Global Employment Taxes Newsletter - PwC · 2018-07-01 · employees with company cars. The new...

Global EmploymentTaxes NewsletterJanuary, 2019

We are pleased to present the latest edition of the Global

Employment Taxes newsletter, bringing you updates on

what’s happening to employment tax regimes in various

countries across the PwC network as of to date.

This edition brings the latest updates in changes to

employment tax administration, particularly in France and

Finland as well as details changes to the immigration rules

in several countries, including Ireland, Hong Kong and

India. An inevitable and increasingly common thread we're

seeing across all regions is the introduction of electronic

based systems in every area, be that Real Time Reporting

for Employer Withholding, E filing of tax and other returns

or electronic visa applications. This will drive companies to

review and assess their systems to cater for this.

We hope you find this interesting and insightful. Please

contact us, or any of your PwC Employment Tax

colleagues, if you have any queries or would like to

discuss anything further.

Tom Geppel

Global Employment Tax and

Payroll Lead

[email protected]

Ken O’Brien

Global Employment Tax and

Payroll Lead

[email protected]

Introduction

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mailto:[email protected]


Contents

Europe and the Middle East

LATAM

NORAM

APAC

Africa

Eurasia

Eurasia

Africa

APAC

LATAM

NORAM

Europe and the Middle East1

2

3

4

5

6

Global Employment Taxes Newsletter 3


Belgium

Belgian social security taxes on equity awards

The position of the Belgian National Security Office (NSSO) on benefits granted by a parent company to

employees of a Belgian entity of the group has been “clarified”. This position applies for both the future (i.e. as

from 1st July 2018) and the past, with a statute of limitation of three years. In the case of an audit costs of

potential regularization can only be borne by the company. Social security contributions (employee and

employer) cannot be recovered from the employees.

As far as GSUs are concerned, social security contributions are due at vesting for individuals subject to

Belgium social security. For stock options, social security contributions are due at exercise. This corresponds

with the “tax point” for income tax purposes.

Fiscal reporting and withholding obligation for benefits attributed by a foreign company

As previously announced, a new fiscal reporting obligation will likely apply for benefits provided by foreign

group companies directly to the employees of a Belgian company/entity of the group. In addition to that

reporting obligation, the Belgian company should, as from income year 2019, apply wage withholding taxes on

the benefit granted by foreign group companies to their employees.

Nevertheless, no legislative amendments have been issued yet in that respect. Official communication from

Belgian authorities is still expected which should provide further information on current practical reporting

questions, as well as the format to be used for that reporting.

New mobility budget

A draft law is pending at the Belgian Parliament to allow companies to grant a mobility budget instead or in

combination with an environmentally friendlier company car. This budget can be used tax free for all most

business allowable mobility purposes (public transport, shared cars, bikes and steps, ride hailing, etc.) by the

beneficiary and the remainder in cash, if any, is taxed at a reduced rate.

This budget would be however, only applicable for employees who already have the right to a company car.

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A summary of the main changes in Finnish payroll taxation and individual taxation for 2019; Social Security

contribution rates for 2019

Almost all statutory social security contribution rates for 2019 have been confirmed. The applicable rates are:

• Employee’s employment pension insurance contribution; for employees under 53 years/over 62 years :

6,75 %; for employees in the age of 53- 62 years : 8,25 %;

• Employee’s unemployment insurance contributions 1,50 %

• Employee’s health insurance contribution 1,54 %

• Employer’s employment pension insurance contribution amounts to on average; for employees under 53

years/over 62 years : 17,65 %; for employees in the age of 53- 62 years : 16,15 %

• Employer’s unemployment insurance contribution 0,50 % up to the amount of salaries of 2 086 500 euros

and 2,05 % on any exceeding portion

• Employer’s social security contribution0,77 %.

The employment related Statutory Accident Insurance premium is determined based on the employer’s branch

or risk category. Risk classification is typically based on the occupation or industry. The average Statutory

Accident Insurance rate is in average 0,80 % of the wage sum.

The employment related Statutory Group Life insurance premium is determined annually according to the

grounds confirmed by the Board of the Employees' Group Life Insurance Pool in Finland. In 2019 the average

Statutory Group Life premium is 0,07 % of the wage sum.

Tax-exempt allowances confirmed by Finish Tax Administration for 2019

Finnish Tax Administration has confirmed the amounts of tax-exempt allowances in 2019 for business travel.

Tax-exempt kilometer allowance by private car (0.43 euros per kilometer), daily allowance (42 euros) and half-

day allowance (19 euros) remain unchanged. Instead some adjustments have been made to tax-exempt daily

allowance for business trips abroad.

Decision of the Finnish Tax Administration on the valuation of taxable in-kind benefits to be applied in 2019

Finnish Tax Administration has also confirmed the principles and valuation to be followed for calculation the

taxable value of in-kind benefits in 2019.


Finland



Finland

Possibility of applying for an additional

prepayment

Tax payers are able to pay a voluntary

supplementary tax prepayment with no

interest or a lower rate of interest applying

to overdue payments before their final tax

assessment. As of November 1, 2018

supplementary tax prepayments are not

in use anymore. Instead tax payers need

to apply for an additional advance tax

from Finnish Tax Administration either via

MyTax online service (OmaVero) or by

sending a paper form.

Late filing penalties applicable in National

Incomes Register

The National Income Register will

commence operation on January 1, 2019.

If employer obligations are neglected,

penalties can be imposed. It was

confirmed that 2019 will be considered a

transitional period during which no

penalty fees will be imposed. However,

in cases of obvious negligence of the

reporting obligation penalty fees may be

imposed during the 2019 transition period.

Salary information must be submitted

within five calendar days of the payment

date, however, the Finnish Tax

Administration will begin to impose

penalty fees if mandatory payment

submissions are reported later than on

the 8th day of the calendar month

following the payment date. The penalty

will accumulate based on the number of

days the payment is outstanding following

this payment date. The penalty is EUR 3

per day. After 45 days when the penalty

reaches EUR 135, an additional penalty

of 1 % of the taxable salaries or salaries

subject to pension insurance declared will

also apply, based on whichever is the

larger amount.

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Social Security

The “Career Development” Bill, published on

September 6, 2018, provides for the

simplification of rules relating to the posting of

workers to France, in particular, foreign

employers are exempt from filing a posting

declaration and from designating a

representative in France if they post employees

for the purpose of prospecting for business. The

conditions of this are to be defined by a

ministerial order that has yet to be published.

In addition, employers posting employees for a

“short period” or on a regular basis may benefit

from arrangements regarding the obligation to

present documents in French in case of

inspection. A decree of the Conseil d’Etat shall

set out the conditions of this simplified regime.

Although this bill creates these business-friendly

exemptions the Career Development Bill has

also rendered the posting declaration regime

more severe in terms of sanctions for non-

compliance which have been reinforced: the

maximum administrative fines incurred in case of

failure to comply with the required formalities or

the regulations applicable to posted workers are

now 4000 euros (instead of 2000 euros) per

posted worker and per violation, or 8000 euros

(instead of 4000 euros) in case of repeated

offense within two years (instead of one year).

As of January 1, 2019, the Tax Credit for

Competitiveness and Employment (“CICE”) shall

be transformed and be replaced by a tax relief of

6 percentage points for employer health

coverage contributions for remunerations below

3746 EUR (per month for 2018) (2.5 the legal

minimum wage as of the date of print). For

remunerations below 2397 EUR (per month for

2018) (1.6 times the legal minimum wage), a

digressive reduction provided for by Article

L.241-3 of the French social security code

(“reduction Fillon”) shall be extended to employer

contributions for complementary pension

coverage as of January 1, 2019. As of October 1,

2019, this reduction shall be extended to

employer unemployment contributions.

Finally, as of September 1, 2019, overtime

worked hours shall be exempt from social

security contributions. In response to the “Yellow

Vest” protests, the government is also studying

the implementation of an exemption from income

tax for overtime work wages.



France

Withholding Tax

As from January 1st, 2019, a revised withholding

tax system will apply to remuneration. The

applicable withholding tax rate is determined by

the French tax authorities based on the last tax

data provided and will be communicated to

employers. However, for the new taxpayers for

whom no tax data is available, a neutral

withholding tax rate will apply (rate determined

as if the employee was single with no dependent).

Therefore, the French tax authorities have

issued a special tax form (2043-SD) to request a

tax number and a personalized withholding tax

rate. Once calculated by the French tax

authorities (within a maximum 3 months period

in principle), the personalized withholding tax

rate is put at the employer disposal. The

information to enclose to the form 2043 SD

would notably include a copy of the

I.D./passports of all the members of the tax

household and evidence of the employer

reporting the estimated net annual

taxable remuneration.

Inbound Tax regime

An amendment to the draft Finance Bill for 2019

aiming at enhancing the tax regime for “inbound

expatriates”; (Article 155 B of the General Tax

Code) is about to be adopted. The provision

extends the 30% flat exemption of the net

taxable remuneration, currently reserved to

employees recruited directly abroad for third

parties, to all modes of recruitment, including

intra-group mobility transfers. Indeed, individuals

transferring their tax residency to France in the

context of an intra-group mobility could not

currently benefit from this flat 30%. They could

only benefit from the exemption of the

contractual salary supplements.

