DOCSLIB.ORG

A Research Report Submitted to the Faculty of Commerce, Law And

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
A Research Report Submitted to the Faculty of Commerce, Law And A research report submitted to the Faculty of Commerce, Law and Management in partial fulfilment of the requirements for the degree of Master of Commerce in the field of Taxation An analysis: the possible consequences of a potential wealth tax on immovable property in South Africa Applicant: Alberta Ignatova Student Number: 0707056M Supervisor: Prof Maeve Kolitz Head of Programme: Prof A P De Koker Head of School: Prof N Padia Degree: Master of Commerce (Specialising in Taxation) Date: 29 March 2019 Abstract The Davis Tax Committee issued a media statement on 25 April 2017, calling for written submissions on the introduction of a possible wealth tax in South Africa (Davis Tax Committee, 2017, p 1). The discussion of a potential wealth tax came two months after an increase applying to the top income tax bracket for individuals by 4% to 45%, resulting in an effective capital gains tax rate for individuals of 18% (ENS Africa, n.d. par 2). This should be seen on the back of the capital gains tax increase of nearly five percentage points from 13.32% in the 2014 year of assessment to 18% in 2017 (ENS Africa, n.d. par 2). The Davis Tax Committee had been tasked to review South Africa’s tax system and had consequently launched a public debate on one of the most controversial possible moves on its agenda, wealth tax (Reuters, 2017, par 1). There is an ongoing debate among South Africans on whether the government should implement such a tax to lessen the glaring inequality in Africa’s most industrialised economy (Reuters, 2017, par 2). South Africa is grappling with weak economic growth and unemployment of more than 25% and the minority still controls a disproportionately big share of the economy (Reuters, 2017, par 9). The public debate on wealth taxes often focuses on redistribution of land, and consequently one of the potential forms of wealth tax could be a wealth tax on property (Davis Tax Committee, 2017, p 1). As taxes on land and property have both fiscal and non-fiscal effects, it is therefore useful to analyse the possible positive and possible negative impact of the potential wealth tax on immovable property on the revenue authority, and taxpayers. The aim of this research report is to analyse the possible consequences of the potential wealth tax specifically with a focus on immovable property. Firstly, consideration will be given to what the possible definition of immovable property could be. Secondly, the potential types of wealth tax on immovable property will be analysed together with existing wealth taxes imposed by the Income Tax Act 58 of 1962 (the Act), municipal legislation (Municipal Property Rates Act, 2004), Estate Duty Act (Estate Duty Act 45 of 1955) and Transfer Duty Act (Transfer Duty Act 40 of 1949). Thereafter the research will consist of an objective analysis of the possible positive and possible negative consequences of the potential wealth tax on immovable property. Key words: Wealth tax, possible, immovable property, consequences, positive, negative 1 | P a g e Declaration I declare that this research report is my own unaided work. It is submitted in partial fulfilment of the requirements for the degree of Master of Commerce (specialising in Taxation) at the University of the Witwatersrand, Johannesburg. It has not been submitted before for any other degree or examination at any other university. ____________________ Alberta Ignatova 2 | P a g e TABLE OF CONTENTS Abstract 1 Declaration 2 Chapter 1: Introduction 1.1: Background 5 1.2: Objective of the research 11 1.2.1: Research statement 11 1.2.2: Sub problems 11 1.2.3: Significance of the study 11 1.2.4: Delimitations of the research 11 1.2.5: Research Method 12 1.2.6: Chapter Outline 12 Chapter 2: Potential definition of immovable property for the purposes of this research 2.1: Introduction 15 2.2: Income Tax Act 58 of 1962 17 2.3: Double Tax Agreements 18 2.4: Capital gains tax Guide Issue 7 19 2.5: The Deeds Registries Act 20 2.6: The Municipal Property Rates Act 21 2.7: Dictionary of Legal Words and Phrases 22 2.8: Ex Parte The Master of The Supreme Court 1906 TS 563 23 2.9: Administration of Estates Act 66 of 1965 24 2.10: Conclusion 24 Chapter 3: An analysis of the definition of wealth tax and what existing South African taxes meet this definition 3.1: What is wealth tax 26 3.2: Estate duty 28 3.3: Transfer duty 30 3.4: Donations tax 32 3.5: Property rates 33 3.6: Capital gains tax 34 3.7: Conclusion 35 3 | P a g e Chapter 4: An analysis of what the form of the potential wealth tax on immovable