Global Updates – July 2024
Global updates – a quick glance
Australia:
- ‘Digital ID Bill’ received royal assent on May 30, 2024, aims to improve online privacy and security by making digital identity verification easier.
- Australian government increases the maximum superannuation guarantee contribution base to AUD 65,070 per quarter and contribution rate from 11% to 11.5% p.a., effective from July 1, 2024.
- Australia Budget 2024; introduced changes to Medicare levy thresholds, extension of benefit of instant write off of eligible assets below AUD 20,000 for small businesses.
Brazil:
- Security Incident Communication Regulations prescribing data breach notification requirements effective from April 29, 2024.
- Monthly return introduced for reporting certain tax benefits availed by the companies.
Bulgaria: introduced new remote working rules laying down health and safety measures and requiring specification of location of work in employment agreements.
Canada:
- Bill-149 amended provisions of Ontario’s Employment Standards Act, 2000.
- Digital Service Tax Act effective from June 28, 2024, and applicable retroactively for revenues earned from year 2022.
China:
- Introduced administrative measures for reporting of beneficial owners effective from November 1, 2024.
- Extended benefit of the reduced unemployment insurance rate by 1% and continued the unemployment contribution refund policy until December 31, 2025.
Colombia:
- Colombia amends Sexual Harassment Law.
- Incentives to employers for new hires.
Costa Rica: Costa Rica’s Tax authority publishes tax rates and slabs for the tax year 2024.
EU: The European Council has approved the Artificial intelligence (“AI”) Act which will regulate AI systems and be applicable to various stakeholders for AI distribution chain.
Finland:
- The standard VAT rate increased to 25.5.% from 24% effective September 1, 2024.
- Public Country by Country reporting to be effective from fiscal years starting on or after June 22, 2024.
France: announced revised thresholds for classification of companies/ groups based on size and appointment of an auditor.
Germany: Germany published Growth Opportunities Act in the official gazette on March 27, 2024.
Gibraltar: Gibraltar presented the budget for the year 2024-25; proposed changes include reduction in personal tax rate to 25% and increase in corporate tax rate to 15% among other changes.
Honduras: Country-by-Country (“CbCR”) reporting and notification obligation for companies in Honduras effective from January 1, 2025.
Hong Kong: Bill passed to give effect to the tax proposals in Budget 2024-25; two-tiered standard rates regime for “salaries tax” and “tax under personal assessment” introduced.
India:
- Rate of damages on delayed payment of provident fund contributions and accumulations revised effective from June 15, 2024.
- Indian Finance Minister presented the Union Budget, 2024, with the several key proposals –
- Change in the income slabs applicable under ‘default tax regime without deductions;’ standard deductions for individual earning salary or pension income increased up to INR 75,000;
- A private sector employee who pays tax under the ‘default tax regime without deduction’ shall be allowed a deduction towards contribution to national pension scheme made by an employer of an amount not exceeding 14% of the employee’s salary (earlier this limit was 10% of the employee’s salary);
- Provision levying tax on difference between issue price and fair market value of shares of private companies (known as angel tax) is proposed to be abolished
- Corporate tax applicable to foreign companies proposed to be reduced from 40% to 35%
Israel: The VAT rate increased to 18% from 17% effective January 1, 2025.
Japan:
- New measure released for partial removal of the residential address details of representative directors from the corporate registry record, effective from October 1, 2024.
- Japan revises labor law provisions to support employees having children effective from April 2025; requires employers to provide flexible working options, remote working facility, childcare leave, etc.
Lithuania: Lithuania approves global minimum tax effective from July 1, 2024.
Malaysia:
- Malaysia expanded the scope of Occupational Safety and Health Act to cover all workplaces effective June 1, 2024; mandated employers to conduct risk assessments, appoint occupation health and safety coordinator and strengthens employee protection requirements.
- Mandated implementation of e-invoicing in phased manner starting from August 2024.
Netherlands: Large employers are required to report work-related mobility databy June 30, 2025.
Peru: Introduction of additional deductions for hiring young employees.
Poland:
- Poland extends family care benefit payment to the first child in 2024, which was available only to the second and subsequent children.
- Mandatory e-invoicing in Poland postponed to February 1, 2026.
- The President signed the ‘Whistleblower Protection Act’ on June 19, 2024.
Singapore:
Tripartite Guidelines on Flexible Work Arrangement Request will come into effect on December 1, 2024
- Singapore amends the Cybersecurity Act, 2018.
Sweden: New rules for parental leave effective from July 1, 2024.
Switzerland: Swiss VAT-registered companies can opt for annual VAT reporting.
Thailand:
- The maximum medical expenses to be paid by employer increased from THB 50,000 to THB 65,000.
- Private limited companies exempted from e-commerce registration requirement, effective June 5, 2024.
- Terminated employees likely to enjoy higher income-tax exemption on severance pay received after January 1, 2023.
Turkey:
- Turkey updates threshold for applicability of independent audit to companies.
- Turkey amended Personal Data Protection Law to introduce new grounds for processing of sensitive personal information and to address cross-border data transfer challenges.
| Data Protection Fines Table | ||||
| Country | Authority Name | Fine imposed on | Reason for Fine Related to Data Protection Failure | Amount of Fine and Penalty |
| Belgium | Belgian Data Protection Authority (“Belgian DPA”) | Unnamed Company | A fine was imposed for the following reasons: Failure to comply with the complainant’s requests to erase data as data subject refuses to give consent for using data for direct marketing. Failure to cooperate with data protection authority. Failure to carry out processing of data as per the provisions of GDPR. | EUR 172,431 |
| Czech Republic | Czech Republic DPA (‘UOOU’) | Avast Software s.r.o.), a software and anti-virus company | A fine was imposed for GDPR violations and data breach arisen due to unlawful processing and cross-border transfer of data to the third party. The company shared with the third-party browsing data related to its around 100 million users without anonymising it for market analysis purposes. | CZK 351 million |
| France | French Data Protection Authority (“CNIL”) | HUBSIDE.STORE, which carries out phone and SMS prospecting campaigns for promotion of products for sell in its stores such as laptops, mobile phones etc. | A fine was imposed for the following reasons: Failure to obtain valid consent from individuals leading to absence of the legal basis to process the collected data. Failure to provide complete information to individuals regarding the purpose of data collection and its use. | EUR 525,000 |
| Greece | Hellenic Data Protection Authority (‘HDPA’) | Ministry of Migration and Aslyum, Public body | A fine was imposed on government organisation for failure to conduct data protection impact assessment while buying and implementing digital security/ surveillance equipment (such as cameras, artificial intelligence tools, drones) for migrants, refuge, asylum centres in Aegan Islands and unlawful processing of biometric data. | EUR 0.175 million |
| Italy | Italian data protection authority (‘Garante‘) | Eni Plenitude S.p.A., a company engaged in sales and marketing services of gas and electricity for homes and businesses. | Fine was imposed on the company for making unwanted commercial phone calls and related violations including the following: Failure to follow the principles of lawfulness, correctness, transparency, accuracy, and security; Failure to establish proper legal basis before conducting telemarketing activities; and Failure to adopt adequate security measures. | EUR 6.4 million |
| Lithuania | The State Data Protection Inspectorate (‘VDAI’) | Vinted UAB, the operator of online second-hand clothing trading and exchange platform “Vinted.” | The fine was imposed on the company for following violations under the GDPR: Not acting upon requests from users regarding deletion of data, thereby not implementing proper systems for protecting the rights of data subjects related to access and erasure of the data; Unlawfully applied ‘shadow blocking’ (i.e., users violating the platform’s principles of operation are required to leave the platform without being aware about processing of their personal data), which is in violation of the principles of fairness and transparency; and Lack of adequate technical and organisational measures to ensure the implementation of the principle of accountability, right of access of data subjects etc. | EUR 23.85 million |
| South Korea | The Personal Information Protection Commission (‘PIPC’) | Kakao Corp. (Kakao) is a South Korean company engaged in mobile communication and Internet Service. | Fine was imposed for failure to: – implement appropriate safety measures; notify data breaches. | Fine – KRW 15 billion Penalty – KRW 7.8 million |
| South Korea | The Personal Information Protection Commission (‘PIPC’) | Golfzon Co., Ltd. (Golfzon) is a South Korean company, engaged in manufacturing golf simulators. | Fine was imposed for the following reasons: Failure to implement appropriate safety measures; Failed to delete personal information for which retention purpose or retention period has expired. | Fine – KRW 5.4 million. Penalty – KRW 7.54 billion |
| Spain | Spanish Data Protection Agency (‘AEPD’) | Caixa Bank S.A., a bank engaged in providing banking and insurance services | A fine was imposed for sharing the personal data of a customer with General Treasury of Social Security (“TGSS”) without obtaining free consent from the customers and thereby violating the provisions of GDPR. The consent requested from customers was not voluntary but compulsory having negative consequences, if not given, and no option to withdraw it. | EUR 1.2 million |
| Sweden | Swedish data protection authority (‘IMY’) | Avanza Bank | The Bank was fined for unauthorized and accidental transfer of personal data of up to one million users to Meta due to incorrect settings of analytics tool used by the Company for optimizing its marketing by tracking visitors’ activity on the website. It was deactivated when the Bank became aware about the incident. The fine was imposed for violating the GDPR principles as follows: Breach involving high-risk data, such as financial information and social security numbers, which caused a significant risk to data subjects’ rights and freedoms. Lack of adequate technical and security measures for ensuring protection of personal data of website visitors and app users. | SEK 15 million |
Table of Contents
Australia: Budget Highlights-2024
Belgium: Extension for VAT declarations due to Summer Holiday 2024.
Brazil: Brazilian Data Protection Authority issues Security Incident Communication Regulations.
Brazil: A monthly ‘DIRBI’ return introduced for reporting of certain tax benefits.
Bulgaria: Introduction of new remote work rules.
Canada: Bill 149 amends some provisions of Ontario’s Employment Standards Act, 2000.
Canada: Digital Service Tax Act effective from June 28, 2024.
China: Extends reduced unemployment insurance rate and policy to refund contributions.
Colombia: Amendments to Sexual Harassment Law.
Colombia: Incentives to employers for new hires.
Costa Rica: Costa Rica’s Tax authority publishes tax rates and slabs for the tax year 2024.
EU: Artificial Intelligence (“AI”) Act approved by the European Council.
Germany: Germany published ‘Growth Opportunities Act’ in official gazette on March 27, 2024.
Gibraltar: Budget 2024-25 Highlights.
Hong Kong: Bill passed to give effect to tax proposals in Budget 2024-25.
India: Union Budget 2024 – Highlights.
Israel: VAT rate increased to 18% effective January 1, 2025.
Japan: Revision in labour laws to support employees having children effective from April 2025.
Lithuania: Lithuania implements Global Minimum Tax effective from July 1, 2024.
Malaysia: Occupational Safety and Health (Amendment) Act effective from June 1, 2024.
Malaysia: Mandatory e-invoicing to be implemented in phased manner starting from August 2024.
Netherlands: Large employers to report work-related mobility data.
Peru: Introduction of additional deductions for hiring young employees.
Poland: Mandatory e-invoicing in Poland postponed to February 1, 2026.
Poland: Minimum wage increased to PLN 4,300 gross from PLN 4,242 gross effective from July 1, 2024.
Poland: The President signed the ‘Whistleblower Protection Act’ on June 19, 2024.
Singapore: Singapore amends the Cybersecurity Act, 2018.
Sweden: New rules for parental leave effective from July 1, 2024.
