Global Tax and Regulatory Update: January 2019


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This month’s update covers important information from Albania to Uzbekistan!

  Albania: Tax updates for 2019

On December 3, 2018 Albanian Parliament adopted changes to a few tax laws. Among the various changes, the ones affecting share plans are the following:

  • The highest tax bracket for employment income will be increased to ALL 150,000 (currently at ALL 130,000), and taxed at a rate of 23%.
  • Dividends and profit-sharing income tax will be reduced to 8% from a current rate of 15%.

These changes form part of Albania’s 2019 fiscal package and are expected to become effective from January 1, 2019.

Our Global Compliance Network Law Firm in Albania, Boga & Associates, would be happy to provide you with more information. For any further information, feel free to reach out to Jonida Skendaj at jskendaj@bogalaw.com

Shareworks Global Compliance comment

We recommend companies review these change and amend their practices accordingly. Please contact us if you have any questions.

  Azerbaijan: New income bands and social contributions for 2019

From January 1, 2019 the income tax for individuals working in the private sector and non-oil and gas industry will be as follows:

  • A monthly income of up to AZN 8,000  has been set at 0% (approximately USD 4.706)
  • A monthly income exceeding AZN 8,000 has been set at 14%.

The new amendment will be valid for 7 years.

From January 1, 2019 the differentiated rate on social contributions shall be applied as follows:

  • If the employee’s salary is up to AZN 200 (approximately USD 118) he/she will pay 3% of the salary, and the employer will pay 22% for social insurance
  • If the salary exceeds AZN 200 the employee will pay 3% (AZN 6) plus 10% of the amount exceeding AZN 200; the employer will pay AZN 44 (approximately USD 26) plus 15% of the amount exceeding AZN 200.

Moreover, according to the amendment made in the Tax Code, 50% of taxpayers’ revenues from sale of participation shares, which have been owned for at least 3 years will also be exempted from tax.

Our Global Compliance Network Law Firm in Azerbaijan, Michael Wilson & Partners, will be happy to provide you with more information. If you have any specific queries, please feel free to reach out to Michael Wilson at michael.wilson@mwp.kz and Aygun Abbasova at aygun.abbasova@mwp.kz

Shareworks Global Compliance comment

We recommend companies review these change and amend their practices accordingly. Please contact us if you have any questions.

  Canada: Change in CPP contribution rates

The start of 2019 marks the kick off of the 7-year enhancement process of the Canada Pension Plan (CPP). Major changes for both employers and employees are expected.

What is expected for 2019?

Canada Pension Plan (CPP)

Starting January 1, 2019, the maximum pensionable earnings under the Canada Pension Plan will be CAD 57,400 (previously CAD 55,900) while employee and employer contributions to the CPP will increase from 4.95% to 5.10%. There is no requirement for contribution on earnings above the cap. The basic exemption amount for 2019 will remain CAD 3,500.

Employment Insurance (EI)

The maximum earnings ceiling for Employment Insurance contributions for 2019 will increase to CAD 53,100 (previously CAD 51,700).

There will be a decrease to the employee contribution rate (1.62% currently at 1.66%) for a maximum contribution of CAD 860.22. However, the employer contribution rate will increase to 2.268%, for a maximum contribution of CAD 1,204.

Our Global Compliance Network Law Firm in Canada, Stikeman Elliott, will be happy to provide you with more information. For any enquiries, please feel free to reach out to Michel Legendre at mlegendre@stikeman.com

Shareworks Global Compliance comment

We recommend companies adjust CPP contributions rates. Please contact us if you need assistance.

  Denmark: New reporting obligations and tax changes for 2019

New reporting obligation

Local employers in Denmark have a monthly reporting obligation to the Danish tax authorities on the issue of a range of employee share plans. From January 1, 2019 the local companies in Denmark will have the legal obligation to annually report the issue of shares made via share plans to the Danish tax authorities through “eKapital AKSA”, an electronic system.