However, to benefit from this flat exemption the

employee’s remuneration should be at least

equivalent to the “reference” remuneration. This

reference remuneration corresponds to the

amount paid to a non-expatriate employee for

similar functions within the company or, where

applicable, within similar companies based in

France. If definitely adopted it will apply to

remuneration paid as from 1st January 2019, for

transfers to France that took place as from 16

November 2018.


France Germany

Tax incentives for electro-mobility

This provides for significantly more favourable

taxation of private use for electric and hybrid

electric vehicles.

The new regulation applies to self-employed

persons and tradespeople as well as to

employees with company cars. The new

regulation applies to vehicles purchased, leased

or rented in the period from 1 January 2019 to 31

December 2021, regardless of whether they are

new or used vehicles.

The monetary benefit from the private use of a

company car will in future be set at 1% of half of

the list price instead of 1% of the full list price.

This applies regardless of how high the list price

actually is in individual cases.The tax advantage

is also taken into account under the application

of the so-called driver's logbook regulation where

the taxable benefit is calculated taking into

consideration costs allocable to private use of a car.

The previous subsidy for electric and hybrid

electric vehicles, which was limited to the battery,

will be suspended for vehicles benefiting from the

new regulation which are subject to the new

ruling. The new subsidy also applies to e-bikes

that are classified as motor vehicles under traffic

law. The subsidy does not apply for the period 1

January 2019 to 31 December 2021, but for the

entire useful life of the subsidized vehicles

purchased, leased or rented after 31 December

2018 and before 1 January 2022.

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Germany

The provision of company bicycles for private use

The current pecuniary advantage arising from

employer provided bicycles and pedelecs, in

addition to the wages already owed and which

cannot be classified as motor vehicles under

traffic law, will be expressly made tax-free from 1

January 2019 (Sec. 3 No. 37 of the Income Tax

Act; new Version). The tax exemption only

applies to the transfer for use, but not to the

transfer of ownership of the bicycles/pedelecs to

the employee. Since the pecuniary advantage is

granted in addition to the wages owed anyway, a

salary conversion does not lead to the tax

exemption of the pecuniary advantage from the

private use of the bicycle/pedelec. In these cases,

the pecuniary advantage must continue to be

determined in accordance with the nationwide

regulation on the tax treatment of the transfer of

(electric) bicycles. The tax exemption is limited to

wage payment periods ending before 1 January

2022. The private use of a bicycle or pedelec that

is not a motor vehicle under traffic law will also

not be taken into account until 31 December 2021.

Workplace health promotion

Benefits provided by the employer to improve the

general state of health and occupational health

promotion are tax-free, provided they do not

exceed € 500 per calendar year. The legal

framework for health promotion, prevention and

occupational health care was changed by the

Prevention Act of 2015.

Among other things, it introduced a certification

procedure for the eligible measures by the

central association of the Federation of Health

Insurance Funds. In future, this certification will

be mandatory for the recognition of tax

exemptions for individual measures. However, in

order to adapt the procedures in companies,

certification for the tax exemption of non-certified

health measures started before 1 January 2019

will only be required for non-cash benefits

granted after 31 December 2019.

Jobticket

From 1 January 2019, a so-called Jobticket will

be tax-free. A Jobticket enables the use of

public transport.

This applies to benefits in kind such as time

tickets and employer subsidies, which are paid in

addition to the employee’s wages and the

employee’s expenses for local public transport.

Private use of the job ticket also remains tax-free.

However, the tax exemption does not apply to

the conversion of wages into a Jobticket, but the

Jobticket must be granted in addition to the wages.



Hungary

Social Security & Tax updates

Research centres will only need to withhold half the

rate of employee social tax for employees working

in the field of research and development. Therefore,

the wage cost of these research centres may

decrease by as much as 10% from 2019.

Secondly, the package contains incentives in

connection with dismissed senior state employees.

Namely, a business hiring an employee who used

to work for the government previously and who is

over 60 years of age, will not have to pay social tax

on income up to four times the minimum wage for

these individuals. Thus the employment of formal

government employees could save employers

some HUF 110 000 – 120 000 per month.

Thirdly, the regulation adopted in the summer has

not changed concerning the employment of retired

persons. It means that pensioners and their

employers will not have to pay social security

charges if they entered into an employment

relationship. A minimal change is that in case the

old age pension is suspended– which can happen

in the case of employment by the government – the

retired person still does not have to pay social

security contributions. As a result of this provision,

employers may provide a 45% higher net salary to

retired persons from 2019 from an unchanged budget.

Changes to the Hungarian fringe benefit system

Generally called ‘cafeteria’, these changes, adopted

in the summer, will remain in effect. However, a few

types of fringe benefits will remain tax exempt, so

the employer will be able to provide tax exempt

tickets to sport and cultural events, such as concerts.

Microbusinesses’ Tax

Based on the planned new regulations of the micro

businesses’ tax, students will only have to pay a

max monthly tax of HUF 25,000 – instead of the

normal rate of HUF 50,000 – even if they

suspended their education provided that they did

not reach the age of 25.

10 PwC



Ireland

Real Time Reporting — Employer’s Guide to

going live from 1 January 2019

RTR for employment tax and payroll compliance

will affect all companies with an Irish employer

PAYE tax registration. It went live on 1 January 2019.

Revenue eBrief No. 210/18 provides a new

employers’ guide to reforming and making

changes to the employer reporting obligations

contained in a new Tax and Duty Manual Part

42-04-35A, “The Employers’ Guide to PAYE”.

The revised procedures, which are detailed

throughout the new guide, are summarised below:

Revenue Payroll Notification (RPN): The RPN

replaces the P2C (the employer copy of the tax

credit certificate). Employers must use the latest

RPN when calculating employees’ statutory

deductions. If an RPN is not available,

emergency tax should apply.

Making a Payroll Submission to Revenue:

Information outlining how employers notify new

employees (Chap 15), how to make a payroll

submissions (Chap 19), how to correct errors in

submission (Chapter 7) and procedures for

cessation of employment (Chapter 16) are

included in the Tax and Duty manual.

Monthly Statements and Payment Methods:

Monthly statements will be made available to

employers based on submissions in the relevant

month. Payment methods in chapter 18.

Key Messages: Employers must ensure that

they have:

• Registered all employees with Revenue.

• Correct, up-to-date PPS number for

all employees.

• Logged into to ROS to review their ROS

digital certificate permissions and ensure it

is active.

• A ROS Digital certificate on the computer they

run their payroll.

Previous thought leadership is included at the

PwC Ireland website.

https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-2102018.aspx

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-42/42-04-35a.pdf

https://www.pwc.ie/payemod


Ireland

Immigration — Review of Economic Migration Policy to lead changes in Employment Permits System

The first major review of Ireland's economic migration policy since 2012 has been undertaken. Ireland's

economic migration policy is to promote the sourcing of labour and skills needs from within Ireland and the

wider EEA. In cases where key skills cannot be sourced through existing talent pools in the EEA, the

employment permits system facilitates attracting and retaining skilled personnel from further afield.

The objective of the review was to examine the current employment permits system in line with continuing

economic and employment growth. The need for additional measures to be implemented to address more

recent labour market pressures in the context of strong employment growth was noted. A key recommendation

of the report is the introduction of a more flexible system to allow for changes to be implemented to meet the

needs of the labour market at all stages of the economic life cycle, as well as;

• A review of salary thresholds, and other qualifying criteria, in line with changing skills and labour market

needs;

• An option for sectors experiencing severe labour shortages to submit an evidence based business case for

consideration on an ad-hoc basis in conjunction with a revamped, bi-annual review of Highly Skilled and

Ineligible Occupations lists;

• The introduction of a Seasonal Employment Permit to facilitate certain categories of short-term workers;

• Modernisation and extension of the existing Labour Market Needs Test;

• Changes to the existing 50/50 rule, which requires that at least 50% of employees of the Irish entity are

EEA nationals, to meet a broader range of enterprise needs.

Israel

Clarification of deductible expenses

There has been a recent clarification with

respect to the definition of "Light Refreshment"

which could be served to employees by a

company. The Israeli Tax Authorities (ITA)

regulations state that 80% of the expenses

incurred in providing "Light Refreshment"

(hold/cold beverages, cookies, etc.) to

employees could be deductible for tax purposes.

On July 3rd, the ITA has published a

clarification, following inquiries from the

general public, stating that the definition of

"Light Refreshment" also includes fresh fruits

and vegetables.

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Lithuania Norway

Changes to the rates of Social

Security contribution

Starting from 2019, the rates of social security

contributions will change for all income types

and social security contributions caps will be

introduced to certain income types. Employer’s

social security contributions will be transferred

to employees. As a result, employers will be

required to change employment agreements

and gross-up the current employees’ gross

salaries by multiplying them by 1.289 and

withhold higher payroll taxes at higher rates.

Net income should not decrease and

employer’s costs should remain unchanged

due to such a change.

Also, changes related to the contributions

payable to the second tier pension funds will

come into force as of 2019.

Reimbursement of newspaper subscriptions

Newspaper subscription reimbursed by an

employer is tax free provided that there is a need

for this in connection with the employment. The

requirement that the employee should hold a

private subscription in addition is now removed

(applicable as from 1.1.2019).

Overtime food

As from 1.1.2019 the employer is able to provide

overtime food or reimburse expenses to overtime

food provided that the employee works at least

10 hours. Previously, the requirement was that

the employees spent more than 12 hours away

from home. For 2019 the suggested limit is

NOK 200.

