Argentina

New thresholds have been set for submission of the Transfer Pricing Study (Local File) and Master File (Master Report)

Argentina simplified its transfer pricing regime and updated thresholds for the Master Report (Master File) vide General Resolution 5010/2021. In addition, new thresholds have been set for the submission of the Transfer Pricing Study (Local File) as under:

• Total operations with related parties exceeding ARS 3 million in the aggregate or exceeding ARS 300,000 for an individual operation; or
• Total operations with parties (related or unrelated) in non-cooperative or low/no, tax jurisdictions exceeding ARS 3 million in the aggregate or exceeding ARS 300,000 for an individual operation.

The new threshold for Master file (Master Report):

• Annual consolidated group revenue in the previous year does not exceed ARS 4 billion (increased from ARS 2 billion)

In the case of related party operations, the general threshold stands reduced from ARS 30 million to ARS 3 million. The threshold for operations with non-cooperative or low/no tax jurisdictions is unchanged. The new thresholds apply from the fiscal year ending December 31, 2020.

Implication

The companies will need to revisit applicability and the scope of transfer pricing compliances applicable to them in light of updated thresholds.

Australia

Base rate entity company tax rate stands reduced from 26% (2020-21) to 25% (2021-22).

The company tax rate for base rate entities for the 2021-22 income year and thereafter stands reduced to 25%. A base rate entity means a company fulfills the below-mentioned criteria:

• Their aggregate turnover is less than the aggregate turnover threshold which is not more than AUD 25 million for 2017-18 and AUD 50 million from 2018-19; and
• 80% or less of their assessable income is base rate entity passive income.

The tax rate for these base rate entities was 26% earlier whereas the standard tax rate for companies other than the base rate entities is unchanged at 30%.

Implication

The base rate entities can take advantage of the reduced company tax rate for assessing their tax liabilities.

Paid Parental Leave (“PPL”) entitlement extended to parents facing stillbirth

The Fair Work Amendment (Improving Paid Parental Leave for Parents of Stillborn Babies) Bill 2021 amends the Fair Work Act 2009 (“Cth”) ensuring that the employees get access to the same amount of employer-funded Paid Parental Leave (“PPL”) regardless of the end result of pregnancy (stillbirth or live birth), and regardless of the nature of entitlement (legislative or arising under an industrial instrument). The current Parental Leave Pay period is 12 weeks. The Bill safeguards the entitlements to Paid Parental Leave (“PPL”) and prohibits the employer to cancel Paid Parental Leave (“PPL”) depending on the birth end result.

Further, thePaid Parental Leave Amendment (COVID-19  Work Test) Act 2021 and Paid Parental Leave Amendment (COVID-19  Work Test) Rules 2021 have brought certain changes in the paid parental leave scheme. A person in receipt of a COVID-19  Government payment/COVID-19  Disaster payment will be considered to be performing qualifying work for the purpose of the paid parental leave work test for Parental Leave Pay (“PLP”), Dad and Partner Pay (“DaPP”). The rules allow a calculation method of the number of hours of qualifying work performed by such people.

Implication

Employers should evaluate their payroll policies and modify them whenever necessary in view of the changes made to the paid parental leave rules.

Payroll Tax payment and Annual Reconciliation deadlines have been extended for the months of July 2021 and August 2021

The New South Wales and Queensland Government extended payroll tax deadlines for July 2021 and August 2021 due to COVID-19  concerns. The payments for July 2021 and August 2021 can be made by October 07, 2021. Similarly, the deadline for submission of the annual reconciliation for the 2020-21 financial year is extended to October 07, 2021.

Implication

Employers can avail the benefit of an extended deadline.

Extension of virtual meeting relief by Treasury Laws Amendment (2021 Measures No. 1) Act 2021

The Treasury Laws Amendment (2021 Measures No. 1) Act, 2021 has extended the temporary relief allowing virtual meetings in the wake of COVID-19 crisis. The companies are allowed to conduct virtual meetings of their members and directors. The virtual meetings must have audio and visual access, all attendees must  have sufficient information and have access to all documents. It also enables the company to use electronic mode to send meeting-related documents. Earlier, the relief was available until March 2021 which has now been extended till April 01, 2022.

Implication

The companies may consider taking advantage of this extended relief measure wherever necessary.

Brazil

Deadline for delivery of the Tax Accounting Bookkeeping (“ECF”) extended to the last business day of September 2021 (previously the last business day of July 2021)

Federal Revenue has extended the deadline for transmission of the Fiscal Accounting Bookkeeping (“ECF”) through RFB Normative Instruction No. 2039, of July 14, 2021.

Normally, the presentation of the ECF must be transmitted by the last business day of July each year. Due to COVID-19 pandemic, the presentation of the Tax Accounting Bookkeeping is extended to the last business day of September 2021.

Implication

Companies may avail of the extension provided for submission of Tax Accounting Bookkeeping (“ECF”).

Brazilian Data Protection Law (“LGPD”) Administrative Sanctions are effective from August 1, 2021

The administrative sanctions provided for the violations of provisions of Brazilian Data Protection Law (“LGPD”) – Law No. 13.709/2018 (the “Law”) are enforceable from August 01, 2021.