The due date to report is by January 20th of the year following the year the share acquisition was made by the employee. The following should be included in the report:

  • Issuer’s name
  • The name of the employee
  • Number of shares acquired
  • Acquisition dat
  • Acquisition price (if any)

Please note that similar reporting requirements already apply to any awards granted under the Section 7P regime.

Personal income tax

Some tax changes effective as off January 1, 2019 have been published by the Ministry of Taxation (Skatteministeriet). The expected changes to personal income tax are as follows:

  • An increase in personal allowance to DKK 47,000 (DKK 46,000 in 2018)
  • An increase in the monthly minimum salary requirement for qualifying for the Danish expatriate regime to DKK 66,600 (DKK 65,100 in 2018) (NB: the minimum salary shall be increased with social contribution payments); and
  • An increase in the minimum income threshold to DKK 513,400 (DKK 498,900 in 2018) before paying top income tax.

Our Global Compliance Network Law Firm in Denmark, Gorrissen Federspiel, will be happy to provide you with more information. For further information, feel free to reach out to Morten Skjønnemand at msk@gorrissenfederspiel.com

Shareworks Global Compliance comment

We recommend companies and share plan administrators review and adjust accordingly. We are happy to assist if you require any additional information regarding these new changes.

  Finland: New individual income tax rates for 2019

The Finnish parliament has adopted the new state income tax rates for 2019, as per below.

Personal Income (EUR) Tax at the lower limit of the bracket (EUR) Tax rate to exceeding amount of lower limit (%)
0 – 17,600 0.00 0
17,600 – 26,400 8.00 6
26,400 – 43,500 536.00 17.25
43,500 – 76,100 3,485.75 21.25
76,100 – 10,413.25 31.25

In addition to the state income tax, various social security contributions and the municipal tax are applicable to earned income, among others. In 2019, the municipal tax varies from 16.50% to 22.50% between different municipalities.

Our Global Compliance Network Law Firm in Finland, Krogerus, would be happy to provide you with more information. For any further information feel free to reach out to Sanna Lindqvist at sanna.lindqvist@krogerus.com

Shareworks Global Compliance comment

We recommend companies review and adjust accordingly. Please contact us if you need assistance.

  Guernsey: New cap for social security contributions

Effective January 1, 2019 the new cap for Social Security contributions both for employees and employers in Guernsey will be GBP 12,194.00 per month (GBP 11,908.00 for 2018). The rate won’t change and will continue to be 6.6%

Shareworks Global Compliance comment

We recommend companies review and adjust accordingly. Please contact us if you need any assistance.

  Jordan: New progressive personal income bands effective 2019

On December 2, 2018 a proposal for amending the Income Tax Law was published in the Jordanian Official Gazette. The main changes, (unless stated otherwise), will apply from January 1, 2019.

The new personal income bands and rates will be as follows:

Annual Net Income (JOD) Rates (%)
0 – 5,000 5
5,001 – 10,000 10
10,001 – 15,000 15
15,001 – 20,000 20
20,001 – 1,000,000 25
1,000,0001 – 30

Shareworks Global Compliance comment

We recommend companies review and adjust accordingly. Please contact us if you need any assistance.

  Latvia: Amendments to social security contributions

Effective January 1, 2019 the threshold for the social security contributions in Latvia will be increased from EUR 55,000 to EUR 62,800.

The maximum amount of mandatory and voluntary insurance contributions will be calculated and determined for three years, taking into account:

  • the maximum amount of the contribution object for the previous period
  • an increase or decrease of average monthly gross salary for the next three calendar years envisaged by the Ministry of Finance; and
  • an increase or decrease of the average monthly gross salary of the employees for the previous calculation period.

The personal income tax threshold is also expected to be adjusted so that it is aligned with the taxable base cap for social security. However this is now pending parliament approval.

Our Global Compliance Network Law Firm in Latvia, Valters Gencs, will be happy to provide you with more information. For any further information, feel free to reach out to Eva Narovska at eva.narovska@gencs.eu

Shareworks Global Compliance comment

We recommend companies review and adjust accordingly. Please contact us if you need any assistance.