Switzerland: Swiss VAT-registered companies can opt for annual VAT reporting.
Thailand: Medical expenses to be paid by employers increased to THB 65,000.
Australia
Australia: ‘Digital ID Bill’ received royal assent on May 30, 2024, aims to improve online privacy and security by making digital identity verification easier.
The Australian Federal Government approved the ‘Digital ID Bill 2024’ on May 16, 2024, which received royal assent on May 30, 2024, with an expected commencement by November 2024. The ‘Digital ID Act 2024’ and the ‘Digital ID (Transitional and Consequential Provisions) Act 2024’ (together, referred to as ‘the Digital ID Acts’) aim to enhance privacy and security for online users by reducing the need to share physical identity documents and encouraging digital ID service providers to join a voluntary accreditation scheme.
Currently, individuals must provide various identification documents to verify their identity for transactions like applying for a rental property or a mobile plan. The key changes introduced by the ‘Digital ID Act 2024’ include:
- Establishing a national Digital ID system for online identity verification across both public and private sectors.
- Ensuring use of Digital ID remains voluntary at the option of the users, with alternative access methods available.
- Introducing rules to enable users to select their Digital ID provider.
- Adding privacy safeguards for use of Digital ID, including strict obligations on handling sensitive information, and ensuring explicit consent before disclosing personal data as required under the ‘Privacy Act 1988’.
- Establishing a limited liability shield and redress framework by way of a statutory contract between users’ entities and digital ID providers.
- Implementing a legislated voluntary accreditation scheme for Digital ID providers.
These amendments ensure that businesses adhere to the ‘Privacy Act 1988’, which mandates the protection of personal information through robust security measures such as encryption and authentication protocols, enhancing the management of risks associated with digital identity services effectively.
Implication:
Businesses should adapt to digital identity verification systems, comply with stringent privacy standards, and potentially revise operational processes to accommodate users’ choice in service providers and ensure robust data security measures.
Australia: Minimum wage increased to AUD 915.90 (per week) from AUD 882.80 (per week) for the year 2024-25 (i.e., effective from July 1, 2024).
Effective from July 1, 2024, the ‘Fair Work Commission’ (“FWC”) has increased the minimum wages in Australia to AUD 915.90 per week from AUD 882.80 per week for the year 2024-25.
Australia: Australian government increases the maximum superannuation guarantee contribution base to AUD 65,070 per quarter and contribution rate from 11% to 11.5% p.a., effective from July 1, 2024.
The ‘Australian Taxation Office’ (“ATO”) has announced the latest maximum superannuation contributions base and rate for the income year 2024-25.
| Particulars | For the Year 2024 (July 1, 2024, to June 30, 2025) | For the Year 2023 (July 1, 2023, to June 30, 2024) |
| Maximum Superannuation Contribution base (per quarter) | AUD 65,070 | AUD 62,270 |
| Superannuation Contribution rate (in % per annum) | 11.5% | 11% |
The “Superannuation guarantee contribution or Super” is the mandatory social security contribution by the employer, calculated on salaries (as defined) of the employees up to a certain limit, which is the maximum super contribution base. If the employee earns exceeding the limit for each quarter, then the employer is not required to make contributions for the part of earnings exceeding the limit. The maximum superannuation contribution base is indexed each year in line with average weekly regular wages.
Implication:
Employers will need to update their payroll and accounting software systems considering the revised contribution base and rate.
Australia: Budget Highlights-2024
The Treasurer, Jim Chalmers MP, presented the 2024-25 Federal Budget on May 14, 2024. The budget made no significant tax changes and focuses on commitments towards health, support payments, providing cost-of-living relief and creation of affordable housing.
Key changes are as follows-
- Instant write off of eligible assets below AUD 20,000 for small businesses with turnover less than AUD 10 million:
In the last budget, small businesses with an aggregated turnover of less than AUD 10 million were allowed to deduct the full cost of eligible assets valued below AUD 20,000 that were first used or installed/ ready for use between July 1, 2023, till June 30, 2024. The deduction is extended for one more year i.e., in respect of assets first used or installed or ready for use between July 1, 2024, till June 30, 2025. The deduction applies on a per asset basis, allowing small businesses to avail immediate write-offs for multiple assets.
- Effective from July 1, 2025, superannuation will be included in the government-funded Paid Parental Leave (“PPL”) Scheme for births and adoptions. Accordingly, eligible parents will receive an additional payment equal to 12% of their PPL payments, which will be contributed to their superannuation fund. This change aims to boost retirement savings for parents during their leave period.
- The Government has announced strengthening of the foreign resident capital gains tax (“CGT”) regime to ensure that foreign residents pay their fair share of tax in Australia, by amending the regime which will be applicable for capital gain tax events occurring on or after July 1, 2025. The amendments will include the following:
- Clarifying and broadening the types of assets subject to capital gain tax for foreign residents;
- The principal asset test will be changed to a 365-day testing period; and
- Foreign residents disposing off shares and other equity valued at over AUD 20 million will be required to notify the Australian Taxation Office (“ATO”) before executing the transaction.
- Cost-of-living relief measures:
As a part of cost-of-living relief measures, the Government has legislated in March this year, tax cuts from the year 2024-25, which are as below:
| 2024 Income (in AUD) | 2024 Tax Rates | 2023 Income (in AUD) | 2023 Tax Rates |
| From 0 to 18,200 | Nil | From 0 to 18,200 | Nil |
| From 18,201 to 45,000 | 16% | From 18,201 to 45,000 | 19% |
| From 45,001 to 1,35,000 | 30% | From 45,001 to 1,20,000 | 32.5% |
| From 1,35,001 to 1,90,000 | 37% | From 1,20,001 to 1,80,000 | 37% |
| 1,90,001 and above | 45% | 1,80,001 and above | 45% |
The Government has also enacted ‘Treasury Laws Amendment (Cost of Living—Medicare Levy) Act 2024 (Act No. 4, 2024)’ in March 2024, increasing the medicare levy low-income thresholds in line with the consumer price index (CPI) for the year 2023-24. In Australia, a medicare levy of 2% applies to all taxpayers having annual taxable income exceeding specified thresholds for funding National Health Scheme.
Effective from July 1, 2023, the medicare levy new thresholds for singles, families, seniors, and pensioners are as below-
| Category | 2023-2024 Annual taxable income (in AUD) | 2022-2023 Annual taxable income (in AUD) |
| Singles | 26,000 | 24,276 |
| Family income (See note) | 43,846 | 40,939 |
| Single seniors and pensioners | 41,089 | 38,365 |
| Family seniors and pensioners | 57,198 | 53,406 |
Note – For each dependent child, the family income threshold is increased further by AUD 4,027.
Implications:
- Companies should take the benefit of immediate write off of eligible assets.
- Employers should take note of the updated income tax slabs while processing the payroll.
- Employers need to take note of the revised medicare levy thresholds.
Belgium
Belgium: Changes to investment deduction and intellectual property regime effective from January 2025.
Belgium has unveiled new tax regulations aimed at modernizing the investment deduction regime and the intellectual property (“IP”) regime, effective from January 1, 2025. These regimes are relevant for Belgian companies and Belgian permanent establishments of foreign companies. These updates include fixed rates for deductions and the option to convert certain deductions into non-refundable tax credits.
The revised investment deduction regime is structured into three tracks:
- The ordinary investment deduction – this provides 10% (or 20% for digital investments) for SMEs – This deduction is most commonly applicable to large number of assets/ investments. It excludes certain investments such as investment in assets and technologies which are environmentally harmful or climate harmful.
- The thematic investment deduction of 40% for SMEs and 30% for other companies -These covers investments which support efficient use of energy or in renewable energy assets, investments for zero-emission transport, investments which are environment friendly including digital investments.
- The technology deduction of 13.5% in case of patents or one time investment in research and development (or 20.5% in case of a staggered deduction in R&D) – To claim this deduction, the taxpayer is required to comply with certification and other requirements.
Taxpayers can choose only one type of investment deduction per fixed asset, with the fixed rates, eliminating the previous yearly indexation mechanism. The general conditions for benefiting from the investment deduction remain unchanged.
With respect to IP regime, from assessment year 2025, taxpayers can choose not to offset part or all of their Innovation Income Deduction (“IID”) against their taxable basis and instead convert it into a non-refundable tax credit. This credit can be carried forward and offset against future corporate income taxes. Starting in 2026, the impact of this tax credit will be evaluated annually, focusing on its budgetary cost and Belgium’s competitive position compared to neighbouring countries.
These reforms aim to enhance legal certainty and competitiveness while supporting sustainable and innovative investments in Belgium. They are effective for assessment year 2025 which covers tax years ending between December 31, 2024, and December 31, 2025.
Implication:
Businesses should evaluate their investments’ eligibility to different types of deductions and determine the most beneficial options for them. The compliance requirement should also be considered and adhered to avail the benefit.
Belgium: Extension for VAT declarations due to Summer Holiday 2024.
On June 11, 2024, Belgium’s Federal Public Service (“SPF”) Finance announced the postponement of the filing dates for VAT declarations and Intra-Community Statements due to the summer holidays in 2024.
VAT Declaration:
| Timeline | Filing Date |
| Monthly return for June 2024 | August 9, 2024 (instead of July 22, 2024) |
| Quarterly declaration for 2nd Quarter 2024 | August 9, 2024 (instead of July 22, 2024) |
| Monthly return for July 2024 | September 10, 2024 (instead of August 20, 2024) |
The following taxpayers cannot avail the benefit of the above extension –
- holders of authorizations for the monthly VAT refund.
- beneficiaries of an accelerated monthly VAT refund due to the starter status (the taxpayer is considered as a ‘starter’ for first 24 months of their operations in Belgium).
In these cases, if they are entitled to a refund of a VAT credit, the return must be filed-- no later than July 24, 2024, for June 2024 return.
- no later than August 24, 2024, for the July 2024 return.
Intra Community Statement:
| Timeline | Filing Date |
| Quarterly statement of intra-Community transactions for 2nd Quarter 2024 | August 9, 2024 (instead of July 22, 2024) |
| Monthly statement of intra-community transactions for June 2024 | August 9, 2024 (instead of July 22, 2024) |
| Monthly statement of intra-community transactions for July 2024 | September 10, 2024 (instead of August 20, 2024) |
However, the taxpayers must make the VAT payments as per the normal deadlines, i.e., by July 22, 2024, at the latest (declaration of 2nd quarter 2024 or June 2024) and no later than August 20, 2024 (July 2024 declaration). A delay in payment of VAT dues may attract the late payment interest.
Implication:
Taxpayers may take advantage of the extension granted for filing of VAT declaration and Intra Community statement. However, it must be noted that there is no extension for the payment of the due VAT.
Brazil
Brazil: Brazilian Data Protection Authority issues Security Incident Communication Regulations.
The Brazilian Data Protection Authority (“ANPD”) through Resolution CD/ANPD No. 15/2024 dated April 24, 2024, approved the Security Incident Communication Regulation (the “Regulation”). The Regulation lays down requirements for data controllers to notify data subjects of security incidents. ‘Security Incidents’ are data breaches, or any adverse event affecting confidentiality, authenticity, integrity of personal data. The Regulations are effective from April 29, 2024.
Key provisions are as under:
- Security incident/ data breaches: Only data breaches causing relevant risk or damage to the data subjects are required to be reported to the affected data subjects and to the ANPD. Such events include breaches affecting the interests and fundamental rights of the data subjects relating to sensitive personal data, or financial data, or legal data or impacting data on a large scale.