New PAYE scheme

As from 1.1.2019 new employees coming to

Norway can choose a flat tax rate taxation. The

new scheme will not be applicable for employees

already resident in Norway. The tax rate is

suggested to 25% and will apply if the income

during the year do not exceed NOK 617 500. For

employees with a valid social security exemption

(A1/CoC) the tax rate will be reduced with 8.2%

(fully exempted) or 3.1% (partly exempted).

Employees choosing the new PAYE scheme will

be exempted from filing a personal tax return.



Poland

Changes to PIT provisions, in force from January 1 2019

Important changes from an employer’s perspective

Amended PIT provisions provide for a shorter deadline for

submitting PIT - 11 and PIT - 8C information to the relevant

tax office. The tax remitter will be obliged to submit

information by the end of January of the following year, not

by the end of February as was done in previous years.

However, the deadline for delivery of these forms to the tax

paying employee remains the end of February following the

tax year in question.

Another adopted change relates to the method for

withholding the monthly tax advances. Until now, the tax

advance payment, according to the 32% higher tax rate,

was to be withheld starting from the month following the

month in which the taxpayer exceeded the relevant

threshold. From January 2020, the tax remitter is to

withhold the tax advance at the rate of 32% in the month in

which it will exceed the threshold.

Important changes from a Taxpayer’s perspective

An important change for the taxpayers includes the

possibility of completing the tax return forms by the tax

authorities. The taxpayer will have the possibility to revise

their input data. These such prepared tax return forms will

be considered as filed within the statutory deadline. This will

also reduce the risk of exceeding the deadline for

filing.Moreover, there will be a shorter deadline for

refunding tax overpayments for PITs submitted electronically.

The deadline is now 45 days instead of 3 months.

A further important change is a modification of the rules for

the possibility of submission of joint married tax returns

after the filing deadline. Currently, spouses who submit their

annual PIT form after the deadline lost their right to joint

assessment. This situation has changed and the right is no

longer forfeited.

The current deadline for submitting annual tax returns is the

end of January following the tax year. An extension is

available until February 15. Furthermore, individuals who

receive rental income and pay tax according to the flat rate

on that income should inform the tax authorities of this fact

by making a tax payment on the day of submitting the

annual tax return, if they had rental income for the month of

December only.

Bitcoin

Profits from trading in Bitcoin will be treated as capital

gain income.

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Portugal

Withholding Taxes

Employment and self-employment income obtained by non-

residents

It is proposed that the employment income and self-employment

income earned by non-residents, where the monthly amount does not

exceed the national minimum wage (EUR 580), is not subjected to

taxation at the higher withholding tax rate provided that the income is

derived from a single entity.

Remuneration for supplementary work and in respect of

previous years

It is envisaged that remuneration for supplementary work and the

remuneration paid or made available in respect of prior years shall be

subject to withholding taxes at an autonomous rate. This should not

be added on to any other income earned in the month in question for

the purposes of determining the withholding tax rate to be applied.

Holiday and Christmas allowances

It is also established that, when holiday and Christmas allowances

due in respect of previous years are paid or made available, the tax to

be withheld is made independently for each year in respect of which

the allowances are paid.

Tax Regime applicable for former tax residents

This is a new tax regime to encourage the return of emigrants to

Portugal, which consists of 50% relief fromtaxation of employment or

self-employment income received after their return to Portugal,

namely for individuals who: i) have become Portuguese tax resident

in 2019 or 2020; ii) have not been qualified as tax resident during the

three years prior to the return to Portugal; iii) have been qualified as

tax resident in Portugal prior to 31 December 2015; iv) have a

regularised tax situation; v) have not applied for the special tax

regime for non-habitual residents. This regime is applicable in the

year of return to Portugal and in the following 4 years and the

withholding tax is applicable only on 50% of the employment or self-

employment income obtained by the individual eligible for the

tax regime.

Personal Income Tax Return

The deadline for filing the PIT return shall be extended to 30 June of

the year following the tax year concerned (Currently the 31 May).



16 PwC

Russia Turkey

Lawmakers determine criminal liability for the

fraudulent migration registration of migrants at

non-residential premises

Law No. 420-FZ introduces criminal liability for

the fraudulent registration of migrants at non-

residential premises. According to the changes,

The following are now considered fraudulent:

• Migration registration of a foreign national or

stateless person as registered at a place of

temporary residence in Russia by means of

issuing deliberate misrepresentations or

unreliable documents;

• the registration of a foreign national or

stateless person at a place of temporary

residence at the premises where such foreign

national has no actual intention to stay either

permanently or temporarily;

• the registration of a foreign national at a place

of temporary residence at the address of a

company where they do not perform job

duties or any other activities classified by

Russian law as eligible under the duly

prescribed procedure for that company.

New tax opportunities for individuals

The tax exemption for income from the sale of

immovable property and equity interests therein,

which is conditional on a minimum period of

ownership, is now extended to non-residents

(clause 17.1 of Article 217). The exemption for

income received by individuals from the sale of

immovable property and equity interests in such

property (conditional on a minimum period of

ownership) would apply to all individuals rather

than only Russian tax residents as is currently

the case.

Reminder of new taxation rules for proceeds

from sale of securities by individuals

Effective from 1 January 2019, only the amounts

that had already been taxed at the time of

securities acquisition (Including by way of

donation, partial payment, gift or inheritance) will

be deemed deductible for the purposes of

calculating the taxable proceeds. The amount of

previously paid Personal Income Tax will be

non-deductible.

Protection of Turkish currency

The Decree no.85 was published and became

effective on November 13th 2018. A new

paragraph, was added to the Article 4 of the

decree No.32 on the "Protection of the Value of

Turkish Currency" available here.

The Turkish local legislation prohibits

agreements concluded in foreign currency

between Turkish entities. Based on this, it is no

longer possible for Turkey entities to invoice

services, for Turkish inbound assignees, directly

to Turkish Banks in foreign currency.

https://drive.google.com/file/d/0B7GJPvv_vpXocFpzd3BvUzV5bTVMYm1rcHBNM1IwTmcwcVFJ/view?usp=sharing


Slovakia Switzerland

Change in the Social Security rate of fines

There were some significant changes in the rate

of fines determined by the Slovak Social security

authority, which became effective from the 1st

August 2018. Some employer related changes

are as follows:

• The maximum fine for the late registration /

de-registration of the employee increased to

EUR 16.60 for every delayed day ( till 31 July

2018 the maximum fine was EUR 3.32 ).

• If the employer did not register / de-register

employee with the Social security authority

and inspections have begun, the maximum

fine increased to EUR 33.20 for every

delayed day ( till 31 July 2018 this was

EUR 6.60 ).

• If employees permanent residence changes

were not reported to the Social security

authority, this fine can be a maximum EUR

1,659.70.

2019 changes to the legal framework of payroll

The turn of the calendar year brought with it

various changes to the legal framework

conditions, which are relevant to payroll

operations. Below are the most important tax,

social insurance and miscellaneous updates –

please contact us for further information.

• Salary Certificate - New Questions,

New Answers;

• Salary Certificate Guideline;

• Source Tax;

• New Source Tax Regime in France;

• OASU (Old Age) and DI (Disability) pensions;

• Guidelines OASI/DI and eligible salary;

• Occupational benefit minimum interest rate;

• Maternity Allowance;

• Family Allowance;

• Data Protection, Switzerland and the EU;

• Mass Immigration;

• Military Service Exemption Tax;

• Outsourcing of payroll services.



U.K.

Autumn Budget 2018

The Chancellor delivered the 2018 Budget on the

29th of October. Key developments include:

• Off-payroll working in the private sector –

current public sector rules will be extended to

the private sector with effect from April 2020,

although small businesses will be exempt.

• The ‘Check Employment Status for Tax’

(CEST) service is available to help

businesses determine whether the off-payroll

working rules apply

• NIC Employment Allowance will be restricted

to those employers who paid less than

£100,000 of employer NIC in the previous

tax year

• NIC on Termination Payments - the levy of

Employer Class 1A NICs will be postponed to

April 2020

• Increase in the benefit in kind charge for

private fuel provided for company cars

and vans

• Increase of Apprenticeship Levy cap from

10% to 25%

PwC commentary on the Autumn Budget

changes can be found here:

Impact of Net Settlement

For UK companies, the net settlement of share

awards is a relatively new phenomenon,

following new accounting rules that entered into

force beginning in January 2018. It describes the

process of a company settling an employee

share award party in shares and party in cash.

Many companies meet the conditions to claim a

specific statutory corporate tax deduction for

employee share plans. However, many are

finding the move to net settlement to be

challenging from a tax perspective, potentially

presenting compliance challenges.

Guidance on disguised remuneration schemes

HMRC has published further guidance on

‘disguised remuneration’ schemes, setting out

how loan schemes are used to avoid paying tax,

what the loan charge is and who it affects, and

the support HMRC can give to people to get their

tax affairs in order. The charge comes into effect

on 5 April 2019, meaning that companies still

have time to settle with HMRC before then.

18 PwC

https://thesuite.pwc.com/insights/autumn-budget-2018-pwc-comments-on-employment-tax

https://www.gov.uk/government/publications/loan-schemes-and-the-loan-charge-an-overview/tax-avoidance-loan-schemes-and-the-loan-charge


U.K.

Reform of apprenticeship levy

The HM Treasury has announced that additional

funding of £90m will be allocated to help

employers to spread apprenticeship funds to

businesses throughout their supply chain. In

addition, £5m funds will be allocated to

implement updated apprenticeship standards by

2020. These changes are aimed at providing

flexibility with respect to the levy, and to help as

many people as possible to find the right training

to equip them for the new economy.

