Corporate Tax News

Turkey has enacted global minimum tax and domestic minimum tax rules, joining the 40+ jurisdictions that have implemented the Pillar Two measures. The Hong Kong government has held a consultation on its proposed rules and Belgium requires Pillar Two in-scope MNEs to submit a detailed notification form to obtain a tax ID number within a relatively short timeframe. India’s 2024-25 budget does not include any announcements on the introduction of Pillar Two rules, but there are measures to attract investment and ease compliance burdens on nonresidents, including a reduction in the corporate tax rate and abolition of the equalisation levy. For more updates on the status of Pillar Two implementation, see our column in this issue and visit BDO’s Pillar Two Tracker.

On the legislative front, Canada has tabled legislation that increases the capital gains inclusion rate. Malaysia has granted a temporary capital gains tax exemption for gains from the disposal of foreign capital assets. Hong Kong’s new patent box has been enacted. Thailand is positioning itself as a leading automotive producer and has introduced incentives for the production of EVs and to encourage the transition of commercial fleets to battery-operated EVs. Tax incentives for conservation and environmental protection in China have been expanded to include digital technology and AI used to upgrade existing equipment.

Recent regulatory guidance tackles a variety of issues: 

• Costa Rica’s tax authorities have released clarifying tax rulings that address issues arising under the capital gains tax introduced as part of the 2020 tax reform. 
• Malaysia has issued guidance on the tax treatment of hybrid instruments and expanded the list of qualifying persons for the foreign dividend income tax exemption.
• A ruling issued by Peru’s tax authorities that digital services referenced in the Income Tax Law and regulations will always be deemed to be digital services even if the services do not meet other legal requirements results in an interpretation that may be at odds with a literal reading of the rules. 
• The tax authorities have issued a guide on the application of the corporate tax law to free zone persons in the United Arab Emirates. 
• The U.S. tax authorities have issued final regulations on information reporting for digital asset transactions. 

Read about these developments and much more in the August Corporate Tax News!