Argentina

Argentina: Minimum and maximum basis for employee social security contributions increased to a monthly salary of ARS 29,456.43 and ARS 957,320.12 respectively from September 1, 2023

The Argentine government through Resolution No. 189/2023 dated August 24, 2023, effective from September 1, 2023, increased the minimum basis for an employee’s social security contributions from ARS 23,891.99 to ARS 29,456.43, and maximum basis from ARS 776,478.32 to ARS 957,320.12. These bases are used for the computation of employees’ portion of social security contributions.

Belgium

Belgium: Adopts new rules for incapacity during annual leave, effective from January 1, 2024

In alignment with the European Working Time Directive, Belgium has introduced formal obligations for employees who fall ill during their holidays. The formal requirements were laid down by the Act of July 17, 2023. There are three key requirements for employees to validly transfer unused paid leave days for utilization in subsequent period:

• Notify their incapacity and provide their location, especially if abroad.
• Submit a medical certificate within two working days, specifying the incapacity’s details. The earlier exception allowing employees to skip the medical certificate for the first day of incapacity no longer applies.
• Inform the employer about their intention to carry over unused leave days until they recover.

Employers must include the new provisions in their work rules, effective from January 1, 2024. Importantly, these new provisions can be added without the standard work rule amendment process. Employers are encouraged to inform employees about these changes.  A failure to implement or amend these rules correctly could lead to fines ranging from a minimum of EUR 400 to EUR 4,000, or an administrative fine ranging from a minimum of EUR 200 to EUR 2,000.

Implication:

Starting January 1, 2024, all employers must add new rules for illness during annual leave to their work policies.

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Belgium: Belgian companies must align articles of association with new Code by December 31, 2023

Belgian companies and non-profit associations which were incorporated prior to May 2019 are required to align their articles of association with the new Companies and Associations Code (“CAC”) by January 1, 2024. This is a mandatory requirement, and failure to comply can result in director’s liability claims.

While the CAC came into force in May 2019, many entities have not updated their articles of association to comply with the new standards introduced on January 1, 2020. To ensure compliance, amendments must be made by December 31, 2023.

Implication:

Companies and non-profit associations should review their articles of association carefully and make necessary changes by December 31, 2023.

Brazil

Brazil: Brazilian Law on equal pay for equal work and gender equality effective from July 4, 2023

The Brazilian government enacted Law 14,611 effective from July 4, 2023, which amended Labour Code of Brazil (“CLT”) and introduced new provisions promoting gender equality relating to wage payment.

The following are the salient features of the newly introduced law:

• Non-discrimination relating to wage payment: The employer should not discriminate between employees on grounds of gender, ethnicity, race, origin or age while paying wages. A monetary fine of ten times the minimum wage owed to the employee is levied in case of discrimination. The discriminated employee has the right to receive the salary difference arising due to discrimination and also can claim compensation for moral damages.
• Salary transparency mechanism and channels for reporting wage discrimination: The company should have in place mechanisms, systems which would ensure salary transparency and outline the criteria followed by company for deciding salaries of employees. It should have a mechanism to keep a check on any discriminatory practices followed relating to salary payments. Any discrimination related to salary payment should be reported through channels envisaged for reporting such practices.
• Diversity inclusion programs at the workplace: The company should conduct various programs promoting gender diversity inclusion at the workplace and train the management level personnel as well as the employees to adopt policies on non-discrimination relating to gender.
• Training and education programs: The company should train and educate women on gender equality and encourage them to report any instances involving discriminatory approach followed at the time of recruitment, selection, or salary payment stage.
• Semi-annual transparency reports: Private companies having 100 or more employees need to prepare and furnish transparency reports on wage and remuneration criteria followed in the company on half yearly basis. Companies should comply with all the provisions of the ‘General Personal Data Protection Law’ (LGPD) relating to the data captured in a manner which would reflect objective comparison between salaries, remunerations based on statistical data relating to race, ethnicity, age of a person. Failure to prepare and submit the report will attract monetary fine of up to 3% of total company’s payroll, capped at 100 times the minimum wages. A company needs to prepare a plan for addressing wage inequalities, if any, identified through the transparency report.

Implication: 

The companies need to abide by the new provisions for ensuring wage equality. Certain companies having 100 or more employees need to submit semi-annual transparency reports and take mitigatory steps to address any wage inequalities identified through the report, in order to avoid facing monetary fines.

Brazil: Updated individual income tax brackets effective from May 2023.

The Brazilian government has through Law No. 14.663 dated August 28, 2023, published the updated monthly individual income tax brackets used for calculating personal income tax (“IRPF”) effective from May 2023.

2023 (From May 2023)Monthly Income (in BRL)	2023 (January to April 2023)Monthly Income (in BRL)	2023 & 2022Tax Rates
Up to 2,112.00	Up to 1,903.98	0%
From 2,112.01 to 2,826.65	From 1,903.99 to 2,826.65	7.5%
From 2,826.66 to 3,751.05	From 2,826.66 to 3,751.05	15%
From 3,751.06 to 4,664.68	From 3,751.06 to 4,664.68	22.5%
Over BRL 4,664.68	Over BRL 4,664.68	27.5%

Implication:

Employers should take note of the updated income tax slabs while processing the payroll.

Bulgaria

Bulgaria: Amends VAT Act to introduce new requirements for uncollectible receivables effective from July 12, 2023

The Bulgarian Value Added Tax (“VAT”) Act has been amended to include new requirements for issuing tax documents and notifications to the National Revenue Agency in cases of adjustments to the taxable amount due to uncollectible receivables. The changes are effective from July 12, 2023.

Key changes include:

• Requirements for issuing credit notes and protocols with a minus sign to correct taxable amounts for supplies involving uncollectible receivables.
• Procedures for issuing debit notes and protocols with a plus sign for payments received after tax base adjustments made for uncollectible receivables.
• Guidelines for recording these documents in VAT ledgers, including columns and codes, have been outlined.
• For uncollectible receivables from taxable supplies exceeding BGN 100,000, new procedures introduced for submission of notifications to the National Revenue Agency. The taxpayer would be required to provide evidence in support of their claims.

Implication:

Businesses that supply goods and services in Bulgaria should carefully review the new requirements to ensure compliance with VAT regulations.

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Bulgaria: Companies must declare cash and receivables over BGN 50,000 effective from August 1, 2023, for VAT

Effective August 1, 2023, the Bulgarian VAT Act is amended to require companies to declare certain financial information if the total amount of cash in cash registers and receivables from natural persons, employees, etc. exceeds BGN 50,000 at the end of each quarter of a financial year.

The specific requirement includes:

• Companies must declare the following information separately for each quarter of a calendar year:

• amount of cash available in the cash register;
• amount of receivables (including loans granted) from owners, employees, persons employed under management agreements.
• The information must be declared within one month of the end of the relevant quarter.

Implication:

Businesses that are affected by this amendment should ensure that they are in compliance with the new requirements. Failure to comply may result in penalties.

Chile

Chile: The Internal Revenue Service of Chile (“SII”) reduced the minimum amount required for issuing simplified VAT invoices.

The Internal Revenue Service of Chile (“SII”), through exempt resolution N°60, effective from July 1, 2023, has reduced the minimum amount from CLP 180 to CLP 1 for issuing simplified VAT invoices for goods or services. The simplified invoices are also used for invoicing exempted and zero value supplies.

Implication:

Companies should consider the changes in the limits and accordingly issue simplified VAT invoices. 

China

China: Extends VAT incentives for small taxpayers till December 31, 2027

China’s Ministry of Finance (“MOF”) and State Taxation Administration (“STA”) vide announcement No. 19 of 2023, has decided to extend the following VAT incentives for small businesses until the end of 2027, which were supposed to expire on December 31, 2023. 