New PAYE trigger for real time adjustment to

tax codes

HMRC will be introducing a facility to notify

employers if there is a discrepancy between the

tax code they are operating for a given employee

versus the one held on HMRC’s systems. This

new trigger will help ensure that more employees

are on the correct tax code and therefore paying

the right tax at the right time, thereby minimising

unexpected tax bills at the end of the year.

Regular PAYE RTI submissions will

continue unaffected.

Increase of Student Loan Plan thresholds

Student Loan Plan 1 and Plan 2 thresholds will

increase effective 6 April 2019 to £18,935 and

£25,725 respectively. The starter checklist for

new employees will be updated to ask new

joiners whether they have both Plan 1 and Plan 2

loans. In addition, repayments for Postgraduate

Loans will begin in April 2019, concurrent to any

undergraduate student loans. There will be new

start and stop notices for these Postgraduate

Loans. HMRC encourages employers to ask new

joiners to complete the new starter checklist to

ensure deductions are being taken under the

correct plan or loan type.

New entitlement to Parental Bereavement Leave

and Pay

The Government is introducing a new right to

Parental Bereavement Leave and Pay for

parents who lose a child under the age of 18,

including those who suffer a stillbirth from 24

weeks of pregnancy. It is intended that these

rules will apply from 6 April 2020. Affected

parents will be entitled to 2 weeks of Parental

Bereavement Leave and those with at least 26

weeks of continuous service and earnings above

the Lower Earnings Limit will also be entitled to

Parental Bereavement Pay at the statutory flat

weekly rate.



U.K.

Welsh rates of Income Tax (WRIT)

In November 2018 HMRC wrote to over 2m

customers with a main residence in Wales telling

them about Welsh rates of Income Tax. This

includes people living in Wales with an active

record of employment (regardless of where

they work).

In February/March, these individuals will receive

‘C’ PAYE codes where HMRC’s records show

they are resident in Wales. These tax codes

should be used from 6 April 2019. HMRC will

continue to administer WRIT as part of UK

Income Tax system.

Visa costs for prospective and existing

employees

Under current rules, migrants outside of the

European Economic Area (EEA) or Switzerland

who wish to come to the UK to take up

employment need to apply for a visa. Where a

non-domiciled individual comes to the UK to take

up employment and an employer covers these

costs there will be no liability to income tax and

NICs. This is because the visa application costs

are considered to be travel-related and therefore

covered as a deduction under s.373 ITEPA 2003

as “provision of travel facilities”.

However, these payments will be liable to income

tax and NICs when the applicant is already in the

UK, because such costs cannot be regarded as

“provision of travel facilities”. They also do not

meet the general deduction rules under s.336

ITEPA 2003 because such costs are not incurred

“in the performance of the duties of the

employment” as they merely put an employee in

a position to eventually perform those duties.

Coordinated HMRC activity

After a period of relative inactivity, it seems in the

last year or so that HMRC has started to re-focus

on Employer Compliance, PAYE reviews, audits

and inspections. Whichever term it goes by, this

recent increase in HMRC scrutiny of employers

and their approach to managing employment tax

risks has a much more co-ordinated and joined-

up feel to it.

At the large business level, this cross-tax thinking

has been around for some time, with CRMs (now

CCMs) overseeing and directing a team of

specialists looking at specific areas of tax

compliance and risk management. The Business

Risk Review approach, itself undergoing change

at the moment, has been followed for a number

of years by HMRC in its dealings with large

businesses, but we have also been seeing

collaboration across taxes at the smaller and

mid-sized end of the scale.

Simplification of tax return amendment process

The government is planning to review the

process for amending tax returns to make it more

transparent and easier for taxpayers to use, with

a possible move to a single digital tax

amendment service. The consultation aims to

improve the current process while recognising

the move towards complete digitisation of the tax

process. There is no consistency in the current

approach to amending returns — there are

different rules for income tax, corporation tax and

VAT, for example. The different methods vary

according to tax, value, accounting period and

turnover, with different time scales and methods

of reporting amendments.

The consultation asks for feedback from

stakeholders on the type of tax returns submitted,

the current amendment process used and

opinions on the level of complexity to the amount

of time it takes to deal with an amendment,

response times and service levels from HMRC,

and any difficulties experienced with the

current system.

The consultation closes for comment on 6

February 2019.

20 PwC

https://www.gov.uk/government/consultations/amendments-to-tax-returns

Individual Tax

There have been legislative updates that seek to

address the potential for the black economy

• Expansion of the taxable payment reporting

system (TPRS)

• Removal of tax deductions for certain wages

and contractor payments has been passed -

Employee Share Scheme Updates

The Government has announced that it proposes

to simplify and extend the current employee

share scheme (ESS) regime, please find a

summary of the proposal here:

Single Touch Payroll (STP) reporting for

mobile employees

The ATO has announced an exemption from

STP reporting for globally mobile employees who

are inbound to Australia. The exemption allows

an employer to defer STP reporting until July 1,

2019 where the employee satisfies the

exemption definition.

To qualify for the exemption, the following criteria

must be satisfied:

• The employee is employed by an offshore

entity, for example, an entity that is a non-

resident for Australian taxation purposes.

• The employee is seconded to Australia.

• All or part of the employee’s base salary and

other remuneration is paid by an offshore entity.

• The employer maintains a shadow

payroll arrangement.

This is an automatic exemption and does not

require written confirmation with the ATO. It is

important to note that the exemption only applies

to reporting and does not apply to defer an

employer’s PAYG withholding requirements.

Please see here for a PwC publication.

APAC

NSW Payroll Tax updates

The New South Wales (NSW) Government has

announced that it will implement all of the

recommendations made by the NSW Productivity

Commission following its review of the payroll tax

system. PwC assisted the Productivity

Commission and compiled a detailed report for

its review. Although there will be no change to

the payroll tax rate or thresholds, the reforms will

reduce the compliance burden for many NSW

businesses. The reforms include the following:

1. From July 2019, small businesses with a

payroll tax liability under AUD 20,000 will

have the option of paying their payroll tax just

once a year, with a single annual return.

Businesses with a liability under AUD 150,000

will be able to submit just one annual return

and make pre-set monthly instalment

payments, based on the previous year’s liability.

2. From mid-2019, businesses which become

payroll tax compliant within three months of

being notified will receive a 50 per cent

reduction in their penalty, saving businesses

around AUD 400,000 in total each year.

3. Businesses will also be given an extra week

to complete their annual reconciliation

requirements, starting with this financial year.

Please see here for the NSW announcement.

Australia


https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Black-Economy-Taskforce--extension-of-the-taxable-payments-reporting-system-(TPRS)/

https://www.ato.gov.au/General/Gen/Removing-tax-deductibility-of-non-compliant-payments/

http://jaf.ministers.treasury.gov.au/media-release/048-2018/?utm_source=wysija&utm_medium=email&utm_campaign=Media+Release+%E2%80%93+Government+proposes+to+double+the+value+limit+available+under+employee+share+schemes

https://www.pwc.com/gx/en/services/people-organisation/publications/assets/pwc-australia-intro-of-single-touch-payroll-with-reporting-exemption.pdf?elq_mid=13793&elq_cid=1086053

https://www.treasury.nsw.gov.au/sites/default/files/2018-11/20181122 - Media Release - Perrottet - NSW Productivity Commission delivers on payroll tax.pdf

The Tax Authority will be responsible for

the collection of China Social Security

contributions from January 1 2019

The National Tax and Tax Administration System

Reform Plan clearly stated that from January 1

2019, the China social security insurance

premiums such as pension insurance, medical

insurance, unemployment insurance, work-

related injury insurance and maternity insurance

will be uniformly collected by the tax authorities.

It will change the contradiction of the current

"double collection" system, improve the efficiency

of collection, reduce the cost of collection, and

expand the coverage of social security insurance.

In the long run, it will help to narrow the

difference on social security rates and payment

bases across cities in China.

State Council: Enterprises without lay-offs, or

with fewer lay-offs, can receive a refund of 50%

of unemployment insurance paid for in the last year

On December 5, 2018, signed by the Prime

Minister Li Ke Qiang, the State Council issued

"Opinions on Promoting Employment in the

Current and Future Period". The "Opinions"

indicated that in order to support the stability of

enterprises, insured enterprises that do not lay-

off employees or lay-off fewer employees can

receive a refund of 50% of the actual

unemployment insurance premiums paid in the

last year.

APAC

New individual income tax law: Solicitation of

comments on implementation rules and

itemised deductions

The PRC Ministry of Finance and State

Administration of Taxation (SAT) jointly released

the Consultation Draft on the Detailed

Implementation Rules of the PRC Individual

Income Tax (IIT) Law (DIRs Draft) and the

Provisional Implementation Measures of

Additional Itemized Deductible Items (Provisional

Measures) on October 20, 2018. Public

comments on the DIRs Draft and Provisional

Measures were solicited for two weeks.

Both the DIRs Draft and the Provisional

Measures are an integral foundation for

additional IIT implementation rules and

interpretation going forward, and there has been

a high level of public attention since their release.

The increase of standard monthly deduction and

the introduction of additional itemized deductions

will increase the deductible amounts claimed by

taxpayers. The DIRs Draft specifies the amount

of taxable income that can be decreased by

deductible items and also mentions that there will

be no carry-forward of unused deductions.

