Global Updates – April 2024
Global updates – a quick glance
Argentina: The minimum and maximum basis for employee social security contributions increased to a monthly salary of ARS 45,281.15 and ARS 1,471,616.10 respectively from March 1, 2024.
Australia:
- Australian Taxation Office (“ATO”) has announced changes to individual income tax rates and thresholds effective from July 1, 2024.
- Australia introduces right to disconnect effective from August 26, 2024.
Belgium:
- Preparation of employee training plan and informing employee their training rights made mandatory for employer with 20 or more employees effective from April 1, 2024.
- Small business scheme for VAT extended to foreign companies meeting certain conditions, effective January 1, 2024.
- Law enacted to mandate public CbC reporting for multinationals effective for financial years beginning on or after June 22, 2024.
Brazil:
- Monthly individual tax brackets and employee social security contribution table revised for 2024.
- Constitutional Amendment introducing major indirect tax reforms enacted.
Bulgaria: Public CbC reporting to be made mandatory for multinationals effective for financial years beginning on or after January 1, 2025.
Canada:
- Canada: Federal budget for 2024 presented on April 16, 2024.
Individual income tax thresholds revised for 2024; 100% Capital Cost Allowance (CCA) deduction in the first year of use on certain assets proposed; waiver of withholding requirement on payments to non-residents in certain situations proposed. - Quebec: The budget for 2024 presented on March 12, 2024. Individual income tax thresholds revised for 2024; changes to refundable and non-refundable tax credit proposed for development of e-businesses.
- Quebec: Introduction of Act to prevent psychological harassment and sexual violence at workplace effective from March 27, 2024.
Chile: Amendments to labour code for prevention, investigation, and punishment for workplace harassment, etc.
China:
- China released new regulation relaxing requirements for cross-border transfer of personal data, effective from March 22, 2024.
- Shanghai reduces employee basic medical insurance payment rate from 10% to 9% from March 1, 2024.
Cyprus:
- Thresholds increased for the preparation of transfer pricing local file.
- Cyprus increased the Intrastat threshold for arrivals effective from January 1, 2024.
Denmark:
- Working Time Act amended, and new provisions introduced to record working time of employees effective from July 1, 2024.
- Revision in the thresholds for filing Intrastat Returns for 2024.
France:
- Revised social security ceilings and income tax scales announced for 2024.
- France released new guidance regarding employer tax due from companies that hire or host foreign nationals.
- France relaxed rules for renewal of parental presence leave.
Gibraltar: Gibraltar announced the implementation of a Qualified Domestic Minimum Top-Up Tax (“QDMTT”) effective from January 1, 2024
Greece: Greece implements a global minimum tax from January 1, 2024.
Hong Kong:
- The first weekday after Christmas has been added as a new statutory holiday beginning 2024.
- Hong Kong’s budget for 2024 increased the business registration fees from HKD 2,000 to HKD 2,200 and proposed introduction of a two-tiered standard tax rates regime for “salaries tax” and “tax under personal assessment”.
Hungary:
- Thresholds for Intrastat returns increased effective from January 1, 2024.
- Hungary amends progressive retail turnover tax rates effective from January 1, 2024.
India: India enacted Finance Act, 2024, extending time limit for incorporation of start-ups eligible for tax holiday from March 31, 2024, to March 31, 2025.
Ireland: Extension of child benefit to 18-year-olds, who are in full time education or having a disability, effective from May 1, 2024.
Italy:
- Italy introduced new rules for the expatriate regime effective from January 1, 2024.
- Italy introduces a biennial preventive agreement to simplify tax obligations for small taxpayers.
- Italy imposes stricter requirements for VAT representatives, effective from February 22, 2024.
Israel:
- Israel Tax Authority updated thresholds for invoicing and VAT reporting for 2024.
- Tax Authority introduced digital system to facilitate employee termination process effective from January 2024.
Japan:
- Japan passes Tax Reform 2024 with following changes:
- Blue tax filing companies are entitled to a 30% income deduction from qualifying income from intellectual properties for a period of seven years starting from April 1, 2025.
- Additional tax credits of 5%-15% for companies on increasing the wages of their employees, extended for another three years till March 31, 2027.
- From April 1, 2025, foreign enterprises offering digital services through a digital platform are liable for consumption tax.
- Japan amended Labor Standard Ordinance effective from April 1, 2024, revising employer obligations regarding notification related to workplace and duties.
Malaysia:
- Service tax rate has been increased from 6% to 8% beginning March 1, 2024.
- Companies (Amendment) Act 2024 has introduced the requirement of identifying and verifying beneficial owner and maintaining beneficial owner register beginning from April 1, 2024.
Morocco: Effective from February 14, 2024, non-resident digital service providers are liable for Value-Added-Tax in Morocco.
Peru: Peru introduced 5 days of paid bereavement leave for employees in private sector.
Poland: Poland announced revised thresholds for small taxpayers and social security contribution caps, effective from January 1, 2024.
Singapore: Singapore budget 2024 presented on February 16, 2024. Introduced Enterprise Support Package; introduction of Refundable Tax Credit; implementation of Global Minimum Tax; changes in the social security contributions for senior workers.
South Africa: National Budget 2024 announced; implementation of Global Minimum Tax (“GMT”) effective from January 1, 2024, announced two pot retirement system proposed to be effective from September 2024.
South Korea:
- South Korea enacted tax reform for 2024, introduced additional obligations for multinational entities to submit supplementary transfer pricing documentation.
- The Personal Information Protection Commission amended enforcement decree for Personal Information Protection Act, laying down rules for appointment/qualification of chief privacy officer, disclosure requirements for cross border data transfer, etc.
Sweden: New rules on digital general meetings effective from January 1, 2024.
Switzerland: Introduction of new online VAT obligation in Switzerland effective from January 1, 2024.
Taiwan: Taiwan enacted the new Minimum Wage Act to create a statutory process for reviewing and adjusting minimum wage, effective from January 1, 2024.
Thailand:
- Thailand issues notifications laying down rules for cross-border transfer of personal data.
- The Ministry of Finance extended electronic filing deadline for returns/payments due between February 1, 2024, to January 31, 2027.
United Kingdom:
- UK Spring Statement 2024 announced on March 6, 2024; Employee’s national insurance contribution rate reduced from 10% to 8%; residence-based regime proposed for non-UK domiciled individuals; revision in the VAT registration and de-registration threshold.
- Provisions of Economic Crime and Corporate Transparency Act 2023 to improve quality of information in company register are effective from March 4, 2024
| Data Protection Fines Table | ||||
| Country | Authority Name | Fine imposed on | Reason for Fine Related to Data Protection Failure | Amount of Fine and Penalty |
| Denmark | Danish data protection authority (‘Datatilsynet’) | Capio A/S, a hospital engaged in providing health care services | A fine was imposed for not supervising the work of data processors appointed by the hospital, hence, violation of the principle of accountability. Further, failure on the part of the hospital to ensure that the processing done by the data processors was for lawful and reasonable purposes, and they have adopted adequate measures for security of the personal data. | DKK 1.5 million |
| Denmark | Danish data protection authority (‘Datatilsynet’) | Netcompany, an IT company engaged in consultancy services and providing IT solutions | A fine was imposed for violation of data protection regulations multiple times when launching the new digital mailbox, viz. failure to implement appropriate security measures while developing the mailbox, absence of impact analysis, failure to discover inappropriate coding, etc. | DKK 15 million |
| France | French Data Protection Authority (“CNIL”) | Amazon France Logistique SAS, is a French company that offers delivery and logistics services in France. | A fine was imposed for excessive monitoring of employee due to: failure to process personal data in adequate, relevant, and limited manner; absence of stated lawful basis; failure to take adequate measures to provide necessary information to the data subject (employees); using video surveillance without consent. | EUR 32 million |
| France | French Data Protection Authority (“CNIL”) | Yahoo EMEA Limited, a global media and advertising company. | Fine was imposed for making the mechanism for refusal of cookies more complex as compared to the mechanism to accept cookies and thus, nudging users to accept cookies. CNIL concluded that this infringes the freedom of consent of internet users. | EUR 10 million |
| Greece | Hellenic Data Protection Authority (“HDPA”) | The Hellenic Post S.A. (ELTA), a state-owned postal service | A fine was imposed for GDPR violations and data breach arisen due to absence/ failure of appropriate technical, security systems and policies leading to unauthorised access to personal data. | EUR 2.9 million |
| Hungary | The National Authority for Data Protection and Freedom of Information (‘NAIH’) | An airline company | The fine was imposed for the following reasons: Failure to inform the data subject about the action taken based on the data erasure request of the data subject within the time limit; Infringement of the principle of transparent data processing as the data subject was not informed about the additional data processed, its purpose, legal basis, or the duration of processing by the airline in relation to the data erasure request made by the data subject. | HUF 5 million |
| Iceland | The Icelandic Data Protection Authority (Persónuvernd) | Stjörnuna ehf., an operator of international fast-food chain called Subway restaurants in Iceland. | Fine was imposed for the following reasons: Failure to produce evidence that employee monitoring was based on legitimate interest for achieving quality control of employees’ work; Failure to inform its employees about being monitored in the workplace by the employers, as mandated by GDPR and the Act; Failure to maintain a register of processing activities as required by GDPR and the Act. | ISK 1.5 million |
| Netherlands | Dutch data protection authority (“AP”) | Uber Technologies Inc., a multinational transportation company that provides ride-hailing services, courier services, food delivery, and freight transport and Uber B.V. (Dutch unit of US-based Uber Technologies) | Fine was imposed for the following reasons: Violation in providing transparent information; Violation of the right to access the data by the data subject; Violation of the right of data portability. | EUR 10 million |
| Poland | The Polish data protection authority (“UODO”) | Morele.net sp. z o. o., a company engaged in consumer electronics distribution segment in e-commerce market. | There was a data breach incident affecting consumers due to an alleged lack of cybersecurity measures. Fine was imposed for the following reasons: Failure to adopt adequate technical security measures against data breaches; Failure to respond to unusual behaviour, such as increased network traffic; Failure to encrypt relevant data; Failure to implement two-factor authentication; Failure to conduct a risk analysis, including threats from public network logins. | PLN 3.8 million |
| Spain | Spanish Data Protection Agency (‘AEPD’) | Endesa Energia S.A.U, a multinational electric utility company | A fine was imposed for major data breach exposing sensitive information of millions of gas and electricity customers to unauthorized third parties and hence, violation of GDPR provisions relating to security breach, violation of provisions related to processing of personal data etc. | EUR 6.1 million |
Table of Contents
Belgium: Increased the minimum wage effective from April 1, 2024.
Brazil: Revises monthly individual tax brackets and employee social security contribution table.
Brazil: Enacts Constitutional Amendment introducing major indirect tax reforms.
Canada: Federal Budget 2024 Highlights.
Quebec: Highlights of the Quebec Budget 2024.
Quebec: Introduction of Act to prevent psychological harassment and sexual violence at workplace
Cyprus: Cyprus increased the Intrastat threshold for arrivals effective from January 1, 2024.
Denmark: New provisions on working time recording of employees will be effective from July 1, 2024.
Denmark: Thresholds for Intrastat Returns increased from January 1, 2024. 35
France: Social security ceilings and income tax scales for 2024 published.
France: Relaxes rules for renewal of parental presence leave.
Greece: Greece implements global minimum tax effective from January 1, 2024.
Greece: Increase in monthly minimum wages effective from April 1, 2024.
Honduras: Monthly minimum wages increase effective from January 1, 2024.
Hong Kong: Starting from 2024 the first weekday after Christmas added as a statutory holiday.
Hong Kong: Hong Kong extends deadline for 2023/24 tax returns under the block extension scheme.
Hong Kong: Budget 2024-25- Highlights.
Hungary: Thresholds for Intrastat returns increased effective from January 1, 2024.
Hungary: Hungary amends progressive retail turnover tax rates effective from January 1, 2024.
India: Finance Act 2024 – Highlights
Italy: Italy introduced new rules for the expatriate regime effective from January 1, 2024.
Israel: E-invoicing implementation postponed until May 5, 2024.
Israel: Tax Authority updated thresholds for invoicing and VAT reporting for 2024.
Israel: Israel Tax Agency extends deadline for annual tax withholding reports for tax year 2023.
Malaysia: Effective from March 1, 2024, service tax rate is increased from 6% to 8%.
Malaysia: Companies (Amendment) Act 2024 is effective from April 1, 2024.
Peru: Peru introduced 5 days of paid bereavement leave for employees in private sector.
Singapore: Budget 2024 – Highlights
South Africa: Minimum hourly wage increased to ZAR 27.58 per hour effective from March 1, 2024.
South Africa: Revised annual earnings threshold to be effective from March 1, 2024.
South Africa: Highlights of National Budget 2024.
South Africa: Ministry of Finance revises the mileage rate for 2024.
Sweden: New rules on digital general meetings effective from January 1, 2024.
Taiwan: Minimum Wage Act effective from January 1, 2024. 67
Turkey: Minimum wage and social security contribution basis increased from January 1, 2024.
United Kingdom: UK Budget (Spring Statement) 2024 – Highlights
United Kingdom: Amendments made to the Paternity leave effective from April 6, 2024.
Argentina
Argentina: The minimum and maximum basis for calculating employee social security contributions increased to a monthly salary of ARS 45,281.15 and ARS 1,471,616.10 respectively from March 1, 2024.
The Argentine National Social Security Administration (“ANSES”) through Resolution No. 39/2024 dated February 29, 2024, effective from March 1, 2024, increased the minimum basis for an employee’s social security contributions from ARS 35,603.99 to ARS 45,281.15, and maximum basis from ARS 1,157,112.83 to ARS 1,471,616.10. These bases are used for the computation of employees’ portion of social security contributions.
Implication:
The companies will need to compute employees’ social security contributions according to the latest monthly base values published.
Australia
Australia: Australian Taxation Office (“ATO”) has announced changes to individual income tax rates and thresholds effective from July 1, 2024.
The Australian Taxation Office (“ATO”) has announced the updated income tax rates and threshold changes effective from July 1, 2024, for individuals as follows:
| 2024 Income (in AUD) | 2024 Tax Rates | 2023 Income (in AUD) | 2023 Tax Rates |
| From 0 to 18,200 | Nil | From 0 to 18,200 | Nil |
| From 18,201 to 45,000 | 16% | From 18,201 to 45,000 | 19% |
| From 45,001 to 1,35,000 | 30% | From 45,001 to 1,20,000 | 32.5% |
| From 1,35,001 to 1,90,000 | 37% | From 1,20,001 to 1,80,000 | 37% |
| 1,90,001 and above | 45% | 1,80,001 and above | 45% |
Implication:
Employers should take note of the updated income tax slabs while processing the payroll.
