Regulatory Updates – March 2021

Brazil

Brazil introduces “Balcão Único”, a system for company incorporation in a simple and automatic way

Recently, Brazil’s Ministry of Economy has launched  “Balcão Único”, a system to incorporate a company in Brazil easily and quickly without having to visit several public agencies of Brazil. This is expected to reduce the time and cost to start a business in Brazil. São Paulo is the first city to have such digital system and the next will be Rio de Janeiro.  To encourage Brazilian and foreign entrepreneurs who want to invest in the Brazil, the federal government intends to expand the project to  the entire country.

Before the introduction of “Balcão Único”, organizations were required to comply with 11 procedures to open a company in in the cities of Rio de Janeiro and São Paulo. With “Balcão Único, companies can fill out a single electronic form and all the necessary data will be collected. This process will allow the following to be done in one step:

  • To receive necessary responses from the City Hall;
  • Company Registration;
  • Obtaining the National Register of Legal Entities (CNPJ) and tax registration number;
  • Taxpayer register;
  • Receipt of licenses, if necessary; and
  • Registration of employees to be hired through e-Social at the time of starting the company.

Implication:

With the introduction of “Balcão Único”, the incorporation process in Brazil will be less time consuming and less expensive. Being a new system, some issues and delays may be expected at this stage.     

Canada

Canada reduces automobile allowance limit by one cent for 2021

With effect from January 1, 2021, the rate used for determination of taxable benefits relating to personal portion of automobile operating expenses (mileage rate / allowance) paid by the employer is reduced by one cent (CAD 0.01) i.e. from CAD 28 cents per kilometer to CAD 27 cents per kilometer.

Implication:

Employers need to make changes in their calculations regarding computation of employee benefits related to mileage allowance. 

Czech Republic

Minimum base income for contribution of health insurance increased to CZK 3,500

Effective from January 1, 2021, the threshold of base income for health insurance participation has been increase from CZK 3,000 to CZK 3,500. The employer must withdraw the name of its employee from the insurance who has participated in health insurance in 2020 with income that is below the prescribed threshold (i.e., CZK 3,500).

New changes are introduced to legal framework regulating Ultimate Beneficial Owners (UBO).

Effective from June 1, 2021, the parliament has passed New UBO Act. The Act includes substantial changes to both the Register and UBOs. The new Act incorporates the following changes –

  • The meaning of UBO is amended as any natural person who draws an ultimate benefit or exerts ultimate influence over a legal entity.
  • Key data of UBO is accessible by the general public.
  • Legal entities may be liable to penalty of up to CZK 500,000 (approx. EUR 19,000) for each case of non-compliance.
  • Legal entity is required to ensure the following rules:
  • Distribution of profit is prohibited if UBO is not registered.
  • Distribution of profit to any shareholder is prohibited if UBO is not registered
  • Prohibiting a non-registered UBO from exercising voting rights at general meetings or pass resolutions as a sole shareholder.
  • Prohibiting any shareholder that has failed to register its UBO(s) from exercising its voting rights at general meetings or pass resolutions as a sole shareholder;

Implication:

Companies that have registered UBOs under the existing Act must review their registrations and make changes according to new UBO Act on or before November 2021. If UBO is registered after June 1, 2021, then the registration must be in accordance with provisions of  the new UBO Act without any delay.

New reporting obligations on employer as per amendment in Employment Act.

Czech Chamber of Deputies has approved a proposed amendment in Employment Act; every employer will have to file the following reports to authorities,

  • Effective from March 1, 2021, every employer must file reports of vacancies with Ministry of Labor and Social Affairs within 10 days of the creation, vacancy or filling of the post.
  • Effective from August 1, 2021, every employer must file electronically a report of information on non-participation of employee in health insurance, modification and termination notice of employee with District Social Security Administration within eight days from date of respective change.
  • Effective from August 1, 2021, every employer must submit an electronic application of registration with the District Social Security Administration within eight days from the date of commencement of employment or respective change in employment.

Implication:

The employer under the new law is obligated to report the compliances related to job vacancies and termination, etc. Any non-compliance will be subject to penal implications. 

France

Social Security Salary Ceiling remains unchanged for the year 2021.

The French government published a decree on December 29, 2021,  fixing the social security salary ceiling effective January 1, 2021. Considering the COVID-19  health crisis and the hardships that employers and employees have gone through as a result, the authorities have not increased the ceiling from the previous year. The salary basis used in determining the ceilings for social security for 2021 are as follows:

  • Monthly basis – EUR 3,428 
  • Daily basis – EUR 189 

Implication:

The employer should take into consideration the latest applicable social security ceilings and apply the same in their payroll system.

Germany

New Companies are required to a request tax number electronically beginning in 2021

Effective from January 1, 2021, tax number is required to be requested electronically by filling out the form tax registration questionnaire, which is available online at ELSTER page (www.elster.de). It is necessary to be registered with ELSTER and to submit a questionnaire on tax registration.

German employment law changes

Effective from July 2021, employers are required to implement and comply with amended German employment law. Following are some changes in employment law:

  • The statutory minimum wage has increased from ERU 9.50 to EUR 9.60 gross per working hour.
  • The short time allowance regulation which was introduced due to COVID-19 is now valid until the end of 2021.

Due date for filing 2019 tax returns is extended

The Ministry of Finance extended the deadline for filing tax returns for calendar year 2019 through August 31, 2021.

Hong Kong

Hong Kong Budget 2021-22 Highlights

The Finance Secretary of Hong Kong, Paul Chan Mo-po, presented the Budget for 2021-22 on February 24, 2021. As mentioned in the Budget Speech, Hong Kong’s economy recorded a negative growth of 6.1% with the latest unemployment rate at 7% in the past year. The Government of the Hong Kong Special Administrative Region has provided nearly HKD 300 billion for stabilizing the economy, which has brought Hong Kong’s fiscal deficit to a record high.

As per the Budget 2021-22, key rates are unchanged – There are no changes proposed in Corporate Income Tax (Profit Tax) rates, salaries tax rates and personal allowances.

