TAX NEWS - 2010

Tax Changes

China Tax – The Chinese Ministry of Finance and State Administration of Taxation have jointly promulgated a circular (Circular 54) that launches a pilot program for the long-awaited reform of the Resource Tax (RT). Circular 54, which applies as from 1 June 2010, makes a fundamental change to the RT regime: the levy of tax based on the selling price rather than volume. It also makes some changes to tax incentives and the reduction of tax under the current RT regime. The pilot program will be tested in the province of Xinjiang before it is rolled out nationwide.

European Union Tax – The European Commission has referred seven EU Member States to the European Court of Justice with respect to their VAT grouping rules (Czech Republic, Denmark, Finland, Ireland, Netherlands, Sweden and the U.K.). VAT grouping is allowed for the purpose of administrative simplification under the VAT Directive, which gives Member States the option to treat those who are legally independent but closely bound to one another by financial, economic and organizational links as a single taxable person. The main concern is that the seven Member States allow the inclusion of nontaxable persons into a VAT group.

Hungary Tax – The new Hungarian government will be submitting a number of tax law changes to Parliament. The most significant measure affecting businesses will be a reduced income tax rate of 10% on taxable income up to HUF 500 million (approximately EUR 1,750,000 or USD 2,165,000) as from 1 July 2010. Details of the new rule and its application will be available mid-July.

Jersey  Tax – The government has issued a consultation document on the Jersey tax system suggesting a number of alternatives to the current "0/10" regime, including a flat rate of corporate tax, a territorial system and the total abolition of corporate tax. The deadline to comment on the document is 30 August 2010.


VAT rate changes effective 1 July 2010

Country       Old rate (%)     New rate (%)
Finland             22                     23
Greece             21                     23
Portugal           20                     21
Romania          19                     24
Spain*             16                     18

*New VAT rates apply to supplies of goods/services for which the tax point is on or after 1 July 2010. Spain's reduced rate increased from 7% to 8%, effective the same date. The super reduced rate of 4% is unchanged.