Some of the administrative sanctions are as under:

• Warnings;
• Fines not exceeding 2% of net revenue of the company capped at BRL 50,000,000 for each and every offense;
• Fines computed on daily basis;
• Suspension of operation of database (partially or totally) for 6 months;
• Suspension of performance of any activity related to the processing of data.

Administrative sanctions may apply to any controller who is responsible for the decision regarding personal data processing or to any processor who carries out such processing of personal data.  The law can have extra-territorial application and is applicable to controllers and processors located in foreign territory.

Implication

The companies processing data will need to comply with the applicable provisions of Data Protection Law to avoid hefty penalties.

Canada

2021 Budget implementation Bill C-30 receives Royal Assent on June, 29 2021

On June 29, 2021, the Bill C-30 received Royal Assent for Budget Implementation Act, 2021 No.1. This Bill implements certain tax measures announced on November 30, 2020 federal fall economic statement, the 2021 federal budget, as well as in the 2019 federal budget along with some previously announced tax measures. The passage of Bill C-30 enacts the government’s budget plan as to the fight against COVID-19, creation of jobs and growth, and ensuring a robust economic recovery. The budget had several proposals relevant for individuals, businesses, employers as well as various COVID-19 support measures.

Some of the key measures in Bill C-30 are given below:

• Extension of the Canada Emergency Rent Subsidy, the Canada Emergency Wage Subsidy, and Lockdown Support until September 25, 2021, in order to give businesses and workers confidence as well as certainty as the recovery takes hold;
• Introduction of the “Canada Recovery Hiring Program” a new alternative temporary wage subsidy, which will provide eligible employers a subsidy on incremental remuneration paid to eligible employees. This will be available retroactively from June 6, 2021 until November 20, 2021;
• Introduction of CAD 15 per hour federal minimum wage effective December 29, 2021;
• Certain federal budget measures related to Transfer pricing rules
• Extension of foreign affiliate dumping  rules to a corporation resident in Canada that is controlled by non-resident individuals, trusts, or a group of non-arm’s length persons
• Certain indirect tax measures which were announced in the 2021 budget or previously announced
• The other previously announced changes in Bill C-30 include:
  • Amendments targeting some cross border security lending arrangements
  • Various technical amendments relating to the accelerated investment incentive rules and accelerated capital cost allowance
  • Amendment to broaden eligibility for the enhanced capital cost allowance to additional zero-emission vehicles

GST/HST registration requirement for non-resident digital economy businesses effective July 1, 2021

Non-resident digital economy businesses will begin charging GST/HST from July 1, 2021, concerning their sales to Canada. These businesses have not previously been required to charge Canada’s sales tax i.e. GST/HST while selling or providing online video streaming services, mobile apps, and other digital platform-based products to Canadian consumers.

New rules will apply to the following types of business from July 1, 2021:  

• Sale of  cross-border digital products and services which includes video/music streaming services;
• Platform-based short-term accommodation including homestays/vacation rentals (less than 1 month and more than CAD 20 per day);
• Supply of qualifying goods in Canada including through fulfillment warehouses in Canada, except goods shipped by courier/mail from outside of Canada.

Implication

All eligible businesses need to register for GST/HST and comply with their obligations.

Regulations on changes for Taxation of Employee Stock options – received Royal Assent on June 29 2021

On June 29, 2021, a proposal introduced in 2019 to make changes to the taxation of employee stock options received Royal Assent and has become law from July 1, 2021. The new rule introduces a CAD 200,000 annual limit over employee stock options, which may qualify for 50% stock option deduction. However, it does not apply to stock options CA granted by Canadian-controlled Private Corporations (“CCPCs”)/ non-CCPCs whose annual gross revenue is CAD 500 million or less.

Implication

The companies to which the new rule would apply have to notify the employees when they grant stock options that exceed the specified limit. Failure to notify the optionee can result in loss of the corporate deduction.

China

Social security for foreign employees working in Shanghai

Shanghai Municipal Human Resources and Social Security Bureau had issued a notice stating that foreign employees legally working in Shanghai may contribute to China’s social insurance scheme in Shanghai voluntarily. Shanghai authorities have followed a practice of regarding the contribution from foreign employees as voluntary based on this notice. However, now this notice has expired on August 15, 2021.

There is speculation in the media that foreign employees in Shanghai could be required to contribute to China’s social insurance scheme starting from August 2021 even though they could provide home country coverage certificates.

Implication

Employers hiring foreign employees should monitor and evaluate the developments regarding social insurance applicability to foreign employees working in Shanghai.

China’s Personal Information Protection Law (“PIPL”) to be effective from November 1, 2021 and Shenzhen’s Data Regulation to be effective from January 1, 2022

National People’s Congress of China, after three deliberations, adopted the Personal Information Protection Law on (‘PILP’) August 20, 2021, which will become effective from November 1, 2021.

The principle of PIPL

PIPL establishes the principle of personal information protection, and the core rule is to use informed consent as a basis to decide on the processing of personal information. The processing of personal information is required to have a clear and reasonable purpose and it shall be directly related to the purpose of processing, in a manner that has minimal impact on the rights and interests of individuals.

Obligations of personal information processor

Personal information processors are required to formulate internal management systems and operating procedures in accordance with the law. They are required to take appropriate security measures, conduct regular compliance audits of the personal information activities and conduct automated decision-making concerning the processing of sensitive personal information, the use of personal information. They should conduct prior impact assessment of high-risk processing activities such as the provision or disclosure of personal information and fulfill the obligations of personal information disclosure notification and remediation.

