Argentina

Argentina: Companies with 100 or more employees to provide child-care spaces or non-remunerative allowance in lieu of the child-care spaces by July 31, 2023.

Decree 144/2022 dated March 23, 2022, amended Section 179 of the Employment Contract Law (Law No. 20,744), by mandating that companies having 100 or more employees should provide onsite child-care spaces for employees’ children between the age group of 45 days and three years. The child-care spaces provided can be consortium spaces, for those employers whose companies are located within the same industrial park, or within a distance of less than two kms, or employers can sub-contract the setting up of childcare spaces. The Decree also states that the requirement of providing child-care spaces can be replaced with a payment of non-remunerative allowance to the employees as re-imbursement of costs of child-care services. The provisions originally effective from March 23, 2023, now stand extended up to July 31, 2023.

Implication:

Companies have to make arrangements for child-care spaces or a non-remunerative allowance in lieu of the spaces by July 31, 2023, to avoid penalties and sanctions from the Labor Authority.

Argentina: Monthly minimum wages increased from April 1, 2023 

In accordance with Resolution 05/2023 dated March 23, 2023, the monthly minimum wages in Argentina are increased as follows: 

• From April 1, 2023 – ARS 80,342 (previously ARS 69,500 till March 31, 2023)
• From May 1, 2023 – ARS 84,512
• From June 1, 2023 – ARS 87,987

The monthly minimum wages apply to workers/employees covered under Labor Contract Regime.

Australia

Australia: ‘Respect at Work’ bill received a royal assent on December 12, 2022, and became a law, which provides stringent legal provisions against sexual harassment and discrimination at workplace and outlines new employer obligations.

The Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Bill 2022 was introduced in the House of Representatives on September 27, 2022, with 7 legislative recommendations (out of the 55 recommendations of the Australian Human Rights Commission’s Respect at Work Report) and all the 7 legislative recommendations are approved and became the law. The new act introduced a positive duty and legal obligation on employers to take proactive and meaningful actions such as:

• To eliminate workplace sexual harassment, sex discrimination and sex-based harassment.
• To prevent and investigate where a person is subject to a hostile workplace environment on the ground of sex; and
• To eliminate certain acts of victimization.

New regulatory powers have been conferred on the Australian Human Rights Commission to investigate and enforce compliance with the positive duty. There is a 12-month transitional period until December 11, 2023, before the Commission’s new monitoring and compliance function takes effect.

Implication:

Employers will need to update their policies to protect the employees against discrimination and harassment.

Australian government increases the maximum superannuation guarantee contribution base to AUD 62,270 per quarter and contribution rate from 10.5% to 11% p.a., effective from July 1, 2023

The Australian Taxation Office (“ATO”) has announced the latest maximum superannuation contributions base and rate for the income year 2023-24.

Particulars	For the Year 2023 (July 1, 2023, to June 30, 2024)	For the Year 2022 (July 1, 2022, to June 30, 2023)
Maximum Superannuation Contribution base (per quarter)	AUD 62,270	AUD 60,220
Superannuation Contribution rate (in % per annum)	11%	10.50%

The “Superannuation guarantee contribution or Super” is the mandatory social security contribution by the employer, which is calculated on salaries (as defined) of the employees 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 superannuation 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.

Australia: Effective from August 1, 2023, businesses with more than 15 employees are obliged to provide 10 days of family and domestic violence paid leave. 

In Australia, the Fair Work Amendment (Paid Family and Domestic Violence Leave) Bill received Royal Assent on November 9, 2022. Effective from August 1, 2023, businesses with more than 15 employees are required to provide family and domestic violence paid leave of ten days to the employees (both permanent and casual) who are subjected to violence, threatening, or otherwise abusive behavior by a current or previous intimate partner, a close relative, or a close friend. 

Previously, employees in Australia were entitled to five days of unpaid family and domestic violence leave during each 12 months of employment.

Implication: 

Employers will need to update their leave policy in accordance with the amended provisions.

Brazil

Brazil: Social Security Contribution Table for 2023 published

Brazil through Ordinance No. 26 dated January 10, 2023, sets out  social security contribution table for 2023 (i.e. effective from January 1, 2023, onwards), which is as follows:

For the year 2023	For the year 2022
Salary range (amounts in BRL)	Rate	Salary range (amounts in BRL)	Rate
0 – 1,302	7.5%	0 – 1,212	7.5%
1,302.01 – 2,571.29	9%	1,212.01 – 2,427.35	9%
2571.30 – 3,856.94	12%	2,427.36 – 3,641.03	12%
3,856.95 – 7,507.49	14%	3,641.04 – 7,087.22	14%
7,507.50 and more	Capped at 7,507.49 *14% i.e., BRL 877.24	7,087.23 and more	Capped at 7,087.22 *14% i.e., BRL 828.38

Implication:

Employers need to consider the social security table for 2023 to calculate the social security contribution of employees.

Brazil: Minimum monthly wage and income tax exemption increased. 

The Brazilian government through a press release dated February 16, 2023, increased the minimum monthly wage and personal income tax exemption limit.

The minimum monthly wage is increased to BRL 1,320 (previously BRL 1,302) effective from May 1, 2023. 

Further, the monthly individual income tax (“IRPF”) exemption is increased to BRL 2,640 (previously BRL 1,903.98). The increased exemption will be applicable from 2024 onwards.

Implication:

Employers need to take into account the increased amounts to calculate the payroll and tax liability of employees.

Bulgaria

Bulgaria Amendments to the VAT Act

The bill amending the VAT Act was approved by the National Assembly and published in State Gazette No. 102 on 23 December 2022. The important amendments are listed below:

• Reduced VAT rate:

Effective January 1, 2023, a reduced rate of 9% applies permanently for certain goods and services such as books including textbooks, magazines and newspapers which are supplied physically or electronically and supplies for babies like baby-food, diapers, etc.

• Reporting of data regarding cross-border payments and their beneficiaries:

Bulgaria has transposed the provisions of Council Directive (“EC”) 2020/284 into the VAT Act effective from January 1, 2024. Accordingly, Payment Services Providers (PSP) are required to collect and report certain data pertaining to cross-border payments. 

PSP are required to maintain electronic records of cross-border payments and their recipient. They are required to report to revenue authorities on a quarterly basis the information about persons who have received more than 25 cross-border payments in the three-month period.

• Increased VAT refund threshold:

Bulgaria has raised the minimum VAT refund thresholds for persons established in third-party (non-EU) nations. Beginning on January 1, 2023, eligible taxpayers in a third country may submit a refund request for a time period shorter than a calendar year but not shorter than three months, provided the tax amount involved is BGN 800 (previously BGN 400) or more.

Applications for refunds can be made for a period shorter than three months only if the relevant period represents the remaining months of a calendar year. When a request for a refund relates to a period partially in one calendar year with the remaining period being in the next calendar year, the minimum refund amount should be at least BGN 100. (Up from BGN 50).

Further, the amended law provides bad debts relief whereby the taxable amount can be reduced in case of non-payment or partial payment for taxable supplies. The relief is subject to conditions and formalities laid down under the law.

• Threshold for mandatory VAT registration revised. 

The mandatory registration threshold under VAT stands increased to BGN 100,000 (previously BGN 50,000) with effect from January 1, 2023, as a result of an amendment to Art. 96, Paragraph 1 of the Bulgarian Value Added Tax Act (VAT Act). The updated threshold is applicable until December 31, 2024. This change is pursuant to the European Council decision authorizing Bulgaria to introduce special measures derogating from the provisions of Article 287 of EU Directive 2006/112/EC on the common VAT system.

Businesses that had a turnover below the amended threshold during the previous 12 months are eligible to apply for deregistration with the National Revenue Agency.

Implication:

Companies should take note of changes in VAT rates, VAT thresholds for refund and analyze the impact on their businesses. Payment service providers should note the new reporting and record keeping requirements effective from January 2024 and should make necessary changes to their systems.

Bulgaria: Increases minimum wage effective from January 1, 2023 

Effective from January 1, 2023, the monthly minimum wage in Bulgaria has increased to BGN 780 from BGN 710. 

Bulgaria: Thresholds for arrivals and dispatches under Intrastat system revised for 2023.

The Bulgarian Government has amended the thresholds for arrivals and dispatches under the Intrastat system for the year 2023. The revised thresholds are as follows:

• Arrival: BGN 700,000 (previously BGN 520,000)
• Dispatch: BGN 1 million (previously BGN 780,000)

Further, along with the above changes in thresholds, the thresholds for declaring the statistical value have also been announced for the year 2023 which are as follows:

• Intra-EU acquisitions: BGN 11 million
• Intra-EU dispatches: BGN 29.3 million

Implication:

Businesses in Bulgaria should take note of the revised thresholds for filing Intrastat and statistical value to remain compliant.

Canada 

Canada Federal Budget 2023 Highlights

The Canadian Deputy Prime Minister and Finance Minister presented the federal budget for 2023 on March 28, 2023. 

The key highlights of budget 2023 are as follows:

• There were no increases to personal or corporate income tax rates, nor in Goods and Services Tax (“GST”) or Harmonized Sales Tax (“HST”), and no new taxes on wealth, inheritance, or capital, introduced. 
• An individual is subject to federal and provincial taxes in Canada. The federal individual (personal) income tax rates remain unchanged for the financial year 2024, the following are the current rates for reference:

Tax brackets	Tax Rates
first CAD 53,359	15.00%
over CAD 53,359 up to CAD 106,717	20.50%
over CAD 106,717 up to CAD 165,430	26.00%
over CAD 165,430 up to CAD 235,675	29.32%
More than CAD 235,675	33.00%

• The corporate tax rates remain unchanged. The current corporate tax rate is 38%, with a 10% federal tax abatement and a 13% general tax reduction (subject to certain exceptions), resulting in an effective corporate tax rate of 15%.
• The government has proposed certain changes in Alternate Minimum Tax (“AMT”) regime, which will be effective from the year 2024, if approved. AMT is calculated considering fewer deductions, exemptions, and tax credits than under the normal income tax calculation rules and, whichever is higher, under the two regimes, is considered to be the final tax liability. Currently, AMT applies at a flat rate of 15% with a standard exemption of CAD 40,000. Following changes are proposed:

• Increase in the AMT rate from 15% to 20.5%;
• Increase in the basic AMT exemption from CAD 40,000 to CAD 173,000 (indexed annually to inflation); and
• Changes in the calculation of the AMT, i.e., broadening the base (types of income to be included for calculation of AMT).

Implication:

The companies should make note of budget changes and implement applicable changes.

