration the above-mentioned budget measures and act accordingly.

Italy

Deadline for replacing Italy’s tax reporting system (“esterometro”) by Sistema di Interscambio (“Sdi”)extended to July 2022 from January 2022

The Budget 2021 introduced some changes in tax reporting schemes wherein current tax reporting scheme i.e., esterometro will be phased out in 2022. The timeline for the phasing out esterometro is extended till July 2022 from January 2022. Effective July 2022, the Esterometro will be abolished and real-time reporting of e-invoices via Italy’s interchange system (“Sdl”), which is mandatory for domestic transactions within Italy, will also become mandatory for cross-border transactions. Sistema de Intercambio (“SdI”) is a system for verifying and transmitting electronic invoices.

Implication:

From July 1, 2022, companies would be required to submit electronically the international invoices or bills through the new Sistema de Intercambio (“SdI”) system instead of the current tax reporting esterometro system within the prescribed time to avoid administrative fines of EUR 2 per invoice capped to a maximum of EUR 400 per month.

Italy amends Equal Opportunities Code requiring companies with more than 50 employees to prepare an Equal Opportunities Report every two years.

Italy’s Equal Opportunity Code is amended by Law No. 162/2021 effective from December 3, 2021. The law promotes gender equality between men and women at workplace and prevents direct and indirect discrimination at the workplace on grounds of sex, age, pregnancy status, personal needs, etc. The important amendments include:

The public and private companies having more than 50 employees need to file Equal Opportunities Report every 2 years by December 31 (Previously, this obligation was applicable only to companies with more than 100 employees). The report includes data on number of male and female employees out of total employees, out of total hires, in payment of wages, bonuses, retirement benefits, in selection processes, in layoffs, etc. Failure to submit the report will attract penalty of EUR 1000 to EUR 5000.

A new article is added wherein the Companies can get Certification on Gender Equality from the Ministry. The Certificate is a reward for the policies and procedures followed by the company to reduce gender gap and promote equal pay at workplace for maintaining harmonious and suitable work environment.

The companies possessing the Certification on Gender Equality are awarded “equality bonus” for the year 2022 in the form of 1% exemption from social security contribution payments, capped at EUR 50,000 per year. The companies having the Gender Equality Certificate for the previous year are awarded a reward score which may help them in generating investments supported by the State.

The membership of boards of unlisted companies controlled by public bodies will be required to comprise a minimum of two-fifths from the under-represented gender. Previously, it was applicable only to listed companies.

The discrimination definition (direct and indirect) is expanded to include discriminatory changes to employment conditions and working time arrangements, which may be disadvantageous to employees on grounds of pregnancy, parental or caring responsibilities, or gender.

Implication:

The companies (private and public) having more than 50 employees will need to prepare and submit “Equal Opportunities Report” every 2 years in prescribed form to avoid fines. The companies obtaining ‘Certification on Gender Equality’ can get an exemption relief from payment of social security contribution.

Japan

Japan: Amendments to the Act on the Protection of Personal Information (APPI) effective from April 1, 2022

On April 1, 2022, amendments to the Act on the Protection of Personal Information became effective. The amended APPI, in particular, includes provisions such as:

Implication:

Businesses should take note of amendments and obligations arising for them and accordingly, modify their data protection policy.

Japan’s Tax Reforms Bill – Key highlights

Japan’s ‘Tax Reforms Bill’ for the year 2022 was enacted on March 22, 2022. Most of the provisions/amendments are applicable effective from April 1, 2022. Some of the important amendments are given below.

• Increase in employee compensation credit

The 2022 tax reforms modified the employee compensation credit provisions. If the total compensation paid in the year (April 1, 2022, to March 31, 2024) to specified employees increases by 3% (previously 2%) or more in comparison with the compensation paid in previous year, the excess compensation paid is eligible for 15% to 40% tax credit (previously 15% to 20%) (subject to ceiling of 20% of corporate income tax payable). Certain conditions in this regard are given below.

• Notification regarding online disclosure of the pay policy of the company along with other information to the ‘Ministry of Economy, Trade and Industry’ needs to be given by the Companies with common capital of JPY1 billion or more and minimum 1000 full-time employees.
• Credit is unavailable in the year of Incorporation of the Company.
• Small and medium-sized enterprises (“SMEs”) are also entitled to lower thresholds and more benefits if certain conditions are met.
• Local enterprise tax is also subject to a similar regime.

• Domestic dividend withholding tax

Dividends paid by a Japanese company to another Japanese company are subject to withholding tax at a rate of 20.42 %under the current law and such withholding taxes are typically fully creditable or refundable for the dividend recipient. However, such dividend withholding tax will be eliminated on the dividend payment to the following types of Japanese company after October 1, 2023.

• 100% Group Company.
• A Company where the dividend recipient is holder of more than 1/3^rd of the company as on the divided record date.

Other amendments

• Provisions of accelerated depreciation on low value asset would not apply to assets for rental purpose.
• Certain modifications made to innovation incentive, earning stripping rule, Japanese consumption tax qualified invoice system, tax consolidation regime, etc.