- Timeline for notifying security incident: The data controllers should notify the ANPD and the data subjects within 3 business days of becoming aware of the security incident.
- Contents of security incident notifications: The security incident notifications which are submitted to the ANPD and the data subjects must contain particulars such as whether sensitive data is involved and category and nature of personal data affected by security incident, number of data subjects affected, technical and security measures implemented to protect personal data, steps implemented to mitigate the effects of the security incident, date of the occurrence of security incident, details of data protection officer of the company who is monitoring the privacy and protection of data etc. Generally, the notifications to data subjects must be submitted individually but where not possible, the notifications can be posted on the company’s website or other modes like social media etc.
- Documentation of security incident notifications: The security incident notifications should be documented and maintained in a record which must be kept for minimum 5 years by data controllers. In addition to the particulars about notifications mentioned in the above point, the records of notifications must also include reasons, if any security incident is not reported etc.
Implication:
The companies need to adhere to the provisions of Security Incident Communication Regulations and timely notify any security incidents to the ANPD and data subjects and also comply with the record keeping requirements of security incident notifications.
Brazil: A monthly ‘DIRBI’ return introduced for reporting of certain tax benefits.
The Brazilian Federal Revenue Service (“RFB”) through Normative Instruction No. 2,198/ 2024 dated June 17, 2024, published in gazette dated June 18, 2024, lays down provisions for filing a monthly return namely ‘Declaration of Incentives, Waivers, Benefits, and Immunities of a Tax Nature (“DIRBI”). The Return is for the companies to report and disclose any federal tax benefits/ incentives availed by them.
The DIRBI will be used to disclose information relating to tax credits and incentives granted to specific sectors such as tourism, infrastructure, semi-conductor, agriculture, pharmaceutical sectors.
The Instruction provides an exhaustive list of tax benefits that need to be reported, which are:
- PERSE: corporate income tax and social contributions on gross revenues (“PIS/COFINS”) benefits for the tourism sector;
- RECAP: PIS/COFINS incentives on purchases of capital goods granted to exporters;
- REIDI: PIS/COFINS incentives on purchases granted to taxpayers in certain infrastructure sectors;
- REPORTO: VAT and import duty incentives to foster the port infrastructure sector;
- Payroll tax (employer social security) reductions granted to certain sectors;
- PADIS: corporate income tax, VAT, and import duty incentives for the semiconductor industry; and
- Other PIS/COFINS tax credits granted on products for the oil and gas, agribusiness, and pharmaceutical sectors.
The DIRBI must be submitted through online mode on the RFB portal on a monthly basis by the 20th day of the next month following the calculation period. For tax benefits for the period from January to May 2024, the DIRBI is to be submitted by July 20, 2024.
Penalties for not filing DIRBI are calculated monthly or as a percentage of the company’s gross revenue, ranging between 0.5% to 1.5%. The penalties are limited to 30% of the value of the tax benefits. In cases of incorrect reporting or omission in reporting amounts, a fine of 3% will be applied, with a minimum amount of BRL 500.
Implication:
The companies availing tax incentives and other tax benefits need to disclose such benefits in a monthly DIRBI return.
Bulgaria
Bulgaria: Introduction of new remote work rules.
Bulgarian National Assembly has adopted a Law to amend and supplement the Labour Code (“LC”), which introduces new rules regarding remote working. It was published in the State Gazette on March 29, 2024, and the amendments have become effective on April 2, 2024. The key amendments are as follows:
- Mandatory specification of the remote workplace:
The new amendments require specification of the exact address of the remote workplace in employment agreements. Parties can agree on multiple remote workplaces, and employees are allowed to temporarily change their remote workplace for up to 30 working days per year.
- Workplace Safety Measures:
Employees working remotely are now required to provide details about their workplace characteristics and report accidents promptly, aligning with employer-set health and safety standards. This will help to limit employer liability in cases of employee negligence or non-compliance.
- Information system for algorithmic management:
Where employers use information systems and algorithm for monitoring working time, they are required to grant employees access to their time and attendance data upon request. Employers are required to ensure that decisions made by algorithmic management systems are reviewed and, where necessary, validated by humans.
- Right to disconnect
All employees have the right to refrain from responding to messages and calls from their employers outside of working hours. Employment agreement or collective bargaining agreement can provide for exceptions to this rule.
The new law also clarifies the division of liability between main contractors and subcontractors as to the liability towards payment of employee remuneration in the context of service agreements.
Implication:
Employers should take note of the changes and modify their practices and policies to align with newly introduced rules for remote work.
Canada
Canada: Bill 149 amends some provisions of Ontario’s Employment Standards Act, 2000.
The Working for Workers Four Act (“Bill 149) came into effect on March 21, 2024, amending some provisions of Ontario’s Employment Standards Act, 2000 (“the ESA”). Some changes are effective from March 21, 2024, while some changes are effective from June 21, 2024.
The below mentioned amendments are effective from March 21, 2024:
- Prohibition on making deductions from employees’ salaries of any cash losses: As per the amendment, employers should not make any deduction from the employees’ salaries of any cash losses or loss of property suffered due to non-payment or other acts of customers. This amendment emphasizes that the employees should not be financially responsible for losses incurred in relation to customers of the employers.
- Definition of ‘Employee’ amended: The definition of ‘employee’ is amended and now includes a person doing work during a trial period. This work performed is considered as training for which employee gets paid, thus as a result, unpaid trial shifts are banned.
The below mentioned changes are effective from June 21, 2024:
- Payment of Tips: The employer must share with the employees any tips or gratuities and pay it to them by cash, cheque, or direct deposit. The employers must disclose a ‘tip sharing policy’ at the workplace, where it is clearly visible, for regulating the conditions of tip payments.
- Vacation pay agreement: There must be an agreement in writing for vacation pay payment, mentioning method of payment if it is different than regular practice of a lump sum payment prior to the employee’s vacation.
Some changes related to publicly advertised job postings will be effective at a future date, which is not yet notified, and they are as under:
- Pay transparency: Employers posting job vacancies through public advertisement need to disclose the salary or the salary range offered for the vacancy advertised.
- Canadian work experience disclosure prohibition: Employers in case of job vacancies posted through public advertisement, should not require, or ask for disclosure of any information relating to Canadian work experience of the job aspirants.
- Record retention: The employers need to retain and keep record of every publicly advertised job posting for 3 years from the date on which the posting is removed.
- Usage of Artificial Intelligence (“AI”): Employers need to issue a statement on the use of AI in the recruitment processes such as screening, assessment, or selection stages for a publicly advertised job posting.
Implication:
The employers in Ontario need to be abreast of these latest developments and accordingly make changes in their policies related to publicly advertised jobs, prepare vacation pay agreements and display tip sharing policies, etc.
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Canada: Minimum wage in Quebec increased to CAD 15.75 per hour from CAD 15.25 per hour effective from May 1, 2024.
Effective from May 1, 2024, Quebec has increased the minimum wage to CAD 15.75 per hour from CAD 15.25 per hour.
Canada: Minimum wage in Ontario increased to CAD 17.20 per hour from CAD 16.55 per hour effective from October 1, 2024.
Effective from October 1, 2024, Ontario will increase the minimum wage to CAD 17.20 per hour from CAD 16.55 per hour.
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Canada: Digital Service Tax Act effective from June 28, 2024.
The Digital Service Tax Act (“DSTA”) was part of Fall Economic Statement Implementation Act, 2023 (“Bill C-59”). The Bill C-59 stated that the Act will come into effect on a date fixed by order of the Governor in Council. Accordingly, the DSTA was enacted on June 20, 2024, by Parliament and became effective on June 28, 2024, through Order In Council of that date.
The following are the salient features of DSTA:
- Applicability and rate: The digital services tax (“DST”) is a tax levied at 3% on revenues generated from online marketplace services, online advertising services, social media services, and user data, as defined under the DSTA. This revenue is also termed as Canadian “in-scope revenue.”
- Registration and taxability threshold for DSTA: Any company which is part of a consolidated group having Canadian digital services revenue exceeding CAD 10 million and global consolidated revenue of equal to or more than EUR 750 million is required to register under the DSTA. However, the threshold for levy of DST is CAD 20 million of Canadian digital services revenue (threshold for taxation). Hence, tax is levied at 3% on the taxable Canadian digital services revenue in excess of CAD 20 million in a calendar year.
- DST return and payment: The companies need to file DST returns and make DST payments on an annual basis by June 30of the following year.
The DSTA is effective retroactively and first payment and return relating to revenues earned between January 1, 2022, and January 1, 2024, needs to be made by June 30, 2025. Eligible companies meeting the registration criteria must register under the DSTA by January 31, 2025.
Implication:
The companies need to be aware of the DSTA and assess if they are covered within the ambit of the DSTA. Accordingly, they must register under the DSTA and make DST payments and returns on an annual basis.
China
China: Introduces administrative measures for reporting of beneficial owners effective from November 1, 2024.
In order to improve the financial market transparency and to prevent money laundering and terrorist financing activities, the People’s Bank of China (“PBOC”) along with State Administration for Market Regulation (“SAMR”) has issued order No. 3 of 2024 titled “Administrative Measures on Beneficial Owner Information”. These measures, which has introduced new compliance requirements for filing beneficial ownership requirements, are effective from November 1, 2024.
The following are the key features of these regulations:
- The regulations are applicable to partnerships, companies, and branch office of foreign companies, who are termed as “filing entities” as per these measures.
- Any natural person meeting any one of the following conditions would be considered to be a beneficial owner for the purpose of filing:
- ultimately holds 25% or more of the equity shares or partnership interests of the filing entity, directly or indirectly; or
- holds 25% or more of the income rights or voting rights of the filing entity; or
- individually or jointly exercises actual control over the filing entity.
If none of the above specified conditions apply, then the individual responsible for the daily operation and management of the filing entity shall be considered as the beneficial owner for filing purposes. In case of branch office of foreign entity, the beneficial owners of the foreign companies identified as per the above criteria will be the beneficial owners of the branch and the senior managerial personnel of the branch.
- An exemption from the filing requirement is granted to the entity whose capital is below RMB 10 million (or its equivalent in foreign currency) and all the shareholders or partners are natural persons.
- The entities registered after November 1, 2024, must submit the beneficial owner information either during the incorporation or within 30 days thereafter. The entities registered before November 1, 2024, have time until November 1, 2025, to complete the filing requirements.
- Any change in the beneficial owner information already provided or when entity does not qualify for exemption from reporting as above should be reported within 30 days of the relevant event.
- Information that needs to be reported include name, gender, nationality, birth date, contact information, details of identification document, type of beneficial owner relationship and date from such relationship existed and date of termination, etc.
- The PBOC will set up a management system to receive, store and process the beneficial ownership information. A penalty not more than RMB 50,000 will be imposed if any entity fails to correct the inaccurate information as instructed by the PBOC and its branches.
Implication:
The companies should take steps to identify the beneficial owners and ensure compliance under the new regulations.
China: Extends reduced unemployment insurance rate and policy to refund contributions.
In order to support companies and maintain stable employment, the China’s Ministry of Human Resources and Social Security, Ministry of Finance, and the State Administration of Taxation have jointly issued the Circular No. 40 of 2024 dated April 26, 2024, to extend certain preferential policies.
Out of the various measures introduced in the circular, the following are the most significant:
- Reduction in the unemployment insurance contribution rate by 1% will continue to apply until December 31, 2025, which was earlier set to expire at the end of 2024.
