(The impact of COVID 19 stimulus packages are not covered in this newsletter and are covered in a series of news separately)
Global updates – a quick glance
Australia: Payroll tax threshold increased from AUD 900,000 to AUD 1 million for New South Wales with effect from July 01, 2020.
China: China has issued new Personal Information (PI) Security Specification to protect personal data which will apply with effect from October 01, 2020.
India: India offers a one-time amnesty for non-compliances under the Companies Act.
Italy: Paid Paternity leave increased from 5 days to 7 days with effect from January 01, 2020.
The Dutch Data Protection Authority has penalized a company with a fine of EUR 725,000 for violations of Article 9 (1) of the EU General Data Protection Regulation (“GDPR”) for processing biometric data of its employees without their explicit consent.
The Spanish Data Protection Authority fined Activos Balagares, a fine of EUR 15,000 for violation of Article 5(1)(f) of the General Data Protection Regulation.
The Swedish data protection authority (“Datainspektionen”) has fined Google LLC for EUR 7 million for violation of GDPR regulations with respect to “right to request delisting”
The Swedish data protection authority (“Datainspektionen”) has fined the National Government Service Centre for SEK 200,000 (Approx. EUR 18,700) for failure to notify about personal data breach to the Data Protection Authority as well as affected parties in due time.
Table of Contents
Payroll tax threshold increased from AUD 900,000 to AUD 1 million for New South Wales for the year 2020-21 with effect from July 01, 2020
The New South Wales (“NSW”) Government has increased the payroll tax threshold by bringing forward the payroll tax threshold of AUD 1 million for 2021-22 to the year 2020-21. The payroll tax threshold has increased from AUD 900,000 to AUD 1 million from July 01, 2020.
To deal with the COVID-19 pandemic, various emergency measures has been taken. One of the measure is the postponement of effective date of Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais) (Law No. 13,709/2018) ("LGPD") from August 15, 2020 to January 2021. In addition, the rules regarding administrative sanctions and penalties are scheduled to be enforceable only after August 2021.
An incentive deduction is announced by Quebec government for the commercialization of innovations in Quebec. This will be applicable from January 01, 2021.
To be qualified for this, the establishment in Quebec is a must for an eligible innovative business. Such entity must do business in Quebec and derive income from the marketing of an eligible intellectual property asset for which it owns the rights.
An eligible intellectual property assets include patents, certificates of additional protection (“CPS”), plant variety protection (“POV”) or related applications etc. For this, the application for the patents, CSPs must be filed after March 17, 2016 under Canadian Patent Act or any equivalent law of foreign jurisdiction and application for POV’s must be filed after March 10, 2020. Software protected by copyright, which is created after March 10, 2020 as a result of research and development carried out at least partially in Quebec is also an eligible intellectual property asset.
The effective corporate tax rate for such innovative businesses will be “2%” on part of the taxable income attributable to the marketing of an eligible intellectual property asset developed in Quebec as compared to basic Quebec corporate tax rate of “11.5%”.
The new PI Specification published on March 06, 2020 by the State Administration for Market Regulation (“SAMR”) and Standardization Administration of China (“SAC”) will be effective from October 01, 2020. This PI Specification will replace earlier version of the existing PI regulations.
This document lays down the best practices for protecting the Personal Information. The PI Specification will enhance privacy protection, place greater emphasis on the independence of individuals' consent in deciding whether to share his / her PI as a condition of access to products and services that offers business functions such as mobile apps.
The PI Specification are not mandatory but encouraged by Chinese Regulators and is expected to be complied by all companies irrespective of size. Complying with the PI specification helps the company in establishing compliance with rules and regulations in government investigations and legal proceedings.
Companies should review and update their China privacy compliance policies in view of new PI Specification. Chinese government is likely to get strict about compliances with these standards.
In Beijing, with effect from March 16, 2020, newly registered taxpayers who need to issue VAT invoices (“FAPIAOS”) shall obtain Tax Ukey (a digital certificate containing tax control device used to issue VAT invoices). Application for Tax Ukey shall be done via Electronic Tax Bureau after tax registration.
Existing taxpayers / Taxpayers who have not obtained any other tax control devices (i.e. tax control disc) can also obtain Tax Ukey from their respective tax authority.