Federal minimum wage in Canada increased from CAD 15.55 to CAD 16.65 per hour, effective from April 1, 2023

Effective from April 1, 2023, Canada has increased the minimum wages rate from CAD 15.55 per hour to CAD 16.65 per 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. 

Federal wage rate applies to workers and interns working in public sector or certain federally regulated private sector, in case of individuals working in ‘industries not regulated by the federal government,’ the provincial minimum wage applies. Where the general minimum wage rate is higher in provinces or territories, the higher rate will continue to apply.

Canada introduces 10 days of mandatory paid sick leave annually for federal workers, effective from December 1, 2022, and other changes.

Effective from December 1, 2022, under the Canada Labor Code (the “Code”), the Canadian workers in federally regulated businesses are entitled to 10 days of mandatory paid sick leave annually. This leave will be accumulated gradually.

Availing uninterrupted leave of the entire 10 days is not needed. However, for continuous leave above five days, the employer can mandate a certificate by a health professional attesting employee’s incapacity to work during this period. 

Implication:

Employers will have to make necessary changes in employment contracts, register of leaves and employment handbook considering the newly introduced annual mandatory paid sick leave provision.

Québec: A new requirement to report significant beneficiaries’ information beginning March 31, 2023

Aiming towards more transparency in the corporate sector, the Quebec Government has introduced reporting requirement of significant beneficiaries’ information via the Bill 78 viz. “An Act mainly to improve the transparency of enterprises” which was passed by the National Assembly of Québec on June 8, 2021, and effective from March 31, 2023. 

The regulations require certain entities in Québec, to declare below information of their significant beneficiaries’/significant individuals to the Québec Enterprises Registrar (“the Registrar”): 

• Full name of the individual and other names used in Quebec;
• Address of their domicile (residential address);
• The date of birth;
• The type of control exercised (including the holding percentage, if applicable); and
• The date on which the person became an ultimate beneficiary and, if applicable, the date on which the person ceased to be an ultimate beneficiary.

Along with the information provided, the entities must provide the registrar with a valid identification document for each existing director (Canadian or foreign director) to support the information provided.

The person is considered to be ‘Significant Beneficial Owner (“SBO”)’ or ‘significant individual’, if the individual/s (natural person/s) 

• Owns (directly/indirectly) beneficial interest in 25% or more fair market value of the company’s securities or 
• Carries 25% or more of the voting rights of the company, or 
• Is an individual who has the right (directly or indirectly) or the ability to exercise direct and significant influence (i.e., ‘control in fact’), such person can influence the decisions of the enterprise in an important way.

All obliged entities will be required to file their SBO information within 6 months from the end of the financial year. 

Non-compliance with the above provisions may result in the cancellation of the registration of the enterprise and levy of penalties ranging from CAD 500 to CAD 25,000.

Implication:

Companies will need to identify their SBO’s and submit the necessary information.

Highlights of the 2023 Quebec Budget

Quebec’s Finance Minister Eric Girard presented the province’s budget for 2023 on March 21, 2023. 

The key highlights of budget 2023 are as follows:

For Individuals

• Changes to Personal income tax rates and income thresholds – it is proposed that income tax will be reduced by one percentage point on the first two income tax brackets as follows:

Financial Year 2023		Financial Year 2022
Taxable Income thresholds	Tax Rates	Taxable Income thresholds	Tax Rates
Up to CAD 49,275	14 %	Up to CAD 49, 295	15%
CAD 49,275 to CAD 98,540	19 %	CAD 49, 295 to CAD 92,580	20 %
CAD 98,540 up to CAD 119,910	24 %	CAD 92,580 up to CAD 112,655	24 %
Above CAD 119,910	25.75 %	Above CAD 112,655	25.75 %

• Changes to Quebec pension plan – Starting January 1, 2024, it is proposed that individuals above 65 years of age (who are still working/employed) will have the option to stop contributing to the Quebec pension plan, which will result in an increase in their after-tax income.

For Employers and Companies

• Corporate income tax rates- No changes in the corporate income tax rates. The general tax rate in Quebec stands at 11.5%.
• New tax holiday for large investment projects- In order to stimulate business investment, the Quebec government has declared a tax holiday for new investment projects, which will replace the existing tax holiday.

The new tax holiday will be available after meeting the specified requirements and upon obtaining an initial qualification certificate from the Minister of Finance before incurring significant expenditure. 

The key features of the new tax holiday are as follows:

Criteria	Details
Tax holiday/ exemption/ benefit	Tax holiday/exemption for:income from eligible activities relating to the project; and employer’s contribution to the Health Services Fund (“HSF”) in respect of the portion of wages paid to its employees attributable to the project activities.  Tax holiday is to be calculated at prescribed percentages of cumulative total eligible expenditure which is subject to the ceiling of CAD 1 billion.
Rate of tax holiday/ exemption/ benefit	15% where investment is in major urban centers.20% in case of investment in other territories or regions.25% in case of investment in territories with low economic vitality
Duration of tax holiday/ exemption/ benefit	10 years.
Investment condition per project	CAD 100 million over 48‑month.
Effective from	It applies in respect of an investment project for which an application for an initial qualification certificate is made after March 21, 2023.

Implication:

Companies should take note of budget changes and consider/implement those whichever are applicable.

Quebec increases minimum wages per hour from CAD 14.25 to CAD 15.25 effective from May 1, 2023

Quebec has increased the minimum wage rate effective from May 1, 2023, from CAD 14.25 per hour to CAD 15.25 per hour for the year 2023.

Ontario requirement to maintain “Transparency Register” of Significant Beneficiaries comes into effect from January 1, 2023

Bill 43, which introduced changes to the Business Corporations Act (Ontario), received royal ascent on December 9, 2021, and came into effect from January 1, 2023. It requires the recording and maintenance of significant beneficial ownership information of individuals with significant control over the corporation in the register (“ISC register”) for private corporations. For more details, please refer to the news captured in our Newsletter April 2022. 

Implication:

Corporations will have to identify and record their beneficial owners annually and report any change in the beneficial ownership within 15 days of becoming aware of the change.

China

China: Final standard contractual clauses for overseas transfer of personal data to be effective from June 1, 2023

Under the Personal Information Protection Law (“PIPL”) of China, personal information processors who wish to transfer personal information outside of China, must comply with one of the following data transfer conditions:

• concluding a standard contract with overseas recipient for cross-transfer of data as provided by the Cyberspace Administration of China (“CAC”);
• pass the security assessment organized by the national cyberspace department; or
• obtain personal information protection certification from the relevant specialized institution in line with CAC legislation.

On February 24, 2023, the CAC, issued the measures on standard contracts for the export of personal Information (the “SCC Measures”) with its annexure, the standard contract clauses (hereinafter referred to as the “SSC”) which shall be effective from June 1, 2023, with a six-month grace period. The highlights of the SCC measures are as follows:-

Applicability

 The SCC measures apply to companies that are established in China and transfer personal information to recipients outside of the territory of China and fulfil all the following conditions:-

• The company is not a critical information infrastructure operator (CIIO)*;
• It handles the personal information of fewer than one million individuals;
• It has provided to overseas recipient personal information of fewer than 100,000 individuals (in aggregate) since January 1 of the previous year; and
• It has provided sensitive personal information to overseas recipient of not more than 10,000 individuals in aggregate since January 1 of the previous year.

*CIIO refers to the person responsible for managing critical information infrastructure such as network facilities and information systems that are engaged in public communication and information services, energy, transport, water, finance, public services, e-government services, national defense or any other any activities that may cause harm to national security, the economy, etc.

The SSC measures also require that the personal information processors should conduct personal information protection impact assessments before providing personal information overseas. The assessment should focus on the legality, legitimacy and necessity of the purpose, scope, and methods of processing personal information by the personal information processor and the overseas recipient.

SCC signing and filing requirements: 

SCC are effective from June 1, 2023, and companies that meet the above applicability criteria are required to:

• Sign the standard contract with the overseas recipient of personal information within grace period six months until December 1, 2023; and
• File the signed standard contract copy along with the corresponding personal information impact assessment with the local branch of the CAC within 10 working days from the SCC implementation date. 

Mandatory clauses

The standard contract clauses are mandatory in nature and covers aspects like obligations of the personal information processor and overseas receiver, rights of the personal information subject, definition, etc. If the companies want to incorporate any other additional clauses, they can do so, provided they don’t conflict with the standard clauses.

Implication:

Companies that are involved in the cross-border transfer of personal data and fall under the above applicability criteria are required to execute SCC with the recipient of the information and file the signed SCC copy with the local branch of CAC by December 1, 2023.

China:  From January 1, 2023, small and thin profit enterprises (“STPEs”) to have effective CIT rate of 5% on annual taxable income of up to CNY 1 million.

The Ministry of Finance (“MOF”) and State Taxation Administration (“STA”) made further announcement regarding the preferential tax treatment (introduced in 2019) for small and thin-profit enterprises (“STPEs”) * on an annual taxable income up to CNY 1 million on March 26, 2023. Accordingly, corporate income tax (“CIT”) for STPEs for the period from January 1, 2023, to December 31, 2024, with respect to annual taxable income of less than 1 million, would be payable at a 20% rate on 25% of the annual taxable income, resulting in an effective CIT rate of 5%.

Previously, for STPEs annual taxable income of up to CNY 1 million was subject to a 20 % CIT rate on 12.5% of the taxable income amount, resulting in an effective CIT of 2.5% during the period from January 1, 2021, to December 31, 2022.

This effective CIT rate of 5% is now aligned with the MOF and STA’s earlier announcement dated March 18, 2022, with respect to the CIT rate applicable to STPEs with annual taxable income between CNY 1 million and CNY 3 million, till December 31, 2024.

* Small and thin-profit enterprises (“STPEs”) refer to enterprises engaged in industries that are not prohibited or restricted by the government and that satisfy 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.

Implication:

Companies that qualify as STPE as above should factor in the impact of increase in CIT on income up to CNY 1 million.

Chile

Chile: Minimum monthly wages increased to CLP 410,000 from CLP 400,000 with effect from January 1, 2023

Through Law 21.456 – ‘The Law on the adjustment of minimum wage and other benefits’ dated May 26, 2022, the Chilean government has raised the minimum monthly wages to CLP 410,000 from CLP 400,000 for workers aged between 18-65 with effect from January 1, 2023.

Colombia

Colombia: Minimum monthly wages increased to COP 1,160,000 from COP 1,000,000, effective from January 1,2023 

Through Decree 2613 of 2022 dated December 28, 2022, the Colombian Government increased the minimum monthly wages to COP 1,160,000 per month from COP 1,000,000 per month with effect from January 1, 2023. 