• The VAT rate for small taxpayers is 3%. Starting from January 01, 2023, to December 31, 2023, small VAT taxpayers were subject to a reduced VAT rate (including prepayment) of 1% which is now extended up to December 31, 2027.
• Small-scale taxpayers with monthly and quarterly sales less than RMB 100,000 and RMB 300,000, respectively, were exempted from the VAT payment requirements for the period from January 1, 2023, to December 31, 2023. This exemption is also extended up to December 31, 2027.

A small VAT taxpayer is defined as a business with an annual sales turnover not exceeding RMB 5 million.

Implication:

Small businesses should take note and adjust their VAT calculations accordingly. 

China: Extends certain tax benefits granted to foreign individuals and Chinese tax residents up to December 31, 2027

Recently the Chinese Ministry of Finance (“MOF”) and State Taxation Administration (“STA”) vide announcements no. 29 and 30 granted extension to the following beneficial tax treatment applicable to individuals from December 31, 2023, to December 31, 2027.

• Annual one-off bonuses policy allowed separate taxation of bonus received by resident individuals whereby bonuses are not combined with other taxable income for calculation of tax liability but taxed separately. 
• Foreign employees in China will continue to enjoy exemption for fringe benefits like housing, child education expenses, meals, relocation expenses, business travel expenses, laundry fee, home leave expenses, education of children expenses and language training fees. 

Implication:

Employer should take note of extension of benefits relating to individual taxation while determining tax liability of their employees.

China: Beijing revises salary thresholds for social security contribution effective from July 1, 2023

Beijing, vide notice dated July 25, 2023, has revised the upper and lower monthly salary base limits, for the contribution to social insurance (basic pension insurance, unemployment insurance, work-related injury insurance, and basic medical insurance including maternity) effective from July 1, 2023, as follows: –

Name of the City	Upper capped payment base(In RMB)	Lower capped payment base(In RMB)
Beijing	33,891(Previously 31,884)	6,326(Previously 5,869)

Implication:

Employers should consider revised ceilings while computing social security contributions.

China: Releases draft proposals to relax cross-border data transfer rules

The Cyberspace Administration of China (“CAC”) released a draft regulation namely, “Regulating and Facilitating Cross Border Data Flow” (“Draft Provisions”) in order to relax the cross-border data transfer provisions. They were made available for public consultation on September 28, 2023.

Under the existing data transfer provisions, a company is required to transfer the data by adopting any one mechanism out of the three available mechanisms namely, security assessment, security certification and standard contract. CAC has also released regulations for implementation of these three mechanisms. However, the requirements under these regulations were so stringent that the companies have to spend considerable amount of time and efforts to obtain necessary approvals for cross-border data transfer. Therefore, in June 2023, the State Council issued an opinion that the governments should explore ways to facilitate cross border data transfer to encourage foreign investment. The Draft Provisions have been issued in light of these developments.

The following are the key highlights of the draft provisions:

• The proposed regulations grant exemption to the following data transfer from the applicability of the 3 mechanisms mentioned above:

•  Data export of less than 10,000 individuals per year involving B2B transactions. However, obtaining consent of data subjects is must.
• Transfer of data resulting from international agreements involving cross-border e-commerce, cross-border payments, flight booking, hotel reservations etc.
• Transfer of employee data necessary for the purpose of HR management and policies when they are in compliance with Chinese labour laws or collective agreements.
• Data necessary for protection of health, property or for safety of individuals in an emergency. This would help international health care services, disaster management or pandemic response.
• Cross border transfer of personal data when it is not generated or collected in China.

• The draft provisions proposes that mandatory security assessment should apply where data transfer results in transfer of 1,000,000 individuals’ data per year or more. However, for transfer of data of more than 10,000 but less than 1 million individuals, other mechanism like standard contract or certification should be complied with.
• The definition of the term “important data” will be provided by the government or competent authorities, restricting the companies from applying their own meaning.
• Pilot free zones can formulate their own negative list which would not have to be subject to the above 3 mechanism. Such list needs to be approved by provincial cybersecurity and information commission.

Implication:

The companies exporting data out of China should keep a close eye on the developments relating to the proposed regulations and should assess the applicability of the concessions to their data transfer activities. The final regulations may be implemented before November 30, 2023, which is the deadline for filing of standard contracts for the existing data transfer arrangements.

Colombia

Colombia: Reduction of minimum working hours in tranches implemented from July 15, 2023

The Colombian Labour code vide its law 2101 of 2021 and Article 161 has implemented the reduced minimum number of working hours from its current forty-seven (47) hours per week to forty-two (42) hours per week in tranches over a period of four years as per the following table:

Sr No	Effective Date of the implementation	Minimum No of working hours
1	July 15, 2023	forty-seven (47) hours
2	July 15, 2024	forty-seven (46) hours
3	July 15, 2025	forty-seven (44) hours
4	July 15, 2026	forty-two (42) hours

Implication:

Companies should consider the changes in the minimum working hours and accordingly revise the working days, employment contracts and internal policies.

Cyprus

Cyprus: Social insurance fund contribution rates to increase from 8.3% to 8.9% with effect from January 1, 2024. 

Effective from January 1, 2024, as per the Social Insurance Law of 2010, the rates for both employer and employees’ contributions to Social Insurance Fund will be increased from 8.3% to 8.9% on employee’s insurable earnings. 

Implication:

Employers should take note of the changes in social insurance contributions and update their payroll processes accordingly.

Czech Republic

Czech Republic: Significant amendments to the Czech Labor Code in line with EU directives on ‘Transparent and predictable working conditions’ and ‘Work-life balance for parents and caregivers’, effective from October 1, 2023.

On September 19, 2023, Act No. 281/2023 was published amending the Labor Code and transposing into law, provisions of European Directives (EU) viz. 2019/1152 on ‘Transparent and predictable working conditions in EU’ and 2019/1158 on ‘Work-life balance for parents and caregivers. The provisions are effective from October 1, 2023, unless specified otherwise. The highlights of the amendments are as follows:

• Information obligation:

Employers are now required to notify employees in writing or electronically within seven days from the start of employment about key terms of employment and working conditions, if the same are not covered in the employment contract, which include: 

• Details of the employer viz., name and address.
• Place of work.
• Working hours/ days, work breaks, overtime, etc.
• Details of compensation viz. salaries/ wages, pay dates, etc.
• Details of annual leave entitlement.
• Employment termination provisions, length of notice period, etc.
• Details of social security authority where the contributions are remitted.

Further, the employees who operate outside of Czech Republic are required to be given additional information such as currency of wages, working conditions in such country, etc.

• Electronic conclusion of agreements: Employment contracts, termination agreement can now be concluded and signed electronically, wherein the employer needs to e-mail such correspondences to the employee.

• Adjustment to the employees’ working time: The employer can reduce the working time for certain employees on such a request being made viz. pregnant women, employee having child below 15 years of age, or having a dependent person. Further, the non-acceptance by the employer to such requests needs to be evidenced by written reasons.
• Parental leave: For availing a parental leave, a written request of at least 30 days in advance is required to be given by the employee stating the duration and dates of parental leave to be taken.
• Remote working/ work from home agreement: A written agreement for a remote work is necessary. Further, a remote work agreement needs to be entered for the existing employees working remotely by November 1, 2023, failing which a fine up to CZK 300,000 may be imposed. The agreement can be terminated by providing 15 days’ notice by either party. Generally, the employers are required to cover the costs incurred by the employees related to remotely working. Employers can make lump sum reimbursement of remote working costs by an agreement with the employees. Alternatively, the employer can pay a flat-rate amount as a compensation for the costs associated with work from home by specifying in the agreement or in the internal regulations.
• Agreement on performance of work or agreement on work activity (contract workers): There are certain changes related to agreements on performance of work or agreements on work activity (contract workers) which will be effective from January 1, 2024. The employer will be obliged to specify working hours in writing in the working hours schedule provided to the contract workers. The contract workers will have the right to cite all obstacles to work and to take vacation leave. The employer will be required to compensate contract workers monetarily as also by providing additional time off for working on holidays, weekends, night work and in a difficult work environment. If the legal relationship under the agreement lasts for at least 180 days during the previous 12 months, the contract workers will have the right to apply for the employment. 