Special attention to cross-border personal information delivery

Personal information processors may provide personal information to a recipient outside China due to business necessity after satisfying at least one of the following conditions:

• A security assessment organized by the national cyberspace authority has been passed;
• Certification of personal information protection has been given by a professional institution;
• A contract has been concluded with the overseas recipient based on the standard contract provided by the national cyberspace authority, specifying the rights and obligations of both parties.

When personal information is provided abroad, the person handling the information shall take the necessary measures to ensure that the activities of the overseas recipient in processing the personal information meet the standards for the protection of personal information stipulated in this Law.

Supervisory authorities and legal liabilities for non-compliance

The personal information protection law does not provide for a single supervisory authority in charge of personal information protection matters. Specifically, the Cyberspace Administration of China is responsible for the overall coordination of personal information protection as well as relevant supervision and regulatory issue. The relevant authorities at the different level are responsible for personal information protection and the supervision within their respective scopes of duties.

The law establishes rigorous punitive measures for violation of personal information protection. Violators may be subject to confiscation of illegal gains, a fine up to RMB 50 million or 5% of the its turnover for previous year, business suspension or revocation of Business License. Any person with direct responsibility will be fined up to RMB 1 million and may also be banned from serving as a director, supervisor, senior officer, or personal information protection officer of the relevant company for a certain period of time.

Shenzhen regional data protection law

Further, Shenzhen MunicipalPeople’s Congress has approved regional data protection law, ‘Data Regulation of the Shenzhen Special Economic Zone’ (“Shenzhen Data Regulations”) on June 29, 2021, and it will be effective from January 1, 2022.

Some highlights of the regulations are as follows:

• Shenzhen Data Regulations have the same set of rules for data processing as mentioned in PIPL.
• Violation of the personal data protection and data security rules could attract fines up to 5% of turnover but not more than CNY 50 million.
• Similar to PIPL, Shenzhen Data Regulations restrict discriminatory treatment to customers by using data profiling.
• Shenzhen Data Regulations provide a Five Data Minimization Tests that personal data shall have a direct relation with the processing purpose, the amount and frequency of data processing shall be minimum, time of personal data storage shall be the minimum and only the authorized person shall be allowed to access the minimum amount of personal data information.

Implication

As the Personal Information Protection Law and Shenzhen Data Regulations are coming into effect soon, companies need to prepare their policy for the protection of employees’ personal information to be compliant with new laws and regulations.

Colombia

Colombia updates procedure for filing Transfer Pricing Return and CbCR Notification

The Colombian tax authority (“DIAN”) through Resolution No. 000072 of August 11, 2021, has laid down the procedure for submission of Transfer Pricing Return (Form 120), and also the Country By Country Report (“CbCR”) notification for 2020 and part of 2021. The Resolution also provides for the technical requirements for submission of the return electronically through e-services. The taxpayer should use Format 1125 Version 13 for validation of Form 120. As far as CbCR notification is concerned, and if a taxpayer is under no obligation to submit Form 120, the CbCr notification should be completed in a prescribed excel format and email must be sent to pricestransferencia@dian.gov.co.

Implication

The taxpayers should note and follow the procedure for filing transfer pricing returns and CbCr Notification.

Czech Republic

Czech Republic proposes new legislation for whistleblowers’ protection

The Czech government mulls on a new Act on the Protection of Whistleblowers. The regulations aim at drawing attention towards the illegal practices at the workplace and protecting the whistleblowers against retaliatory measures taken against them by the employers/ obliged entities. The law will affect most areas of business activities including employment, consumer protection, financial services, corporate income tax, etc.

The ‘Protection of Whistleblowers bill’ which is yet to be approved is set to impose a host of new obligations for employers with a staff of at least 25 employees in the past calendar quarter. Some of the obligations will include:

• Establishment and implementation of an internal reporting system (alongside other measures) by March 31, 2022;
• Information on methods of notification to concerned people;
• Designation of a competent person to receive and assess the validity of the notification made;
• Public announcement of reporting channels for the submission of information through an online platform, etc.

The Whistleblowers Protection Bill is based on the EU Directive 2019/1937 of the European Parliament. The bill defines a list of acts that can be termed as retaliatory measures against the whistleblower such as termination of employment, changing or increasing work hours, a pay cut, withholding career development, etc. A fine of up to CZK 1 million or 5% of their net turnover may be levied in case of a breach. On the other hand, in case of false notification, the whistleblower can be fined a penalty of up to CZK 50,000.

Entities affected by the legislation will have to conform to the new legal obligations by March 31, 2022. The current bill is expected to be implemented by December 17, 2021.

Implication

Companies should monitor the developments relating to the proposed law as it would entail additional compliance on implementation of the law.

Amendment to State Social Support Act; Increased child allowances applicable retroactively w.e.f.  January 1, 2021

The Czech government amends State Social Support Act to increase child allowances and other benefits. The act enters into force on July 28, 2021.