property could be 4.1: Introduction 36 4.2: Forms of a potential wealth tax 37 4.2.1: Area-based Assessment 37 4.2.2: Market Value Assessment 37 4.2.3: Rental Value Assessment 38 4.2.4: Self-Assessment 39 4.2.5: Considerations of the rate 42 4.3: Wealth tax in France 43 4.4: Wealth tax in India 46 4.5: Conclusion 49 Chapter 5: An analysis of the positive and negative consequences of a potential wealth tax on immovable property 5.1: Introduction 51 5.2: Possible positive consequences of a potential wealth tax on 51 immovable property 5.2.1: Historically favoured by economists 51 5.2.2: Additional funds for local public services 51 5.2.3: Unproductive land speculation 52 5.2.4: Revenue for tax authorities 53 5.2.5: Land price bubbles 54 5.2.6: Efficiency 54 5.3: Possible negative consequences of a potential wealth tax 55 on immovable property 5.3.1: Poor revenue raiser 55 5.3.2: The valuation issue 56 5.3.3: Compliance burden 57 5.3.4: Harmful effect on Economic Growth 58 5.3.5: Reduction in general levels of indebtedness 58 5.4: Conclusion 59 Chapter 6: Conclusion 60 Reference List 64 4 | P a g e Chapter 1: An Introduction 1.1 Background Then President Jacob Zuma called for a radical transformation of the economy following losses in local elections in 2016 partly caused by anger over deep inequality that persisted more than two decades after apartheid, while the white minority still controls a disproportionately big share of the economy (Reuters, 2017, par 8). Treasury further struggled to meet its revenue targets amid sluggish economic growth and the tax agency fell R30 billion short of its projection in the 2016 fiscal year (City Press, 2017, par 12). Tax revenue was projected to fall short of the 2017 Budget estimate by R50.8 billion in that year, the largest under-collection since the 2009 recession (City Press, 2017, par 11). With additional shortfalls expected in 2018 and 2019, the country faces a total shortfall of R209 billion in the next three years (City Press, 2017, par 11). Government is under mounting pressure to shift its focus on taxing the wealthy minority to alleviate its predicament (Webber Wenzel, 2017, par 1). In 2017, under instruction of Finance Minister Pravin Gordhan (Finance Minister at the time of the announcement), the Davis Tax Committee was tasked to investigate the possibility of a wealth tax (Davis Tax Committee, 2017, p 1). In light of the request, the Davis Tax Committee considered the following possible wealth taxes: a land tax; a national tax on the value of property, and an annual wealth tax (Davis Tax Committee, 2017, p 2). The Davis Tax Committee announced it was inviting submissions from South Africans on whether the government should implement such a tax (Davis Tax Committee, 2017, p 2) to lessen the glaring inequality in Africa's most industrialised economy (Reuters, 2017, par 2). At the time of this research report the Davis Tax Committee had finalised their report of findings on the feasibility of wealth tax in South Africa. These findings included, but were not limited to wealth tax on immovable property alone. South Africa is known for its extreme income inequality, which is one of the highest in the world. Studies show that 10% of the population earn around 55%–60% of all income, compared to only 20%-35% in more advanced economies. (Orthofer, 2016, par 1.) Tax and survey data (conducted between 2010 and 2011) has suggested that 10% of the South African population owns at least 90%–95% of all assets. This share is much higher than in advanced economies, where the richest 10% own around 50%-75% of all assets. (Orthofer, 2016, par 2.) 5 | P a g e Kloppers’ view is that post-apartheid South Africa faces a variety of challenges that emanated from the injustices caused by apartheid and that one of the earliest challenges faced by the first democratically elected government was how to address the unequal distribution of land in the country. He further comments that the South African government has shown commitment to eradicate the inequalities and injustices of the past and has initiated a comprehensive land reform programme with a strong constitutional basis, a programme consisting of three pillars namely: restitution, land redistribution and tenure security. (Kloppers, 2014, par 1.) The Davis Tax Committee also confirms that land redistribution is a pivotal element in the inequality discussion and that wealth tax is an instrument used to address the inequalities of income and wealth (Davis Tax Committee, 2018, p 14). These inequalities have resulted in the passing of the Expropriation Bill by the National Assembly, bringing to conclusion years of hard work by Parliament on this crucial draft legislation (Politicsweb, 2016, par 1).