Implication:

Employers should check their eligibility for employee compensation credit. Businesses should take note of amendments related to earning stripping rules, accelerated depreciation on low value assets, etc. to assess the impact if any.

Lithuania

Lithuania increases Intrastat reporting thresholds for 2022 effective from January 1, 2022

Intrastat is the system of collecting statistics on the trade in goods between the European Union (“EU”) member states. The Intrastat reports (viz. UPS -01-dispatches/ UPS -02-arrivals) are to be provided by every VAT payer whose annual value of dispatches or arrivals of goods from the EU member states exceeds the specified exemption thresholds. The VAT payers not meeting the thresholds are exempted from providing any Intrastat Information.

Further, VAT payers are also required to provide certain additional information (box 13 statistical value) in the declaration forms UPS-01 and/or UPS-02 if the annual value of dispatches or arrivals of goods from the EU member states exceeds the specified statistical value thresholds.

Effective from January 1, 2022, Lithuania has raised the Intrastat reporting exemption thresholds and statistical value thresholds as follows:

The statistical value thresholds for providing statistical value of arrivals/ dispatches in box 13 of the declaration UPS-01 and/or UPS-02 is changed as follows:

• From EUR 6,000,000 to EUR 3,000,000 for dispatches, and
• From EUR 6,000,000 to EUR 5,000,000 for arrivals.

Implication:

Businesses will need to follow revised thresholds for submission of Intrastat reports.

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Malaysia

Malaysia: Finance Act 2021, effective date January 1, 2022

Malaysian parliament passed the Finance Act 2021 on December 31, 2021. The key highlights of the Finance Act are as follows:

For Employers/Companies

• Tax deduction in respect of renovation or upgrading costs of premises up to RM 300,000 extended until December 31, 2022.
• Deferment of income tax instalment payment is allowed for micro, small, and medium enterprises (“MSMEs”) for six months until June 30, 2022.
• Tax rebate available for certain small and medium-sized enterprises (“SMEs”) and limited liability partnerships (“LLPs”) is extended for an additional year, till December 31, 2022.
• Companies are allowed to amend the estimated income tax payable in the 11th month before October 31, 2022 (for year of assessment 2021). Generally, companies can amend the estimates in 6^th and 9^th month.
• Sales tax levy is imposed on low-value goods (value less than RM 500) from abroad sold by online merchants and sent to consumers in Malaysia via air courier services.
• Service tax is levied on e-commerce platforms except for food and beverages delivery and logistics.
• Implementation of tax identification numbers from 2022 onwards. This number shall be issued by the tax authority to individuals and all companies that are required to report their income.  
• Compliance Certificate is mandated as a pre-requisite for companies to participate in Government procurement beginning January 1, 2023.
• For year of assessment 2022, Special one-off tax (Cukai Makmur) is imposed on non MSME companies which generate high profits during pandemic; first 100 million shall be taxed at 24% and excess at the rate of 33%.
• Special Voluntary Disclosure Program (“SVDP”) set to be Introduced in phases to encourage taxpayers to voluntarily declare any indirect tax that has either not been paid, underestimated, or erroneously reported to RMCD.
• Originally it was provided that from January 1, 2022, foreign sourced income received in Malaysia by a resident would be taxable at 3% till June 30, 2022, while prevailing tax rates will apply from June 30, 2022. However, as per subsequently issued Press Release by Finance Ministry, all foreign-sourced income received in Malaysia by a resident is tax-free from January 1, 2022, to December 31, 2026, while for tax-resident companies and limited liability partnerships, only foreign-sourced dividend income will be tax-free during the above-mentioned period and the rest of the income will be subject to corporate income tax. Further, special one-off tax (Cukai Makmur) is not applicable on foreign sourced income.
• Unabsorbed business losses can be carried forward up to 10 years (extended from 7 years).
• 2% withholding tax is applicable on payments made by companies to their authorized agents, dealers or distributors subject to threshold of sales exceeding RM 100,000.
• Several incentives introduced for technology provider and digital infrastructure providers like concessional tax rates, import duty exemption, sales tax exemption subject to certain conditions

For Individuals

• Extension of reduction in KSWP (Kumpulan Wang Simpanan Pekerja) (Employees’ Provident Fund) rate from 11% to 9% for another period of 6 months until June 2022.
• Tax relief for premium for deferred annuity and contribution to private retirement scheme of RM 3,000 extended for another 4 years till 2025.

________________________________________________________________________

Malaysia: Employment (Amendment) Bill 2021 

The Dewan Rakyat (lower house of the Malaysian Parliament) passed the Employment (Amendment) Bill 2021 on March 21, 2022, making several significant changes to the Employment Act 1955 (“the Act”).

Highlights of the amendments as follows-

Amendments for the betterment of Female employees-

• Raised maternity leave from 60 days to 98 days;
• Prohibition on the termination of a female employee while she is pregnant, unless the termination is due to misconduct or wilful breach of the employment contract, or for any other valid reasons;
• Removal of restriction on women from working at night and working ‘underground’.

Other Amendments-

• Introduction of paid paternity leave of 7 days;
• Employers will be required to publish notices to raise awareness about sexual harassment, and fines will be increased for employers who fail to comply with provisions relating to sexual harassment.