Implication:

The companies need to change its employment policies and amend employment contracts as per the amendments introduced in the Labor code.

Czech Republic: Czech Republic published the ‘Act on Protection of Whistleblowers’ in line with the EU Directive, effective August 1, 2023

Czech Republican government published on June 20, 2023, the ‘Act on Protection of Whistleblowers’ adopting the EU Whistleblowing Directive (2019/1937), which is effective from August 1, 2023. 

The Act introduces measures for protection of whistle-blowers in Czech Republic. The Act will require companies with 50 or more employees to establish an internal and external reporting mechanism by which whistle-blowers can report significant violations, non-compliances, or criminal activities, confidentially without fear of reprisals.

The Act will apply in a phased manner for setting up internal as well as external reporting channel/ whistle-blower systems as per the following timelines:

Criteria	Timeline to set up the internal reporting office by the companies
Companies with 250 or more employees	Up to August 1, 2023
Companies with 50 to 249 employees	Up to December 15, 2023.

The key provisions of the law are as follows:

• Companies are required to establish a whistleblowing channel and designate at least one person to receive and follow up on whistleblowing reports. The designated person can be a compliance officer, HR head, etc. The Company is required to publish the information about whistleblowing channel on the company’s website viz. how to report an incident, name and contact details of the designated person, applicability of the whistleblowing channel viz. available only to employees, or also to independent contractors, suppliers, service providers, etc.

• The whistleblowing report is an information on alleged breaches/ acts/ omissions, which should contain the direct identification of the whistleblower, or information allowing such identification. An anonymous report does not trigger the mandatory steps under the Whistleblowing Act. The law offers suitable protection to anyone reporting acts or omissions amounting to any infringements contained in any law (i.e., whistle-blower). Any acts including any attempt of retaliation, harassment, threats, discrimination against such persons are prohibited.
• The reports relating to the whistleblowing incidents and investigations need to be retained by the company for 5 years.
• The law also penalizes individuals, including designated officer, for any actions or omissions hindering the investigation processes and those acts which prevent a whistleblower from reporting any incident up to a penalty of CZK 1 million.
• Companies can be fined up to CZK 1 million for not complying with the provisions of the law viz. not implementing whistleblowing system and reporting channels, non-appointment of designated officer, breach of confidentiality etc. Further, in cases of violation of confidentiality norms, provisions under GDPR (General Data Protection Regulation) may also apply.

Implication:

Companies need to structure and implement internal whistleblowing systems and reporting channels for the protection of whistle-blowers.

France 

France: Defers implementation of electronic invoicing initially scheduled for July 1, 2024

The French government has announced that the launch date of the mandatory electronic invoicing system, initially set for July 1, 2024, will be postponed. The new time schedule will be determined in December 2023 as part of the adoption of Finance law for 2024.

The government will continue to work with businesses to ensure that they are ready for the new system before it is implemented.

Implication:

Businesses need to monitor developments on e-invoicing while checking readiness of their systems for e-invoicing.

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France: Employers to pay 30% social security contribution on mutually agreed termination indemnity effective from September 1, 2023

A new social security regime for mutually agreed termination indemnity came into force on September 1, 2023, in France.

Under the new regime, the 20% flat-rate social security contribution applicable to specific indemnities for termination by agreement has been replaced by a 30% employer’s contribution payable on the portion exempt from social security contributions. This change applies to all contractual terminations taking effect from September 1, 2023, even if the procedures commenced before this date.

The new law also abolishes the distinction between employees eligible for a retirement pension and those who are not, for social security contributions. This means that all employees are exempt from social security contributions and CSG (Contribution Sociale Généralisé)/CRDS (Remboursement de la Dette Sociale) on their severance pay, regardless of their retirement status. However, this distinction continues to be relevant from tax purpose as employees who are entitled to a retirement pension will still be subject to income tax on their severance pay.

Implication: 

Businesses should take note of the new social security regime for mutually agreed termination indemnity and factor it into their cost calculations while negotiating severance packages with employees.

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France: Expands benefits under parental leave and child care provisions effective from July 21, 2023

A new law in France, Law 2023-622 of July 19, 2023, has expanded job-protected parental leave and introduced employer-paid leave for parents of children with serious health conditions or in case of child bereavement. The law also enhances job security for employees on parental leave. 

Key provisions include:

• Parents are entitled to 14 workdays (earlier 7 days) of employer-paid leave in case of the death of a child under 25, or a child of any age who was a parent, or a person under 25 who was fully dependent on the employee. For older children who were not parents, this entitlement is 12 working days (earlier 5 days).
• If a child is diagnosed with a chronic disease or becomes disabled, parents receive 5 workdays of employer-paid leave.
• Employees on parental leave are protected from termination, including part-time or split leave. Additional legislation protects women from dismissal for 10 weeks following a miscarriage between the 14th and 21st weeks of pregnancy.
• Parents of sick or disabled dependent children can request remote work, which employers may only refuse based on objective business reasons.
• State-paid family allowances for caring for a sick or disabled child can now be paid before the state medical assessment is finalized.

The above provisions became effective on July 21, 2023.

• Additionally, a waiver of the three-day waiting period for short-term disability benefits following a miscarriage between weeks 14 and 21, is expected to apply from January 1, 2024.

Implication: 

Employers must review their policies and collective agreements to ensure compliance with the new requirements on parental leave and bereavement leave.

Germany 

Germany: German Whistle-Blower Protection Act is now in force with effect from July 2, 2023.

On December 16, 2022, the German federal parliament (Bundestag) passed the German Whistle-Blower Protection Act – HinSchG (“the Act”) which is now effective from July 2, 2023.

The Act has introduced measures for protection of whistle-blowers in Germany. The Act will require companies with 50 or more employees or companies in the financial sector to establish an internal and external reporting mechanism by which whistle-blowers can report significant violations, non-compliances, or criminal activities, confidentially without fear of reprisals. The Act will apply in phases to qualifying companies. For more information, please refer to our April 2023 newsletter.

Implication:

Companies should review their whistle-blower policy to ensure compliance with the Act.

Germany: Reduced parental allowance income limits with effect from January 1, 2024.

The German Cabinet has approved the reduction in the parental allowance, the changes are expected to be effective from January 1, 2024.

The new income limit for parental allowance will be lowered to EUR 150,000 for both couples and single parents, which is expected to apply to parents whose child will be born on and after January 1, 2024. For parents whose child will be born up to and including December 31, 2023, the current regulations will apply. 

Currently, the parental allowance is available to parents having taxable income in the previous year below EUR 300,000 for couples and EUR 250,000 for single parents. The monthly parental allowance paid by the government ranges from a minimum of EUR 300 to a maximum amount of EUR 1800.

Gibraltar

Gibraltar: Budget 2023-24 Highlights

The Chief Minister of HM Government of Gibraltar presented the budget for the year 2023-24 on July 11, 2023.