Colombia: E-invoicing will be mandatory for all taxpayers, effective from June 1, 2023

The Colombian tax authority (“DIAN”) through Resolution No. 1092 dated July 1, 2022 (“the resolution”), has set timelines for implementation of electronic invoicing regime.

Under the e-invoicing regime, for sales of goods and/or provision of services exceeding the amount of UVT 5, the taxpayers are required to issue an electronic sales invoice. 

The resolution elucidates phased roll-out of e-invoicing mandate in Colombia, in the following manner:

Sr. No.	Date	Criteria/ Applicable to
1	February 1, 2023	Large Taxpayers.
2	April 1, 2023	Tax filers (i.e., Income and complimentary tax filers, which is corporate and personal income tax in Colombia), who are other than large taxpayers.
3	May 1, 2023	Non-tax filers of income tax.
4	June 1, 2023	All other taxpayers not included above.

“UVT” or Unidad de Valor Tributario is acronym for “Tax Value Unit” in Spanish. UVT is the value measure established by the Colombian government in order to simplify the calculations, tax obligations, etc. The value of UVT is published annually by the DIAN. UVT for 2023 is declared as COP 42,412.

Implications:

• Use of e-invoicing by all businesses will eliminate the use of multiple invoice formats and will bring standardization in the invoicing. 
• It is recommended for all businesses to start preparing for the e-invoicing system implementation before the due date.

Denmark  

Denmark: Intrastat thresholds increased in 2023.

In Denmark, statistical reports viz. ‘Intrastat returns’ are required to be submitted in respect of the movement of goods across the national borders to or from other EU countries. Intrastat returns list down the goods sent out of Denmark i.e., ‘dispatches’, and goods brought into Denmark i.e., ‘arrivals.

Intrastat returns are required to be submitted only upon exceeding the reporting thresholds.

The threshold for submitting Intrastat returns effective from January 1, 2023 are as follows:

• Arrivals threshold: DKK 22 million (previously DKK 13 million);
• Dispatches threshold: DKK 11 million (previously DKK 10 million).

Implication:

The businesses will need to follow revised thresholds for submission of Intrastat returns.

Finland

Finland: Thresholds for arrivals and dispatches under Intrastat system revised for 2023.

The Finnish administration has announced updated thresholds of arrivals and dispatches under Intrastat system for the year 2023. The revised thresholds are as follows:

For arrivals and dispatches: EUR 800,000 (previously EUR 700,000)

Implication:

Businesses in Finland should take note of the revised thresholds for intrastate declaration to remain compliant.

France

France: Obligation of online filing of updated DUERP from July 1, 2023, for companies with more than 150 employees 

In France, all employers are required to assess risks to health and safety of their employees and keep a record of such assessment in the form of a unified occupational risk assessment document (“DUERP”).

DUERP lists down risks and dangers identified by the company and various prevention and protection measures taken by the company. The rules governing the DUERP were updated by Law No. 2021-1018 of August 2, 2021, as stated by Decree No. 2022-395 of March 18, 2022, which went into effect on March 31, 2022. The amended law, among other provisions, also requires electronic filing of DUERP on the dedicated portal. This requirement of electronic filing would apply to companies with more than 150 employees with effect from July 1, 2023, and to companies with less than 150 employees effective from July 1, 2024 (yet to be notified).

The employers should be compliant with the following requirements regarding DUERP.

• Preservation of DUERP: The employer must preserve the up-to-date DUERP for at least 40 years.
• Updating the DUERP: The employer needs to update the DUERP in of the following situations – 

• Decision is taken to make major changes to health and safety conditions or working conditions.
• Additional information concerning the assessment of a risk is brought to the attention of the employer.
• At least once a year by an employer with more than 11 employees.

• Availability of DUERP: Anyone including former workers who can demonstrate an interest in accessing DUERP can access the DUERP.

Implication:

Employers who are subject to the requirement of electronic filing of DUERP from July 2023 should take note of the new requirement. 

France: Employers need to maintain pay slip containing additional details effective July 1, 2023 

Effective from July 1, 2023, the Employer must include the following additional information in the pay slip issued to employees. 

Employer is required to disclose the “Net Social Amount,” or the sum left over after all social security taxes have been deducted from the employee’s gross monthly wage. Currently, the pay slip is required to display the employee’s gross wage, withholding tax, and the amount paid to the employee. This change will assist employees who are required to disclose this information to social organizations in order to obtain some benefits which are designed for workers with lower incomes.

Implication:

Employers should make necessary amendments to pay slip formats to comply with this new requirement.

Germany 

Germany: German Federal Parliament Passes Whistle-Blower Protection Act, which is yet to be promulgated.

On December 16, 2022, the German federal parliament (Bundestag) passed the German Whistle-Blower Protection Act – HinSchG (“the Act”). But it is yet to enter into force and has not yet been promulgated into Federal Law. On February 10, 2023, the legislative body representing 16 Federal States of Germany (Bundesrat) rejected the bill leading to further delay in promulgation of the act by few months.

The Act plans to introduce 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 to all companies upon promulgation, but it 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 more than 249 employees	3 months after the law comes into force.
Companies with 50 to 249 employees	Up to December 17, 2023.
Companies in the financial services sector	Immediately after the law comes into force, regardless of the number of employees.

The key provisions of the Act are as follows:

• Requirement to record whistle-blower’s report anonymously: The companies are required to maintain both internal and external reporting channels to record anonymous reports and in addition, it also requires the communication with the reporting person to be anonymous. The Act provides an implementation period until January 1, 2025, to implement the requirement of maintaining anonymity in the whistle-blowing reporting channel.
• Requirement to provide incentives for whistle-blowers: The companies must provide incentives for whistle-blowers to contact the internal reporting office prior to contacting an external office (i.e., a federal or state reporting office). Although, whistle-blowers will be allowed to choose between internal and external reporting offices, any reports made first to the internal report office of the company can first be carefully investigated internally and the external reporting bodies can refer the internal investigation for clarification.
• Provision to claim both material and non-material damages: The provision not only allows for individuals to seek compensation for material damage (i.e., an actual quantifiable loss) but also for non-quantifiable damages (e.g., for damage to the reputation of the whistle-blower caused by the employer).

Implication:

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

Germany: Elimination of the obligation to submit the certificate of incapacity for work to the employer by employees who are members of the statutory health insurance, effective from January 1, 2023

Effective from January 1, 2023, the German Continued Remuneration Act (Engeltfortzahlungsgesetz – “EFZG”) was amended to add a new section 5(1a) to ease the process of reporting employee’s incapacity to work to the employer.

Now employees who are registered with the statutory health insurance (gesetzliche Krankenversicherung) will no longer have to submit the certificate of incapacity to work to the employer but the health insurance company itself will send the report to the employer upon his request. The employees, however, will still be required to intimate the employer about their incapacity.

The amendment does not apply to employees insured with private health insurance companies or in certain other cases and they have to continue submitting to the employer sick certificate in paper form.

Prior to the amendment, the employees were required to notify the employers about: 

• incapacity to work and its expected duration in “certificate of incapacity or sick certificate” which was in paper form, within four days of sickness, and
• a follow-up certificate, where the expected duration of the incapacity was extended.

Implication:

Employers should make a note of it and inform employees covered by the amendment. Further, they will have to update the policy handbooks and employment agreements.

Honduras

Honduras: Individual income tax table published for 2023.

The Honduras revenue administration (“SAR”) has published the table for progressive individual income tax brackets and rates, effective from January 1, 2023:

For the year 2023	For the year 2022
Annual Salary range (amounts in HNL)	Rates	Annual Salary range (amounts in HNL)	Rates
0 – 199,039.47	0%	0 – 181,274.56	0%
199,039.48 – 303,499.90	15%	181.274.57 – 276,411.57	15%
303,499.91 – 705,813.76	20%	276,411.58 – 642,817.63	20%
705,813.77 and above	25%	642,817.64 and above	25%

Further, the monthly salary exemption has been set at HNL 19,919.96 per month for 2023.

Implication:

Employers need to consider the updated tax rates and thresholds for calculating the tax liability of employees.

Hong Kong

Hong Kong Budget 2023-24 – Highlights

The Finance Secretary of Hong Kong, Paul Chan, presented the budget for the year 2023–24 on February 22, 2023. Hong Kong experienced a slowdown in 2022 with the economy contracting by 3.5%, however, due to the labor market improvement, unemployment rate reduced from 5.4% early last year to 3.4%. The budget forecasts the Hong Kong economy to grow at 3.5% to 5.5% during the year 2023, with inflation expected to be around 2.5%.

The key proposals of the Budget 2023-24 are as below. For more details, please refer to our Hong Kong Budget 2023-24 Highlights notes.

For Companies

• There are no changes proposed in the corporate income tax (Profit Tax) rates, however, the Budget proposes a reduction of 100% profit tax for the tax year 2022–23 with a ceiling of HKD 6,000 (similar reduction was granted for the tax year 2021–22 but with a higher ceiling of HKD 10,000). The reduction will be reflected in the final tax assessment for the tax year 2022–23. 

• In order to encourage the innovation and technology sector to engage in more research and development (R&D) activities and to create more patented inventions, the Government plans to introduce a “patent box” tax incentive that will give tax concession on profits earned in Hong Kong from qualifying patents generated through R&D activities. The Government proposes to consult the stakeholders on this and submit legislative amendments in the first half of the year 2024.
• In Hong Kong, both, the employer, and the employee are mandatorily required to contribute to Mandatory Provident Fund (“MPF”) for employees aged 18 to 64, and they can claim tax deductions accordingly. Employer can also claim deduction on voluntary MPF contributions subject to the ceiling. In order to encourage employers to hire elderly employees, the budget proposes to increase the tax deduction from 100% to 200% for voluntary contributions made by employer to Mandatory Provident Fund (MPF) for employees aged 65 or above.

For Individuals

• There are no changes proposed in individual tax slabs and rates in the budget. However, the budget proposes a 100% reduction of “salaries tax” and “tax under personal assessment” up to a ceiling of HKD 6,000 for the tax year 2022–23 (similar reduction was provided earlier with a ceiling of HKD 10,000 for tax year 2021-22). This will be reflected in the final tax payable for the tax year 2022-23. 
• The Budget proposed to increase the basic and the additional child allowance for each child born during the tax year 2023–24 from the current HKD 120,000 to HKD 130,000. Child allowances are deductions from the taxable salary for each child up to the ninth child, which get doubled in the year of childbirth.

