Days ahead of hosting a high-profile international investment conference, Egypt has announced it is slashing its top tax rate in an apparent bid to enhance its appeal to potential investors.
The top rate for corporates and individuals is to be reduced from 25 per cent to 22.5 per cent. But the decision also means the abolition of an additional 5 per cent “millionaire’s tax” levied on annual incomes above one million Egyptian pounds, or $133,000. That levy, introduced last year and intended as an exceptional measure for three years only, had brought the top rate to 30 per cent.
“This definitely makes Egypt more attractive to foreign investors,” said Angus Blair, president of the Signet Institute, a Cairo-based economic think tank. “I thought it was a mistake last year when the tax rate was increased. It was not the appropriate time. Egypt is now more investor-friendly than last week.” Read more
As Peru’s economy struggles to regain its former ebullience, the government has again stepped in, this time with a stimulus package worth an estimated $4bn next year or about 2 per cent of gross domestic product. Much of the money comes in tax breaks but the package also includes about $1bn in bond issuance to help pay for government investment, poverty relief and job creation.
The package of measures – the fourth to be announced this year, and still subject to final approval in Congress – was unveiled last week by Alonso Segura, finance minister, just two months after he replaced the widely-respected Luis Miguel Castilla, who resigned unexpectedly in September. Read more
By Winnie Byanyima of Oxfam International
After the world was plunged into a financial crisis, back in 2009, G20 leaders promised to clean up the international tax system, once and for all. The result – five years on – is a plan of action devised for them by the Organisation for Economic Co-operation and Development to tackle Base Erosion and Profit Shifting (BEPS), a series of tactics used by multinational companies to make profits ‘disappear’ or move to another country, to pay less or even avoid paying corporate taxation. Read more
South Korea’s stock exchange opened a gold trading platform on Monday with the hope of boosting transparency of gold trades and rooting out shady deals used for tax evasion.
Eight brokerages and 49 dealers were allowed to participate in the market. They will get tax benefits to encourage their active participation and they will be exempted from trading commissions temporarily until March 2015. Importers of gold to be traded on the exchange will also be exempted from tariffs to increase supply. Read more
A further twist in the tumultuous case of Vodafone and the Indian tax authority.
After deciding to scrap conciliation talks with Vodafone India just two weeks ago, the Indian government has put the offer back on the table – just as the opposition Bharatiya Janata Party (BJP) is making noise about resolving these kinds of conflicts if it comes to power following this year’s general election.
It is just the latest in a protracted $2.6bn dispute over capital gains taxes allegedly due in connection with Vodafone’s acquisition of Hutchison Essar back in 2007. Read more
By Richard Asquith of TMF Group
It has been a difficult three years for Egypt, both politically and economically. The euphoria following the toppling of President Mubarak has given way to violent turmoil and a sharp decline in the country’s traditional economic drivers: exports, FDI and tourism. GDP growth has fallen from 7 per cent in 2009 to just over 1 per cent today and, with unemployment rising to over 13 per cent and a national debt equivalent to 89 per cent of GDP, major economic surgery is required. Read more
All questions in India today seem to have the same answer. Everything, it seems, depends on the results of the upcoming general election.
So it’s refreshing to find someone saying that – in some ways – it doesn’t matter who comes into power in the centre. Read more
Nokia, the Finnish telecoms group, asked the Delhi High Court on Thursday to release factory assets frozen by tax authorities this year, as it prepares to hand its mobile devices unit to Microsoft.
Back in September Microsoft announced plans to buy the loss-making business from cash-strapped Nokia for €5.4bn. But in India, the deal faces a small complication: a $321m tax dispute in which Nokia’s local assets were frozen. Bank accounts have subsequently been released but fixed assets – including a factory in Chennai – remain stuck in limbo. Read more
Did Enrique Peña Nieto’s proposed fiscal reform, unveiled on Sunday, deliver what Mexico needs to boost its woefully low tax take? One way of assessing that is to gauge what the reform aims to provide against the bills that Mexico has to pay. On that basis, the answer is “Partly” – even though the economic slowdown prompted Peña Nieto to hold back from a widely expected sales tax increase on medicines and food. Read more
By Emma Seery of Oxfam
While disagreements over Syria are likely to dominate the annual G20 summit in St Petersburg this week, leaders are at least in agreement about one key issue on the table: the need to rewrite global corporate tax rules. Read more
Where’s the easiest place in the world to set up an untraceable shell company? Cayman? Singapore? Jersey? Not according to research by a group of academics. Actually, the answer is Kenya. Read more
Overheard in an up-market pharmacy in São Paulo:
Till operator: “Tax code on your receipt, madam?”
Customer: “On a bill this size? God forbid, my husband would kill me!”
The tax code on the receipt is a nifty idea that at first glance should have universal appeal. So what was this customer’s problem? Read more
In a bid to jump-start its struggling auto assembly industry, Ukraine has introduced yet another tax on auto imports, infuriating officials at the European Union and further jeopardising any chance of signing planned association and free trade agreements with the EU in the autumn. Read more
From Oleksandr Klymenko, Minister of Revenues and Duties of Ukraine
In response to the article Ukraine: will new tax law hit the oligarchs? published in the FT on July 10, 2013, I would like to clarify a few points about Ukraine’s new transfer pricing control legislation.
Amendments to the Law on Transfer Pricing adopted by the Parliament do not distort the original intent of the initiative; the “place of profit” for transnational corporations who have production facilities in Ukraine should correspond to the location of these facilities and product manufacture. Read more
There's an oligarch in there somewhere
With economic challenges piling up fast, you would think Ukraine’s government would move fast to clean up things at home. Cracking down on tax evasion in a country where half of the economy is estimated to operate in the shadows would be a good place to start.
But will the ruling administration of president Viktor Yanukovich force the billionaire oligarchs who backed him into paying their fair share of taxes, or will they continue applying various means to squeeze hard-earned cash out of average citizens that are struggling to survive? Read more
Kenya may have avoided the dreaded ‘resource curse’ afflicting many of its African peers, but that leaves the government with painful revenue-raising choices, such as the controversial recent attempt to raise taxes on mobile money transfers.
But the country might not be as resource-barren as it once seemed. Read more
Apart from the sunshine, beaches and tender sea breeze, there’s now another reason to head for Hainan, China’s southernmost holiday island: duty-free shopping. Read more
Zambia’s plans to make companies repatriate foreign currency export earnings back to Lusaka are part of an effort to crack down on tax avoidance, particularly in the mining sector.
But are they going to be enough? Perhaps not, according to the country’s vice president Guy Scott. Read more
Tax isn’t an issue just for the G8. African governments are on a push to raise their tax contribution to GDP, with Kenya planning to reintroduce a capital gains tax according to the recent budget, and Ghana expected to place a CGT on disposable shares from August this year.
This puts pressure on the status of Mauritius as a tax efficient – or even tax-free – gateway to Africa. Read more
As beyondbrics wrote on Wednesday, the Hungarian government’s latest austerity package includes a “tax” on local government bonds held by banks that looks suspiciously like a haircut.
Gabor Orban, state secretary at the finance ministry, responded on Thursday to a beyondbrics request for comment. He says the ministry had thought of giving bondholders a haircut but pulled back for “technical reasons”. His full comment follows. Read more