Australia: Australia introduces right to disconnect after working hours effective from August 26, 2024.
The Fair Work Legislation Amendment (Closing Loopholes No.2) Bill 2023 received royal assent on February 23, 2024. The Amendment Act is aimed at reforming employment and workplace relations and includes reforms/ changes such as right to disconnect, casual employment, transitioning from multi-enterprise agreements etc. The right to disconnect will enter into effect from August 26, 2024, for businesses with at least 15 employees and from August 26, 2025, for businesses with less than 15 employees.
The right to disconnect legislation gives employees a right to refuse monitoring, reading, or responding to contact (or attempted contact) from an employer outside of the working hours – unless such refusal is unreasonable. The right also extends to contact by third parties where the contact relates to work.
Further, under the new provisions, reasonableness of contacting employees after work hours can be determined based on the following factors:
- The reason for contacting or attempting to contact the employees;
- The manner in which the contact was initiated and the extent of disruption it caused to the employee;
- The employee’s job role, duties, and the responsibilities;
- The employee’s personal circumstances, including family or caregiving responsibilities;
- Any compensation, both monetary and non-monetary, provided to the employee for being available outside of regular working hours.
Employers are prohibited from initiating adverse actions against employees who exercise their right to disconnect. However, it is important to note that refusal to connect will be deemed unreasonable if the communication is legally required.
Additionally, if an enterprise collective agreement offers more favourable terms regarding the right to disconnect compared to the statutory provisions, the terms outlined in the enterprise collective agreement take precedence and apply to the relevant employees.
Implication:
Employers need to note the implementation timeline for these changes, which will differ based on their headcount. Meanwhile, they should also conduct a thorough review of their employment contracts, any enterprise-level collective agreements in place, and internal policies and practices.
Belgium
Belgium: Preparation of employee training plan mandatory for employer with 20 or more employees effective from April 1, 2024.
The Labour Deal Act of October 3, 2022, imposes obligation on the private sector employers, to prepare an annual training plan and inform the employees about their right for individual training. In addition to this, the employer has to maintain training information of the employees in the Federal Learning Account (“FLA”) which is set up at the Federal level by the Law relating to the creation and management of the “Federal Learning Account” (1) (the Act of October 20, 2023).
The key highlights of these laws are as under:
- Employer to prepare a training plan: The companies having 20 or more employees are required to prepare an annual training plan by March 31 every year which should give an overview to the employees of the various training initiatives including the type of training that is formal or informal and the target groups for whom the training programs are intended. Formal training would include training programmes or internship developed by professional trainer meeting certain conditions while those program not meeting conditions of formal training would be regarded as informal trainings. While preparing the plan the employer should take into account the respective sector specific and industry specific guidelines and restrictions. Such plan can cover one year or a longer time if employees or their representatives agree.
- Provision of individual training rights to employees: The Labour Deal Act grants the employees the right to individual training which depends upon the number of employees in a company, whether employee works full time or part time and applicability of the sector based collective bargaining agreements (“CBAs”). From January 1, 2024, the full-time employees of company with more than 20 workers are entitled to five days of individual training per year and if the company has less than 20 but more than 10 employees, the training entitlement is at least one day per year of individual training.
- Opening of Federal Learning Account (“FLA”): FLA is a digital application developed for assisting the employees to have knowledge of their training rights, training credits, attended training days, completed training sessions, etc., which is accessible through www.mycareer.be. From April 1, 2024, the employer should regularly update and maintain the data of the training plans in the FLA. The employers must note that the launch of the Federal Learning Account, initially targeted for April 1, 2024, has encountered delays due to the registration tool not being fully prepared. Consequently, a beta version of the registration tool is accessible starting April 1, allowing users to engage with its functionalities. The definitive version of the tool is anticipated to be available by June 1, 2024, with mandatory registration requirements in place.
Implication:
Every company falling under the above-mentioned criteria should prepare the training plans, update the Federal Learning Account, and inform the existing and new employees of their individual training rights.
Belgium: Extends small business scheme for VAT to foreign companies meeting certain conditions, effective January 1, 2024.
On March 14, 2024, the Parliament approved the law amending taxation regime applicable to the small businesses (small business scheme for VAT) registered in Belgium. The amendment is consistent with the EU Directive No. 2020/285 of February 18, 2020.
As per the existing small business scheme for VAT, the small businesses established in Belgium having annual turnover less than EUR 25,000 (excluding VAT) can opt for exemption from certain VAT obligations. Eligible taxpayers are not required to charge VAT on their supplies and file periodic returns with tax authorities.
From January 1, 2024, the exemption scheme for the small businesses has been extended to the small foreign businesses which are not established in Belgium. The amended law provides for applicability of the scheme to the small businesses established in other EU Member States having annual turnover in Belgium up to EUR 25,000 and annual turnover in the EU up to EUR 100,000.
Additionally, small businesses established in Belgium can request for the application of the exemption in other EU Member States if their annual turnover in the EU does not exceed EUR 100,000.
However, this tax-free regime does not apply to certain sectors such as, certain construction services, supplies of used materials, industrial and non-industrial waste, etc., supplies of manufactured tobacco, supplies of seafood directly from fishing vessels, among others.
Implication:
The eligible companies who wish to opt for the small business scheme for VAT must give prior intimation and make arrangements to comply with the formalities as required by the VAT law.
Belgium: Effective from April 1, 2024, the employer is obliged to contribute to the Back to Work Fund in case of termination of employment contract due to medical reasons.
In Belgium, the employers are required to assist the employees who are terminated due to long term illness, in transitioning to new employment or career opportunities outside of their current workplace by providing for “outplacement assistance.”
Effective from April 1, 2024, the outplacement assistance is being replaced by a contribution to the “Back to Work Fund.”
Accordingly, the employer is now obligated to pay a contribution of EUR 1,800 to the “Back to Work Fund” established by the National Institute for Sickness and Disability Insurance (“RIZIVI/INAMI”) if the employee is terminated due to long term illness. In contrast to outplacement assistance, the “Back to Work Fund” can be utilized regardless of whether the termination of the employment contract due to long-term illness is initiated by the employer, employee, or both parties. With the help of “Back to Work Fund” the terminated employee can apply for customized specialized services, such as career guidance or personalized coaching, for reintegrating the employee into the labor market, etc.
Prior to the introduction of the “Back to Work Fund,” outplacement assistance in Belgium was available to employees who were entitled to a notice period or corresponding notice indemnity of at least 30 weeks. Under the new system the employer should notify the fund within 45 days of the termination of the contract and provide necessary information of the employee.
Employees whose contract has been terminated for medical reasons can apply for assistance from the fund within 6 months of the termination of the employment contract. The government has also provided a transition period to apply for the fund until January 2, 2025, for employees whose contracts were terminated for medical purposes between April 1, 2024, and July 1, 2024.
Implication:
Employers should take note of the new requirement and make necessary arrangements for complying with the new system.
__________________________________________________________________________________
Belgium: Increased the minimum wage effective from April 1, 2024.
Effective from April 1, 2024, the monthly minimum wage in Belgium has increased from EUR 1,994.18 to EUR 2,029.88.
Belgium: Enacts law to mandate public CbC reporting for multinationals effective for financial years beginning on or after June 22, 2024.
On January 26, 2024, Belgium implemented the public Country-by-Country (“CbC”) reporting as required by European Union (“EU”) Directive 2021/2101 by amending Belgian Companies and Associations Code with regard to the publication, by certain companies and branches, of information relating to corporate income tax.
Accordingly, the public CbC reporting is applicable to the multinational entities having total consolidated revenue of more than EUR 750 million in each of the last two consecutive financial years, whether headquartered in the EU or outside. The public CbC reporting requirement will apply for financial years beginning on or after June 22, 2024.
Such entities must publicly disclose separate income tax information for:
- Each EU Member State;
- Jurisdictions listed by the EU as non-cooperative (Annex I of the EU list);
- Jurisdictions that have been grey listed (Annex II of the EU list) for two consecutive years.
For disclosing information of the jurisdictions other than above, the entities have the option to present it on an aggregate basis or in detailed form.
Public CbC reports must be published within 12 months of the balance sheet date of the financial year for which the report is drawn up and be made available online in at least one of the official languages of the EU, free of charge. The detailed rules will be published after the bill enters into force.
Implication:
Multinational enterprises meeting the threshold as above should make necessary arrangements to comply with public CbC reporting requirements.
Brazil
Brazil: Revises monthly individual tax brackets and employee social security contribution table.
The Brazilian Government through Provisional Measure No. 1.206 dated February 6, 2024, has updated the monthly individual income tax brackets effective from February 1, 2024, which is as under:
| For the year 2024 | For the year 2023 | ||
|---|---|---|---|
| Salary range (amounts in BRL) | Tax Rate | Salary range (amounts in BRL) | Tax Rate |
| 0 – 2,259.20 | 0% | 0 – 2,112 | 0% |
| 2,259.21 – 2,826.65 | 7.5% | 2,112.01 – 2,826.65 | 7.5% |
| 2,826.66 – 3,751.05 | 15% | 2,826.66 – 3,751.05 | 15% |
| 3,751.06 – 4,664.68 | 22.5% | 3,751.06 – 4,664.68 | 22.5% |
| 4,664.69 and more | 27.5% | 4,664.69 and more | 27.5% |
Further, through Ordinance No.2 of January 11, 2024, sets out social security contribution table (i.e., effective from January 1, 2024, onwards), which is as follows:
| For the year 2024 | For the year 2023 | ||
|---|---|---|---|
| Salary range (amounts in BRL) | Social Security Employee’s Contribution Rate | Salary range (amounts in BRL) | Social Security Employee’s Contribution Rate |
| 0 – 1,412 | 7.5% | 0 – 1,302 | 7.5% |
| 1,412.01 – 2,666.68 | 9% | 1,302.01 – 2,571.29 | 9% |
| 2,666.69 – 4,000.03 | 12% | 2,571.30 – 3,856.94 | 12% |
| 4,000.04 – 7,786.02 | 14% | 3,856.95 – 7,507.49 | 14% |
| 7,786.03 and more | Capped at 7,786.02 *14% (i.e., BRL 908.85) | 7,507.50 and more | Capped at 7,507.49 *14% (i.e., BRL 877.24) |
Implication:
The employers need to take into account these changes while processing payroll of the employees.
Brazil: Enacts Constitutional Amendment introducing major indirect tax reforms.
The Brazilian Government has enacted the Constitutional Amendment No. 132/2023 on December 21, 2023, which introduces major indirect tax reforms in the country.
The tax reform introduces a dual value added tax (“VAT”) system, which consolidates 5 taxes namely:
- the social contributions on gross revenues (“PIS and COFINS”);
- Federal Excise Tax on industrial products (“IPI”);
- State Sales Tax levied on the supply of goods, rendering of communication services, interstate and intermunicipal transportation services (“ICMS”); and
- Municipal Service Tax (“ISS”).
PIS, COFINS and IPI will be replaced by the contribution on goods and services tax (“CBS”) which will be levied/managed at Federal Level and ICMS and ISS will be replaced by goods and services tax (“IBS”) which will be levied/ managed at state/ municipal level.
Additionally, a new federal selective tax/ Excise Federal Tax (“Imposto Seletivo – IS”) will be introduced for goods and services considered harmful to health and the environment.
The CBS and IBS will be formulated by a supplementary law, which needs to be presented by the Executive Branch of the Brazilian Government within 180 days from the approval of the Constitutional Amendment Law.
The new indirect taxes will be introduced in phases beginning in 2026 and ending 2033, along with the reduction and removal of the old taxes.
Implication:
The taxpayers need to keep themselves abreast of these developments related to major indirect tax reforms and various implementation timelines.
Bulgaria
Bulgaria: Enacted law introducing Public CbC Reporting requirements effective for financial year beginning on or after January 1, 2025.
On December 19, 2023, Bulgaria published the “Law on Amendments and Supplements to the Accountancy Act”, introducing public Country-by-Country (“CbC”) reporting in the official gazette as required by EU Directive (“EU”) 2021/2101.
Accordingly, the public CbC reporting is applicable to the multinational entities having total consolidated revenue of more than BGN 1.5 billion (about EUR 765 million) in each of the last two consecutive financial years. The public CbC reporting is applicable to branches of non-EU MNEs having net turnover of BGN 16 million (about EUR 8 million) in each of the last two consecutive financial years.
The public CbC reporting requirement will apply for financial years beginning on or after January 1, 2025. Public CbC reports must be published within 12 months after the end of the financial year for which the report is drawn up and be made available online in at least one of the official languages of the EU, free of charge. It should also be published for announcement in Commercial Register. The detailed rules will be published subsequently.
Implication:
Multinational enterprises meeting the threshold as above should make necessary arrangements to comply with public CbC reporting requirements.
__________________________________________________________________________________
Bulgaria: Increased the maximum monthly basis for social security and health insurance contributions from BGN 3,400 to BGN 3,750 effective from January 1, 2024.
Effective from January 1, 2024, there is an increase in the amount of maximum monthly basis for social security and health insurance contributions from BGN 3,400 to BGN 3,750.
Implication:
Employers should take note of the impact of the change on calculation of social insurance and health contributions and update their payroll processes accordingly.
Canada
Canada: Federal Budget 2024 Highlights.
The Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland presented the federal budget for 2024 entitled “Fairness for every generation” in the House of Commons on April 16, 2024. The budget focuses on making life more affordable for Canadians by introducing several support measures, including measures designed to tackle the housing crisis, and expanding various social supports.
The key highlights of budget 2024 are as follows:
Personal Taxation:
- There are no changes in personal income tax rates.
An individual is subject to federal and provincial taxes in Canada. Federal tax brackets are indexed to inflation every year. The tax brackets for 2024 are as under:
| Financial Year 2024 | Financial Year 2023 | 2024 and 2023 | ||
|---|---|---|---|---|
| Taxable Income Thresholds (in CAD) | Constant (in CAD) | Taxable Income Thresholds (in CAD) | Constant (in CAD) | Tax Rate |
| Up to 55,867 | 0 | Up to 53,359 | 0 | 15% |
| 55,868 to 111,733 | 3,073 | 53,360 to 106,717 | 2,935 | 20.5% |
| 111,734 to 173,205 | 9,218 | 106,718 to 165,430 | 8,804 | 26% |
| 173,206 to 246,752 | 14,414 | 165,431 to 235,675 | 13,767 | 29% |
| 246,753 and above | 24,284 | 235,676 and above | 23,194 | 33% |
- Budget extends the eligibility criteria for availing Canada Child Benefit (“CCB”) wherein the individual can avail the benefit in respect of a child for 6 months post the death of a child. This measure will be effective for deaths that occur after 2024.
