Monthly Archives October 2021

The declaration being prepared at the OECD concerns large global companies and does not change the current tax regime for Estonian companies. As a next step, Estonia is now entering close negotiations with EU member states and the European Commission to protect Estonia’s interests in developing an EU directive implementing the agreement. of the OECD.

“The Estonian corporate tax system has been one of the cornerstones of the international competitiveness of the Estonian business environment, which must be firmly protected. As Estonia opposed the introduction of a global minimum tax, we conducted intense negotiations throughout the summer to achieve a situation where this global tax would affect Estonian entrepreneurs as little as possible. Following the successful negotiations, the minimum tax will not change anything for most Estonian entrepreneurs and will only apply to subsidiaries of large international groups, ”Prime Minister Kaja Kallas explained.

“At the same time, the taxation of digital giants has long been a problem. However, such a digital tax can only work if all countries have a similar approach towards tech giants, as digital services know no borders. The large digital business tax affects groups with a turnover of 20 billion dollars and therefore does not affect any business in Estonia, ”Kallas said.

The Prime Minister explained that the tax environment for large multinational companies is changing anyway, regardless of Estonia’s decisions. “We therefore adhere to the global tax agreement. By actively making proposals and vigorously defending our positions, we have the best opportunities to ensure that Estonia’s business environment and fiscal policy continue to work in the interests of a better future for all of us. . ”

Tomorrow, October 8, there will be a meeting of the 140 countries involved in the reform, with a view to approving the two-part tax package. The first pillar of the reform concerns the tax on group profits with a turnover of 20 billion, or so-called digital tax, which Estonia supports.

The second pillar of the reform concerns an overall minimum corporate income tax of at least 15 percent. The minimum tax would only apply to groups with a consolidated turnover of at least 750 million euros per year. The OECD wants to achieve political consensus tomorrow in favor of this proposal, and the countries joining the reform promise to develop and implement the necessary laws in 2023.

If the effective tax rate of a subsidiary operating in a country other than the head office of the group is less than 15 percent, the country of the head office has the right to impose itself the difference between the effective tax and the ‘minimum tax, which means that in the case of Estonia, these subsidiaries may be taxed by another country.

In order to protect its interests, Estonia has conducted intense negotiations to give local subsidiaries of international groups the longest possible tax deferral period, which would allow companies more flexibility in deciding their cash flow. throughout the business cycle, rather than forcing us to tax immediately profits. As a compromise, a period of four years was proposed.

In 2019, personal income tax revenue represented 24% of total tax revenue in OECD countries. Countries tax labor income in a variety of ways through payroll taxes, personal income taxes and, in some cases, surcharges.

Between 2018 and 2021, eight European OECD countries changed their top personal income tax rates. Of these eight countries, four have reduced their highest personal income tax rates while the other four have raised their highest rates.

The Czech Republic, Latvia and Lithuania have moved from flat-rate personal income taxes to progressive tax structures. Spain has increased its highest personal income tax rate. Sweden has removed a surcharge. A surcharge in Greece has been temporarily suspended. The Netherlands have slightly changed their personal income tax rates. Turkey has added a new upper personal income tax bracket.

Czech Republic

From 2021, the Czech Republic reintroduced progressive taxation with a maximum rate of 23% on income above 1 million Czech crowns (US $ 78,000). Previously, a flat tax of 15 percent applied.

Greece

Greece reduced the top personal income tax tax rate from 55% to 54% (44% income tax plus 10% solidarity surcharge) in 2020. In 2021, the solidarity surcharge has been suspended for all types of income, other than income from public sector employment and pensions. . The maximum rate applies to income over 40,000 € (45,610 USD).

Latvia

In 2018, Latvia moved from a flat-rate personal income tax to a progressive tax. Prior to this change, Latvia applied a flat tax of 23%. The new system has three separate tranches, at 20%, 23% and 31% (31.4% before 2021). The maximum rate applies to income over € 62,800 (US $ 71,608) in 2021.