Implication:

Employers will need to update their leave policy in view of increased maternity leave and introduction of paternity leave provisions. Employers should also take note of other amendments and make suitable changes to their human resource policies.

_______________________________________________________________________________

Minimum wage raised to RM 1,500 per month from May 1, 2022

The national minimum wage has been raised from RM 1,200 per month to RM 1,500 per month in Malaysia as follows: –

Effective Date	Minimum Wage (In RM per month)	Applicability
May 1, 2022	1,500	Employers with five or more employees
January 1, 2023	1,500	Employers with fewer than five employees

Implication:

Employers should check the impact of increase in minimum wages on payroll cost and revise salaries if necessary.

_______________________________________________________________________________

Mexico

Mexico announces UMA values effective from February 1, 2022

The Mexican Government published (unidad de medida y actualización or Unit of Measurement and Update -(“UMA”) which are effective from February 1, 2022

UMA values are as under:

	2022 (Amounts in MXN)	2021 (Amounts in MXN)
Daily	96.22	89.62
Monthly	2,925.09	2,724.45
Annually	35,101.08	32,693.40

The UMA values are used for computing tax and social security contributions for employees.

Implication:

Employers need to consider the latest UMA values for computing the employee’s tax liability and social security contributions.

Netherlands

Netherlands Pension Update for 2022

The Dutch government has announced the pension scheme deductible (Algemene Ouderdomswet/ AOW-franchise) as well as the maximum pensionable salary for the year 2022. An AOW-franchise is the pension scheme where the contribution is deductible (EUR 14,802) before the contribution rate applies with a salary cap of EUR 114,866. This makes employees not to pay the actual pension contribution (17.90%) as the first EUR 14, 802 is deductible.

The standard deductible (AOW-franchise) for defined benefit and contribution pension schemes is EUR 14,802 (EUR 14,544 for 2021) in 2022.

Effective January 1, 2022, the pensionable salary threshold is EUR 114,866 (EUR 112,189 for 2021) for 2022. 

Netherlands increased paid parental leave pay from 50% to 70% effective from August 2, 2022

The Ministry of Social Affairs and Employment will present a proposal to the Senate and House of Representatives to raise the pay for paid parental leave from 50% to 70%, effective August 2, 2022.

Employees who are eligible can take a total of 26 weeks of parental leave. A 26-week leave can be taken within the first seven years of a child’s birth. If the entire 9 weeks of paid parental leave is not taken in the first year of a child’s, it can be added to the remaining leave quota (17 weeks of unpaid leave).

Implication:

The employer needs to make an application to the employee insurance agency (“Uitvoeringsinstituut Werknemersverzekeringen/UWV”) for claiming the benefits of the paid parental leaves taken by employees, but only after the leaves are taken. The employment policies and payroll processing can be altered accordingly.

Peru

Peru increases minimum wage from PEN 930 to PEN 1,025 with effect from May 1, 2022

The Peruvian government through Supreme Decree No. 003-2022-TR dated April 3, 2022, has increased the minimum wage to PEN 1,025 from PEN 930 with effect from May 1, 2022. This applies only to workers who are subject to the labor regime in the private sector.

Implication:

Employers need to consider the revised minimum wage for payroll of employees.

Peru sets tax unit value for 2022, increased to PEN 4,600 from PEN 4,400

Peruvian Ministry of Economy and Finance through Supreme Decree No. 398-2021-EF dated December 29, 2021, has published tax unit value (“Unidad Impositiva Tributaria – UIT”) for 2022. The tax unit value is increased from PEN 4,400 to PEN 4,600.

The tax unit value is used for various tax related purposes, viz. in individual income tax brackets and deductions, for determining revenue thresholds for transfer pricing local and master files, etc.

Implication:

Companies need to consider latest tax unit value for computation of tax liability of employees and for determining revenue thresholds for Local and Master files.

Peru issues rules and timelines for reporting of ultimate beneficial owners for 2022 and 2023

Through Superintendence Resolution No. 000041-2022/SUNAT, dated March 22, 2022, the Peruvian government has set the net income thresholds and timelines for submission of ultimate beneficial ownership information to National Superintendency of Customs and Tax Administration (“Superintendencia Nacional de Aduanas y de Administración Tributaria – SUNAT”).

Peru introduced beneficial ownership reporting requirement through Legislative Decree No. 1372 of 2018, with implementing regulation provided by Supreme Decree No. 003-2019-EF. As per the regulations, Peruvian entities are required to report ultimate beneficial individual owners to the Peruvian tax authority by filing a special form. An individual is considered as a beneficial owner if he/she holds minimum 10% of an entity’s capital.

The net income thresholds and the respective due dates for submission of information for years 2022 and 2023 are as under:

• For tax year 2022: Peruvian entities having net income in previous year more than UIT 1,000 must file the Form in May 2022.
• For tax year 2022: Peruvian entities having net income in previous year more than UIT 500 and not exceeding UIT 1,000 must file the form in August 2022.
• For tax year 2023: Peruvian entities having net income in previous year exceeding UIT 300 must file the form in May 2023

UIT – Tax Unit Value (“Unidad Impositiva Tributaria”) (UIT 1 = PEN 4,600)

Implication:

The companies should adhere to the timelines set for submitting the ultimate beneficiary ownership information.

