International Tax Update
Bailout takes its toll on Cyprus
Cyprus’ Parliament has passed legislation that will raise corporate taxes to 12.5% (up from 10%), increase levies on transactions by credit institutions by 0.04%, and double the tax on bank deposit and interest and dividends collected via the Special Defence Contribution to 30%. These new taxes are imposed as part of the deal to secure a bailout from the EU.
The haircut on deposits was also expanded to cover more institutions across Cyprus. Business Spectator reports that Charities, private schools, and insurance firms with deposits in the Bank of Cyprus will also take a 27.5% hit to their accounts. Cyprus’ central bank said that the review on taxing previously exempted institutions was undertaken to “lighten the burden on affected depositors.”
The European Commission had previously issued a statement saying that Cyprus suffered from “poor practices of risk management” in the banking sector, which the EC identified as the cause of the current crisis. The commission also stressed the need for a mechanism to prevent the emergence of unsustainable banking sectors throughout Europe.
Singapore’s tax filing rate hits 95%
The Inland Revenue Authority of Singapore (IRAS) reported that the individual tax filing rate as of April 18 reached a record high of 95%. 900,000 taxpayers had filed their returns online by April 18, while 27,000 filed paper returns. In addition, 1.13 million tax payers had their returns automatically submitted as they were on the No-Filing Service for 2013.
Employers with 15 or more employees are required under the Auto-Inclusion Scheme (AIS) to electronically report their employees’ salary information to IRAS. This means that taxpayers whose employers are subject to AIS don’t have to manually enter their salary information when filing returns. In the following years, the AIS will be extended to firms with 12 or more employees, meaning that 100,000 more taxpayers will enjoy a more convenient tax filing process.
British Virgin Islands denies tax evasion reports
British Virgin Islands (BVI) Premier Orlando Smith has denied reports that the island state facilitates tax evasion for investors in its financial services industry. Over 2 million documents were leaked to the International Consortium of Investigative Journalists, which conducted a three-year investigation exposing investors all around the world, including government officials and their families.
Smith emphasized that the BVI was not a “secrecy jurisdiction” and that as a member of the OECD Global Forum, it has 22 tax information exchange agreements and shares information when legitimate requests are made by its partners.
“We firmly commit to the full and effective implementation of internationally established standards concerning tax information exchange, the combating of money laundering and all other forms of financial crime,” said Smith. He also said that while the majority of persons use financial centers for legitimate purposes, some still seek to abuse the system, and that appropriate enforcement action will be taken to punish wrongdoing.