Implication:

Companies should take advantage of an additional reduction from tax liability of HKD 6,000. They should monitor developments on proposal related to ‘patent box’ incentive. Employers should evaluate proposals relating to deduction for voluntary MPF contributions.

Hong Kong’s hourly minimum wage to rise to HKD 40 from May 1, 2023

Through the minimum wage ordinance (amendment of schedule 3) notice 2023, dated January 10, 2023, Hong Kong government has raised the hourly minimum wages from HKD 37.50 to HKD 40 with effect from May 1, 2023.

Hong Kong amends Companies Ordinance to allow conduct of general meeting in fully virtual and hybrid mode. 

Hong Kong has amended the Companies Ordinance (“CO”) (Cap. 622), mainly in order to modernize law enabling the conduct of general meetings in fully virtual or a hybrid mode, vide the Companies (Amendment) Ordinance 2023 (“Amended Ordinance”). The amended ordinance was gazetted on January 26, 2023, and the amendments are effective from April 28, 2023.

Current provision for conducting general meetings

Section 584 of the CO provides that a company, subject to its articles of association, can hold general meetings from “two or more places” by using technology that enables effective communication amongst the members and voting at the general meeting, but there is no specific provision in the CO for a company to hold general meeting in fully virtual mode or hybrid mode.

Key amended provisions are as under:

• Section 547: The definition of “virtual meeting technology” is newly added to the CO.
• Section 573 (Publication of notice of general meeting on website) and Section 576 (Contents of notice of general meeting): Sections are substituted to add that the notice of the general meeting must specify the virtual meeting technology to be used if the general meeting is to be held in virtual or hybrid mode, unless the articles of the company prohibit holding the general meeting in virtual mode or require a general meeting to be held only at a physical venue.
• Section 583A (Mode of holding general meeting): New section is added under the CO that allows companies to hold the general meeting in physical, fully virtual, or hybrid modes. 
• Section 584 (Meeting at two or more physical places): This section is substituted to mandate the companies to use any technology that allows members who are not together at the same physical venue to listen, speak and vote at the general meeting.
• Section 585 (quorum at meeting): This section is substituted to consider any person who attends the general meeting through virtual mode as being present for the purpose of the quorum of the general meeting. 

Implication:

Hong Kong-incorporated companies can hold their general meeting in fully virtual mode or in a hybrid mode. There is no need to amend the articles of association to allow the conduct of general meeting in virtual or hybrid mode, however, the Articles can prohibit use of virtual or hybrid mode.

 Hong Kong extends deadline for 2022/23 tax returns under the block extension scheme.

Hong Kong Inland Revenue Department (“IRD”), vide circular letter dated March 20, 2023, has announced extensions of the due dates for 2022/23 profit tax returns as follows. The extension is available under the block extension scheme which is applicable to taxpayers filing their returns through tax representatives. 

Accounting Date and Code	Extended Due Date	Electronic Due date	Conditions
April 1, 2022 – November 30, 2022 (For N code returns)	No Extension	No Extension	N/A
December 1, 2022 – 31 December 31, 2022(For D code returns)	August 15, 2023	September 15, 2023(1-month further extension for electronic filing)	N/A
January 1, 2023 – March 31, 2023 (For M code returns)	November 15, 2023	December 15, 2023(1-month further extension for electronic filing)	N/A
Current year loss cases for the tax year 2022/23 (for “M” code returns)	January 31, 2024	January 31, 2024	Have allowable losses for the year of assessment 2022/23.

Implication:

Companies filing returns through their tax representatives should take advantage of the extended timeline.

Hungary

Effective from January 1, 2023, mothers between the age of 25-30 are exempted from personal income tax

With effect from January 1, 2023, the Hungarian government introduced via Decree No 30/596 of December 28, 2022 an exemption from personal income tax to mothers who are over the age of 25 and under the age of 30 for monthly salary up to HUF 499,952. 

Implication:

Employers in Hungary need to take note of the changes and calculate personal taxes accordingly. 

India

Finance Act 2023 – Highlights

On February 1, 2023, Indian Finance Minister, Ms. Nirmala Sitharaman presented the last full-fledged Union Budget before the 2024 Lok Sabha elections in India. The Finance Ministry has now notified the Finance Act, 2023, consequent to the passing of Finance Bill, 2023 in the Parliament. Certain amendments were made when the Finance Bill was passed in Lok Sabha (the lower house of Indian Parliament) including changes in withholding tax rates under domestic law on royalty and fees for technical services paid to non-residents.

The tax amendments listed below are applicable for Financial Year (“FY”) 2023-24 corresponding to Assessment Year (“AY”) 2024-25, unless specified otherwise.

Income tax rates

Individuals:

• Indian Income-tax Act provides for two tax regimes for taxation of individuals – one provides for concessional slabs / rates without allowing certain exemptions /deductions (tax regime without deductions or optional regime introduced from FY 2020-21) and other has higher tax rates, but it allows number of deductions (tax regime with deductions). The Finance Act, 2023, made the tax regime without deductions as a default tax regime, applicable with an option to taxpayers to opt for other tax regime i.e., tax regime with deductions.

The Finance Act, 2023, amended tax rates and income slabs applicable to the tax regime (without deductions) as under:

Income slabs/tax rates for individuals below the age of 60 years:

FY 2023-24	FY 2022-23
Annual Taxable Income(In INR)	Income Tax Rate	Annual Taxable Income(In INR)	Income Tax Rate
Up to 300,000	Nil	Up to 250,000	Nil
300,001 to 600,000	5%	250,001 to 500,000	5%
600,001 to 900,000	10%	500,001 to 750,000	10%
900,001 to 1,200,000	15%	750,001 to 1,000,000	15%
1,200,001 to 1,500,000	20%	1,000,001 to 1,250,000	20%
1,250,001 to 1,500,000	25%
Above 1,500,000	30%	Above 1,500,000	30%

Tax rates and income slabs remain unchanged for the tax regime with deductions, which are as follows for individuals below the age of 60 years:

FY 2023-24 and FY 2022-23
Annual Taxable Income(In INR)	Income Tax Rate
Up to 250,000	Nil
250,001 to 500,000	5%
500,001 to 1,000,000	20%
Above 1,000,000	30%

• While computing total income under the tax regime without deductions, an individual earning income from salary or pension would be eligible to claim standard deduction up to INR 50,000. Earlier such deduction was not allowable when taxpayer opted for regime without deductions.
• The Income-tax Act provides for a rebate whereby taxpayers are not required to pay any taxes if their total income is INR 500,000 or less. The Finance Act, 2023, amends the provisions relating to this tax rebate, whereby from FY 2023-24 if the taxpayer has opted for the tax regime without deductions, no tax would be payable if his income does not exceed INR 700,000. However, if the taxpayers opt for a tax regime with deductions, the old provisions restricting this benefit for income up to INR 500,000 would apply. 
• The tax computed as above is to be further increased by surcharge at rates mentioned below and a health and education cess @ 4%.

• Income (all kinds of income) exceeding INR 5 million but not exceeding INR 10 million – 10%
• Income (all kinds of income) exceeding INR 10 million but not exceeding INR 20 million – 15%
• Income (excluding income from dividend and specified capital gains) exceeding INR 20 million but not exceeding INR 50 million – 25%
• Income (excluding income from dividends and specified capital gains) exceeding INR 50 million – 37%. However, where the taxpayer opts for the tax regime (without deductions), the surcharge applicable will be restricted to 25%.
• In the case of the last two situations mentioned above, a surcharge at 15% is applicable on income from specified capital gains and dividend.

Companies: 

• 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 2023-24	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, 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 2021-22 not exceeding INR 4 billion	25%
Any other domestic company	30%

• The above tax is further increased by surcharge at rates mentioned below and a health and education cess @ 4%

• Companies with taxable income exceeding INR 10 million but less than INR 100 million – 7%
• Companies with taxable income exceeding INR 100 million – 12%
• Company opting for special/optional tax regime (companies subject to tax rate of 15% or 22% as above) as mentioned above – 10%.

Other Key Changes 

• The Finance Act, 2023, increased tax rate applicable to royalties and fees for technical services received by a non-resident or a foreign company not having a permanent establishment in India from 10% to 20%. However, this increase is in rate applicable under domestic law and if the provisions of double taxation avoidance agreement (“DTAA”) are more beneficial, non-resident can take advantage of such beneficial provisions.

• The tax exemption limit of INR 300,000 for leave encashment on separation (i.e., retirement, resignation, other) of non-government salaried employees stands increased to INR 2,500,000.
• The period provided for the incorporation of eligible start-ups for claiming tax exemption is extended from March 31, 2023, to March 31, 2024. The eligible start up can claim 100% tax exemption for three consecutive assessment years out of ten years beginning from the year of incorporation, at the option of the taxpayer, subject to certain conditions. Further, losses can be set off for up to ten years as against the earlier provision of seven years.
• Introduction of a time-limit of six months (or period as extended by competent authority) for Special Economic Zone (“SEZ”) unit claiming tax holiday to bring in India the export proceeds in convertible foreign exchange.

• Indian Income-tax law allows deduction for certain expenses only once actual payment is made and not on accrual basis. This provision is amended and made applicable to any expenditure involving payment to Micro or Small Enterprises, provided the payment is made within the given timelines under the Micro, Small and Medium Enterprises Development Act.
• Where a private/ closely held company receives any consideration for the issue of shares exceeding the fair value of such shares, the excess consideration (calculated as per given formulae) is taxable as other income. This measure was introduced in order to prevent generation and circulation of unaccounted money through share premium. The scope is now extended to non-resident investors also.
  • Deduction of interest expense is restricted in respect of any debt issued by a non-resident, being an associated enterprise of the borrower, which can be an Indian company, or a permanent establishment (“PE”) of a foreign company in India. The interest deductible is restricted to 30% of earnings before interest, taxes, depreciation, and amortization (“EBITDA”), where interest or expenses of similar nature exceeds specified threshold. This also includes certain debt issued by a lender which is not an associated enterprise of the borrower. Now the borrowers (i.e., Indian company, or a PE of a foreign company in India) engaged in the business of banking or insurance and certain classes of non-banking financial companies (“NBFC”) as specified, are excluded from the scope of the said provisions.
  • The time limit for completion of audit (i.e., assessment by the tax authorities) is extended to twelve months from the end of the assessment year in which the income was first assessable, effective from the assessment year commencing on or after April 1, 2022. Further, to empower the tax officers to direct the taxpayer to get inventory valuation done by a cost accountant time limit for completion of assessment has been extended by the period of inventory valuation.
  • In case of transfer pricing audits initiated by tax authorities, they can call from the taxpayer transfer pricing report or any other document or information to support the arm’s length price. Earlier, such information or document was required to be submitted within 30 days of such request which can be further extended by another 30 days. The amendment reduced the time-limit for furnishing of such documents/information to 10 days from the request. The time-limit can be extended at taxpayer’s request for a further period up to 30 days. 