Philippines

Philippines: Deadlines for Filing of Annual Financial Statements (“AFS”) and General Information Sheet (“GIS”)

All corporations including the branch offices, representative offices, regional headquarters and regional operating headquarters are now required to use Electronic Filing and Submission Tool (“Efast”) to complete the annual submission (AFS and GIS). Reports which are unavailable in eFAST may be submitted through email at ictdsubmission@sec.gov.ph.

Schedule for filing Annual Financial Statements (“AFS”) and General Information Sheet (“GIS”)

• AFS

For All the Corporations with financial year ending December 31, the deadline is set according to the last digit of the Securities and Exchange Commission (“SEC”) registration or license number. Deadlines for 2022 are as follows

• 1 and 2:  July 1 to 15
• 3 and 4:  July 16 to 31
• 5 and 6:  August 1 to 15
• 7 and 8:  August 16 to 31
• 9 and 0:  September 1 to 15

Above deadlines do not apply to below mentioned entities:

• Entities with financial year ending other than December 31, 2022 – Filing within 120 calendar days post year end
• Companies with securities listed on the Philippine Stock Exchange (“PSE”).
• Entities whose AFS is audited by Commission on Audit (“COA”). 

• GIS

All corporations shall file their GIS within 30 calendar days from:

• Stock Corporations – date of actual annual stockholders’ meeting
• Non-Stock Corporations – date of actual annual members meeting
• Foreign Corporations – anniversary date of the issuance of the SEC License.

Penalties would apply for late filings which would be accepted post September 16, 2022.

Implication:

The Companies should note schedule for filing AFS and GIS and adhere to it to avoid penal consequences.

Poland

Poland increases monthly minimum wages from PLN 2,800 to PLN 3,010 effective from January 1, 2022

Effective from January 1, 2022, the Polish government has raised the monthly minimum wages from PLN 2,800 to PLN 3,010 and the hourly minimum wages from PLN 18.30 to PLN 19.70.

Implication:

Employers in Poland need to take note of changes and adjust their payroll policies accordingly.

Poland increases social security basis cap for 2022 from PLN 157,770 to PLN 177,660 effective from January 2022

In Poland mandatory social security contribution mainly consists of pension insurance, disability insurance accident insurance, labor fund, and sickness insurance. For pension and disability insurance, the employer must contribute 16.26% of the total gross salary up to the cap of PLN 157, 770 which is changed to PLN 177,660 in 2022. Similarly, the employee must contribute 11.26% of total gross salary to pension and disability insurance up to the cap of PLN 156, 810 which is changed to PLN 177,660 in 2022. The revised cap of PLN 177,660 is 30 times the estimated average salary of PLN 5,922.

Implication:

Employers in Poland must adjust their payroll and social security calculations to reflect the increased social security contribution cap for pension and disability insurance contributions.

Singapore

Singapore Budget 2022 – Highlights

On February 18, 2022, the Finance Minister, Lawrence Wong delivered the budget speech for the year 2022. The Finance Minister (“FM”) stated that the Singaporean economy is expected to grow at the rate of 3% to 5% in the year 2022, but it will continue to be vulnerable to pandemic-related risks and supply-chain disruptions.

The key highlights of budget 2022 are as under:

Goods and Services Tax (“GST”)

Personal Income Tax

Please find below the table depicting tax rates changes:

Current Income Tax Slab For years of assessment up to year 2023	Upcoming Income Tax Slab For the year of assessment 2024
Annual Taxable Income (In SGD)	Income Tax Rate	Annual Taxable Income (In SGD)	Income Tax Rate
Up to 20,000	Nil	Up to 20,000	Nil
20,001 to 30,000	2.00%	20,001 to 30,000	2.00%
30,001 to 40,000	3.50%	30,001 to 40,000	3.50%
40,001 to 80,000	7.00%	40,001 to 80,000	7.00%
80,001 to 120,000	11.50%	80,001 to 120,000	11.50%
120,001 to 160,000	15.00%	120,001 to 160,000	15.00%
160,001 to 200,000	18.00%	160,001 to 200,000	18.00%
200,001 to 240,000	19.00%	200,001 to 240,000	19.00%
240,001 to 280,000	19.50%	240,001 to 280,000	19.50%
280,001 to 320,000	20.00%	280,001 to 320,000	20.00%
Above 320,000	22.00%	320,001 to 500,000	22.00%
		500,001 to 1,000,000	23.00%
		Above 1,000,000	24.00%

Corporate Income Tax proposals 

Proposals relevant for Employer

Age Band	From January 1, 2021	From January 1, 2022	From January 1, 2023	Long term target by 2030
Less than 55	37.00%	No change
More than 55 less than 60	26.00%	28.00%	29.50%	37%
More than 60 less than 65	16.50%	18.50%	20.50%	26%
More than 65 less than 70	12.50%	14.00%	15.50%	16.5%
More than 70	12.50%	No change