Earlier the French companies that conduct business activities which are considered sensitive or strategic to national interests of the country may require prior approval from the French Minister of the Economy. However as per new decree, the rules and procedures governing such foreign investment authorizations is modified and set to be effective from April 01, 2020.
The new decree provides additional sectors that fall under the foreign investment regulations such as Agricultural and Food products, the press (Print and Digital Media), Critical technologies like Cyber Security, AI, Robots, Additive manufacturing, semi-conductors, quantic technologies and energy storage.
The definition of foreign investor has also been modified by lowering the threshold for investments by non-EU investors to 25% from existing 33.33% and applicable only to the acquisitions of shares voting rights. On exceed of 25% threshold French law will trigger control of investments.
Other key highlights of new decree include:
As definition of strategic sector or sensitive sector has been widened, companies planning to invest in such sectors will have to undergo the foreign investment authorization process and get the necessary approval from the Ministry of Economy.
The mandatory implementation of electronic invoicing is delayed by Indian government for larger businesses (turnover more than INR 1 billion) by 6 months i.e. the effective date is postponed from April 01, 2020 to October 01, 2020. For smaller business (turnover less than INR 1 billion), the effective date for voluntary and trial basis of electronic invoicing will remain the October 01, 2020.
In addition, the implementation of QR codes on invoices is delayed until October 01, 2020 and e-wallet scheme is delayed until March 31, 2021.
Since 2016, equalization levy at the rate of 6% is levied on purchases of advertising services by Indian businesses from non-residents.
Effective from April 01, 2020, 2% equalization levy is chargeable on consideration receivable by a non-resident “e-commerce operator” for “e-commerce supply or services” provided or facilitated by it. An “e-commerce operator” is defined as a non-resident that owns, operates or manages a digital or electronic facility or platform for online sale of goods or the online provision of services. Business covered under 2% of equalization levy includes online marketplaces; subscription-based platforms, including social media; cloud services; search engines; streaming services etc.
Indian businesses are required to deduct the amount of the equalization levy on payments made for such specified services and remit it to the government on quarterly basis.
The 2% equalization levy is not applicable, where –
Finance Act 2020 introduced simplified tax regime for individuals, that offers lower tax rates with a condition to forego certain deduction, exemptions etc. with respect to the same, the Central Board of Direct Taxes (“CBDT”) has issued a clarification confirming that the employer may apply the tax rates as per simplified tax regime for the purpose of withholding taxes from the salary payments, provided that the employee has opted for the same.
The employee must notify the employer during the previous year about his intention to opt for simplified tax regime for withholding tax purposes for the current year. On receipt of such notification from employee, the employer may withhold the tax at the lower rates. Where no such notification is provided by an employee, the employer must continue to withhold tax at the normal rates, and allow all exemptions and deductions permitted by the law.
An employee may notify the employer of the election only once in each financial year. However, the employee can change the option at the time of filing the income tax return.
In pursuance of Govt. of India’s efforts to provide relief to the companies and Limited Liability Partnerships (“LLPs”) in light of COVID 19, the Ministry of Corporate Affairs (“MCA”), has introduced the “Companies Fresh Start Scheme, 2020” and "Modified LLP Settlement scheme" on March 30, 2020.
Name of the Scheme
Companies Fresh Start Scheme, 2020 (“CFSS-2020”)
Duration of Scheme
April 1, 2020 to September 30, 2020
Highlights of the scheme
*Dormant company is a company generally incorporated for a future project, or to hold an asset or Intellectual Property Rights, but is not carrying out any “significant accounting transaction.” A dormant company has less compliance requirements.
The Scheme is not applicable to the following:
Modified LLP settlement scheme
Ministry of Corporate Affairs (“MCA”) had launched an “LLP Settlement Scheme, 2020” for limited liability partnerships (“LLPs”) which allows a one-time condo nation of delay in filing of statutory documents with Registrar (“ROC”). This earlier scheme was to remain in force till June 13, 2020 but it will end on March 31, 2020, and the modified LLP settlement scheme will remain in force from April 1, 2020, until September 30, 2020, thereby permitting LLPs to file belated documents that were due up to August 31, 2020. Under the modified scheme the additional fees would be waived off (which earlier under the original settlement scheme was INR 10/- per day for the period of delay, in addition to any fee payable, maximum of INR 5000/- per document).
