Argentina

Argentina: The minimum and maximum basis for calculating employee social security contributions increased to a monthly salary of ARS 35,603.99 and ARS 1,157,112.83 respectively from December 1, 2023.

The Argentine National Social Security Administration (“ANSES”) through Resolution No. 220/2023 dated November 17, 2023, effective from December 1, 2023, increased the minimum basis for an employee’s social security contributions from ARS 29,456.43 to ARS 35,603.99, and maximum basis from ARS 957,320.12 to ARS 1,157,112.83. These bases are used for the computation of employees’ portion of social security contributions.

Implication:

The companies will need to compute employees’ social security contributions according to the latest monthly base values published.

Brazil

Brazil: Minimum monthly wages increased to BRL 1,412 from BRL 1,320 with effect from January 1, 2024.

Through decree number 11,864 published in the official gazette dated December 27, 2023, the Brazilian government increased the minimum monthly wages to BRL 1,412 from BRL 1,320 with effect from January 1, 2024.

The minimum wages are used for computation of salaries and social security contributions of employees etc.

Belgium

Belgium: A draft law was submitted to the Parliament to introduce mandatory B2B e-invoicing, to be effective starting January 1, 2026.

On January 5, 2024, the Belgian government submitted the draft law to the parliament to make e-invoicing mandatory for business-to-business (“B2B”) transactions effective from January 1, 2026. 

The key takeaways of the draft law are as follows:

• The e-invoicing obligation is applicable to all Belgian VAT registered entities (i.e., entities incorporated in Belgium and fixed establishments of foreign entities) as well as to foreign entities with no Belgian establishment which are required to inform the Belgian VAT number to the domestic entity (vendor) in case of exports.
• All domestic transactions will be covered under the e-invoicing regime subject to certain exceptions. However, foreign entities having a Belgian VAT number will be subject to the e-invoicing regime in case of export of goods.
• Pan-European Public Procurement Online (“PEPPOL”), a platform which is used for B2G transactions, is proposed for B2B transactions and hence the standard e-invoice format would be PEPPOL-BIS format. The entities would have the flexibility to use other platforms and standards, as long as they comply with the European standard.

Implication:

Businesses should prepare their systems in order to be ready for new compliance requirements once the law becomes effective.

Belgium: Made an adjustment to the system allowing a reduction in social security contributions for first hires in 2024.

To encourage job creation, Belgium implemented a system that allows reduction from the social security contributions for the employees hired by a new employer. Under the existing system, permanent exemption of EUR 4,000 per quarter is allowed for first hire and the exemption reduces gradually from second to sixth hire.

For the year 2024, Belgium has made the following changes in this system:

• Reduction in the exemption allowed to the employers for the first employee from EUR 4,000 to EUR 3,100 per quarter. This is available permanently;
• Exemption for the fourth to sixth employee is eliminated;
• Exemption for the third employee is increased and levelled up with second hire. Reduction for the second and third employee is available only up to 12^th quarter after which is discontinued.

The above changes can be summarized through following table: 

	Quarters eligible for reduction and reduction amounts (in EUR)
	1-5		6-9		10-13		Starting Q 14
	2024	2023	2024	2023	2024	2023	2024	2023
1st hire	3,100	4,000	3,100	4,000	3,100	4,000	3,100	4,000
2nd hire	1,550	1,550	1,050	1,050	450	450	NA	NA
3rd hire	1,550	1,050	1,050	1,050	450	450	NA	NA
4th hire	NA	1,050	NA	1,050	NA	450	NA	NA
5th hire	NA	1,050	NA	1,050	NA	450	NA	NA
6th hire	NA	1,050	NA	1,050	NA	450	NA	NA

A new employer is defined as an employer who has never been subject to Belgian social security, or who has not been subject to it for at least 12 consecutive months preceding the starting date of the first employee.

Employers who were entitled to reduction for their 4^th, 5^th and 6^th employee prior to the above amendment will continue to get the benefit as per the system as applicable until December 31, 2023. However, the reduction in contribution for the first employee (EUR 4,000 to EUR 3,100) will be applicable to all employees.

Implication:

Companies planning to hire employees in Belgium for the first time should check their eligibility for the above benefits and take necessary steps to avail the same.

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Belgium: Parliament approved a law requiring e mployers with more than 50 employees to appoint a ‘person of trust’ to address psychosocial issues. 

In order to promote mental well-being at work, the Belgian Parliament approved a law on October 26, 2023, requiring employers who have more than 50 employees to appoint a ‘person of trust’ effective from December 1, 2023. The requirement aims to prevent psychosocial issues in the workplace.

Employers with less than 50 employees are not mandated to appoint a ‘person of trust’ unless all the members of the trade union request for such an appointment or, in the absence of a trade union, all employees request for such an appointment. A person of trust has an informal role to whom an employee can approach for information and guidance if he or she is considering filing a formal complaint alleging harassment at work.

The law also stipulates other provisions, including the appointment process, eligibility for appointment as a person of trust, training of the person of trust , and penalties in case of non-compliance, etc. 

Implication:

Companies subject to the new requirement of appointing a person of trust should make necessary arrangements to comply .

Bulgaria

Bulgaria: Increased the minimum wage effective from January 1, 2024.

Effective from January 1, 2024, the monthly minimum wage in Bulgaria has increased by 19.6% from BGN 780 to BGN 933. The Bulgarian Ministry of Labor and Social Policy made this announcement on October 11, 2023.

Bulgaria: Thresholds for arrivals and dispatches under Intrastat system revised for 2024.

The Bulgarian Government has amended the thresholds for arrivals and dispatches under the Intrastat system for the year 2024. The revised thresholds are as follows:

• Arrival: BGN 1.65 million (previously BGN 700,000)
• Dispatch: BGN 1.9 million (previously BGN 1 million)

 long with the above changes in thresholds, the thresholds for declaring the statistical value have also been announced for the year 2024, which are as follows:

• Intra-EU acquisitions: BGN 16 million (previously BGN 11 million)
• Intra-EU dispatches: BGN 37.2 million (previously BGN 29.3 million)

Implication:

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

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Bulgaria: Amended the VAT law; increased VAT registration threshold from BGN 100,000 to BGN 166,000, with effect from January 1, 2025.

The amendments to the Bulgaria Value Added Tax Act (the VAT Act) were published in the State Gazette No. 106 on December 22, 2023. The important amendments are listed below: 

• The mandatory VAT registration threshold will increase to BGN 166,000 (previously BGN 100,000) with effect starting January 1, 2025. However, the BGN 100,000 threshold will remain applicable until December 31, 2024.
• A system for deferred payment of VAT is initiated in case of centralized clearance upon imported goods, for which the taxpayer must have certain permits.
• Taxpayers who did not apply for the mandatory VAT registration in a timely manner are allowed to issue tax invoices and levy the applicable VAT after VAT registration, for supplies made during the period in which they should have had a registration but remained unregistered. Consequently, recipients of goods and services have the option to claim input on VAT deductions based on the newly issued tax documents. 

Implication:

Businesses should take note of amendments and study the impact on their operations. They should make changes to their policies and systems accordingly.

Canada 

Canada: Implemented changes to the Canada Labor Code relating to a minimum notice period for individual terminations and a requirement to provide a written statement of benefits, effective from February 1, 2024.

The Canadian Labor Code, which is a federal law affecting the private sector of employers, is amended with respect to the requirements of a provision of notice for individual terminations and a requirement to provide a written statement of benefits to the terminated employees. The amendment related to notices of termination was first introduced in the Budget Implementation Act, 2018, No. 2, which is now coming into force.

Effective from February 1, 2024, when an employer terminates the employment of an employee who has completed at least 3 years, the employer must either:

• Provide the employee with a written termination notice equivalent to at least 1 week per completed year of employment, up to a maximum of 8 weeks of notice (duration of notice will increase gradually depending on the years of continuous service, see below), or
• Pay regular wages in lieu of notice to the employee.

Duration of service	Minimum notice period
Minimum 3 months to less than 3 years	2 weeks
3 years completed	3 weeks
4 years completed	4 weeks
5 years completed	5 weeks
6 years completed	6 weeks
7 years completed	7 weeks
8 years and above	8 weeks

A combination of a notice and wages in lieu of a notice is also permitted. Currently, employers need to provide a minimum of 2 weeks’ notice to the employees who have completed a minimum of 3 continuous months of service.

Further, effective from February 1, 2024, employers are required to provide to employees a statement of benefits at the time of termination of employment, giving following details:

• wages,
• vacation pay, 
• severance pay and
• any other benefits and pay arising from the employment.

Currently, federally regulated employers are obligated to provide a written statement of benefits to the employees in the context of a group termination of employment, which is now applicable to all the employees.

Implication:

Employers should amend their employment policies/ contracts as per the latest amendments.

Canada: Canada and Quebec’s social security contribution rates and maximum bases for 2024 announced. (i.e., January 1, 2024, to December 31, 2024). 

E mployers are mandated to contribute towards social security , which includes contributions to the Pension Plan and Employment Insurance (EI) premiums. The g overnment has confirmed rates and maximum bases for pension plan contribution and EI premium for the year 2024, for Canada and province of Quebec, which are as follows:

Social Security Contributions
	For the Year 2024 (January 1, 2024, to December 31, 2024)			For the Year 2023 (January 1, 2023, to December 31, 2023)
	Maximum pensionable salary	Contribution (in %)		Maximum pensionable salary	Contribution (in %)
	(In CAD)	Employer	Employee	(In CAD)	Employer	Employee
Canada Pension Plan (CPP)	68,500	5.95%	5.95%	66,600	5.95%	5.95%
Second additional Canada Pension Plan contribution (CPP 2)	73,200	4.00%	4.00%	–	–	–
Quebec Pension Plan (QPP)	68,500	6.40%	6.40%	66,600	6.40%	6.40%
Second additional Quebec Pension Plan contribution (QPP 2)	73,200	4.00%	4.00%	–	–	–
Canada Employment Insurance (EI)	63,200	2.324%	1.66%	61,500	2.282%	1.63%
Quebec Employment Insurance (EI)	63,200	1.85%	1.32%	61,500	1.778%	1.27%

Federal: Effective from January 1, 2024, the second additional Canada Pension Plan contribution (CPP2) is introduced, which is withheld from an employee’s pensionable salary or wages. The employer and employee contribute equally at the rate of 4%. It applies on pensionable earnings between the maximum pensionable earnings ceiling for the year (i.e., CAD 68,500) and second ceiling of maximum additional pensionable earnings (i.e., CAD 73,200).

Quebec: Effective from January 1, 2024, the second additional Quebec Pension Plan (QPP2) contribution is introduced, which is withheld from an employee’s pensionable salary or wages. The employer and employee contribute equally at a rate of 4%. It applies on pensionable earnings between the years’ maximum pensionable earnings (i.e., CAD 68,500) and maximum pensionable earnings set for a second additional QPP contribution (i.e., CAD 73,200).

Implication:

Employers need to make note of these changes for calculating the social security contributions and payroll for the year.

Canada: New administrative policy for determining remote employee’s province of employment for payroll purposes, effective from January 1, 2024.

The Canada Revenue Agency (CRA) has formulated a new administrative policy for determining a remote employee’s province of employment to calculate payroll and taxes correctly . The policy is effective from January 1, 2024, and will benefit the employers in determining the province of employment of employees working remotely, where the employer and employee are in different provinces.

Under the existing policy, an employee’s province of employment is considered as a place where the work is performed, or where the employee reports to work, or the place from where payroll is processed.

The new policy prescribes that the employee’s province of employment can be considered, where the employee physically reports for work or is reasonably considered attached. However, where employees can be considered reasonably attached, may differ from the location from which payroll is processed. Under the new policy, the employer will need to take into account various primary and secondary indicators collectively (explained in the policy) to determine the employee’s province of employment. Broadly, the primary indicator is the location where the employee would physically attend to carry out duties if not under a remote work agreement or where the employee used to attend work before entering into remote work agreement. Other secondary indicators include: 

• The location where the employee would report for in-person meetings, or to pick up materials or equipment; or
• The establishment mentioned in the employment agreement as work or supervising establishment; etc.

The determination of location or province of employment is to be made based on the facts of each case.

Implication:

Employers will need to review their remote-working agreements with employees to determine if the employees’ province of employment is stated correctly, taking into account the primary and secondary indicators collectively.

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Canada: Federal and certain provincial income tax slabs increased for 2024.

Effective from January 1, 2024, the federal and certain provincial income tax slabs for Ontario, British Columbia and Quebec have increased while the tax rate is unchanged.

Federal:

Financial Year 2024		Financial Year 2023		2024 & 2023
Taxable Income tdresholds (in CAD)	Constant (in CAD)	Taxable Income tdresholds (in CAD)	Constant (in CAD)	Tax rate
Up to 55,867	0	Up to 53,359	0	15%
55,868 to 111,733	3,073	53,360 to 106,717	2,935	20.5%
111,734 to 173,205	9,218	106,718 to 165,430	8,804	26%
173,206 to 246,752	14,414	165,431 to 235,675	13,767	29%
246,753 and above	24,284	235,676 and above	23,194	33%

Ontario:

Financial Year 2024		Financial Year 2023		2024 & 2023
Taxable Income tdresholds (in CAD)	Constant (in CAD)	Taxable Income tdresholds (in CAD)	Constant (in CAD)	Tax rate
Up to 51,446	0	Up to 49,231	0	5.05%
51,447 to 102,894	2,109	49,232 to 98,463	2,018	9.15%
102,895 to 150,000	4,177	98,464 to 150,000	3,998	11.16%
150,001 to 220,000	5,677	150,001 to 220,000	5,498	12.16%
220,001 and above	7,877	220,001 and above	7,698	13.16%

British Columbia:

Financial Year 2024		Financial Year 2023		2024 & 2023
Taxable Income tdresholds (in CAD)	Constant (in CAD)	Taxable Income tdresholds (in CAD)	Constant (in CAD)	Tax rate
Up to 47,937	0	Up to 45,654	0	5.06%
47,938 to 95,875	1,266	45,655 to 91,310	1,205	7.70%
95,876 to 110,076	3,950	91,311 to 104,835	3,762	10.50%
110,077 to 133,664	5,920	104,836 to 127,299	5,638	12.29%
133,665 to 181,232	9,142	127,300 to 172,602	8,706	14.70%
181,233 to 252,752	12,948	172,603 to 240,716	12,331	16.80%
252,753 and above	22,299	240,717 and above	21,238	20.50%

Quebec:

Financial Year 2024		Financial Year 2023		2024 & 2023
Taxable Income tdresholds (in CAD)	Constant (in CAD)	Taxable Income tdresholds (in CAD)	Constant (in CAD)	Tax rate
Up to 51,780	0	Up to 49,275	0	14%
51,781 to 103,545	2,589	49,276 to 98,540	2,463	19%
103,546 to 126,000	7,766	98,541 to 119,910	7,390	24%
126,001 and above	9,971	119,911 and above	9,489	25.75%

Implication:

Employers and employees need to take into consideration the updated income tax brackets for calculating income tax liability accordingly.