Business Taxation:
- The corporate tax rates remain unchanged. The current corporate tax rate is 38%, with a federal tax abatement of 10% and a general tax reduction of 13% (subject to certain exceptions), resulting into an effective corporate tax rate of 15%.
- There are no changes in Goods and Services Tax (“GST”) or Harmonized Sales Tax (“HST”) rates.
- The budget proposes to provide immediate expensing (i.e., a 100% first-year capital cost allowance ‘CCA’ deduction) of certain assets acquired on or after April 16, 2024, and becomes available for use before January 1, 2027, which include:
- patents or rights to use patented information for a limited or unlimited period;
- data network infrastructure equipment and related systems software;
- general-purpose electronic data-processing equipment and systems software.
The accelerated capital cost allowance (“CCA”) will be available only for the year in which the asset becomes available for use.
- Under the current provisions, withholding of 15% applies on the payment made to a non-resident for services provided in Canada. Non-resident service providers having no Canadian tax liability can apply to the CRA for an advance waiver of the withholding requirement for a specific transaction or may apply for a refund of the withheld amounts. As per the budget proposals, CRA will have the legislative authority to waive the withholding requirement over a specified period, on payments made to a non-resident service provider, if either of the following conditions are met:
- the non-resident is not subject to Canadian income tax in respect of the payments as a result of tax treaty between its country of residence and Canada; or
- the income from providing the services is exempt income from international shipping or from operating an aircraft in international traffic.
This measure would come into force on royal assent of the enacting legislation.
Capital Gains Taxation:
Budget proposes following key changes related to taxation of capital gains –
- Increase in the capital gains inclusion rate from 1/2 to 2/3 from June 25, 2024 (In case of individuals, inclusion rate of 1/2 will continue to apply up to gains of CAD 250,000). The inclusion rate indicates the part of the capital gains amount that will be included in computing a taxpayer’s income.
- Currently, an individual is granted a lifetime tax exemption up to certain limit in respect of capital gains realized on the disposition of qualified small business corporation shares and qualified farm or fishing property, which is indexed to inflation (limit for 2024 is CAD 1,016,836). The budget proposes to increase the lifetime tax exemption up to CAD 1.25 million of eligible capital gains in respect of sales effected on or after June 25, 2024, and indexing to inflation will resume in 2026.
- Introduction of the Canadian entrepreneurs’ incentive by way of reduction in capital gains inclusion rate from current 2/3 inclusion rate to 1/3 inclusion rate. The incentive applies in respect of capital gains arising on or after January 1, 2025, from dispositions of qualifying shares by an eligible individual, subject to certain conditions, up to specified limit per individual over the lifetime. The lifetime limit would be phased in by increments of CAD 200,000 per year, beginning on January 1, 2025, and will be reaching CAD 2 million by January 1, 2034.
Implication:
Individuals and companies should a take note of budget changes, monitor further developments and implement accordingly.
__________________________________________________________________________________
Quebec: Highlights of the Quebec Budget 2024.
Quebec’s Finance Minister Eric Girard presented the province’s budget for 2024 on March 12, 2024.
The key highlights of the budget 2024 are as follows:
For Individuals
- Changes to personal income tax rates and income thresholds – There is no change in individual income tax rates. The Quebec income tax brackets are indexed to inflation every year. The tax brackets for 2024 are as follows:
| Financial Year 2024 | Financial Year 2023 | 2024 and 2023 | ||
|---|---|---|---|---|
| Taxable Income Thresholds (in CAD) | Constant (in CAD) | Taxable Income Thresholds (in CAD) | Constant (in CAD) | Tax Rate |
| Up to 51,780 | 0 | Up to 49,275 | 0 | 14% |
| 51,781 to 103,545 | 2,589 | 49,276 to 98,540 | 2,463 | 19% |
| 103,546 to 126,000 | 7,766 | 98,541 to 119,910 | 7,390 | 24% |
| 126,001 and above | 9,971 | 119,911 and above | 9,489 | 25.75% |
For Employers and Companies
- Corporate income tax rates - No change in the corporate income tax rates. The general corporate income tax rate in Quebec stands at 11.5%.
Tax credit for development of e-business (“TCEB”) –
The budget proposes changes to the refundable and non-refundable tax credits that are available for the development of e-business. These tax credits provide tax assistance to businesses in the information technology sector that carry out e-business activities, notably in the fields of computer systems design and software publishing. The tax credits include 24% refundable and 6% non-refundable tax credits, calculated on qualified wages (up to limit of CAD 83,333) incurred by a qualified company. The budget proposes following changes in the tax credits, which will apply in respect of a tax year beginning after December 31, 2024:- Introduction of an exclusion threshold per eligible employee for the calculation of the tax credits. Hence, the tax credits will apply only to wages exceeding the threshold amount. The threshold amount will generally correspond to the amount used to determine the basic personal tax credit for the relevant calendar year (i.e., for 2024 – CAD 18,056);
- Removal of the limit of CAD 83,333 currently applicable to the qualified wages of an eligible employee; and
- Increase in the non-refundable tax credit by 1% every year till it reaches 10% from current rate of 6% and reduction in the refundable tax credit by 1% every year till it reaches 20% from current rate of 24%.
Tax credit (i.e. TCEB) rates:
| Year | 2024 | 2025 | 2026 | 2027 | 2028 onwards |
| Refundable tax credit | 24% | 23% | 22% | 21% | 20% |
| Non-refundable tax credit | 6% | 7% | 8% | 9% | 10% |
- The budget has proposed changes in tax credits applicable to other sectors also viz. multimedia sector, film or television production sector, oil production sector, etc.
Implication:
The employers should make a note of the budget changes and monitor related developments.
__________________________________________________________________________________
Quebec: Introduction of Act to prevent psychological harassment and sexual violence at workplace
The Quebec enacted a law to prevent and combat psychological harassment and sexual violence in the workplace (proposed as “Bill 42” in November 2023), which became effective on March 27, 2024. The law intends to protect the victims of psychological harassment and sexual violence in the workplace and lays down framework in preventing and combating such incidences.
Salient features of the new provisions are as follows:
- New definition of sexual violence: Sexual violence now includes any form or manner of violence or act targeting sexuality or any other misconduct, unwanted gestures, comments, behaviours with sexual remarks, irrespective of their occurrence, including violence relating to sexual and gender diversity. The definition has broadened the scope of sexual violence.
- Employment Injury: The Law on Industrial Accidents and Occupational Diseases (“LATMP”) is amended wherein certain injuries or diseases arising in course of work and resulting in sexual violence will be termed as employment injury. Further, where an employee contracts a disease within 3 months of a committed act of sexual violence at workplace, it will also be termed as employment injury. These amendments to LATMP will be effective from September 28, 2024.
- Extension of claim period for victims of sexual violence: The existing period of 6 months is extended to 2 years for filing a claim of occupational injury resulting from sexual violence under LATMP with the authorities (viz. CNESST).
- Obligation scope increased for employers: The employer in Quebec needs to prevent and combat psychological harassment by any person and the employer needs to be vigilant that these acts are not committed against any third parties viz. employer’s customers, suppliers’ contractors etc. Further, employer can take into consideration previous conduct of sexual violence for imposing sanction on a new case of sexual violence.
- Protection against reprisals: The law establishes protection against reprisals for employees who report a situation of psychological harassment against another employee or by collaborating in the process of a psychological harassment complaint.
- Psychological Harassment Prevention and Complaint Processing Policy: The employer must formulate a policy on prevention and treatment of psychological harassment. The policy must include certain particulars such as:
- methods used to identify, control, combat and eliminate the risks of psychological harassment
- training programs for employees on the prevention of psychological harassment
- details about the persons designated by the employer to handle such complaints or report to the management/ employer;
- The process for filing a complaint;
- Measures to protect the confidentiality of the complaint;
- The period for which records must be stored related to psychological harassment, viz. at least two years.
These measures will be effective from September 28, 2024.
Implication:
Employers need to abide by these new provisions for combating and eliminating incidences of psychological harassment and sexual violence at workplace.
__________________________________________________________________________________
British Columbia: Increases the minimum wage to CAD 17.40 per hour from CAD 16.75 per hour, effective from June 1, 2024.
Effective from June 1, 2024, British Columbia has increased the minimum wage to CAD 17.4 per hour from CAD 16.75 per hour.
Chile
Chile: Amendments to labour code for prevention, investigation, and punishment for workplace harassment, etc.
The Chilean Ministry of Labour and Social Welfare published the Law No 21643 dated January 15, 2024, adopting various measures related to the guidelines of the Convention of 190 of International Labour Organisation (“ILO”) to be effective from August 1, 2024. The law introduced series of amendments in labour law with an aim to strengthen the prevention of harassment, inequalities, discrimination, etc. at workplace.
The key provisions are as follows:
- Employers will be required to have a protocol/ policy covering prevention of sexual harassment, workplace harassment and violence at work and protection of privacy of those involved in any related investigation, as also information about rights and responsibilities of the employees.
- Employer-employee relations must be based on gender equality, dignity, free of violence, etc.
- It also covers cases of violence at work caused by third parties unrelated to the employment relationship.
- The definition of workplace harassment is widened to any conduct that constitutes aggression or harassment exercised by the employer or by a worker, against another, by any means, whether once or repeatedly, and which results in impairment, mistreatment, or humiliation for the affected.
- Employers will be subject to disciplinary actions in case of discrimination at workplace.
Implication:
Employers are required to take a note of the new provisions and accordingly make changes in the internal policies, take proactive and remedial steps for preventing all forms of discrimination, harassment, and violence at workplace.
China
China: China released new regulation relaxing requirements for cross-border transfer of personal data, effective from March 22, 2024.
To simplify provisions regarding the cross-border transfer of personal data, the Cyberspace Administration of China (“CAC”) had issued draft regulations titled “Promoting and Regulating Cross-Border Data Flows” for public consultation on September 28, 2023. After debate and discussion, the final regulations were released on March 22, 2024, which became effective with immediate effect.
The highlights of the new regulation are as follows: –
- Exemption from data transfer mechanism:
Under the Personal Information Protection Law (“PIPL”), personal information processors transferring data outside of China need to comply with any one of the data transfer mechanisms, such as passing a security assessment organized by the national cyberspace department, obtaining personal information protection certification, or concluding a standard contract for cross-border data transfer as provided by CAC.
However, new regulations introduce the following exemptions whereby the transfer of personal data outside of China would not require compliance with any of the above-mentioned mechanisms: - transfer of personal information, excluding sensitive personal information, involving fewer than 100,000 individuals to overseas recipients since January 1,2024, by entities other than critical information infrastructure operators (“CIIO”) *. As per the draft regulations this threshold was 10,000 individuals which stands increased to 100,000 in final regulations.
- transfer of personal information for executing and performing contracts to which data subject is a party like cross border shopping, hotel booking etc.
- transfer of employees’ personal information necessary for implementation of cross-border human resource management which is made in accordance with employment laws and regulations and collective agreements.
- transfer of personal information necessary to protect the life, health, or property of individuals in an emergency.
- transfer of data collected and generated during international trade, academic cooperation, and overseas manufacturing that do not include personal information or important data.
- Personal information collected and generated abroad by data processors.
- Other important relaxations /changes
- Transfers of personal information involving between 100,000 and 1 million individuals, or sensitive personal information involving fewer than 10,000 individuals since January 1, 2024, will now require standard contract filings or certification, rather than a security assessment organized by the national cyberspace department.
- The law stipulates that those transfers involving important data or personal information exceeding 1 million individuals, or sensitive personal information exceeding 10,000 individuals since January 1, 2024, would necessitate a security assessment.
- The new regulations mandate the data processors to actively identify “important data.” There was no such obligation under the draft regulations. A new standard, namely, Data Security Technology-Rules on Data Categorization and Classification has been issued in this respect recently which would be relevant in this respect.
- Free-trade zones are granted authority to draft their own negative lists for data export to specify what data will be subject to data transfer mechanism. For data outside the negative list, the cross-border transfer will be exempt from any of the legal mechanisms.
*CIIO are 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 harm to national security, the economy, etc.
Implication:
Companies which transfer personal data outside of China should evaluate if they can be benefited due to the relaxations as above. Those who have already filed applications for data security assessment or standard contracts may relook at the necessity for these measures and file withdrawals if these mechanisms are not applicable to their data transfer under new regulations. Companies involved in transfer of personal data outside of China should ensure that they have efficient mechanism to track volume of data transfer to determine the applicability of various mechanisms and relaxations from them.
China: Shanghai employee basic medical insurance payment rate has reduced from 10% to 9% with effect from March 1, 2024.
According to the “Notice on Phased Adjustment of Basic Medical Insurance Premium Rates for Employees in this City,” as stipulated in Shanghai Medical Insurance Regulations [2024] No. 1, effective from March 1, 2024, the employer contribution rate for basic medical insurance for employees has been reduced by 1%, from the original 10% to 9%. Further, the employee contribution ratio remains unchanged at 2%
Implication:
Employers must take note of the reduced contribution amount and ensure that their payroll software is adjusted accordingly to reflect the updated employer contribution rate for basic medical insurance.
Colombia
Colombia: Colombia increased minimum monthly wages from COP 1,160,000 to COP 1,300,000 effective from January 1, 2024.
Through Decree 2292 of 2023 dated December 29, 2023, the Colombian Government increased the minimum monthly wages from COP 1,160,000 to COP 1,300,000 effective from January 1, 2024.
Cyprus
Cyprus: Cyprus tax authorities have increased thresholds for the preparation of transfer pricing local files.
According to the provisions of Cyprus ‘Income Tax Law’(“ITL”), the obligation to prepare transfer pricing local file applies to multinational national enterprises (“MNE”) which are tax residents in Cyprus or have permanent establishments in Cyprus, referred to as ‘Liable Taxpayers’. This obligation arises when their transactions with connected persons, as defined, exceed (or will exceed based on the arm’s-length principle), EUR 750,000 in aggregate per category of transaction per tax year.
The Tax Department issued revised thresholds on February 1, 2024, relating to taxpayer’s obligation to prepare local file for the transactions for tax year 2022 (effective from January 1, 2022), as below:
- Financing transactions category: threshold is increased from EUR 750,000 to EUR 5,000,000
- All other categories of transactions: threshold is increased from EUR 750,000 to EUR 1,000,000
Further, it should also be noted that transactions below the above-mentioned thresholds are subject to simplified transfer pricing provisions as per the provisions of tax circular 6/2023 issued on July 6, 2023, which will continue to apply. The simplified transfer pricing documentation refers to the minimum documentation requirements to support the arm’s length pricing of transactions.