The following are the changes in allowances and annual tax credits:

• Child tax credit: Increases from CZK 19,404 to CZK 22,320 for the second child, and from CZK 24,204* to CZK 27,840 for the third and another following dependent child (under certain conditions). The child tax credit for first child has remained the same.
• Tax bonus: If there is a negative tax after deducting credits for children, taxpayers are entitled to a “tax bonus” which will be paid to the individuals by the state. This bonus is available to those who have a monthly income of at least half the minimum wage in the last year.
•  The ceiling on the amount of bonus that can be received from the State is removed.
• There is a one-off payment of parental allowance:
• In Czech Republic maternity leave is financial support and is paid for 28 weeks. If a person is not eligible to claim maternity leave they may instead claim the parental allowance as soon as the child is born.
• If a parent has claimed parental allowance but due to a another child being born has lost the right to parental allowance (due to the maternity allowance for the next youngest child), then that person can claim a one-off payment of the amount not exhausted from the total amount of parental allowance. The one-off payment of the amount shall be paid to the parents in the following month after the birth of the child.
• Child allowance: Child allowance is a basic long-term benefit provided to the low-income families with dependent children. A dependent child up to the age of 26 years old living in a family with an income lesser than 3.4 times the “family’s living minimum amount” (i.e. the subsistence level) is entitled to this allowance. Earlier the limit was 2.7 times the subsistence level of the family.
• The annual benefit per child will however remain at the current CZK 15,204 for 2022.

Higher amounts of tax benefits are retroactively applicable from January 1, 2021, (only in the annual tax settlement for 2021 or in the tax return for 2021); however, while settling the monthly salary, higher amounts of benefits will be applied only from January 2022.

Implication

The increased child tax credit and tax bonus will financially aid employees with 2 or 3 children. The employers will have to make changes in the withholding tax calculations, if any.

Czech Employment Act amended; Employer can face a penalty up to CZK 10 Million for outsourcing, service contracts, etc.

The Czech Employment Act is amended to curb hidden employment practices. The amendment entered into force on August 2, 2021.

The new amendment aims to enshrine the obligation of entities using the services of agency staff and to ensure that the proportion of staff seconded to them temporarily is not higher than 10% of all staff.

Hidden agency employment is where a legal entity without an employment agency license assigns its employees to a third-party user to carry out dependent work. The contract employees are supervised and managed by the third-party user itself. Now going forward the outsourcing, service contracts, or contracts on work will require detailed review to verify that they do not show signs of hidden agency employment or disguised agency job. The breach will entitle the government to levy a fine of up to CZK 10 million.

Implication

The employers will have to review new and existing service contracts or contracts on work very carefully to avoid getting them classified under hidden agency employment.

France

French Parliament Approves Amending Finance Bill 2021 including Loss Carry back Relief

The French Parliament approved the amendments reflected in the Finance Bill 2021 on July 12, 2021. Subject to review by the French Constitutional Council (“Le Conseil constitutionnel”), the bill is finalized and will be published at the earliest.

The amendments primarily concern the carrying back of tax losses. The amendments have temporarily altered the mechanism’s timing and amount, which are discussed below:

• The Company can utilize the tax losses incurred during fiscal years ended June 30, 2020, and June 30, 2021 to offset profits for the previous three fiscal years (i.e., 2019, 2018, and 2017 for a company with a fiscal year ending on December 31, 2020);
• No cap on the amount of the tax losses to be utilized (previously capped at EUR 1 million).
• The deadline to file the election for availing the benefit is the due date for filing the corporate income tax return (i.e. generally September 30, 2021) with a fiscal year ending on June 30, 2021.
• The amount of set off will be calculated using the Corporate Income Tax rate in effect for fiscal years beginning on or after January 01, 2022 and based on the fiscal year’s turnover. (Generally 25% for 2022).

Implication

The company shall take into consideration the amendments concerning carry back losses and file the election before the set deadline to avail benefits.

Germany

Deadline for filing 2020 Tax Return extended until October 31, 2021

The Bundersrat (“Federal Council”) has approved the extension of 3 months for filing the 2020 tax return until the end of October 2021. Tax returns prepared by tax consultants and taxpayers who prepare their own tax returns are both eligible for the three-month extension for the 2020 assessment period.

In cases where the employer has hired a tax advisor with the responsibility of the preparation of the return, the due date is further extended to May 31, 2022. The taxpayer will also enjoy the grace period of three months for paying back the overdue tax before the interest starts accruing on such unpaid and overdue tax.

Implication

The taxpayer shall take into consideration the extension given for filing of 2020 tax return and plan the filing activity accordingly.

Hungary

Introduction of new UBO Register in Hungary for Data Reporting

To implement 4th and 5th anti-money laundering EU directives, Hungary introduces the ultimate beneficial owners’ (“UBOs”) register. The UBO Register will be managed by the Hungarian Tax and Customs Authority (“TA”) & will work as a central database for the same.

The data on UBOs must be reported to the TA by the account holder bank. Moreover, UBOs need to inform their companies of any change in the personal data within 15 days and the companies must update their banks within 5 days. The banks are then required to regularly report to the TA.

Implication

UBO must be informed as and when the change happens, but an annual check for updating the UBO register should be done before the annual general meeting.