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Canada: Reporting requirements for companies related to forced labor incidences effective from January 1, 2024.

In Canada, the ‘Fighting Against Forced Labor and Child Labor in Supply Chains Act’ (the “Act”) became effective on January 1, 2024, introducing reporting requirements for certain companies as well as to help companies to combat forced labor and child labor.

The provisions of the Act apply to every company in Canada whose activities include producing, selling or distributing goods in Canada or elsewhere, or importing goods into Canada, (or controlling an entity engaged in these activities), and

• which is listed on a stock exchange in Canada; or
• has a place of business in Canada, does business in Canada, has assets in Canada, and meets at least two of the following conditions for at least one of its two most recent financial years (based on its consolidated financial statements):

• has at least CAD 20 million in assets,
• has generated at least CAD 40 million in revenue, or
• employs an average of at least 250 employees.

The companies covered under the Act must, on or before May 31 of each year, report on the steps that the company adopted during its previous financial year to prevent and reduce the risk of forced labor and to ensure that the child and forced labor incidences are not prevalent at any step of the production or supply chain. The first reports are due for filing by May 31, 2024, must be filed with the federal government, and made publicly available on their website.

Contents of the report include the following information in respect of each entity subject to reporting:

• structure, activities, and supply chains of a company;
• policies/methods and steps in relation to monitoring forced labor and child labor;
• the functions of supply chains which have a risk of forced labor or child labor being used and the steps taken to counter the risk;
• any measures taken to mitigate any forced labor or child labor;
• details of training provided to employees on forced labor and child labor.

Further, federally incorporated companies must also provide the above-mentioned report to each shareholder, along with its annual financial statements.

Implication:

Employers need to keep a check on any child and forced labor incidences prevalent and furnish annual reports about the steps taken to prevent and mitigate such incidences.

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China

China: Amendments to the Company Law to take effect from July 1, 2024.

The Standing Committee of the National People’s Congress (“NPC”) adopted a new company law (hereinafter referred to as the amended company law) on December 29, 2023. The amended company law comprises a total of 266 articles, including 112 newly added or revised articles, and it is set to come into effect on July 1, 2024. 

The key highlights of the major changes are as under: 

• Capital Contribution:

The amended company law states that for a maximum period of 5 years from the establishment of the company, within which the shareholders of limited liability companies (“LLCs”) must subscribe to their capital. Further, the LLC is required to register its share capital with the company registration authority, which is referred to as the subscribed capital. The existing law gives flexibility to shareholders to determine the capital payment terms of the LLC. C ompanies established prior to 2023 that do not comply with this provision are required to gradually adjust their capital contribution schedule.

Under the amended company law, the board of directors have a responsibility to direct the company and issue a demand letter for the outstanding capital contribution amount. I f the shareholder fails to pay within the grace period of 60 days, the company can forfeit the share capital to the extent of outstanding amount by passing a resolution in a board meeting. The company is required to either transfer the forfeited equity amount or reduce the registered capital. If it is not done, other shareholders of the LLC will be required to pay up the corresponding amount in accordance with their capital contribution ratio.

Further the amended law requires LLCs to make additional disclosure regarding the amount of subscribed and paid-up capital, information about shareholders, and changes in equity through the National Enterprise Credit Information Disclosure System.

• Subscribed capital to be recorded in the register of shareholders:

Under the amended company law, the register of shareholders is required to include the date of capital contribution, date of acquisition and loss of shareholders.

• Constitution of boards of directors: 

The amended company law removed the earlier provision of limiting the maximum number of directors in the LLC to 13. Furthermore, for an LLC with over 300 employees, the amended law mandates the inclusion of at least one employee representative within the board of directors.

• Use of electronic communication: 

Under amended company law, companies can use electronic communication for meetings of shareholders, the board of directors, the board of supervisors, and for voting, unless otherwise provided in the article of association (“AOA”).

• Elimination of supervisor’s requirement; empowering LLCs to establish audit committee:

The amended company law allows small scale LLC or LLC with a small number of shareholders to not appoint supervisor(s) or a board of supervisors with the unanimous consent of all shareholders. Alternatively, in lieu of supervisors, companies have an option to establish an audit committee within the board of directors, to exercise the powers of the supervisory board or supervisors. 

• Legal Representatives:

The current company law stipulates that the legal representative of a company shall be the chairman, executive director, or manager. The amended company law specifies that the legal representative of a company shall be a director or manager actively involved in corporate affairs on behalf of the company. Further, the appointment and change in the legal representative is required to be recorded in the AOA.

• Simplified registration procedure:

The amended company law requires registering authorities to optimize the company registration procedure to improve efficiency by promoting online processing or other convenient mechanisms.

• Liabilities of directors and senior management:

If directors and senior managers, while performing their duties to the company, cause damage to third parties, then in addition to the liabilities of the company, such directors and senior managers can be held liable for compensation in case of gross negligence or intentional actions.

• Enhanced flexibility in share Issuance:

The amended company law enhances flexibility in the types of shares which can be issued by an LLC, subject to provisions of the company’s AOA. The amended provisions allow the issue of preferred and subordinate shares, shares with special voting rights, transfer-restricted shares, and other types specified by the State Council.

• Deregistration, dissolution, and liquidation:

The amended company law states that if a company has reasons for dissolution, it shall publicize the reasons for dissolution through the national enterprise credit information publicity system within 10 days. The amended law clarifies that directors should serve as a liquidator in case of liquidation and elaborate upon the liquidation obligations of parties.

Further, the company that has remained debt-free throughout its existence or has successfully settled all its debts, has an option to cancel its registration using simplified procedures in accordance with the provisions, with the commitment of all shareholders. 

• Shareholders’ right to information:

The amended law provides additional rights to shareholders. For example, the shareholders of LLCs can inspect vouchers in accounting books, authorize their accountants or law firms, inspect and review articles of association, review the shareholders’ list, minutes, etc., and hold shareholders’ rights to file lawsuits against directors, supervisors, managers of wholly owned subsidiaries of the companies in the event of violations against them .

Moreover, the amendments also cover clarification of duties of loyalty and due diligence for directors, supervisors and other executives, provisions to clarify the resignation process of legal representatives, provisions regarding procedures to reduce registered capital, and expanding the scope of one person or company to cover a joint stock company, among other changes.

Implication:

The amended law brings significant changes which have an impact on the operations of all companies. The law is effective from July 1, 2024 and companies should analyze the impact and make necessary changes in their constitution documents, policies, and procedures to fulfill the requirements of the new law.

Colombia

Colombia: Colombia published a decree providing final regulations on the Significant Economic Presence (“SEP”) provisions, effective from January 1, 2024.

On November 27, 2023, the Ministry of Finance published Decree 2039 providing final regulations on the new Significant Economic Presence (“SEP”) provisions. The provisions were introduced in 2022 imposing a tax on non-residents effective from January 1, 2024, in respect of income from selling goods and/ or specified digital services in Colombia, subject to certain conditions.

Such income will be subject to either (i) a 10% withholding tax on gross income, or (ii) a 3% tax on gross income, which is to be included in an income tax return that will be filed by the non-resident annually.

The SEP provisions apply in following cases where:

• The non-resident maintains deliberate and systematic interaction with 300,000 or more customers and/or users located in Colombia during the relevant taxable year, or displays prices in pesos (“COP”), or allows payment in pesos (“COP”); and
• During the relevant taxable year, the non-resident obtains gross income of UVT 31,300 or more (approx. USD 297,000) from transactions carried out with clients and/or users located in Colombia. 

(UVT – Unidad de Valor Tributario is an adjusted tax value unit used in Colombian Regulations and adjusted yearly based on retail price index).

Digital services include services that are provided through the internet or an electronic network, and cannot be rendered without information technology, and they are subject to certain exclusions such as technical or consulting services . 

By introducing the SEP provisions, Colombia has expanded its right to tax the profits of foreign companies without a physical presence in the country, or though having a digital presence and/ or interactions with Colombian customers. 

Implication: 

The non-residents of non-established businesses carrying on business transactions in the Colombian market need to examine the taxability of their operations in Colombia.

Costa Rica

Costa Rica: Costa Rica published tax rates and slabs for the tax year 2024. 

The tax authorities published a decree for income slabs applicable to corporations and individuals for the year 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:

2024Annual Income (in CRC)	2023Annual Income (in CRC)	2023 & 2024Tax 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:

2024Monthly Income (in CRC)	2023Monthly Income (in CRC)	2023 & 2024Tax 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:

Companies may need to consider the revised slabs for advance corporate income tax payments and take note of the updated income tax slabs while processing their payroll.

Costa Rica: Costa Rica enacted tax reforms to achieve exclusion from the EU’s list of non-cooperative jurisdictions.

On October 17, 2023, the Council of the European Union (“EU”) delisted Costa Rica from EU’s list of non-cooperative jurisdictions, Annex I (generally known as the “blacklist”) post introduction of the reforms by the Costa Rica in its Income Tax Law through Law No. 10.381 published on September 26, 2023. However, the EU has placed the country in Annex II (generally known as “grey list”), pending its implementation of the Global Forum recommendations in respect of automatic exchange of information. Annex II contains jurisdictions that are currently not complying with all international tax standards but have committed to implementing the reforms.

Costa Rica’s tax reforms include amendments to the foreign-source income exemption regime, provides a clarification to the scope of the territoriality principle, and introduces a new taxation regime for foreign-source passive income earned by the entities not meeting economic substance requirements.

Implication:

Companies with foreign-source passive income should carefully review the amended regulations and align their structure and operations with the new economic substance requirements.

Cyprus

Cyprus: Cyprus introduced a reduced VAT rate of 3% for selected goods and services and added new goods to the 0% VAT rate, effective from July 21, 2023. 

Cyprus published a law introducing a new reduced VAT rate of 3% for certain supplies (previously taxed at 5%), effective from July 21, 2023. This includes books, newspapers, special equipment for disabled individuals, orthopaedic goods, street cleaning services, waste recycling and debut-performance tickets for theatrical, musical, dance, or classical plays. 

Additionally, it has extended the zero VAT rate to certain items used by physically disabled people, such as typewriters with braille characters and armchair vehicles for disabled people, etc. 

Implication:

Businesses may take note of it and apply the correct VAT rate on relevant supplies.

Cyprus: Maximum insurable earnings for social insurance contribution increased from EUR 60,060 to EUR 62,868 with effect from January 1, 2024. 

Effective from January 1, 2024, the maximum insurable earnings as per the Social Insurance Law of 2010, is increased from EUR 60,060 to EUR 62,868 per annum for 2024. Maximum insurable earnings refer to the highest amount of income on which individuals or entities are required to pay contributions or premiums for insurance programs. This limit is often set by government or insurance authorities and serves as the cap beyond which contributions or premiums are not required.

Implication:

Employers should take note of the changes in social insurance contributions and update their payroll processes accordingly.

Cyprus: Implemented a new law for remote working, effective from December 1, 2023.

Cyprus published ‘The Regulation of the Organizational Framework of Telecommuting Law of 2023’ (the “Law”) in the Gazette on December 1, 2023, which stands as the first legislation to govern remote working in the country. It applies to private sectors providing a comprehensive framework for remote work. The provisions of the regulations are effective from December 1, 2023.

The key aspects of the law are as follows:

• The employer can provide employees an optional remote working scheme at any time during the term of employment by amending the existing employment contract, or at the commencement of the employment relationship. 
• The employer must conduct written risk assessments before allowing the remote working to ensure health and safety.
• The remote working scheme can be provided on a full-time, part-time or any other basis, either exclusively from a place other than the workplace or in conjunction with employment at the workplace.
• Employers must cover costs incurred by the employees working from home including the cost of equipment and its maintenance, telecommunications, use of the home workplace, and the repair of breakdowns. The payment towards such costs incurred by the employees shall not constitute salary and shall not be subject to any tax or social insurance contribution.
• Provision of technical support for remote work is the employer’s responsibility.
• Terms of employment contracts must be communicated electronically within eight days of commencement of remote work, which should include details of the cost to be borne by the employer for the remote work set up, the equipment required for the remote work, the procedures to be followed during the work process, the responsibilities to secure both personal and professional data and the necessary action taken to comply with such obligation etc.
• The law protects labour rights and prohibits discrimination against those unwilling to work remotely.
• Performance evaluations must respect employee privacy and data protection.
• Remote employees have the right to disconnect from work-related activities outside contracted hours.
• Disputes over health-related risks for remote work involve medical examinations by specialists.

Implication:

Employers, in the light of the new law, should align their employment agreements for remote work, review privacy policies, and performance evaluation procedures. Additionally, it’s crucial for employers to provide financial and technical support to remote employees, outlining these arrangements in employment contracts for transparency and compliance.

Cyprus: Increased the monthly minimum wages effective from January 1, 2024.

Effective from January 1, 2024, Cyprus Government has increased the monthly minimum wage from EUR 885 to EUR 900 for full-time employment with the same employer until the completion of 6 months and from EUR 940 to EUR 1,000 after the completion of 6 months.