Implication:
Businesses should make a note of revised thresholds and adhere to it, minimizing risks of non-compliance and optimizing tax strategies. They should also explore simplified measures available for smaller entities to streamline compliance efforts and ensure regulatory alignment.
__________________________________________________________________________________
Cyprus: Cyprus increased the Intrastat threshold for arrivals effective from January 1, 2024.
Cyprus increased the threshold for reporting arrivals in the Intrastat return (i.e., intra-community acquisitions of goods) from EUR 270,000 to EUR 320,000, effective from January 1, 2024. The threshold for reporting dispatches remains unchanged at EUR 75,000.
In Cyprus, 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 Cyprus i.e., ‘dispatches,’ and goods brought into Cyprus i.e., ‘arrivals.’
Intrastat returns are required to be submitted only upon exceeding the reporting thresholds.
Implication:
The businesses will need to follow revised thresholds for submission of Intrastat returns.
__________________________________________________________________________________
Denmark
Denmark: New provisions on working time recording of employees will be effective from July 1, 2024.
The Danish Parliament on January 23, 2024, passed a bill amending the Working Time Act, which introduces new provisions related to working time registration, effective from July 1, 2024.
As per the new provisions, employers need to implement/ install a time recording system, wherein each employee’s daily working time will be recorded. The purpose of the new system is to ensure compliance with maximum weekly working hours provisions (i.e., 48 hours per week on average, over a period of 4 months), as also, observance of daily and weekly rest periods.
The new provisions include following clarifications related to time recording that:
- The employees are required to only register deviations from the agreed and/ or scheduled working hours; and
- Only the ‘total’ daily working hours of the employees are required to be registered and it is not required to specify the time period/ slots in which the work was performed.
While implementing a new time tracking system or adjusting an existing time registration system, the employers are required to consider the following:
- Information and guidance to the employees before implementation.
- Data protection policy of the company and any amendments needed considering working time registration provisions;
- Changes into employment contracts for self-organisers (i.e., employees exempted from time registration since they have significant freedom and the opportunity to set their own working hours).
Employers should ensure that all employees have access to their own registration information throughout their employment. Further, the employer must store the information for five years after the end of the reference period that forms the basis for the calculation of the employee’s average weekly working hour.
Implication:
Employers need to install/ devise a time tracking system to track the total working hours of the employees of the company after considering all the above points.
__________________________________________________________________________________
Denmark: Thresholds for Intrastat Returns increased from January 1, 2024.
In Denmark, statistical reports called ‘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 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, 2024, are as follows:
- Arrivals threshold: DKK 41 million (previously DKK 22 million)
- Dispatches threshold: DKK 11.3 million (previously DKK 11 million)
Implication:
The businesses will need to follow revised thresholds for submission of Intrastat Returns.
__________________________________________________________________________________
France
France: Social security ceilings and income tax scales for 2024 published.
Effective from January 1, 2024, the French Government has increased the social security ceilings by 5.4% for the year 2024. The following are the revised social ceilings rates for the year 2024:
| Frequency | 2024 Amount in EUR | 2023 Amount in EUR |
| Annual | 46,368 | 43,992 |
| Monthly | 3,864 | 3,666 |
| Hourly | 29 | 27 |
Further, the income tax scales have also been revised considering inflation. In France, the tax scales are used to calculate tax liability taking into account the ‘family quotient’ which depends upon the number of members in the family, whether there is adult or children in the family, etc. The tax scales for 2024 apply to income of the year 2023. The revised tax scales are as under:
| Tax Rate | Tax scale (2024) | Tax scale (2023) |
| 0% | Up to EUR 11,294 | Up to EUR 10,777 |
| 11% | EUR 11,295 to EUR 28,797 | EUR 10,778 to EUR 27,478 |
| 30% | EUR 28,798 to EUR 82,341 | EUR 27,479 to EUR 78,750 |
| 41% | EUR 82,342 to EUR 177,106 | EUR 78,751 to EUR 1,68,994 |
| 45% | Above EUR 177,106 | Above EUR 168,994 |
Implication:
Employer should consider impact of the revised social security ceilings on their payroll.
France: France releases new guidance regarding employer tax due from companies that hire or host foreign nationals.
Employers in France who hired foreign workers had to pay tax as “employer tax” to the French Office for Immigration and Integration under the French immigration code (“CESEDA”). Starting 2024, this tax would be recovered by French tax authorities. This tax does not apply to employees who are nationals of EU, EEA Member States, Switzerland, Monaco, Andorra, and Saint Martin.
In order to attract the international talent due to labour shortages, the French government has made certain relaxations. The significant revisions concerning the hiring of foreign nationals are:
- Starting from 2024, the employers who hire the foreign nationals holding French residence permit (who are exempt from work authorization) are exempt from paying the “employer tax”.
- Previously, employers liable for the tax used to receive invoices after each new hire, leading to multiple payments throughout the year. Now, the tax is paid once annually, streamlining administrative tasks and financial planning.
- The changes to the terms and conditions regarding the declaration and payment of tax by the employer apply to year beginning from January 1, 2023. The initial payment window for the calendar year 2023 opened in February 2024. If the employer is subject to standard tax regime under VAT, Appendix 3310A-SD is to be submitted with VAT return for the month of January 2024 or quarterly return as the case may be. If the employer is subject to simplified VAT regime, Form 3517-S-SD is to be filed with VAT return for the relevant financial year. Where VAT is not applicable the Appendix 3310 A is to be filed by February 25 of the following year.
Implication:
While hiring new foreign employees, employers should follow the new provisions and pay the taxes and report in their VAT returns effective from 2024.
______________________________________________________________________________
France: Relaxes rules for renewal of parental presence leave.
French labour law allows employees the benefit of parental presence leave to take care of child if their child suffers from illness, disability, or serious accident. Employees are entitled to leave for a maximum duration of 310 working days which can be used along the span of maximum 3 years.
In case all the leaves are utilised before the end of this period then the employee is eligible to take further leaves from an additional 310 days of leave to be taken during the new period of 3 years. Such type of renewal is allowed only in case of exceptional events like relapse or recurrence of child’s disease or when the child’s condition still required continuous attention and care.
It is now simpler to renew parental leave before its end as well as exercise the right to benefit from the daily parental presence allowance (“AJPP”) by simply providing the employer with the medical certificate issued by the doctor treating the child. Earlier employee had to obtain explicit permission from the medical control service of employee’s primary health insurance fund or the special Social Security regime, which is now no longer required.
Implication:
The employers need to take note of the newly introduced revision in the leave while structuring their leave policies.
Gibraltar
Gibraltar announces implementation of a Qualified Domestic Minimum Top-Up Tax (“QDMTT”) effective from January 1, 2024.
The Gibraltar Government, through a ministerial statement dated December 19, 2023, has outlined its strategy and timeline for the adoption of the OECD’s Pillar Two Global Anti-Base Erosion (“GloBE”) rules. The strategy involves two stages, with the first stage focusing on reallocating taxing rights and ensuring that large multinational enterprises (“MNEs”) pay taxes where they generate profits, referred to as the Qualified Domestic Minimum Top-up Tax (“QDMTT”). The second stage aims at ensuring a minimum level of taxation globally and preventing multinational companies from shifting profits to low-tax jurisdictions or avoiding taxes altogether, known as the Global Minimum Tax (“GMT”).
The ministerial statement announces introduction of QDMTT effective from accounting periods commencing on or after January 1, 2024. The QDMTT in Gibraltar will apply to subsidiaries established in Gibraltar or permanent establishments of MNEs having a minimum revenue of Euros 750 million in their consolidated financial statements in at least two of the four immediately preceding accounting periods.
The QDMTT applies to subsidiaries or permanent establishments of MNEs whose Ultimate Parent Entity operates in a jurisdiction that has also implemented Pillar Two rules. The necessary legislation related to QDMTT shall be released in the year 2024 only. Further, after December 31, 2024, Gibraltar will continue working towards full implementation of Pillar Two, specifically focusing on the GMT.
Implication:
Multinational enterprises (“MNEs”) with subsidiaries or permanent establishments in Gibraltar should check if they qualify for applicability of QDMTT and if yes, should gear up for new requirement.
Greece
Greece: Greece implements global minimum tax effective from January 1, 2024.
The Greece Government published Law No. 5100/2024, which provides for the implementation of global minimum tax transposing the EU Minimum Tax Directive (Council Directive (“EU”) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union) into law, which was published in the official gazette on April 5, 2024, and effective from January 1, 2024.The provisions introduce 15% global minimum tax rate for companies, that are part of multinational and domestic groups with consolidated annual revenue of at least EUR 750 million.
The provisions include:
- Qualified Domestic Top-up Tax (“QDMTT”) – This domestic top up tax of 15% will apply to qualifying Greek companies and permanent establishments if their foreign operations have an effective tax rate below 15%.
- The legislation also provides for the additional charging mechanism such as the Income Inclusion Rule (“IIR”) and Undertaxed Profit Rule (“UTPR”), which will apply in certain specific circumstances from the following years:
- The IIR will apply to financial years commencing on or after December 31, 2023.
- The UTPR will apply to financial years commencing on or after December 31, 2024. UTPR generally applies, where the ultimate parent company in the group is located in a country that has not introduced the said rules. However, UTPR will be effective for the fiscal years commencing on or after December 31, 2023, where the ultimate parent entity of a group is established in an EU Member State that has opted to defer the global minimum tax rules.
• Taxpayers can elect to apply a temporary safe harbor based on country-by-country reporting.
Implication:
Businesses should take note of changes and comply with them accordingly.
Greece: Increase in monthly minimum wages effective from April 1, 2024.
Effective from April 1, 2024, vide Grek Ministerial Decision No 25058/29.3.2024, the minimum monthly wages are increased from EUR 780 to EUR 830 per month and for skilled worker, the minimum daily wages are increased from EUR 34.84 to EUR 35.07.
Honduras
Honduras: Monthly minimum wages increase effective from January 1, 2024.
On February 26, 2024, Honduras’s Tripartite Table (containing representatives of the Government, business sector and labour sector) has reached an agreement to increase the minimum wages in Honduras between 5.5% and 7% for years 2024 and 2025, depending on the workforce size. The increase is effective from January 1, 2024. The percentage increase in minimum wages is as follows:
| Number of employees | 2024 (%) | 2023 (%) |
| 1-10 | 5.5% | 5.32% |
| 11-50 | 5.5% | 5.5% |
| 51-150 | 6.5% | 6.5% |
| 151 and more | 7% | 8% |
Further, the revised monthly minimum wages are announced for various sectors viz. agricultural, hospital, restaurant, textile sector and transport, storage, and communications sector. Please find below the increase in wages relating to transport, storage, and communications sector:
| Number of employees | 2024 (Amounts in HNL) | 2023 (Amounts in HNL) |
| 1-10 | 11,994.03 | 11,368.75 |
| 11-50 | 12,374.92 | 11,729.78 |
| 51-150 | 14,587.02 | 13,696.73 |
| 151 and more | 16,557.90 | 15,474.67 |
Implication:
The employers should consider the increased minimum wages for the payroll purposes.
__________________________________________________________________________________
Hong Kong
Hong Kong: Starting from 2024 the first weekday after Christmas added as a statutory holiday.
In accordance with the Employment (Amendment) Ordinance 2021, statutory holidays in Hong Kong will gradually increase from 12 to 17 over a period of 9 years, starting from the year 2022 to the year 2030. Consequently, the first weekday after Christmas Day is the newly added statutory holiday starting in 2024. If an employee’s statutory holiday falls on a Sunday, they will be given a holiday the following day.
Implication:
The employer would need to modify employment policies in view of the newly announced statutory holiday for the year 2024 and update their employees accordingly.
Hong Kong: Hong Kong extends deadline for 2023/24 tax returns under the block extension scheme.
Hong Kong Inland Revenue Department (“IRD”), vide circular letter dated March 22, 2024, has announced extensions of the due dates for 2023/24 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, 2023 – November 30, 2023 (For N code returns) | No Extension | No Extension | N/A |
| December 1, 2023 – 31 December 31, 2023 (For D code returns) | August 15, 2024 | September 15, 2024 (1-month further extension for electronic filing) | N/A |
| January 1, 2024 – March 31, 2024 (For M code returns) | November 15, 2024 | December 15, 2024 (1-month further extension for electronic filing) | N/A |
| Current year loss cases for the tax year 2023/24 (for “M” code returns) | January 31, 2025 | January 31, 2025 | Have allowable losses for the year of assessment 2023/24. |
Implication:
Companies filing returns through their tax representatives should take advantage of the extended timeline.
Hong Kong: Budget 2024-25- Highlights.
The Finance Secretary of Hong Kong, Mr. Paul Chan, presented the budget for the year 2024-25 on February 28, 2024. In 2023, Hong Kong witnessed a post-pandemic economic recovery, achieving a growth rate of 3.2%. The budget projects a 2.5% to 3.5% growth in real term for the Hong Kong economy in 2024, with an expected average inflation rate of 2.5%.
The key proposals of the Budget 2024-25 are as under:
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 2023–24 with a ceiling of HKD 3,000 (similar reduction was granted for the tax year 2022–23 but with a higher ceiling of HKD 6,000). The reduction will be reflected in the final tax assessment for the tax year 2023–24.
- The budget introduces two proposals to provide higher deduction for expenses to businesses while calculating profit tax effective from the tax year 2024-25. Accordingly, businesses can deduct expenses for restoring leased premises to their original condition. Further under the existing provisions, businesses can claim tax allowances on industrial and commercial buildings for up to a certain number of years. Now the time-limit to claim this allowance is removed, enabling new owners to claim benefits after a change in ownership.
- In line with the initiative proposed in the previous budget, the Government will submit a legislative proposal in the first half of 2024 to introduce a mechanism incentivizing companies domiciled overseas to relocate to Hong Kong, especially those with a business focus on the Asia-Pacific region.
- Effective from April 1, 2024, business registration fees have been increased from HKD 2,000 to HKD 2,200 per annum. To alleviate its impact, a business registration levy of HKD 150 payable to the Protection of Wages on Insolvency Fund has been waived for two years.