- The unemployment insurance contribution refund policy is extended until December 31, 2024. The companies eligible to take benefit of this policy should meet the following conditions:
- unemployment insurance contributions are paid in full for more than 12 months; and
- no employee is terminated in the previous year, or the layoff rate is not higher than the national urban survey unemployment rate control target of the previous year; and enterprises with 30 employees or fewer shall not have a layoff rate exceeding 20%.
The refund rate for large enterprises is capped at 30%, while for small enterprises, it is 60% of the unemployment insurance contributions paid by the enterprise and its employees in the preceding year. The refund amount can be used towards stabilizing jobs, production, and operations costs such as insurance premium payment, living allowance to employees, job transfer training, etc.
Implication:
Employers should take note of the extension for reduced contribution rates and ensure that their payroll software is adjusted accordingly. Eligible companies may take the benefit of the unemployment insurance contribution refund policy.
Colombia
Colombia: Amendments to Sexual Harassment Law.
Colombian Government passed Law No 2365 of 2024on June 20, 2024, covering measures for prevention, protection, and attention of sexual harassment in the workplace and in higher education institutions in Colombia. The key highlights of the new law covering measures for sexual harassment at workplace are outlined below:
- The law guarantees the fundamental right to equality, non-discrimination, and a life free of violence through the adoption of measures for the prevention, protection, and care of victims of sexual harassment in the workplace.
- The law applies to all victims of sexual harassment, as well as to persons who commit such conduct in the workplace context (i.e., the physical workplace and any professional interactions/ relationships that occur within the scope of work, irrespective of location). Any interactions between workers, agents, employers, contractors for the provision of services, interns, and other people who participate in the work context are part of the work context, regardless of the nature of the relationship.
- Within twelve months from the enactment of this law, the government will need to include within the policies, a Transversal Plan for the elimination of sexual harassment in the workplace.
- Victims of sexual harassment have the right to truth, to be treated with dignity, to privacy, confidentiality, freedom of expression, comprehensive health care, effective access to justice, reparation, non-repetition, non-victimization, institutional non-violence, protection against possible retaliation, non-confrontation with their aggressor.
- The sexual harassment victim may get specified relaxations such as work from home and job continuity for six months. The affected person shall not be dismissed from the job without approval of labour inspector.
- The affected person can request for a transfer of workplace to a different area.
- The employers should have policy for sexual harassment, and it will be considered inadequate if the provisions are merely incorporated in the employment agreement.
- The employers will be subject to penalty, and/ or damages if found in violation of provisions related to sexual harassment including provision of adequate measures/ protection at the workplace.
Implication:
Employers are required to take a note of the new provisions and accordingly make changes in the internal policies, take proactive and remedial steps for preventing all forms of discrimination, harassment, and violence at workplace.
Colombia: Incentives to employers for new hires
Through Decree No 533 of 2024 issued by Ministry of Labor on April 29, 2024, the employers will be entitled to specified incentives if they hire certain types of employees for a period not less than 6 months and have contributed towards social security for at least a month. Following incentives are given:
| Eligible hiring/ recruitment | Incentives |
| Young hire between age group of 18 to 28 years | 30% of Minimum Legal Monthly Wages (“SMMLV”) i.e., COP 390,000 for the year 2024 for every additional hire officially linked. |
| Women hiring over 28 years of age with income up to 3 SMMLV | 20% of SMMLV i.e., COP 260,000 for the year 2024 for every additional hire officially linked. |
| Men hiring over 28 years of age with income up to 3 SMMLV | 15% of SMMLV i.e., COP 195,000 for the year 2024 for every additional hire officially linked. |
| Hiring employee with disabilities | 35% of SMMLV i.e., COP 455,000 for the year 2024 for every additional hire officially linked. |
The employer will be entitled to receive 24 incentives during the year and one for each employee.
Implication:
Employers should take note of the changes and avail the tax incentives by complying with the specified conditions.
Costa Rica
Costa Rica: Costa Rica’s Tax authority publishes tax rates and slabs for the tax year 2024.
The Ministry of Treasury has announced the updated income tax rates and income slabs for corporates and individuals applicable with effect from January 1, 2024.
Corporate Income Tax
Corporate tax rate is 30%. However, companies having annual gross income up to CRC 120,582,000 (CRC 122,145,000 in 2023) will be subject to the following corporate tax rates:
| 2024 Income (in CRC) | 2023 Income (in CRC) | 2024 & 2023 Tax Rates |
| Up to 5,687,000 | Up to 5,761,000 | 5% |
| From 5,687,001 to 8,532,000 | From 5,761,001 to 8,643,000 | 10% |
| From 8,532,001 to 11,376,000 | From 8,643,001 to 11,524,000 | 15% |
| From 11,376,001 to 120,582,000 | From 11,524,001 to 122,145,000 | 20% |
Employed Individuals
Tax rates and slabs for employed individuals based on monthly salary are as below:
| 2024 Income (in CRC) | 2023 Income (in CRC) | 2024 & 2023 Tax Rates |
| Up to 929,000 | Up to 941,000 | Nil |
| From 929,001 to 1,363,000 | From 941,001 to 1,381,000 | 10% |
| From 1,363,001 to 2,392,000 | From 1,381,001 to 2,423,000 | 15% |
| From 2,392,001 to 4,783,000 | From 2,423,001 to 4,845,000 | 20% |
| 4,783,001 and above | 4,845,001 and above | 25% |
The income tax slabs and rates are different for self-employed individuals, which are not given above.
Implication:
Employers should take note of the updated income tax slabs while processing the payroll.
European Union
EU: Artificial Intelligence (“AI”) Act approved by the European Council.
On May 21, 2024, the EU Council approved the EU Artificial Intelligence (“AI”) Act (“AI Act”). The AI Act particularly defines AI systems and introduces rules for general purpose AI (“GPAI”) models. These are models which have general application, and which can perform a wide range of distinct tasks and can be integrated into many systems or applications.
The key features of the AI Act are as follows:
Scope:
The AI Act will apply to various players in the AI distribution chain, including:
- AI providers (developers of AI systems).
- AI deployers (users of AI systems, excluding personal use).
- Importers and distributors of AI.
- AI product manufacturers.
- Authorized representatives of non-EU AI providers.
- Affected persons in the EU.
The AI Act applies extraterritorially, affecting businesses outside the EU if they offer AI systems or GPAI models in the EU market or if the AI system’s output is used in the EU. Non-EU providers of GPAI and high-risk AI systems must appoint an EU-based AI representative as a contact point for regulators.
Categories of AI systems:
The EU’s AI Act categorizes AI systems using a risk-based approach as under:
- Prohibited AI systems: Banned due to unacceptable risks to safety, rights, or values, such as social scoring and real-time biometric identification in public spaces.
- High-Risk AI systems: Strictly regulated due to significant harm potential, including AI used in critical infrastructure, education, employment, law enforcement, and border control.
- Limited Risk AI systems: Present lower risks but still require some safeguards, like AI-powered customer service chatbots.
- Minimal Risk AI systems: Pose minimal risks and face limited regulations, such as basic email spam filters.
Obligations and penalties:
The AI Act also provides certain obligations to provider and deployer of the High-risk AI system such as compliance with the act, documentation, monitoring of the system, etc. AI deployer which are most likely to be businesses, are required to create appropriate structure to ensure that instructions on AI system use given by the AI provider are duly followed. There should be sufficient oversite by natural persons who have the capability and qualification to conduct such oversite. Businesses are required to keep records of logs generated by a high-risk AI system for at least 6 months and cooperate with national authorities. They must ensure that the fundamental right impact assessment is completed before using high risk AI system.
The AI Act also prescribes penalties for non-compliance of the obligations laid down under the AI Act.
Applicability:
The AI Act was published in the EU’s Official Journal on July 12, 2024, and it will come into force after 20 days of its publication in the Journal i.e., from August 1, 2024. The new regulation will apply gradually within 24 months after its entry into force (subject to certain exceptions) as given below:
- Prohibition of certain unacceptable uses of AI: February 2025.
- Rules on GPAI models: August 2025.
- Penalties for breaching obligations: August 2025 except for fines for providers of GPAI models.
- High-risk AI systems as part of safety components in regulated products: August 2027.
GDPR and AI Act:
There is a close relationship between GDPR and the AI Act. While AI Act aims at ensuring safety of AI products, GDPR aims at protecting privacy rights of individuals. Thus, both the laws will assume importance when AI systems use personal data of individuals. The AI law has powers to stop use of unlawful AI systems which use personal data, but the individuals will have to exercise their rights for protecting their privacy under the GDPR. Article 27 of the AI Act mandates a fundamental right impact assessment in case of high-risk AI system while clarifying that such assessment will compliment requirement of data protection impact assessment under GDPR.
Implication:
Companies which develop, use, or deploy AI systems should carefully consider the implications under the AI Act. Further, where the AI system uses personal information, the requirements, and implications under AI Act and GDPR should be taken into consideration. AI systems used for human resource management can have implications under both the regulations.
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Finland
Finland: Standard VAT rate increased to 25.5% effective September 1, 2024; small business exemption scheme revised effective January 1, 2025.
The Finnish Parliament has adopted amendments to the VAT regulations, introducing changes to the VAT regime for small businesses as proposed by the Ministry of Finance. These changes will take effect on January 1, 2025, in accordance with EU Directive 2020/285 dated February 18, 2020.
The key changes are as follows:
- Small businesses established in another EU member state, without a permanent establishment in Finland, can opt for the VAT exemption if their annual EU turnover does not exceed EUR 100,000. However, the VAT registration is mandatory if the turnover in Finland is EUR 20,000 or more as against earlier threshold of EUR 15,000. For determining the threshold, the turnover for two preceding calendar years would be considered.
- The earlier scheme providing relief to small businesses will be discontinued.
Separately the standard VAT rate is set to be at 25.5% (increased from 24%) effective September 1, 2024.
Implication:
Businesses should note the increase in the standard tax rate. Small businesses should take note of changes in VAT schemes and align their tax practices and policies accordingly.
Finland: Introduction of public CbC reporting effective for fiscal years starting on or after June 22, 2024.
On May 3, 2024, the Finnish Parliament approved the law amending the Accounting Act in order to implement the public Country by Country (“CbC”) reporting requirement under the EU Directive 2021/2101. The Parliament also approved the law amending the Audit Act whereby the auditors are required to specify in their report if the company is subject to public CBC reporting requirement and if it has complied with such requirement.
The requirements to publish CbC report apply to ultimate parent entities or group entities of the group which has annual consolidated group revenue of EUR 750 million in each of the previous two consecutive financial years. Certain exclusions are also provided. The requirements apply to the fiscal years beginning on or after June 22, 2024. The public CbC report must be prepared in the language in which the financial statements are prepared and at least in one of the official languages of the European Union. It must be submitted to the Finnish Patent and Registration Office for registration within 12 months following the close of the relevant financial year. Furthermore, the report should be accessible to the public on the reporting entity’s website free of charge within 12 months following the end of the relevant financial period. The report should be accessible to the public for at least five years. Further, the law allows temporary omission of information from the report if its disclosure would harm commercial position of the group or undertaking. However, such an omission must be disclosed in the report along with the reasons for non-disclosure of information. The law also provides for fines for failure to meet the reporting obligations.
Implication:
Companies falling within the scope of reporting requirements shall take the necessary steps to stay compliant with the newly introduced Public CbC reporting requirements.
France
France: Announced revised thresholds for classification of companies/ groups based on size and appointment of an auditor.
The French Government has revised thresholds for company and group sizes, and the mandatory appointment of an auditor, effective March 1, 2024. Companies must meet two out of the following three thresholds to qualify for a specific class and applicability of audit.