• Last year, Finance Act 2022 introduced withholding tax obligation on payment made in relation to transfer of virtual digital asset (VDA) at the rate of 1% of the consideration, exceeding specified monetary threshold. Since the consideration for transfer of VDA can be in exchange of another VDA, i.e., in kind, the person responsible for paying the consideration is required to ensure that the applicable tax has been paid. Now, penalty and prosecution provisions are also enabled for failure to make/ ensure tax payment on such consideration received in kind.
• The budget also introduced certain other changes like reduction in customs duty on certain goods, GST prosecution thresholds revision, etc.

Illustrations of tax liability of individual taxpayers calculated at different income levels and under different options can be accessed here along with certain other proposals in the Budget.

Implication:

Employers should take note of changes in personal tax rates and adjust their payroll processing accordingly. Companies should note changes in withholding tax rates on royalty and fees for technical services as it may impact tax outgo in case of ‘net of tax’ arrangements where rates under tax treaties are higher than domestic law rates. Companies should evaluate the impact of other amendments regarding computation of business income.

Central Board of Direct Tax extends paper filing of Form 10F until September 30, 2023, in eligible cases.

As per the Indian Income Tax Act, 1961, non-resident(“NR”) taxpayers who wish to avail benefits under a Double Taxation Avoidance Agreement (“DTAA”) are required to obtain a Tax Residency Certificate (“TRC”) from the government of the country in which they are resident. Further, NR taxpayers are also required to furnish a self-declaration in Form 10F where TRC does not contain certain details required under income-tax law. Earlier, it was not mandatory to furnish Form 10F electronically, but effective from July 16, 2022, NR taxpayers are mandatorily required to file Form 10F electronically through the income tax portal for the financial year 2021-22 onwards. 

However, for online filing of Form 10F, one needs to login to the Indian Income-tax office web portal for which a Permanent Account Number (“PAN”) is used as a login credential. Thus, to comply with the new requirement, NR taxpayers are required to obtain a PAN. In light of the practical difficulties faced by NR taxpayers in electronic filing of Form 10F due to the non-availability of a Permanent Account Number (“PAN”), the Central Board of Direct Tax earlier issued a notification dated December 12, 2022, for granting a partial exemption to NR taxpayers who do not have a PAN and are not required to have a PAN. Such taxpayers were allowed to file Form 10F physically to claim DTAA treaty benefits till March 31, 2023.

in view of continued practical challenges faced by NR taxpayers, this temporary exemption from mandatory e-filing is now further extended from March 31, 2023, to September 30, 2023.

Implication

Non-residents requiring filing form 10F can avail benefit of relaxation till September 30, 2023.

Indonesia

Indonesia: Maximum pension contribution wage revised, effective from March 1, 2023

The Indonesian government has recently updated the maximum wage for calculation of the pension contribution under the workers’ social security program managed by Badan Penyelenggara Jaminan Sosial (“BPJS”). 

Effective from March 1, 2023, the maximum wage for the calculation of pension contributions is increased from IDR 9,077,600 per month to IDR 9,559,600 per month. Revised contribution rates are as below:

Effective date	Maximum Monthly Wage (for pension purposes)In Indonesian rupiah (IDR)	Rate and Maximum Contribution by Employer (considering maximum monthly wage)	Rate and Maximum Contribution by Employees (considering maximum monthly wage)
Before March 1, 2023	9,077,600	2% of wages up to maximum of IDR 181,552	1% of wages up to maximum of IDR 90,776
March 1, 2023, onwards	9,559,600	2% of wages up to maximum of IDR 191,192	1% of wages up to maximum of IDR 95,596

Implication:

Employers should take note of changes in contribution rates and cap and revise payroll policy/calculations accordingly. 

Ireland

Ireland: New requirements for verification of director’s identity by providing their Personal Public Service Number (“PPSN”), effective from April 23, 2023

Effective from April 23, 2023, the directors of Irish companies will be required to identify themselves by providing their Personal Public Service Number (“PPSN”) to the Companies Registration Office (“CRO”) in certain forms. The PPSN is a unique reference number assigned to every individual in Ireland equivalent to a US social security number and is used for dealings with public service agencies.

The directors will now have to undergo the new identity verification obligation while filing the following forms:

Sr. No.	Form details	Form Name
1	Incorporation of a company	A1
2	Company Annual Return	B1
3	Change in director or change in details of the director	B10
4	Notice by a director of cessation of office (where the company itself has failed to file a notice)	B69

Implications:

• Companies and promoters will have to check that all the directors have PPSN (or other alternatives as specified) to ensure the upcoming company filings.
• For non-resident directors not having PPSN, an alternative process for obtaining a unique identifying number is expected to be notified.

Ireland: Implementation of EU Working Conditions Directive, effective from December 16, 2022

Effective from December 16, 2022, Transparent and Predictable Working Conditions Regulations 2022 (the 2022 Regulations) were signed into law in Ireland, transposing the corresponding European Directive.

Prior to amendment, the probationary periods and other employment related aspects were governed by the employment contract of the employee and the following acts, which now stand amended:

• Terms of Employment (Information) Act 1994; 
• Protection of Employees (Fixed-Term Work Act) 2003;
• Organization of Working Time Act 1997; and 
• Workplace Relations Act, 2015.

The following are the key changes in brief that will affect the employers and employees:

• Employer will now have to provide the “statement of terms of employment” (i.e., statement with detailed terms of employment) to the employee within a month of commencement of employment instead of the existing two months period.
• Additional terms will be required to be included in the employee’s “statement of terms of employment” and in the “five-day statement” (i.e., the statement of key employment details provided to the employee within five days of commencement of employment).
• The new regulations specify that probationary periods cannot exceed 6 months for most new hires in the private sector, which may be extended to 12 months if it is in the interest of the employee. 
• Upon completion of probationary periods, the employee may request ‘more predictable and secure working conditions’ from employers, where there is an option to do so.
• Certain employees will be allowed to refuse work that is scheduled outside pre-agreed work hours without any adverse consequences.
• Employers required by either law or by a collective agreement to provide training to the employees will now have to provide that training without charging the employees, as part of the employee’s work hours and during working time wherever possible.
• Employers can no longer restrain employees from taking up a second job outside their work schedule, except where the restriction is proportionate, and justified on objective grounds. 

Implication:

Employers would need to revise the “statement of terms of employment” and the “five-day statement” to include additional terms in it as required, within the stipulated time, as also need to follow the other changes as applicable. 

Israel

Israel: The Tax Authority publishes updated personal income tax slabs and rates for 2023.

The Israel Tax Authority has announced the updated tax rates and slabs related Personal Income Tax (“PIT”) for the year 2023. The updated tax rates and slabs are as follows.

2023 – Annual Income (in NIS)	2022 – Annual Income (in NIS)	Tax Rates
Up to 81,480	Up to 77,400	10%
From 81,481 to 116,760	From 77,401 to 110,880	14%
From 116,761 to 187,440	From 110,881 to 178,080	20%
From 187,441 to 260,520	From 178,081 to 247,440	31%
From 260,521 to 542,160	From 247,441 to 514,920	35%
Above 542,160	Above 514,921	47%

Further, the taxable income above NIS 698,280 (previously NIS 663,240) is subject to an additional surtax of 3%. 

Implication:

Employers should take note of the updated income tax slabs and update their payroll processes accordingly.

Israel:  Minimum monthly wages increased to NIS 5,571.75 effective from April 1, 2023

Israel Minister of Labor has approved increase in the minimum monthly wages from NIS 5,300 to NIS 5,571.75 effective from April 1, 2023. Additionally, if the hourly wage paid is less than NIS 29.95 (based on the calculations done for 186 hours of work per month), it would be considered a criminal offense.

Italy

Italy Budget Highlights-2023 

The Italian Budget Law 2023 (Italian Law No 197/2022) was published in the Official Journal (Gazzetta Ufficiale) on December 29, 2022, and is effective from January 1, 2023. Some important changes are as follows:

• Parental leave changes 

Currently, parental leave is ten months (nine months compensated and one month unpaid) in total for both parents, from childbirth till the child turns 12 years of age. A mother and a father, each are entitled to three months of non-transferable compensated leave (i.e., total six months) which was extended by three months transferable compensated leave in August 2022 (i.e., nine months compensated leave in total for both parents). The compensation by way of an allowance at 30% of the salary is paid by the Social Security Administration – Istituto Nazionale Previdenza Sociale (“INPS”). 

Effective from January 1, 2023, pursuant to Article 34 of Legislative Decree 151/2001 (Consolidated Maternity Act), out of the nine months of compensated leave, one month leave is compensated at 80% of the salary (balance eight months at 30% of the salary). This one month leave needs to be availed by either parent within the first six years of the child’s birth.

• Social Security Contribution relief provided for the employees:

For the calendar year 2023, a relief is provided by way of reduction in some portion of social security contribution to employees (both public and private), which is as follows: 

• 2% relief if the taxable salary is less than EUR 2,692 per month (i.e., EUR 35,000 p.a. for 13 months).
• 3% relief if the taxable salary is less than EUR 1,923 per month (i.e., EUR 25,000 p.a. for 13 months).

• Employment incentives and social security contribution relief are provided for the employers in case of following recruitments made in the calendar year 2023:

• Employers hiring young employees below the age of 36 on a permanent basis can avail 100% exemption from social security contribution in respect of these employees for three years up to a maximum limit of EUR 8,000 per year. 
• Employers recruiting unemployed women belonging to economically “disadvantaged categories” can avail 100% exemption from social security contribution in respect of these women employees for 18 months up to a maximum of EUR 8,000 per year. 

Implication:

Employers must take note of the budgetary changes in the payroll calculations and amend their leave policies accordingly.

Japan

Japan: Unemployment insurance contribution on salaries increased effective from April 2023 

Japan has announced an increase in unemployment insurance contribution rate from 1.35% to 1.55% effective from April 2023. Both the employer and the employee are required to pay the unemployment insurance contribution. Employer’s contribution stands increased from 0.85% to 0.95% while employee’s contribution stands increased from 0.5% to 0.6%.