- To encourage innovation and technology sector to engage in more research and development (“R&D”) activities and to create more patented inventions, the Government will submit legislative amendments in first half of 2024 (originally proposed in the budget for 2023-24). These amendments aim to introduce a ‘patent box’ tax incentive through which a reduced tax rate of 5% will apply exclusively to profits earned in Hong Kong from qualifying patents developed through R&D activities.
- The Budget proposes an extension of the 80% and 90% Guarantee Products (government typically guarantees up to 80% -90% of the loan amount) under the SME Financing Guarantee Scheme (“SFGS”) from March 2024 to March 2026, aiming to alleviate financial strain on small and medium-sized firms (SMEs).
- In December 2023, Hong Kong and China jointly released guidelines for standard contract for cross-border transfer of personal information within the Guangdong-Hong Kong-Macao Greater Bay Area. Currently in the first phase, this mechanism is being used by banking, credit referencing and health care sectors. Budget states that it would gradually apply to the other business sectors depending upon the outcome of the implementation of the first phase.
For Individuals
- In Hong Kong, salaries tax is payable at progressive rates based on a taxpayer’s net chargeable income or at the standard rate on their net income (before reduction of allowances), whichever is lower. The budget did not propose any changes to individual tax slabs and rates. However, starting from the tax year 2024-25, the budget has proposed a two-tiered standard rates regime for “salaries tax” and “tax under personal assessment” as outlined below:
| Tax Year 2024-25 | Tax Year 2023-24 | ||
|---|---|---|---|
| Net Income (In HKD) | Standard Rate | Net Income (In HKD) | Standard Rate |
| Up to 5,000,000 | 15% | Any amount | 15% |
| More than 5,000,000 | 16% | Any amount | 15% |
- Budget proposes a 100% reduction of “salaries tax” and “tax under personal assessment” up to a ceiling of HKD 3,000 for the tax year 2023–24 (similar reduction was provided earlier with ceiling of HKD 6,000 for tax year 2022-23). This will be reflected in the final tax payable for the tax year 2023-24.
Other Proposals
- Property tax concessions:
Under the property tax regulations (known as ‘Rating system’), a property tax (‘rate’) is payable at a specified percentage of the assessed rateable value of the property i.e., estimated annual rental value of the property. The government considers, on an annual basis, granting of rates concession based on the prevailing circumstances. The Government has proposed the following measures:- The budget proposes a rate concession for domestic and non-domestic (including offices) properties only for the first quarters of the tax year 2024–2025, subject to a ceiling of HKD 1,000 (in 2023 the concession was HKD 1,000 per quarter for the first two quarters).
- Starting from the fourth quarter of 2024-25 i.e., January to March 2025, the budget proposes a progressive rating system for domestic properties (excluding public rental housing), replacing flat rate of 5% of rateable value. The progressive rates concessions will be in the range of 5% – 12% based on the annual rateable value of the property.
- The government has eased restrictions on residential property transactions by abolishing the Buyer’s Stamp Duty (“BSD”), which was imposed on buyers who are not Hong Kong permanent residents, and the New Residential Stamp Duty (NRSD) for second-time purchasers. Additionally, homeowners are no longer required to pay a Special Stamp Duty (“SSD”) on the resale of residential property within two (2) years from the date of acquisition.
- Budget proposed to increase duty on cigarettes by 80 cents per stick with immediate effect. An increase in the same proportion will be made for the other tobacco products also.
- Phase 1 of Project ‘mBridge,’ a multi-central bank digital currencies (“CBDC”) platform developed to facilitate real-time cross-border payments and foreign exchange transactions, is expected to be launched this year. It aims to become one of the pioneering projects globally, enabling cross-boundary transactions for corporates using CBDCs.
- The first registration tax (“FRT”) concessions for electric vehicles will be extended from March 2024 to March 2026. However, the budget proposes a 40% reduction in concession considering lower prices and increased options of electric vehicle. The maximum FRT concession for general electronic private cars (e-PCs) under the ‘One for One Replacement’ Scheme is set at HKD 172,500, and for general e-PCs the ceiling is lowered to HKD 58,500. Moreover, E-PCs valued at over HKD 500,000 before tax will not be eligible for concessions, following the ‘affordable users pay’ principle.
- Budget proposes the hotel accommodation tax at a rate of 3% per cent starting from January 1, 2025 (waived from July 1, 2008).
Implication:
Businesses should note the increase in business registration fees. They should evaluate the impact of changes on their tax liabilities.
Hungary
Hungary: Thresholds for Intrastat returns increased effective from January 1, 2024.
In Hungary, 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 Hungary i.e., ‘dispatches,’ and goods brought into Hungary 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, 2024, are as follows:
- Arrivals threshold: HUF 270 million; (previously HUF 250 million)
- Dispatches threshold HUF 150 million; (previously HUF 140 million)
Implication:
The businesses will need to follow revised thresholds for submission of Intrastat returns.
Hungary: Hungary amends progressive retail turnover tax rates effective from January 1, 2024.
Hungary enacted Law LXXXIII of 2023, which was published in the official gazette on November 30, 2023. The Law amends the progressive retail turnover tax rates for the year 2024 as follows:
| Net Annual Turnover (in HUF) | 2024 Tax rates | 2023 Tax Rates |
| Up to 500 million | 0% | 0% |
| Over 500 million up to HUF 30 billion | 0.1% | 0.15% |
| Over HUF 30 billion up to 100 billion | 0.4% | 1% |
| Over HUF 100 billion | 2.7% | 4.1% |
The retail turnover tax is in addition to value added tax (“VAT”) payable by the retailer. The retail tax applies to traditional retail sales in physical stores as well as electronic sales via websites. Foreign entities having no permanent establishment in Hungary but distance selling goods to Hungarian customers are also subject to retail turnover tax. The rule covers all retailers and e-commerce, including retailing food, beverages, tobacco, pet food, electronics, household goods, books, sporting goods, toys, clothing, furniture etc. The tax is calculated on the basis of annual net turnover (excluding VAT), regardless of whether the trader is profitable or loss-making.
Implication:
Retailers in Hungary should take note of the amended retail turnover tax rates.
India
India: Five-Month extension granted for employers to upload wage details for employees seeking higher pensions, deadline now set for May 31, 2024
The Employees’ Provident Fund Organisation (“EPFO”) has extended the deadline for employers to submit wage details online for employees seeking higher pension benefits, by an additional five months, from December 31, 2023, to May 31, 2024. This extension applies to employees who have retired on or after September 1, 2014, and are eligible to exercise an option to receive pension on wages higher than the cap provided under employee pension scheme, 1995 (EPS-1995). Employees who were part of EPS-1995 before September 1, 2014, and had not retired before September 1, 2014, can be eligible for contribution towards pension at 8.33% of the actual salary instead of the cap amount. Thus, they had an option to receive pension on higher wages as compared to cap amount. However, this option was removed with effect from September 1, 2014. Many employees had filed a petition before the Supreme Court for receiving higher pension based on contribution made on the actual salary amount and the Court rendered a decision in October 2022.
In compliance with the Supreme Court order dated October 2022, EPFO initially launched an online facility on February 26, 2023, for uploading wage details online related to higher wage pensions. Initially set to conclude on May 3, 2023, the timeline for the online facility has been extended several times, with the latest extension set to May 31, 2024, due to the pending processing of applications numbering over three lakhs.
Implication:
Employers should prioritize and expedite the validation of wage details for employees eligible to seek higher pension benefits, by uploading the necessary information online by May 31, 2024.
India: Finance Act 2024 – Highlights
On February 1, 2024, the Finance Minister of India, Ms. Nirmala Sitharaman presented the interim budget before the Parliament. As this is an election year, the interim budget does not contain any significant tax related changes and a full-fledged budget will be presented after the formation of new government after the elections. Further, the Ministry of Law and Justice notified the Finance Act, 2024 on February 15, 2024, consequent to the passing of Finance Bill, 2024 in the Parliament.
There are no changes in Personal Income tax slabs and rates. The tax rates applicable for FY 2024-25 are same as applicable for FY 2023-24. There is no change in corporate income tax rates (“CIT”) including rates applicable for optional or special tax regime. The Finance Act has not extended the last date for commencing the manufacturing in case of new manufacturing companies claiming concessional rate of tax of 15%. Such date continues to be March 31, 2024.
The period provided for incorporation of eligible start-ups for claiming tax exemption is extended from March 31, 2024, to March 31, 2025. The eligible start up can claim 100% tax exemption for 3 consecutive assessment years out of 10 years beginning from the year of incorporation, at the option of the taxpayer, subject to certain conditions. More details on the proposals of the Finance Bill, 2024 can be accessed here.
Ireland
Ireland: Extension of child benefit to 18-year-olds effective from May 1, 2024, who are in full time education or having a disability.
Currently, child benefit provides financial assistance to children under the age of 16, offering a monthly payment of EUR 140 per child (irrespective of household income levels), which is not taxable. The benefit is disbursed to the primary caregiver, including mothers, stepmothers, fathers, or stepfathers, based on the child’s living arrangements.
Minister for social protection announced extension of age limit from 16 years to 18 years for the child benefit, effective from May 1, 2024. Accordingly, the child benefit is extended to children aged 18, who are in full-time education or who have a disability up until their 19th birthday. Full-time education includes primary and post-primary schools, further education and training courses, and third-level courses. However, this does not include courses that are part of an employment, apprenticeship or work experience programme which arise from the employment.
Implication:
Businesses should adjust their policies to accommodate employees with eligible children, ensuring compliance with updated regulations.
Italy
Italy: Italy introduces a biennial preventive agreement to simplify tax obligations for small taxpayers, along with stricter requirements for VAT representatives in Italy, and new registration requirements in the EU VIES for non-EU taxable persons, effective from February 22, 2024.
Legislative Decree No.13 of February 12, 2024, aimed at (i) introduction of biennial preventive agreement- an innovative mechanism designed to simplify tax obligations for small taxpayers, and (ii) stringent requirements for VAT representatives in Italy, as well as new requirements regarding registration in the European Union (“EU”) VIES (VAT Information Exchange System) by non-EU taxable persons. The changes are effective from February 22, 2024.
The two-year preventive agreement aims to support small taxpayers in Italy, including individuals, partnerships, and similar entities, as well as those earning from business or self-employed income from arts and professions. To qualify for this agreement, taxpayers must have no tax debts for the relevant fiscal year or have settled debts exceeding Euro 5,000, including interest and penalties.
Exclusion criteria that preclude the application are as follows – (i) failure to file tax returns for at least one of the three preceding fiscal years, (ii) conviction for specific tax crimes or related offenses within the last three fiscal years, or (iii) commencing the activity in the fiscal year immediately before the one covered by the proposal.
The agreement provides a proposal from the Italian Revenue Agency for the two-year settlement of the income derived from the business or profession for the purposes of direct taxes and of the value of net production for the purposes of Regional Tax on Productive Activities (“IRAP”).
Upon acceptance, a taxpayer is required to report the agreed amounts of income in their tax returns for the covered fiscal years and fulfil various filing and disclosure obligations. The benefits of the agreement are potential exemption from tax assessments for covered fiscal years, with the option to renew the agreement for the following two-year period subject to fulfilling the eligibility criteria.
The Decree also imposes new responsibilities on Italian fiscal representatives of non-EU businesses. These representatives are now jointly liable with their represented companies and must ensure the accuracy and completeness of information and documents provided by the non-EU company before applying for its Italian VAT registration. They are required to meet certain conditions to demonstrate their trustworthiness, including having no previous convictions for tax crimes and submitting a guarantee in favour of the Italian Tax Authority. Fulfilment of these obligations is necessary for the inclusion of the Italian VAT number of non-EU represented companies in the VAT Information Exchange System (“VIES”) database and for intra-EU supplies to and from Italy. The VIES is a search engine in the EU that enables companies to confirm the VAT numbers of their trading partners and enables EU tax administrations to monitor and control the flow of intra-community trade.
Implication:
Businesses need to carefully assess their eligibility and choose the appropriate tax agreement option. Additionally, businesses employing VAT representatives must ensure compliance with new joint liability requirements, aimed at guaranteeing accurate documentation and avoiding penalties, facilitating inclusion in the VIES database for seamless intra-community trade.
Italy: Italy introduced new rules for the expatriate regime effective from January 1, 2024.
Italy implemented new regulations for the expatriate regime starting January 1, 2024, through Law No. 301, published in the Official Gazette on December 28, 2023. Under these provisions, highly skilled or specialized employees or self-employed individuals relocating their tax residency to Italy, will qualify for a 50% (60% in specific cases) tax reduction for a maximum of five years. The amount of income eligible for relief is capped at EUR 600,000. To avail the benefit, the said employees need not be resident in Italy in the previous three years and maintain tax residency in Italy for at least five years. Special rules apply to employees working in Italy for the same employer that employed them before moving to Italy or an employer in the same group.
Implication:
The new expatriate regime in Italy offers businesses, the opportunity to attract highly skilled talent while potentially reducing their tax burdens, enhancing competitiveness and innovation.
Israel
Israel: E-invoicing implementation postponed until May 5, 2024.
As announced under the 2023/2024 State budget plan, Israeli authorities had planned to adopt the Continuous Transaction Controls (“CTC”) system for real-time submission and approval of invoices above NIS 25,000 in B2B transactions with effect from January 1, 2024. Under the CTC system, businesses must obtain an allotment allocation number from the tax authority, without which the input tax deduction will not be allowed.
The implementation of the electronic invoicing (e-invoicing) is further postponed until May 5, 2024. During this period, all invoices above NIS 25,000 will still be able to claim VAT tax without the need for an allocation number. However, companies would be able to request for allotment number if their systems are ready on voluntary basis.
The Israeli Ministry of Finance, has planned to implement the e-invoicing system in phased manner in accordance with the invoice’s value as follows:
- May 5, 2024: all invoices over NIS 25,000
- January 1, 2025: invoices over NIS 20,000
- January 1, 2026: invoices over NIS 15,000
- January 1, 2027: invoices over NIS 10,000
- January 1, 2028: invoices over NIS 5,000
Implication:
The revision to the schedule aims to provide businesses additional time to prepare for the mandatory use of electronic invoices. Businesses should prepare their systems and processes to fulfil the new requirements.
Israel: Tax Authority updated thresholds for invoicing and VAT reporting for 2024.
The Israel Tax Authority published several updates related to VAT reporting, invoicing, and penalty.
The changes described below are effective from January 1, 2024, unless stated otherwise:
- The turnover threshold for exempt dealer set at NIS 120,000;
- To demand invoices from seller by the VAT registered buyers the value should exceed NIS 338;
- Purchase value threshold of NIS 27,183 would trigger additional VAT requirements;
- The threshold for periodic reporting of specified input tax surplus amounts is NIS 20,279;
- Penalty for late reporting, will be NIS 233 for every two weeks effective July 1, 2024.