The highlights of the budget 2021-22 are:

For Individuals

  • A reduction of 100% salary tax payable and tax payable under personal assessment for the year of assessment 2020-21, subject to a ceiling of HKD 10,000 per annum.  This means that no tax is payable for salaries up to HKD 10,000 and salaries above HKD 10,000 will receive a deduction of HKD 10,000. This reduction will be reflected in the final tax payable for the year of assessment 2020-21.
  • Rate concessions will be given to all rate payers to offset the rates payable for four quarters from April 2021 to March 2022. For each domestic tenement, the ceiling will be $1,500 per quarter for the first two quarters (April 2021 to September 2021) and $1,000 per quarter for the following two quarters (October 2021 to March 2022). No payment will be required for the quarter if the quarterly rates payable do not exceed the corresponding rates concession ceiling. 
  • Grant of a subsidy of HKD 1,000 to each residential electricity account.
  • For 2021-22 year, there is no change in the allowances for individuals such as personal and child allowances and dependent parent and grandparent allowances. These are the same as provided for 2020-21.
  • The Government proposes relaxation of the working hour requirements under the Working Family Allowance Scheme.  The current basic working hour requirement of not fewer than 144 hours per month for non-single parent households will be substantially lowered by half for one year. It is subject to Finance Committee’s (FC) approval.
  • A Special 100% Loan Guarantee for Individuals Scheme to provide an extra financing option for the unemployed has been proposed. Under this scheme, the Government of Hong Kong proposes to offer a guarantee for loans. The maximum loan amount per applicant is set at six times his/her average monthly income during employment, subject to a ceiling of HKD 80,000. There will be a principal moratorium for the first 12 months. Repayment of principal and interest will be over a period of up to five years with an interest rate fixed at 1% per annum. The Financial Services and the Treasury Bureau (FSTB) will provide details in due course.
  • There is an increase in the rate of ad valorem stamp duty from 0.1% to 0.13%  in consideration or value of each transaction of Hong Kong stock payable by buyers and sellers, respectively.
  • There will be an issue of electronic consumption vouchers in installments with a total value of HKD 5,000 to each eligible Hong Kong permanent resident and new arrival aged 18 or above, in order to encourage and boost local consumption. 

For Employers

  • In order to continue to relieve the cash flow pressure of small and medium enterprises (SMEs), the period for applications to the Special 100% Guarantee Product has been extended until the end of 2021. This scheme aims to alleviate the burden of paying employee wages and rents by small and medium-sized enterprises (SMEs) which are suffering from reduced income. Other changes to the scheme as per Budget 2021-22 are:
  • Increase in the maximum loan amount per enterprise from the total amount of employee wages and rents for 12 months to that for 18 months.
  • Increase in the loan ceiling from HKD 5 million to HKD 6 million.
  • Extension to the maximum repayment period from 5 years to 8 years; and
  • Extension to the maximum duration of principal moratorium from 12 months to 18 months.

For Companies

  • Reduction of 100 % Corporate Income Tax (CIT) for assessment year 2020-21, subject to a ceiling of HKD 10,000 per annum. This reduction will reflect in the final tax payable for the assessment year 2020-21.
  • Rate concession will be given to all rate payers to offset the rates payable for four quarters from April 2021 to March 2022. For each non-domestic tenement, the ceiling will be $5,000 per quarter for the first two quarters (April 2021 to September 2021) and $2,000 per quarter for the following two quarters (October 2021 to March 2022). No payment will be required for the quarter if the quarterly rates payable do not exceed the corresponding rates concession ceiling.
  • Waiving the business registration fees for 2021-22.
  • Waiving of 75% of the water and sewage charges payable by non-domestic households for 8 months starting from April 2021, subject to a monthly ceiling of HKD 20,000 and HKD 12,500 respectively per non-domestic household.
  • The Government will continue to grant the 75% rental or fee concession to eligible tenants of government properties and eligible short-term tenancies and waivers under the Lands Department for 6 months starting from April 2021.
  • Budget highlights that were announced in November 2020, the Pre-approved Principal Payment Holiday Scheme was extended for 6 months until April 2021. Under the Scheme, banks in Hong Kong offer principal payment holidays to covered corporate borrowers on a pre-approval basis.
  • By mid-2022, unless there are legal or operational constraints, all government forms and license applications can be submitted electronically.
  • The Hong Kong Monetary Authority (HKMA) is currently working with the Office of the Government Chief Information Officer (OGCIO) to develop the business version of the “iAM Smart” digital authentication platform. It can be used to authenticate the identity of enterprises through an electronic channel.

The Employment (Amendment) Ordinance 2020 sets out updates in concern with Maternity Leave 

The Hong Kong Government has issued “The Employment (Amendment) Ordinance 2020” (the Ordinance) to enhance the maternity benefits for female employees. These updates will be effective from December 11, 2020. Following are the highlights of the Ordinance:

  • Employees (mother to be) with a due date on or after December 11, 2020 shall be eligible to have an extra leave of 4 weeks in addition to the current period of 10 weeks of Statutory Maternity Leave (SML).
  • Employees are entitled to receive the Statutory Maternity Leave Pay (SMLP) of 14 weeks from employers.  The reimbursement of the benefit for the period of extra four weeks will be paid by the government to the employer at later stage.
  • SMLP will still be calculated at 4/5th of an employee’s average daily wages. Further, the amount reimbursed for the additional 4 weeks’ SMLP is calculated at 4/5th of an eligible employee’s average daily wages, up to HKD 80,000 per employee.

The criteria for the entitlement of maternity pay benefits shall remain unchanged.

Implication:

The employers in Hong Kong should be aware of these changes in employment laws. They will have to change their policies for maternity leave pays and procedure. Many employers already pay higher maternity pay and at full salary rates. 

India

India Budget 2021-22 Highlights

The Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman presented the Union Budget 2021-22 in Parliament on February 1, 2021. The budget seeks to further simplify tax administration and litigation management while easing the compliance of direct tax administration, and customs duty. The key highlights of the budget are as follows:

For Individuals

There are no changes in Personal Income Tax slabs and rates. The rates applicable for FY 2021-22 will be as follows. The taxpayer has the option to choose a regime for tax purposes.