Czech Republic

 Czech Republic: Budget 2024 – Highlights.

The Czech President signed on November 22, 2023, the law containing budget consolidation package for 2024. The package focuses on stabilizing public finances and reducing the country’s budget deficit and debt levels. The provisions will apply from January 1, 2024, unless stated otherwise. 

Some of the key measures include the following:

Corporate tax measures:

• The corporate income tax rate is increased from 19% to 21%.
• Public Country-by-Country (“CbC”) reporting is introduced in line with European Union Directive (“EU”) 2021/2101, for multinational companies with a threshold of annual consolidated revenue of EUR 750 million in each of the last two consecutive fiscal years.
• Companies with the majority of their operations in foreign currency will be legally allowed to keep their accounts in a foreign currency (viz. euros or dollars, etc.) 
• The reduced VAT rates of 15% and 10% are replaced with a single reduced rate of 12%, with the standard VAT rate maintained at 21%. Newspapers and magazines are included under the reduced rate of 12%, while books are exempt from VAT.

Personal Income tax measures: 

• The threshold for the 23% individual income tax rate (upper rate) is reduced from 48 times the average wage to 36 times the average wage i.e., from a monthly income of CZK 161,000 to CZK 121,000.
• The tax exemption limit was introduced for non-financial benefits provided to the employees up to 50% of the average salary. The exemption limit is set at annual benefits provided up to CZK 21,983 for 2024. The benefits provided that exceed the limit will be taxed as regular salaries and will be subject to social security and health insurance.
• Introduction of a limit of CZK 50,000 for exemption of other income, which will apply only to specific types of income.
• The value of non-cash benefits of employees using business cars or zero-emission vehicles for private purposes is reduced to 0.25% from 0.5% of the purchase price (including VAT), which will be included in the employee’s salary as non-cash income.

Social welfare measures:

• The employee health (sickness) insurance contribution is reintroduced at a reduced rate of 0.6% of monthly wages assessment base. Presently, sickness insurance is paid only by the employer.

Implication:

Businesses must take note of the budgetary changes and amend their policies and processes accordingly. 

Czech Republic: Increased parental allowance starting on January 1, 2024.

The Czech Republic Ministry of Labour and Social Affairs updated its State social Support Act no .117/1995 to increase the parental allowance up to CZK 350,000, up to 3 years of the child’s age. The parent who is taking care of the youngest child may also apply for this allowance. In case of twins or more children, this allowance is extended up to CZK 525,000. 

Currently, the total parental allowance is up to CZK 300,000 up to 4 years of child’s age. In case of twins or more children, the allowance is extended up to CZK 450,000.

Implication: 

Companies should consider the revised allowance provisions and make the necessary changes in their employment contract and internal policies. 

__________________________________________________________________________________

Czech Republic: Established n ew reporting obligations for Payment Service Providers related to cross-border transactions, effective January 1, 2024. 

The Council Directive (“EU”) 2020/284 imposed new reporting requirements on payment service providers (PSP) beginning January 1, 2024, was implemented by the Czech Republican Government on December 14, 2023. PSPs now have an obligation to report to the Administrators of the Member States on a quarterly basis, payments made to a beneficiary within/outside EU, if there are more than 25 payments made per calendar quarter. 

Implication:

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

Denmark

Denmark: Global minimum tax introduced through Minimum Taxation Act. 

In December 2023, Danish Parliament enacted new legislation titled the Minimum Taxation Act (“Minimumsbeskatningsloven”), which was effective from December 31, 2023. The new law is in line with the European Union’s (EU) Minimum Tax Directive (Council Directive 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union). The provisions introduce a 15% global minimum tax rate for companies that are part of multinational and domestic groups with consolidated revenue of at least EUR 750 million in in least two of the previous 4 financial years.

The provisions include:

• Qualified Domestic Minimum Top-up Tax (“QDMTT”) – This domestic minimum top-up tax will apply when the effective tax rate for the multinational group is below 15%, ensuring that the Danish group of companies are subject to being taxed at the rate of at least 15%.
• The legislation also provides additional charging mechanisms, such as the Income Inclusion Rule (“IIR”) and Undertaxed Payment Rule (“UTPR”), which will apply in certain specific circumstances from following years:

• The IIR will apply to financial years commencing on or after December 31, 2023.
• The UTPR will apply to financial years commencing on or after December 31, 2024. UTPR generally applies where the parent company in the group is located in a country that has not introduced the said rules.
• Taxpayers can elect to apply for temporary safe harbor based on country-by-country reporting.

Implication:

The companies meeting the prescribed thresholds need to take note of these changes.

Finland

Finland: Key taxation changes proposed in the 2024 budget.

The government has presented a series of changes to taxation as part of the 2024 budget proposals. These changes primarily focus on reducing labor taxation and easing the burden on low and middle-income earners. The following are the key highlights:

• It is proposed to reduce labor taxation, particularly for low and middle-income earners. An index adjustment at 2.8% is proposed whereby all income slabs under progressive income tax scale will be increased. Further, a new top step will be added to the state’s progressive income tax scale at an income level of EUR 150,000. Thus, the revised tax rates and income limits for different income levels are as follows:

Proposed national tax rates for 2024				National tax rates for 2023
Taxable income (EUR)		Base tax amount (EUR)	Tax on excess (%)	Taxable income (EUR)		Base tax amount (EUR)	Tax on excess (%)
From	Up to			From	Up to
0	20,500	0	12.64	0	19,900	0	12.64
20,501	30,500	2,591.20	19	19,901	29,700	2,515	19
30,501	50,400	4,491.20	30.25	29,701	49,000	4,377	30.25
50,401	88,200	10,510.95	34	49,001	85,800	10,215	34
88,201	150,000	23,362.95	42	85,801	–	22,727	44
150,001	–	49,318.95	44	–	–	–	–

• The basic deduction will increase from EUR 3,870 to EUR 3,980.
• The maximum deduction from work income will be increased from EUR 2,030 to EUR 2,140, along with increased income limits. However, it would not be available where net earned income is EUR 168,400 or more. Additionally, the maximum amount of the work income deduction will double from EUR 600 to EUR 1,200 for individuals aged 65.
• The deductible amount for travel expenses will increase from EUR 750 to EUR 900. 
• The maximum amount of the household deduction for household, nursing, or care work will increase from EUR 2,250 to EUR 3,500.
• Finland provides a foreign expert tax regime under which tax is withheld at a 32% flat rate on Finnish sourced salary income for a maximum period of 48 months. It is proposed to extend the period for flat taxation from 48 months to 84 months. This regime applies to foreign employees whose work requires special expertise and who otherwise would be taxable at progressive tax scale.

Implication:

Employers and companies should evaluate the impact of the above changes on their payroll processing and stay informed about future developments regarding 2024 budget proposals.

France

France: French Supreme court overrules earlier ruling warranting significant changes to paid leave entitlements for employees.

On September 13, 2023, the French Supreme Court overruled earlier decisions which warrants significant changes to the paid leave entitlements of employees who are absent from work due to sickness, work-related accidents, or parental leave. This will result in a better alignment of French law with European law, which provides greater protection for employees. The key implications of these decisions for companies are as follows:

• Employees on sick leave: Employees on sick leave, regardless of the cause, will now be entitled to accrue paid leave during their absence. Employers should not deny paid leave to employees on sick leave based on the provisions of the French Labor Code.
• Work-related accidents and occupational diseases: The calculation of paid leave entitlement for employees with work-related accidents or occupational diseases cannot be restricted to the first year of absence. This means that employees will be entitled to accrue paid leave beyond the initial year of absence.
• Statute of limitations: The statute of limitations for entitlement to paid leave provides for a limitation period of three years. The limitation period can start only when the employer gives the employee the opportunity to take paid leave. Employers should ensure that they provide employees with the chance to exercise their right to take paid leave to avoid any potential claims.
• Parental leave: Any accrued paid leave at the start of parental leave must be carried forward and granted when the employee returns to work.

Implication: 

Employers should review their policies and practices to ensure compliance with the law laid down by the Supreme Court on paid leave accrual during sick leave.

France: French Parliament approves new timelines for e-invoicing implementation.

The French Parliament has approved new timelines for the nationwide e-invoicing implementation by adopting an amendment to the Finance Bill, 2024. The new timelines are as under:

• Large and medium-sized businesses (with possibility of 3-month deferral): September 1, 2026
• Small businesses (with possibility of 3 months deferral): September 1, 2027

Earlier, the implementation schedule was going to be effective in phases starting from July 2024.

The e -reporting mandate would follow the same timetable. 

Implication:

The revision to the schedule aims to provide businesses additional time to prepare for the mandatory use of electronic invoices. Businesses should prepare their systems and processes to fulfil the new requirements.

France: New social security ceiling effective from January 1, 2024. 

The Official Bulletin of Social Security has recently declared a 5.4% increase in the annual ceiling, effective from January 1, 2024. The Social Security ceiling represents the highest limit on remuneration or earnings considered for the calculation of social security rights, specific contributions, and the basis for certain contributions.

As of January 1, 2024, the annual Social Security ceiling (“PASS”) will increase to EUR 46,368, (previously EUR 43,992) and the monthly ceiling will rise to EUR 3,864 (previously EUR 3,666) as compared to 2023.

Implication:

Employers should align their payroll systems to ensure accurate calculation of social security contributions.

France: Increased minimum hourly wage from EUR 11.52 to EUR 11.65 effective from January 1, 2024.

Effective from January 1, 2024, the minimum hourly wages (gross) in France have been increased to EUR 11.65 (previously EUR 11.52). Due to the aforesaid increase, the minimum growth wage (“SMIC”) per month (“gross”) in France increased to EUR 1,766.92 (previously EUR 1,747.20).

France: Legislation adopted to obligate small and mid-size businesses to implement the “Profit Sharing Scheme” effective from December 1, 2023.

The French Parliament adopted the provisions of national interprofessional agreement (ANI) on value sharing into the Profit Sharing Act 2023 (the Act), which was published in the official journal on November 29, 2023. The Act is designed to foster closer collaboration between workers and employers, particularly in small and mid-sized businesses, by linking workers’ compensation to their employers’ economic performance. 

Starting on January 1, 2025, companies employing between 11 and 49 employees will be required to establish a profit-sharing scheme if they are consistently profitable. Specifically, the net profit before tax must be equal to at least 1% of sales for three consecutive years. However, companies that already have profit-sharing schemes in place will be exempt from this requirement. Such companies can implement a profit sharing formula which derogates from standard design if agreed with employees or their representatives. Companies should select any one of the following plans under the profit-sharing scheme:

• Voluntary participation in the profit;
• Contribution by company to a company savings plan (“pee”) or a pension plan;
• Value sharing bonus.

This obligation has been introduced on an experimental basis for 5 years.

Implication:

Companies subject to new profit-sharing scheme legislation should formulate a new scheme or review their existing schemes, as required.

France: Parliament approved Finance bill for 2024.

The French Parliament adopted the Finance Bill, 2024 on December 21, 2023. The Finance Act 2024 was published in the official gazette on December 30, 2023.

The following are the key provisions and amendments introduced in the Finance Act 2024: 

• France has implemented the OECD’s BEPS 2.0 GloBE proposals, transposing the EU Minimum Taxation Directive into law, whereby multinational groups (“MNE”) with consolidated revenue over EUR 750 million during at least two of the last four fiscal years, are liable to minimum taxation of 15%. This law brings in a top-up tax, which will apply when the effective tax rate for the multinational group constituent entity or Permanent Establishment in France is below 15%, effective from FYs starting on or after December 31, 2023. Further, it was decided to introduce the Undertaxed Profit Rule (“UTPR”), effective from December 31, 2024. There will be French qualified domestic minimum top-up tax (“QDMTT”) equal to the difference between 15% and an effective tax rate of constituent entity in France. The finance law also provides for temporary safe harbor rules for FY 2024, FY 2025, FY 2026, and provides for reporting and payment obligations for MNE subject to GloBE rules.
• The Business Contribution on the Added Value (“CVAE” or “Cotisation sur la Valeur Ajoutée des Entreprises”) tax rate will gradually decrease to 0.28% in 2024 to 0.19% in 2025 and 0.09% in 2026. The complete abolishment of CVAE will take place in 2027. Earlier it was proposed to be abolished by 2024.

The following table summarizes the applicable rates for the FY 2024, FY 2025, and FY 2026: 

Turnover (excluding taxes)	Rates for 2023	Rates for 2024	Rates for 2025	Rates for 2026
< EUR 500,000	0%	0%	0%	0%
EUR 500,000 ≤ turnover ≤ EUR 3 million	0.125% x ((turnover – EUR 500,000) / EUR 2,500,000)	0.094% x ((turnover – EUR 500,000) / EUR 2,500,000)	0.063% x ((turnover – EUR 500,000) / EUR 2,500,000)	0.031% x ((turnover – EUR 500,000) / EUR 2,500,000)
EUR 3 million < turnover ≤ EUR 10 million	0.125% + 0.225% x ((turnover -EUR 3,000,000) / EUR 7,000,000	0.094% + 0.169% x ((turnover -EUR 3,000,000) / EUR 7,000,000	0.063% + 0.113% x ((turnover -EUR 3,000,000) / EUR 7,000,000	0.031% + 0.056% x ((turnover -EUR 3,000,000) / EUR 7,000,000
EUR 10 million < turnover ≤ EUR 50 million	0.35% + 0.025% x ((turnover -EUR 10,000,000) / EUR 40,000,000)	0.263% + 0.019% x ((turnover -EUR 10,000,000) / EUR 40,000,000)	0.175% + 0.013% x ((turnover -EUR 10,000,000) / EUR 40,000,000)	0.087% + 0.006% x ((turnover -EUR 10,000,000) / EUR 40,000,000)
> EUR 50 million	0.375%	0.28%	0.19%	0.09%

• The Finance Act provides a tax credit for green industry on investments in tangible or intangible assets (known as C3IV for Crédit d’Impôt au titre des Investissements en faveur de l’Industrie Verte). The credit would be available for companies establishing facilities related to batteries, wind turbines, heat pumps, etc. The tax credit may vary from 20% to 40% (depending upon the location of the investment) whereas for investments made by the medium sized entities and small entities, the tax credit is increased by 10% and 20% respectively. The total amount of tax credit is restricted to EUR 150 million per financial year. Eligibility criteria includes a commitment to operate investments for at least five years. Companies could submit requests for ruling by September 27, 2023, and decisions are expected to be given by December 31, 2025.
• The promotion of instruments that facilitate tax fraud will be considered an autonomous criminal offense, punishable with imprisonment up to 5 years and fine up to EUR 500,000 for individuals and EUR 2.5 million for legal entities.
• With effect from January 1, 2024, the revenue/gross-asset threshold for applicability of the transfer pricing documentation requirement has been reduced from EUR 400 million to EUR 150 million. Transfer pricing documentation is now binding on the taxpayer, and the minimum fine for non-submission or partial submission of documentation has increased from EUR 10,000 to EUR 50,000. The statute of limitations for the transfer of certain intangibles has been extended to 6 years.