- Penalty of 1%, with a minimum of NIS 350 will be levied, for inadequate recordkeeping, effective from July 1, 2024.
Implication:
Companies should take note of various new thresholds and ensure compliance to avoid penal consequences.
Israel: Tax Authority introduce digital system to facilitate employee termination process effective from January 2024.
In order to ease the termination process, the Israel Tax Authority (“ITA”) has introduced a digital system through which employers can report the resignation or retirement of an employee and complete the administrative formalities smoothly. This new system is established by the SAO Unit and the Assessment and Audit Division of the Tax Authority in association with the National Digital System and the Capital Market, Insurance and Savings Authority.
Key highlights of this new digital system are as follows:
- The new system will avoid errors in reporting and make available the past data easily to the employees at any point of time;
- The new system will simplify the process of making payments including severance pay for the employers as well as employees who can make decisions about the compensation money digitally.
- The termination formalities will be completed through online process quickly, without any errors.
The digital system was developed with user experience in mind and includes comprehensive and easy-to-understand explanations regarding the implications of the decisions made by the employee regarding the compensation funds.
Implication:
The employers should take advantage of the new system and procedure established by the ITA and inform the employees of the change made in the employment termination process.
Israel: Israel Tax Agency extends deadline for annual tax withholding reports for tax year 2023.
On March 4, the Israeli Tax Authority extended the filing deadline of reports on withholdings from salary and wages (Form 0126), and from payments other than salary and wages (Form 0856) for tax year 2023, from April 30, 2024, to May 31, 2024.
The announcement also provides:
- guidelines for transmitting annual reports, including submission confirmations;
- the registration and identification process; and
- clarification that reports transmitted and approved online in the approval system by June 30, 2024, will be considered timely submitted.
Japan
Japan: Gradual increment in the employment rate for persons with disabilities effective from April 1, 2024.
Effective from April 1, 2024, the legal employment rate for people with disabilities in companies has increased from 2.3% to 2.5%. Thus, as of April 1, 2024, companies with 40 or more employees are now required to employ at least one person with disabilities. Earlier, this requirement applied to companies having more than 43 employees. From July 2026 onwards, the legal employment rate for people with disabilities will be further raised to 2.7%.
Implication:
Companies with 40 or more employees should adhere to the requirement of employing at least one person with disabilities.
Japan: Japan amends Labor Standard Ordinance effective from April 1, 2024, revises employer obligations regarding notification related to workplace and duties and notification of entitlement of fixed term employees.
Article 15 of the Labor Standards Act (“LSA”) of Japan, which deals with ‘making the working conditions explicit,’ mandates employers to clearly notify employees about specific terms and conditions of employment. Recently, Japan amended the Ordinance for Enforcement of the Labor Standards Act (Ordinance) bringing in changes to the notification requirement. These amendments are effective from April 1, 2024.
The key amendments are explained below:
- Mandatory notification of possible changes in workplace and duties:
As per the provisions of the Ordinance, employers must clearly inform employees about their workplaces and duties immediately upon hiring. The amended Ordinance now requires employers, upon hiring employees, to provide notice to employees about all possible changes in their workplaces and duties throughout their employment. Thus, where the employer specifies a limited scope of changes in the notice regarding workplace and duties, these limitations would form part of the employment contract thereby limiting the ability of the employer to unilaterally alter the employee’s workplace and duties beyond the agreed scope.
- Increased responsibilities on conversion of fixed-term to indefinite-term employment:
As per the Labor Contract Act, a fixed-term employee has the right to apply for a conversion from fixed-term employment to indefinite-term employment if he has provided services to the same employer for more than five years. The amended ordinance mandates the employers to inform fixed-term employees with five or more years of tenure about their entitlement to apply for such conversion. Additionally, they should also be informed about the factors that would be considered in determining the terms of their employment on such conversion.
- Maximum number of contact renewals and total contract period:
Under LSA, employers are required to provide clear notice regarding the criteria for renewing a fixed-term employment contract. The amended Ordinance introduces an additional obligation to provide clear notification of both the maximum number of contract renewals and the total employment period under such renewed contracts. In case of changes into these details in future, the employer is required to provide a detailed explanation for the same.
Implication:
Employers should immediately take note of the additional obligations above and take necessary steps to comply with them.
Japan: Tax Reform for 2024.
On December 14, 2023, tax reforms for the financial year (“FY”) 2024 (April-March) were announced and the legislation was passed on March 28, 2024. The highlights of the tax reforms for the FY 2024 are as follows: –
- Corporate Taxation
- Introduction of Innovation Box regime
Blue tax filing companies are entitled to a 30% income deduction from qualifying income from intellectual properties for a period of seven years starting from April 2025.
- Tax credit for companies:
The tax credit rates for companies mentioned below have been extended for a period of three years from April 1, 2024, to March 31, 2027, as follows: –- Reduced general tax credit rate to 10% (originally it was 15%).
- Company is eligible for additional tax credits if it increases the wages of their employees. The higher the increase in wages, the greater the tax credits they can receive. For example:
- If a company increases wages by at least 4%, it will receive additional 5% tax credit.
- If a company increases wages by 5%, it will receive additional 10% tax credit.
- And if a company increase wages by 7% or more, it will receive the tax credit of 15%
- Additional 5% credit would be available to companies that increase training costs for employees by at least 10% compared to the previous financial year, if the training cost is greater than 0.05% of the wages paid to all employees.
- Revision in size-based criteria for enterprise tax
- As per the existing criteria, companies are subject to size-based taxation under the enterprise tax (local corporate tax) where their stated capital is JPY 100 million or more. Effective April 1, 2025, if a company that was subject to size-based enterprise tax in the previous year reduces its capital below JPY 100 million in the current year, it will remain subject to size-based enterprise tax if the total of its capital and capital surplus exceeds JPY 1,000 million.
- Consumption Tax
- When foreign enterprises offer digital services, such as online advertising, and cloud services (excluding few digital services exclusively for businesses) through a digital platform and receive compensation exceeds JPY 5 billion within a tax period via platform operator, then these platform operators would be required to submit consumption taxes on behalf of foreign digital services businesses to the Japan Tax Authorities. These provisions would be effective after April 1, 2025.
Additionally, it is proposed to amend provisions related to global minimum tax in line with OECD’s guidance in this respect.
- Individual income taxation
- Effective from June 2024, fixed tax reduction of JPY 30,000 for income tax and JPY 10,000 for resident tax for a total of JPY 40,000 has been decided for those with an annual income of JPY 20 million or less.
Implications
Companies should check their eligibility for tax credits. Employers should evaluate impact of tax reductions from income tax and resident tax on their payroll processes.
Malaysia
Malaysia: Effective from March 1, 2024, service tax rate is increased from 6% to 8%.
As announced in the 2024 Malaysian Budget speech, effective March 1, 2024, the service tax rate on all taxable services, including digital services provided by foreign registered persons, has increased from 6% to 8%, in accordance with the provisions of the Service Tax Act of 2018. However, certain categories such as food and beverage, telecommunications, and parking services are exempted from this adjustment. Additionally, specific services such as credit card and permanent charge card services will continue to be taxed at a fixed rate of RM25 per year.
Furthermore, on February 26, 2024, new services have been brought under the umbrella of service tax, including karaoke centres, maintenance or repair services, non-financial brokering and underwriting services, and logistics services, with varying tax rates ranging from 6% to 8%.
Implication:
Companies should adjust their pricing structures to reflect the higher service tax rate and update their billing and invoicing systems to ensure that the service tax is accurately applied.
_________________________________________________________________________________
Malaysia: Companies (Amendment) Act 2024 is effective from April 1, 2024.
Malaysia amended the Companies Act 2016 (principal act) through the Companies (Amendment) Act 2024 (amended act) which was gazetted on February 2, 2024, and came into effect on April 1, 2024. The highlights of the amended act are as follows:
- Beneficial ownership
- The term “beneficial owner” (“BO”) with respect to a company is now defined as a natural person who ultimately owns or controls a company and a person who exercises ultimate effective control over a company. Earlier definition was narrower in scope.
- The amended act introduces a requirement for companies under the principal act to maintain a register of BO. Earlier such requirement was codified in the guidelines issued by the Companies Commission of Malaysia (“CCM”).
- The register of BO of the company is required to be kept at the registered office of the company or any other place in Malaysia as notified to the CCM.
- Companies are now required to inform the CCM of any changes relating to registered BO within 14 days of recording in the register. All the information is to be updated through the e-BOS system, a designated online platform.
- Companies are required to acquire information regarding their BO or validate the accuracy of information from any individual whom the company knows or suspects to be a BO of the company.
- Individuals qualified as BO bear the responsibility of self-reporting their status to the company and promptly notifying changes to their particulars. A failure to adhere to these reporting duties constitutes an offense under the Act.
Penalties are also introduced for the company and every officer in default, with fines of up to RMB 20,000 and a further fine of up to RMB 500 for each day in the case of a continuing offense.
- Additional information for registration as foreign companies
Through the amended act, a foreign company is required to provide the details of its BO for the registration as a foreign company under the principal act.
- Inclusion of beneficial owner information in annual return
Annual return of companies, including foreign companies, is now required to include details of BO and the address at which the BO register is kept if it is not kept at the registered office.
Additionally, the amended Act also introduces certain provisions regarding reconstruction of companies, a scheme of arrangement and corporate rescue mechanism.
Implication:
Starting from April 1, 2024, Companies are required to comply with the beneficial ownership related compliances and need to include the related information while preparing the annual return.
Morocco
Morocco: Effective from February 14, 2024, non-resident digital service providers are liable for Value-Added-Tax in Morocco.
The Finance Law of 2024 introduced amendments to value-added tax (“VAT”) rules, whereby non-resident companies offering digital services to clients in Morocco are required to register for VAT. These digital services include software and application provision and updates, digital content delivery (such as music, films, online games, and images), remote training, consulting, support services etc., all of which can only be delivered via information and telecommunications networks. Effective from February 14, 2024, non-resident companies providing digital services in Morocco, even without physical presence, are subject to the following obligations:
Obligations for non-resident digital service providers:
- Registration with Moroccan tax authorities through electronic platform and the need to obtain tax identification number.
- Disclosure of monthly earned revenue and payment of VAT.
- Maintenance of electronic register of digital service provided in Morocco, which shall be accessible to the Moroccan tax authorities for 10 years.
Implication:
Effective from February 14, 2024, non-resident digital service providers operating in Morocco are required to register with the Moroccan taxation authority and fulfill other obligations as mentioned above.
Peru
Peru: Peru introduced 5 days of paid bereavement leave for employees in private sector.
Peru Government through its Supreme Decree No. 013 -2023 TR (regulation) published on December 24, 2023, introduced paid bereavement leave for employees in private sector, on account of death of direct family member including spouse, parents, siblings for a period of 5 days from the day of such death. When the death occurs at a place other than the place of work, the leave will be extended allowing the employee to travel as per General Table of Distance Terms approved under the legislation. The employee is required to apply for this leave and submit a proof of relationship with the deceased at the end of the leave.
Implication:
Employers should provide paid bereavement leave to the eligible employees, make necessary changes in their policies/ employment contracts, and establish administrative procedures for application and documentation of such leaves provided.
Poland
Poland: Poland announced revised thresholds for small taxpayers and social security contribution caps, effective from January 1, 2024.
- In Poland, the threshold of PLN equivalent of EUR 2 million applies to small taxpayers for the reduced corporate tax rate, the simplified VAT regime, and the simplified flat-rate tax. The threshold for the investment incentive deduction is PLN equivalent of EUR 50,000. PLN equivalent values are determined by an exchange rate specified by Poland’s National Bank on the first working day of October in the previous year, rounded off to the nearest thousand. The exchange rate on October 2, 2023, was PLN 4.6091, i.e., reduced from the exchange rate of PLN 4.8272 in the previous year. Accordingly, thresholds in PLN equivalent set for 2024 are as follows:
| Description | 2024 and 2023 (EUR) | 2024 (PLN) | 2023 (PLN) |
| Revenue threshold for small taxpayers for reduced corporate tax rate (inclusive of VAT) | 2 million | 9,218 million | 9,654 million |
| Revenue threshold for simplified flat-rate tax applicable to small taxpayers | 2 million | 9,218 million | 9,654 million |
| Supply threshold applicable to small taxpayers for simplified VAT regime | 2 million | 9,218 million | 9,654 million |
| Investment incentive deduction for acquisition of fixed assets for small taxpayers and newly established businesses | 50,000 | 230,000 | 241,000 |
- Additionally, the social security contribution caps are increased from PLN 208,050 (2023) to PLN 234,720 for 2024 calculated at 30 times the estimated average salary of PLN 7,824. This cap applies to contributions to pension (retirement) and disability funds by both employers and employees.
Implication:
Small taxpayers should take note of the revised thresholds to reassess their eligibility for tax incentives and compliance with VAT regulations, impacting their overall tax planning.
The employer needs to consider these revised social security contributions caps for processing the payroll.
Singapore
Singapore: Budget 2024 – Highlights
On February 16, 2024, the Finance Minister, Lawrence Wong delivered the Budget speech for the year 2024.
The key proposals of the Budget 2024 are as under:
- Corporates/Businesses
- There are no changes proposed in corporate tax rates. The standard corporate tax rate in Singapore is 17%. The tax year followed in Singapore is calendar year. The corporate tax is assessed on a preceding year basis (i.e. “basis period”). Hence, the income earned in the basis period is assessed to tax in subsequent year (i.e. year of assessment “YA”).
- Introduction of ‘Enterprise Support Package’, aiming to aid businesses in managing escalating costs by offering a comprehensive set of measures. The package provides SGD 1.3 billion in support to companies altogether and includes three key components viz., (i) Corporate income tax rebate, (ii) Enhancements to the enterprise financing scheme, and (iii) Extension of the skill’s future enterprise credit, which are elaborated as below:
- Corporate income tax (CIT) rebate:
- A CIT rebate of 50% of tax payable is proposed for the YA 2024, capped at SGD 40,000. Along with this, companies meeting the “local employee condition” i.e., contributing to Central Provident Fund (CPF) for at least one local employee (Singapore citizen or permanent resident) in 2023 subject to certain exclusions, will receive a minimum SGD 2,000 benefit in cash, termed as “CIT Rebate Cash Grant.”