Foreign nationals cannot enjoy double benefits

from expenses incurred of the same nature under

both the non-taxable benefits rules and the

additional itemized deductions rules.

China

22 PwC

Personal Tax: Updated Certificate of Domicile for

foreign tax residents

On 21 November 2018, the Director General of

Tax (DGT) has issued regulation No PER-

25/PJ/2018 (“PER-25”) which will apply from 1

January 2019. PER-25 provides a new

Certificate of Domicile template which merges

the existing DGT-1 Form and DGT-2 Form into a

single DGT Form.

The new DGT Form consists of seven sections to

be completed by foreign tax residents depending

on their status and valid for a maximum of 12

months period (cover 12 month period crossing

different fiscal years).

The tax withholder is now required to submit the

relevant information on the DGT Form through

the DGT electronic system. Upon submission, a

receipt will be issued and the tax withholder

should forward this receipt the foreign tax resident.

For subsequent tax withholders, the foreign tax

resident is only required to provide the receipt of

the existing DGT Form. The original DGT Form

should be kept by the tax withholder and copy of

the receipt of the DGT Form should be attached

to the Monthly Article 26 Income Tax Return

when the tax is due.

Please refer here for more details.

APAC

Immigration

The Hong Kong Immigration Department has

revised the policy on applications for entry of

non-local same-sex dependents with effect from

19 September 2018. Under the revised policy, a

person who has entered into the following

outside Hong Kong with an eligible sponsor, in

accordance with the local law in force of the

place of celebration and with such status being

legally and officially recognized by the local

authorities of the place of celebration, will

become eligible to apply for a dependent

visa/entry permit for entry into Hong Kong.

Indonesia Hong Kong


https://www.pwc.com/id/en/taxflash/assets/taxflash-2018-13.pdf

Immigration

The Ministry of Home Affairs (MHA) has taken

several measures to liberalise the visa process

for foreigners coming to India. These measures

have focused on simplifying processes, reducing

in-person interactions with authorities and

delegation of authority to jurisdictional officers.

The MHA has recently issued a press release

summarising the various measures taken

towards liberalisation of the visa regime. The key

changes introduced have been outlined below:

1. E-visa facility has been extended to 166 countries

2. In addition to the existing categories, e-visa

facility has now been extended to conference

and medical attendant visas

3. E-FRRO (Foreigners Regional Registration

Office) services is now operational across

India. The requirement of personal visits has

been dispensed with

4. E-visa issued with an initial validity of 60 days

may now be extended to 90 days by the FRRO

5. The FRRO may grant in-country visa

extension for business/employment visa

holders for up to 10 years

6. The FRRO may convert the existing visa of a

foreign national married to an Indian citizen/

Person of Indian Origin/ Overseas Citizenship

of India card holder to an entry visa.

7. Provisions for issuance of visas to foreign

interns has been liberalised. The minimum

remuneration for interns has been reduced to

INR 360,000 per annum from INR 780,000

You may refer to the PwC Newsletter for

more information.

APAC

24 PwC

India

https://www.pwc.in/assets/pdfs/news-alert-tax/2018/pwc_news_alert_23_november_2018_liberalisation_of_visa_processes_in_india.pdf

Individual Tax

Continued from the topics we covered last quarter on the tax

reform proposals, here are some important changes that can

affect the 2019 year-end settlement if the government’s bill is

approved by the National Assembly. The proposed

amendments are expected to come into effect from January 1,

2019 and will be applied from the 2019 year-end settlement.

Tax Credit for Post-natal Care Centre Costs

Currently the medical expenses eligible for tax credit is

limited to the cost of examination, treatment, prevention, cost

of medicine for cure or care. Under the proposal, the expense

for Post-natal Care Centre Cost would be eligible for medical

tax credit. The qualifications would be employees whose

annual wage does not exceed KRW 70,000,000 or compliant

business operators whose business income is less than KRW

60,000,000. The credit limitation is KRW 2,000,000.

Expansion of Tax Credit for Donations

Currently an individual taxpayer is entitled to a 15% tax credit

on the first contribution worth KRW 20 million or less and a

30% tax credit on the contribution amount in excess of KRW

20 million. According to proposed changes, a 15% tax credit

will be granted to the first credit to the contribution amount in

excess of KRW 10 million and a 30% tax credit to the

contribution amount in excess of KRW 10 million.

Expansion of Carry-over Period for Donations

Currently the amount contributed by an individual or

corporate taxpayer in excess of a deductible limit prescribed

under the tax laws is carried forward to the five (5)

succeeding taxable years. Under the proposal, the carryover

period will be extended from 5 years to 10 years.

Deduction for Museum and Library Admission Fees

Currently the 15% on credit card spending, 30% on debit

card/cash receipt spending, 40% on public

transportation/traditional market spending, 30% on

books/performances would be deductible if the total spending

exceeds 25% of the gross salary where the gross salary

should not exceed KRW 70,000,000. Under the proposal, the

museum/library admission fee is additionally subject to the

30% deduction.

Expansion of Child Tax Credit

Currently the 2019 child tax credit is allowed for the 6 ~ 20

years old dependent children. Under the proposal, the child

tax credit for a dependent child younger than 6 years old is

also allowed if the taxpayer is not eligible for a child subsidy

or had never received the subsidy previously.

APAC

Korea


Individual Tax

Special Income Tax Disclosure Program

The IRBM has initiated a Special Programme for

Voluntary Disclosure from 3 November 2018 to

30 June 2019 to offer an opportunity for

taxpayers to come forward and voluntarily

disclose prior years’ under-reported income,

including income received and remitted into

offshore bank accounts.

Unexplained extraordinary wealth

The IRBM will investigate any unexplained

extraordinary wealth displayed by possession of

luxury goods, jewellery, handbags or property.

Additional taxes, penalties or fine would be

imposed as appropriate.

Contributions to social enterprise

Contributions from individuals to any social

enterprise would be eligible for tax deduction,

restricted to 7% of the aggregate income of the

individual (effective 1 January 2019).

Tax Relief - Payments of life insurance

premium and contributions to EPF

Combined tax relieves for EPF contributions and

life insurance premiums/ takaful contribution

would be increased w.e.f Y/A 2019 from

RM6,000 to RM7,000 per year of assessment,

broken down as follows:-

• EPF - RM4,000

• Takaful & life insurance premium - RM3,000

Perbadanan Tabung Pendidikan Tinggi

Nasional (PTPTN) loan paid by employers

Companies that help the PTPTN loans of their

full-time employees are eligible for tax deduction

on the repayment amount (w.e.f. 1 January 2019

to 31 December 2019). Employee's PTPTN loan

settled by the employer is deemed as a

perquisite and hence, subject to tax.

Reduction in Employee's Provident Fund

(EPF) contribution rates for employees aged

60 and above

Employer's portion of EPF contributions will be

reduced to 4% from the current 6% for

employees aged 60 and above w.e.f 1 January

2019. The employee is not required to contribute.

APAC

Malaysia

26 PwC

Individual Tax

Continuing from last quarter's update, majority of

the recent tax updates continue to stem from the

IR's business transformation, which involves

rethinking how NZ's tax administration system

can be modernised and simplified for businesses,

individuals and social policy recipients. A key

change would be the shift to payday reporting

(effective 1 April 2019).

Another upcoming change would be in relation to

real time reporting for investment income from 1

April 2020. Key changes include:

• Payers of interest, dividends, taxable Maori

authority distributions to provide investment

income information to IR by the 20th of the

month following the month in which the

income was paid

• Multi-rate Portfolio Investment Entities (PIE)

that are not a superannuation fund or

retirement savings scheme will be required to

report investment income information to IR

yearly by 15 May after the end of the tax year

• Transitional measure: payers of income

subject to RWT and NRWT to report the

required year-end information by 15 May,

instead of 31 May for the years ending 31

March 2019 and 31 March 2020.

• An investment income payer paying more

than $5,000 of interest will only need to

withhold RWT and report monthly on

payments of interest where the payments

relating to a taxable activity exceed $5,000,

notwithstanding if total interest payments

made by the payer exceed $5,000

APAC

New Zealand Tax Working Group Interim Report

NZ Tax Working Group (TWG) released their

Interim Report, providing insight on the general

direction of their final recommendations to the

Government.

Key highlights include:

• Detailed design for extending the taxation of

capital income (capital gains tax)

• Ruling out the introduction of land tax or

wealth taxes

• Desire to retain current GST regime, meaning

no further exemptions to be introduced and

• Largely maintaining the current framework for

taxing businesses

See here for the PwC Tax Alert.

New Zealand


https://www.pwc.co.nz/pdfs/2018pdfs/tax-tips-alert-september-2018.pdf

Individual Tax: Revenue Memorandum Circular (RMC) No. 96 - 2018

Due to questions raised from various stakeholders regarding the clarification of the BIR included in RMC No.

50 – 2018, specifically group health insurance premiums (Q7/A7), and director’s fees (Q34/A34), the BIR

through the issuance of RMC No. 96 – 2018 deleted the aforementioned items in the former RMC and

highlighted the need to make further study regarding these items.

Subsequently, the BIR issued a tax advisory maintaining the status quo treatment regarding the deleted items

on the RMC No. 50 – 2018.

Therefore, group insurance coverage for the employees’ premium shall remain tax-exempt but only for now

and until such time that the BIR issue another clarification in the future about this specific matter.

Please see here for the communication from the BIR.