Implication:

Employers should take note of the revised rate of unemployment insurance contributions and adjust their payroll processes accordingly.

Lithuania 

Minimum monthly wages in Lithuania are increased to EUR 840 from EUR 730 effective from January 1, 2023

Lithuania has increased the minimum monthly wage to EUR 840 from existing EUR 730, while the minimum hourly wage is also increased to EUR 5,14 from EUR 4,47, effective from January 1, 2023

Malaysia  

New obligations on the employment and termination of foreign Workers in Malaysia

The Employment (Amendment) Act 2022 (“amendment act”) amends the Employment Act 1955 (principal act) and takes effect from January 1, 2023, imposing new obligations on the employer with respect to hiring and termination of foreign employees as under:

• Hiring foreign employees.

Section 60K of the principal act has been substituted and it now requires prior approval from the Director General for hiring any foreign employee. The requirement applies to all non-Malaysian employees as well as all non-permanent resident employees. The application for approval is required to be filed in the relevant form to the labor department through its website. After the approval, the employer is required to furnish to the Director General the particulars of the foreign employee within 14 days of his employment.

A failure to comply with the above obligation can attract a fine not exceeding RM 100,000, imprisonment for a term not exceeding five years, or both. However, such approval is subject to the condition that the employer has no outstanding matters relating to any decision, order, or conviction under the employment act or laws relating to social security, minimum wages, minimum housing, human trafficking, or forced labor.

As per the earlier provisions, the employer was merely required to provide the information about the foreign employee to the Director General within 14 days of his employment, but there was no requirement for prior approval.

• Obligation on termination of foreign employee

Under the earlier provisions, there was a requirement to intimate about the termination of foreign employee. However, the amended act has expanded the scope of its applicability irrespective of salary or type of work done by such employees. Thus, the employer needs to inform the Director General upon the termination of the service of foreign employee – 

• within 30 days of the termination, if service of foreign employee is terminated by his employer or due to the expiry of the employment pass issued by the Immigration Department of Malaysia or by reason of repatriation or deportation of the foreign employee.
• Withing 14 days if the foreign employee terminates his services or absconds from his place of employment.

Implication: –

While hiring foreign employees, employers should comply with the new requirement of prior approval from the Director General. 

Malaysia: Budget 2023 – Highlights 

The Malaysian Prime Minister and Finance Minister, YAB Dato’ Seri Anwar Ibrahim presented the revised budget for the year 2023 in the Parliament on February 24, 2023. The previous budget could not be approved due to the dissolution of parliament. The key highlights of the budget are as follows:

The tax proposals listed below are applicable for the year of assessment/financial year (“YA/FY”) 2023 unless specified otherwise.

For companies 

• For Micro, Small and Medium Enterprises (“MSMEs”) * a reduced corporate income tax rate of 15% (previously 17%) is proposed for the chargeable income up to RM 150,000. The tax rate applicable to MSME are proposed to be as follows:

For YA 2023	For YA 2022
Annual Taxable Income(In RM)	Income Tax Rate (in %)	Annual Taxable Income(In RM)	Income Tax Rate (in %)
Up to 150,000	15%	Up to 600,000	17%
150,001 to 600,000	17%
Above 600,000	24%	Above 600,000	24%

* Companies or Limited Liability Partnership (“LLP”) with paid-up capital of up to RM2.5 million and below with an annual sales turnover not exceeding RM 50 million are classified as MSME.

• Budget also announces various incentives for companies renting non-commercial motor vehicle, companies manufacturing electric vehicles, taxpayers in hotel industry, aerospace Industry, food industry, agriculture sector etc.

For Individuals

• There are changes proposed to the individual income tax rates in the budget 2023 as follows: –

Annual Taxable Income(In RM)	Income Tax Rate(in %)For YA 2023	Income Tax Rate(in %)For YA 2022
0-5,000	0%	0%
5,001 to 20,000	1%	1%
20,001 to 35,000	3%	3%
35,001 to 50,000	6%	8%
50,001 to 70,000	11%	13%
70,001 to 100,000	19%	21%
100,001 to 250,000	25%	24%
250,0001 to 400,000	25%	24.5%
400,001 to 600,000	26%	25%
600,001 to 1,000,000	28%	26%
1,000,001 to 2,000,000	28%	28%
2,00,000 above	30%	30%

• Budget proposes a tax relief of up to RM 4,000 for YA 2023 for medical treatment expenses regarding early intervention for autism, attention deficit hyperactivity disorder, global developmental delay, intellectual disability, down syndrome, and specific learning. The overall limit for medical expenses tax relief will be increased from RM 8,000 to RM 10,000 in view of the expansion in the scope of expenses covered.
• Tax relief of RM 3,000 for individual enrolling their child aged 6 years and below in childcare centers has been extended for another year, until YA 2024.

Implication:

Companies should examine the applicability of reduced corporate tax rates and other incentives and take advantage of reduction in rates wherever applicable. Employers should take note of changes in personal tax rates and adjust their payroll processes.

Mexico

Mexico: UMA values effective from February 1, 2023

The Mexican Government published unidad de medida y actualización or Unit of Measurement and Update – (“UMA”) which are effective from February 1, 2023

UMA values are as under:

	2023 (Amounts in MXN)	2022 (Amounts in MXN)
Daily	103.74	96.22
Monthly	3,153.70	2,925.09
Annually	37,844.40	35,101.08

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.

Morocco

Morocco temporarily suspends country-by-country report requirement for certain entities.

Effective from the financial year 2021, a requirement to file country-by-country (“CbC”) report was introduced in Morocco for the multinational groups with a consolidated turnover of MAD 8.1225 billion or above during the previous financial year. CbC report is required to be filed in Morocco within 12 months from the end of the relevant financial year.

However, vide announcement dated December 16, 2022, Morocco has temporarily suspended the applicability of filing CbC Report for the companies that are part of MNE group where ultimate parent entity is located in a jurisdiction – 

• that does not require the filing of a CbC report; or
• with which Morocco has not entered into an agreement allowing exchange of information for tax purposes or has entered into an agreement but there is a systemic failure for the exchange the information.

Implication

Morocco based entities that are part of an MNE group subject to CbC Reporting should check their eligibility for temporary exemption from CbC report filing obligation and take advantage of it.

Netherlands

Netherlands: New obligation to Payment Service Provider to report cross-border transactions. 

The Council Directive (“EU”) 2020/284, which imposes new reporting requirements on payment service providers beginning January 1, 2024, was implemented by the Dutch parliament on March 16, 2023. PSP’s now have an obligation to report payments by EU payer to a beneficiary outside EU if there are more than 25 payments made to the recipient. 

Implication:

Payment Service Providers should take note of the new requirement and endeavor to comply with the same within set timelines.

Philippines  

Philippines: Monthly VAT returns replaced by Quarterly VAT Returns from 2023

The Philippines Bureau of Internal Revenue (“BIR”) through Memorandum Circular No. 5-2023 of January 13, 2023, replaced the monthly VAT returns with quarterly VAT returns from January 1, 2023.

From January 1, 2023, VAT-registered taxpayers need to file quarterly VAT returns (BIR Form No. 2550Q) instead of monthly VAT returns (BIR Form No. 2550M) within 25 days following the close of each quarter. The circular also provides certain transitory provisions.

Implication:

Companies, from January 1, 2023, onwards, need to file only quarterly VAT returns.

Poland

Poland: New regulations under Labor Code are implemented for remote work with effect from April 7, 2023, and employee’s sobriety checks effective from February 21, 2023.

Poland approved amendments to the Labor code introducing regulations related to remote working and sobriety control. The new rules will take effect in two phases. 

The regulations governing the employee’s sobriety checks are effective from February 21, 2023, and regulations on remote working will be effective from April 7, 2023.

Sobriety Check Regulations

Currently, only certain authorities (like Police) are allowed to conduct sobriety checks involving consumption of alcohol without employee consent to protect public order. Further, employers are also permitted to carry out such checks when employees consent to or explicitly requested. However, under the new regulations, it will be possible for employers to conduct sobriety checks as necessary, without the consent of employees.

The key changes made by new regulations are as follows:

• The employers can now conduct sobriety checks of the employees if necessary to protect the life and health of the employees. 
• The sobriety checks (viz. of alcohol consumption, presence of drugs like alcohol) can be carried out in a manner that does not require a laboratory test and ensures that the dignity and personal rights of the employees are protected. 
• The employer may process personal data related to the results of the sobriety checks without the employee’s consent.
• The employer may not allow the employee to work if the check reveals the presence of an unacceptable level of alcohol or a drug.
• The employer needs to give prior 2 weeks’ notice of the introduction of the sobriety checks at the workplace.
• The relevant records pertaining to the test date, location and test result need to be maintained for a period of one year. 

Remote Working Regulations

The key changes are as follows:

• The regulations define remote work as “work performed entirely or partially at a location indicated by the employee (including his/her home address) and agreed with the employer on a case-by-case basis.”
• The remote working rules must be specified in the employment contract.
• The employer should provide necessary equipment/ accessories and impart necessary training to employees to facilitate smooth remote working.
• The costs relating to remote working set up such as electronic and telecommunications, need to be borne by the employer.

Implication: 

Employers need to review and structure the internal HR policies to give effect to the new regulations pertaining to remote working and sobriety checks at the workplace.

Poland: Mandatory e-invoicing in Poland postponed. 

Poland had introduced the new National System of e-Invoices (Krajowy System E-faktur or KSeF). E-invoicing using KSeF (i.e., Issuing of structured e-invoices) which was likely to be mandatory from January 1, 2023, extended to January 1, 2024, which is now further extended to July 1^, 2024. 

Implication:

Businesses will need to revise their processes to enable compliance with the new e-invoicing regulations.

Poland: Effective from January 1, 2023, employees will be automatically enrolled in employee capital plan (PPK Pracowniczy Plan Kapitalowy) subject to certain conditions.

Employee Capital Plan (PPK) is a voluntary savings system for all persons, regardless of the form of employment. The system is financed by employer, employees, and the State. The employer and employee contribute to PPK at 1.5% and 2% of salary, respectively. The State pays PLN 250 as a welcome payment and an annual surcharge of PLN 240 for the plan. 

Effective from January 1, 2023, employees aged between 18 and 55 are automatically enrolled in the PPK. New employee is eligible for automatic enrolment into PPK within ten days after three months of employment. The automatic enrolment is carried out every four years. The employees not intending to join PPK, are required to submit the ‘opt-out declaration’ every four years. Previously, every employer, hiring even one employee, was required to enroll their employees for PPK.