- Enterprise financing scheme (EFS):
- The EFS is extended for one more year i.e., till March 31, 2025 (in the previous Budget it was extended till March 2024), which provides trade loans of SGD 10 million. The EFS scope broadened with the aim of including Smaller and Medium Enterprises (SME) with an increase in limits of working capital loan from SGD 300,000 to SGD 500,000.
- Skills Future Enterprise Credit (SFEC):
- The Budget proposes to extend SFEC scheme introduced in Budget 2020, until June 20, 2025. The SFEC encourages employers to undertake enterprise and workforce transformation initiatives, providing eligible companies with a one-time credit of up to SGD 10,000. This credit covers up to 90% of out-of-pocket expenses for qualifying enterprise capability development and workforce transformation programs, with SGD 3,000 specifically allocated for workforce transformation efforts.
- The Budget 2024 introduces significant changes to corporate tax considering Base Erosion and Profit Shifting (“BEPS” 2.0) initiative, a project led by Organization for Economic Co-operation and Development (“OECD”). BEPS has 2 pillars/approaches. Pillar 1 aims to ensure businesses pay taxes in jurisdictions where they earn profits, irrespective of their physical presence in the jurisdiction by re-allocating taxing rights to marketing jurisdictions. The implementation of Pillar 1 is delayed currently. Pillar 2 introduces a global minimum effective tax rate of 15% for large multinational enterprises (MNE) groups with consolidated annual revenues of EUR 750 million or more. In light of the global developments and introduction of Pillar 2 minimum tax in many jurisdictions, Singapore intends to implement Global Anti-Base Erosion (“GloBE”) rules of Pillar 2 of BEPS 2.0 from 2025. The Budget proposes to introduce two components of Pillar 2 namely, Income Inclusion Rule (IIR) and Domestic Top-up Tax (DTT) from January 1, 2025, which will apply to MNEs with global turnover of minimum EUR 750 Mn. The IIR will be applicable to MNEs headquartered in Singapore in respect of the profits of their group entities operating outside of Singapore. The DTT will be applicable to MNEs headquartered outside Singapore in respect of the profits of the group entities operating within Singapore.
- The Budget proposes introduction of Refundable Investment Credit’ (RIC), in which additional revenues obtained from global minimum tax will be re-invested by Singapore to stay competitive. It is a tax credit with a refundable cash feature. It will help in attracting investments from global companies. It will support high-value and substantive economic activities, including the setting up or expansion of manufacturing facilities; new innovation and R&D activities; as well as activities in support of the green transition. The RIC will support up to 50% of qualifying expenditure and can offset corporate tax payable or be refunded within four years from when the company meets the eligibility criteria for cash refund. More information on RIC will be available by the third quarter of 2024.
- Effective from YA 2025, the tax deduction for ‘Renovation or Refurbishment’ (“R&R”) expenditure will undergo significant enhancements. Under the current provisions, businesses can claim tax deduction for R&R expenses over 3 years with a cap of SGD 300,000. The changes in the deduction are as below:
- The scope of qualifying expenditure to cover designer or professional fees;
- The relevant three-year period for computing the R&R expenditure cap will be fixed, with the initial period spanning from YA 2025 to YA 2027; and
- Introducing an option to accelerate the R&R expenditure claim within a single YA, subject to the prevailing expenditure cap.
Further details on these enhancements will be provided by the Inland Revenue Authority of Singapore (IRAS) by the third quarter of 2024.
- Employers
- Effective from January 1, 2025, the Budget proposes a total increase of 1.25% in CPF contribution rate for senior workers aged between 55 to 65 years of age, including increase of 0.5% in the employer’s contribution.
- Certain measures are introduced for uplifting of lower wage workers, namely:
- The Budget 2022 introduced a ‘Progressive Wage Credit Scheme’ (PWCS) to co-fund employers, for progressive wage increases for lower-wage workers (i.e. earning below SGD 3,000 per month). The current Budget proposes to increase the Government co-funding levels from maximum of 30% to maximum of 50%, and also proposes increase in gross monthly wage ceiling for PWCS co-funding from SGD 2,500 to SGD 3,000 in qualifying years 2025 and 2026.
- The minimum ‘Local Qualifying Salary’ (LQS) for entities hiring foreign workers is increased from SGD 1,400 to SGD 1,600 per month for full time workers and from SGD 9 to SGD 10.50 per hour for part time workers, effective from July 1, 2024. The computation quota of foreign workers will be adjusted with new LQS.
- The qualifying wage cap under the ‘Workfare Income Supplement Scheme’ is increased from SGD 2,500 to SGD 3,000 effective from January 1, 2025, and increased workfare payout for lower-wage senior workers from SGD 4,200 up to maximum annual payout of SGD 4,900.
- Individuals/Employees
- The tax year in Singapore followed by individuals is the calendar year. An individual’s income from a previous calendar year is assessed to tax in the following calendar year (i.e. year of assessment, “YA”).
The Budget 2022 introduced two new income bracket tiers viz. 23% and 24%, which took effect from YA 2024. In the current Budget, there are no changes proposed in the personal income tax rates. The personal income tax rates applicable to residents for FY 2023 and 2024 (i.e. YA 2024 and 2025), are as follows:
| 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 120,000 | 11.50% |
| 120,001 to 160,000 | 15.00% |
| 160,001 to 200,000 | 18.00% |
| 200,001 to 240,000 | 19.00% |
| 240,001 to 280,000 | 19.50% |
| 280,001 to 320,000 | 20.00% |
| 320,001 to 500,000 | 22.00% |
| 500,001 to 1,000,000 | 23.00% |
| Above 1,000,000 | 24.00% |
- In view of cost-of-living concerns, the Budget proposes personal income tax rebate for Singaporean residents for YA 2024 up to 50% of tax payable with the maximum limit of SGD 200.
- Effective from YA 2025, there is an increase in the annual income threshold from SGD 4,000 to SGD 8,000 for dependant related reliefs.
- The Budget proposes discontinuation of course fees (including tuition and examination fees) benefit of up to SGD 5,500 from YA 2026 relating to approved academic, professional, or vocational qualifications.
- The Budget proposes one-time MediSave bonus of up to SGD 300 to all Singaporeans aged between 21 to 50 years.
- Goods and Services Tax (GST)
The GST rate is increased from 8% to 9%, effective from January 1, 2024. There are no changes proposed to GST rates in this Budget.
- Others
- The Budget has proposed the introduction of Overseas Humanitarian Assistance Tax Deduction Scheme (“OHAS”), which will be piloted from January 1, 2025, until December 31, 2028. Currently, there is no tax deduction for overseas cash donations unless qualify under Philanthropy Tax Incentive Scheme for Family Offices (“PTIS”). Under the new OHAS, both individual and corporate donors will receive a 100% tax deduction for qualifying overseas cash donations made through a designated charity towards emergency humanitarian assistance fundraisers, provided the charity holds a valid permit/ approval for the purposes. Tax deductions are capped at 40% of the donor’s statutory income, jointly with deductions under the PTIS. Any unused tax deductions cannot be carried forward or transferred under the Group Relief System. Additional details on OHAS will be furnished by the IRAS by the second quarter of 2024.
- Tax incentive schemes for funds managed by Singapore-based fund managers, known as “Qualifying Funds,” were initially set to expire after December 31, 2024. However, these schemes will now be extended until December 31, 2029.
Implication:
Individuals and companies should a take note of budget changes, monitor further developments and implement accordingly.
__________________________________________________________________________________
South Africa
South Africa: Minimum hourly wage increased to ZAR 27.58 per hour effective from March 1, 2024.
Effective from March 1, 2024, the Employment and Labour Ministry of South Africa increased the minimum wages by 8.5% to ZAR 27.58 per hour from ZAR 25.42 per hour.
__________________________________________________________________________________
South Africa: Revised annual earnings threshold to be effective from March 1, 2024.
South Africa has revised the annual earnings threshold for the year 2024 by 5.5% from ZAR 241,110.59 to ZAR 254,371.67 effective from March 1, 2024.
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 subject to fulfilment of certain conditions.
Implication:
Employers should evaluate if any of their employees qualify for benefits under various labor laws mentioned above due to increase in earnings threshold and take necessary actions for ensuring compliance.
South Africa: Highlights of National Budget 2024.
On February 21, 2024, the Finance Minister of South Africa announced the National Budget for the year 2024. The proposals would apply for tax year beginning from March 1, 2024, unless specified otherwise.
The key proposals announced in the National Budget are as follows:
- Starting from March 1, 2026, manufacturers may claim 150% of qualifying investment for production of electric and hydrogen-powered vehicles. This can be claimed in the first year of investment.
- The government proposed the implementation of the Global Minimum Tax (“GMT”) effective from January 1, 2024, through draft Global Minimum Tax Bill. The provisions would ensure that companies that are part of multinational and domestic groups with consolidated annual revenue of at least EUR 750 million are subjected to effective tax rate of 15%. Domestic Minimum Top-up Tax (“DMTT”) and Income Inclusion Rule (“IIR”) will be introduced consecutively.
- It is proposed to increase the per liter carbon fuel tax on petrol and diesel to ZAR 0.11 and ZAR 0.14 per liter respectively from April 3, 2024.
- It is proposed that two pot retirement system will become effective from September 2024 with saving component and retirement component. The retirement fund member would have access to savings fund even prior to retirement.
There are no changes to Personal Income Tax (“PIT”) rates and slabs in the year 2024.
Implication:
Companies should evaluate if the budget proposals have an impact on their business and profitability and make necessary changes.
__________________________________________________________________________________
South Africa: Ministry of Finance revises the mileage rate for 2024.
The South African Revenue Service (“SARS”) increases the tax free per kilometer mileage rate from ZAR 4.64 to ZAR 4.84.
Employer can reimburse employees more than this rate, however in that case, the exceeded amount has to be included in the remuneration for withholding purposes.
The above rates will apply for the period from March 1, 2024, to February 28, 2025, for determining the allowable deduction for business travel against an allowance where travel expenses are not reimbursed.
Implication:
Employers should take note of the revised mileage rates to determine taxability of the travel allowance or reimbursement of the travel expenses while compensating employees for using their vehicle for business journeys.
South Korea
South Korea: Enacts tax reform for 2024, introduces additional obligations for multinational entities to submit supplement transfer pricing documentation.
Following the passage by the National Assembly on December 21, 2023, the South Korea’s tax reform 2024 stand enacted on December 31, 2023. The tax amendments are generally effective from the financial year starting on or after January 1, 2024, unless otherwise specified.
The highlights of the amendments are as follows:
- Previously, multinational entities (“MNEs’) required to submit a Master File and Local File were exempted from submitting certain transfer pricing documentation (i.e., the statement of international transactions, the summary income statement of foreign-related parties, and the report on the arm’s length pricing method). However, with the recent tax reform, this exemption has been removed. Now, these MNEs are obligated to submit transfer pricing documentation within the specified timeline unless waiver conditions are satisfied. The proposal to reduce the deadline for submission of master and local files from 12 months to 6 months from the end of the relevant financial year has not been approved.
- Small and Medium Enterprises (“SMEs”) are granted a 50% tax reduction on income from the transfer of technology and 25% on income from technology licensing. The period for the availability of these reductions has been extended to December 31, 2026.
- SMEs enjoy a tax credit where part time employees are converted to full time employees. Such credit is extended to December 31, 2024.
- Foreign employees working in South Korea on or before December 31, 2026 (as per original proposal up to 2028), will be eligible for flat income tax rate of 19% for 20 years. Further, foreign engineers working in South Korea will continue to enjoy 50% income tax reduction if they start working before December 31, 2026 (2028 as per original proposal).
- South Korea implemented Global Minimum Tax (“GLoBE”) rules pursuant to Pillar 2 of BEPS project which are effective from January 1, 2024. Further, the applicability of undertaxed payment/profit rule (“UTPR”) has been deferred from January 1, 2024, to January 1, 2025, while Primary Income Inclusion Rule remains effective from January 1, 2024. Certain other amendments have been made to clarify the applicability and computation of the global minimum tax.
- A new additional penalty has been introduced for foreign electronic service providers that fail to register for VAT in South Korea within 20 days of commencing business. The penalty would be levied at 1% of the value of supply made between the date of commencing business and the day immediately before the registration.
- A new filing requirement has been introduced for domestic companies, including the permanent establishments (“PEs”) of foreign companies, to report transactions involving share-based compensation received by executives or employees from foreign controlling companies. Effective from January 1, 2024, domestic companies, along with the PEs of foreign entities, are mandated to submit transaction details (grant, exercise, and payment) whenever stock-based compensation is exercised by executives or employees. The submission deadline is March 10th of the year following the year in which the exercise or payment of stock-based compensation occurred.
Implication:
Multinational entities required to submit a Master File and Local File should take note of the new obligation to submit transfer pricing related statements; SMEs should note the extension of benefits applicable to them; Domestic companies, including the PEs of foreign entities, should take note of the newly introduced reporting obligation regarding the exercise of stock-based compensation by employees or executives.
South Korea: Amendments to the enforcement decree of the Personal Information Protection Act are effective from March 15, 2024.
The Personal Information Protection Commission (“PIPC”) announced amendments to the Enforcement Decree of the Personal Information Protection Act (amended enforcement decree), effective from March 15, 2024. The highlights of the amendments are as follows: –
- Right of data subject regarding automated decisions
Data subjects have the right to request an explanation or review of automated decisions generated through artificial intelligence, without the involvement of humans. They can decline these decisions if they significantly impact their rights and duties. Data controllers are required to provide clear explanations for the decision-making process if requested by the data subject. However, refusal isn’t allowed if the data subject was already informed and consented to the automated decision-making. Furthermore, a request by data subject for an explanation or objection to automated decision making can be rejected by the data processor for legitimate reasons.
- Introducing qualification requirements for the Chief Privacy Officer (“CPO”)
- According to the Personal Information Protection Act (“PIPA”), data controllers are obligated to appoint a Chief Privacy Officer (“CPO”) to oversee and manage the processing of personal information. The amended enforcement decree provides qualification requirement for the CPO, requiring a total of 4 years or more of combined experience in personal information protection, information security, and information technology, with at least 2 years specifically related to personal information protection.
- A grace period of two years, until March 14, 2026, is provided during which existing CPOs should meet the new requirement.
- Entities required to Appoint CPO
The following entities are required to appoint CPO:- Data controllers with personal information of 1 million or more data subjects, or 50,000 or more data subjects’ sensitive information or unique identification information such as resident registration numbers, passport numbers, driver’s license numbers, etc., with annual revenue or income of more than KRW 150 billion.
- Universities with over 20,000 students.
- Hospitals processing a large volume of sensitive information, or
- Institutions that operate public data systems.