Implication:

The French Finance Act of 2024 contains a number of significant changes that will have a broad impact on both multinational corporations and domestic businesses. Companies need to closely evaluate these changes and adjust their strategies accordingly.

Germany

Germany: Extended the timeline for mandatory e-invoicing of B2B transactions until January 1, 2027.

On December 14, 2023, Germany extended the timeline for implementation of mandatory e-invoicing of B2B transactions to 2027, which was scheduled initially to be January 2026. Effective from January 1, 2027, companies with a turnover exceeding EUR 800,000 will be obligated to issue e-invoices for B2B transactions. 

Implication:

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

Germany: Changes in maximum income bases and rates for social security contributions for 2024.

• Social security contribution:

In Germany, contributions to social security include pension insurance, unemployment insurance, health insurance, long-term care insurance, and compulsory insurance, which is shared (generally equally) by employer and employee. Additionally, only the employer needs to contribute towards accident insurance, insolvency insurance and certain other insurance covers. 

As per the Ordinance on ‘Social Security Calculation parameters 2024’ approved by the Federal Council on October 11, 2023, certain maximum annual income thresholds and rates are increased effective from January 1, 2024, which are as follows:

Type of contribution	Region	For the Year 2024 (January 1, 2024 – December 31, 2024)	For the Year 2023 (January 1, 2023 – December 31, 2023)
Maximum base for pension and unemployment contribution	Western Federal States (Old States)	EUR 90,600	EUR 87,600
	Eastern Federal States (New States)	EUR 89,400	EUR 85,200
Maximum base for healtd insurance contribution	All States	EUR 62,100	EUR 59,850

• Private health Insurance:

As per the Ordinance approved by the Federal Council on October 11, 2023, compulsory insurance limit i.e., income threshold for opting for private insurance is increased to EUR 69,300 per year from EUR 66,600 per year, effective January 1, 2024. 

The income threshold for private health insurance is adjusted annually. The employees earning higher than the income threshold, can select between public or private health insurance. The public insurance premium/contribution is part of statutory social security contributions.

Implication:

The employer needs to consider these revised rates and maximum bases of social security contributions for processing the payroll.

Germany: New rules for working parents who need to take care of a sick child effective from January 1, 2024.

In Germany, employees can apply for “Kinderkrankengeld” (child sickness benefit) during illness of their children below the age of 12 and the health insurance fund pays benefits amounting to 90% of the lost net salary from the first day of sickness. This is a compensation benefit that can be claimed for working days by persons with statutory health insurance, on meeting specified conditions. 

Until 2023, the applicable benefit was 30 working days per child (60 for single parents) and a maximum of 65 days per parent (130 for single parents) in case of several children. Effective from January 1, 2024, the entitlement decreases to a maximum of 15 working days per child (30 for single parents) and a maximum of 35 days per parent (70 for single parents) in case of several children. 

Additionally, parents were required to submit their child’s sick note from the first day of illness to claim the child sickness benefit. However, effective from January 1, 2024, parents only need to provide the employer with a sick note from the fourth day of their child’s sickness to avail themselves of child sickness benefit.

Implication:
Employers in Germany must accommodate the revised child sickness benefit entitlements and sick note submission rules, necessitating updates to leave policies and effective communication with employees to ensure compliance.

Germany: Deadline for submission of transfer pricing documentation reduced to 30 days upon request from the German Tax Authorities, to be effective starting January 1, 2025.

Under the German Tax Laws, transfer pricing documentation (Master file and Local file) is required to be submitted upon request from the tax authorities within 30 days of the request for extraordinary business transactions and within 60 days of the request for regular business transactions. Pursuant to the amendments to the German Tax Law with effect from January 1, 2025, the submission deadline for all the transactions is uniformly reduced to 30 days upon request from the tax authorities. 

The German transfer pricing documentation is based on the OECD Master File-Local File concept and is required only if the entity meets certain specified thresholds. If the thresholds are met and documentation requirements are applicable, it is to be prepared before the corporate tax return filing date and to be submitted upon request from the tax authorities.

Implication:
Companies should take note of the revised deadlines for submission of the transfer pricing documentation.

Germany: Implementation of global minimum tax effective from January 1, 2024.

The German Federal Council passed the ‘Minimum Taxation Directive Implementation Act’ (“MinBestRL-UmsG”) on December 15, 2023, transposing the EU Minimum Tax Directive (Council Directive (“EU”) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union) into law, which was published in the official gazette on December 27, 2023, and effective from January 1, 2024. The provisions introduce a 15% minimum effective tax rate for companies that are part of multinational and domestic groups with consolidated revenue of at least EUR 750 million in at least two of the previous four years.

The provisions include:

• Qualified Domestic Minimum Top-up Tax (“QDMTT”) – This domestic top up tax of 15% will apply to qualifying German companies and permanent establishments if their foreign operations have an effective tax rate below 15%. 
• The legislation also provides for the additional charging mechanism such as the Income Inclusion Rule (“IIR”) and Undertaxed Profit Rule (UTPR), which will apply in certain specific circumstances from following years:

• The IIR will apply to financial years commencing on or after December 31, 2023.
• The UTPR will apply to financial years commencing on or after December 31, 2024. UTPR generally applies where the ultimate parent company in the group is located in a country that has not introduced the said rules.
• Taxpayers can elect to apply a temporary safe harbor based on country-by-country reporting.

Implication:

The companies meeting the prescribed thresholds need to take note of these changes.

Greece

Greece: Significant amendments to the Greek Labor Law in line with EU directive on ‘Transparent and predictable working conditions’ effective from September 26, 2023.

On September 26, 2023, Act No. 5053/2023 was published in the Gazette amending the labour law, in accordance with provisions of EU Directive 2019/1152 on ‘Transparent and predictable working conditions in the EU’. The Act also introduces simplifications of procedures in the Labour Inspectorate’s ERGANI information system (‘ERGANI II’). The key amendments of the law are set out below:

• Information obligation:

Employers are now required to notify the employees in writing or electronically within seven days from the start of employment about key terms of employment and working conditions, which include: 

• Details of the employer viz., name and address;
• Place of work;
• Position and scope of the work;
• Details of probation period, starting duration and end period;
• Working hours/ days, work breaks, overtime, etc.;
• Details of compensation viz. salaries/ wages, pay dates, etc.;

Employers are required to retain the proof of delivery of the above obligations.

• Employment contracts on Ergani II information system: The employment contracts are required to be uploaded on Ergani II information system platform with digital signatures/ certificates.
• Multiple/ Concurrent employment: The law allows for concurrent employment i.e., working with more than one employer, to be subject to compliance with working hours, rest time, etc. under the law.
• Probationary Period: The regulation sets out a probationary period of a maximum of 6 months. In case of fixed term employment agreements, the probation period can be up to a maximum of one quarter of total duration of the agreement or a period of 6 months, whichever is lesser.
• Training: The new law provides that in cases of mandatory training, such training, if possible, should be provided during working hours, free of cost. 
• Digital cards on Ergani II: Employers are required to upload the details of working hours on Ergani platform in case they are not having digital cards system. In case of employees having digital cards, if there is variation in working hours reported and working hours by digital cards system, a penalty of EUR 10,500 per employee may be imposed.
• Work on the 6^th day: The law introduces legal work on the sixth day in industrial enterprises, with continuous operation or capable of continuous operation, subject to a 40% surcharge on the paid hourly wage. Work may not exceed eight hours, while overwork and overtime are prohibited.
• Voluntary termination: In case the employee is absent from employment without proper justification for a continuous period of 10 working days, it can be considered as a voluntary departure provided the employer follows a valid written notification procedure. 

Implication:

Companies need to take note of the changes and amend their employment policies and employment contracts accordingly.

Greece: New reporting obligations to Payment Service Providers related to cross-border transactions, effective from January 1, 2024. 

The Council Directive (“EU”) 2020/284 imposed new reporting requirements on payment service providers (“PSP”) beginning January 1, 2024. These obligations were implemented by the Greek Government on December 11, 2023. PSPs now have an obligation to report to the Administrators of the Member States on a quarterly basis with payment made to a beneficiary within/outside EU, if there are more than 25 payments made per calendar quarter. 

Implication:

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

Hong Kong

Hong Kong: Implementation of Unique Business Identifier (“UBI”) for entities under the administration of Registrar of Companies. 

For easy and unique identification of legal entities, the Companies Registry of Hong Kong vide circular no. 3/2023 dated October 27, 2023, announced that the first eight digits of the Business Registration Certificate issued by the Inland Revenue Department, would be adopted as the Unique Business Identifier (“UBI”) for companies and entities from December 27, 2023, onwards. 

The UBI implementation by the Companies Registry occurred in two stages. The first phase, targeting limited partnership funds, commenced on November 1, 2021, while the second phase, covering limited companies and all other entities, was initiated on December 27, 2023.

The key features of Phase 2 of UBI (“BRN” as the new “UBI”) for companies and entities: 

• BRN is adopted as the number on the certificate of incorporation, certificate of registration, or certificate of change of name to be issued by the Registry;
• BRN is to be mentioned on specified forms and documents delivered to the Registry instead of the existing company registration number (“CR No.”); and
• BRN is the primary number for searching and identifying a company or entity under different services of the Registry.

For companies incorporated prior to the UBI implementation (before December 27, 2023), there will be no re-issuance of certificates to replace the existing ones. Instead, the Registry will dispatch letters regarding the replacement of existing CR No. with BRN to these companies/entities at their registered addresses.

To facilitate the execution of phase two of UBI, the Registrar has revised 117 specified forms effective from December 27, 2023. Further, a transitional period of six months has been established during which both old and new forms will be accepted, with the exception of a few forms which have a shorter transitional period of four weeks.

Implication:

Companies should coordinate with the registry to obtain a letter confirming the replacement of the current CR number with the BRN. Furthermore, after the end of the transitional period, the BRN must be mentioned on the forms and documents that need to be delivered to the Registry, instead of the existing company registration number.

Hungary

Hungary: Implementation of global minimum tax effective from January 1, 2024.

The Hungarian Parliament passed Law LXXXIV of 2023 on November 21, 2023, transposing the EU Minimum Tax Directive (Council Directive (“EU”) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union) into law, which was published in the official gazette on November 30, 2023, and is effective from January 1, 2024. The provisions introduce a 15% minimum effective tax rate for companies that are part of multinational and domestic groups with consolidated revenue of at least EUR 750 million in at least 2 of the previous 4 years. 

The provisions include:

• Qualified Domestic Minimum Top-up Tax (“QDMTT”) – This domestic top up tax of 15% will apply to qualifying Hungarian companies and permanent establishments if their foreign operations have an effective tax rate below 15%. 
• The legislation also provides for the additional charging mechanism such as the Income Inclusion Rule (“IIR”) and Undertaxed Profit Rule (UTPR), which will apply in certain specific circumstances from following years:

• The IIR will apply to financial years commencing on or after December 31, 2023.
• The UTPR will apply to financial years commencing on or after December 31, 2024. UTPR generally applies where the ultimate parent company in the group is located in a country that has not introduced the said rules.
• Taxpayers can elect to apply a temporary safe harbor based on country-by-country reporting.

Implication:

 The companies meeting the prescribed thresholds need to take note of these changes. 

Hungary: Increased the monthly minimum wages and guaranteed minimum wages, effective from December 1, 2023.

Effective from December 1, 2023, the Hungary Government has increased the monthly minimum wage from HUF 232,000 to HUF 266,800. F or jobs requiring secondary education or professional qualifications ,a  monthly guaranteed minimum wage (also known as graduate minimum wages) is increased from HUF 296,400 to HUF 326,000, effective from December 1, 2023.

India

India: Ministry of Corporate Affairs mandates the appointment of a designated person for significant beneficial owner compliance; non-small private companies to mandatorily dematerialize securities.

The Ministry of Corporate Affairs (“MCA”) introduced two major amendments on October 27, 2023. The MCA issued the Companies (Management and Administration) Second Amendment Rules, 2023 and the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023 to introduce the appointment of designated person for carrying out the Significant Beneficial Owner (“SBO”) compliance and dematerialization of securities of non-small private companies, respectively.

• Appointment of person to comply with the SBO provisions:

In accordance with the amended rules, every company must appoint a person (designated person) for compliance to the SBO provisions. Such a designated person can be a company secretary, or key managerial personnel (“KMP”) or every director (when there is no company secretary or KMP) of the company. Until the appointment of such a person, any existing person from the above stated list could be deemed to be the designated person. Such a person is responsible for furnishing and extending cooperation in providing necessary information to the Registrar of Companies (ROC) or any other authorized officer. Every company is under obligation to give details of the designated person in the Annual Return as well as inform the change in the designated person, if any, through E-form GNL-2.

• Mandatory dematerialization of securities of the non-small private companies:

As per the amended rules, the non-small private companies are required to mandatorily convert the physical securities into demat form as per the provisions of the Depositories Act, 1996 within 18 months from the closure of the financial year 2022-23 (i.e., on or before September 30, 2024). Earlier this requirement was applicable only to public companies.

