Newsletter - January 2020
Trends of 2019….
We have compiled a list of regulatory trends from around the world indicating the possible future course of regulations that needs to be watched out while expanding globally.
Reduction in corporate tax rates
Many major economies have been reducing the corporation tax rates (“CIT”) –
Digitalization of everything!
Ultimate Beneficial Owner (“UBO”) / Significant Beneficial Owner (“SBO”) reporting on the rise
Privacy regulations getting effective and stricter
Global updates – a quick glance
Australia – Obtain Director Identification Number (DIN) prior to their appointment as Director is likely to become effective soon.
Brazil – Brazil reduces the social security costs of 28-29% for new employees between age of 18 to 29
India – India has proposed a bill on data privacy, designed on the lines of GDPR.
France – seconded employees to France to have same rights as the local employees.
Japan – Consumption tax rate has been increased to 10%.
Hong Kong – employee maternity leave has been increased to 14 weeks from 10 weeks
Ireland – details of Ultimate beneficial owners (UBO) must be provided in a new form (non-resident UBOs)
Switzerland – Corporate Income Tax rates have been significantly lowered at cantonal level.
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Country |
GDPR Fines |
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United Kingdom |
The Information Commissioner (ICO) of the UK has imposed a fine of EUR 320,000 on Doorstep Dispensaree Ltd. (Pharmacy) for violation of Article 32 of GDPR i.e. Security of processing. |
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Swedish Data Protection Authority imposed a fine of EUR 35,000 on Nusvar AB (data controller/processor) due to insufficient legal basis for data processing. |
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Germany |
The German Real Estate Company Deutsche Wohnen SE (the Şirket Company) fined for EUR 14.50 million for keeping personal data in the system while the purpose of storage was removed.
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Telecommunications provider “one & one” fined for EUR 9.55 million for posing risk to all its customer’s personal data. |
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A Hospital in Rhineland-Palatinate fined for EUR 105,000 for several breaches of GDPR, which includes false invoicing and organizational deficiencies in patient management. |
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Spain |
The Spanish Data Protection Authority has fined Corporación radiotelevisión espanola a fine of EUR 60,000 for violations of the EU General Data Protection Regulation (“GDPR”) due to lack of technical and organizational measures in place for information security. |
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France |
French data protection authority Commission Nationale de l'Informatique et des Libertés (“CNIL”) imposed fine of EUR 500,000 on Futura Internationale for infringement of provisions of EU General Data Protection Regulation in connection with cold calling campaigns.
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Table of Contents
Directors should obtain Director Identification Number (DIN) prior to appointment as Director.
Employment program proposed for young people for promoting employment in Brazil
New contribution rates announced for social security in Brazil for private employees
Introduction of Digital Services Tax (“DST”) at 3% - Proposed
Changes in Canada pension plans (CPPs) and other Pension Plans for 2020
Ontario: Compliance for making the workplace practices accessible to employees with disabilities
Minimum wage and guaranteed wage increased
Changes in Social Security ceiling thresholds for 2020
Rights of seconded employees in France
VAT return submission frequency changed for newly incorporated companies
VAT registration threshold for small business increased to EUR 22,000
Changes to statutory maternity leave
Electronic invoicing introduced for business-to-business (“B2B”) transactions
Increase in limit of Paid-up Share Capital (“PUC”) for mandatory appointment of Company Secretary
India introduces Data Privacy Bill in the Parliament
The consumption tax rate increased
Proposal for increasing Goods and Service Tax (“GST“) rates
Treasury Laws Amendment (Registries Modernization and Other Measures) Bill 2018 (Cth) (Bill); has introduced the provision of obtaining Director Identification Numbers (“DIN”) by the Directors. Obtaining a DIN is already mandatory in countries like India.
Directors would need to apply for a DIN prior to their appointment. The bill also proposes that any failure of a director to notify the Australian Securities and Investments Commission (“ASIC”) of resignation within 28 days will result in the effective date of resignation to be from the date of notification. This will make the director liable for the period between actual resignation and the date of notification.
This is still a Bill and will be effective if passed by the Parliament.
Implication
Any failure to comply with the DIN requirements would attract both criminal and civil penalties. The company will have to review and obtain DIN for its directors once this becomes a law.
Recently, there have been certain modifications with respect to Severance Fund (“FGTS” i.e. Fundo de Garantia do Tempo e Serviço). One of the changes is the elimination of 10% of FGTS fine paid by the employer in the case of any termination without cause.
Before this change, companies were liable to pay a 50% fine on all FGTS deposits in unjustified layoffs. Of this total, 40% was to the worker and the remaining 10% used to go to the National Treasury single account. This 10% penalty was not applicable when the employee resigns.