The key highlights of budget are as follows:

Personal taxes

• Reduction in the tax rate by 1% on all income levels (last year, rates were increased by 2%) for all taxpayers under the both the systems i.e., Allowance Based System (ABS) and the Gross Income Based System (“GIBS”), earning income below GIP 100,000 per annum. This will lower the maximum effective tax rate for such taxpayers from 27% to 26%. The tax rate for the taxpayers earning income of GIP 100,000 per annum or more will continue to pay the tax at the rate of 27%. 

Temporary rate increases of 2% introduced last year will end in 2024/25, and all taxpayers will be charged with a maximum effective tax rate of 25%.

• Employers in the private sector may choose to make tax-free payments to its employees on same terms as those declared in the budget for the public sector:

• GIP 1,200 for basic salary below GIP 50,000.
• GIP 900 for basic salary between GIP 50,000 and GIP 75,000.
• GIP 600 for basic salary between GIP 75,000 and GIP 1,00,000.
• Minimum wage will increase from GIP 8.10 per hour to GIP 8.60 per hour with effect from August 01, 2023.

Corporation taxes

Gibraltar will initiate a consulting process on new incentives and taxation of companies within the scope of the Pillar 2 of OECD BEPS Project and a domestic minimum top up tax.

Implication:

Employers should make note of tax rate changes and adjust their payroll processes accordingly. 

Gibraltar: New Fair-Trading Act effective from October 1, 2023

Vide Notice no. 616/2023 dated September 8, 2023, new Fair-Trading Act 2023 has become effective on October 1, 2023, replacing the Fair-Trading Act 2015.

Key highlights of Fair-Trading Act 2023 are: 

• When applying for a business license, there is no need to publish notices in the Gazette or local newspapers anymore. Instead, one consolidated application will be submitted to the Office of Fair Trading (“OFT”), who will publish the notice on its website. Now the application can be filed online through e-services platform.
• Simplified registration process for cottage industries, artisans and other service providers earning less than GIP 20,000 annually.
• The New Act will facilitate renewal and conversion of the existing licenses. 
• Setting up of new framework for the protection of consumers.
• The New Act grants Office of Fair Trading (“OFT”), regulatory powers required to investigate, conduct inquiries, verify compliance with new law etc. 

Implication:

Companies should check the new law and adopt required changes for their smooth operations.

India

India: Digital Personal Data Protection Bill 2023 passed, received Presidential assent, and became Act, Awaiting Enforcement.

The Parliament of India has passed the Digital Personal Data Protection Act, 2023 (“DPDP Act” or “the Act”) which received presidential assent on August 11, 2023. The provisions of the DPDP Act would come into effect on the issue of notification by the Central Government in the official gazette which may happen in stages. 

The Highlights of the Digital Personal Data Protection Act (“DPDP Act”), 2023, are as follows: –

• The DPDP Act applies to processing of digital personal data collected within the territory of India. It can include data collected online or collected offline and digitized later. Further, its scope can extend beyond the territories of India when processing is connected with the activity of offering goods or services to the data principals within the territory of India. However, the DPDP Act is not applicable to the data processed by an individual for any personal or domestic use or data which is made publicly available by the data principal (to whom the data relates) or by any other person who is under obligation to do so by the law of India.
• Separately, the DPDP Act provides certain exemptions from rights of data principals or obligations of data fiduciaries (except data security) such as processing by government entities, cases of processing to prevent offenses, research, archiving or statistical purposes, etc. as may be prescribed.
• Many concepts under the DPDP Act are similar to those given under the EU General Data Protection Regulation (“GDPR”). The following are some of the important definitions given under DPDP Act: 

• Personal data: Any data through which an individual can be identified.
• Data principal: The individual to whom the personal data relates. In case of a child (below the age of 18), data principal includes the parents or lawful guardian of such a child and in case of a person with disability, data principal includes lawful guardian of such persons. This concept is similar to the ‘data subject’ in GDPR.
• Data fiduciary: Any person (individual, Hindu undivided family, a firm, a company, state, etc.) who alone or in partnership with other persons determines the purpose and means of the processing of an individual’s personal data. This concept is similar to the ‘data controller’ in GDPR. The Act also authorizes the Central Government to notify data fiduciary or a class of data fiduciaries as a ‘significant data fiduciary’ considering certain facts such as the volume or sensitivity of personal data processed, risk of harm to data principals, potential impact on the sovereignty and integrity of India, security of state, public order, etc.

• The DPDP Act permits processing of personal data for a lawful purpose when it is based on consent given by data principal or when it is for certain legitimate uses. The data fiduciary before processing the data, has to make a request for consent of the data principal along with which he must provide a notice specifying the personal data and the purpose of processing such data. The notice should also specify the manner in which data principal can exercise their rights as well as the manner of making a complaint to the Data Protection Board of India (“DPBI or the Board”). The consent of the data principal should be freely given, specific, informed, and unambiguous indication of the data principal’s wishes by which the data principal, by a clear affirmative action, signifying agreement to the processing of his or her personal data for the specified purpose. When consent is the basis of processing personal data, the data principal shall have the right to withdraw the consent at any time. 
• The concept of ‘deemed consent’ which was there in earlier draft has been replaced by ‘legitimate uses’. It includes situations such as, processing data for specific purpose for which it is provided by the data principal voluntarily; or processing for compliance with judgment or order issued under law; or processing for responding to medical emergency or for providing medical treatment during epidemic, outbreak of disease or other threat to public health. It also includes processing for the performance of any function under law, for issue of permit or license by State or instrumentality of State, etc. It also covers processing for the purposes of employment or for safeguarding the employer from loss or liability, such as prevention of corporate espionage, maintenance of confidentiality of trade secrets, intellectual property, classified information, etc.
• The DPDP Act recognizes various rights of data principals such as the right to correction or erasure of data, right to register grievances with data fiduciary, right to withdraw consent for processing, right to nominate other individual in case of death or incapacity of the data principal, etc. 
• The Central Government has the authority to restrict cross-border transfer of data to specific countries by notification to that effect. Thus, the DPDP Act allows transfer of data to countries except for those countries to which such transfer is restricted by the Government. However, the DPDP Act does not restrict applicability of more stringent restrictions on data transfer under any other law.
• The data fiduciary is responsible for processing digital personal data strictly in accordance DPDP Act. The data fiduciary should ensure that data is accurate and complete and take reasonable safeguards to protect personal data in their possession and implement appropriate technical and organization measures to ensure effective adherence of this law. 
• The data fiduciary has to meet the obligation under the DPDP Act such as, to notify data protection authority and each affected data principal in the event of data breach, not retain data for a period beyond what is necessary for legal or business purpose or when the purpose for which such personal data is retained is no longer served by its retention, publication of information of data protection officer or any other person who will be responsible for answering on behalf of it, appointment of a data protection officer, etc. 
• The DPDP Act also provides for additional obligations in respect of a ‘significant data fiduciary’ such as to appoint data protection officer based in India, to appoint an independent data auditor to evaluate compliance with the provisions of the law, to undertake periodic data protection impact assessment, periodic audit, and such other measures, consistent with the provisions of this law, as may be prescribed.
• The DPDP Act provides for the formation the Data Protection Board of India (“DPBI”), which would be notified by the Central Government and will have the power to determine non-compliance with the provisions of the law and impose penalties provided therein.
• DPBI has the power to levy penalties in case, after an inquiry and after giving an opportunity of being heard, it concludes that the non-compliance is significant. The following penalties are provided for various violations:

• Non-fulfilment of additional obligations of significant data fiduciary – Up to INR 1.5 billion. 
• Failure to notify the DPBI and affected data principals of a personal data breach or non-fulfilment of additional obligations in relation to processing data of children – up to INR 2 billion.
• Failure to take reasonable security safeguards to prevent personal data breach: Up to INR 2.5 billion.
• Other non-compliances – INR 500 million.