Year	Payout period	Employees with gross monthly wages up to SGD 2,500	Employees with gross monthly wages more than SGD 2,500 and up to SGD 3,000
2022	Q1 2023	50%	30%
2023	Q1 2024	50%	30%
2024	Q1 2025	30%	15%
2025	Q1 2026	30%	–
2026	Q1 2027	15%	–

• budget proposes to revise the minimum qualifying salary for various work passes (commonly known as work visas) for foreign workers as under:

Status	Sector(s)	Revised minimum qualifying salary
Employment Pass (EP) Holders	All sectors, except for Financial Services	SGD 5,000 (increases up to SGD 10,500 for a candidate in mid-40s)
Financial Services sector	SGD 5,500 (increases up to SGD 11,500 for a candidate in mid-40s)
These changes will apply to new applications from September 1, 2022, and to renewal applications from September 1, 2023.
S Pass holders	Minimum qualifying salary for new applications will be revised in 3 phases
Sector(s)	On September 1, 2022	On September 1, 2023	On September 1, 2025
All sectors, except for Financial Services	SGD 3,000 (increases up to SGD 4,500 for a candidate in mid-40s)	At least SGD 3,150*	At least SGD 3,300*
Financial Services sector	SGD 3,500 (increases up to SGD 5,500 for a candidate in mid-40s)	At least SGD 3,650*	At least SGD 3,800*

*The finalized values will be announced later.

Other proposals

Singapore parliament passes the Corporate Registers (Miscellaneous Amendments) Act to strengthen corporate governance regime

The Singapore Parliament on January 10, 2022, passed the Corporate Registers (Miscellaneous Amendments) Act, which amends the Companies Act, 1967 and the Limited Liability Partnerships Act 2005.  The purpose is to strengthen Singapore’s corporate governance regime, improve transparency and beneficial ownership related provisions for companies and limited liability partnerships. The enforcement date would be separately notified. The proposed provisions of the act are as follows:  

• as Registrable Controllers:

The amended provisions require identification and compulsory registration of an Individual who has executive control as Registrable Controller.

An individual with executive control is defined as –

The amendment would ensure better transparency of beneficial ownership and control and align the requirement with international standards.

Under the amended provisions, companies are required to maintain register of Nominee Shareholder and their Nominator and update changed information for local companies (within seven days) and foreign companies (within 30 days) after the change. Earlier to the amendment, there was no requirement to identify nominator where shares were held by nominee shareholders.

Implication:

Once amendments become enforceable, companies need to comply with the provisions.

Singapore: Increased Financial Penalty under the Personal Data Protection Act (“PDPA”)

On March 4, 2022, the Ministry of Communications and Information (“MCI”) announced the financial penalties under PDPA to be effective from October 1, 2022. The maximum financial penalty for data breaches according to PDPA are as follows:

Implication:

All companies in Singapore need to ensure compliance of provisions of PDPA to avoid penal consequences.

Slovakia

Slovakia minimum wage limits increased from EUR 623 to EUR 646 effective from January 1, 2022

Effective from January 1, 2022, Slovakia has increased the monthly minimum wages from EUR 623 to EUR 646 and the hourly minimum wages from EUR 3.58 to EUR 3.713.

Implication:

Employers in Slovakia need to take note of the changes and adjust their payroll policies accordingly.

__________________________________________________________________________________

Slovenia

Slovenia increases the national monthly minimum wage from EUR 1,024.20 to EUR 1074.43 effective from January 1, 2022

Effective from January 1, 2022, the Slovenian government has raised the monthly minimum wages by 4.9% from EUR 1,024.20 to EUR 1,074.43.

Implication:

Employers in Slovenia need to take note of the changes and adjust their payroll policies accordingly.

__________________________________________________________________________________

Slovenia amends income tax act, reduces the personal income tax rate from 50% to 45%

On March 21, 2022, the Slovenian parliament has published in the official gazette amendments to the Personal Income Tax Act (the “Act”), that are effective from April 1, 2022, including amendments relating to reduction in the tax rate, changes in rental income and increase in the personal allowance, etc.

Certain important amendments are as follows:

• (list will be issued), for which there is a shortage of sufficient staff in the labor market.; and

Implication:

__________________________________________________________________________________

South Africa

South Africa: The earnings threshold increased to ZAR 224,080.48 per annum from ZAR 211,596.30 per annum with effect from March 1, 2022

The Minister of Employment and Labour through Official Gazette publication dated February 8, 2022, increased the earnings threshold defined under the Basic Conditions of Employment Act, 1997 (“BCEA”) from ZAR 211,596.30 per annum to ZAR 224,080.48 per annum from March 1, 2022.

Employees earning less than the prescribed earnings threshold are regulated and governed by some of the provisions of the Basic Conditions of Employment Act, 1997 whereas the employees earning more than the prescribed earnings threshold are not regulated and are exempted from certain provisions relating to ordinary working hours, overtime, meal breaks, daily and weekly rest periods, Sunday pay, payment for night work, public holiday work payment.