  Norway: Income tax updates for 2019

As mentioned in our October release, the Budget for 2019 was presented to parliament on October 8, 2018. Although the final voting would not take place until mid-December, the current government secured parliamentary backing for the budget and no significant changes were expected in the period leading up to the vote.

We have summarised changes for Personal Income Tax effective January 1, 2019:

Personal income tax

The personal income tax rate will be reduced from 23% to 22%.

National income tax

The rates for the national income tax on gross income (trinnskatt) will be as follows:

Income Bands (NOK) Rates (%)
0 – 174,500 0
174,501 – 245,650 1.9
245,651 – 617,500 4.2
617,501 – 964,800 13.2
964,801 – 16.2

 

Our Global Compliance Network Law Firm in Norway, Arntzen de Besche, will be happy to provide you with more information. For further information, please feel free to reach out to Marianne Sahl Sveen at mss@adeb.no and Eyvind Sandvik at eys@adeb.no

Shareworks Global Compliance comment

We recommend companies review and adjust accordingly. Please contact us if you need any assistance.

  Poland: Wage base for social security updated for 2019

Effective January 1, 2019 the wage base for calculating the social security contributions will be as follows:

Personal Income (PLN) Employee Employer
0 – 142,950 11.26% 16.26%
142,951 – 2.45% 6.15%

As for the maximum withholding tax rate on Personal Income, there will be no changes to the current 32%.

Shareworks Global Compliance comment

We recommend companies review and adjust accordingly. Please contact us if you need any assistance.

  Portugal: Tax return submission extended

On October 15, 2018 the Minister of Finance presented the 2019 State Budget to parliament which contained modifications to the personal income tax code.

Among other changes, the deadline for submitting the personal income tax return was extended from April 30th to June 30th, irrespective of being a holiday or weekend. In effect, taxpayers will now have one more month to file their tax return.

The proposed modifications within the Budget for 2019 should be confirmed by the end of the year and the final version of the Budget will be published right after. Although it is still a proposal, it is expected that all the measures will be approved by parliament.

Our Global Compliance Law Firm in Portugal, Abreu & Marques e Associados, will be happy to provide you with more information. For further information, feel free to reach out to Cidália Conceição atcidalia.conceicao@amsa.pt.

Shareworks Global Compliance comment

Please contact us if you need any assistance.

  Spain: New cap for social security contributions

Effective January 1, 2019 the new cap for social security contributions both for employees and employers in Spain will be EUR 3,803.7 per month (EUR 3,751 for 2018). The rates have not changed and will continue to be 6.35% for employees and 29.90% for employers.

Shareworks Global Compliance comment

We recommend companies review and adjust accordingly. Please contact us if you need any assistance.

  Ukraine: Employer social security contributions for 2019

In our previous newsletter we made you aware of a Draft Law geared towards amending the rates of mandatory social security contributions, which was included in Parliament’s agenda for consideration. This proposal included regressive rates of social security contributions for salaries exceeding the ceiling. The proposal was never put to the vote, therefore neither rejected nor approved.

Effective January 1, 2019 the minimum statutory salaryhas been established at UAH 4,173, thus the employer social security contributions are now confirmed to be of 22% capped at UAH 66,595 (UAH 55,845 for 2018).

CMSOur Global Compliance Network Law Firm in Ukraine, CMS, will be happy to provide you with more information. For further information, feel free to reach out to Viktoriia Stavchuk at viktoriia.stavchuk@cms-cmno.com

Shareworks Global Compliance comment

We recommend companies review and adjust accordingly. Please contact us if you need any assistance.