Old Tax Regime(The exemption and deductions are not available)New Tax Regime(The exemption and deductions are not available)**
Annual Taxable Income (in INR)Tax rateAnnual Taxable Income (in INR)Tax rate
0 to 250,0000%0 to 500,0000%
250,001 to 500,000*5%500,001 to 750,00010%
500,001 to 1,000,00020% 750,001 to 1,000,00015%
1,000,001 and above30%1,000,001 to 1,250,00020%
1,250,001 to 1,500,00025%
1,500,001 and above30%

* Individual taxpayers having taxable income up to INR 500,000 get full tax rebate and are not required to pay income tax. Please note that taxable income exceeding INR 500,000 does not receive any benefit from the tax rebate and individuals have to pay income tax on full taxable income.

**The new tax regime will be optional for taxpayers and therefore an individual who is currently taking deductions is exempt under the Income Tax Act and may choose to forgo them and pay tax. Some of the common deductions that will no longer be allowed include: House rent allowance, leave travel allowance, standard deductions, Interest on property, and investment related deductions under 80C, 80D, 80DD etc.

Note – surcharge and cess will continue to apply on existing rates, depending up on the level of individual’s income.

  • Senior citizens who are of 75 years of age and above having only pension and interest income will be exempt from filing their income tax return.
  • Extension to the eligibility period for claims of additional deductions for interest of INR 150,000 paid for loans taken for purchase of an affordable house (Section 80EEA of Income Tax Act) from March 31, 2021 to March 31, 2022.
  • To ease the filing of returns, details of capital gains from listed securities, dividend income and interest from banks, post office etc., will be pre-filled in the returns. Details of salary income, tax payment, TDS etc., are currently pre-filled in returns.
  • Taxpayer’s advance-tax liability on dividend income shall arise only after the declaration or dividend payment.
  • Effective from April 1, 2021, the exemption for leave travel concession (LTC) cash scheme has been proposed (i.e., in order to provide relief to employees), to provide tax exemptions up to the amount given to an employee in lieu of LTC subject to incurring specified expenditure.
  • Effective from April 1, 2021, the interest earned on the annual provident contribution above INR 250,000 will be taxable.
  •  There is a proposal to notify rules for removing hardship of double taxation faced by Non-Resident Indians returning to India with respect to accrued incomes in their foreign retirement accounts.

For Employers

  • In order to ensure timely deposit of employee’s provident fund contribution, late deposit of employee’s contribution by employer will not be allowed as a deduction to the employer for tax purposes.

For Companies

  • There is no change in Corporate Income Tax (CIT) rates. The CIT rate for domestic company for FY 2021-22 will be 30% (or 25% for companies with turnover below INR 4 billion in previous year) plus applicable surcharge and cess. The reduced CIT rate of 22% (instead of 30% or 25% for companies with turnover below INR 4 billion) or 15% for the new domestic manufacturing companies (incorporated after October 1, 2019 making new investments in manufacturing), plus surcharges and cess are applicable, subject to the condition that all exemptions/incentives are foregone.
  • The Tax Audit Limit (Section 44AB of Income Tax Act) for persons who are performing 95% of their transactions digitally has been increased from INR 50 million to INR 100 million.
  • The time limit for reopening of income tax proceedings has been reduced from 6 years to 3 years. However, assessment can be reopened for up to 10 years (after the approval of the Principal Chief Commissioner) in case of serious tax evasion, where there is evidence of concealment of income of INR 5 million or more in a year.
  • There is a revision in the ‘Small Companies’ definition under the Companies Act, 2013 that is increasing the threshold for paid capital from ‘not exceeding INR 5 million’ to ‘not exceeding INR 20 million’ and by increasing the turnover from ‘not exceeding INR 20 million’ to ‘not exceeding INR 200 million’. This will benefit many small companies by easing their compliance requirements.
  • To further reduce litigation of small taxpayers, it is proposed to constitute a Dispute Resolution Committee, which will be faceless to ensure efficiency, transparency, and accountability. Anyone with a taxable income up to INR 5 million and disputed income up to INR 1 million will be eligible to approach the Committee.
  • Setting up of a National Faceless Income Tax Appellate Tribunal Centre was also announced. All communication between the Tribunal and the appellant shall be electronic. Where a personal hearing is needed, it shall be done through video-conferencing.
  • To promote the establishment of start-ups in India, there is a proposed eligibility period to claim tax holiday for a start-up by an additional year, i.e., up to March 31, 2022.
  • It has been clarified that a transaction taxable under income-tax is not liable for equalization levy. There is also a proposal to clarify the applicability of equalization levy on physical/offline supply of goods and services.

Goods and Service Tax (GST)

  • Certain changes have been made in the Central GST Act, 2017 (CGST Act) and Integrated GST Act, 2017 (IGST Act) on the basis of recommendations made by the GST Council. These includes measures for –
  • Facilitating taxpayers, such as removing the mandatory requirement of getting annual accounts audited and reconciliation statement, filing of the annual return on self-certification basis and charging interest on net cash liability effective from July 1, 2017.
  • Improving compliance, such as a tax credit when the details have been furnished by the supplier in the statement of outward supplies etc.

Custom Duty

  • There is a proposal to review 400 old exemptions in the custom duty structure this year.  An extensive consultation will be conducted and a revised customs duty structure free of distortions will be put in place.
  • It is also proposed that any new customs duty exemptions will be valid up to March 31st following two years from the date of issue of the exemption. 

Proposed Applicability of certain provisions and rules of Companies Act, 2013 to Limited Liability Partnerships (LLPs) including rules relating to significant beneficial ownership (SBO) etc.

