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Home > Tax News > December 2009

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TAX NEWS - DECEMber 2009

Estonia tax, Kazakhstan tax and OECD tax in brief

Estonia - The Ministry of Finance has published draft amendments to the income tax law dealing with the taxation of permanent establishments (PEs). The explanatory letter that accompanied the draft changes indicated that Estonia would no longer seek to charge an exit tax on outbound transfers of assets from Estonian PEs of nonresident companies. Previously, where there was a cross-border transfer from an Estonian PE of a nonresident company, the transfer was deemed to take place at fair market value with any gain being subject to Estonian tax. The explanatory letter accompanying the draft law changes indicates that such transfers would now be deemed to take place at acquisition cost such that no taxable gain should arise. The change is being introduced in response to infringement proceedings that were brought against Estonia by the European Commission due to the different tax treatment of residents and nonresidents in this area. Under current law, Estonian resident companies are able to transfer assets from Estonian branches to overseas branches free from tax, whereas transfers from an Estonian branch of a nonresident company to an overseas branch would have resulted in an exit charge.

Kazakhstan - Kazakhstan has postponed the previously enacted reduction in the corporate income tax rate. The tax rate will remain a flat rate of 20% until 2013 and will reduce to 17.5% in 2013, and 15% in 2014.

OECD - The OECD has released a discussion draft on "The Granting of Treaty Benefits with respect to the Income of Collective Investment Vehicles," proposing changes to the discussion in the Commentary to the OECD model treaty of the extent to which either CIVs or their investors are entitled to treaty benefits on income received by the CIVs.
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