Implication:

The Digital Data Protection Act 2023 imposes significant obligations on companies engaged in processing of personal data in India. Such companies should note that hefty penalties are provided in the law for non-compliances. Companies engaged in processing personal data should assess their obligations under the new law, evaluate their systems and make necessary changes to remain compliant with the new law. 

India: New time limit for e-invoice reporting for businesses having turnover more than INR 1 billion 

The Goods and Service Tax (“GST”) authority has decided to set up a new time limit of 30 days from date of the invoice for reporting of electronic invoices on e-invoice portals with effect from November 01, 2023. This will be applicable to taxpayers with an Aggregate Annual Turnover (“AATO”) of INR 1 billion or more. 

Implication:

Businesses should take note of the new time limit for reporting of the invoices. 

India: India amends Rule 11UA of Income Tax Rules 1962 with respect to Angel Tax 

India’s Central Board of Direct Taxes (“CBDT”) vide Notification No. 81/2023, effective from September 25, 2023, made changes to Rule 11UA of the Income Tax Rules 1962 to include valuation methods for non-resident and resident investors under the new angel tax provisions. 

Angel tax is levied when an unlisted company issues shares to resident or non-resident investors at a price exceeding their fair market price.

The key highlights of the amendments to Rule 11 UA include:

• Five new methods for valuation of shares are made available for foreign investors in addition to the Discounted Cash Flow (“DCF”) and Net Asset Value (“NAV”) method which include the Comparable Company Multiple Method, Probability Weighted Expected Return Method, Option Pricing Method, Milestone Analysis Method, and Replacement Cost Method.
• Provision of safe harbor up to 10% variation in value.
• Consideration received for share issue, from a foreign entity notified by the centre, can be considered as the fair market value (“FMV”) for both resident and non-resident investors subject to certain conditions. Similarly, price matching with investment by venture capital funds or other specified funds is also provided.
• Valuation methods for calculating the FMV of Compulsorily Convertible Preference Shares (CCPS) is also provided. 

Implication:

The new rules provide some respite from rigours of angel tax and private companies should check if they are beneficial to them.

India: MCA issued clarification for extension of timeline for conducting annual general meeting (“AGM”) and extra-ordinary general meeting (“EGM”) through Video Conference (“VC”) or Other Audio-Visual Means (“OAVM”) 

The Ministry of Corporate Affairs (“MCA”), vide circular no. 09/2023 dated September 25, 2023, has granted extension to the companies whose Annual General Meeting (AGM) is due in the year 2023 or 2024, to conduct their AGM through video conference (“VC”) or Other Audio-Visual Means (“OVAM”) till December 31, 2024 (in the case of first “AGM”) and till September 30, 2024, in other cases.

Further the circular has also allowed the companies to hold the Extra-Ordinary General Meeting (EGM) through VC or OAVM or transact through postal ballot till September 30, 2024.

Ireland

Ireland: Ireland’s Budget highlights 2024

The Ministry of Finance, Ireland announced the Budget on October 10, 2023. The Finance (No.2) Bill 2023 was published on October 19, 2023, covering legislative provisions to implement changes announced in the Budget and also certain additional provisions. The Bill will get approved by both the houses of Parliament and will be enacted by end of this year. The provisions generally apply from January 1, 2024, unless stated otherwise.

The key highlights of Budget 2024 are as under: 

• Personal income tax measures: 
• The personal income tax rates remain unchanged at 20% (standard rate) and 40% (higher rate). However, income slabs are revised as given below:

Category/ Status	Tax Rate	Income Slabs for 2023 (EUR)	Income Slabs for 2024 (EUR)
Single	20%	0-40,000	0-42,000
	40%	40,001 and above	42,001 and above
Married (single earner)	20%	0-49,000	0-51,000
	40%	49,001 and above	51,001 and above

• Employee tax credit, and personal tax credit will be increased from EUR 1,775 to EUR 1,875. Personal tax credit is applicable to all individuals who are single, married, separated, divorced or a former civil partner. The employee tax credit applies to all salaried employees.

• Corporate tax measures:

• The research and development (“R&D”) tax credit is increased from 25% to 30% of all qualifying R&D expenditure. Further, the first-year payment threshold is also increased from EUR 25,000 to EUR 50,000. The claim can be paid in full in the first year up to the threshold amount, instead of instalments over three years. 

Under the R&D tax credit regime, companies are entitled to a fully payable credit that is paid over 3 years in fixed instalments viz. 50%, 30% and 20%. The company can claim to have each instalment paid out by the tax authorities in each year or can elect to treat full or part of each instalment as a pre-payment of tax and offset it against the tax liabilities payable (i.e., corporation tax, VAT, employment taxes).

• The Bill introduced new defensive measures for prevention of double non-taxation of outbound payments of interest, royalties, and distributions (including dividends) made on or after April 1, 2024 (subject to transitionary provisions) to certain jurisdictions viz. European Union (“EU”) list of non-cooperative jurisdictions, no-tax jurisdictions, and zero-tax jurisdictions. The measures will limit certain domestic withholding tax exemptions on specified payments and will also require reporting of the same. Accordingly, a withholding tax will apply on certain specified payments made by Irish companies to associated entities (as defined) that are resident in no-tax, zero-tax, or EU non-cooperative jurisdictions, subject to certain conditions.
• The Bill transposes the EU Minimum Tax Directive (Council Directive (“EU”) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union) into Irish law. The provisions introduce 15% minimum effective tax rate for companies that are part of multinational and domestic groups with consolidated revenue of at least EUR 750 million in at least two of the previous four years. The provisions include:

• Qualified Domestic Top-up Tax (“QDTT”) – This domestic top up tax of 15% will apply to qualifying Irish companies and permanent establishments if their foreign operations have an effective tax rate below 15%. 
• The legislation also provides for the additional charging mechanism such as the Income Inclusion Rule (“IIR”) and Undertaxed Profit Rule (UTPR), which will apply in certain specific circumstances.

The global minimum tax measures will apply to fiscal years beginning on or after December 31, 2023, except for the UTPR, which will apply to fiscal years beginning on or after December 31, 2024.

• Social welfare measures:

• The national minimum wage has been increased from the current minimum wage of EUR 11.30 per hour to EUR 12.70 per hour.
• In the Universal Social Charge (“USC”), upper ceiling in the 2% band has been increased from EUR 22,920 to EUR 25,760 and the rates of USC have been reduced from 4.5% to 4% for incomes between EUR 25,761 and EUR 70,044. As a result, the USC rates, and bands will be:

Annual Income Band for 2023	Annual Income Band for 2024	USC contribution rate for employees
EUR 0 – EUR 12,012	EUR 0 – EUR 12,012	0.5%
EUR 12,013 – EUR 22,920	EUR 12,013 – EUR 25,760	2%
EUR 22,921 – EUR 70,044	EUR 25,761 – EUR 70,044	4% (Changed from 4.5% for 2023 to 4% in 2024)
EUR 70,045 above	EUR 70,045 above	8%

• From October 1, 2024, Pay Related Social Insurance (PRSI) contribution rate will increase from 4% to 4.1%.
• Effective from September 1, 2024, child benefit will be extended to children aged 18 (previously applicable to children up to 17 years of age) who are in full-time education.
• Parental leave benefit will increase from 7 weeks to 9 weeks from August 1, 2024.