Implication:

The employers need to consider the latest earnings threshold to assess and determine the employees which will be governed by some of the provisions of the Basic Conditions of Employment Act, 1997 and will need to accordingly draft the employment contracts with the employees.

__________________________________________________________________________________

South African Government brings down the corporate income tax rate from 28% to 27% for years of assessment ending on or after March 31, 2023

Minister of Finance (Minister) announced in the 2022 Budget Speech delivered on February 23, 2022, that the corporate income tax (“CIT”) rate will be reduced to 27% from 28% for years of assessment/ tax years ending on or after March 31, 2023 for all companies.

With regards to Small Business Corporation (“SBC”), which is a company whose gross income is below or equal to ZAR 20 million per year and which has natural persons as shareholders or owners, the corporate tax rate will reduce to 27% from 28% in respect of last bracket/ slab (i.e. for income of or exceeding ZAR 550,001) for the tax year ending on or after March 31, 2023. The revised tax rates for SBC are as under:

Taxable Income	Rates applicable for years of assessment ending on or after March 31, 2023	Rates applicable for years of assessment ending prior to March 31, 2023
Upto ZAR 91,250	0%	0%
ZAR 91,251 to ZAR 365,000	7% of taxable income above ZAR 91,250	7% of taxable income above ZAR 91,250
ZAR 365,001 to ZAR 550,000	21% of Taxable income above ZAR 365,000 + 19,163	21% of Taxable income above ZAR 365,000 + 19,163
ZAR 550,001 and above	27% of Taxable income above ZAR 550,000 + 58,013	28% of Taxable income above ZAR 550,000 + 58,013

Implication:

Entities are required to consider revised tax rate while calculating their tax liability.

__________________________________________________________________________________

South Africa increases the national minimum wage from ZAR 21.69 per hour to ZAR 23.19 per hour with effect from March 1, 2022

Vide Gazette no. 45882 dated February 7, 2022, the Minister of Employment and Labour increased the national minimum wage (“NMW”) to ZAR 23.19 per hour from ZAR 21.69 per hour for the year 2022 with effect from March 1, 2022. The minimum wage amount is used in the computation/determination of salaries of employees and no employee should be paid below the minimum wage amount established.

Implication:

Employers need to consider the increased minimum wage rate for updating and processing their payrolls.

__________________________________________________________________________________

South Africa issues ‘Code of good practice on prevention and elimination of harassment at the workplace’ which came into effect on March 18, 2022.

The Department of Employment and Labour has issued a ‘Code of Good Practice on Prevention and Elimination of Harassment at the workplace’ which came into effect on March 18, 2022.

The Code applies to all the employers and employees in South Africa and aims to prevent and eradicate any form of harassment of employees (men, women, and members of Lesbians, Gays, Bisexual, Transgenders, Queer, Intersex, Asexual – LGBTQIA) at the workplace. Further, the Code prohibits harassment not only at the workplace but also at places where the employee travels such as work-related trips, events, social activities, transportation to and from the workplace, etc.

The Code deals with the concept of harassment covering sexual harassment and racial, ethnic, or social origin harassment. As per the Code, harassment includes violence, physical abuse, psychological abuse, emotional abuse, sexual abuse, gender-based abuse, and racial abuse. It also includes the use of physical force or power, (whether threatened or actual) against another person or against a group or a community.

Employers are required to take proactive and remedial steps for preventing all forms of harassment at the workplace, which include assessing the risk of harassment to employees, implementing a policy addressing harassment, conducting training for education, and increasing awareness of employees about harassment.

Implication:

The employers must formulate and develop a policy on harassment which should be communicated to all the employees. The policy must aim at preventing and keeping a check on any acts of harassment and should also provide for a redressal mechanism in which the harassment case is treated in a fair and just manner.

South Korea

South Korea tax reform 2022

After considering various measures in the Tax Reform Bill, 2022, the Korean National Assembly passed the Tax reform Bill on December 2, 2021, effective from financial year starting on or after January 1, 2022.

Key highlights of the new and amended tax laws are as follows: –

Corporate Income Tax (“CIT”)

Value Added Tax (“VAT”)

Others

Implication:

Foreign companies should take note of additional compliances for representative office.  Companies should also take note of changes in VAT documentation and TP provisions.

South Korea: Key changes in Labor Law

The plenary session of the National Assembly passed amendments to the Korean labor laws on April 29, 2021.

Amendments to the Labor Standards Act (“LSA”) (effective November 19, 2021)

• for amount paid for overtime/ day-off/night-time work); and

Failure to provide the prescribed wage statements will attract an administrative penalty up to KRW 500,000.

Amendment to the Equal Employment Opportunity and Work-Family Balance Assistance Act:

Implication:

Employers should revise leave and human resource policies /employee handbook in light of the above changes. 

Spain

Minimum wage in Spain (“SMI”) increased to EUR 1,000 per month from EUR 965 per month with effect from January 1, 2022

Spain Government increased the national minimum wage for the year 2022 to EUR 1,000 per month from EUR 965 per month with effect from January 1, 2022.