India

MCA introduces relief measures to fight second COVID-19 wave

The relief measures for companies introduced by the Ministry of Company Affairs (“MCA”) to fight the second wave of COVID-19 pandemic are as follows:

• The ministry has extended the deadline for holding the Annual General Meeting (“AGM”) for FY 2020-21 by 2 months, in light of the COVID-19 second wave. An AGM is required to be held within 6 months after the financial year-end of the company. The AGMs can now be convened by companies up to November 30 instead of September 30 for the financial year 2020-21 (for the year ending on March 31, 2021);
• The timeline for conducting Extraordinary General Meetings (“EGMs”) through Video Conferencing (“VC”) or other audio-visual means (“OAVM”) complemented with e-Voting facility/simplified voting is extended till 31st December 2021 which was  June 30, 2021 previously;
• Companies are allowed to conduct their Annual General Meetings (“AGMs”) through VC or OAVM where AGMs were due to be held in the year 2020 or become due in the year 2021. They can conduct such virtual AGMS on or before December 31, 2021. Companies are also allowed to send the Board’s reports, Auditor’s reports, financial statements, along with and other necessary documents through email.
• Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 which contains Matters Not to be Dealt With in a Meeting Through Video Conferencing or Other Audio-Visual Means has been repealed by the ministry now all the matters can be discussed in Board Meeting through video conferencing or other audiovisual means;
• The Companies (Auditor’s Report) Order, 2020 has now been made applicable from the audit of financial statements for the financial year 2021-22.
• Ministry vide notification dated June 18, 2021 extended the COVID -19 related rent concession from June 30, 2021 to June 30, 2022, by amending the Companies (Indian Accounting Standards) Rules, 2015.
• Considering the second COVID wave, the Ministry further extended the interval between the board meetings to 180 days for the two quarters– April to June 2021 and Quarter – July to September 2021 for the financial year 2021-22.
• An additional period of 180 more days has been allowed to comply with the requirement of filing a declaration for Commencement of Business by newly incorporated companies.
• Non-compliance of requirement as to minimum residency in India by at least one director for at least 182 days shall not be treated as non-compliance for the financial year 2019-20 and 2020-21.
• Expenditure incurred on activities relating to Central Armed Police Forces (“CAPF”) and Central Para Military Forces (“CPMF”) Veterans, and their dependents including widows have been considered as corporate social responsibility expenditure.

Implication

Companies can take benefit of relief granted by MCA specially extension of AGM for FY 2020-21 by 2 months.

BPO/KPO services not intermediary services; 0% GST on Supply of BPO/KPO services to foreign clients 

On September 17, 2021, India’s Goods and Services Tax (“GST”) Council in its 45^th meeting clarified the scope of terms “intermediary services” and “merely establishment of distinct person” (as per the Integrated Goods and Service Tax [“IGST”] act) in India. This clarification was awaited as it substantially impacted the Knowledge Process Outsourcing/ Business Process Outsourcing (“KPO/BPO”)  service industry with respect to supply of services to foreign customers. Pursuant to GST Council decision, a circular giving the clarification was issued by Central Board of Indirect Taxes and Customs (“CBIC”).

Earlier pursuant to an Authority for Advance Rulings (“AAR”) order arose a need for clarification as to whether back office services provided by BPO companies to foreign customers are to be treated as either exports (for tax /IGST purpose) or as intermediary services. Export of services are zero-rated under GST and not liable to the tax while intermediary service is subject to 18% levy under GST. In case of zero rated services a refund of the input tax paid is available to the service provider.

The circular clarifies that the scope of intermediary service neither includes an independent supply of such goods and/or services (i.e. supplying on own account) nor any ‘sub-contracting for a service’. Further, it clarifies that a person involved in supply of ‘main services which are not ancillary in nature’ on principal-to-principal basis to another person cannot be considered as ‘supplier of intermediary service’. For terming a service as ‘intermediary services’ there is a requirement of three parties in the contract. An activity between only two parties (e.g. BPO/KPO and foreign client) therefore, cannot be considered as an intermediary service. Separately, circular gives example of overseas software service provider who outsources part of software development work to Indian entity.  The circular states that Indian entity may have to interact with foreign client to understand the specific requirements and it is the main supplier of software development service.  Thus, it cannot be termed as intermediary.

Implication

The clarification has given a much needed relief to USD 180 billion BPO sector in India. The BPO and KPO sector can now realize old GST refunds struck in the system. It also confirms that Indian affiliates providing BPO services to their overseas group entities would not be subject to GST levy.

E-Way Bill (“EWB”) blocking resumes from August 15, 2021 for non-filers

Blocking of E-way Bill (“EWB”) generation facility resumes from August 15, 2021. The System will check the status of returns filed in Form GSTR-3B and restrict the generation of EWB in case of:

S. No	Tax Payer Category	Return Pending Period
1	GSTR 3B – Normal Taxpayers	Two or more return periods up to June 2021

Implication

Companies should check their pendency of filling GSTR 3B returns and file pending returns immediately to avoid EWB blocking.

Amendments to the Limited Liability Partnership Act effective from August 13, 2021

The Limited Liability Partnership (“LLP”) (Amendment) Bill, 2021 passed by the Lok Sabha on July 30, 2021, and by Rajya Sabha on August 04, 2021, and finally become the law after receiving the assent of the President on August 13, 2021.