• Indirect Tax measures:

• The temporary excise rate reductions on auto diesel, petrol and marked gas oil that were due to expire on October 31, 2023, will be extended until March 31, 2024.
• Changes to VAT registration thresholds are as follows:

Type of business activity	Current Threshold (Applicable up to December 31, 2023)	New Threshold (Effective January 1, 2024)
Sale of services	EUR 37,500	EUR 40,000
Sale of goods	EUR 75,000	EUR 80,000

• The application of the reduced VAT rate of 9% to gas and electricity supplies is extended for one year until October 31, 2024 (from November 1, 2024, the VAT rate will be 13.5%).
• The VAT rate on the supply of electronic books and audio books will be reduced to 0% from standard rate of 9%.

Implication:

Businesses should take note of the budget changes and comply with them accordingly.

Israel

Israel: Israeli Parliament passes law providing incentive for High-Tech industry effective from July 31, 2023

On July 25, 2023, the Knesset, the Israeli Parliament, approved the Law for Encouragement of Knowledge-Intensive Industry (Temporary Order) – 2023 (“the New Law.”) The purpose of this law is to promote investments and acquisitions of Israeli high-tech companies, and in certain instances, foreign high-tech companies.

The New Law is effective for a period of three and a half years, that is for the period from July 31, 2023, to December 31, 2026. It introduces several significant provisions, which include:

• Amortization of the net acquisition cost of an Israeli high-tech company over 5 years.
• Tax amortization for the net acquisition cost of a foreign high-tech company over 5 years, provided certain criteria are met.
• Interest paid by Israeli high-tech companies to foreign financial institutions from countries with which Israel has a double-tax treaty will not be subject to withholding tax.
• Individual investors who invest in early-stage Israeli research and development (“R&D”) companies will be eligible for tax credit.
• Benefit to claim a capital loss equal to the investment amount made by an individual investor in a high-tech company that goes public.

Implication: 

High-tech companies should assess eligibility for the tax incentives for their investments and ensure tax compliance to maximize benefits under the ‘New Law’. 

Italy

Italy: Italian Government implemented EU Whistleblowing Directive effective from March 30, 2023.

The Italian government enacted Legislative Decree no. 24/2023 (the Italian Whistleblowing Legislation) implementing European Union (“EU”) Directive 2019/1937 (the EU Whistleblowing Directive) with effect from March 30, 2023. The Act is in force for companies in the financial sector and became effective for large companies (viz. employee count 250 or more) from July 15, 2023. The provisions will come into force effective December 17, 2023, for companies with employee count between 50-249.

The Italian Whistleblowing Legislation’s scope is broader than that of the EU Whistleblowing Directive, encompassing both EU law and Italian law violations, including illicit activities with legal consequences and offenses as specified in the respective Laws.

The Act has introduced measures for protection of whistle-blowers in Italy. The Act will require companies with 50 or more employees or companies in the financial sector to establish an internal and external reporting mechanism by which whistle-blowers can report significant violations, non-compliances, or criminal activities, confidentially without fear of reprisals. 

The key provisions of the legislation are as follows:

• Internal/ external reporting channels: The entities covered by the new regulations are required to set up an internal reporting channel to a designated office within the entity itself. The external reporting channel for the whistle-blowers is generally the National Anti-Corruption Authority (“ANAC”).
• Requirement to record whistleblower’s report anonymously: The companies are required to maintain both internal and external reporting channels to record anonymous reports and in addition, it requires the communication with the reporting person also to be anonymous.
• Whistleblower’s protection: The whistleblower is protected from retaliation, encompassing actions like dismissal, suspension, demotion, negative reviews, discrimination, harassment, and disciplinary measures. They are offered supportive measures, including free information, assistance, and guidance on reporting, protection under national and EU regulations, individual rights, and access to legal aid. In cases of retaliation, remedies are available, involving filing a complaint with ANAC, which, in turn, informs the National Labor Inspectorate and assists the whistleblower in seeking job reinstatement if dismissed due to their report, as well as pursuing compensation for damages.
• Provision to claim both material and non-material damages: The law  provides for damages against any retaliatory act caused to the whistle-blowers for reporting of any violation/ act/ omission. The whistle-blowers can seek compensation for material damage (i.e., an actual quantifiable loss) as also for non-quantifiable damages (e.g., for damage to the reputation of the whistle-blower caused by the employer).
• Penalties for non-compliance: Failure to establish an internal reporting channel compliant with the Italian Whistleblowing Legislation or conduct thorough investigations of reported violations may result in monetary penalties imposed by ANAC, ranging from EUR 500 to EUR 50,000. Similarly, sanctions can be applied in cases of retaliation or hindrance to the reporting process.

Implication:

Companies should review their whistleblower policy to ensure compliance with the Act.

Japan

Japan: New invoicing system for Consumption Tax effective from October 1, 2023

Japan has implemented a new invoicing system for its Japanese Consumption Tax (“JCT”) regime from October 1, 2023. This system, known as the “qualified invoice system,” will require more detailed information on invoices and is similar to value-added tax systems used in other countries.

Under the new system, JCT taxpayers will need to use the qualified invoices issued by registered invoice issuers to claim an input tax credit. Qualified invoices will need to contain more detailed information than the previous system, including:

• The supplier’s name and registration number.
• The date of the transaction.
• A detailed description of goods or services.
• The invoice amount for each JCT rate (inclusive and exclusive of JCT). 
• The relevant JCT rate; and
• Customer name.

Implication:

Businesses in Japan should make themselves ready for the new requirement by updating their invoicing systems.

Japan: Requires e-archiving of electronic trading documents from January 1, 2024

Japan is introducing mandatory e-archiving for electronic trading documents, including invoices, from January 1, 2024. This means that businesses in Japan will be required to store their trading documents electronically, rather than in paper form. Archiving hard copies is common in Japan, but now it would be necessary to time stamp the record through public authority certified software or use method to prevent alternation of documents post digitization.

Complying with the e-archiving requirements:

Businesses can comply with the new e-archiving requirements in a number of ways, including:

• Applying timestamps on the sending and receiving documents.
• Having a system or internal process to ensure documents cannot be edited or deleted.
• Using a system that can keep logs of editing and deleting traceable.
• Making sure that archived documents are human-readable and searchable by transaction data.

Implication:

Businesses in Japan should start preparing for mandatory e-archiving. This may involve reviewing their current document management system, implementing an e-archiving solution, and training employees on how to use the new system.

Malaysia 

Malaysia: Implements uniform minimum wage rate across the nation effective from July 1, 2023 

Effective from July 1, 2023, minimum wage of MYR 1,500 stands implemented across Malaysia. 

Earlier, Malaysia had increased the minimum wage in May 2022 from MYR 1,200 to MYR 1,500 for entities other than micro-enterprises (business with five or less employees) while deferring its applicability to micro-enterprises till July 2023. 

The new minimum wage rate per day for all types of entities are as follows:

• for employees working four days per week – MYR 86.54.
• for employees working five days per week – MYR 69.23.
• for employees working six days per week – MYR 57.69.

Malaysia: Makes electronic tax filing mandatory effective from January 1, 2024

The Malaysian Inland Revenue Board (“HASiL”) is taking steps to make the use of e-services mandatory for services provided through the MyTax Portal service portal, in phased manner between the period from September 1, 2023, to January 1, 2024. This initiative aligns with technological advancements and the digitization of the taxation service system, with the goal of enhancing customer service. 

The services which would be mandatorily available online include application for tax identification number, tax returns and other forms, sending employee related information, filing of appeals and applications, etc.

Implication:

Taxpayers should keep track of developments and equip themselves for the compliance. 

Morocco

Morocco: Moroccan Government increases the minimum wage by 5% effective from September 1, 2023

Moroccan Government announced increase in the minimum wage by 5% across all the sectors, effective from September 1, 2023. This raise in the minimum wage is in line with the terms agreed between the government, central labour union and General Confederation of Moroccan Enterprises in the year 2022. 