Electronic invoicing to be prepared as per new technical specifications issued by Italian Revenue Agency
The Italian Revenue Agency has approved new technical specification rules regarding XML files for e-invoices. The new specifications refer to the new codes to be set up in XML files which will help indicate the “Type of document” and “Nature of transaction”. The new technical specifications are effective from May 04, 2020. The current version of e-invoices can be used by the taxpayers till September 30, 2020. From October 01, 2020 all the invoices prepared under the current rules (version 1.5) will be rejected and considered as not issued by the tax authorities and the taxpayers will have to issue e-invoices in accordance with the updated version (version 1.6) of technical specifications.
According to budget law 2020 (Law No 160/2019) mandatory paid paternity leave is now extended from the previous 5 days to 7 days with effect from January 01, 2020. This leave can be taken during the first 5 months following the child’s birth.
The Dutch Data Protection Authority imposed a fine of EUR 725,000 on a company for unlawfully processing fingerprints (i.e. the biometric data) of its employees.
Under the GDPR regulations, the biometric data of a person is considered as a ‘Personal Data’ and cannot be processed without valid consent of the person under article 9 of the GDPR. The employer in this case could not prove that the ‘explicit consent’ of the employees was duly taken. Even if there is no consent, in ‘case of necessity’ for “authentication or security purposes” the data can be processed [which is an exception provided in the Dutch Implementation Act (Uitvoeringswet Algemene Verordening Gegevensbescherming, “UAVG”)], but exception of “necessity” can be considered only when the buildings and information systems are required to be secured and it cannot be done in any way other than the use of biometrics.
Companies should make a note to take explicit consent from employees before processing their biometric data or other personal data.
The Chancellor of the Exchequer presented the United Kingdom (UK) Budget 2020 to Parliament on March 11, 2020. As mentioned in the budget statement, employment growth remains strong; and earnings growth continues in the UK above the inflation rate while the employment rate has reached a record high since December 2019. The Budget also has allocated a whopping GBP 12 billion plan in support of public services, individuals and businesses, whose finances are affected negatively due to COVID-19.
As per Budget 2020, key rates are unchanged- The Corporation Tax Rate is maintained at 19 percent from April 2020, and employer and employee NIC rates unchanged. Income Tax, Capital Gains Tax, Dividend Tax rates also remain unchanged. The VAT rates and thresholds remain the same as well. The highlights of the 2020 budget are as follows:
With effect from April 06, 2020, the changes with respect to the Written statement of particulars of employment are as follows:
In addition to the principal statement, the employers are required to provide the wider written statement within 2 months of the commencement of the employee or worker’s start date. It includes:
In case of failure to provide a compliant written statement by an employer, the employee may be awarded with additional compensation of 2-4 weeks of pay, currently capped at GBP 525 per week.
Employers must ensure that their onboarding process is compliant with the new changes. Having a well drafted contract of employment, issued on time, can relieve the employers of these requirements.
Argentina implemented a new system enabling taxpayers to electronically register sales, purchases, exports, imports in Digital VAT Book. The taxpayers will have to enroll/register based upon their sales in a year and in accordance with the enrollment deadlines set by AFIP. The electronic registration is mandatory from the month in which the status of person registered or exempt in VAT is acquired. The deadlines for enrolling start from June 2020. The enrollment deadlines are based upon the total net taxes and fees.
Finland - New e-invoicing mandate w.e.f. from April 01, 2020; All businesses can demand e-invoices from suppliers in Finland.
In Finland from April 01, 2020, public administrations and private companies can demand suppliers under the law to provide for e-invoices. The invoice recipient has the right to ask for e-invoice. However, during the Coronavirus epidemic, old e-invoice standards will still be acceptable.
The national prescribed e-invoice formats are F-invoice and Teapps (version 3.0). These comply with the European standard and the Finnish tax administration’s VAT tax invoicing requirements.
Other countries mandating e-invoice include:
© 2020 Shan & Co