Key Highlights of the amendments Act as follows:

• LLP shall be considered small LLP when contribution by partners does not exceed INR 2.5 million or such higher amount as may be prescribed but not exceeding INR 50 million, and turnover for preceding financial year does not exceed INR 4 million or such higher amount as may be prescribed but not exceeding INR 500 million or any other condition as the central government notifies.
• The meaning of resident in India changed for the designated person from a person who has stayed in India for a period of not less than 82 days to 20 days.
• Provision made for the establishment of special courts for expeditious trial of offenses.
• In consultation with National Financial Reporting Authority (“NFRA”), accounting standards and auditing for classes of LLPs would be prescribed by the Central Government.
• The amendment decriminalizes 12 offenses under the LLP Act.
• Now, the Regional Director or any officer not below the rank of Regional Director may compound any offense under this Act, which would be punishable with a fine only.
• For fraudulent activities, the maximum term of imprisonment increased from two years to five years. 

Implication

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

From September 1, Non-filers of 2 monthly GSTR-3B returns are banned from filing GSTR-1

From September 1, not filing GSTR-3B returns for 2 months will result in ban for filing GSTR-1. The form GSTR-1 (for reporting details of all outward supplies of goods and services made) of the particular month is required to be filed by the 11th day of the subsequent month while GSTR-3B (monthly self-declaration to be filed, for furnishing, summarized details of all outward supplies made, input tax credit claimed, tax liability ascertained and taxes paid) of the month is required to file between the 20th-24th days of the succeeding month. 

Goods and Service Tax Network has announced that registered person who has not furnished their Form GSTR-3B for the preceding two months shall not be allowed to furnish the details of outward supplies of goods or services or both in Form GSTR-1 from September 01, 2021, onwards.

Implication

Companies are required to file pending form GST-3B, if any, in order to avoid ban on filing of Form GSTR-1.

Amnesty scheme for late filing of GSTR-3B extended till November 30, 2021.

The Government had provided relief to the taxpayers by lowering or exempting late fees for non-filing Form GSTR-3B if the returns are furnished from June 1, 2021, to August 31, 2021, for the tax periods of July 2017 to April 2021.

Now the amnesty scheme benefits extended by three months to November 30, 2021.

Implication

Employers can avail the benefits of extended amnesty scheme benefits and can file their pending GSTR-3B returns.

Extension of income tax due dates

On September 9, 2021, the Ministry of Finance (India) – Central Board of Direct Taxes (“CBDT”), has extended due dates for filing of Income Tax Returns and various reports of Audit for the Assessment Year 2021-22 as follows.

Income Tax Return (in case where Tax Audit is not applicable) for the Assessment Year 2021-22, including individual returns *	July 31, 2021	September 30, 2021	December 31, 2021
Tax Audit Report (Form 3CA and Form 3CD) for the Assessment Year 2021-22	September 30, 2021	October 31, 2021	January 15, 2022
Transfer pricing Report (Form 3CEB) for the Assessment Year 2021-22	October 31, 2021	November 30, 2021	January 31, 2022
Income Tax Return (in case where Tax Audit report is applicable) for the Assessment Year 2021-22*	October 31, 2021	November 30, 2021	February 15, 2022
Income Tax Return (in case where Transfer Pricing report is applicable ) for the  Assessment Year 2021-22*	November 30, 2021	December 31, 2021	February 28, 2022
Belated or Revised Income Tax Returns for Assessment Year 2021-22	December 31, 2021	January 31, 2022	March 31, 2022
Compliance	Original Due Date	Extended Due Date Via Circular No. 9 of 2021 dated May 20, 2021	Further extended due date via a press release dated September 09, 2021

*Note that, for taxpayers, whose entire income tax liability is not discharged by Tax Deducted at Source (“TDS”) and advance tax and such shortfall is more than INR 100,000, they should file their income tax return within the respective original due dates to avoid interest for defaults in furnishing return of income (i.e. Section 234A of Income Tax Act 1961).

Implication

Taxpayer are required to file their tax return within the extended due dates to avoid penalties.

Indonesia

Extension of COVID 19 Incentives by MOF

On July 1, the Indonesian Ministry of Finance (“MOF”) further extended the coronavirus pandemic-specific tax incentives from June 30, 2021, to December 31, 2021, vide Regulation No. 82/PMK.03/2021.

The extended benefits include:

• 50% reduction in monthly income tax installments for certain specific industry taxpayers (bonded regions)
• Employees with an annual income of up to IDR 200 million are provided with withholding tax exemption;
• The exemption provided to MSE from the 0.5 percent gross receipts tax.

Ireland

Introduction of Gender Pay Gap Information Act 2021

On July 13, 2021, the President signed the Gender Pay Gap Information Act 2021 into law. The regulations are expected to enter into force by the end of this year, with the reporting process expected to begin in next year i.e. 2022. Reporting of certain information on the pay difference between male and female employees and measures taken/proposed to be taken to reduce such gap in pay needs to be published by the entities once the regulations are implemented. Both Public and Private Sector entities are required to publish the above-mentioned data. The phase-wise implementation of the reporting requirements is given below: 

• The employer with more than 250 employees – Once the regulations are implemented.
• Employers with less than 250 employees – On or after the 2nd anniversary of the implementation of regulations.
• Employers with less than 150 employees – On or after the 3rd anniversary of the implementation of regulations.
• Employers with less than 50 employees are not required to publish any such data under this act.

Implication

Employers falling within the scope of reporting requirements need to keep an eye on the implementation of the regulations and comply with them whenever applicable.