The Ministry of Corporate Affairs (MCA) has announced the application of certain provisions and rules of Companies Act, 2013 to limited liability partnerships (LLPs) including rules relating to significant beneficial ownership (SBO). Following provisions and rules of Companies Act, 2013 are expected to be made applicable to LLPs –

  • Sub- sections (1) to (11) of section 90: Obtaining SBO declaration from person holding beneficial interest, maintaining register of significant beneficial owners (SBO) etc.
  • Sub- sections (1) and (2) of section 164: Provisions regarding disqualifications for appointment of director.
  • Sub-sections (1) and (3) to (6) of section 165: Provisions regarding number of directorship.
  • Sub-section (1) to (3) of section 167: Provisions regarding vacation of office of director

The government may specify the maximum number of firms in which an individual can act as a partner or designated partner and grounds for disqualification of partners and vacation of office.

  • Sub-section (5) of section 206: Provisions regarding power to Call for Information, Inspect Books and Conduct Inquiries
  • sub-section (3) of section 207: Provisions regarding Conduct of Inspection and Inquiry
  • Sub-sections (1) to (3) of section 252: Provisions regarding Appeal to Tribunal
  • Sub-sections (1) to (4) of Section 439: Offences to be Non-cognizable

Implication:

Limited liability partnerships (LLPs), its partners and designated partners are advised to complete the UBO compliances as have become applicable. Once effective, they need to comply with the amended law and related provisions. 

Ireland

Subsidy Rates provided by Employment Wage Subsidy Scheme (EWSS) to be effective till March 31, 2021.

The Irish Government has announced that the subsidy rates provided by the Employment Wage Subsidy Scheme (EWSS) shall remain effective till March 31, 2021. This will be aligned with the extension of rates of the Pandemic Unemployment Payment (PUP).

Implication:

The extended effectiveness of the subsidy rate shall help the affected business to survive in these hard times. All eligible business should apply for  this benefit.

Irish VAT Rate Cut to be reversed in March 2021.

The Finance Minister has announced that the rate of VAT will be 23% from March 2021. The rate of VAT was temporarily reduced to 21% in response to the difficulties faced by the business due to COVID-19. The temporary reduction was part of the Stimulus Package introduced by the Government which was effective  September 1, 2020 till February 28, 2021.

Implication:

Businesses shall take into consideration the effective rate applicable from March 2021 to avoid recording inaccurate VAT on any transactions causing non-compliance.

Italy

Key features of Italian Budget Law 2021

The budget law 2021 (Law No. 178, published in the Italian Official Gazette on December 30, 2020) introduced significant tax incentives for businesses. 

Following are the important highlights –

  • Research and development tax credit:

The Italian Law No. 160/2019 extends the tax credit for investments in research and development, technical and other innovative activities until December 31, 2022.

  • The tax credit for research and development has been increased from 12% to 20%, and the expense limit has been raised from EUR 3 million to AUR 4 million (approximately AUD 3.6 million).
  • The tax credit for technological innovation design or aesthetic growth has been increased from 6% to 10%, and the spending limit has been raised from EUR 1.5 million to EUR 2 million.
  • Research and development tax credits for southern Italy:

For 2021 and 2022, the following tax credit is accepted for research and development investments made in accordance with section 1 (200) of Italian Law No. 160/2019, including COVID-19 research and development projects directly related to production facilities in the Italian regions of Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia, and Sicily:

PercentageType of enterpriseCriteria to fulfill
25large enterprisesemploy at least 250 people with an annual turnover of at least EUR 50 million or an annual balance sheet total of at least EUR 43 million
35medium-sized enterprisesemploy at least 50 people and with an annual turnover of at least EUR 10 million;
45small enterprisesthat employ less than 50 people and with an annual turnover or an annual balance sheet total of no more than EUR 10 million
  • Tax credit for advertising investments:

In 2021 and 2022, a uniform tax credit of 50% of advertising investments made in daily newspapers and monthly magazines (either online or manual), is granted, up to a maximum of EUR 50 million in 2021 and 2022, respectively. 

  • Tax credit for training on technical know-how:

In accordance with the Italian Law No. 205/2017 (46-56); the tax credit for training intended to develop or boost the technical knowledge specified in the 4.0 Industry National Plan is awarded for the expenses listed in Article 31 (3) of Commission regulation (EU) 651/2014 dated June 17, 2014 for the tax period beginning December 31, 2020, and ending December 31, 2022.

  • Paternity leave:

Paternity leave has been increased to ten days in the event of a child’s birth or adoption (previously it was seven days).

Implications

Companies should be aware of the increase in tax credit for Research & development as well as increase of tax credit for advertising.  Employer will also have to make the amendments to the paternity policy of the company. 

From 2022 cross border transactions in Italy will be subjected to New E-invoicing rules 

Italy has put into practice the mandatory B2B e-invoicing, due to which, from January 1, 2020 Esterometro has been removed and all cross-border invoices are sent via Sistema di Interscambio (SDI).   The FatturaPa format is used to send invoices, and it recently added the new XML requirement, which has become mandatory since January.

Non-resident supplier’s purchase invoices must be submitted to SDI by the 15th day of the month following the month in which the document was released or received. As far as sales invoice for non-resident customers is concerned, it must be reported within 12 days from the date of the invoice.

Implication:

Businesses shall take into consideration the mandatory B2B e-invoicing to be sent via Sistema di Interscambio (SDI) effective January 1, 2020. 

Mexico

Digital service providers must Obtain Tax Identification Number from RFC 

Effective from June 1, 2021, all foreign residents and companies that provides digital services to Mexican residents but has no permanent establishment are required to do registration with the taxpayer registry (Registro Federal de Contribuyentes – RFC), and obtain a tax identification number, and comply with obligations under digital services tax rules. 

Mexico City Labor Outsourcing News

Effective from January 1, 2021, companies are required to file notice to Ministry of Administration and Finance of Mexico City (MAF), when hiring or subcontracting services from contractor. Non-compliance of this regulation will result in fines ranging from MXN 3,713 to MXN 9,413.