As per the amended rules, after September 30, 2024:

• E very non-small private company, before offering any securities, should ensure that the entire holding of the securities of the directors, promoters and the KMP is dematerialized;
• I n case of transfer or issue of securities, the transferor, or the subscriber respectively, should ensure that the securities are in demat form (in both the cases).

This amended rule does not apply to government companies.

Please note that small companies are those companies whose paid-up capital and turnover is not more than INR 40 million and INR 400 million, respectively. The concept does not apply to holding companies , subsidiary companies or a company registered under section 8 of the Companies Act of 2013 or a company or body corporate governed by any special act. The new requirement applies to private companies, which do not qualify as small companies.

Implication:

Private companies should evaluate the applicability of the new dematerialization requirement. Companies should take note of the new requirement of appointment of designated person for SBO compliance and arrange to comply with it.

India: The Finance Ministry clarifies GST applicability on corporate guarantees between related entities; 18% GST applicable on actual consideration or on 1% of the value of guarantee, whichever is higher.

In accordance with the GST Council’s recommendation, the Central Board of Indirect Taxes and Customs (“CBIC”) issued Circular No. 204/16/2023-GST dated October 26, 2023, clarifying the levy of Goods and Service Tax (“GST”) on personal guarantees from directors and corporate guarantees between the related entities, such as parent companies and subsidiaries. The circular explains that even when no consideration is charged for such guarantee, the transaction is considered as supply of service for the purpose of GST. Further, with respect to corporate guarantees between related entities, considering different practices being followed by the tax officers and taxpayers in determining the taxable value, and to bring uniformity in practices, Rule 28 of CGST rules was also amended vide Notification No. 52/2023 dated October 26, 2023. Accordingly, 18% GST will be charged either on the actual value of the consideration or on 1% of the value of guarantee, whichever is higher.

It is also clarified that GST will not be applicable to the personal guarantee issued by a director of the company against any loan sanctioned to the company for which no consideration is paid to the director. Noting that the Indian Central Bank i.e., the Reserve Bank of India mandates that no consideration should be charged for such personal guarantee, it is clarified that the market value of such guarantee is to be considered as zero and therefore, GST is not payable on such personal guarantee.

Implication:

The companies engaging in related party transactions should take note of the above clarification and make necessary changes to their practices. Companies should also evaluate the impact of this amendment on arm’s length price determination under the transfer pricing provisions under Indian Income-tax Act, 1961.

India: Ministry of Corporate Affairs publishes Limited Liability Partnership (Significant Beneficial Owners) Rules, 2023 for LLPs.

In a notification dated November 9, 2023, the Indian Ministry of Corporate Affairs (“MCA”) introduced the Limited Liability Partnership (Significant Beneficial Owners) Rules . Accordingly, every LLP is required to identify its Significant Beneficial owners (“SBO”) and comply with the reporting obligations as specified in the regulations. Further, the existing SBOs need to give a declaration to LLP in Form LLP BEN-1 disclosing their interest in the LLP in the form of contribution or voting rights, within 90 days from the commencement of these rules. Any change in details of or an acquisition of new significant beneficial ownership needs to be reported to the LLP within 30 days of the relevant occurrence.

The term “Significant Beneficial Owner” in relation to a reporting LLP is defined to mean an individual who acting alone or together, or through one or more persons or trust, who possesses one or more of the following rights or entitlements in such reporting LLP, namely: –

• Holds indirectly, or together with any direct holdings, not less than 10% of the contribution;
• Holds indirectly, or together with any direct holdings, not less than 10% of the voting rights in the management or policy decisions;
• Has a right to receive or participate in more than 10% of the total distributable profits, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings;
• Has a right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone.

The following are the key obligations of the LLP with respect to identification of the SBO:

• The LLP must take necessary steps to identify its SBO and make sure that such SBO submits declaration through Form LLP BEN-1; 
• The LLP must give notice in Form LLP BEN-4 to partners (other than individuals) who holds 10% or more of its contribution or voting rights, or right to receive or participate in the profits for acquiring information; 
• After receiving the declaration, the reporting LLP is required to file a return in Form No. LLP BEN-2 with the Registrar within 30 days from the receipt of such declaration; 
• The LLP must maintain the SBO register in Form No. LLP BEN-3.

Implication:

LLPs should take steps to identify their SBOs and ensure compliance under the new regulations.

India: MCA notifies amendments to the Limited Liability Partnership Rules, 2009.

The Ministry of Corporate Affairs (“MCA”) issued a notification dated October 27, 2023 and introduced several amendments to LLP Rules, 2009. These amendments came into effect on the date of the notification. The following are the key takeaways:

• Register of Partners 

A new rule 22-A, related to the register of partner, has been inserted under the LLP rules as follows: 

• LLPs incorporated after the amendment date are obligated to maintain a register of partners in Form 4A, from the date of incorporation and are required to keep it at their registered office.
• Existing LLPs are required to maintain such a register within 30 days of the commencement of the amendment rules.
• The register of partners must include the details, such as personal information of partners (name, address, PAN, occupation, nationality etc.), date of becoming the partner, date of cessation, amount, and nature of contribution.
• Any modifications to the details maintained in the register should be updated in the register within seven days of modification.

• Declaration in respect of beneficial interest in contribution

A new rule 22-B, related to the declaration in respect of beneficial interest in any contribution has inserted under the LLP rules as follows:

• A registered partner of an LLP who does not hold any beneficial interest in contribution, either fully or partially, is required to file declaration with the LLP in form 4B within 30 days from the date of registering his name in the register of the partner, specifying the name of the partner who actually holds the beneficial interest in such contributions. Any further changes that occur in the beneficial interest in respect of such contribution are also required to be reported in Form 4B within 30 days from the date of such change.
• Individuals holding beneficial interest in the LLP’s contributions, but not listed in the register of partners, are required to submit a declaration in Form 4C to the LLP within 30 days of obtaining such beneficial interest. Any further changes to the beneficial interest are also required to be reported in Form 4C within 30 days from the date of such change.

After receiving the declarations in either Form 4B or 4C, the LLP is required to record the declaration in the register of partners and file a return in Form 4D within 30 days with the Registrar of Companies (“ROC”), along with the applicable fees.

• Mandatory to designate a partner for providing information.

The amendments introduced are mandatory requirements for LLPs to designate a partner responsible for disclosing beneficial information in the LLP. The details are as follows:

• The amendment mandates that each LLP is to designate a partner responsible for disclosing information related to beneficial interests in the LLP’s contributions to the ROC in Form 4. 
• Additionally, amendments specify that in the absence of a specifically designated partner, every designated partner is accountable for furnishing the required information until such designation is made.

Implication:

LLPs should take note of the amendments and make necessary arrangements, to maintain a register of partners, submit declarations regarding actual beneficial interests to the ROC, and designate a partner responsible for disclosing information related to beneficial interests in the LLP’s contributions to the ROC within the prescribed time limit.

Ireland

Ireland: Ireland introduces five days of paid leave for domestic violence, effective from November 27, 2023.

The Government of Ireland introduced domestic violence leave provisions by amending the ‘Work Life Balance and Miscellaneous Provisions Act 2023’. Ireland is one of the first countries in the European Union to introduce paid domestic violence leave for employees. Accordingly, effective from November 27, 2023, all employers are mandated to provide up to five days of paid leave within a 12-month period for employees who are subjected to violence, threatening, or otherwise abusive behavior by a current or previous intimate partner, a close relative, or a close friend. There is no requirement of completion of certain years of employment to avail the leave and during the leave, employees are entitled to receive their regular pay.

Employers are required to manage domestic violence leave with utmost sensitivity and cannot insist on providing advance notice or supporting evidence to the employees affected by domestic violence. Employees seeking domestic violence leave are safeguarded against penalization under the Parental Leave Acts, encompassing dismissal and adverse treatment. Additionally, employers are obligated to keep records of domestic violence leave, including the employment period and leave dates for each employee, with a requirement to retain these records for three years.

Implication: 

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

Ireland: Ireland introduces Enhanced Reporting Requirements (“ERR”) for employers in relation to non-taxable reportable benefits provided to employees with effect from January 1, 2024.

In Ireland, the Finance Act of 2022 introduced Section 897C in Taxes Consolidation Act 1997, requiring employers to report on ‘Real Time Basis’ certain benefits given to employees and directors. The reporting obligations are effective from January 1, 2024, as per the commencement order dated December 15, 2023.

Following tax free payments and benefits, defined as ‘reportable benefits’, are required to be reported:

• Provision of small benefits to employees covered under small benefits exemption regime;
• Provision of remote working daily allowance of EUR 3.2;
• Payments to employees towards travel and subsistence, which are considered tax free.

Employers must submit details of reportable benefits provided to employees and directors using a tax portal from the Revenue Online Services (“ROS”) on or before the payment of benefits to the employees.

The ERR submission is distinct from the regular monthly payroll return and should be submitted separately each time for provision of reportable benefit/ payment to the employees.

Implication: 

Employers should take note of the changes in mandatory reporting requirements of non-taxable reportable benefits provided to their employees and update their accounting systems, payroll processes accordingly.

Israel

Israel: Implementation of Continuous Transaction Controls (“CTC”) system for e-invoicing delayed by 3 months. 

As announced under the 2023/2024 State budget plan, Israeli authorities had planned to adopt the Continuous Transaction Controls (“CTC”) system for real-time submission and approval of invoices above NIS 25,000 in B2B transactions with effect from January 1, 2024. Under the CTC system, businesses must obtain an allotment allocation number from the tax authority, without which the input tax deduction will not be allowed. 

On October 23, 2023, Israeli authorities announced a delay in the implementation of the CTC system for the first phase for transaction value above NIS 25,000 by 3 months. Thus, the taxpayers are allowed to claim input tax deduction without an allocation number until March 31, 2024 (previously December 31, 2023). 

Implication:

Businesses in Israel should note the extension granted for implementation of the CTC system.

Italy

Italy: Mandates E-Invoicing for Micro-Businesses effective from January 1, 2024.

Effective from January 1, 2024, micro-businesses with a turnover not exceeding EUR 25,000 annually are mandated to comply with e-invoicing in Italy. 

Italy has implemented electronic invoicing system called the “Sistema di Interscambio” (“Sdl”), which is a pre-clearance invoicing system designed to facilitate the exchange of electronic invoices between businesses and the government. 

It was initially introduced in 2014 for business- to- government (“B2G”) transactions and extended in 2019 to business- to- business (“B2B”) and business- to- consumers (“B2C”) for domestic transactions. In 2022, the scope was widened by including cross-border invoices and a phased introduction for small businesses in the regime. However, key healthcare professionals will be exempted until January 1, 2025. Under the system, the taxpayers are required to electronically transmit their sales invoices to the government/ Sdl portal for live validation and approval. After the approval, valid VAT invoices are available to the purchasers for downloading or automated delivery.

The reporting deadlines for invoices are as follows:

• Sales invoices within 12 days of time of supply;
• Purchase invoices by the 15^th of the month following the time of supply.

Effective from July 2022, all invoices related to domestic and cross border transactions are required to be transmitted to the tax authorities by Italian companies via Sdl (previously, reported via Esterometro system). 

Effective from January 1, 2024, the scope is extended to micro-businesses with a turnover not exceeding EUR 25,000 annually. Micro-businesses are those having less than 10 employees and annual turnover or balance sheet is equal to or less than EUR 2 million.

Implication:

Micro-businesses in Italy are mandated to adopt SdI e-invoicing from January 1, 2024 and must align their invoicing processes with the electronic platform, necessitating technological readiness and procedural adjustments.

Italy: Italy’s Budget highlights 2024.

The Italian Budget Law 2024 (Italian Law No. 213 of 30 December 2023) was published in the Official Journal (Gazzetta Ufficiale) on December 30, 2023. The provisions generally apply from January 1, 2024, unless stated otherwise. Some important changes are as follows:

• Personal income tax measures: 
• The personal income tax bands are reduced from 4 to 3.

Income Slabs for 2024 (EUR)	Income Slabs for 2023 (EUR)	Tax Rate
Up to 28,000	Up to 15,000	23%
–	15,001 to 28,000	25%
28,001 to 50,000	28,001 to 50,000	35%
50,001 and above	50,001 and above	43%

• The benefits in kind/ fringe benefits given by the employer will not be considered as salaries (i.e., exemption for fringe benefits) up to EUR 2,000 for employees/ workers with dependent children and up to EUR 1,000 for all other employees (the threshold is increased from EUR 258.23 for employees without children). The limit also includes amounts disbursed or reimbursed by the employer (i.e. payment of household utilities, rent and interest on the mortgage related to the primary home for all employees with or without children).

• The tax-free threshold for income from employment has increased from EUR 8,145 to EUR 8,500. The threshold is calculated after considering regular deductions applicable to an employee.

• The substitute tax rate for productivity bonuses is reduced from 10% to 5%. In Italy, employers grant productivity bonuses to employees, which consists of a variable remuneration dependent upon achievement of pre-established performance parameters, generally in relation to increased productivity and efficiency of the employees and the company. The bonus was subject to a substitutive taxation of 10% (including personal income tax, regional, and municipal taxes), in the case of employees earning annual gross compensation during the previous year (including variable compensation) not exceeding EUR 80,000. The tax rate is now reduced to 5%. Individuals earning more than EUR 80,000 will be subject to regular tax regime and will not be entitled to benefit from this tax discount.