- Expansion of insurance coverage requirement
- The amended enforcement decree broadens the range of data controllers required to have insurance coverage to address any damages suffered by data subjects due to violations of PIPA. Now, the requirement of insurance applies to data controllers for both online and offline service providers, with 10,000 users or more and annual sales of KRW 1 billion (previously it was applied only to online service provider).
- There are certain exceptions from the applicability of this insurance requirement such as public institution, non-profit private organization, etc.
- Frequency of regular evaluations
Under amended PIPA, frequency of regular evaluations for unique identification information management would be every three years as compared to earlier requirement of every two years. Moreover, entities holding ISMS-P certifications or undergoing evaluations required by other applicable laws are exempt from this requirement.
- Overseas Transfer of Personal Information
- The data controllers situated abroad who directly gather and handle the personal data of individuals living in Korea must clearly state this fact in the privacy notice, including the country where the data is collected and processed.
- When data controllers transfer personal information overseas, they are obligated to provide detailed information in their privacy policy, including:
- details of personal information transferred.
- detail of country along with the time and method of transfer
- details of receipt of personal information.
- purpose and the retention period.
- explaining the mechanism for refusing the data transfer and the effect of such refusal.
Implication:
Data controllers must comply with the above requirements regarding data subject rights, CPO qualifications, insurance coverage, and overseas transfer of data.
Sweden
Sweden: New rules on digital general meetings effective from January 1, 2024.
The Swedish Parliament (Riskdagen) on November 22, 2023, passed the law giving an option to companies, associations to hold digital general meetings effective from January 1, 2024, if it is permitted/ provided in the articles of association/ byelaws of the company. Hence, necessary amendment may be required to be made in the articles of association and byelaws of the company. The new rules do not specify the technological aspect of conduct the general meetings. However, it is the responsibility of board / chairperson of the meeting to ensure that the general meeting can be held in a correct manner so as to identify the participants and manage voting and counting of votes.
Implication:
Businesses should take a note of the changes and comply with it accordingly.
__________________________________________________________________________________
Switzerland
Switzerland: Introduction of new online VAT obligation in Switzerland effective from January 1, 2024.
From January 1, 2024, the new regulation, based on Article 65a of the Federal Law on Value Added Tax, requires all companies that are subject to VAT to register and settle their VAT electronically. Businesses filing their submissions with the authorities in paper format have been granted a transitional period of 1 year for implementing electronic processing. From January 1, 2025, VAT registration and reporting using e-Portal will be mandatory.
Implication:
Businesses are required to comply with the changes as per the given timelines.
Taiwan
Taiwan: Minimum Wage Act effective from January 1, 2024.
Taiwan enacted the new Minimum Wage Act (the “Act”), on December 27, 2023, to create a statutory process for reviewing and adjusting Taiwan’s minimum wage, which is effective from January 1, 2024.
Salient features of the Act are as under:
- Establishment of Minimum Wage Commission: The Ministry of Labor will establish a Minimum Wage Commission which will review annually the minimum wages. The Commission is required to consider changes in the Consumer Price Index as also certain other factors, while reviewing the minimum wages.
- Penalty provisions: In case of violation of minimum wages provisions under the Act, the employer can be subject to penalty in the range of TWD 20,000 to TWD 1,000,000.
As announced in September 2023, the minimum wages are increased from TWD 26,400 per month to TWD 27,470 per month effective from January 1, 2024.
Implication:
The employers need to consider provisions of the new act and adopt minimum wages in their payroll and policies.
Thailand
Thailand: Thailand’s new regulations on cross-border transfer of personal data are effective from March 24, 2024.
In Thailand, for the cross-border transfer of personal information, data controller has to comply with certain requirements outlined under the Personal Data Protection Act (“PDPA”). Thus, the cross-border transfer of personal data is allowed when data protection standard of destination country are adequate. Such countries are regarded as white-listed countries. The requirement of the foreign country having the adequate data protection standards will not apply if – (i) there is ‘personal data protection policy’ or ‘binding corporate rules’ (“BCRs”) established for regulating personal information transfer within the same group and such policies or rules are approved by the Personal Data Protection Commission; or (ii) when transferor and transferee undertake appropriate protective measures such as standard contractual clauses.
Thailand’s Personal Data Protection Committee (“PDPC”) on December 25, 2023, has issued two notifications pursuant to section 28 and 29 titled “Criteria on Protection of Personal Data sent or transferred to a foreign country”. These provisions, which are effective from March 24, 2024, lay down certain rules regarding the above mechanisms for cross-border transfer of personal data. The highlights of these provisions are as follows: –
- The regulations clarify the term ‘sending or transferring personal data’ which will not include a situation where third parties would not have access to personal data transferred outside of the country. The regulations give an example of transfer to cloud computing service providers without access to any third party.
- Adequacy data protection standard of destination country (Whitelisted Countries) (Section 28)- the new regulations lay down criteria which PDPC needs to consider while notifying countries as white -listed countries. These criteria include the existence of equivalent data protection laws, data protection supervisory authorities similar to those in Thailand, etc. The key responsibility of the data controller includes providing appropriate security measures. Additionally, PDPC may soon issue a list of destination or data-receiving countries considered to have adequate standards pursuant to the PDPA.
- Binding Corporate Rules and Appropriate Safeguards (Section 29):
- Binding Corporate Rules contain the procedures for submitting BCRs to the PDPC for review and approval.
- Appropriate safeguards include measures such as entering standard contractual clauses, undertaking a certification or signing of binding agreement between Thai and foreign government authorities. Thailand currently accepts two distinct models for standard contractual clauses- the Thai Model and the Overseas Model. For the Overseas Model, acceptable models include ASEAN Model Contractual Clauses for Cross Border Data Flows, EU Standard Contractual Clauses for the Transfer of Personal Data to Third Countries, or any other model clauses prescribed by the PDPC.
Implication:
Effective from March 24, 2024, companies are required to adhere to the newly notified provisions for cross-border transfer of personal data.
Thailand: Ministry of Finance extends electronic filing deadline for returns/payments due between February 1, 2024, to January 31, 2027.
To promote electronic filing of tax returns and payments, the Thai Revenue Department has provided an additional eight-day timeframe in respect of e-filing of certain tax returns and payments since 2012. These returns/payments include corporate income tax, specific business tax, transfer pricing disclosure form, personal income tax, VAT, and withholding tax. This extension is granted beyond the regular filing deadline applicable to paper filing of taxes. The last provided extension lapsed on January 31, 2024.
To maintain the continuity, the Thai Ministry of Finance, vide a notification dated January 12, 2024, has once again granted the additional eight-day extension to timelines for e-filed tax returns and payment which is effective from February 1, 2024, to January 31, 2027.
Implication:
Taxpayers should take note of the extended timelines for returns in case of electronic filing and take advantage of them.
Turkey
Turkey: Minimum wage and social security contribution basis increased from January 1, 2024.
Effective from January 1, 2024, the Turkish Ministry of Labor and Social Security has raised the monthly gross minimum wage to TRY 20,002.5 (previously TRY 13,414) leading to an increase in the net minimum wage to TRY 17,002.12 (previously TRY 11,402).
With an increase in the minimum wage, the social security contributions limits stand revised. Thus, minimum monthly basis is increased to TRY 20,002.5 (previously TRY 10,008) and maximum monthly limit is raised to TRY 150,018.90 (previously TRY 75,060.00). These bases are used for the computation of both employee and employer portion of social security contributions.
Implication:
The companies will need to compute employees’ social security contributions according to the latest monthly base values published.
United Kingdom
United Kingdom: UK Budget (Spring Statement) 2024 – Highlights
On March 6, 2024, the UK Chancellor of the Exchequer, Mr. Jeremy Hunt, presented the Spring Statement before the UK Parliament. He announced that the UK economy grew at 0.8% during the year 2023-24 and is expected to grow at 1.9% in the following year. The inflation rate is expected to fall to the target rate of 2% in quarter 2 of 2024, that is, a year earlier than expected.
The following are the highlights of the proposals presented in the Spring Statement and the Spring Finance Bill 2024:
For individuals and employers
- National Insurance Contributions (“NICs”):
- The Autumn statement had reduced the Employee’s Class 1 NIC main rate from 12% to 10%. From January 6, 2024. the Spring Budget further reduces it from 10% to 8%. No reduction is proposed in employer’s NI contribution. The Chancellor announced that this brings average personal taxes to the lowest level since 1975.
The following table summarizes the changes:
| Timeline | Rates for Employer | Main rates for Employee (below Upper Earnings Limit) | Additional rate for Employee (above Upper Earnings Limit) |
| Prior to January 6, 2024 | 13.80% | 12% | 2% |
| Effective from January 6, 2024 (announced in Autumn statement) | 13.80% | 10% | 2% |
| Effective from April 6, 2024 (announcement in Spring statement) | 13.80% | 8% | 2% |
Various ceilings and limits for applicability of NIC remain unchanged.
- Self-employed individuals are required to pay for Class 2 and Class 4 NIC. The Spring Statement announces cuts in Class 4 NIC rates for self- employed from 8% to 6% effective from April 6, 2024.
- It is also proposed to abolish the tax rules for non-UK domiciled individuals, (known as “non-doms”) which will be replaced with a residence-based regime from April 6, 2025. Under the new regime, the individuals will not pay tax on their foreign income for the first four years of their residence in the UK provided they have been non-tax residents for the earlier 10 years. However, once they are tax-resident in the UK for more than four years, they will pay UK tax on their foreign income and gains, similar to the other UK residents. It is also proposed to introduce a transitional arrangement for the existing non-doms.
- The child benefit is provided to support families to pay the cost associated with having children. Further, High Income Child benefit charge (“HICBC”) is payable if one of the parents have income above GBP 50,000. It is proposed that HICBC will be administered on a household basis rather than an individual basis by April 2026 and the threshold for its applicability will be increased from GBP 50,000 to GBP 60,000 from April 2024. Thus, HICBC will apply at 1% of the full Child Benefit award for each GBP 200 of adjusted net income between GBP 60,000 and GBP 80,000, halving the rate at which HICBC is charged. The charge on taxpayers with income above GBP 80,000 will be equal to the full amount of Child Benefit paid.
- The higher rate of capital gains tax for residential property disposals will be cut from 28% to 24% from April 2024. The lower rate will remain at 18% for any gains that fall within an individual’s basic rate band.
For businesses and others
- To support small and medium enterprises, it is proposed to increase to VAT registration threshold from GBP 85,000 to GBP 90,000 from April 1, 2024. Further the deregistration threshold will increase from GBP 83,000 to GBP 88,000.
- The Energy Profits Levy was introduced in 2022 whereby the oil and gas producers in the UK were required to pay tax on their extraordinary profits. Gas prices are forecast to remain abnormally high until at least 2028-29. Therefore, it is proposed to extend the Energy Profits Levy by an additional year to 2028-29.
- The Spring Statement also announces certain measures, incentives, and relief to specific industries like creative industry, green industry, life sciences, etc.
Other proposals
- It is proposed to maintain the rates of fuel duty at the current levels for a further 12 months. Thus, the temporary 5 pence cut in fuel duty is extended for another 12 months cancelling the planned inflation-linked increase for 2024-25.
- It is proposed that a new duty will be introduced on vaping products from October 2026 to discourage non-smokers from taking up vaping. A vape, or an electronic cigarette, is a device which simulates tobacco smoking. Further, there will be a one-off increase in duty on tobacco products to maintain the current financial incentive to choose vaping over smoking.
- Air Passenger Duty (“APD”) rates will increase for premium economy, business, first class and private jet passengers from 2025-26.
Implication:
Employers should take note of revision in NIC rates and adjust their payroll procedure accordingly. Businesses proposing to start operations in the UK should take note of the revised VAT registration thresholds. Individuals relocating to the UK should evaluate the impact of new residence-based regime which is being introduced in place of tax rules for non-UK domiciled individuals.
United Kingdom: Amendments made to the Paternity leave effective from April 6, 2024.
The UK government has made changes to the right to take paternity leave which will apply to:
- Parents of babies whose expected week of childbirth starts on or after April 6, 2024, and
- Parents of children, whose expected date of placement for adoption or entry into the UK for adoption is on or after April 6, 2024.
The following revisions to the paternity leave are effective from April 6, 2024:
- Employees eligible to take paternity leave can now take it in two non-consecutive blocks of one week instead of taking it only in one block of either 1 or 2 weeks;
- Employees are allowed to take paternity leave at any time during the 1st year after birth or adoption, rather than taking it within 8 weeks.
- The notice period has been reduced to 4 weeks except in the case of domestic adoption.
Implication:
Employers should take note of the changes and amend employment contracts, internal leave policies, etc.
United Kingdom: Provisions of Economic Crime and Corporate Transparency Act 2023 to improve quality of information in company register are effective from March 4, 2024.
The UK has passed the Economic Crime and Corporate Transparency Act 2023 (the Act) which has introduced changes to the company law in order to reduce the unlawful activities and strengthen the corporate governance. The Act aims to bring substantial changes to powers of Companies House and introduce a new corporate offense targeting the failure to prevent fraud.
Following changes are launched through the first phase which is effective from March 4, 2024, unless stated otherwise:
- Appropriate address: All the companies, new and existing, must have appropriate address otherwise the Companies House may initiate strike off process against such company. The companies should have “appropriate address” as defined under the Act.
- Registered email address: All the companies, new and existing, must have appropriate registered email address as defined by the Act. The existing companies can update their email address by filing next confirmation statement on or after March 5, 2024, while new companies are required to provide the same at the time of registration.
- Lawful objectives: All new companies should be incorporated with lawful purpose. Existing companies can update their objectives by filing next confirmation statement on or after March 5, 2024.
- Increase in Companies House fees: The fees for incorporation and registration will be increased effective from May 1, 2024.
- Enhanced powers to the Companies House: The registrar would have powers to question the information provided by the companies when it has inconsistencies or mistakes, to remove incomplete or wrong information, conduct stronger checks on company names to avoid misleading information to public, provide comments to user of information about any potential issues in the information in the company register, etc.
- Identity verification: The directors, promoters, and persons with significant control of new company will have to verify their identity during incorporation process. The authorities of the existing company will be given chance to verify their identity during a transition period. This provision will be effective in future.
- Online filing of the accounts: The Act will soon implement filing of the accounts online through software.
Implication:
Companies should check any missing /incorrect information in their records with company house and take necessary steps to comply with the requirements introduced by the Economic Crime and Corporate Transparency Act 2023.
Shan & Co © (Nucleus is an affiliate of Shan & Co)