Revised Individual Income Tax Rates for 2021

Effective 2021, the Mexican Tax Administration (SAT) revised individual tax rates including general withholding rates, specified tax rates and annual tax rates for fiscal year 2021 are as follows:

Taxable income (MXN)Tax Rate (%)
0.017,735.001.92
7,735.0165,651.076.40
65,651.08115,375.9010.88
115,375.91134,119.4116.00
134,119.42160,577.6517.92
160,577.66323,862.0021.36
323,862.01510,451.0023.52
510,451.01974,535.0330.00
974,535.041,299,380.0432.00
1,299,380.053,898,140.1234.00
3,898,140.13and above35.00

Singapore

Singapore Budget 2021 Highlights

On February 16, 2021, the Deputy Prime Minister, Coordinating Minister for Economic Policies and Minister for Finance, Mr. Heng Swee Keat delivered the budget statement 2021. As stated in the budget statement, in addition to the usual spending last year, the Government committed nearly SGD 100 billion through five Budgets to support Singaporeans, help  businesses during difficult periods due to the COVID-19 pandemic, and most importantly, keep everyone safe. It is also stated that Singapore faced the worst recession since its independence and the overall budget deficit for Financial Year 2020 is also the largest since Singapore’s independence.

As per the Budget 2021, key rates are unchanged – There are no changes in corporation tax rate, personal income tax rates, and GST rates. 

The key highlights of budget 2021 are: 

Goods and Services Tax (GST)

  • In the 2018 Budget, the need to raise the GST rate (from 7% to 9%) sometime from 2021 to 2025 was announced. In view of economic conditions, the GST rate increase will not take effect in 2021. The move to increase the GST rate will be made between 2022 to 2025.
  • Extension of GST to imported low-value goods (currently, low-value goods imported via air or post are not subject to GST) effective beginning January 1, 2023.

Other Tax measures

  • Extension of 250% tax deduction for donations to Institutions of a Public Character (IPCs) for another two years, until the end of 2023.
  • To ease the transition for Singaporeans, especially for those who rely on their vehicles for their livelihood, the Government will provide following support:
  • For motorcycles using petrol, there is a 60% road tax rebate to all motorcycles for one year from August 1, 2021.
  • In addition, individual owners of smaller motorcycles up to 400cc will receive SGD 50 or SGD 80 per annum in cash, depending on engine capacity.
  • For cars using petrol, there is a one-year road tax rebate of 15% from August 1, 2021.

Non-Tax measures

  • A COVID-19 Resilience Package of SGD 11 billion to address immediate needs to safeguard public health and re-open safely, to support workers and businesses, including support for sectors that are still under stress.
  • In order to support workers and businesses (second prong of COVID-19 Resilience Package)
  • Budget 2021 continued to provide for Jobs Support Scheme (JSS) for harder hit sectors
  • Extension to various schemes under the SGUnited Jobs and Skills Package, including the Jobs Growth Incentive (JGI) and specific traineeship, attachment, and training opportunities
  • Over the next three years, the Government will allocate SGD 24 billion to enable firms and workers to emerge stronger.
  • To support businesses, Government will invest in three key platforms:
  • Corporate Venture Launchpad – This will provide co-funding for corporates to build new ventures through pre-qualified venture studios.
  • Open Innovation Platform (OIP) – This will facilitate the matching of problems faced by companies and public agencies, with solution providers, and co-funds prototyping and deployment.
  • Global Innovation Alliance (GIA) – This will serve to catalyse cross-border collaboration between Singapore and major innovation hubs globally.
  • Extending and enhancing the Enterprise Financing Scheme – Venture Debt programme – Under this scheme, the Government shares up to 70% of the risk on eligible loans with Participating Financial Institutions. In addition, there will be an increase in the cap on loan quantum supported, from SGD 5 million to SGD 8 million.
  • Introduction of the new Emerging Technology Programme – This program will co-fund the costs of trials and adoption of frontier technologies like 5G, artificial intelligence and trust technologies.
  • The Chief Technology Officer, or CTO-as-a-Service initiative – This will help firms to identify and adopt digital solutions by providing access to professional IT consultancies.
  • Introduction of the new Digital Leaders Program – This will support promising firms in hiring a core digital team and in developing and implementing digital transformation roadmaps.
  • For existing enterprise schemes such as the Scale-up SG programme, Productivity Solutions Grant, Market Readiness Assistance Grant, and Enterprise Development Grant, the Government will extend the enhanced support levels of up to 80% until the end of March 2022.
  • There will be an extension of the Wage Credit Scheme for a year, at a co-funding level of 15%.
  • Introduction of a Household Support Package, to provide additional support to families.

South Korea

Updates on 2020 tax Revision

The government announced its updates to the 2020 tax revision on January 6, 2021.  Major changes are as follows – 

  • An extra 10 percent income tax deduction of up to 1 million won for credit card spending is provided and the same is applicable to the amount exceeding the previous years by five percent or more.
  • Temporarily expand the job creation tax incentive to companies which could not retain employees in 2020, the tax incentive will be given if jobs have increased from 2019.
  • National employment insurance:  Require employers to report their wage payments every month, instead of every quarter or half, and for outsourcing jobs, every quarter, a change from every year
  • Expand the corporate investment tax deduction to almost all businesses except rental property businesses and clubs.
  • Raise the tax deduction ceiling for corporate discretionary expenses and advertising expenses
  • The simplified VAT ceiling has been raised for revenues up to 80 million won from 48 million won
  • Expand the new technology R&D tax reduction to 240 technologies, an increase from 223 technologies, including Digital and Green New Deal technologies and bio health technologies

Implication:  

Companies operating in Korea needs to check for any additional deductions they might claim and to check for increased compliance for National employment insurance.

Spain

Amendments to the taxation introduced by Law 11/2020, on General State Budgets for 2021 (BOE of December 31)

Increase in tax rate for high earners

Effective January 1, 2021, a new bracket has been added under personal income tax for the net taxable income that exceeds €300,000, which will be taxed at the rate of 24.5%.

Update introduced on labor laws 

There have been many changes to Labor law in Spain. Some of the important changes are as follows: –

  • Equality Plan:
  • From March 7, 2022 it is mandatory to have an equality plan for companies with up to 50 people.
  • Salary Register
  • The salary register or remuneration register will be mandatory as of April 14, 2021 for all companies irrespective of their size or number of employees, it must include all the average amounts ​​of company worker’s wages (this include all employees regardless of the type of contract under which they are employees) including salary supplements and non-wage benefits, separated by sex and distributed by professional groups, professional categories or equal jobs or equal value work. 
  • The  register is applicable for one calendar year and any changes to the information or applicable regulations shall be updated accordingly.
  • Paternity leave

Effective January 1, 2021, the paternity leave period will be 16 weeks out of which the 6 uninterrupted weeks after delivery will be compulsory.