• Corporate tax measures:
• Implementation of global minimum tax effective from January 1, 2024:

Italy passed the Legislative decree no. 209 ‘International Tax Decree’ dated December 27, 2023, transposing the EU Minimum Tax Directive (Council Directive (“EU”) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union) into law, which was published in the official gazette on December 28, 2023, and effective from January 1, 2024. The provisions introduce a 15% minimum effective tax rate for companies that are part of multinational and domestic groups with consolidated revenue of at least EUR 750 million in at least two of the previous four years. The provisions include:

• Qualified Domestic Minimum Top-up Tax (“QDMTT”) – This domestic top up tax of 15% will apply to qualifying Italian companies and permanent establishments if their foreign operations have an effective tax rate below 15%. 
• The legislation also provides for the additional charging mechanism such as the Income Inclusion Rule (“IIR”) and Undertaxed Profit Rule (UTPR), which will apply in certain specific circumstances from following years:
  • The IIR will apply to financial years commencing on or after December 31, 2023.
  • The UTPR will apply to financial years commencing on or after December 31, 2024. UTPR generally applies where the ultimate parent company in the group is located in a country that has not introduced the said rules.
• Taxpayers can elect to apply a temporary safe harbor based on country-by-country reporting.

• Tax residency rules revised for corporate entities, which aim at aligning the provisions with international practices and double-tax-treaty principles about tax residency. The new provisions include criteria like ‘place of effective management’ and ‘place of day-to-day executive management’ for determining tax residency i.e., places where strategic decisions are made, and the management activity is carried out.

• A new tax incentive is introduced for migration of business activities to Italy from any country, other than EU/ EEA Member States. The incentive offers 50% tax exemption to companies relocating production activities to Italy. This incentive applies from the year of the transfer and extends for the subsequent 5 years. The exemption covers the transfer of business activities to Italy that were originally started in Italy and then relocated abroad (i.e., reshoring) as also, foreign business activities (i.e., onshoring). However, the exemption does not apply to business activities performed in Italy during the 24 months preceding their transfer. 

• Indirect Tax measures:
• The sugar tax and plastic tax are further suspended until July 1, 2024.
• The VAT rate on the supply of feminine hygiene and baby products is increased from 5% to 10%.

• Social welfare measures:
• For the calendar year 2024, a relief is provided by way of reduction in some portion of social security contribution, payable by the employees (both public and private), which is as follows: 

• 6% relief if the taxable salary is less than EUR 2,692 per month (i.e., EUR 35,000 p.a. for 13 months).
• 7% relief if the taxable salary is less than EUR 1,923 per month (i.e., EUR 25,000 p.a. for 13 months).

• For a period of three years, starting from January 1, 2024, until December 31, 2026, employers are given 100% exemption from the obligation to make social security contributions for working mothers hired on a permanent basis with a minimum of three children. This reduction in social security contributions will continue until the youngest child reaches the age of 18, with a capped annual limit of EUR 3,000. As a temporary measure in the year 2024 only, this relief is also extended to working mothers with at least two children, until the youngest child reaches 10 years of age, on an experimental basis.

• Employers hiring unemployed women victims of violence can avail 100% exemption from social security contribution in respect of these employees for three years period – i.e., from 2024 to 2026 up to a maximum limit of EUR 8,000 per year and for the duration of 24 months- if hiring on a permanent basis, 12 months- if hired on a fixed term basis and 18 months-if the employment contract is converted from a fixed term to permanent. 

• Employers can avail from 120% to 130 % super deduction of labor cost for permanent hires of young people, women, workers from disadvantaged categories, and former recipients of citizenship income.

• Parental leave changes: 

Currently, parental leave is ten months (nine months compensated and one month unpaid) in total for both parents, from childbirth until the child turns 12 years of age. Out of these nine months of compensated leave, the first month’s leave is compensated at 80% of the salary and the balance of eight months at 30% of the salary. This first month’s leave needs to be availed by either parent within the first six years of the child’s birth. The compensation is paid by the Social Security Administration – Istituto Nazionale Previdenza Sociale (“INPS”), by way of an allowance at the respective percentage of the salary.

For year 2024, employees who go on parental leave to take care of their children aged 12 or below, will be compensated at 80% of their salary for the first month of leave, as also for the second month of leave (earlier 30%) and 30% of their salary for the remaining leave period. From the year 2025 onwards, the second month of the leave will be compensated at 60% of their salaries.

Implication:

The companies meeting the prescribed thresholds need to take note of the global minimum tax provisions to comply with the required compliances. Employers must take note of the budgetary changes related to revised tax bands, productivity bonus, parental leave, social welfare measures and amend their policies/ processes accordingly.

Lithuania

Lithuania: Lithuania budget for 2024 – Highlights. 

On October 5, 2023, Lithuania presented the budget for 2024 to the Parliament, which was approved on December 5, 2023. The provisions generally apply from January 1, 2024. 

The key highlights of the budget are as follows:

• The minimum monthly wage increased by 10% to EUR 924 from EUR 840. 
• The monthly tax-exempt income threshold for employment income of resident individuals increased by 20% to EUR 747 from EUR 625. 
• The current corporate tax incentives for investment projects extended for a further period of five years i.e., until the end of 2028.

Implication:

The businesses should consider the budget changes, and adopt the same, as applicable.

Lithuania: Thresholds for Intrastat returns increased from January 1, 2024.

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

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

The threshold for submitting Intrastat returns effective from January 1, 2024, are as follows:

• Arrivals threshold: EUR 550,000; (previously EUR 500,000)
• Dispatches threshold EUR 400,000 (previously EUR 300,000)

Implication:

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

Malaysia

Malaysia: Parliament approves Finance (No.2) Bill, 2024, introduces capital gains tax and Global Minimum Tax proposals.

The Malaysian Prime Minister and the finance minister presented the budget for the year 2024 in the Parliament on October 13, 2023. Following this, the Finance (No. 2) Bill 2023 was released on November 7, 2023, incorporating certain amendments and other proposals. The Finance (No. 2) Bill, 2023 was passed by the Parliament in December 2023 and the Act was gazetted on December 29, 2023. Many proposals from the Budget 2024 are not included in this Bill and are expected to be implemented through separate legislation.

The key highlights of the proposals passed by the Parliament in Finance (No. 2) Bill, 2023 are as follows:

The tax proposals listed below are applicable for the year of assessment (“YA”) 2024 unless specified otherwise.

For Employers/Companies: 

• The Act implements the Global Minimum Tax and Domestic Top-up Tax for the multinational groups (MNEs) having annual turnover of EUR 750 million in at least two out of four financial years from the year 2025, in line with BEPS Project 2.0. MNEs. The ultimate parent entity in Malaysia is required to compute an effective tax rate (ETR) for each jurisdiction they do business in and if the same is less than 15%, they are required to pay multinational top-up Tax (MTT). Further, a domestic top-up tax (DTT) will be imposed on constituent entities in Malaysia if their ETR in Malaysia is less than 15%. There is a requirement to file certain returns and pay the MTT and DTT by the 15^th month from the closing of the reporting financial year.
• The income-tax Act is amended to introduce capital gains tax on the disposal of unlisted shares of local companies and companies incorporated outside of Malaysia, which derives value from real-estate in Malaysia. If the share acquisition date is prior to January 1, 2024, then the taxpayer has an option to pay the capital gains tax at the rate of 10% of the net profit of the shares or 2% of the gross sales value. For shares acquired after January 1, 2024, the tax rate applicable is 10% of the gains. Further, Income Tax (Exemption) (No. 7) Order 2023 exempts capital gains or profits derived from disposal of shares made between January 1, 2024, to February 29, 2024, subject to certain exceptions. The tax is applicable to companies, limited liability partnership and certain other entities. The law mandates the filing of a new return about capital gains tax, which is to be submitted within 60 days of the disposal of the asset.
• The implementation of the e-invoicing is postponed from June 2024 to August 2024 for businesses with annual turnover of more than RM 100 million. For other taxpayers, it will be implemented from July 2025 (earlier timeline was January 2025).
• Effective from YA 2024, companies are allowed to submit revised estimates of tax payable for a YA in the 11th month of the basis period (normally the financial year), as opposed to the current practice of the 6th and 9th months for a YA.
• The law authorizes tax authorities to require taxpayers to provide information and documents electronically within 30 days of the due date of tax return.
• The cap of RM 2,000 on stamp duty in case of specified foreign currency loan has been removed and duty is payable at 0.5% of the loan amount without any limit.
• The amended law mandates electronic submission of certain forms (Form E/CP21/ CP22/CP22A and CP22B) by all the categories of employers.

For Individuals:

• The tax exemption for women returning to work after at least a 2-years of break will be extended to December 2028 from December 2027. Applications for exemption should be made between January 1, 2024, and December 31, 2027.
• Tax benefits for the returning expat program will be extended to cover applications received between January 1, 2024, to December 31, 2027. Benefits include 15% tax rate for employment income for five consecutive years of assessment and excise duty exemption on completely knocked down vehicles.
• Income-tax exemption for child-care allowance of employees or expenses incurred by employers on childcare will increase from RM 2,000 to 3,000 per year.
• The annual tax relief of RM 2,000 for fees related to attending upskilling or self-enhancement courses, conducted by a body recognized by the Director General of Skills Development, has been extended from YA 2023 to YA 2026.

Implications: 

Businesses and their investors should evaluate the impact of newly introduced capital gains tax on disposal of unlisted shares. Employers should study the changes with respect personal taxes and employer obligations and make necessary changes to their systems.

__________________________________________________________________________________

Malaysia: The Companies Commission of Malaysia (“CCM”) issued a new Code of Ethics for Company Director and Company Secretary effective from January 1, 2024.

With effect from January 1, 2024, a new Code of Ethics for Company Director and Company Secretary is applicable superseding the previous code of ethics. The Companies Commission of Malaysia (“CCM”) amended the code with the aim to enhance the corporate governance practices in Malaysia, mainly focusing on the duties and responsibilities of a director and a company secretary. The code is developed as guidelines for all types of companies to develop their own policies and procedures. For the purpose of the code, any person who occupies the position of director will be considered as director irrespective of the name of his position or designation.

Although many provisions of the new code are similar to the old code, the following are some of the significant modifications implemented:

• A director and company secretary are required to stay abreast with the affairs of the company and be kept informed of the company’s compliance with relevant legislations and contractual requirements;
• A director is required to disclose all direct or indirect contractual interests with the company;
• A director has to make sure that the employees understand the importance of good corporate governance practices through continuous trainings, awareness programs and communication;
• A director should comply with the environmental, social, and governance (“esg”) standards by implementing suitable policies;
• A director should implement effective procedures in order to protect the company and management from liabilities arising under section 17a of the Malaysian anti-corruption commission act 2009;

• Both the director and company secretary are responsible for protecting the company from the risks associated with exposure to Anti-Money Laundering (“AML”) / Counter Financing of Terrorism (“CFT”) activities.

Mexico 

Mexico: Daily minimum wages increased to MXN 248.93 from MXN 207.44, effective from January 1, 2024.

On December 1, 2023, the National Minimum Wage Commission (“CONASAMI”) increased the daily minimum wages to MXN 248.93 from MXN 207.44 with effect from January 1, 2024. Minimum wages are used to calculate social security contributions of the employees.

_________________________________________________________________________________

Mexico: New UMA values effective from February 1, 2024.

The Mexican Government published unidad de medida y actualización or Unit of Measurement and Update (“UMA”) which are effective from February 1, 2024.

UMA values are as under:

	From February 1, 2024 (Amounts in MXN)	From February 1, 2023 (Amounts in MXN)
Daily	108.57	103.74
Monthly	3,300.53	3,153.70
Annually	39,606.36	37,844.40

The UMA values are used for computing tax and social security contributions for employees.

Implication:

Employers must make note of these increased UMA values for the purpose of calculating payroll and social security contributions for the year 2024.

Netherlands

Netherlands: Tax Plan 2024 approved by Dutch Parliament.

The Senate (upper house of parliament) approved the 2024 tax plan on December 19, 2023, as well as the Minimum Tax Act 2024 and Tax Miscellaneous Provisions Act 2024. Most of the provisions are effective from January 1, 2024. Earlier, the lower house of the Parliament, namely the House of Representatives, had approved the tax plan in October 2023.

The following are the major amendments introduced in the 2024 tax plan : 

Personal income-tax: 

• Personal tax slabs and rates applicable to Box 1 income, which includes employment income and certain other types of income (rates for persons below state pension age), are as under:

2024		2023
Brackets	Tax rates	Brackets	Tax rates
Up to EUR 38,098	36.97%*	Up to EUR 37,149	36.93%*
From EUR 38,098 to EUR 75,518	36.97%	From EUR 37,149 to EUR 73,031	36.93%
Above EUR 75,518	49.50%	Above EUR 73,031	49.50%

*Includes national insurance contributions of 27.65%

• Increase in tax credits (for employees up to state pension age) are as under: 

Tax credit	2024Amount (in EUR)	2023Amount (in EUR)
General tax credit	3,362	3,070
Employment (labor) tax credit	5,532	5,052

From January 1, 2024, the exemption granted on employment income under the 30% ruling regime for expatriate employees is restricted as 30% exemption for the first 20 months, 20% exemption for the next 20 months and 10% exemption for the final 20 months, after which the regime will discontinue. Further, the ceiling on exemption would be at EUR 233,000 for the year 2024.

Corporate tax:

• Key corporate tax rates are proposed to be kept unchanged.
• Certain amendments are made to address the problem of dividend stripping and to introduce revised rules for the classification of foreign entities in line with international tax practices. 
• The Senate approved the Minimum Tax Act to implement a global minimum tax as per EU directive 2022/2523 for MNE groups having annual consolidated revenue of EUR 750 million or more in at least two out of the four preceding years. The law introduces a qualified domestic top-up tax (“QDMTT”), an Income Inclusion Rule (“IIR”) and undertaxed payment/profits rule (“UTR”). Income Inclusion rule (“IIR”) and qualified domestic minimum tax (“QDMTT”) will apply for tax years beginning on or after December 31, 2023, and undertaxed payment/profits rule (“UTR”) will apply for tax years starting on or after December 31, 2024.

Employers can provide tax-free benefits to employees under the Work Cost Ruling Scheme, which provides certain limits beyond which the employer needs to pay levy on tax free allowances. In 2023, there was a temporary increase in tax -free allowance under the scheme, which will not apply in the year 2024. Thus, the tax-free limit will reduce from 3% to 1.92% for the first EUR 400,000 of employee benefits and will continue to be 1.18% above EUR 400,000. 