For non-agricultural sector like commerce, industry, and services, the new hourly minimum wage will be MAD 16.30 (previously MAD 15.55).

Netherlands

Netherlands: Lowers minimum pension entry age to 18 effective from July 1, 2023 

On May 30, 2023, the Dutch Senate approved the new Dutch Pension Act, aimed at reforming the Dutch pension system. This Act came into effect on July 1, 2023, and it has significant implications for all employers with existing pension schemes.

This change involves lowering the entry age for pension accrual from 21 years to 18 years. In most pension schemes, the entry age is currently 21 years.  Employers and pension providers are granted a grace period until January 1, 2028, to make adjustments to their current pension schemes and ensure alignment with the new pension laws.

Implication:

Employers and pension providers should review their current pension schemes and make necessary adjustments.

Netherlands: Introduces conditional dividend withholding tax effective from January 1, 2024

The Netherlands will apply a conditional dividend withholding tax (Conditional Dividend WHT) at a rate of 25.8% effective from January 1, 2024. This tax applies to dividend payments to low-taxed jurisdictions and in certain abusive situations. It differs from the existing regular dividend WHT, which is set at 15% and has certain exemptions.

The key differences between the two taxes are:

• The regular dividend WHT exemption applies to dividends when certain conditions are met, such as direct shareholder belonging to a country with which Netherlands has entered into tax treaties and anti-abuse provisions in the treaty are not applicable. The anti-abuse provision allows Dutch taxpayers to look through the ownership chain including entities from low tax jurisdictions and apply the rules to the first entity engaged in an active business.
• The conditional dividend WHT of 25.8% applies to dividends to low taxed jurisdictions and abusive or hybrid situations. This rate can be reduced by any regular dividend WHT. It does not allow looking through the entities in low-taxed jurisdictions. Thus, a higher rate of 25.8% will apply for withholding when dividend payment is to low tax jurisdictions and in certain hybrid situations.

Implication:

Businesses with international structures should review their arrangements to determine whether they may be impacted by the new conditional dividend WHT.

Netherlands: Passes bill regarding determination of place of supply of virtual services on September 21, 2023

The Netherlands has passed a bill that will implement changes to the place of supply rule for VAT purposes for certain services provided virtually. The changes are in line with the mandatory parts of the VAT rate directive and must be implemented by December 31, 2024, and will be applicable from January 1, 2025.

Accordingly, cultural, artistic, sporting, scientific, educational, or entertainment services provided virtually will be taxed in the location where the customer is established or has their residence or usual place of stay.

Implication:

Businesses that provide virtual services should review the changes and make necessary adjustments to their VAT compliance processes.

Netherlands: Extends VAT exemption for small businesses in EU effective from January 1, 2025

The Netherlands has implemented a small business scheme (“KOR”) whereby small businesses with an annual turnover not exceeding EUR 20,000 are exempt from VAT in the Netherlands. 

Vide amendment made on August 14, 2023, the exemption has now been extended to small businesses established in other EU Member States, provided their annual turnover in the EU does not exceed EUR 100,000. Small businesses established in the Netherlands can also request the application of the exemption for other EU Member States, provided their annual turnover in the EU does not exceed EUR 100,000. The businesses who opt for this scheme cannot charge VAT to their customers and cannot recover VAT or take input tax credit for VAT already paid by them. To be eligible for the scheme, certain conditions such as the taxpayer should not supply immovable property, or new means of transport, etc. are required to be complied with.

This amendment gives effect to EU Directive 2020/285 and will take effect from January 1, 2025.

Implication:

The new scheme will reduce the administrative burden for the eligible small businesses by eliminating the need to charge and collect VAT.

Netherlands: Proposed tax plan 2024 – Key highlights

The Netherlands Budget 2024 was presented before the Parliament on September 19, 2023. The following are the key tax proposals included in the budget for the year 2024 which if approved by the Parliament, will be effective from January 1, 2024.

Personal income-tax 

• Proposed personal tax slabs and rate applicable to Box 1 income which includes employment income and certain other types of income (rates for persons below state pension age) are as under:

2024	2023
Brackets	Tax rates	Brackets	Tax rates
Up to EUR 38,139	36.97%*	Up to EUR 37,149	36.93%*
EUR 38,139 – EUR 75,624	36.97%	EUR 37,149 – EUR 73,031	36.93%
Above EUR 75,624	49.50%	Above EUR 73,031	49.50%

*Includes national insurance contributions of 27.65%

• Proposed increase in tax credits (for employees up to state pension age) are as under: 

Tax credit	2024Amount (in EUR)	2023Amount (in EUR)
General tax credit	3,374	3,070
Employment (labor) tax credit	5,553	5,052

• Tax-free travel allowance is proposed to be increased from EUR 0.21 per km to EUR 0.23 per km.
• 30% ruling is applicable to expatriate employees whereby they enjoy exemption from tax up to 30% of their salary. In 2023, it was announced that there would be ceiling applicable on this exemption which was fixed at EUR 223,000. The ceiling will not apply till January 2026 for the expatriate employees who were utilizing this benefit in 2022.

Corporate tax

• Key corporate tax rates are proposed to be kept unchanged.
• The budget proposes certain amendments to address the problem of dividend stripping and to introduce revised rules for classification of foreign entities in line with international tax practices. 
• A bill is proposed to be introduced as a domestic top-up tax, an Income Inclusion Rule for tax years beginning on or after December 31, 2023, and an Undertaxed Payments Rule for tax years starting December 31, 2024, considering BEPS Pillar 2 proposals and EU directives in this respect.

Implication

Companies should monitor the progress of the budget and assess the impact of amendments on their businesses.

Singapore  

Singapore: Increase in standard GST rates in Singapore effective January 1, 2024

As announced in the Minister of Finance’s Budget 2022, the Goods and Services Tax (“GST”) rate will increase from 8% to 9% effective from January 1, 2024, subject to transitionary provisions. Accordingly, purchases of goods and services from GST-registered businesses, which are subject to GST at 8% in 2023, will increase to GST of 9% in respect of purchases made on or after January 1, 2024.

Implication:

Businesses must take a note of new GST rate and update their systems (accounting, invoicing, etc.) accordingly. 

Serbia

Serbia: Extends paternity leave to fathers where mothers are self-employed effective from August 1, 2023

The National Assembly of the Republic of Serbia amended the “Financial Support for Families with Children Act” with effect from August 1, 2023, to support the self-employed woman entrepreneurs in taking care of their children without affecting their businesses.

Earlier, an employed father was eligible to use paid childcare leave if the mother was employed. Now the government of Serbia has extended these rights to employed fathers where the mother is self-employed. With effect from August 1, 2023, father will be eligible to use the paid childcare leave instead of the mother, if the mother is self-employed and has her own business. Such leave can be taken only after child is three months old and extend till the child turns one year old, for the first child and for second and third child until the child is two years old. 

Similarly, the father will be eligible to use the special childcare leave (available to parents of a child with severe impairment) even if the mother of the child is self-employed and has her own business.

Implication:

Employers should update their company employee handbooks, employment contracts and paternity leave policies in accordance with the new provisions.

Serbia: Decides to increase its minimum wage by 17.8% effective from January 1, 2024

Serbia Government announced on September 14, 2023, a decision to increase the minimum wage by 17.8% to RSD 47,154 per month (previously RSD 40,000 per month) effective from January 1, 2024. The hourly minimum wage will increase from RSD 230 to RSD 271.

South Korea

South Korea: Decides to increase its minimum wage by 2.5% for the year 2024.

The South Korea’s Minimum Wage Commission (MWC) declared on July 19, 2023, its decision to raise the minimum wage for the year 2024 by 2.5% to KRW 9,860 per hour (previously KRW 9, 620 per hour). 