APAC

House bill 8083 or Tax Reform for Attracting

Better and High-Quality Opportunities

(TRABAHO) Bill

After the version of the Congress, the Senate

held its first public hearing on 25 September

2018, which was attended by various

stakeholders, representatives from the

Department of Labour and Employment (DOLE)

and Department of Finance (DOF), and various

foreign commerce representatives.

One of the main topics was about job security of

Filipinos, as they were seeing loss of

employment, possible massive layoffs and

foreign divestment.

Nonetheless, the DOF has remained on its stand

that the second package will lead to growth of

jobs and investments, and higher incentives on

those firms who will invest on the countryside.

As a result of the division among the

stakeholders involved about the real impact of

the bill, the Senate Committee on Ways and

Means is requiring economic managers and the

Philippine labour department to present their joint

study on the impact of the provisions of

TRABAHO Bill, specifically on jobs, before

proceeding with their deliberation.

While it is consistently reiterated that such

project is a priority of the present administration,

and is targeted to be implemented on 1 January

2019, Senators who support this program are not

optimistic to meeting such target due to the lack

of support from peers as well as the limited

time involved.

Philippines

28 PwC

Tax Amnesty Act of 2018 or Senate Bill 2059 and

House Bill 8554

On 9 October 2018 and 14 November 2018, the

Senate and the House of Representative,

respectively, approved the respective bill

regarding the tax amnesty program that would

cover estate tax amnesty, general tax amnesty

and amnesty for delinquencies. This program

covers unpaid internal revenue taxes due for

taxable year 2017 and prior years.

Further, the proposed amnesty will also be

granted to all national internal revenue taxes and

value-added tax and excise taxes collected by

the Bureau of Customs.

The program seeks to 1) raise the government’s

revenue to help fund the government’s

infrastructure program and 2) give the

opportunity to erring taxpayer to have a fresh

start and being diligent on their tax obligations.

The data collected through the amnesty program

would also be of help to the Bureau of Internal

Revenue (BIR) to prevent loopholes on its

collection efforts and fortify the prosecution of

tax evaders.

The proposed tax amnesty bills will still undergo

a bicameral conference deliberation which is

scheduled on 5 December 2018.

https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2018/RMC No 96-2018.pdf

Employment Act: Amendment Bill

Briefly, the Singapore Ministry of Manpower has made significant changes to the Employment Act (EA)

including:

• Removal of the salary cap for the coverage of core employment provisions.

• Increased salary threshold for non-workmen.

• Authorisation of the Employment Claims Tribunal to hear wrongful dismissal claims.

These changes have been legislated and are scheduled to take effect 1 April 2019. Employers will have to

review the changes against their current policies and practices to ensure compliance and quantify the

implication to the organisation and its employees. Employers may wish to begin assessing their operational

readiness for the new rule by doing the following:

• Review the profile of employees to validate whether their current benefit provisions meet the proposed

changes as a minimum.

• Check end to end HR processes and whether they are sufficiently fair and robust to minimise employee

disputes and implement any changes before 1 April 2019.

APAC

Employees with Digital Tokens

Providing long term incentives to key executives

is not a new idea, they can drive the success of

the businesses and also attract, retain and

motivate staff. Providing these in the form of

tokens rather than deferred cash, or traditionally,

company shares, may bring the following

potential advantages. (Currently there is no

legislation prohibiting Singapore employers from

delivering discretionary incentives in the form of

digital tokens).

1. Issuing tokens rather than company shares

will not dilute the shareholding of founders or

other investors;

2. Issuing tokens can increase adoption and

circulation of the “product” which may help

take hold in the market;

3. Unlike case, tokens may provide the recipient

with an opportunity to realise capital gains if

the value increases.

However, most payroll systems are not set up to

handle the necessary employer compensation

reporting. Tokens may come in many different

forms and it is not always clear how these should

be treated or value for income tax or Central

Provident Fund purposes (for example should a

security token be subject to the “deemed

vest” rule?).

Please refer here for our full publication on

rewarding employees with digital tokens:

Singapore


https://www.pwc.com/gx/en/services/people-organisation/publications/rewarding-employees-with-digital-tokens.html

Individual Tax: Additional allowance deduction

for income earners with second or subsequent

child born in year 2018 onwards

In November 2018, the Thai Revenue Code has

been amended to allow an additional deduction

of THB30,000 for each additional child born in

year 2018 onwards (i.e. THB60,000 per child).

There is no change in the deduction for the first

child (i.e. taxpayers will continue to enjoy a

deduction of THB30,000 for the first child).

**Note: Deduction is only applicable to

dependent children who are not over the age of

20 years old or not over the age of 25 years old

(for those who are studying).

Shopping for Nation Deduction allowance

Taxpayers are allowed to claim a deduction of up

to THB15,000 for spending made between 15

Dec 2018 to 16 Jan 2019 (i.e. tax years 2018

and 2019) for the following items:

1. Tyre, where documents from the Rubber

Authority of Thailand is available

2. OTOP products, which are registered with the

community development department

3. Book and E-Book (excluding magazine and

newspaper)

Receipts have to be maintained for all spending

made in order to claim a deduction and the

deduction is capped at THB15,000 for two tax years.

APAC

Thailand

30 PwC

New rules on Income Tax

On January 3rd, 2019, a new income tax

regulation (R.G. 4396) was published in

Argentina and some changes were made to the

previous rules.

One of the main changes is that employers will

now be required to report to the Argentine Tax

Authority (AFIP) certain details in relation to

employees who received gross income above

ARS 1,000,000 in the fiscal year.

Another relevant change introduced by this

regulation is in relation to life insurance.

Deductions related to life insurance should be

done on an annual basis (rather than monthly).

The changes also introduced new deductions,

which include:

1. Contributions to private retirement insurance

plans administered by entities which meet

certain requirements.

2. Work related expenses such as clothing

and/or equipment which were acquired

exclusively for use in the workplace (where

the costs were not reimbursed by employer).

New law project aim to make the transfer of

Brazilian employees abroad more variable and

less costly

Currently, the Brazilian legislation is set in such

way that Brazilian employers may incur high

costs, from an employment taxes perspective,

when having a Brazilian employee seconded to a

foreign country.

The proposed changes are intended to facilitate

the transfer or hiring of Brazilians abroad. The

project states that the applicable labour

legislation should be those of the place where

services are provided, as it is done in most

countries around the world. Companies must

sign a compromise letter informing the worker

about the working conditions and the main rights

provided by the legislation of the transferring country.

This proposal has been approved by the

Committee on Foreign Relations and National

Defense (CRE) in November 2018, and is now

being considered for further analysis by another

committee (Committee of Social Matters).

LATAM

Update on the Brazilian Income Tax Regulation

An updated version of the Brazilian Income Tax

Regulation was published on November 23rd,

2018. Although the main purpose of the

publication was to consolidate in a single

document a number of legislations which deal

with tax matters, it also clarified some aspects

that were previously unclear, and it introduced

some changes.

New regulation of Data Protection

In August 14th, 2018 a Federal Law in relation to

personal data protection, also known as General

Law on Data Protection, was enacted. This new

regulation follows in many aspects the principles

enshrined in the General Data Protection

Regulation ("GDPR"), getting Brazil in line with

the European standards.

The law will enter into force in Brazilian territory

in February 2020, therefore it is important that

companies perform reviews of internal processes,

including payroll and HR systems, and make the

necessary adjustments prior to this date. The

penalties for non-compliance could be up to 2%

of annual revenue, limited to BRL 50 million,

per occurrence.

Tax Agreement: Brazil and the UAE

Brazil and the UAE have signed an agreement

which seeks to eliminate double taxation on

income and prevent tax evasion and tax

avoidance. The document was signed on

November 12th, 2018 by Foreign Minister and

the ambassador of the United Arab Emirates.

Argentina Brazil

Brazil


Social Security Contributions: Changes in the

offset rules

Significant changes were made to the system

used by companies to offset social security

credits due on the remuneration paid or credited

to employees, in addition to amounts withheld

relating to the assignment of labour and

contract projects.

From now on, companies enrolled in the eSocial

that have social security credits, including those

arising from unappealable court decisions, are

allowed to offset these credits using electronic

systems. In addition, the offset may include own

liabilities, whether overdue or not yet due, that

are related not only to own social security

contributions, but also to other taxes

administered by the Brazilian tax authorities.

One of the main changes brought by the new

legislation is in relation to the social security

offset rules, by establishing that companies that

generate credits may use the credits to offset

their own liabilities related to any RFB-

administered taxes and contributions.

Regarding the offset of withholding social

security contributions in the assignment of labour

and contract projects, in certain circumstances,

service providers will be allowed to deduct the

amount withheld on an accrual basis.

LATAM

Tax Law Reform Project

The Columbian Congress passed on December

28 tax reform legislation that includes major

changes to Colombian tax law. Stay tuned for

further details on the reform in the next edition.

Updates on Tax Legislation

Some rules for individual taxes’ deductions have

been introduced in Peru.

Through a legislative decree, issued on last

August, the government unexpectedly eliminated

the possibility of people using the interest paid in

a mortgage loan to access a greater deduction in

the payment of income tax.

Additionally, the Ministry of Economy and

Finance (MEF) amended the Income Tax

Regulation through a supreme decree to add

deductions in the calculation of fourth and fifth

category income tax. The regulations indicate

that, as of January 1st, 2019, workers may apply

as a deduction up to 15% of what was paid for

services received in restaurants, hotels, bars and

canteens, considering even the taxes implied in

the payment (VAT).