Implication:

Employers should take note of the changes in payroll taxes and adjust their payroll and withholding accordingly. Companies should evaluate the impact of corporate tax amendments on their operations.

Netherlands: Changes to Dutch VAT grouping rules took effect on January 1, 2024.

Effective from January 1, 2024, foreign establishments within the European Union (“EU”) are no longer allowed to be included in a Dutch VAT Group. This change will have significant implications, particularly in the financial sector, for the VAT treatment of transactions between entities within a Dutch group that have foreign establishments.

As a result of this change, both the Dutch VAT group and any foreign establishment are now considered separate taxable entities for VAT purposes. Consequently, transactions between the Dutch VAT group and foreign establishments are subject to VAT and require taxation, unless an exemption is available, or the place of supply is outside the European Union (“EU”).

Implication:

Businesses should assess the impact of the change in Dutch VAT grouping rules on VAT liability and compliances and adjust their systems accordingly.

__________________________________________________________________________________

Netherlands: Social Security Contribution rates announced for 2024.

The Ministry of Social Affairs and Employment, vide Regulation No. 2023-0000518574 dated November 13, 2023, has set the Social Security Contribution rates for the year 2024 as follows : 

• The total social security contribution for employees will continue to be 27.65% which includes general old-age social security (“AOW”) at 17.90%, surviving dependent (spouse) social security (“ANW”) at 0.10%, and long-term care (“WLZ”) at 9.65%.
• The social security contribution for employer are set at:

• General unemployment insurance (“AWF”) –2.64% for workers with an indefinite term; 7.64% for flexible and temporary workers (no change);
• Occupational disability insurance (“WIA”) – High contribution rate will be 7.54% (previously 7.11%) and low contribution rate is set at 6.18% (previously 5.82%);
• Childcare allowance contribution – 0.50% (no change).

• Health insurance premiums under the Health Insurance Act is set at 6.57% (previously 6.68%) for the year 2024.
• The maximum salary base for the employer contribution for 2024 is EUR 71,628 per annum (previously EUR 66,956).

Implication:

Employers should take note of changes in social security contribution rates / base and adjust their payroll processing accordingly.

Netherlands: An agreement was entered with Belgium for the interpretation of permanent establishment for employees working from home.

Netherlands entered into an agreement with Belgium on November 23, 2023, which was published in the official gazette in Netherlands on December 8, 2023. This agreement lays down rules for the determination of permanent establishment (PE) in cases where an individual employed by a foreign company works from home in his country of residence (for example, an employee of a Dutch company is working from home in Belgium where he is tax resident). Such situations can lead to the constitution of PE if certain conditions are met, and the employer may be obligated to comply with the corporate tax and other provisions in the employee’s country of residence.

The agreement provides framework and guidelines on how to assess the following situations:

• Employee occasionally working from home;
• Employee permanently working from home with the option to work at the office; and
• Employee compulsorily working from home as it is required to do so.

Implication:

Employers having employees residing in another country should check the applicability of the above agreement and evaluate the impact of rules of PE determination as laid down by the agreement on their tax obligations.

Netherlands: Multinationals to comply with Public CbC Reporting requirements soon.

On December 5, 2023, the Dutch Senate (the upper house of parliament) approved the bill for implementing public Country-by-Country (“CbC”) reporting as required by European Union (EU) Directive 2021/2101. 

Accordingly, the public CBC reporting is applicable to the multinational entities having total consolidated revenue of more than EUR 750 million in each of the last two consecutive financial years, whether headquartered in the EU or outside. The public CbC reporting requirement will apply for financial years beginning on or after June 22, 2024.

Such entities must publicly disclose separate income tax information for:

• Each EU Member State;
• Jurisdictions listed by the EU as non-cooperative (Annex I of the EU list);
• Jurisdictions that have been grey listed (Annex II of the EU list) for two consecutive years. 

For disclosing information of the jurisdictions other than above, the entities have the option to present it on an aggregate basis or in detailed form. 

Public CbC reports must be published within 12 months of the balance sheet date of the financial year for which the report is drawn up and be made available online in at least one of the official languages of the EU, free of charge. The detailed rules will be published after the bill enters into force. 

Implication:

Multinational enterprises meeting the threshold as above should make necessary arrangements to comply with public CbC reporting requirements.

Netherlands: Dutch government introduces uniform wage rate from January 1, 2024.

From January 1, 2024, Minimum Wages and Minimum Holiday Allowance Act has been amended to provide a uniform statutory minimum hourly wage for all salary levels, which means legally prescribed minimum daily, weekly, and monthly wages stand eliminated. As a result, the monthly wage of all the employees will be calculated on the basis of actual hours worked, thus correcting the discrimination. 

From January 1, 2024, the statutory minimum wage will increase by 3.75% which means for employees aged 21 and older statutory gross minimum hourly wage will be EUR 13.27 per hour. This increase is a standard indexation, whereby the minimum wage is adjusted every six months to the collective labour agreement wages. 

Implication:

The employer should make note of the new statutory minimum wage requirement and make adjustments to payroll administrations, employment contracts, etc.

Singapore

Singapore: Tax treatment of foreign sourced capital gains effective from January 1, 2024.

On October 3, 2023, Singapore parliament passed the Income Tax (Amendment) Act, introducing a new Section 10L for the taxation of gains from the sale of foreign assets received in Singapore by businesses without economic substance in Singapore, effective from January 1, 2024. Currently, such gains were not taxable in Singapore. The amendment aligns Singapore’s foreign source income exemption regime with international standards.

Following the changes to the foreign source income regime, on December 8, 2023, the Inland Revenue Authority of Singapore has released a new e-Tax Guide explaining the tax provisions for gains or losses from the sale or disposal of any movable or immovable property situated outside Singapore.

Implication:

The companies receiving foreign sourced capital gains in Singapore need to take note of the changes.

Serbia

Serbia: Amended electronic invoicing law effective from January 1, 2024.

The National Assembly of Serbia adopted amendments to the ‘Law on Electronic Invoicing,’ as published in the official gazette of the Republic of Serbia No. 92/23 on October 27, 2023. The amendments took effect on January 1, 2024 with the following changes:

• The deadline for electronically recording value-added tax (“VAT”) calculations in Sistem e-Faktura (“SEF”), the national e-invoicing system, has been shortened from 15 to 10 days after the end of the tax period. However, if any changes affecting the electronic recording of VAT calculations occur after the initial 10 days, the necessary amendments should be made within the VAT return submission deadline for the respective tax period in which the change occurred.
• The requirement to include “recipient business account details” has been removed from the standard format in electronic invoices. Instead, the “tax category,” has been incorporated into the e-invoice format.
• Taxpayers are now required to electronically record the input VAT amount paid while importing goods. This requirement is obligatory, irrespective of whether taxpayers are entitled to claim deductions for the recorded input VAT. This amendment is effective for tax periods beginning on or after August 1, 2024.

Implication:

Companies should adjust their systems to fulfill the amended requirements of e-invoicing.

Serbia: Changes to personal income tax and mandatory social security contributions effective from January 1, 2024.

The Serbian Parliament enacted amendments to the laws on personal income taxes and mandatory social security contributions, which came into force on January 1, 2024. 

The key changes include :

• The non-taxable salary limit increased from RSD 21,712 to RSD 25,000. 
• Minimum and maximum basis for computation of social security contributions have been revised with effect from January 1, 2024. Minimum monthly contribution basis is RSD 40,143 and maximum monthly contribution basis is RSD 573,470.
• The incentive for hiring new employees is extended from December 31, 2023, to December 31, 2024. Accordingly, employers hiring individuals registered as unemployed for at least 6 months (or 3 months for trainees) with the National Employment Service are entitled to a reimbursement or refund of payroll tax and social contributions (“SSC”) paid on monthly salaries for each new employee as follows: 

• 65% refund when the number of newly hired employees is between 1 and 9.
• 70% refund when the number of newly hired employees ranges from 10 to 99.
• 75% refund when the number of newly hired employees is 100 or more.

However, “micro” or “small” enterprises that hire two or more employees can qualify for a 75% refund of payroll and SSC taxes paid.

Implication:

Effective from January 1, 2024, employers should consider the revised non-taxable salary limit for employees while deducting the employee’s income tax along with changes in mandatory pension and disability insurance basis.

South Africa

South Africa: Government publishes Bill to amend non-resident employers’ obligations to withhold employees’ tax.

On November 1, 2023, the South African government released the Tax Administration Amendment Bill (the amendment bill), proposing an amendment to the definition of the term ‘non-resident employers’ with respect to withholding obligations of employer-on-employee salaries. The amendment proposes to include non-resident employers conducting business through a permanent establishment (“PE”) in South Africa. 

At present, a non-resident employer who has appointed a representative employer in South Africa has an obligation to withhold employees’ tax (Pay-As-You-Earn or PAYE) from the remuneration paid to their employees. Once the Bill is passed, all non-resident employers having a PE in South Africa would be required to register as an employer with the South African Revenue Service (“SARS”) and withhold employees’ tax (Pay-As-You-Earn or PAYE) from the remuneration paid to their employees. In addition to PAYE withholding, the non-resident employers with PE in South Africa will have an obligation to pay Skills Development Levies (“SDL”) and make Unemployment Insurance Fund (“UIF”) contributions to SARS on behalf of its employees.

Implication:

Non-resident companies that have employees in South Africa should evaluate if they constitute a PE and where the new Bill is applicable, they should augment their systems to meet withholding and reporting obligations under the proposed law.

Spain

Spain: Minimum wages in Spain (“SMI”) increased to EUR 1,134 from EUR 1,080 per month effective from January 1, 2024.

The Spanish government increased the national minimum wage for the year 2024 to EUR 1,134 from EUR 1,080 per month with effect from January 1, 2024.

The Minimum Wage (“SMI”) is the minimum remuneration or wage that the worker should receive. The government sets the SMI amount annually. It applies to temporary workers, domestic or permanent employees, and is based on the legal working days, irrespective of the type of contract. The SMI is used for calculation of payroll and social security amounts.

Implication:

Employers will need to review and modify their payrolls accordingly.

Spain: The m aximum monthly social security contribution base increased from EUR 4,495.50 to EUR 4,720.50 effective from January 1, 2024.

The Spanish government announced the increase in the maximum monthly social security contribution base from EUR 4,495.50 to EUR 4,720.50 effective from January 1, 2024. Further, an additional contribution of 0.7% (previously 0.6% in 2023) will be paid towards non-occupation common contingencies insurance (‘MEI’) where the employer will contribute to the extent of 0.58% (0.5% in 2023) and employee will contribute to the extent of 0.12% (0.1% in 2023).

The maximum monthly contribution base is used for calculation of various social security contributions relating to unemployment insurance, common contingencies insurance, vocational training, and wage guarantee fund contributions (“FOGASA”), wherein both the employer and employee contribute.

Implication:

The employers will need to take note of the increased social contribution base and the rate for calculating the social security contributions for 2024.

Sweden

Sweden: Budget 2024 Highlights.

On September 20, 2023, the Swedish Government presented the budget for 2024 to the Parliament.

The key highlights of budget 2024 are as under:

• Extension of tax relief provided for foreign experts, researchers, etc. moving to Sweden for work from five years to seven years. The extended duration will apply to entries into Sweden after March 31, 2024;
• Removal of reduced contributions towards employer’s social security fund for employees aged 15 to 18 from January 1, 2024;
• Increased turnover threshold for VAT from SEK 80,000 to SEK 120,000 from January 1, 2025; 
• Abolished tax on plastic carrier bags from November 1, 2024; and
• Reduced excise tax on petrol and diesel from January 1, 2024.

Implication:

Businesses should monitor the developments related to budget proposals and implement budget changes in the policies, as applicable.

Sweden: Sweden implements Global Minimum Tax effective from January 1, 2024.

On December 13, 2023, the Swedish Government approved the new act on additional tax for companies in large groups. The new law, which is effective from January 1, 2024, is in line with the European Union (“EU”) Minimum Tax Directive (Council Directive on EU Pillar 2 Minimum Tax Directive Council Directive 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union). The provisions introduce a 15% global minimum tax rate for companies that are part of multinational and domestic groups with consolidated revenue of at least EUR 750 million in at least two of the previous four years. 

The provisions include:

• Qualified Domestic Top-up Tax (“QDTT”) – This domestic top up tax of 15% will apply to qualifying Swedish companies and permanent establishments if their foreign operations have an effective tax rate below 15%. 
• The legislation also provides for the additional charging mechanism, such as the Income Inclusion Rule (“IIR”) and Undertaxed Profit Rule (“UTPR”), which will apply in certain specific circumstances from the following years:

• The IIR will apply to financial years commencing on or after December 31, 2023.
• The UTPR will apply to financial years commencing on or after December 31, 2024. UTPR generally applies, where the ultimate parent company in the group is located in a country that has not introduced the said rules.

Implication:

Businesses should take note of changes and comply with them accordingly.

Switzerland

Switzerland: Increases leave for surviving the parent of newly born children, effective January 1, 2024.

Switzerland’s government updated the Income Compensation Act (“EOG”) with increased leave for the surviving parent of newly born children, effective from January 1, 2024. In case of the death of a mother within 14 weeks of giving birth, the surviving parent is allowed 14 weeks of leave apart from two weeks of regular paternity leave. For availing the leave, it will be taken immediately after the death and if the person rejoins the office during the leave, the leave will be automatically terminated. Correspondingly, if the other parent (i.e., other than a mother) dies during 6 months after the birth of a child, the mother can avail the additional leave of 2 weeks along with the regular leave.

Implication:

Businesses should take note of the changes and amend employment contracts, internal leave policies, etc.

Switzerland: Switzerland implements global minimum tax in stages from January 1, 2024.