Lithuania

In 2019, Lithuania moved from a fixed personal income tax of 15% to a progressive income tax initially with two brackets with rates of 20% and 27%. The current maximum rate is now 32%. The upper bracket applies to income over € 81,162 (US $ 92,545).

Netherlands

The progressive tax system in the Netherlands has gone from four brackets with a maximum personal income tax rate of 52% to three brackets with a maximum rate of 51.75% in 2019. The structure of the brackets has been further improved. amended in 2020, reducing the top personal income tax bracket. at 49.5%.

Spain

Spain has a fiscally decentralized system with personal income tax rates which are a combination of national and regional policies. Madrid has the lowest combined personal income tax rate in the country: a local tax rate of 21% plus the current national tax rate of 24.5% gives a combined rate of 45.5 %. The highest rate is 54 percent in the Valencian Community. In 2020, the national rate rose from 22.5 to 24.5, increasing rates across the country.

Sweden

Sweden removed its highest personal income tax rate in 2020, which added a 5% surtax on income above SEK 703,000 (US $ 76,372). Sweden levies a 20% tax rate on income over SEK 523,200 (US $ 56,839) as well as a variable municipal tax rate. The current average municipal rate is 32.85%.

Turkey

In 2020, Turkey introduced a new personal income tax rate of 40% that applies to income above TRY 650,000 (US $ 92,527). The new rate has been added to Turkey’s tax brackets of 15, 20, 27 and 35 percent.

There has been an ongoing fight in Ohio since the first stay-at-home order was issued: Should commuters pay income taxes to towns where they no longer physically worked?

The cities said yes. A conservative group called the Buckeye Institute said no. And now three judges from the Tenth Ohio District Court of Appeals will decide who is right.

Ohio law allows local governments like cities to tax people who live and work within their borders. The idea being that the people who work there should help pay for the services they use like sidewalks, roads, police and ambulances.

And cities are quite dependent on this type of tax.

For example, the six largest cities in Ohio (Cleveland, Columbus, Cincinnati, Akron, Toledo, and Dayton) derive about 88% of their income from income tax, a substantial portion of which comes from commuters.

“Cities across the state stand at risk of losing a huge amount of tax revenue,” Columbus City Attorney Zach Klein said in a statement when first filing the complaint in July 2020.

That’s why state lawmakers passed a bill during the shutdown that allowed municipalities to continue collecting taxes from these former commuters until the governor ends the state of emergency. from Ohio.

They then changed their minds and decided that Ohioans could get reimbursements for the days they worked from home in 2021 but not in 2020.

The big legal question

The Buckeye Institute was happy with the legislature’s decision on 2021, lawyer Jay Carson said. But he still believes thousands of Ohioans owe money for 2020.

“We believe that if the General Assembly is to help cities, there are many constitutional avenues they could take to do so,” Carson said.

But letting cities tax people who don’t live or work within their borders is not one of them. He argued that what lawmakers passed in March 2020 violated the state’s constitution and should be struck down by the court as a matter of principle.

“The city has to have some sort of jurisdictional hook,” Carson said.

A Franklin County judge disagreed.

“Put simply, the Ohio General Assembly has a long history of regulating municipal tax authority,” Justice Carl Aveni wrote in his April ruling.

And that’s the point made by Diane Menashe, lawyer for Columbus City auditor Megan Kilgore.

She argued that state lawmakers simply extended a concept existing in state law that allows employees to work away from the main workplace during certain periods while paying municipal income taxes.

“It was aimed at maintaining the status quo during a time of chaos,” Menashe said.

What is happening now?

The three judges who heard the case on Wednesday will have to render a decision, which could be made next week or next year.

“Usually it takes about three to six months,” Carson said. “But you never know.”

Both sides have made it clear that they will appeal if the decision goes wrong with them, which could mean this case is headed to the Ohio Supreme Court.

It is also not the only ongoing trial in the system. The Buckeye Institute appealed a similar case in Hamilton County. And he has two more pending in other parts of the state.