Implication:

Employers need to inform the employees about their automatic enrolment in PPK plan and if they intend to provide opt-out declarations for not joining the PPK plan.

Serbia

E-invoicing becomes applicable to all B2B transaction effective from January 1, 2023

Following EU Directive 2014/55, the government of Serbia enacted the law of electronic invoicing (“e-invoicing”) for regulating issue of invoices through an electronic system called “Sistem e-Faktura” (“SEF”). This law requires government and private sector entities to use the electronic system SEF for the generation, transition, receipt, processing, and archiving of electronically generated invoices. This law came into force on May 7, 2021, and the implementation process was completed gradually in three phases by making it applicable to different types of transactions one by one. In all types of transactions, both parties, that is, private entities and government sector entities, are obliged to send and receive e-invoices.

• E-invoicing implementation phases for private sector in brief:
• Phase 1: Effective from May 1, 2022- private sector entities are required to issue e- invoices to the Serbian Government entities (Business 2 Government transactions).

• Phase 2: Effective from July 1, 2022- Sebian Government entities are required to send e-invoices to private businesses who should be able to then receive and process them (Government 2 Business transactions).
• Phase 3: Effective from January 1, 2023- private sector entities are required to issue and maintain electronic invoices for transactions among themselves (Business 2 Business transactions).

• Fines for non-compliance of e-invoicing

In case of non-compliance with the e-invoicing provisions, legal entities can be held liable for a fine of RSD 200,000 to RSD 2,000,000; the responsible person can be held liable for a fine ranging from RSD 50,000 to RSD 150,000.

Implication:

In view of the expanded scope of e-invoicing, all private entities should ensure that they issue, maintain, and receive e-invoices in order to avoid penalties under the law.

Singapore

Singapore Budget Highlights-2023 

On February 14, 2023, the Finance Minister, Lawrence Wong delivered the budget speech for the year 2023, which received assent from President Halimah Yacob on March 23, 2023.

Generally, tax year is Calendar Year (“CY”)/ Financial Year (“FY”) in Singapore and income from a preceding calendar year is assessed to tax in the following calendar year i.e., Year of Assessment (“YA”), say for FY 2023, YA is 2024.

The key proposals of Budget 2023 are given below, for more details, please refer to the news captured in our Singapore Budget 2023 – Highlights  note. 

Corporates/Businesses:

• There are no changes proposed in the corporate tax rates.
• Enterprise Innovation Scheme is introduced to enhance tax benefits for the specified activities in the innovation value chain, such as staff cost and consumables incurred on R&D, registration of intellectual property, etc. Currently, businesses are eligible to claim a deduction of up to 250% of qualifying expenditure on some of the above activities (deduction varies according to activities). It is proposed to enhance tax deduction to 400% of the ‘qualifying expenditure’ for the above activities, subject to cap per activity. Tax benefit for innovation under the existing provisions was available up to YA 2025. The new scheme will apply from YA 2024 to YA 2028.
• Businesses will have an option to accelerate the write-off of the cost of plant and machinery (P&M) acquired in FY 2023 (i.e., YA 2024) over two years viz. 

• 75% of the cost incurred to be written off in the first year (i.e., YA 2024); and
• 25% of the cost incurred to be written off in the second year (i.e., YA 2025).

The option will be irrevocable and cannot be deferred. Currently, businesses can claim either a capital allowance (i.e., write-off over the working life of the assets) or a write-off of acquisition cost over three years.

• The businesses will be given an option to accelerate the deduction for renovation or refurbishment (R&R) expenditure incurred in FY 2023 over one year (i.e., YA 2024) instead of the three years allowed currently. A cap of SGD 300,000 for every relevant period of the three consecutive YA continues to apply. 
• As announced in the last Budget, GST rates to be increased in a phased manner as follows:

• Increase from GST rate of 7% to 8% from January 1, 2023, and
• A further increase in the GST rate to 9% from January 1, 2024.

• The employers and the employees contribute 17% and 20%, respectively, to the Central Provident Fund (“CPF”) calculated on an ordinary monthly salary capped at SGD 6,000. The Budget proposes increasing the salary ceiling in a phased manner over a period of four years from current ceiling of SGD 6300 to SGD 8,000 in 2026, which is as follows:

Effective date	CPF Monthly Ordinary Wage/ Salary ceiling in SGD
September 1, 2023	6300
January 1, 2024	6800
January 1, 2025	7400
January 1, 2026	8000

• The Budget proposes to double the Government paid paternity leave from two weeks to four weeks for children born on or after January 1, 2024. Initially, the additional two weeks of paternity leave will be given on a voluntary basis so that employers who wish to grant such leave will be reimbursed by the Government. However, over a period it will be reviewed and made mandatory.
• The Budget proposes to increase the unpaid infant care leave for each parent during the child’s first two years of life from 6 days to 12 days per annum effective from January 1, 2024.

Individuals/Employees:

• There are no new changes proposed in the personal income tax rates. However, changes made last year to personal income tax rates are effective from FY 2023 (i.e., YA 2024), which are as follows:

Income Tax Slabs For the year of assessment 2024
Annual Taxable Income(In SGD)	Income Tax Rate
Up to 20,000	Nil
20,001 to 30,000	2.00%
30,001 to 40,000	3.50%
40,001 to 80,000	7.00%
80,001 to 1,20,000	11.50%
1,20,001 to 1,60,000	15.00%
1,60,001 to 2,00,000	18.00%
2,00,001 to 2,40,000	19.00%
2,40,001 to 2,80,000	19.50%
2,80,001 to 3,20,000	20.00%
3,20,001 to 5,00,000	22.00%
5,00,001 to 10,00,000	23.00%
Above 10,00,000	24.00%

• The Budget proposes to change Working Mother’s Child Relief, (“WMCR”), from a percentage of the mother’s earned income to a fixed amount relief effective from YA 2025. WMCR is a tax relief given to working mothers subject to certain conditions. 

Changes in WMCR relief are as under:

Particulars	Tax relief (SGD) for a child born after January 1, 2024	Tax relief for a child born before January 1, 2024
First child	8000	15% of the mother’s income
Second child	10,000	20% of the mother’s income
Third and subsequent child	12,000	25% of the mother’s income

Implication:

Companies should take note of budget changes and consider/implement whichever are applicable.

South Africa 

South Africa: Revised New earnings threshold and minimum wages announced to be effective from March 1, 2023

In February 2023, the Minister of Employment and Labor has announced an increase in annual earnings thresholds and minimum wages effective from March 1, 2023. 

Annual Earnings Threshold:

The amount of annual earnings threshold for the year 2023 is increased from SAR 224,080.48 to SAR 241,110.59 effective from March 1, 2023.

Employees earning less than annual earning threshold enjoy protection under Basic Conditions of Employment Act (“BCEA”), Labor Relations Act and Employment Equity Act, e.g., certain provisions of BCEA regarding ordinary hours of work, overtime pay rates, meal intervals, rest period, night work, etc. apply only to employees earning below annual earning threshold. Further, under the Labor Relations Act, a temporary employee earning below the annual earning threshold may be considered as employed for indefinite period if they work for more than three months with the same employer. Thus, employees earning between SAR 224,080 and SAR 241,110 will now enjoy protection under BCEA and other laws.

Minimum Wage:

The Department of Employment and Labor has announced an increase in national minimum wage from SAR 23.19 to SAR 25.42 per hour effective from March 1, 2023.

South Africa: Highlights of National Budget 2023 

On February 22, 2023, the Finance Minister of South Africa announced the National Budget for the year 2023. The amended provisions would apply for tax year beginning from March 1, 2023, unless specified otherwise.

The key amendments announced in the National Budget are as follows:

• Personal Income Tax (“PIT”) rates and brackets:

The Following PIT income slabs and tax rates are applicable for the tax year 2023 effective from March 1, 2023.

Tax Brackets (Tax Year 2024)	Tax Brackets (Tax Year 2023)	Tax Rates
ZAR 1 to ZAR 237,100	ZAR 1 to ZAR 226,000	18%
ZAR 237,101 to ZAR 370,500	ZAR 226,001 to ZAR 353,100	26%
ZAR 370,501 to ZAR 512,800	ZAR 353,101 to ZAR 488,700	31%
ZAR 512,801 to ZAR 673,000	ZAR 488,701 to ZAR 641,400	36%
ZAR 673,001 to ZAR 857,900	ZAR 641,401 to ZAR 817,600	39%
ZAR 857,901 to ZAR 1,817,000	ZAR 817,601 to ZAR 1,731,600	41%
ZAR 1,817,001 and above	ZAR 1,731,601 and above	45%

*The annual tax-free threshold for a person under the age of 65 (below which no tax return needs to be filed) increased from ZAR 91,250 to ZAR 95,750.

• Taxes on companies and small business corporations*

Tax rate applicable to companies stands reduced from 28% to 27% effective from tax year beginning on March 1, 2023.

The Following rates and income slabs are applicable to small business corporations effective from April 1, 2023.

Tax Brackets (Tax Year 2024)	Tax Rates	Tax Brackets (Tax Year 2023)	Tax Rates
ZAR 1 to ZAR 95,750	0%	ZAR 1 to ZAR 91,250	0%
ZAR 95,751 to ZAR 365,000	7%	ZAR 91,251 to ZAR 365,000	7%
ZAR 365,0001 to ZAR 550,000	21%	ZAR 365,001 to ZAR 550,000	21%
ZAR 550,001 and above	27%	ZAR 550,001 and above	28%

* Companies that meet certain requirement qualify as Small Business Corporations and are subject to concessional tax rates. Such requirements include their shareholders/members are all natural personals, their gross income for the year does not exceed ZAR 20 million, members/shareholders do not hold interest in other close corporation, etc. 

• R&D incentive

The Ministry extends research and development (“R&D”) tax incentive under Section 11D for 10 more years until December 31, 2033. The eligible companies can claim 150% deduction for qualified expenditure on scientific or technological R&D. The Department of Science and Innovation (“DSI”) will grant taxpayers six months pre-approval grace period to claim eligible expenses. Earlier, expenses could be claimed only if incurred after the application for approval is submitted. The definition of R&D will be simplified to facilitate administration by the DSI and clear understanding by the taxpayer. Further, the restriction on eligibility for internal company processes will be removed and inventions intended for sale, usage by affiliated parties, or even for internal use will be eligible for benefit.

• The Budget also provides incentive for renewable energy installations at 125 percent of the cost of such assets put to use between March 1, 2023, to February 28, 2025. There would be no threshold on generation capacity.