Companies:
| Type of Company | Balance Sheet Total | Net Sales | Number of employees |
| Micro | EUR 450,000 (earlier EUR 350,000) | EUR 900,000 (earlier EUR 700,000) | 10 |
| Small | EUR 7.5 million (earlier EUR 6 million) | EUR 15 million (earlier EUR 12 million) | 50 |
| Medium | EUR 25 million (earlier EUR 20 million) | EUR 50 million (earlier EUR 40 million) | 250 |
| Large | More than EUR 25 million (earlier EUR 20 million) | More than EUR 50 million (earlier EUR 40 million) | More than 250 |
Group Companies:
| Type of Group | Balance Sheet Total | Net Sales | Employees |
| Small | EUR 9 million (earlier EUR 7 million) | EUR 18 million (earlier EUR 14 million) | 50 |
| Medium and Large | EUR 30 million (earlier EUR 24 million) | EUR 60 million (earlier EUR 48 million) | 250 |
Mandatory Appointment of an Auditor:
| Type of Company | Balance Sheet Total | Net Sales | Employees |
| Independent Companies | EUR 5 million (earlier EUR 4 million) | EUR 10 million (earlier EUR 8 million) | 50 |
| Controlled Companies | EUR 2.5 million (earlier EUR 2 million) | EUR 5 million (earlier EUR 4 million) | 25 |
New thresholds for classification of companies/groups based on their size are applicable to accounts and reports relating to the financial year beginning on or after January 1, 2024. However, ongoing mandate of statutory auditors as on March 1, 2024, will continue to apply till the expiry of such mandate.
Implication:
Companies should take note of the revised thresholds to determine their classification and ensure compliance based on its classification.
Germany
Germany: Germany published ‘Growth Opportunities Act’ in official gazette on March 27, 2024.
Germany published the ‘Growth Opportunities Act’ in the Official Gazette on March 27, 2024, which is effective from March 28, 2024.This Act introduces various measures related to interest deductions, VAT, loss carry forward, depreciation, and more.
The key measures include the following:
- Starting from the tax year 2024, new provisions enforce stricter rules on interest deduction for cross-border intercompany financing:
- Interest deduction limitation: The Act limits the interest deduction by establishing a rate based on the group’s overall credit rating. Any interest rate higher than this rate is considered not in line with the arm’s length principle.
- Compliance Requirements: Taxpayers must demonstrate their ability to service the debt throughout its term (debt capacity/cash-flow test), prove a genuine business need and appropriate use of borrowed funds (business purpose test), and ensure the interest rate aligns with conditions applicable to an unrelated third party (maximum interest rate test).
- Temporary increase in loss carry forward offset from 60% to 70% of current year income exceeding EUR 1 million for individual and corporate income tax purposes applies from years 2024 to 2027. However, loss carry back period of two years remains the same.
- For the 25% Research & Development (R&D) tax allowance, the maximum annual amount of qualifying expenses incurred after March 27, 2024, increases from EUR 4 million to EUR 10 million per year. Additionally, the allowed portion of expenses for contract R&D in respect of expenses commissioned after March 27, 2024, also increases from 60% to 70%.
- The ‘Second Corona Tax Assistance Act’ allowed declining balance method for depreciation of movable assets acquired in 2020 and 2021, up to 2.5 times the straight-line rate or at the rate of 25%. This was extended to assets acquired between January 1, 2020, and December 31, 2022, by the Fourth Act. The Growth Opportunities Act now permits declining depreciation for assets purchased from April 1, 2024, to December 31, 2024, at the rate of up to 20% or 2 times the straight-line rate. Businesses can choose between declining and straight-line depreciation methods, but declining depreciation is only applicable for tax purposes and requires proper justification in commercial accounting.
- The exemption threshold for filing quarterly advance VAT returns will increase from EUR 1,000 to EUR 2,000 from January 1, 2025. When the total VAT payable in the previous year exceeds the threshold, businesses are required to file their VAT returns quarterly, else they are permitted to submit annual returns. If the VAT payable in the previous year exceeds EUR 7,500, then monthly filing is required.
- The turnover threshold for applying cash basis for VAT accounting increased for the year 2024 to EUR 800,000 from EUR 600,000. Cash basis accounting means the VAT payment is due along with the VAT return at the end of the applicable filing period, in which payment from customers is received.
- Businesses with turnover below EUR 800,000 or profit below EUR 80,000 are exempted from preparing yearly financial statements from the year January 2024. The previous limits were EUR 600,000 and EUR 60,000, respectively till the year December 2023.
Implication:
Businesses should adapt to the new regulatory changes to improve financial efficiency and strategic planning while managing compliance requirements.
Gibraltar
Gibraltar: Budget 2024-25 Highlights.
The Chief Minister of HM Government of Gibraltar presented the budget for the year 2024-25 on July 1, 2024.
The key highlights of the budget are as follows:
Personal taxes
- The maximum tax rate was reduced to 25% on all income levels for all taxpayers under both the systems i.e., Allowance Based System (“ABS”) and the Gross Income Based System (“GIBS”). The tax rate of 26% will be reduced by 1% for income up to GIP 100,000, while the tax rate of 27% will be reduced by 2% for income exceeding GIP 100,000.
- The cap on employers’ and employees’ social insurance contribution is set to increase by 5% with effect from July 1, 2024.
- Minimum wage proposed to be increased from GIP 8.60 to GIP 8.90 per hour.
- State Pension and Disability Benefits will increase by 2.6%. The full old age pension will now be GIP 571.15 for a single person and GIP 856.90 for a married couple.
Corporate Tax
- The standard corporate tax rate will increase from 12.5% to 15%. It will be effective once published in the official gazette.
- Businesses can claim up to a 50% deduction for expenses incurred to achieve net-zero carbon emissions, subject to approval by the Commissioner of Income Tax. The maximum annual deduction is capped at GIP 10,000.
Implication:
Employers should make note of tax rate changes and adjust their payroll processes accordingly. Companies should evaluate the impact of planned increase in tax rates on their profits.
Honduras
Honduras: New obligation to file Country-by-country report (“CbCR”) and notification for multinational companies in Honduras to be effective from January 1, 2025.
The Honduran Tax Administration (“SAR”) through the “Agreement SAR-653-2023” published on March 19, 2024, lays down guidelines on the Country-by-Country Report (“CbCR”) reporting and notification obligation applicable to multinational companies (“MNC” s) having tax residence in Honduras. The following are the key aspects of the guidelines:
- Eligible entities: Ultimate Parent Entities (“UPEs”) of multinational groups which are tax residents in Honduras need to submit the “Country by Country Report.” Apart from this, non-parent constituent entities, which reside in Honduras, must also submit the report if:
- The UPE is not required to present the report in its jurisdiction where it is situated;
- There is no information exchange agreement between the jurisdiction of the UPE and Honduras; or
- A systematic failure of information exchange has been notified by SAR to the constituent entity.
- CbCR reporting and notification threshold: The eligible companies need to submit CbCR, if they have consolidated group income exceeding EUR 750 million or its equivalent in Honduran Lempira (“HNL”) as per exchange rate as of January 2015. The legal representative of constituent entity should also notify about their status whether they are a parent entity or the identity of the reporting entity which will submit CbCR.
- Reporting form: The CbCR needs to be submitted in XML format electronically with SAR.
- Submission deadline: CbCR should be submitted within 12 months from the last day of the reporting year, whereas notification needs to be submitted by December 31 of the reporting year.
The above guidance on CbCR will be applicable from tax years starting from January 1, 2025.
Implication:
The companies need to keep track and adhere to the CbCR agreement once it comes into effect from January 1, 2025.
Hong Kong
Hong Kong: Bill passed to give effect to tax proposals in Budget 2024-25.
The Inland Revenue (Amendment) (Tax Concessions and Two-tiered Standard Rates) Bill, 2024 was gazetted on May 31, 2024, implementing some of the 2024-25 budget proposals. The amendments are as under:
- starting from the tax year 2024-25, a two-tiered standard rates regime for “salaries tax” and “tax under personal assessment” will be applicable as outlined below:
| Tax Year 2024-25 | Tax Year 2023-24 | ||
| Net Income (In HKD) | Standard Rate | Net Income (In HKD) | Standard Rate |
| Up to 5,000,000 | 15% | Any amount | 15% |
| More than 5,000,000 | 16% | ||
- 100% reduction of “salaries tax” and “tax under personal assessment” up to a ceiling of HKD 3,000 for the tax year 2023–24 (similar reduction was provided earlier with a ceiling of HKD 6,000 for tax year 2022-23). This will be reflected in the final tax payable for the tax year 2023-24.
- Deduction will be allowed up to HKD 20,000 for home loan interest or domestic rents, in addition to the basic deduction ceiling of HKD 10,000, if certain conditions are fulfilled by the taxpayer.
Implication:
Employees should take advantage of the above benefits in their tax calculations.
India
India: Rate of damages on delayed payment of provident fund contributions and accumulations revised effective from June 15, 2024.
The Ministry of Labour and Employment has recently issued a number of notifications introducing amendments in the provident fund regime of India. One of the notifications has revised the rate of damages payable by the employers for delay in payment of contribution or defaults in the transfer of accumulated funds under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
Starting June 15, 2024, the appropriate authority can impose a uniform rate of 1% per month on arrears or defaults as mentioned above. Previously, the rate ranged from 5% to 25% based on the period of default. Earlier, there was a ceiling as per which the damages could not exceed 25% where the delay was of 6 months or more. The amended provisions do not have such ceiling meaning interest for delay in payment can now exceed 25%. This can have serious impact on employer where the delay is significant.
The revised rates for damages due to delay in deposit/transfer are also applicable to the Employees’ Pension Scheme, 1995 (EPS Scheme) and Employees’ Deposit Linked Insurance Scheme, 1976 (EDLI Scheme). Further, notifications also make amendment in the method of calculating withdrawal benefit under pension scheme.
Implication:
Employers should take note of the revised damages rates and avoid delays in payment of contribution or transfer of accumulated balance to avoid higher interest burden.
India: Directors can update their mobile numbers and email IDs anytime during the year effective from August 1, 2024.
The Ministry of Corporate Affairs (“MCA”) has published the Companies (Appointment and Qualification of Directors) (Amendment) Rules, 2024 on July 16, 2024, for amending the provisions related to the form DIR-3 KYC. This amendment will come into effect from August 1, 2024. According to the amended rules, Directors will have the flexibility to update their mobile number or email address any time during the financial year.
As per the existing provisions, a DIN holder can update their mobile number or e-mail address only once a financial year, by end of September, through the E-Form DIR-3 KYC. However as per the amended rules, the DIN holders will now be able to update the mobile number anytime during the year, by filing the form DIR-3 KYC along with INR 500.
India: Union Budget 2024 – Highlights.
On July 23, 2024, the Finance Minister of India, Ms. Nirmala Sitharaman presented before the Parliament, the first full-fledged Union Budget after the 2024 Lok Sabha elections in India. Earlier, an interim budget was presented on Feb 1, 2024, by the Government prior to elections.
The tax proposals listed below are applicable for Financial Year (“FY”) 2024-25 corresponding to Assessment Year (“AY”) 2025-26, unless specified otherwise.
Direct Tax Rates
Individuals:
- Indian Income-tax Act (the Act) provides two tax regimes for taxation of individuals – one provides for concessional slabs / rates without allowing certain exemptions /deductions (tax regime without deductions) which is a default tax regime and the other has higher tax rates, but it allows number of deductions (tax regime with deductions). The taxpayer has the option to choose the ‘tax regime with deductions’ by filing an applicable form with the income tax department.