Electronic Invoices obligation

Through a legislative decree issued on October

2018, the Peruvian Tax Administration (SUNAT)

established the obligatory use of electronic

service operator (see-OSE) and electronic

emission system-Sunat operations Online (see-

SOL). The companies that meet certain

established criteria, will be required to used one

of these systems from March 1st, 2019.

Brazil Colombia

Peru

32 PwC

Federal

Canadian Pension Plan Enhancement

Starting in 2019, the Canada Pension Plan (CPP)

will be gradually enhanced. This means

employees will receive higher benefits in

exchange for making higher contributions. In

2019, the CPP will begin to grow to replace one

third of their average work earnings (from one

quarter prior to 2019). The maximum limit used to

determine their average work earnings will also

gradually increase by 14% by 2025.

The enhancement will increase CPP retirement,

disability and survivor’s pensions.

From 2019 to 2023, the contribution rate for

employees will gradually increase by one

percentage point (from 4.95% to 5.95%) on

earnings between $3,500 and the original

earnings limit.

In 2024, employees will begin contributing 4% on

an additional range of earnings. This range will

start at the original earnings limit (estimated to be

$69,700 in 2025) and go to the additional

earnings limit, which will be 14% higher by 2025

(estimated to be $79,400).

Employers will pay the same increase in

contributions as their employees.

Employment Insurance (EI) rates

The Federal government announced that,

effective January 1st , 2019, the contribution rate

for Employment Insurance will be reduced and

the Maximum Insurable earnings increased

as follows:

Outside Quebec

• Maximum Insurable earning from $51,700 to

$53,100

• Employee premium rate from 1.66% to 1.62%

• Employer premium rate from 2.324% to

2.268%

Quebec

• Maximum Insurable earning from $51,700

to $53,100

• Employee premium rate from 1.30% to 1.25%

• Employer premium rate from 1.82% to 1.75%.

NORAM

New 5-week Parental Sharing Benefit Scheme

to commence

On September 26, 2018, the Honourable Jean-

Yves Duclos, Minister of Families, Children and

Social Development, announced that the

Government of Canada intends to launch the

new parental sharing benefit on March 17, 2019.

Originally anticipated for June 2019, this new

measure will provide an additional five weeks of

EI parental benefits when parents—including

adoptive and same-sex parents—agree to share

parental benefits, or an additional eight weeks for

those who choose the extended parental benefit

option. Parents with children born or placed for

adoption on or after March 17, 2019, will be eligible.

The new benefits will provide the

following enhancements:

• Parents selecting the standard duration of

parental benefits could receive up to 40

weeks of parental benefits, an increase from

the current 35 weeks.

• The sharing benefit would be available to

eligible birth parents and adoptive parents,

including both opposite-sex and same-

sex parents.

• Parents who qualify for EI would be eligible to

access the sharing benefit based on:

– the date of birth of their new-born child; or

– the date that the child is placed with them

for the purpose of adoption.

Canada


Connecticut's Convenience rule takes effect

for tax years beginning 1 January 2019

Connecticut’s legislature revised its Public Act

18-49, Sec. 20(2)(C) as follows:

(C) For purposes of determining the

compensation derived from or connected with

sources within this state, a non-resident natural

person shall include income from days worked

outside this state for such person’s convenience

if such person’s state of domicile uses a similar test.

This provision only applies if the taxpayer’s home

state applies the same test such that Connecticut

income tax is imposed on convenience days if:

1. The state from which he/she performs such

services is within Delaware, Nebraska, New

York, or Pennsylvania (i.e., this new rule is

invoked only when a Connecticut non-

resident employee is a resident of a state

also imposing a similar rule), and

2. The work is performed outside of

Connecticut for other than a bona fide

reason of the employer. The convenience

rule will not apply to sources of income from

a business, trade, profession, or occupation

carried on in Connecticut other than

compensation for personal services

rendered by a non-resident employee, and

does not apply to sources of income derived

by an athlete, entertainer or performing artist,

including, but not limited to, a member of an

athletic team.

NORAM

34 PwC

State and Local Withholding Updates

California State

The EDD has released the 2019 Method A

(Wage Bracket Table Method) and Method B

(Exact Calculation Method) withholding tables.

The 2019 annual standard deduction amount for

withholding purposes will increase from $4,236 to

$4,401 and the withholding allowance will

increase from $125.40 to $129.80 in 2019.

Instructions to Withholding Tables include a

recommendation for married employees with

spouses, who work, to avoid under-withholding of

state income tax liability, by either: (1) using a

single filing status to compute withholding for the

employee and spouse; or (2) withholding an

additional flat amount of tax.

Maryland State and Local

Maryland has issued its 2019 Withholding Tax

Facts sheet. For 2019, there are 14 tax brackets

as follows:

1.75%, 2.25%, 2.40%, 2.50%, 2.60%, 2.65%,

2.80%, 2.85%, 2.90%, 3.00%, 3.05%, 3.10%,

3.15%, and 3.20%.

Employers should refer to the county listing in the

facts sheet and use the table that agrees with, or

is closest to one of the brackets, without going

below the actual local tax rate. Local income tax

rates remain the same in 2019 except for

Caroline County (increases from 2.80% to 3.20%

in 2019). Generally, non-residents do not have a

local tax rate; instead, employers withhold

additional state tax using the lowest local tax rate

of 1.75%.

Employers should use $3,200 as the value of an

exemption when using the withholding tables.

There is no need to adjust for any reduction in

the exemption amount, as employees are

instructed to reduce / phase- out the number of

exemptions being claimed on Form MW507,

Employee’s Maryland Withholding

Exemption Certificate.

The 2018 annual employer withholding

reconciliation return is due on January 31.

United States

State and Local Withholding Updates

continued

Ohio Local Withholding

Effective January 1, 2019, the Central Collection

Agency (CCA) states that it will collect taxes from

the following new municipalities:

1. Marble Cliff

2. New Madison

3. Obetz

4. Prairie Obetz JEDZ.

In addition, effective January 1, 2019, the

following localities are increasing their income

tax rates:

1. Mt. Orab Village (from 1% to 1.35%);

2. Middlefield Village (from 1% to 1.25%);

3. Woodlawn Village (from 2% to 2.3%);

4. Wellington Village (from 1% to 1.75%);

5. Germantown City (from 1.25% to 1.5%);

6. Columbus Grove Village (from 1.25% to 1.5%);

7. Macedonia City (from 2.25% to 2.5%); and

8. Marietta City (from 1.7% to 1.85%).

Further, effective January 1, 2019, school

districts rate changes are as follows:

1. St. Mary's City School District imposes a

new 1% levy;

2. Granville Exempted Village School District

imposes a new 0.75% levy;

3. James A. Garfield Local School District

imposes a new 1.5% levy;

4. Norton City School District imposes a new

0.5% levy; and

5. Green Local School District imposes a new

0.5% levy.

Forward looking, effective January 1, 2020, the

following school districts are decreasing their

income tax rates:

1. Evergreen Local School District (from 1.75%

to 1.5%); and

2. Riverside Local School District (from 1.75%

to 1.5%).

NORAM

Oregon Local

Oregon’s Tri-County Metropolitan Transportation

District (TriMet) tax rate will increase from

0.007537 to 0.007637, and the Lane Transit

District (LTD) tax rate will increase from 0.0073

to 0.0074 in 2019

Reminder: New York Paid Family Leave –

2019 Increase for Payroll Deductions

Payroll deductions to fund the NY Paid Family

Leave program will increase effective January 1,

2019. The maximum employee contribution is

0.153% of an employee’s weekly wage, and is

capped at a maximum of $107.97. (The

maximum employee contribution in 2018 was

0.126% of an employee’s weekly wage, and was

capped at a maximum of $85.56.) Employees

taking paid family leave will receive 55% of their

average weekly wage (50% in 2018), up to a

maximum of 55% of the state-wide average

weekly wage, which is $1,357.11 in 2019

($1,305.92 in 2018).

The maximum weekly benefit in 2019 will be

$746.41. Leaves of absence under the PFL

program will increase to a maximum of 10 weeks

in 2019 (8 weeks in 2018).

Reminder: Vermont no longer participates in

the Combined Federal/State Program

Vermont Department of Taxes issued a reminder

that it is no longer participating in the Combined

Fed/State Program for submitting Forms W-2

and 1099 with the IRS. Taxpayers must file these

forms with the Department. Electronic filing

through MyVTAx is mandated for those who

have 25 or more W-2s or 1099s to file, and for

CPAs and payroll providers.

United States


Amendment to the first schedule to the Income

Tax Act, 2015 (Act 896)

The tax rates applicable to individuals have

changed within the 2018 year of assessment. In

August 2018, the flat tax rate of non-resident

individuals was increased from 20% to 25%,

whilst the income tax band for resident

individuals was amended to include a new band

whereby annual chargeable income in excess of

GH¢120,000 (approximately US$ 24,406) is

taxed at 35%.

In the 2019 Budget Statement and Economic

Policy laid before Parliament, the Finance

Ministry proposed to parliament a new rate and

the highest tax band rate reduced from 35% to

30% and highest chargeable income increased

from GH¢120,000 (approximately US$ 24,406) to

GH¢240,000 (approximately US$ 48,812).