Statutory Sick Pay to employees from the year 2022

The Department of Enterprise, Trade, and Employment of the Irish Government has announced the phase-wise implementation of the Statutory Sick Pay (“SSP”) scheme starting from the year 2022 until 2025. Before the introduction of the SSP, the payment of Sick pay was at the discretion of the employer. The number of Sick leaves will increase from 3 days (2022) to 10 days (2025) as follows:

Year	Sick Leaves (No of Days)
2022	3
2023	5
2024	7
2025	10

SSP has to be paid by the employer at 70% of the gross wages of employees restricted to the threshold of a daily cap of EUR 110. The threshold may change in the future due to inflation and changing incomes.

Implication

The employer needs to alter the employment policies in line with the SSP scheme.

Introduction of Business Resumption Support Scheme (“BRSS”) to help businesses affected by COVID -19.

The Government introduced the Business Resumption Support Scheme (“BRSS”) for providing monitory benefits to businesses affected by the COVID-19  pandemic significantly. As per the BRSS the eligible businesses who had commenced trading before August 26, 2020, shall get a one-off payment of EUR 15,000 (known as The Advance Credit for Trading Expenses [“ACTE”]).

The reference period for the calculation of ACTE is set from September 1, 2020, until August 31, 2021. The ACTE shall be calculated as three times the sum of

• 10% of the average weekly turnover of the reference period up to EUR 20,000 and
• 5% of the average weekly turnover of the reference period that exceeds EUR 20,000.

The ACTE payment will be subject to a maximum of EUR 15,000.

The eligible businesses can claim a BRSS irrespective of whether they have previously qualified for any COVID-19 related government scheme.

The application period for claiming the BRSS starts from September 1, 2021 until November 30, 2021 through the Revenue On-Line Service (“ROS”).

Implication

Eligible businesses may apply to claim the ACTE within the given time to avail of the benefits.

Israel

Deadline for periodic VAT Return filing and payment extended.

The Tax Authority of Israel has granted an extension for filing VAT returns and making a payment towards periodic VAT obligation for below mentioned months until October 05, 2021.

• July and August 2021 (Bi-Monthly)
• August 2021 (Monthly)

This will ease the burden of compliances for the employers for September where the number of working days is very less due to the “Tishrei” holidays.

Further, it is also clarified that the said relaxation shall not apply to any other current reporting requirements.

Implication

Businesses should take into consideration VAT filing extension and proceed accordingly.

Malaysia

Malaysia provides temporary exemption from levy of Human Resources Development Fund (“HRDF”)

The Prime Minister of Malaysia had announced the People’s Protection and Economic Recovery Package (“PEMULIH”) on June 28, 2021 in the wake of the COVID -19 pandemic. The package granted a temporary exemption from the imposition of monthly Human Resources Development Fund (“HRDF”) levy as follows:

• A 2-month exemption is provided to employers that were unable to operate under Malaysia’s Movement Control Order, applicable to salary payments for July and August 2021.
• A 6-month exemption is provided to newly covered employers, applicable to salary payments for July to December 31, 2021.

Implication

Employers may avail of the COVID-19 temporary relief.

Extension of due date for filing tax returns for 2021

The Malaysian Inland Revenue Board (“MIRB”) provided an extension for filing tax returns for 2021 for companies as under:

Taxpayer	Calendar year/accounting period ending	Extended grace period for filing from the statutory filing deadline
Companies	November 01,  2020, to  January 31, 2021	Three months (original date of filing is  July 31, 2021, extended filing date is October 31, 2021)
February 01, 2021, to  April 30, 2021	Two months

Implication

Companies can avail the benefit of extension of time for filing of tax returns.

Poland

New annual reporting, tax strategy report obligation for entities with revenues exceeding EUR 50 million w.e.f. 2021

The Ministry of Finance has confirmed the applicability of filing tax strategy report for the fiscal year 2020 to be reported by end of 2021. The obligation requires public announcement and preparation of a tax strategy report by taxpayers with revenues exceeding EUR 50 million and tax capital groups.  If an entity does not have a website the report can be published on a related party’s website. All reports (for subsequent years) are required to be showed/kept together and made available on the website.

The obliged entities should prepare and publish the relevant report by the end of 2021. The report should include specific information such as:

• Applied tax processes and procedures to manage tax compliance;
• Transactions with related entities the value of which exceeds 5% of the total carrying amount of assets (based on the statutory financial statements);
• Performance as to tax-related duties in Poland;  
• Tax settlements in countries applying harmful tax competition;
• Implemented or planned restructurings;
• Transactions with entities from black-listed jurisdictions;
• Applications filed for a tax ruling, binding vat rate information (“wis”) and binding excise information (“wia”), etc.

A penalty of up to PLN 250,000 can be levied in case of breach of obligation.

Implications:

• The new reporting requirements will require obliged entities to implement processes and procedures for confirming adequate tax governance and compliance and to have the proper basis for subsequent reporting.
• A relevant tax framework (policies) ensuring adequate tax risk management will be required to be drawn.
• The entities will have to confirm that content shared with the public is in line with the group’s policies and standards if any.

South Africa

South African Revenue Service Announces Emergency (COVID-19) Tax Relief for Compliant Businesses

On July 30, 2021 the South African Revenue Service (“SARS”) announced several emergency tax relief measures in response to the continuing COVID-19 pandemic for the recovery of tax-compliant businesses.