The Budget proposes to change the income slabs applicable to the default tax regime (i.e., regime without deductions) as under:
| FY 2024-25 | FY 2023-24 | ||
| Annual Taxable Income (In INR) | Income Tax Rate | Annual Taxable Income (In INR) | Income Tax Rate |
| Up to 300,000 | Nil | Up to 300,000 | Nil |
| 300,001 to 700,000 | 5% | 300,001 to 600,000 | 5% |
| 700,001 to 1,000,000 | 10% | 600,001 to 900,000 | 10% |
| 1,000,001 to 1,200,000 | 15% | 900,001 to 1,200,000 | 15% |
| 1,200,001 to 1,500,000 | 20% | 1,200,001 to 1,500,000 | 20% |
| Above 1,500,000 | 30% | Above 1,500,000 | 30% |
However, in case of tax regime with deductions, tax rates and income slabs continue to remain unchanged since FY 2022-23 which are as follows:
For individuals below the age of 60 years:
| FY 2024-25 and FY 2023-24 | |
| Annual Taxable Income (In INR) | Income Tax Rate |
| Up to 250,000 | Nil |
| 250,001 to 500,000 | 5% |
| 500,001 to 1,000,000 | 20% |
| Above 1,000,000 | 30% |
- Further the Act provides a tax rebate whereby the taxpayer is not required to pay tax if his taxable income is below INR 500,000 (for tax regime with deductions) or INR 700,000 (for tax regime without deduction). This provision remains unchanged from the earlier year. The surcharge rates and health education cess also remain unchanged.
Companies:
- There is no change in corporate income tax rates (“CIT”) for Indian companies. However, the CIT for the foreign companies is proposed to be reduced from 40% to 35%. The surcharge and health and education cess rates remain unchanged from the previous year rates.
Other key direct and indirect tax proposals
Individuals:
- A private sector employee who pays tax under the ‘tax regime without deduction’ shall be allowed a deduction towards contribution to national pension scheme made by an employer of an amount not exceeding 14% of the employee’s salary (earlier this limit was 10% of the employee’s salary). The benefit of increased rate is not applicable when employee pays tax under the regime with deductions.
- While computing total income under the tax regime without deductions, an individual earning income from salary or pension would be eligible to claim standard deduction up to INR 75,000. Earlier such deduction was INR 50,000.
- The employer is required to withhold taxes (tax deduction at source – TDS) from the payment of salary to employees. While computing TDS, the employee can request the employer to consider income from other heads. The budget proposes to allow employer to consider tax withheld on such other income as well any tax collected at source while determining the TDS. This proposal would be effective from October 1, 2024.
Companies:
- In case of private sector employers, any contribution made towards national pension scheme is allowed as deduction while computing business income provided it does not exceed the specified percentage of the salary of its employees. The budget proposes to increase the deduction for contribution from 10% of salary to 14% of the salary.
- In case of private companies, where the amount received for issuance of shares was higher than the fair market value of such shares, such excess amount was taxable in the hands of the company as income from other sources. This was popularly known as angel tax as it badly affected the investment by angel investors in start-up companies. The budget introduces a sunset clause for this provision whereby this provision will not be applicable from assessment year 2025-26 onwards.
- The Indian Income Tax Act (the Act) provides different tax rates for taxability of short-term and long-term capital gains and the rates also vary based on the nature of assets. The budget introduces several changes to capital gains taxation such as revision in duration of holding for treatment of capital gains as short term or long term, revision in capital gains tax rates applicable to different classes of assets, method of computation of long-term capital gains, etc. Short term capital gains tax rate on listed equity shares and equity oriented mutual fund units will increase from 15% to 20%. A tax rate of 12.5% is proposed for all category of long-term capital gains. Earlier different rates were applicable for different types of assets.
- It is proposed that any amount received from the company on buy back of shares will now be taxed in the hands of recipient as dividends at applicable rates and the capital loss on buy back of shares calculated at issue price of such shares will be allowed to be carried forward. Earlier, companies were required to pay tax at 20% (plus applicable surcharge and cess) on the difference between buy back price and issue price. This amendment is effective for all buybacks which take place on or after October 1, 2024.
- The Act requires e-commerce operators to deduct TDS at 1% on the gross amount of sales or services facilitated through their digital platforms or electronic facilities. To align with the lower TDS and TCS rates for offline transactions, it is proposed to reduce the TDS rate on e-commerce transactions from 1% to 0.1%. This amendment will take effect from October 1, 2024.
- Revision in rate of securities transaction tax (“STT”) is as follows:
| Transaction | STT rate Oct 1, 2024, onwards | STT rate prior to October 1, 2024 |
| Sale of an option in securities | 0.1% | 0.0625% |
| Sale of a futures in securities | 0.02% | 0.0125% |
- Under the Income-tax Act, a liaison office of a foreign company in India is required to furnish certain statement to the authorities in respect of its activities during the financial year. The budget proposes to levy a penalty for the failure to furnish such statement at the rate of INR 1,000 per day for which the failure continues if the period of failure does not exceed three months. In all the other cases, penalty will be INR 100,000. However, no penalty will be levied if the failure is on account of a reasonable cause.
- The budget proposes to abolish equalization levy at 2% on amount of consideration received/ receivable by an e-commerce operator from e-commerce transactions such as online sale of goods and provision of services including those sale or provision of services facilitated by the e-commerce operators. An “e-commerce operator” is a non-resident who owns, operates, or manages digital or electronic facility or platform for online sale of goods or online provision of services or both.
- In order to comply with the Automatic Exchange of Information (“AEOI”) framework, a penalty of INR 50,000 under section 271FAA of the Act applicable for providing inaccurate information in the statement of financial transactions/ reportable account by the specified persons is also applicable to failure to comply with due diligence requirement in the statement, without reasonable cause, effective from October 1, 2024.
- Custom duty rates revised on several items such as reduction in basic custom duty rates on mobile phones, charger and other related equipment, gold, silver, and platinum.
Other key proposals
- The Finance Minister announced certain incentive schemes for promotion of employment. Under one of the schemes, all first-time employees working in formal sectors will receive amount equal to the one-month wage not exceeding INR 15,000 in three instalments through a direct benefit transfer mechanism. For determining eligibility, first time employees as registered with Employee Provident Fund Organization (EPFO) having salary up to INR 1 lakh per month will be considered. Under another scheme, the government will reimburse to employers up to INR 3,000 per month for 2 years towards their EPFO contribution for each additional employee. Employee with a salary up to INR 100,000 per month will be eligible for this scheme.
A detailed note of the budget proposals including amendments related to capital gains tax, customs duty, sample computation of tax liability for individual at different income level can be accessed here.
Implications:
Employers need to update their payroll system to incorporate personal tax changes. They should evaluate the proposed incentive schemes to verify their eligibility and benefit availability. Companies should evaluate impact of proposed changes including changes in capital gains taxation.
Israel
Israel: VAT rate increased to 18% effective January 1, 2025.
The Finance Committee of the Knesset has approved the increase of 1% in the VAT rate from 17% to 18% effective January 1, 2025.
Implication:
Businesses should take note of increase in VAT rate and evaluate impact on their pricing and profitability. They should also update their system to reflect the changed VAT rate.
Japan
Japan: New measure released for partial removal of the residential address details of representative directors, effective from October 1, 2024.
In Japan, individuals appointed to certain directorial positions must register their residential addresses on the corporate registry, making them accessible to the public. The public disclosure of the detailed addresses of management personnel has raised concerns, including issues related to their privacy rights. To address these concerns, Japan’s Ministry of Justice has introduced “Measures to hide the addresses of the representative directors, etc.” (“the measures”) by amending the Commercial Registration Regulations, which will allow certain management personnel to hide the details or publish abridged details relating to their residential addresses recorded on the corporate registry.
These measures will apply exclusively to the personnel of Kabushiki Kaisha (joint-stock company), starting from October 1, 2024.
The key points of these measures are as follows:
- They will enable partially hiding the residential address recorded in the registration certificate, registration summary, and registration information provision service.;
- This benefit is available only to representative directors, representative executive officers, and representative liquidators/administrators of a Kabushiki Kaisha;
- The residential address may be partially hidden only upon request by the Kabushiki Kaisha through an application filed in the following situations:
- company incorporation;
- appointment of representative director;
- changing the address of representative director.
- The attachments to be filed with the application will vary based on whether the company is publicly listed. Publicly listed companies must submit documentation proving their listing status.
- New provisions relating partial removals will only apply to future information, which means that historical information on corporate officers, including past residential addresses, will remain visible on the corporate registry, and companies cannot request partial removal for this historical data.
- The address of the management personnel can be displayed in full, if the respective representative director later requests to disclose this information, or if it is determined by the registrar that the corporation does not exist at its registered head office location.
Japan’s Ministry of Justice has implemented these measures in response to concerns about privacy rights. However, it has cautioned that once these measures are applied to conceal the addresses of representative directors and other executives in official company records, verifying the address of the company representative using certified copies of the company register may become difficult or impossible.
Implication:
Companies may file an application as per the aforesaid provisions, if any eligible management personnel wish to edit/partially hide their residential address.
Japan: Revision in labour laws to support employees having children effective from April 2025.
Recently Japan made revisions to the labour laws which are applicable to the employees with young children. The amendments are aimed at supporting working parents and advancing gender equality in workplace.
As per these amendments, the new provisions of the childcare and nursing care leave law will be gradually implemented effective from April 2025.
The following are the key highlights:
- Companies are required to provide a minimum of two flexible working options, namely remote work, reduced hours, or flexible work schedules, for employees with children aged 3 and above.
- Companies should take efforts to facilitate remote working for parents with children under the age of 3 years.
- Employees having children can now be relieved from overtime work until their children reach elementary school age, extending the previous exemption threshold of 3 years of age.
- Childcare leave for sick or injured children will now extend to children up to third grade.
- Companies having more than 300 employees must disclose the percentage of male employees taking childcare leave. Companies having more than 100 employees are required to set targets for such leave.
- Companies must provide information on public support programs to employees aged 40 and above in order to reduce the employee turnover due to eldercare responsibilities.
Employers must establish specific systems or policies to implement these provisions, thereby supporting employees with children.
Implication:
Employer should update their employee leave and other policies in line with the above changes and take efforts to improve employee awareness about these measures.
Lithuania
Lithuania: Lithuania implements Global Minimum Tax effective from July 1, 2024.
The Lithuanian Parliament approved Law No. XIV-2680 on June 6, 2024 for implementing global minimum tax transposing the EU Minimum Tax Directive (Council Directive (“EU”) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union) into the law, which was published in the official gazette on June 19, 2024, and effective from July 1, 2024 for the financial year starting on or after December 31, 2023.The provisions introduce 15% global minimum tax rate for companies, that are part of multinational and domestic groups with consolidated annual revenue of at least EUR 750 million.
The provisions include:
Qualified Domestic Top-up Tax (“QDMTT”) – This domestic top up tax of 15% will apply to qualifying companies and permanent establishments if their foreign operations have an effective tax rate below 15%.
The legislation has deferred the additional charging mechanism such as the Income Inclusion Rule (“IIR”) and Undertaxed Profit Rule (“UTPR”).
Implication:
Businesses should take note of changes and comply with them accordingly.
Malaysia
Malaysia: Occupational Safety and Health (Amendment) Act effective from June 1, 2024.