In other words, anyone looking for a refund of their 2020 municipal income taxes should be prepared to wait.

Anna Staver is a reporter for the USA TODAY Network Ohio Bureau, which serves Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal, and 18 other affiliated news organizations across Ohio.

The Town of Worthington begins collecting tax revenue for the Township of Sharon as part of a Joint Economic Development District.

On September 20, the city council created a special JEDD income fund with the aim of collecting tax revenue.

“Worthington will collect income tax for the Township of Sharon,” said board chair Bonnie Michael. “We will receive a fee for our processing, then the majority of the income tax will go to Sharon Township.”

The arrangement will apply to around $ 3 million in payroll for workers employed in the JEDD zone at the Olentangy Valley Center shopping complex, according to Worthington executive assistant Ethan Barnhardt, who is the city’s representative to of JEDD and vice-president of the board of directors of JEDD. .

The 2.5% tax rate is expected to generate about $ 75,000 per year, he said. Of that amount, about $ 60,000 will go to Sharon Township and about $ 15,000 to Worthington for the maintenance and administration of the JEDD, Barnhardt said, although there is still additional revenue for the town after the fees. administrative.

“It’s a win-win solution for both communities and it further deepens our collaborative relationship,” said Barnhardt.

The arrangement was due to start on October 1, he said.

Barnhardt said townships are unable to collect income taxes under Ohio law, and the JEDDs help fill in the gaps and help townships meet their economic development goals.

“The JEDDs were created so that the townships and municipalities can collaborate and agree to extend the fiscal authority of municipalities with the aim of facilitating economic development within the township,” said. “The main advantage for the township is that it does not have to annex its land and that it can start collecting part of the income from income tax that otherwise would not have been collected in the area. unincorporated area. “

The JEDD was created on July 20, 2020, when city council voted to allow City Manager Matt Greeson to enter into a contract with the Township of Sharon, Barnhardt said.

It is an extension of the city and township partnership in which the city provides fire extinguishing and emergency medical services to township residents and businesses.

Sharon Township approved the JEDD in May, according to administrator John Oberle, who is a member of the JEDD board.

Barnhardt said the JEDD was created to “help facilitate economic development and create jobs and economic opportunities” within its borders.

He said the JEDD consists of five plots in Sharon Township at the Olentangy Valley Center – a commercial development in the township off Highway 315 just north of Interstate 270, which is due to be redeveloped in recent years. and received tax incentives from Franklin County in 2018 to stimulate redevelopment of the site, as reported by The Columbus Dispatch in February 2018. These plots include the Hills Market at 7860 Olentangy River Road, the new Bristol Senior Living facility at 7780 Olentangy River Road and several other businesses.

“Worthington and the Township of Sharon have always had a close bond, and it was a logical way for Worthington to help the Township in the redevelopment of the Olentangy Valley Center by generating new income for the Township,” said Barnhardt.

Because the commune was waiving taxes in the Center of the Olentangy Valley as a result of the tax incentives, Oberle said, JEDD was needed to help recover some of that income.

“We are comfortable with this, but we also have a duty to our residents to make sure (that) if we are going to forgo certain tax incentives, we thought that one way to compensate was to create the JEDD”, did he declare. noted. “I anticipate this will help us with some of the costs that have been lost for investment in the development. And it will go to other township costs that are ingrained for the benefit of our residents. It will be a win-win.

“It won’t be a godsend, but it will help us with our budget.”

Oberle said the township was not losing any income because of the tax incentives.

Sharon Township’s annual operating budget for the current fiscal year is approximately $ 3 million, he said.

According to Barnhardt, taxes levied on an employee in JEDD must be withheld by the employer. If there is a tax in the municipality where that person’s residence is located, that municipality can choose to give full or partial credit for taxes paid at a workplace, he said.

“The logic behind this tax system is that people pay taxes where they live and work because they use city services provided both at the workplace and at residence, such as driving. , police and firefighters, ”he said. “If a person works in Sharon Township but does not live there, it is very likely that the employee is already taxed on their income elsewhere.