  • Teleworking:
  • Prior to March 2020 when the pandemic hit, remote and home-working was relatively unusual in Spain and therefore largely unregulated.
  • The Remote Work Law was entered into force on October 13, 2020 to regulate remote working in Spain and provides three month’s duration for the remote work agreement to be formalized between employer and employee.  
  • Similarly, a period of three months was given to the entities to apply the adaptations or changes to the individual remote work agreements which were not originally part of the collective agreements.
  • The ordinary Labor laws will continue to apply to the remote working as a result of the COVID-derived health measures.

Implication:

Employers will be under an obligation to make changes in Employment policy in order to bring changes regarding the Equality plan, Salary Register, paternity leave as well as the Remote Work Law

VAT Local Bank payments are no longer mandatory for non-resident businesses

Non-resident businesses with Spanish VAT registration will no longer have to make regular VAT settlements through Spanish Bank account. From March 15, 2021 taxpayers can use non-Spanish Banks as well. Note that this change does not affect the mandatory requirement of appointing a Spanish local VAT agent.

United Kingdom

UK’s Making Tax Digital (MTD) Phase 2 for VAT starts April 1, 2021 – Businesses to have Digital link between their software’s

United Kingdom (UK) has introduced the Making Tax Digital (MTD) for VAT in the year 2019 for first time, which is known as ‘soft landing’ period/phase. It covered businesses with annual turnover of more than GBP 85,000 i.e. VAT registration turnover and required them to submit VAT returns electronically.

The second phase was originally planned to be effective from April 2020. However, due to COVID-19 pandemic, it was postponed until April 2021. Now, the second phase will become applicable for VAT period starting April 1, 2021. In second phase, apart from using electronic VAT return filing, the businesses who use different pieces of software are required to have ‘digital link’ between them. A ‘digital link’ is a transfer or exchange of data that can be made electronically between software programs, products or applications without the involvement or need for manual intervention. Manual typing or pasting of data will not be considered as digital links for MTD purpose. However, a spreadsheet emailed to the outsourced VAT compliance provider is allowed under the second phase.

Implication:

UK businesses are required to have a digital link for MTD purposes in order to avoid any non-compliance and penalties thereof. 

 The UK simplifies VAT treatment for import of goods from outside Great Britain (GB) under Postponed Accounting (PA)

Post Brexit, the United Kingdom (UK) has become a third country for EU member states and any acquisitions are treated as import and thus requires a declaration when imported.

To make the accounting for import VAT simpler, the UK announced the Postponed Accounting (PA), which is an accounting for import VAT on a VAT return. It means the business (importer) must make declarations and recovers import VAT in the same return rather than having to pay it upfront and recover it later on. Brief details of PA are as under:

  • Normal rules in case of input tax reclaim under VAT will apply.
  • From January 1, 2021, the businesses registered for VAT in UK are able to account for import VAT in its return for the goods which are imported into Great Britton (England, Scotland and Wales) from anywhere outside the UK and imported into Northern Ireland from outside the UK and EU.
  • No changes in VAT treatment for movement of goods between the Northern Ireland and EU.
  • No approval required to account for import Vat on its return.

Implication:

Businesses registered under UK VAT are eligible to take benefit of Postponed Accounting (PA) while accounting for their import VAT. It will also provide a cash flow benefit as it removes the need to account for the import VAT when typically due. 

UK companies are not required to appoint a fiscal representative for VAT post Brexit in Italy

Post Brexit, United Kingdom (UK) is treated as a third country in the EU member states for VAT purpose and this change in status requires UK businesses (having EU VAT number) to appoint a fiscal representative in EU member states. However, Italy has confirmed that no such appointment of a fiscal representative is required in Italy, which is based on the EU-UK Trade and Cooperation Agreement.  

UK Budget 2021 Highlights

The Chancellor of the Exchequer presented the United Kingdom (UK) Budget 2021 to Parliament on March 03, 2021. The UK Budget 2021 has continued to provide for benefits under several coronavirus support schemes. As stated in the budget statement, GDP in 2020 fell by 9.9%, the largest annual fall in 300 years. It is also stated that, taking into account the measures announced at Budget 2020, which included significant capital investment; total support for the economy amounts to GBP 407 billion this year and next. It is the largest peacetime support package for the economy on record.

As per the Budget 2021, key rates are unchanged – No changes in corporation tax rate (currently 19%); however, it will increase sharply in April 2023, employer and employee NIC rates are also unchanged, Income Tax, Capital Gains Tax rates also remain unchanged, the VAT rates and thresholds remain the same as well.

The highlights of the 2021 budget are as follows:

For Individuals

  • Effective April 2021, the income tax personal allowance will be increased from GBP 12,500 to GBP 12,570 per year. It will remain frozen until April 2026.
  • For the year 2021-22, the individual income tax basic rate threshold will be increased from GBP 37,500 to GBP 37,700. Therefore, the individual income tax higher rate threshold (i.e. the Personal Allowance plus the basic rate limit) will increase from GBP 50,000 to GBP 50,270 for 2021-22. It will remain unchanged until April 2026.
  • For the year 2021-22, there will be increase in National Insurance contributions (NICs) thresholds per year, as follows. The upper earning limit will remain unchanged until April 2026.
Particulars 2021-222020-21
Lower Earnings LimitGBP 6,240GBP 6,240
Primary ThresholdGBP 9,568GBP 9,500
Secondary ThresholdGBP 8,840GBP 8,788
Upper Earnings LimitGBP 50,270GBP 50,000
  • The Capital Gains Tax Annual Exempt Amount (AEA) will be maintained at the present level until April 2026 i.e. it will remain at GBP 12,300 for individuals etc.
  • The Working Tax Credit claimants will receive at GBP 500 one-off payment over the next 6 months.