The Occupational Safety and Health (Amendment) Act 2022 (Amendment Act) which received royal assent on March 4, 2022, is effective from June 1, 2024, along with two new subsidiary legislations, the Occupational Safety and Health (Plant Requiring Certificate of Fitness) Regulations 2024 and the Occupational Safety and Health (Licensed Person) Order 2024. The Amendment Act introduces significant changes to the existing law, aiming to enhance occupational safety and health legislation in Malaysia.
The key amendments are explained below:
- The Occupational Safety and Health Act 1994 (OSHA) was earlier applicable to specific industries. However, after the amendment, it will now be applicable to all workplaces nationwide, with the exception of domestic employment, the armed forces, and certain maritime activities.
- Under the amended law, the principal has responsibility for safety and health of any contractor engaged by such principal and any sub-contractor or employees of contractor when they are at work. Principal is a person who in the course of or for the purpose of his trade, business, profession etc., contracts with a contractor for execution of his work.
- According to the Amendment Act, employers are required to conduct risk assessments to evaluate safety and health risks in their workplaces. Following these assessments, they must implement suitable controls and measures based on the findings.
- The Amendment Act strengthens employee protection by enabling them to take proactive measures to safeguard their health and safety, including the right to remove themselves from imminent danger if the employer fails to address risks. It also prohibits employers from retaliating against employees who assist in inspections or report safety concerns, ensuring a safer work environment without fear of repercussions.
- The Amendment Act imposes joint and several liability on company officers, specifically directors, compliance officers, or managers, for offences committed by the company.
- The existing law requires the appointment of a competent person as a safety and health officer, who must possess relevant qualifications. The Amendment Act introduces a new requirement for employers having five or more employees to appoint an occupational safety and health coordinator, unless exempted by the Gazette. The appointed Coordinator is responsible for overseeing and managing all occupational safety and health matters at the workplace.
- The Minister of Human Resources can direct specified employees and other individuals to attend an occupational safety and health training course. Employer must ensure that such direction to attend training are duly complied before authorizing them to perform tasks where such training is necessary.
- Under the Amendment Act, penalties for certain offenses have been significantly increased.
Implication:
Employers must take note of the changes and adjust their policies and procedures to adhere to the new legal requirements, as applicable.
Malaysia: Mandatory e-invoicing to be implemented in phased manner starting from August 2024.
In March 2023, the Inland Revenue Board of Malaysia (“IRBM”) announced mandatory adoption of e-invoicing which will be rolled out in phases. The initial timeline has been postponed, and a new schedule for the phased implementation of e-invoicing has been approved as follows:
- August 2024: For businesses with annual turnover of more that MYR 100 million
- January 2025: For businesses with annual turnover of more than MYR 25 million but less than or equal to MYR 100 million
- July 2025: For all remaining businesses.
The following are the key feature of the proposed e-invoicing system in Malaysia:
- The e-invoice must be in either XML or JSON format and requires information in approximately 53 fields.
- The e-invoicing is mandatory for all types of transactions viz. B2B, B2G and B2C.
- The taxpayers can submit the e-invoices to the IRBM through either of the following mode:
- MyInvois Portal which is an online platform established by IRBM; or
- Application Programming Interface (API), a software that taxpayers can install in their system for direct transmission of invoices.
- The e-Invoicing system in Malaysia adopts the Continuous Transaction Control (“CTC”) Model, which enables a high level of control through the validation of e-Invoices received by IRBM.
- The small businesses having an annual turnover below MYR 150,000 are exempted from e-invoicing, unless they implement it voluntarily. The exempted taxpayers must consolidate all invoices and receipts issued and submit a single e-invoice through the MyInvois portal, within 7 days from the month end.
Implication:
Companies subject to e-invoicing requirements must synchronize their invoicing procedures with the electronic platform, requiring technological preparedness and procedural adjustments.
Netherlands
Netherlands: Low-income benefits (“LIV”) available to employer is expiring effective from January 1, 2025.
Employers employing individuals having lower wage which is between 100% to 104% of minimum wages are entitled to lower income benefit ((lage-inkomensvoordeel “LIV”) if such employees work for at least 1248 hours on an annual basis. The tax administration pays the employer such benefit at the end of the year. However, effective January 1, 2025, this benefit will be abolished and would no longer be available for employers as declared by the Netherlands Government. Earlier, the upper limit for wages was reduced from 125% to 104% of minimum wages effective from January 1, 2024.
Implication:
Employers taking the benefit of LIV should factor in the impact of the discontinuation of the benefit on their costs.
Netherlands: Large employers to report work-related mobility data from July 1, 2024.
Beginning from July 1, 2024, large employers (those having 100 or more employees) in the Netherlands are required to report work-related mobility data under the Climate Agreement which aims to reduce CO2 emissions by 1.5 megatons by 2030.
The reporting obligation includes data on commuting and business travel, excluding air traffic. Employers must report annually on kilometres driven, transport mode used, and fuel used via the Netherlands Enterprise Agency’s digital form, which will calculate CO2 emissions automatically. Data for the year 2024 (For July to December 2024) must be reported by June 30, 2025.
The Ministry of Infrastructure and Water Management has provided a guide to assist with data collection. Compliance will be monitored by regional environmental services. For the employer to qualify as a large employer, the number of employees as on January 1, 2024, is to be considered excluding employees who work less than 20 hours per month, temporary agency workers and deputed workers. Foreign employers who fulfil the condition of having 100 or more employees are also subject to this compliance requirement.
Implication:
Employers shall take appropriate measures to collect, and report required information regarding business commute/travel. Furthermore, employers are required to take appropriate measures for achieving the goal of sustainability.
Peru
Peru: Introduction of additional deductions for hiring young employees.
Peru introduced new Law vide the decree no. 054-2024-EF published on April 18, 2024, providing additional deduction to the companies for hiring young employees up to 50% of the basic salaries paid to the new employees in the years 2024 and 2025, subject to below conditions:
- The employment starts on or after January 1, 2024.
- The employee is in the age group of 18 to 29 at the time of employment.
- The employee is not registered on the electronic payroll of any other company within 12 months prior to the beginning of current employment.
- The monthly remuneration (including variable) to the new hires during the years 2024 and 2025 will not exceed PEN 1700 per month.
- The average number of employees in the previous year (i.e., the year prior to which the benefit is claimed) is lesser than the employees registered on employer’s electronic payroll in the current/ relevant year in which the benefit is claimed.
Implication:
Employers should take note of the new regulations and avail tax benefit by complying with the specified conditions.
Poland
Poland: Poland extends family care benefit to the first child in 2024, which was available only to the second and subsequent children.
Poland has extended the family care capital benefit to the first child from the year 2024, which was available only to the second and subsequent children.
The benefit is by way of a payment to parents of PLN 500 or PLN 1000 per month, with a maximum of PLN 12,000 per child, based on the parents’ preference. Family care capital is a benefit for parents of children aged between 12 to 35 months, aimed at partially covering expenses related to raising a child, including care, and meeting the child’s life needs. This benefit is available to Polish citizens and specified foreigners under the Act. It is entitled to the mother, father, or a person who has taken a child for upbringing and applied to the guardianship court for adoption proceedings. The support is independent of family income and is not taxed.
The benefit is paid monthly by the ‘Social Insurance Institution’ (“ZUS”) to the account in Poland or a bank account in an EU/EFTA member state if the parent or guardian resides there.
Implication:
Employees can take note of the extended family care benefit to the first child starting in 2024, offering increased financial support.
Poland: Mandatory e-invoicing in Poland postponed to February 1, 2026.
Poland had introduced the new National System of e-Invoices namely Krajowy System E-faktur or KSeF. The new e-invoicing system (i.e., issuing of structured e-invoices) was likely to be mandatory from January 1, 2024, then extended to July 1, 2024, is now further extended to February 1, 2026. Starting from February 1, 2026, e-invoicing will be mandatory for large taxpayers with annual revenues over PLN 200 million, and beginning April 1, 2026, it will be mandatory for all other taxpayers.
Implication:
Businesses will need to revise their processes to enable compliance with the new e-invoicing regulations.
Poland: Minimum wage increased to PLN 4,300 gross from PLN 4,242 gross effective from July 1, 2024.
Effective from July 1, 2024, the government has increased the minimum wages in Poland to PLN 4,300 gross from PLN 4,242 gross (previously until June 2024).
Poland: The President signed the ‘Whistleblower Protection Act’ on June 19, 2024.
Poland government adopted the ‘Act on Protection of Whistleblowers’ (transposing the EU Whistleblowing Directive (2019/1937)), signed by the President on June 19, 2024. It was published in Journal of laws on June 24, 2024. The new law will take effect three months after being enacted, with the exception of the external reporting rules for competent authorities, which will have an additional six months for full implementation.
The Act introduces measures for protection of whistle-blowers in Poland. The Act will require companies with 50 or more employees or companies in financial sector, anti-money laundering obligated entities, to establish an internal and external reporting mechanism by which whistle-blowers can report significant violations, non-compliances, or criminal activities, confidentially without fear of reprisals.
The key provisions of the law are as follows:
- Companies are required to establish a whistleblowing channel and designate at least one person to receive and follow up on whistleblowing reports. The designated person can be a compliance officer, HR head, etc. The Company is required to publish the information about whistleblowing channel on the company’s website viz. how to report an incident, name and contact details of the designated person, applicability of the whistleblowing channel viz. available only to employees, or also to independent contractors, suppliers, service providers, etc.
- The whistleblowing report is an information on alleged breaches/ acts/ omissions, which should contain the direct identification of the whistleblower, or information allowing such identification. The Act protects whistleblower anonymity, allowing identity disclosure only with their consent or when required by law for investigations or legal proceedings to ensure the reported person’s right of defence. An anonymous report does not trigger the mandatory steps under the Whistleblowing Act. The law offers suitable protection to anyone reporting acts/ omissions amounting to any infringements contained in any law (i.e., whistle-blower). Any acts including any attempt of retaliation, harassment, threats, discrimination against such persons are prohibited.
- The sanctions outlined in the Act include criminal liability, such as imprisonment for impeding a whistleblower from making a report, retaliating against a whistleblower, and disclosing a whistleblower’s identity. A whistleblower who faces retaliatory actions is entitled to compensation of at least the average monthly salary.
- Additionally, the Act grants whistleblowers, the right to claim damages for material loss (no less than the average monthly salary in Poland) and compensation for non-material damage (such as pain and suffering).
- Failure to implement or properly maintain an internal whistleblowing channel can result in fines for the companies.
Implication:
Companies should review their whistle-blower policy to ensure compliance with the Act.
Singapore
Singapore: Tripartite Guidelines on Flexible Work Arrangement Request will come into effect on December 1, 2024.
Singapore’s Ministry of Manpower (“MOM”) announced on April 16, 2024, that the “Tripartite Guidelines on Flexible Work Arrangement Request” (Guidelines) will come into effect on December 1, 2024. The new guidelines will replace the current Tripartite Advisory on Flexible Work Arrangements of 2014 and the Tripartite Standard on Flexible Work Arrangements of 2017.
The Tripartite Workgroup was convened in September 2023 for developing a set of Guidelines for flexible work arrangement (“FWA”) requests considering the needs of employees and businesses. The Government has accepted all 10 recommendations by the Tripartite Workgroup on the Tripartite Guidelines. These Guidelines will establish the right norms and expectations around FWAs, by setting rules related to making requests for FWAs by the employees and handling of such requests by the employers. The employers will continue to have the right to decide on work arrangements. The key features of the Guidelines are as follows:
- The guidelines apply to all employers including small and medium size employers.