The measures are:

• Tax subsidy not exceeding R 750 monthly for the upcoming 4 months for employers of the private sector having employees who have salary less than R 6500.
• Tax compliant businesses having gross income not exceeding R 100 million can defer 35% of their Pay –As- You Earn (“PAYE”) liabilities during the next three months, free of any penalty or interest.

Businesses are considered tax compliant for availing these emergency tax measures under the following:

• Business is registered for all required taxes;
• Business has filed tax returns within the prescribed time;
• Business has no debt remaining outstanding for any taxes, except:
• Transactions having payment by installments;
• Compromise of tax debt
• Tax payment being suspended till any objection or appeal is delivered.

Implication

The eligible businesses may avail of these relief measures provided by the South African Revenue Service (“SARS”)

Amended Consolidated Directions on Occupational Health and Safety Measures in Certain Workplaces

The Minister of Employment and Labour has issued an Amended Consolidated Direction on Occupational Health and Safety measures in certain workplaces to help prevent and combat the spread of COVID-19  in certain workplaces in the republic of South Africa. A large part of the guidelines provided by this Consolidated Direction applies to employers having more than 50 employees. These directions apply to employers who are going to start/continue operations at their workplaces.

Some guidelines, which are applicable for employers having less than 10 employees, emphasize the following matters:

• Formulation of health and safety plan on phased return of employees by identifying the employees who are remotely working and those who have comorbidities and are above 60 years of age;
• Provision of hand sanitizers, surface disinfectants, cloth masks at the workplace;
• Keeping a safe distance of 1.5 meters between two workstations;
• Disinfecting the workplace regularly;
• Undertaking any other measure as per the risk assessment performed at the workplace for ensuring the safety of employees.

These directions have come into effect from June 1, 2021 and will be in force till the duration of the national state of disaster.

Implication

The employers intending to start or continue operations at the workplace should follow these.

South Korea

Increase in Hourly Minimum Wages effective from January 1, 2022

Effective from January 1, 2022 South Korea’s Minimum Wage Commission agreed to increase the hourly minimum wages by 5.1 % from KRW 8,720 to KRW 9,160.

Implication

Employers in South Korea will need to review and revise their employee salaries as per the new minimum wages rate and align their payroll processes accordingly.

Thailand

Thailand VAT registration rules for non-resident digital services providers and platform operators are effective from September 1, 2021

In February 2021, Thailand enacted legislation to introduce an obligation on non-resident digital/electronic services providers and platform operators for registering and remitting VAT, which is now effective from September 1, 2021.

E-services include online software sales or licensing, web hosting, or any other services that are delivered over the Internet, essentially automated electronic network that could not be successfully provided if such technologies were not available.

Non-resident electronic service providers and platform operators subject to certain exclusions are liable for VAT registration in Thailand if:

• Electronic services are providing from abroad or offering/delivering service, receiving payment on behalf of non-resident made continuously;
• Such services are used by non-VAT registered entities in Thailand and
• Income received by a non-resident from such services exceeds THB 1.8 annually.

Implication

Companies providing digital services or platform operators services in Thailand should check their VAT registration obligations as the law is effective from September 1, 2021 and get registered accordingly.

United Kingdom

Announcement of revised tax-free fuel rates effective from September 1, 2021

The Government has announced the revised mileage rates for usage of company car effective from September 1, 2021.

Below are the revised mileage rates in pence (previous rates given in bracket)

Engine size	Petrol	Diesel	LPG
Petrol 1400cc or less	12p (11p)	–	7p
Diesel 1600cc or less	–	10p (9p)	–
Petrol 1401 to 2000cc	14p (13p)	–	8p
Diesel 1601 to 2000cc	–	12p (11p)	–
over 2000cc	20p (19p)	15p (13p)	12p

Implication

The Employer needs to take into consideration revised fuel rates effective from September 1, 2021 for calculations for any allowance given to employees for using company cars.

Furlough Scheme Extended until September 30, 2021

The Coronavirus Job Retention Scheme (“CJRS”) introduced by the Government is now extended until September 30, 2021. This perhaps is the last extension of the scheme. Under the Job Retention Scheme, the furloughed employees shall be getting 80% of their wages (up to GBP 2,500 per month) for the hours they are on furlough/not worked.

Following is the bifurcation of the percentage to be borne by the government and employer as per the CJRS.

Time Line	Government	Employer
Until July 2021	80%	NA
July 2021	70%	10%
August and September 2021	60%	20%

Implication

To avoid any errors or miscalculations, the employer must take into account the percentage of gross earnings that must be contributed for furloughed employees.

Vietnam

Proposal for Tax Reductions for 2021 Due to COVID-19  by Vietnam Government

A proposal was announced on August 13, 2021 by Vietnam’s Ministry of Finance to provide tax reductions for 2021 considering the effects of the COVID-19 pandemic, which would need approval from Vietnam’s National Assembly. The resolution provides the following:

• 30% reduction in corporate income tax for SMEs,
• 50% income tax reduction for individuals and business households for the 3rd and 4th quarters of 2021,
• 30% VAT reduction for specific service sectors.
• Relief from late payments penalties for businesses that have suffered losses in 3 consecutive years 2018, 2019, and 2020.

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