South Korea: Issues Tax Law Amendment Bill 2023 

South Korea’s Ministry of Finance issued draft of the Tax Law Amendment Bill (draft amendment bill) 2023 on July 27, 2023, proposing changes which are subject to approval by the National Assembly. The following are key changes recommended under the draft amendment bill:

• The due date to file the Local and Master file are proposed to be revised from 12 months to 6 months with effect from January 1, 2024. The companies submitting the local file will be required to submit statement on international transactions as well.
• SMEs (Small and Medium Enterprises) are granted a tax reduction at 50% on income from transfer of technology and 25% on income from technology licensing is available. The period for availability of these reduction is proposed to be extended to December 31, 2026.
• SMEs enjoy a tax credit where part time employees are converted to full time employees. Such credit is proposed to be extended to December 31, 2024.
• Foreign employees working in South Korea on or before December 31, 2028, will be eligible for flat income tax rate of 19% for 20 years. 
• South Korea implemented Global Minimum Tax (“GLoBE”) Rule pursuant to Pillar 2 of BEPS project which would become effective from January 1, 2024. The Bill proposes to defer the applicability of undertaxed payment/profit rule (“UTPR”) from January 1, 2024, to January 1, 2025, while Primary Income Inclusion Rule will apply from January 1, 2024.

Implication:

Companies subject to transfer pricing compliances should note the proposed change in timelines for filing of local and Master file. SMEs should note possible extension of benefits applicable to them. 

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Taiwan

Taiwan: Basic wage increases from TWD 26,400 per month to TWD 27,470 per month effective from January 1, 2024.

Taiwanese government has increased the basic wages from TWD 26,400 per month to TWD 27,470 per month effective from January 1, 2024. 

Basic wage is the minimum monthly wage paid to the workers by law. Basic wages are used for the purpose of calculating social security contributions of employees.

Thailand

Thailand: Cabinet of Ministry approves increase in the employees’ medical allowance: 

Thailand Cabinet of Ministers approves the proposal to increase the medical expenses to be paid by the employer to the employee from baht 50,000 to baht 65,000. This applies when an employee is injured or falls sick during work or on account of work. The revised rate is expected to cover the increased cost of the medical expenses so as to relieve employees from the financial burden.

Earlier, the injury to be eligible for medical allowance had to be the injury which was treated by craniectomy (open-skull surgery). The draft Ministerial Regulations remove this requirement by revising the definition of “severe head injuries.” Further, the following will be eligible for the medical allowance:

• Severe head injury which makes it difficult to perform daily activities for more than 20 days.
• Severe head injury where it is impossible to be operated or which may not require a surgery.
• Severe injury due to fall from a height to any part of the body which requires admission to the intensive care unit (“ICU”) for 3 nights with abdominal bleeding without surgery.

Implication:

Employers will need to consider revised thresholds for payment of medical allowance in appropriate situations.

Thailand: Extends the reduced VAT rate of 7% till September 30, 2024

Thailand approves the decision to extend the reduced VAT rate of 7% till September 30, 2024.

In the past the government of Thailand had reduced the VAT rate from standard rate 10% to 7% which was extended from time to time considering the economic conditions. The extended period was about to expire on October 1, 2023, which was earlier extended for the period for two years from October 1, 2021, due to covid-19 pandemic. 

The government decided to continue the 7% VAT rate further for one year. 

Implication:

Businesses should take note of extension to 7% VAT rate.

Turkey

Turkey: Enacts tax reforms on July 14, 2023, raises corporate tax rate, and removes exemptions

Turkey has implemented significant tax changes through Law No. 7456, published on July 14, 2023, as under:

• The standard corporate tax rate increases from 20% to 25%. For financial sector companies (banks, leasing, asset management, insurance), it stands increased to 30%. These rate changes will apply to returns filed October 1, 2023, onwards, for income earned in the tax year 2023 onwards.
• Reduction in corporate tax rate applicable to export income stands at 5% (up from 1%), while 1% rate reduction for eligible companies for income from production activities remains unchanged. However, if a company enjoys both the benefits, only the tax rate reduction in case of export profits will apply.
• The following tax exemptions are repealed:

• 50% exemption for capital gains on immovable property held for at least 2 years stands repealed from July 15, 2023. But qualifying property acquired before July 15, 2023, will enjoy 25% exemption.
• VAT exemptions on property sales would not apply from July 15, 2023, though it will continue to apply for sales of eligible property held before that date.
• Exemption for transferring property to a new or existing company under tax-free spin-off provisions ends on January 1, 2024.
• The exemption on income from mutual funds, excluding venture capital funds, is repealed for participation shares acquired after July 15, 2023. Venture capital fund income exemption remains.

Implication: 

The new tax law represents a significant change to the Turkish tax regime. Businesses operating in Turkey should evaluate impact of increased corporate tax rates and repealing of various exemptions on their profits.

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Turkey: Increases VAT Rates Effective from July 10, 2023

Turkey has amended VAT rates according to Presidential Decree No. 7346 published in the Official Gazette on July 7, 2023, as under:

• The general VAT rate has been increased to 20%, up from 18%.
• The reduced VAT rate has increased from 8% to 10%.
• VAT rate on cleaning products, excluding toothbrushes, pastes, and dental floss, stands increased from 8% to 20%.
• The reduced VAT rate of 1% applicable to certain supplies remains unchanged.

These new rates became effective from July 10, 2023.

Implication: 

Businesses operating in Turkey should carefully review the new VAT rates to assess the impact on their operations.

United Kingdom

United Kingdom: UK-US Data Privacy Framework extension effective from October 12,2023

The UK and the US have announced an extension to the EU-US Data Privacy Framework (“DPF”), which will come into effect on October 12, 2023. This means that UK businesses will be able to transfer personal data to US organizations under the DPF based on self-certification pursuant to UK extension to DPF.

The UK Secretary of State for Science, Innovation and Technology has determined that the US provides adequate levels of protection for personal data in certain transfers, and the US Attorney General has also designated the UK as a “qualifying state” under an Executive Order dated September 18, 2023.

Implication:

Businesses should review their data transfer practices ensuring that they comply with the requirements of the DPF. This includes ensuring that they have a valid data transfer agreement in place with any US organizations to which they transfer personal data.

United Kingdom: UK employees to receive new family friendly benefits in 2024.

The family friendly laws namely The Carer’s Leave Act, The Neonatal Care (Leave and Pay) Act, and The Protection from Redundancy (Pregnancy and Family Leave) Act are set to be effective by early 2024. They will provide employees with assistance in certain caregiving and family-oriented situations. The highlights of benefits that would be available to employees are as follows: 

• The Protection from Redundancy (Pregnancy and Family Leave) Act: This will extend the current redundancy safeguards for pregnant employees to encompass a period of 18 months following childbirth, granting mothers returning from maternity leave an extra six months of protection. Accordingly, employers have an obligation to offer the eligible employee a suitable alternative vacancy where one exists before offering redundancy.
• The Neonatal Care (Leave and Pay) Act: This will provide supplementary leave and pay for employees responsible for infants undergoing neonatal care. Parents will have the opportunity to take up to 12 weeks of paid leave, in addition to their existing leave benefits, such as maternity and paternity leave.
• The Carer’s Leave Act: This will grant up to five days of unpaid leave to employees who provide or arrange care. This leave would be available from the first day of employment.

The Flexible Working Bill have also received Royal Assent in July 2023 which grants employees the right to request flexible working from the very first day of a new job. Employers are obligated to assess all such requests and must provide a reason if they decide to reject them.

Implication: 

Businesses may need to adjust their policies and procedures to comply with the new laws.

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