Implication:

Employers should take note of changes in slabs/rates for personal income taxes and adjust their payroll processes accordingly. Companies should take note of changes in tax rates. Eligible companies should take advantage of the amended R & D incentive and renewable energy incentive.

Spain  

Spain: Minimum wages in Spain (“SMI”) increased to EUR 1,080 per month from EUR 1,000 per month, effective from January 1, 2023.

Spain Government increased the national minimum wage for the year 2023 to EUR 1,080 per month from EUR 1,000 per month with effect from January 1, 2023.

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:

Employers will need to review and modify their payrolls accordingly.

Spain: Companies to have internal information and reporting system for protection of Whistle-blowers.

Spain government introduced Law 2/2023 of February 20, 2023, on ‘the protection of persons who report breaches of the law and on combating corruption’ which is published in the Official State Gazette on February 21, 2023. The provisions are effective from March 13, 2023. The law transposes EU Directive 2019/1937, known as the ‘Whistleblowing Directive’.

The key provisions of the law are as follows:

• 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 of retaliation against such persons are prohibited.
• The law mandates companies having 50 or more workers to have an internal information system and reporting channels in place. These systems must be according to certain standards pertaining to accessibility, safeguards relating to confidentiality, whistle-blower monitoring, investigation, and reporting. The companies should appoint an independent and autonomous person to be in-charge of this system. The information pertaining to the internal information and reporting channel must be published on the website of the company in an identifiable way. 
• Companies having employees between 50 and 249 and belonging to the same corporate group can share the same reporting channels.
• The companies have a timeline of three months from the entry into force of this law (i.e., June 12, 2023) to implement an internal information and reporting system. However, private sector companies having less than 249 workers can set up the required system by December 1, 2023.
• The law also penalizes any actions or omissions hindering the investigation processes and also any false disclosure of breaches of the legal system.
• Companies can be fined up to EUR 1 million for not complying with the provisions of the law.

Implication:

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

Switzerland

Switzerland: Introduction of two weeks of adoption leave for employees, effective from January 1, 2023

Employed individuals who have worked for the employer for minimum five months and have adopted a child under the age of four are entitled to a two-weeks adoption leave compensated by the adoption allowance (Incoming Compensation), beginning January 1, 2023. 

The eligible employees can avail themselves of leave within one year from the date from when the child began living with them. If both the parents are employed, they can share the leave between them, but cannot avail it at the same time. The government paid adoption allowance is 80% of the average earned income, up to CHF 196 per day. The allowance is calculated separately for each parent based on their respective income.

Implication:

The employers need to take note of the newly introduced leave while structuring employment contracts and leave policies.

Taiwan

Taiwan increases the exemption limit for Income Basic Tax (alternative minimum tax) for companies from 2023.

As per the notice issued by the Taiwan’s Ministry of Finance dated December 29, 2022, the amount of basic income eligible for an exemption from Income Basic Tax (“IBT”), i.e., an alternative minimum tax, is increased from TWD 500,000 to TWD 600,000 for the companies for 2023. IBT is levied at a rate of 12% on corporate’s taxable income and certain exempt income. Further, tax payable is the tax calculated as per IBT or regular corporate income tax, whichever is higher.

The basic income for IBT purposes is calculated as per formulae stipulated by the government which is dependent on Consumer Price Index (“CPI”). The increase in the exemption limit for 2023 is due to an increase of 10% in the applicable CPI. 

Implication:

The employers should note the changes for the purposes of calculating IBT for 2023.

Thailand

Thailand: Labor Protection Act amended to facilitate remote working and work from home provisions. 

Thailand’s Labor Protection Act (B.E. 2541) of 1996 (“LPA”) was amended through the Amendment Act (No. 8) B.E. 2566 (2023) (also known as “work from home” (“WFH”) legislation) which was published in the royal gazette on March 19, 2023. Through the Amendment Act, a new section “23/1” is added to the LPA, which has introduced the work-from-home or remote working provisions effective from April 18, 2023.

The highlights of section 23/1 related to the WFH are as follows: –

• To benefit the employer’s business operations and to improve the employee’s work life balance, or in necessary situations, the employer and employee may mutually agree that the employee may work outside of business premises, at the employee’s residence, or anywhere remotely using proper working equipment.
• In case of remote work or WFH, employers must execute a written or electronic agreement with the following details:-

• duration of the agreement;
• normal working hours, days, rest periods, and overtime work;
• rules for overtime work, holiday work, and leave;
• scope of employee work and employers’ control and supervision;
• responsibility for providing supplies and equipment, including essential work costs.
• It introduces the “right to disconnect” for employees. After the completion of normal working hours or the completion of work assigned, the employee has the right to refuse any communication with the employer or other related person unless the employee has given written consent.
• This section guarantees that the employees working remotely shall have the same rights as the employees working physically in the employer’s office.

Implication:

Employers should make necessary changes to their employment contracts, employment policies, and employee handbooks to incorporate provisions relating to work from home or remote working.

United Arab Emirates

UAE: Cabinet of Ministers announces income threshold for corporate tax. 

The Ministry of Finance of UAE has released Federal Decree-Law No. 47 of 2022 on December 9, 2022, introducing corporate tax regime in UAE. The corporate tax (“UAE CT”) regime would be effective for financial years starting on or after June 1, 2023. 

The law does not specify income limit for applicability 0% corporate tax rate, which was to be announced later through the decision of Cabinet of Ministers. The FAQs published by the Ministry of Finance stated that the threshold may be set at AED 375,000. Now, the Ministerial Decision No. 116 of 2022 dated December 30, 2022, has set the threshold amount at AED 375,000 above which the corporation tax will be levied at 9%.

Implication:

Companies should take note of the threshold of AED 375,000 beyond which 9% corporation tax rate will apply.

United Kingdom

UK Budget (Spring Statement) 2023 – Highlights 

The Chancellor of the Exchequer Mr. Jeremy Hunt presented the United Kingdom (“UK”) Budget (Spring Statement) 2023 before the Parliament on March 15, 2023. As per the Spring Statement, Inflation rate is expected to fall to 2.9% (from 10.1% in January 2023) by the end of 2023. While the economy will remain stagnant in 2023 with the GDP expected to be falling by 0.2% in 2023, it is forecasted to grow by 1.8%, 2.5% and 2.1% in 2024, 2025 and 2026 respectively. The Government has proposed certain measures to provide support to households and businesses in view of the rising cost of living. The Spring Finance Bill 2023 was published on March 23, 2023, for implementing announcements made in the Spring Statement 2023.

The following are the key proposals of Spring Statement and the Spring Finance Bill 2023 and for more details, please refer UK Budget (Spring Statement) – Highlights note.:

• For Individuals and employers:

• Personal income tax (“PIT”) and National Insurance Contribution (“NIC”) rates – There are no further changes proposed in PIT and NIC rates and thresholds in addition to announcements made earlier.
• Pension tax relief – From April 2023, it is proposed to increase the Annual Allowance for individuals making pension contribution, from GBP 40,000 to GBP 60,000. Annual allowance is the maximum amount an individual can save via pension contributions without incurring a tax charge. Further, the Government plans to abolish life-time allowance (currently at GBP 1,073,100) in future budgets. The minimum Tapered Annual Allowance (“TAA”) and Money Purchase Annual Allowance (“MPAA”) will rise from GBP 4,000 to GBP 10,000. Moreover, the adjusted income threshold for the TAA will rise from GBP 240,000 to GBP 260,000. TAA represents reduced annual allowance for individuals having income above certain limit while MPAA is reduced annual allowance applicable to individuals who flexibly access their pension.
• Company Share Option Plan (“CSOP”) – As announced earlier, Spring Finance Bill will legislate changes to CSOPs which is tax advantaged employee share scheme applicable to all UK companies and their employees. Thus, effective from April 6, 2023, CSOP limit will be doubled to GBP 60,000 from the current limit of GBP 30,000.

• For Companies: 

• Corporate Income Tax (“CIT”) rates – As announced earlier, the main corporate tax rate increases to 25% from 19% with small profit tax rate remaining at 19% effective from April 1, 2023.
• Capital allowance – The Super Deduction plan stands discontinued as of March 31, 2023. It is proposed to introduce a new ‘full expensing’ policy for a period from April 1, 2023, to March 31, 2026. This would enable businesses to claim the First Year Allowance (“FYA”) at 100% of their capital expenditures made on qualified plant and machinery. Also, a temporary FYA of 50% will be available on the expenditure made towards special rate plant and machinery including long-life assets. This benefit will apply only to the businesses subject to corporate tax.
• Annual investment allowance – As announced in autumn budget, annual Investment Allowance (“AIA”) will be allowable up to GBP 1 million on a permanent basis from April 1, 2023. This will allow businesses to claim allowance in respect of the cost of qualifying plant and machinery acquired during the year up to GBP 1 million.
• Research and Development (“R&D”) expenditure by SMEs – The Government has announced that the loss-making SMEs will be eligible to claim the credit of 27% (27p for every GBP 1) on their R&D expenditure provided that 40% of their total business expenses are towards R&D. Thus, eligible SMEs would receive GBP 27 from HMRC for every GBP 100 spent on R&D. The Government will also consider response to public consultation on merging R&D expenditure credit and SME schemes and take decision on the same in future. Draft legislation on the merged scheme will be published during summer for consultation.
• Investment zones – The Government has decided to set up 12 investment zones including four across Scotland, Wales, and Northern Ireland, for fast and better economic growth with the investment package of GBP 80 million over five years. The businesses from such investment zones will get a single five-year tax offer involving several benefits such as tax cuts, increased capital allowances, relief from stamp duty land tax, business rate relief, employer NIC relief, etc.
• Transfer Pricing documentations – As announced in July 2022, the Spring Finance Bill proposes to introduce transfer pricing documentation in accordance with OECD Guidelines. Thus, effective from April 2023, large multinational groups (with turnover above EUR 750 million) need to maintain the transfer pricing documentation in the form of Master and Local File as per OECD guidelines. 
• Multinational top-up tax and domestic top-up tax – As announced in the Autumn Statement 2022, the Spring Finance Bill includes proposals based on OECD BEPS Pillar 2 framework which will become effective for the accounting period beginning on or after December 31, 2023. Large UK headquartered MNE groups (with consolidated revenue more than EUR 750 million) will have to pay a top-up tax if their foreign operations have an effective tax rate below 15%. Further, there would be a supplementary Domestic Top-up Tax on large groups including those having operations exclusively in the UK and they will be required to pay a top-up tax if their UK operations have an effective tax rate of below 15%.

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