For Employers

  • The introduction of a retrospective income tax exemption for payments that an employer makes to an employee to reimburse for the cost of a relevant coronavirus antigen test for the tax year 2020 to 2021. The same will be extended for 2021 to 2022. There will be no Income Tax liability for the employee or employer.
  • From April 2021, the national living wage (i.e. minimum wage) will increase from GBP 8.72 to GBP 8.91.

For Companies

  • From April 2023, the corporate income tax (CIT) rate will increase to 25% (Currently at 19%) on profits above GBP 250,000. However, the rate for smaller companies having profits under GBP 50,000 will remain at 19%. Also, Companies with profits between GBP 50,000 and GBP 250,000 will be taxed at the main rate of 25% but will be able to claim marginal relief.
  • From April 2023, the Diverted Profits Tax rate will rise from 25% to 31% so that it remains an effective deterrent against diverting profits out of the UK.
  • Effective April 2021, for company vehicles, the fuel benefit charges and the van benefit charge will increase in line with CPI (consumer price index).
  • As announced in the Budget, the government will provide for an extension of income tax and National Insurance Contribution exemption for COVID-19 related home office expenses until April 5, 2022.
  • From April 1, 2021 until March 31, 2023, a company investing in qualifying new plant and machinery assets will get the benefit of a 130% first-year capital allowance.
  • New visa-scheme will be introduced for helping start-ups and rapidly growing tech firms to attract talent from overseas.

VAT

  • No changes in the VAT registration and deregistration thresholds for a further period of 2 years from April 1, 2022.
  • The scope of Making Tax Digital (MTD) for VAT to be extended to all VAT registered businesses effective April 1, 2022.
  • The UK Budget 2021 preponed the implementation date to May 1, 2020 instead of December 1, 2020 for introducing legislation for a zero rate VAT on e-publications i.e. to make it clear that e-books, e-newspapers, e-magazines, and academic e-journals are entitled to the same VAT treatment as their physical counterparts.

Other measures

  • Interest harmonization and reform of penalties for late submission and late payment of tax –
  • The UK government proposed to reform the penalty regime for VAT and Income Tax Self-Assessment (ITSA) to make it fairer and more consistent. The new regime will be points-based and a financial penalty will be levied only when the relevant threshold is reached.
  • Under the new regime, penalties will be proportionate to the amount of  the tax due and the tardiness of the  payment.
  • The government will introduce a new approach to interest charges and repayment of interest to align VAT with other tax regimes.

Covid-19 Support Schemes

  • An extension of the Coronavirus Job Support Scheme to September 2021 across the UK.
  • Effective April 06, 2021, the UK government will provide a new Recovery Loan Scheme. It will be open to all businesses. It will provide lenders with a guarantee of 80% on eligible loans of between GBP 25,000 and GBP 10 million.
  • Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.
  • Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to GBP 3,000.

United States of America

California

New COVID-19 Reporting Obligations for California Employers Took Effect from January 1, 2021

The employers in California are now obligated to notify the employees (and employers of subcontracted employees) along with the Public Health Officials in case of COVID-19 exposures at the workplace as per the new law effective January 1, 2021. This new law also empowers the Public Health Officials to close down the workplace fully/partially in the event that they find the workplace unsafe for employees. The following are the features of the new law:

Closures, Prohibitions on Use, and Posting at the Workplace. 

The authority can close down the workplace or prohibit the entry to the part of workplace exposed to the hazard which can cause COVID 19 infection. The Notice given by the Authority (i.e. The Division of Occupational Safety and Health (DOSH) known as CAL/OSHO) needs to be posted at the workplace and can only be removed if permitted by the authority.

Notice to Employees. 

In case of a receipt of a notice of a potential exposure to an individual infected by COVID-19 or who was subject to an order to isolate, the following actions must be initiated by the employer within one business day of notice:

  • Issue a written notice to all the employees and contractors who were working at same place as the individual during the infectious period that they may have been exposed to COVID-19.
  • The notice must be sent to all employees in the regular way of communication which has been followed prior to that date by the employer and employee.
  • The employer shall arrange to provide all the benefits to the employees who are exposed by the infection under Federal as well as State laws such as leaves or compensation.
  • The employer must notify all employees of the disinfection and safety plan the employer intends to implement pursuant to Center for Disease Control (CDC) guidelines.

Notice to Public Health Agencies of Outbreak. 

In case the employer is notified of three or more laboratory confirmed employee cases of COVID-19 living in different households within the period of two weeks, the public Health Agencies must be notified of such cases with required details within 48 hours of receipt of such information by the employer. Any subsequent finding of cases of COVID-19 must be reported to local health department.

Privacy Rights and Anti-Retaliation. 

The privacy of the employee must be protected by the employer and the employer shall not ask employee to disclose medical information unless otherwise required by law. Any worker believing that employer has compelled him/her to disclose the information may file a complaint with the Division of Labor Standards Enforcement (DLSE).

Maintenance of Records.

All written notifications are subject to preservation for the period of three years.

Implication:

The employer shall take note of the above-mentioned reporting and disclosure obligations along with the requirement of maintaining records of written notifications to avoid any non-compliance or penalties for violations of these provisions.

Global Updates

Argentina

Regulations for the Remote-work Law introduced via Decree No. 27/2021

By virtue of the resolution 54/2021 passed on February 5, 2021 the Remote Employment Law No. 27,555 and its regulations shall be effective from April 1, 2021. The Government had also issued the Presidential Decree no. 27/2021 (“Decree”) to implement and regulate some of the sections of the Remote Employment Law. The highlights of the law are as follows.