The Minimum Interprofessional Wage (“SMI”) is the minimum remuneration or wage that the worker should receive. The government sets the (“SMI”) amount annually. It applies to temporary workers, domestic or permanent employees, and is based on the legal working days, irrespective of the type of contract.

Implication:

The employers will need to review and modify their payrolls accordingly.

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Reduction in personal income tax rates for community of Madrid in 2022 with effect from January 1, 2022

The community of Madrid reduced the personal income tax rates for the year 2022 by 0.5%.

Tax Slabs (Amounts in EUR)	Tax Rate (2022)	Tax Rate (2021)
0	12,450	8.5%	9%
12,451	17,707.20	10.7%	11.2%
17,707.21	33,007.20	12.8%	13.3%
33,007.21	53,407.20	17.4%	17.9%
53,407.21	above	20.5%	21%

Implication:

The employers need to take into consideration the reduced rates while computing the tax liability of employees.

Taiwan

Taiwan: Tax registration rules for e-commerce are effective from March 1, 2022.

The Taiwan Ministry of Finance (“MOF”) on November 23, 2021, had announced the draft amendment to “tax registration rules” for companies selling goods and services through online platforms, applications, or any other electronic means (e-commerce companies), which have now been effective from March 1, 2022, as follows: –

Registration requirements apply only to businesses that are selling goods and services through online platforms and have a fixed place of business in Taiwan; therefore, foreign entities are exempted from the registration requirements. However, if Taiwanese business entities using a foreign entity’s online platform to sell their products and services to Taiwanese customers, the foreign entity is required to display the Taiwanese business entities’ registered names and business IDs on its selling platforms.

Implication:

E-commerce companies to which tax registration rules are applicable must comply with the tax registration requirements.

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Taiwan increases paid paternity leave

Taiwan’s Ministry of Labour (“MOL”), vide an announcement dated January 18, 2022, increased the paid paternity leave from five days to seven days with immediate effect. Further, pregnant employees can avail seven days of leave for prenatal check-up as against earlier eligibility of five days.

Implication:

Employers are required to pay for additional two days leave and can avail subsidies by applying to Labor Insurance Bureau. 

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Taiwan: Amendments to the Tax Collection Act

The Tax Collection Act was amended, and amendments became effective by a Presidential Decree on December 17, 2021. The key changes are as follows

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Taiwan: Controlled Foreign Company (“CFC”) rules to be effective from January 1, 2023

On January 14, 2022, Taiwan’s Executive Yuan (executive branch of the government of the Republic of China (Taiwan)) announced the effective date for the controlled foreign company (“CFC”) rules for “profit-seeking enterprises” from the tax year 2023 and for “individuals” from January 1, 2023.

CFC Rules were introduced for enterprises in 2016 and for individuals in 2017 for which now the effective dates have been announced. Under CFC Rules, when a Taiwan company, either by itself or with related parties, directly or indirectly owns more than 50% of the shares of or is capable of having “significant control” over the human resources, finance, and operational policies of a foreign entity located in a low-tax jurisdiction, then Taiwan company would have to pay tax on investment income of such foreign entity. However, there are certain exemptions provided from the applicability of CFC Rules.

Implication:

Companies having shareholding in foreign entities situated in low tax jurisdictions should track developments on CFC Rules and determine their impact on them.

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Thailand

Thailand: Tax Rules relaxed for Digital Assets

Thai cabinet has announced decision on March 8, 2022, to relax the tax rules for investment in digital assets for the period from April 1, 2022, to December 31, 2023.

As per the decision, traders are allowed to offset annual losses against taxable earnings while determining tax liability on crypto investments and 7% value-added tax (“VAT”) will not apply to cryptocurrency trading on authorized exchanges or trading of digital currency to be issued by the central bank.

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Thai Cabinet announces 3-month reduction in Social Security Contributions

As part of a relief package to combat rising fuel prices, the Thai cabinet on March 22, 2022, reduced the mandatory social security contribution rate from 5% to 1% for both employers and employees for a period of three months from May to July 2022. For former employees, contributions from the employer side stands reduced to 1.9% from 9% for the same period.

Implication:

Employers may take advantage of this relief measure of reduced social security contribution rates.

United Arab Emirates

UAE introduces new penalties for delay in payment of wages

The Ministry of Human Resources and Emiratisation (“Mohre”) issued a decree introducing new penalties against employers failing to pay wages on time, which applies to all companies registered with the ministry in the UAE and annuls the previous rules. The companies have been given three-months’ time for complying with the new provisions.

As per the new provisions, failure to pay its workers on time may attract penalties of up to AED 50,000 and/ or suspension of issuing of work permits and/ or legal action. The work permits are required to be obtained by the company for its new employees.

The new provisions include:

Implication:

Employers in UAE should take a note of the above changes and ensure payment of wages on time to avoid penalties and other actions.

United Kingdom

UK Budget (Spring Statement) 2022 – Highlights

The Chancellor of the Exchequer presented the United Kingdom (“UK”) Budget (Spring Statement)2022 before Parliament on March 23, 2022. National Statistics confirmed that inflation has reached a 30-year high. Inflation rate is expected to peak at 8.7% in Q4 of 2022 with forecast annual inflation rate for 2022 being 7.4%. The GDP is expected to grow by 3.8% in 2022, with forecast GDP growth rate of 1.8% for 2023. The Government has proposed certain measures to provide support to households and businesses in view of rising cost of living.