  USA: Individual income bands and FICA contributions effective 2019

The Personal Income Tax bands for single-taxpayers effective January 1, 2019 in the United States of America are listed below:

Individual Income (USD) Rate
0 – 9,700 10%
9,701 – 39,475 12%
39,476 – 84,200 22%
84,201 – 160,725 24%
160,726 – 204,100 32%
204,101 – 510,300 35%
510,301 – 37%

The changes to the Social Security wage base effective January 1, 2019 (capped tax rate on maximum earnings) used in calculating the Social Security portion of payroll taxes in the Unites States of America are mentioned below:

The wage base that will be subject to the Social Security payroll tax will increase by USD 4,500 from USD 128,400 in 2018, amounting a total of USD 132,900. This means that taxable wages up to USD 132,900 will be subject to the 6.2% Social Security tax when calculating payroll taxes.
The Medicare Tax rate will remain the same at 1.45% and will apply to all earned wages (there is no threshold limits for Medicare taxes).
Any employees’ earnings in excess of USD 200,000 (single filers) will also be subject to a 0.9% additional Medicare tax, which remains unchanged from 2018.

2019 FICA rates*

Individual Income (USD) Employer Employee
0 – 132,900 7.65% 7.65%
132,901 – 200,000 1.45% 1.45%
200,001 1.45% 2.35%

 

*Social Security and Medicare payroll taxes are collected together as the Federal Insurance Contributions Act (FICA) tax.

Shareworks Global Compliance comment

We recommend companies review and adjust accordingly. Please contact us if you need any assistance.

  Uzbekistan: Tax amendments for 2019

By decree dated June 29, 2018 the National Tax Policy Improvement has been approved by the President. A draft version of the Tax Code was presented on December 1, 2018. As of January 1, 2019 the tax policy is expected to account for the following changes.

Reduction of personal income tax

The progressive personal income tax rates will be abolished and replaced by a 12% flat rate.

Abolishment of social security contributions

The social security contributions to the private pension fund (8%) and mandatory contributions to the state funds (3.2%) will no longer be effective. Unified Social Charge at employer level will be 12%.

Reduction of income tax dividends

Income tax dividends and interest payable will be reduced from 10% to 5%.

Our Global Compliance Network Law Firm in Uzbekistan, Mukhamedjanov & Partners, will be happy to provide you with more information. For further information, please feel free to reach out to Davron Khasanov at dkhasanov@mapartners.uz

Shareworks Global Compliance comment

We recommend companies review and adjust accordingly. Please contact us if you need any assistance.

Upcoming Filing and Reporting Deadlines

  India: Indian employer tax filings

January 15, 2019
Affects: Local Company

Indian employers are required to file Form 24Q with the Indian tax authorities on a quarterly basis. These quarterly returns report information on employment income paid to employees (including from share-settled awards) as well as taxes withheld.

The quarterly returns must be submitted by:

  • Quarter ending March,31: May 31
  • Quarter ending June 30: July 31
  • Quarter ending September 30: October 31
  • Quarter ending December 31: January 31

Our collaborating law firm in India, Little & Co.,is happy to assist, should you need any support with this.

  Thailand: Thai SEC filing

January 15, 2019
Affects: Parent company

The annual reporting deadline for companies that grant stock options to employees in Thailand is approaching. Companies must report any exercises of those options to the Thai SEC by January 15 following the year in which they were exercised.

Our collaborating law firm in Thailand, International Legal Counsellors Thailand Limited, is happy to assist, should you need any support with this.

  Taiwan: Tax withholding statement

January 31, 2019
Affects: Local company

Taiwan employers must submit to tax authorities by January 31 a non-withholding statement that includes the name, address, national ID number of each employee with awards that vested, if they were exercised or purchased under an employee purchase plan in the previous calendar year. In addition, the Taiwan employer must also issue a non-withholding statement to employees by February 10.

Our collaborating law firm in Taiwan, Huang & Partners, is happy to assist, should you need any support with this.

  Malaysia: Annual reporting of equity awards

January 31, 2019
Affects: Local company

The deadline for annual reporting in respect of equity awards granted to Malaysian employees is approaching. Companies that granted such equity awards to employees in Malaysia must report any stock option exercises, RSU vesting, and/or purchases under an ESPP that took place during the previous calendar year to the Malaysian Inland Revenue Board on Appendix C of the Form BT/MSSP/2012 and on the statement of remuneration (EA form) which is issued to employees.