- The FWA is defined as mutual arrangement between employer and employee which is a variation from standard work arrangement and can be broadly categorised into three types:
- Flexitime: It provides flexible work timings to employees with no change in total working hours or workload.
- Flexi-Place: As the name suggest it provides flexible place of work, other than regular/ general place of work (such as work from home, etc.).
- Flexi-Load: It provides flexible workload corresponding to the salary paid (such as part- time, etc.).
- The guidelines recommend that FWA should cover all employees who have completed probation.
- The employers may communicate FWA policy to the employees; the job roles for which FWA may not be possible; expectations from employees opting for FWA, etc. Further, the employers may also state their FWA policy in the job advertisements and interviews for information of jobseekers.
- The FWA request should be formally made, documented and contain the information needed by the employer for deciding on the request.
- The employers need to properly consider FWA requests based on business grounds, and employees need to request responsibly. The employers are required to provide a written decision approving or rejecting the formal FWA request within two months of receiving it. Any rejection of FWA request should be based on reasonable business grounds and alternatives, if any available, can be discussed with the relevant employee.
Implication:
Employers are required to consider the new guidelines and take steps to implement it before it becomes effective by making changes in the internal policies, agreements, etc.
Singapore: Singapore amends the Cybersecurity Act, 2018.
On May 7, 2024, Singapore Parliament passed the Cybersecurity Amendment Bill (‘the Bill’) 2024 amending the existing Cybersecurity Act of 2018 (“Act”) and assented to by the President on May 23, 2024. The bill aims to bring the Singaporean cybersecurity laws with the changing business and technological models across different geographies.
The key highlights of the bill are outlined as below:
- Currently, the Act applies to Critical Information Infrastructure (“CII”) located wholly or partly in Singapore. The Bill has extended the scope to cover CIIs located wholly outside of Singapore also. Further, the new bill covers virtual CII systems (i.e., cloud computing systems).
CIIs are critical computer systems that are necessary for the continuous delivery of an essential services in Singapore, such as utility supplies and banking services. The list of CII owners is not publicly published.
- The Bill introduces new categories of regulated entities and computer systems namely, owners of Systems of Temporary Cybersecurity Concern (“STCC”), Entities of Special Cybersecurity Interest (“ESCI”) and Foundational Digital Infrastructure service providers (“FDI”). Further, essential service providers will be responsible for such third party-owned CIIs for meeting the necessary cybersecurity standards and requirements.
- Under the Act, the CII owner is required to report cybersecurity incidents relating to the CII and interconnected computer systems. Under the new provisions, CII owners will need to report additional incidents that affect: (i) other computers under the owner’s control, and (ii) computers under the control of a supplier that are interconnected with or communicate with the CII.
- Under the new bill, the Commissioner with the consent of Public Prosecutor can bring an action for civil penalties in court in respect of contraventions which are punishable with criminal offences.
Implication:
Businesses should consider provisions of the new bill and comply with them accordingly.
Sweden
Sweden: New rules for parental leave effective from July 1, 2024.
From July 1, 2024, as per the amendments to the Sweden Social Security Code (Sw 2010:110) and Parental Leave Act (1995:584), new provisions related to parental leave giving more flexibility are effective, which include the following:
- Both parents can be on parental leave together with their child for 60 days (i.e., doubled from currently 30 days), which can be availed until the child is 15 months old;
- The parents with joint custody can transfer the parental leave benefits of 45 days (90 days for parents with sole custody) to any other non-parents, including grand-parents and relatives, subject to valid application.
Implication:
Employers should take a note of the amendments, make changes in their internal policies, and comply with them accordingly.
Switzerland
Switzerland: Swiss VAT-registered companies can opt for annual VAT reporting.
The Swiss Federal Council has confirmed that the partial revision of the Swiss VAT Law adopted by the Swiss Parliament in June 2023, will be effective from January 1, 2025. The revised law covers several changes, which include the following:
- Swiss VAT-registered companies can opt for annual VAT reporting
VAT returns in Switzerland are usually submitted on a quarterly basis. However, returns can also be filed monthly where the input VAT exceeds the output VAT or even on a half-yearly basis for small businesses. The VAT return is due within 60 days after the end of the reporting period. Effective from January 1, 2024, VAT registration and submission of VAT returns must be carried out electronically.
Effective from January 1, 2025, VAT registered companies will have the option to choose annual VAT reporting. With the new law, small and medium-sized businesses can file VAT annually, reducing their reporting frequency, subject to following conditions:
- The annual taxable turnover should not exceed CHF 5,005,000; and
- The tax returns and liabilities, at least for previous three tax years, should have been submitted/ paid within timelines.
However, the taxpayers opting for annual reporting are still required to make advance VAT payments, generally, based on the previous year’s VAT. The advance payments are quarterly for the flat tax rate method and semi-annual for the net tax rates method. The advance payments will be adjusted against the final tax after submitting the annual return, and any excess will be refunded, and interest will be charged for late payments or shortfalls.
Businesses can choose to opt in or opt out of annual VAT reporting at the beginning of any tax period, by providing requests within 60 days, however, returning to annual reporting, after opting out of it, is permitted only after three full tax periods. The authorities may revoke the annual reporting option in certain circumstances like not meeting the turnover threshold, shortfall of advance VAT payments, failure to submit the annual return, etc.
- Removal of requirement for foreign taxpayers to appoint a representative in Switzerland.
In Switzerland, under the current provisions, appointment of a local tax representative is a must for non-resident non-established businesses registering for VAT and such appointment should be notified to the tax authorities.
Under the new law, appointing a VAT representative is not required if alternative communication methods with foreign taxpayers are established.
Implication:
Companies registered for VAT purposes in Switzerland are required to ascertain their eligibility for switching to annual VAT reporting and corresponding implications.
Thailand
Thailand: Medical expenses to be paid by employers increased to THB 65,000.
The Minister of Labor issued new regulations namely, the Ministerial Regulation on Medical Expenses B.E. 2567 (2024) (Regulation), issue no. 2, in order to increase employer-paid medical expenses to match with the economic conditions and cover treatment for employees facing various types of severe head injuries or illnesses.
The Regulation made the following two key changes to the existing rules given under the Ministerial Regulation B.E. 2563 (2020):
- The maximum amount of the medical expenses paid by the employer is increased from THB 50,000 to THB 65,000. In cases where employee is injured or ill, the employer will cover actual medical expenses, not exceeding THB 65,000.
- If medical expenses surpass the THB 65,000 limit, employers will cover additional costs up to THB 100,000 for employees experiencing severe head injuries as outlined in the regulation.
These new rules apply retroactively to employees who had already suffered injury or illness before the effective date of ministerial regulations, provided they are still undergoing medical treatment.
Implication:
Employers will need to consider revised thresholds for payment of medical allowance in appropriate situations.
Thailand: Private limited companies exempted from e-commerce business registration with effect from June 5, 2024.
Thailand’s Ministry of Commerce (“MOC”) published a new notification under the Commercial Registration Act hereby exempting the private limited companies and other specified entities from e-commerce registration requirement, effective June 5, 2024.
This notification replaces the earlier provision which required, legal entities involved in regulated activities, such as online sales of goods or services, to register their businesses with the local district office and obtain e-commerce registration certificate. The e-commerce certificates issued earlier to these legal entities are no more valid as per the notification.
However, legal entities running online sales or e-marketplace platforms are still required to register for direct marketing and obtain a direct marketing certificate under the Direct Sales and Direct Marketing Act.
Thailand: Terminated employees likely to enjoy higher income-tax exemption on severance pay received after January 1, 2023.
The Ministry of Finance has given in principle approval to increase the income tax exemption ceiling on severance pay for terminated employees. The draft Ministerial regulation will become effective on publication in official gazette. Accordingly, new exemption limit for statutory severance pay would be equivalent to 400 days’ wages for employees who has worked for 20 or more years or THB 600,000 whichever is less. Previously, the limit was 300 days wages or THB 300,000 whichever is lower.
This provision does not apply in case of payments made on retirement or end of fixed term contract with employee. The revised limit will apply to income received from January 1, 2023, onwards and refund can be claimed where excess tax has been withheld.
Turkey
Turkey: Threshold for applicability of independent audit to companies revised effective from fiscal period beginning on or after January 1, 2024.
On April 6, 2024, the Decision on the Amendment of the “Decision Regarding the Determination of Companies Subject to Independent Auditing” was published in the official gazette which has introduced changes to thresholds applicable for auditing. The amended provisions are applicable to fiscal periods starting January 1, 2024.
The Decision amends the monetary thresholds for companies that are not publicly traded or subject to different monetary thresholds specified in the annex to the Decision as follows:
- Total Company Assets – TRY 150 million (increased from TRY 75 million)
- Annual Net Sales Revenue – TRY 300 million (increased from TRY 150 million)
- Number of Employees – 150 (no change)
If a company meets two of the above criteria for two successive fiscal years, it will be subject to independent auditing.
Separately, the decision also makes certain changes to applicability of auditing to listed and other public sector entities.
Implication:
In light of revised thresholds for applicability of audit, company should re-examine audit applicability and take necessary steps to be compliant.
Turkey: Amends Law on Protection of Personal Data regarding processing of sensitive personal information and cross-border data transfer.
The Personal Data Protection Authority (“KVKKK”) announced that the amendments to the Law on Protection of Personal Data (the Law) which were approved on March 12, 2024, will be effective from July 1, 2024. The key amendments to the law are as follows:
Processing of Sensitive Personal Data:
The Amended Law aligns provisions relating to sensitive personal data processing with GDPR provisions and standardizes conditions for processing health and sexual life data. Earlier, such data processing was allowed only on obtaining explicit consent of the data subject or when it is permitted under the law. Now, sensitive personal data can also be processed for additional grounds such as, (i) to protect vital interest of data subject or any other persons and consent cannot be obtained; (ii) when data processing is necessary for the fulfilment of legal obligations relating to employment, occupational health and safety, social security, social services, and social assistance ; (iii) when the data is made public by the data subject and processing is consistent with the object for which data was made public, (iv) for protecting a right, etc.
Cross Border transfer of Personal Data:
The Amended Law aligns PDPL’s cross-border data transfer rules with GDPR, addressing operational challenges. Accordingly, personal data can be transferred to third parties without explicit consent only after fulfilling the following conditions:
- There is adequacy decision of the Personal Data Protection Board (the Board) for the jurisdiction or international institution to which the data is being transferred. The law also lays down provision for periodic review of such decision by the Board and criteria which would be considered by Board for determining adequacy.
- In the absence of an adequacy decision, one of the following appropriate safeguards can be relied upon for cross-border data transfer:
- An agreement approved by the Board.
- Binding corporate rules approved by the Board.
- Standard contractual clauses approved by the Board.
- A commitment between transferring parties to ensure adequate protection, approved by the Board.
Further, the data controllers and processors must notify the Board about the signing of contractual clauses within five days from the date of execution and the failure to notify may result in fines ranging from TRY 50,000 to TRY 1,000,000.
Further, the amended law specifies bases under which data can be transferred temporarily when there is no adequacy decision or other safeguards in place. Such bases include explicit provisions under the law, when transfer is necessary to protect the life of data subject or any other individual who is unable to give consent due to certain inabilities, when processing is directly related to performance of a contract with the data subject or to fulfil legal obligations or legitimate interest of data controller, or to establish or protect right, etc.
The existing provisions concerning cross-border data transfer, along with the amendments, will remain in force until September 1, 2024.
Implication:
Companies engaged in processing personal data should take note of the amendment and make necessary changes to their systems to ensure compliance with the law.
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