The following are the key highlights:

• For Individuals and employers:
• National Insurance – The annual primary threshold will be increased to GBP 12,570 from GBP 9,880 effective from July 2022. Further, for self-employed, the lower profits limit has also been increased to GBP 12,570.
• Personal Income Tax (“PIT”) – The Basic rate of Personal Income Tax would be lowered to 19% from 20% effective from April 2024.
• National Living Wages (“NLW”) – National Living Wages (“NLW”) for individuals above the age of 23 years increased by 6.6% to GBP 9.50 per hour effective from April 2022.
• Employment Allowance – The Employment Allowance has been increased from GBP 4,000 to GBP 5,000 effective from April 2022 to assist the employer to reduce their National Insurance Contributions (“NIC”) liability.

• Indirect taxes:
• Relief for Energy Saving Materials (“ESM”) – Effective from April 2022, the installation of ESMs such as solar panels and heat pumps are taxable at zero rate. Further, wind and water turbine would also be considered as ESMs.
• Reduced Fuel Duty – The duty on petrol and diesel is reduced by 5 pence per litre for the period of 12 months until March 2023. The cut is effective from March 23, 2022, 6 p.m.

• Other tax benefits
• Annual Investment Allowance – Annual Investment Allowance (“AIA”) allows company to deduct full value (100%) of an amount invested in Qualified Plant and Machinery (excluding Car) for the year. Previously this allowance was set at GBP 200,000. However, the said limit is increased to GBP 1 million until March 2023. The Government is also looking at ways for providing further tax relief for capital investment which are likely to be announced in Autumn budget. Earlier the Government has introduced super deduction which is a capital allowance in first year of investment and is available up to March 2023.
• Research and Development Relief – The Government is proposing to revamp the R&D relief. It intends to include cloud cost associated with R&D in the scope of relief. More announcements are expected in the future Finance Bill.

UK Finance Act 2022 enacted

Earlier, the Finance Act for 2022 was published in the official gazette and received the royal consent on February 24, 2022. The Finance Act 2022 enacted proposals made in Autumn budget which was presented in October 2021. Among other changes, the Finance Act, 2021 increased income tax rate on dividend income by 1.25% effective from April 6, 2022. The new income tax rates post such increase are given below:

Income Tax Band	Tax Rate for the year 2021-22	Tax Rate for the year 2022-23
Basic Rate	7.5%	8.75%
Higher Rate	32.5%	33.75%
Additional Rate	38.1%	39.35%

Earning threshold for 2022-23

Further, earnings thresholds for NIC for the year 2022-2023 pursuant to changes made by the Finance Act, 2022 and the spring statement are as under:

           (Amounts are in GBP)

Timeline	Lower Earnings Limit (“LEL”)	Primary Threshold (“PT”)	Secondary Threshold (“ST”)	Upper Earning Limit (“UEL”)
		April 6, 2022, to July 5, 2022	July 6, 2022, to April 5, 2023
Weekly	123	190	242	175	967
Monthly	533	823	1,048	758	4,189
Annually	6,396	9,880	12,570	9,100	50,270

The HM Revenue & Customs (“HMRC”) revises the rates for repayment and late payment interest effective from April 5, 2022

The HM Revenue & Customs (“HMRC”) has announced the late payment Interest rates and repayment interest rates, effective from April 5, 2022, to be applied in case of payment of main taxes and duties collected by HMRC. The rates are given below:

• Late payment interest rate — 3.25%
• Repayment interest rate — 0.5%

Vietnam

Vietnam introduces fine of up to VND 30 million for sexual harassment at the workplace

Effective from January 17, 2022, a new decree, replacing the earlier decree, applies for administrative violations in the field of sending Vietnamese workers working in foreign countries under labor, social insurance, and contracts.

The new decree provides for the following fines:

• A fine within the range of VND 15 million to VND 30 million is introduced for sexual harassment at the workplace, without criminal liability prosecution.
• A fine within the range of VND 3 million to VND 7 million can be imposed for the following acts:
• Making employees work in locations other than agreed in the labour contract,
• transferring employees to work at different locations permanently for no proper reason, or without employees’ written consent or without giving sufficient notification,
• Not allowing employees to re-join after the expiration of temporary suspension as per the labour contract if the labour contract is still valid unless otherwise agreed or otherwise provided by law.

• A fine within the range of VND 1 million to VND 3 million can be imposed for the following acts:
• Transferring employees temporarily to work on another job without giving employees any notice,
• Changes in the employment terms without 3 days advance notice or no notice,
• Work allotted is not suitable for the employee considering health position or gender,
• Making employees work on something that is not mentioned in their labour contract without any specific reason, or without their consent.

Implication:

Employers in Vietnam should take a note of the above changes and ensure compliance under the labour law to avoid penalties.

Shan & Co © (Nucleus is an affiliate of Shan & Co)