With effect from January 01, 2020, employers are no longer required to pay a 10% penalty for dismissing the employee without cause.
Implication
There will be a reduction in employer’s liability in case of any termination without cause.
On November 11, 2019, the Provisional Measure 905/19 was published which includes measures for the Green and Yellow employment contract, as well as changes to the labor and social security legislation.
Main features of Green and Yellow employment contract Program is as follows:
Companies are exempted from the following installments on the payroll of contractors in the Green and Yellow Employment Contract modality-
In addition to the above, there will be a reduction in the fine for firing an employee without just cause from 40% to 20% under the Green and Yellow employment contract Program.
This provisional measure is expected to be converted into law shortly.
Implication
Hiring young employees will become very attractive for the companies Brazil. Besides a reduction of the tax burden for employers by around 28 – 29% of the salary, the employer will also have an option to only commit for a fixed term.
Effective from March 01, 2020, there will be a change in employee social security contribution rate for private-sector employees, as follows:
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Previous rates |
Effective rates from March 01, 2020 |
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Monthly Salary (In BRL) |
Rate |
Monthly Salary (In BRL) |
Rate |
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Up to BRL 1,751.81 |
8% |
Up to National monthly minimum wage i.e. BRL 998.00* |
7.5% |
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From BRL 1,751.82 to BRL 2,919.72 |
9% |
From national monthly minimum wage i.e. BRL 998.01 to BRL 2,000.00 |
9% |
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From BRL 2,919.73 to BRL 5,839.45 |
11% |
From BRL 2,000.01 to BRL 3,000.00 |
12% |
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From BRL 3,000.01 to BRL 5,839.45 |
14% |
*7.5% for a monthly payment of up to the national monthly minimum wage, which for the year 2019 is BRL 998 and which is to increase for 2020.
Implication
Employers are required to make necessary changes in their payroll to comply with new employee social security rates.
Canadian Prime Minister has proposed to introduce Digital Service Tax (“DST”) at 3% on revenues from sales of online advertisements and user data (globally referred to as the “Google tax”). The tax will be applicable to companies having global revenue more than CAD 1 billion (Around USD 759 million) and Canadian revenue of more than CAD 40 million (Around USD 30 million). The expected date of implementation is April 01, 2020.
Implication
Businesses involved in online advertisements will need to consider the cost implications of digital service tax for their businesses in Canada. The computation and compliance burden will increase due to this law.
Canada Revenue Agency announces maximum pensionable earnings and Employer, Employee contributions rate for Canada Pension Plan for 2020
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Particulars |
2020 (In CAD) |
2019 (In CAD) |
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The Maximum annual pensionable earnings under the Canada Pension Plan (“CPP”) |
58,700 |
57,400 |
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The Basic Exemption Amount |
3,500 |
3,500 |
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The Maximum contributory earnings under the Canada Pension Plan (“CPP”) |
55,200 |
53,900 |
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The contribution rate for employee and employer (Each) |
5.25 % |
5.10 % |
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The Maximum annual employee and employer contribution (Each) |
2,898.00 |
2,748.90 |
The rates mentioned in the previous newsletter for CPP were proposed and changed as mentioned above.
Contribution limits for various pension plans like registered pension plans (“RPP”), Registered retirement savings plans (“RRSP”) for 2020 are also revised marginally.
Implication
Employers are required to make necessary changes in their payroll to comply with the revised Canada Pension Plan threshold and rates.
In Ontario, the employers are required to make their workplace practices accessible to the employees with disabilities as per the standards of the Accessibility for Ontarians with Disabilities Act (“AODA”).
The standards specify practices that all organizations should follow to recognize, remove and prevent any barriers for people with disabilities. AODA will apply to all organizations having any employees.
The employers with 20 or more employees need to submit an AODA Compliance Report by December 31, 2020, while, the large private and not-for-profit organizations (having 50+ employees) are required to make their websites compliant with the WCAG 2.0 Level AA standard.
Implication
All employers having employees in Ontario will need to adopt AODA and produce company policies, revise the website and file the applicable reports.
Effective from January 1, 2020, the minimum wage and Guaranteed wage will increase from CZK 13,350 to CZK 14,600.
The French government published a decree on December 02, 2019, for fixing the social security ceiling with effect from January 01, 2020. The proposed monthly and daily Social Security Contribution maximum thresholds for 2020 are as follows:
Implication
The employer should take into consideration the latest applicable social security ceilings and apply the same in their payroll system.
Rights of seconded employees in France
New regulations on enhancing seconded employees rights and employer obligations will be in effect from July 30, 2020. The seconded employees will also be benefited from remuneration provisions in every aspect. The secondment period will be limited to 12 months period after which all provisions of French labor code will apply to seconded employees.