The due date for filing is January, 31 following the end of the tax year. Form Appendix C of the Form BT/MSSP/2012 is available on the website of the Malaysian Inland Revenue Board.

Our collaborating law firm in Malaysia, Loh Chow Tet & Associates, is happy to assist, should you need any support with this.

  Sweden: Swedish annual tax reporting

January 31, 2019
Affects: Local company

The employer must provide information on the company’s employees to the Swedish Tax Agency by January 31 at the latest, following the year of payment.

Our collaborating law firm in Sweden, Skeppsbron Skatt, is happy to assist, should you need any support with this.

  Germany: Wage tax certificate

February 28, 2019
Affects: Local Company

German employers must issue a wage tax certificate (“Lohnsteuerbescheinigung”) containing information about the calendar year income, as well as information on social security contributions. The wage tax certificate which should include employee benefits must be sent electronically on an official form to the tax authority at which the employer is registered and a copy must also be provided to the employee. The deadline for filing is the last day in February after the end of the previous tax year (December, 31).

Our collaborating law firm in Germany, Haver & Mailaender, is happy to assist, should you need any support with this.

  Singapore: Filing for former or posted employees

March 1, 2019
Affects: Local company

The local company will need to file a report with the Singapore Inland Revenue Authority (IRAS) in respect of Singapore permanent resident employees who have ceased employment or are posted overseas, and derived gains from the vesting, exercise, assignment, release or acquisition of any rights derived under any employee stock option plan (ESOP) or employee share ownership plan (ESOW) that are taxable in Singapore.

The due date for the filing is March, 1 following the end of the tax year.

Our collaborating law firm in Singapore, Low Yeap Toh & Goon LLP, is happy to assist, should you need any support with this.

  Ireland: Equity reporting

March 31, 2019
Affects: Local company

The March, 31 deadline for annual reporting in Ireland is approaching.

Companies have to report to the Irish Revenue on Form RSS1 (filed electronically) any unapproved options and other rights to acquire shares that were granted, assigned, released and/or exercised by employees and/or directors during the relevant year.

Separate reporting requirements apply for approved save-as-you-earn plans, approved profit-sharing plans and employee share ownership trusts. The forms are available for download on the Irish Revenue website.

Please note that failure to comply with these mandatory filing obligations will result in a penalty and, in the case of any approved schemes, may result in the withdrawal of Revenue approval for approved schemes.

Our collaborating law firm in Ireland, McCann FitzGerald, Solicitors, is happy to assist, should you need any support with this.

  Japan: Foreign asset reporting

March 15, 2019
Affects: Employee

Individuals who are permanent residents for tax purposes in Japan (whether they are tax payers or not) are required to file a report when the total value of their foreign assets exceeds JPY 50 million (approximately USD 500,000) as at December, 31 of any year. This includes foreign nationals who are currently resident in and/or have had a domicile in Japan for more than 5 years in the preceding 10 years or those who are currently tax residents. Foreign assets include any assets held by a Japanese resident located outside of Japan that have an economic value even if they have been awarded or acquired outside of Japan. This includes vested but unexercised options. Unvested awards do not need to be included in the report.

This filing should be effected using a specific form which differs from the income tax return and is required even if no individual income tax return is made. The due date is March, 15 (or the next business day) for assets held at December, 31 of the previous year.

Our collaborating law firm in Japan, Anderson Mori & Tomotsune, is happy to assist, should you need any support with this.

  Japan: Equity reporting

March 31, 2019
Affects: Local company

The deadline for annual reporting in respect of offshore assets for Japanese employers is approaching. Japanese companies that are majority owned by non-Japanese companies and Japanese branch offices of non-Japanese companies must file an annual report to the tax authorities, using Form 9(3), if their employees have cash or equity awards that have vested or have been exercised in the previous tax year.

The due date for filing is 31 March following the end of the tax year. Form 9(3) is available on the website of the Japanese tax authority.

Our collaborating law firm in Japan, Anderson Mori & Tomotsune, is happy to assist, should you need any support with this.

 

 

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