  • Consent: Workers must give their consent to work remotely on employer’s request.
  • Applicability: The regulations will not be applicable to the following employees.
  • Rendering the services from Client Establishment to whom continuous services are provided
  • Remote work applies periodically and irregularly from the employee’s domicile
  • Employees with disturbed schedule due to various reasons must communicate virtually and precisely about the start and end of non-working time. 
  • Employer must respond to the request made by employee for working from employer’s premises within 30 days. Reversibility would not apply for employees who had agreed to a remote-work regime at the beginning of the employment relationship.
  • Employees working remotely are entitled to receive the same rights and benefits assigned for workers who are working in person and their remuneration cannot be lower than that of in-person workers.
  • Employer shall assure that the employee working remotely is well equipped to perform his/her duties.
  • Remote workers will have the right to compensation for the costs of connectivity and/or consumption of services.

Implication:

The employer shall take into consideration the provisions regarding the remote work law to ensure smooth practice and compliance. The employer is expected to prepare remote working policies and additions to employment contracts to effect the changes. 

Russia

Reduced pension and social insurance contributions for IT companies

Effective January 1, 2021, the Russian Government approved an amendment in the tax code and revised the pension and social insurance contribution rates for IT and Technology companies. The rates are as follows:

  • Compulsory pension insurance is reduced to 6% from 8%.
  • Compulsory social insurance in the event of temporary incapacity or maternity or other income of foreign citizens or stateless individuals temporary living in Russia is 1.5% previously 1.8% to 2%.
  • Compulsory medical insurance is reduced to 0.1% from 4%.

Thailand

Thailand’s Personal Data Protection Act coming to effect from June 01, 2021 

Thailand’s Personal Data Protection Act (PDPA)  will be in effect from June 1, 2021. It aims to offer comprehensive protection against any misuse or mishandling of personal data. It is applicable to all employers who collect any kind of data from their employees. Below are some of the features of PDPA:

  • Data Handling and recruitment process

Employers need to obtain employees consent for collection of personal data and such collection is only for the data, which is necessary to meet any legal purpose. 

  • Sensitive Personal Data

PDPA prohibits the collection of sensitive personal data from employees without obtaining the express consent. Sensitive personal data may include employee’s data related to Ethnic background, Religious affiliation, Race, Political opinion, Biometric data, Sexual orientation, Criminal records, and Health records.

  • Data Security

Employer is required to have appropriate security measure (digital and physical) at workplace for protection of employee’s personal data. Any security breach shall be reported within 72 hours of becoming aware of such breach to the Office of the Personal Data Protection Committee.

  • Data Retention

Employer should inform, at the time of data collection itself, about the data retention period to the employees. The PDPA does not provide for definite retention period; however, the companies may consider a retention period of 10 years as this is the maximum prescription period for unfair termination.

Implication:

As the Data Protection Act (PDPA) in Thailand is coming into effect soon, employers need to revise their policy for protection of employee’s personal data to be compliant with new data protection act. 

United Arab Emirates

Abu Dhabi Global Market (ADGM) introduces New Data Protection Regulations 2021

On 14th February 2021, the Abu Dhabi Global Market (ADGM) enacted its new Data Protection Regulations 2021 thereby replacing the current Data Protection Regulations 2015 regime following a transition period of 12 months for current businesses established in ADGM prior to 14th February 2021 and six months for new businesses established in ADGM on or following 14th February 2021.

Key amendments to the Regulations include:

  • Levying Data Protection Fee for all Controllers subject to the Regulations.
  • In companies where Processing is conducted by a public authority or companies that process high volume of personal data and/or Special Categories of Personal Data may now be required to appoint a DPO.
  • An obligation on the Controller to conduct a Data Protection Impact Assessment.
  • Two months period to report to Data Subjects’ requests.
  • Controllers are obliged to alert the Commissioner of the Data Protection of a Data Breach within 72 hours of becoming aware of it. 

Companies governed by the Regulations must update or design policies and contractual documents, including and/or addressing a data protection policy to be circulated among employees setting out why and how personal data will be collected, as well as how long the personal data will be retained and a privacy policy setting out the company’s processing activities which must include the following information:

  • The name and contact details of the company’s Controller and DPO;
  • The type of personal data processed by the company; its purpose(s) and the company’s data retention policy;
  • A narrative of the type of data subjects and the individuals who will have access to personal data;
  • A narrative of the “technical and organizational measures” employed to warrant the security of personal data; and
  • An account of all appropriate safeguards applied when sharing personal data abroad.
  • The execution of a deletion strategy and process to securely and perpetually deleted Personal Data after the retention period has expired.
  • The preparation of written agreement with suppliers, distributors and clients.

Implication:

Businesses must adhere to the new data protection norms established by the new Data Protection Regulations and ensure smooth compliance to avoid any penalty for non-compliance.

Global GDPR Fines – Select Cases

CountryGDPR Fines
Czech RepublicDPA (UOOU) fined 11 companies a total of EUR 118,500 for sending unrequested postal advertising messages to the mailboxes of various citizens.
Spain
The Data Protection Authority (DPA) found that the controller of the two companies namely Waitum, S.L. and Servicios Aby violated the principles of purpose limitation and data minimization. The letters sent to the customer mentioning alleged breaches of contract and non-payment by the companies to the controller was found to be unlawful and unnecessary by DPA on part of the controllers. 
IBERDROLA CLIENTS, SAU was fined €50,000 by The Spanish Data Protection Authority for violating of Art.5 (1) GDPR and 17 GDPR.
Vodafone fined €200,000 by the Spanish Data Protection Authority for processing the complainant’s personal data although it did not have legal basis to do so. The fine was eventually reduced to €120,000.
SwedenThe Swedish Authority for Privacy Protection (IMY) has fined the Swedish Police Authority for SEK 2,500,000 as the personal data was processed by using Clearview AI to identify individuals which was in breach of the Criminal Data Act.
United KingdomThe Information Commissioner’s Office (‘ICO’) has imposed a fine of GBP 50,000 to Muscle Foods Limited for sending unsolicited marketing calls and SMS messages to individuals without their consent over a period of seven months.
The Information Commissioner’s Office (‘ICO’) has imposed a fine of GBP 150,000 to the House of Guards Bournemouth and GBP 120,000 to Call Centre Ops Ltd for making nuisance calls made to numbers registered with the Telephone Preference Service (TPS), which resulted in a breach of the Privacy and Electronic Communications (EC Directive) Regulations 2003 (‘PECR’).

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