On December 22, 2023, the Swiss Federal Council officially declared the entry into force of the Swiss implementation of the global minimum tax from January 1, 2024, which was published in the Federal gazette on December 28, 2023. The Federal Council is implementing the global minimum tax in stages, which includes the following:

• An initial temporary ordinance for the minimum tax by means of a “supplementary tax”, which will ensure a minimum domestic tax rate of 15% for large multinational enterprises with consolidated global revenue exceeding EUR 750 million. The ordinance will eventually be replaced by a federal law, and
• The application of the additional charging mechanisms such as Income Inclusion Rule (IIR) and Undertaxed Payments Rule (UTPR) has been delayed and are likely to be introduced from January 1, 2025. 
• Taxpayers can elect to apply a temporary safe harbor based on country-by-country reporting.

Implication:

The companies meeting the prescribed thresholds need to take note of these changes and keep a track of further developments.

Switzerland: Increase in value-added tax (VAT) rates effective from January 1, 2024.

On December 12, 2022, the Swiss Federal Tax Administration (“SFTA”) updated its guidance on value-added tax (VAT) rates confirming that the rates will be increased from January 1, 2024. The increase in the VAT rates is resulting from the public referendum held on September 25, 2022, in which Swiss voters approved the increase in VAT rates for funding the public pension system. 

On February 7, 2023, SFTA published ‘VAT Info 19’ (MI 19) providing new rates, guidelines, and transition rules. 

The VAT rates will be increased from January 1, 2024, as per the below table:

Value Added Tax	Current Rate	New Rate applicable from January 1, 2024
Standard rate	7.7%	8.1%
Reduced rate	2.5%	2.6%
Special rate for accommodation services	3.7%	3.8%

Implication:

The businesses should take a note of the revised VAT rates and make necessary changes in the systems related to invoicing, returns, etc.

Taiwan

Taiwan: Amendments to the acts dealing with sexual harassment, effective from March 8, 2024.

Taiwan’s Government has amended provisions of three acts titled. ‘Act of Gender Equality in Employment,’ ‘Gender Equity Education Act’ and ‘Sexual Harassment Prevention Act’ in order to combat violations and incidences of sexual harassment at workplace, school, and other places, respectively. The amendments are effective starting March 8, 2024. The highlights include 

• Scope broadened: The scope is widened to include acts done beyond working hours, as also acts done by business associates of different business units.
• Applicability extended to small companies: The amendments have also increased the scope by including companies with 10 to 30 employees, who will need to comply with the Act. 
• Reporting mechanism: Companies should set up reporting channels for reporting incidences of sexual harassment and processes for handling complaints.
• Complaint investigation and reporting: Employers need to conduct prompt investigations of the complaints raised and report the investigation results to the local labor authorities.
• Training and counselling: Employers need to conduct sexual harassment protection trainings for the employees and provide medical and counselling service to the victims of any such incidents.
• Increased penalties: Employers will be subject to monetary fines ranging between TWD 10,000 to TWD 1 million on failure to address sexual harassment complaints. Offenders will be sentenced to imprisonment of 3 years (earlier 2 years) for committing such acts. Further, any acts relating to abuse of power in committing sexual harassment incidences will be subject to fine of TWD 600,000.

Implication:

Employers should make note of these amendments and increased penal provisions and take steps to combat incidences of sexual harassment at workplace.

Thailand

Thailand increases average minimum wage by 2.37% across all provinces, from January 1, 2024.

Effective from January 1, 2024, the Thai government has increased the average minimum wage (“AMW”) of all provinces by 2.37%, resulting in the raising of minimum wages to THB 330–370 per day from the previous range of THB 328-354 per day. Accordingly, the province of Phuket now has the highest minimum wage of THB 370 per day, while Narathiwat, Pattani, and Yala have the lowest minimum wage of THB 330 per day. The minimum wage in Bangkok is THB 363 per day.

United Kingdom

United Kingdom: Mandatory online VAT registration applicable from November 13, 2023.

As a part of the HM Revenue and Customs’ (“HMRC”) Making Tax Digital (“MTD”) strategy, online VAT registration is made mandatory, effective from November 13, 2023, for all existing as well as new businesses through VAT Registration Service (“VRS”). 

The HMRC has provided a VAT helpline for taxpayers who are unable to or exempt from making an application through the digital platform and to request for a physical filing through VAT 1 form.

United Kingdom: New law mandates employers to prevent sexual harassment in the Workplace, effective from October 2024.

The Worker Protection Act of 2023 (Amendment of Equality Act 2010) has received Royal Assent and has taken effect from October 2024.

The key changes introduced by the Worker Protection Act 2023 (Amendment of Equality Act 2010) include:

• Establishing a statutory duty for employers to take reasonable steps to prevent sexual harassment in the workplace.
• Holding employers liable for acts of discrimination, including sexual harassment, committed by their employees, unless they can demonstrate that they have taken all reasonable steps to prevent such behaviour.
• A focus on prevention with employers being required to proactively take reasonable steps to prevent sexual harassment in the workplace.
• The Equality and Human Rights Commission (“EHRC”) will have the authority to enforce compliance with the new law. Employment Tribunals will also have the power to uplift compensation awarded to victims of sexual harassment if an employer is found to have breached their duty.
• The EHRC will update its technical guidance on sexual harassment and harassment at work to incorporate the new duty, providing employers with further guidance on compliance.

Implication:

Employers will need to review their policies and procedures to ensure they are compliant with the new law. If employer’s anti-harassment measures are not robust enough, there is risk of liability for higher compensation in case of workplace harassment incidents.

United Kingdom: Autumn Statement 2023: Key Highlights.

On November 22, 2023, UK Chancellor of the Exchequer, Mr. Jeremy Hunt, presented the Autumn Statement before the UK Parliament. Subsequently, the National Insurance Contribution Bill (reduction of rates) was published on November 23, 2023, and the Autumn Finance Bill was published on November 27, 2023.

The following are the highlights of the proposals presented in the Autumn Statement.

Measures relevant for employers/individuals:

• National Insurance Contributions (“NICs”):

From January 6, 2024, the Employee’s Class 1 NIC main rate stands reduced from 12% to 10%. No reduction is made in the employer’s NI contribution. The following table summarizes the changes:

Timeline	Rates for Employer	Main rates for Employee (below Upper Earnings Limit)	Additional rate for Employee (above Upper Earnings Limit)
Prior to January 6, 2024	13.80%	12%	2%
Effective from January 6, 2024,	13.80%	10%	2%

Various ceilings and limits for applicability of NIC remain unchanged.

• National Minimum Wage (“NMW”)/National Living Wage (“NLW”): Effective from April 1, 2024, the NMW/NLW rates will increase. Individuals aged 21 and above will receive GBP 11.44 per hour.
• Self-Assessment and PAYE: Starting from 2024-25, individuals with income taxed only through the PAYE system will not be required to file a self-assessment return. There are certain exceptions to this treatment.
• Data collection via Real Time Information (“RTI”): Legislation will be introduced to require employers, company directors, and self-employed individuals to provide new or improved data to the UK tax authority HMRC. From an employer’s perspective, this requires providing more detailed information on employee hours paid via RTI reporting. These changes will come into effect from April 2025.
• Off-payroll working rules: These rules, also known as IR-35 rules, aim to ensure that contractors pay the same amount of income tax and NIC as employees if they meet certain conditions. Effective April 6, 2024, the changes will be legislated and HMRC will be able to offset an employer’s PAYE liability against taxes already paid by a worker (contractor) and their intermediary, where an error has been made in applying off-payroll working rules and the contractor is deemed to be an employee under these rules.
• Pensions: Workers will now have the right to nominate the pension pot to which their employer contributes, known as a “pot for life.” A call for evidence will be conducted to explore these proposals in more detail. Additionally, Autumn Finance Bill 2023 proposes to abolish the Lifetime Allowance, effective from April 6, 2024. It is the total amount one can accumulate as pension savings without incurring a tax liability and any benefit beyond it was subject to tax charge. The lifetime allowance tax charge was earlier removed in April 2023, and the new system is likely to be introduced.
• State pension: The UK government has announced an 8.5% increase in the state pension, effective from April 6, 2024. This increase will bring the new full state pension to GBP 221.20 per week.

Measures relevant for business:

• Capital allowances: The full expensing will be made permanent. Thus, businesses can claim upfront relief for the full cost of qualifying new plant and machinery (other than cars or assets acquired for leasing). Additionally, the 50% first-year allowance will continue to be available for a special rate plan and machinery. The existing rules were applicable until April 1, 2026, but the Autumn Finance Bill 2023 proposes to remove this end date.
• Research & Development (“R&D”) tax relief:

• The Small and Medium-sized Enterprises (“SMEs”) scheme and Research and Development Expenditure Credit (“RDEC”) schemes will be merged into a single simplified scheme from April 1, 2024. This will provide an above-the-line (before tax credit) expenditure credit at a rate of 20%. The national tax rate applied to loss making taxpayers will be lowered from 25% (as per REDC scheme) to the small profits rate of 19%. 
• To further support loss-making SMEs, which are heavily invested in R&D, the UK government has announced a reduction in the intensity threshold for additional support. Effective starting April 1, 2024, the intensity threshold will be lowered from 40% to 30%, making it easier for more SMEs to qualify for enhanced support. The government will also introduce a one-year grace period, so that companies that dip under the 30% qualifying R&D expenditure threshold will continue to receive relief for 1 year.

• Adoption of OECD/G20 Global Minimum Tax Regime (BEPS Pillar 2): The UK will implement Multinational Top-up Tax (“MTT”) and Domestic Top-up Tax (“DTT”), effective from accounting periods beginning on or after December 31, 2023, to ensure multinational enterprises are subject to a minimum 15% effective tax rate. Technical amendments reflecting recent guidance are included in the Autumn Finance Bill 2023. Further, the government will introduce the Undertaxed Profits Rule for accounting periods beginning on or after December 31, 2024. This initiative aims to ensure that companies pay their fair share of tax and to prevent tax avoidance.
• Investment Zones and freeports: Legislation will be introduced to extend incentives and tax reliefs for investment zones and freeports from five to 10 years. Details of confirmed investment zones will be announced, with the aim to confirm all zones by summer 2024. Businesses in freeport normally enjoy reliefs such as certain building and structure allowances, employer NIC relief, etc.
• Business rates: The small business multiplier will be frozen, and the 75% discount on rates for the retail, hospitality, and leisure industry (up to a GBP 110,000 discount) will be extended for another year. Changes will take effect from April 1, 2024, in England. 
• Enterprise Investment Scheme (EIS) and Venture Capital Trusts (“VCT”): Both schemes will be extended to 2035. These initiatives aim to encourage investment in small and growing businesses.

Implication:

Employers should take note of revision in NIC rates and minimum wages and adjust their payroll procedure accordingly. Additionally, businesses should proactively assess their capital expenditure plans to take advantage of permanent full expensing benefits. Companies eligible for R&D benefit should assess the impact of changes in the R&D incentive regime on their profitability.

United Kingdom: The UK Government enacts Employment Relations (Flexible Working) Act 2023. 

The Employment Relations (Flexible Working) Act 2023 (Flexible Working Act) which received royal assent on July 20, 2023, is expected to come into force in July 2024. The Flexible Working Act makes amendments to the Employment Rights Act, 1996 whereby employees can now request for a flexible working arrangement.

Key changes introduced are:

• Employees will be able to make two requests for flexible working in any 12-month period instead of one;
• Employers will have to respond within two months (earlier it was three) from the date of request;
• Employer must consult with the employees before turning down the request;
• Employee is no longer under the obligation to explain to the employer how a flexible working request might affect the employer and how the effect could be reduced.

In addition to this, the UK government has laid before the parliament the second amendment to the Flexible Working Act which will grant employees the “day one right” to request for flexible working from their first day of joining. The law is expected to be effective from April 6, 2024. This would remove the requirement of 26 weeks of continuous working service with the employer for making flexible working applications. 

Implication:

Employers should review their policies and procedures to ensure they are compliant with the new law once it is enforced.

United Kingdom: Government proposes amendment to simplify Transfer of Undertakings (Protection of Employment) Regulations (“TUPE”).

The UK government has proposed amendments to simplify the Transfer of Undertakings (Protection of Employment) Regulations, 2006 (“TUPE”). TUPE is the law for protecting employees and their benefits in case of transfer of their employment in situations like business take-over, etc. These changes aim to reduce administrative burdens while ensuring employee interests are protected during business transfers.

Key Changes:

• Expanding Direct Consultation Eligibility: Currently, only micro-businesses (fewer than 10 employees) without recognized unions or employee representatives can conduct TUPE consultations directly with their employees. The new regulations will extend this option to:

• Businesses with fewer than 50 employees, regardless of whether they have a union or employee representatives.
• Transfers impacting fewer than 10 employees, regardless of the employer’s size.

Implication:

These new regulations are expected to apply to TUPE transfers occurring on or after July 1, 2024. This provides employers with a grace period to adjust their procedures and comply with the updated regulations.

Scotland: Scotland revises personal income tax bands and rates for 2024 to 2025.

The Scottish government presented the Statement for the Scottish budget for the year 2024 to 2025 on December 19, 2023, revising personal income-tax bands and rates.

As per the revision, 45% tax rate will be applicable for the earnings between GBP 75,000 and GBP 125,140 and the tax rate for top band will increase by 1%. The starter, basic, intermediate, and higher tax rates will remain unchanged. 

The following table summarizes the changes:

Band Type	2024-25		2023-24
	Band	Rate	Band	Rate
Starter	GBP 12,571 to GBP 14,876	19%	GBP 12,571 to GBP 14,732	19%
Basic	GBP 14,877 to GBP 26,561	20%	GBP 14,733 to GBP 25,688	20%
Intermediate	GBP 26,562, to GBP 43,662	21%	GBP 25,689 to GBP 43,662	21%
Higher	GBP 43,663 to GBP 75,000	42%	GBP 43,663 to GBP 125,140	42%
Advanced	GBP 75,001to GBP 125,140	45%	NA	NA
Top	Above GBP 125,140	48%	Above GBP 125,140	47%

Individuals with an income exceeding GBP 100,000 will experience a reduction of GBP 1 in their Personal Allowance for every GBP 2 earned beyond the GBP 100,000 threshold.

Implication:

Employers should take note of changes in personal tax rates and adjust their payroll processing accordingly. 

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