“With the JEDD, the income tax which was previously withheld where the employee lived would be redirected to the JEDD to cover the costs linked to the redevelopment of the Center de la Vallée d’Olentangy.”

Oberle said tax incentives for owners of Olentangy Valley Center, Columbus-based Continental Real Estate Cos., Include a district tax increase funding through the township and an incentive for the community redevelopment through Franklin County.

Oberle said TIF is redirecting money that would normally be paid in taxes to infrastructure development in support of the site. The CRA “provides property tax exemptions for homeowners who renovate existing buildings or construct new buildings,” according to ohio.gov.

The redevelopment of the center of the Olentangy Valley is complete, with the exception of a plot on the north side of the site which is still under development, Oberle said.

A Sheetz gas station and convenience store were offered for this plot, but Sheetz announced that it had withdrawn its proposal in August 2020.

[email protected]

@ThisWeekSteve

Mohamed Maait, Minister of Finance, issued Resolution No. 491 for 2021 in order to amend certain provisions of the Regulations for the execution of the Income Tax Law promulgated by Law No. 91 of 2005.

Reda Abdel Qader, chairman of the Egyptian Tax Authority (ETA), said on Monday that the first paragraph of article 51 of the executive regulations will be replaced by the following:

“Pursuant to the provisions of article 42, the competent tax authority is notified of the taxpayer to pay tax on the form (8 buildings), and the taxpayer is required to inform the competent tax administration of the building taxable transfers via the electronic portal of the Egyptian tax administration or by any electronic means on the form (16 bis).

Abdel Qader added that in order to facilitate the procedures and complete the electronic services provided by ETA, a 16-bis form (notification of the transfer of a built property or a building plot) has been made available. available electronically on both the electronic declaration and the automated tax procedures system, and therefore the financier is required to submit a form (16 bis) electronically from the date on which it was made available on the electronic system.

He pointed out that in accordance with Article 42 of the Income Tax Law, property tax is levied at the rate of (2.5%) of the value of the property sold, without any reduction in the total value of the sale of built buildings. real estate or building land, as well as whether the contracts for these transactions are made public or not.

He explained that all real estate and residential units in the villages are exempt from property tax, as well as the actions of the heir until the promulgation of Law No. 158 of 2018 amending Law No. (91) of 2005, amending article 42., in buildings devolved by succession in their inheritance condition, in addition to buildings presented in kind in the capital of joint-stock companies on condition that the corresponding shares are not sold for a period of five years, as well as endowment contracts between assets and branches, nor is it considered a taxable assignment of forced sales and expropriation for the public good or improvement.

He stressed that the delivery of proofs indicating the payment of the property tax has been canceled in the event of a real estate declaration or provision of a service on the real estate being transferred, by Law n ° (5) of 2021.

He added that the owner is required to pay the tax within 30 days from the date of the “land transfer” and that it applies in return for the delay provided by the income tax law to counting from the day after the end of the thirty days. .

He added that in the case of the only act of a natural person with a tax file, the taxpayer is obliged to submit a form (16 bis) on the automated system of tax declarations, as well as to pay the value of the tax on real estate transactions on the system.

In the case of the only act of a natural person who does not have a tax file, Abdel Qader indicated that the financier undertakes several steps, which consist in going to the competent tax office with a copy of the contract of sale and the original visit contract, as well as a copy of the identity document, to open a tax file and obtain a tax identification number. Then the taxpayer creates an account on the automated tax declaration system under the tax registration number, to submit a form (16 bis) on the automated tax declaration system, as well as to pay the value of the tax on real estate transactions on the system.

Abdul Qader said that a form (16 bis inventory) is submitted electronically on the electronic reporting system www. Incometax.gov.eg. and on the automated tax procedures system www.eta.gov.eg

He explained that the Integrated Communication Center receives all inquiries on hotline 16395 or via email [email protected]