Implication
The employers should make sure that the contracts and benefits of seconded employees in France comply with the French regulations by July 2020.
Effective from the year 2021 to 2026, newly incorporated companies will submit quarterly VAT returns in their first year of operation. Generally, the filing period for such entities is monthly.
Effective from January o1, 2020, the annual sales limit of small businesses for VAT registration purposes will increase from EUR 17,500 to EUR 22,000.
Changes proposed to statutory maternity leave in Employment Ordinance 2019 Bill are as under:
The Central Board of Indirect Taxes and Customs (“CBIC”) have issued a notification for implementing electronic invoicing for business-to-business (“B2B”) transactions. The mandatory e-invoicing is applicable for businesses having turnover of INR 1 billion, effective from April 01, 2020. However, the businesses may issue e-invoices on a voluntary basis from January 01, 2020.
Implication
Indian employers/companies who are required to have e-invoicing in place will need to incur additional costs for the implementation of software, purchasing of new software, etc.
Ministry of Corporate Affairs (”MCA”) has notified the changes in Companies Act, 2013 regarding the appointment of company secretary in private company. The limit for mandatory appointment of whole-time company secretary in private limited company has been increased from Paid up share capital of INR 50 million or more to Paid-up share capital of INR 100 million or more.
Ministry of Electronics and Information Technology (“MeitY”) has introduced the Data Protection Bill in the Indian Parliament on December 11, 2019, which provides for the protection of personal data of individuals. It also mentions certain obligations on individuals and entities in order for governance and regulation of the collection, processing, usage, and transmission of personal data.
Some of the highlights of the Bill are as under:
Implication
The Indian data protection bill, once enacted, will require any business operating in India and outside India having personal data of individuals in India to comply with additional compliances and processes specified under this bill which is similar to GDPR in the EU.
National Minimum Wage is increased from EUR 9.80 to EUR 10.10 from February 01, 2020, along with the employer PRSI threshold, which is increased from EUR 386 to EUR 395
A beneficial owner who does not possess or who does not have a Personal Public Service Number (“PPSN”) should make an application in Form BEN-2 for reporting the beneficial ownership details with the Registrar.
Form BEN-2 verifies a person’s identity where a beneficial owner does not have an Irish Personal Public Service Number (“PPS”) Number assigned. The Form includes the name, date of birth, nationality, and address of the beneficial owner. The beneficial owner must solemnly declare this information to be correct and true and have this Declaration verified, witnessed and signed.
The Form needs to be uploaded on the RBO online portal.
Implications
Effective from October 01, 2019, the consumption tax rate increased from 8% to 10%. A reduced rate of 8% is also introduced.
Mexican National Commission on Minimum Wages (Comisión Nacional de los Salarios Mínimos or CONASAMI) increased the current Daily General Minimum Wage (“DGMW”) from MXP 102.68 to MXP 123.22 with effect from January 01, 2020.
The Netherlands introduces a new VAT small businesses scheme (kleineondernemersregeling—KOR) which provides VAT exemption for small businesses with effect from January 1, 2020. Unlike the old KOR scheme, the scope of the new KOR scheme is much wider, now the legal entities like private companies (besloten vennootschappen—BVs) can opt for the new KOR system.
Who can avail the new KOR scheme?
The new KOR scheme can be availed by any business who
In case the turnover exceeds EUR 20,000, the scheme automatically ceases to apply.
Benefits under the new KOR scheme
The new KOR scheme is optional but it is beneficial to small businesses in many ways such as:
Implications
The implications for businesses are as follows:
The Netherlands social security contribution rates for 2020 were published on November 6, 2019, which have become effective from January 1, 2020. The total social security contribution for 2020 remains the same as 2019 at 27.65%. The maximum employer contributions annual salary basis cap for 2020 is increased to EUR 57,232 as against the earlier amount of EUR 55,927.
Implication
Employers are required to make necessary amendments to their contributions to comply with the revised Social Security rates and thresholds.
Singapore government is planning to increase the rate of GST from 7% to 9%. The government has not declared the period for such a change in rate to be effective. However, the increase is likely to happen anytime between the financial years 2021 to 2025.
Effective from January 01, 2020, The Federal Act on TRAF entered into force. The tax reforms are implemented resulting in a lower corporate tax rate in various cantons. The new rate for Zurich and Geneva canton is:
The UK government has legislated to increase the holiday pay reference period from 12 weeks to 52 weeks for workers without fixed hours or pay effective from April 06, 2020. For computing reference period, the employer should take note of below –
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