Additionally, a proposal has been made by the

Minister for the tax free threshold of the income

tax band to be aligned with the daily minimum

wage. Recently, the daily minimum wage of

GH¢9.68 (approximately US$ 1.97) was

increased to GH¢10.65 (approximately US$ 2.17)

and it will take effect on 1 January 2019. The

proposed amendments are expected to be

passed by the Parliament of Ghana by the end of

2018 and enforced from the beginning of 2019.

Africa

36 PwC

Payment of professional fees on behalf of Ex-pats

It is the practice of many organisations, who

second expatriate employees to South Africa, to

settle the expatriate employee’s tax liability in

South Africa to ensure that the employee is tax

neutral and is no worse off as a result of their

assignment to South Africa. Often the employer

company will appoint a professional tax services

firm to assist with the tax compliance of the

expatriate employee with the professional

consulting fees being funded by the employer. In

a recent High Court Judgment, the Court has

ruled that the payment of professional fees on

behalf of expatriates is a taxable benefit in terms

of paragraph 2(e) of the Seventh Schedule.

Employers who have implemented this practice

should take note of this judgment as SARS is

likely to claim any under deducted PAYE from

the employer, together with associated interest

and penalties. In addition, this could have an

impact on the expatriate employee’s net take

home pay as the professional fees would be

treated as a taxable benefit in the hands of the

expatriate employees. If the employee is tax

equalised, however, this will result in an

additional cost to the employer. We understand

that this judgement will be appealed by the taxpayer.

Ghana South Africa

National Minimum Wage Act 9 of 2018

The National Minimum Wage Bill was signed into

law on the 23 November 2018. Its effective date

appears to be 1 January 2019, but this has yet to

be confirmed. Essentially, the Act provides for a

minimum wage of R20 for each hour worked.

The Act distinguishes between farm workers,

domestic workers and workers on an expanded

public works programme and states that the

hourly minimum wage for the abovementioned

category of workers is R18, R15 and R11 respectively.

Electronic filing of Income Tax Returns

The Egyptian Tax Authority (ETA) has introduced

a new electronic filing (“e-filing”) system for the

submission of the income tax returns. Corporate

taxpayers will be required to submit their income

tax returns electronically (through the ETA’s

website), starting from this financial year (i.e. 2018).

Accordingly, manual filing will no longer be

accepted as of this year.

Africa


Summary of the key aspects of the new e-filing

system

As of this financial year, the e-filing of income tax

returns on the ETA’s website, has become

mandatory.Accordingly, the taxpayer will be

required to register on the ETA’s website to

create an account and obtain a username and

password, as well as a specific code to be

provided to their tax advisor. Following the

registration process, taxpayers shall prepare

their annual income tax returns on the ETA’s

website, and then have them reviewed/ verified

by their tax advisor. Prior to electronically

submitting the return, both the taxpayer and the

tax advisor will be required to sign-off the return.

Upon submission of the tax return, the taxpayer

will be required to pay the tax due (as per the tax

return) through one of the following methods:

• Bank transfer through the taxpayer’s own

bank; or

• Using smart card to pay/ transfer the tax due

to the ETA; or

• Through the banks or the National Post

Authority with which the ETA has specific

agreements, for taxpayers to settle the tax

due and this is also through using smart cards.

As for individual taxpayers, they still have the

option to pay their annual income taxes due,

electronically or manually.

Egypt

Tax amnesty on Foreign Income

The Finance Act, 2018 extended the deadline of

filing for amnesty on foreign income and assets

to 30 June 2019. The amnesty covers taxes,

penalties and interest for repatriated foreign

income earned on or before 31 December 2017

and which would have been subject to tax in

Kenya. Subject to certain conditions, the

declared funds are exempted from the provisions

of the Proceeds of Crime and Anti-Money

Laundering Act, 2009 and other Acts that relate

to investigations of financial transactions.

Tightening the noose on employers who delay

pension contribution remittances

The Finance Act, 2018 amended the Retirement

Benefits Act, 1997, to give powers to the

Retirement Benefits Authority to compel non-

compliant employers to pay the outstanding

contributions and interest with a penalty of five

percent of the unremitted contributions or a

minimum of twenty thousand shillings. This is a

welcome move to employees who previously did

not have sufficient remedies for their non-

compliant employers. The change was effected

on 1 October 2018.

Late payment penalty and interest

The Finance Act, 2018 introduced a late payment

penalty of 5% of the tax due and has retained the

1% interest on late payments. There is a reprieve

for individuals since the Act reduced the late

filing penalty for individuals’ annual returns from

twenty thousand shillings to the higher of 5% of

the tax payable or two thousand shillings.

Proposed tax reforms: Introduction of a National

Housing Development levy

Kenya is in the process of introducing a National

Housing Development Fund (“NHDF”).

Employers and employees will each be required

to contribute 1.5% of the employee’s monthly

basic salary to the fund but the combined

contribution is capped at KES 5,000 per month.

The NHDF is not yet operational as contributions

will only be made once certain Regulations are

in place.

Africa

Kenya

38 PwC

Eurasia


Kazakhstan Mongolia

Electronic visa application in Kazakhstan

The Ministry of Foreign Affairs introduces a

procedure for obtaining a single entry visa in

electronic format.

Effective 1 January 2019, foreigners may apply

for an electronic visa (business, tourist and

medical treatment) on the website of the Visa

and Migration Portal (www.vmp.gov.kz), based

on a letter of invitation approved by the Ministry

of Foreign Affairs.

Foreigners can enter/exit Kazakhstan using a

valid electronic visa only at Astana and

Almaty airports.

The tourist electronic visa applies to citizens of

117 countries, business and medical treatment

visas to citizens of 23 countries.

The electronic visa is valid only for the visa

applicant (not to accompanying persons).

These changes simplify the process of obtaining

a single entry visa to Kazakhstan. The process

of obtaining a letter of invitation remains the same.

Mongolian immigration regulations

The government of Mongolia revised regulations

on matters of visas and residence permits

(Regulations) on 23 May 2018 for purpose of

easing the visa procedures. Under the

Regulations, following major changes have

been made:

• Some visa types can be changed while in

Mongolia. Under the previous regulations,

visa holders were required to leave the

country in case of they need to change their

visa types. However, under the new rule,

short term tourist (J visa) or business visa (B

visa) holders are permitted to change their

visa type to investors (T visa) without leaving

the country.

• Waiting period for re-applying visas shortened.

Short term visas (up to 90 days) can be

extended only once for 30 days. When this

extension period finishes, those visa holders

were required to leave the country and wait

for at least 180 days to re-apply the same visa

again. However, under the new Regulations,

this term is shortened to 90 days.

• Re-apply ban period reduced. Prior to the new

Regulations, the visa holders who penalized

for their non-compliances with the immigration

regulation were subject to the ban for re-

applying for a visa for 3 months from the

penalty imposition date. But the period has

been reduced to 1 month under the

new Regulation.

http://www.vmp.gov.kz/

Eurasia

Uzbekistan

Updates on Immigration

1) "Visa relief“

Starting from 1 February of 2019 (15 January for German citizens), citizens from 45 more countries are eligible

to visit Uzbekistan without visa for a period of 30 days. Thus, number of visa-free countries has reached 64 in

total. In addition, new types of visas (Vatandosh, Student visa, Academic visa, Medical visa, Piligrim visa) are

introduced to stimulate tourists, investors, scientists and others to strengthen their ties with Uzbek culture,

people and business communities. List of visa-free countries and more information can be located here and here.

2) "New technologies implementation"

As part of large effort from Uzbek Government towards liberalisation of visa issuance process, new electronic

system was launched in July of 2018. Citizens from about 76 countries, beginning from the 1 February 2019,

are eligible to get visa for 30 days in few steps by using electronic application on the web site - www.e-

visa.gov.uz . Special features of the new system are availability to get double entry or multiple visa and make

payment online through the web site. More information you can find here.

3) "Liberalisation of border issues"

New Presidential decree envisages more liberal approach towards breaching of visa regime by foreign

citizens. Four leading governmental agencies working under the project that is going propose much softer

penalties for foreigners who fall in difficult situation related to border control. Please see here for more

information.

40 PwC

http://uzbektourism.uz/newnews/view?id=38


http://www.e-visa.gov.uz/


https://www.gazeta.uz/ru/2019/01/18/stay/


Ken O’Brien

[email protected]

Aoife Reid

[email protected]

Julian Sansum

[email protected]

Mark Geerse

[email protected]

Elmer Van Lienen

[email protected]

Ruth Punter

[email protected]

Karen Toora

[email protected]

Karyn Amaro

[email protected]

Barry Knoetze

[email protected]

Gavin Duffy

[email protected]

Contacts

Africa












Rohan Geddes

[email protected]

Sakaya Johns Rani

[email protected]

Rebecca Lai

[email protected]

Crystal Lu

[email protected]

Tom Geppel

[email protected]

Tina Schrob

[email protected]

Grace Huang

[email protected]

Jerry Alberton

[email protected]

Contacts (cont’d)

APAC

NORAM

42 PwC









LATAM

Anar Khassenova

[email protected]

Alisher Zufarov

[email protected]

Helena Fontenelle

[email protected]

Flavia Fernandes

[email protected]

LATAM

Eurasia

Contacts (cont’d)






This content is for general information purposes only, and should not be used as a substitute for consultation with professional

advisors.

© 2019 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a

separate legal entity. Please see www.pwc.com/structure for further details. 180725-094316-WP-OS CN-20190221-5-C1

http://www.pwc.com/structure

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