Load more

Recommended publications
  • Wealth Distribution and Taxation in EU Members
    ISSN 1725-7565 (PDF) ISSN 1725-7557 (Printed) TAXATION PAPERS Wealth WORKING PAPER N. 60 – 2015 distribution Anna Iara (European Commission) and taxation in EU Members Taxation and Customs Union Taxation Papers are written by the staff of the European Commission’s Directorate-General for Taxation and Customs Union, or by experts working in association with them. Taxation Papers are intended to increase awareness of the work being done by the staff and to seek comments and suggestions for further analyses. These papers often represent preliminary work, circulated to encourage discussion and comment. Citation and use of such a paper should take into account of its provisional character. The views expressed in the Taxation Papers are solely those of the authors and do not necessarily reflect the views of the European Commission. Comments and inquiries should be addressed to: TAXUD [email protected] Cover photo made by Milan Pein Despite all our efforts, we have not yet succeeded in identifying the authors and rights holders for some of the images. If you believe that you may be a rights holder, we invite you to contact the Central Audiovisual Library of the European Commission. This paper is available in English only. Europe Direct is a service to help you find answers to your questions about the European Union Freephone number: 00 800 6 7 8 9 10 11 A great deal of additional information on the European Union is available on the Internet. It can be accessed through EUROPA at: http://europa.eu. For information on EU tax policy visit the European Commission’s website at: http://ec.europa.eu/taxation_customs/taxation/index_en.htm Do you want to remain informed of EU tax and customs initiatives? Subscribe now to the Commission’s e-mail newsflash at: http://ec.europa.eu/taxation_customs/common/newsflash/index_en.htm Cataloguing data can be found at the end of this publication.
    [Show full text]
  • Wealth Tax in South Africa
    REPORT ON FEASIBILITY OF A WEALTH TAX IN SOUTH AFRICA FOR THE MINISTER OF FINANCE Intended use of this document: The Davis Tax Committee is advisory in nature and makes recommendations to the Minister of Finance. The Minister will take into account the report and recommendations and will make any appropriate announcements as part of the normal budget and legislative processes. As with all tax policy proposals, these proposals will be subject to the normal consultative processes and Parliamentary oversight once announced by the Minister. THE DAVIS TAX COMMITTEE March 2018 Davis Tax Committee: Wealth Tax Report: March 2018 Table of Contents Executive Summary ................................................................................ 3 Chapter 1: Introduction .............................................................................................. 3 Chapter 2: Background ............................................................................................... 3 Chapter 3: Economic principles of wealth taxation ................................................... 4 Chapter 4: Lessons from international experience .................................................... 5 Chapter 5: The South African case ............................................................................. 6 Chapter 6: Conclusion and recommendations ........................................................... 7 Chapter 1: Introduction .......................................................................... 8 Chapter 2: Background ........................................................................
    [Show full text]
  • Capital in the Twenty-First Century
    $39.95 PIKETTY R CAPITAL Emmanuelle Marchadour “ This book is not only the definitive account of the historical evolution What are the grand dynamics that drive the accu- of inequality in advanced economies, it is also a magisterial treatise on R mulation and distribution of capital? Questions capitalism’s inherent dynamics. Piketty ends his book with a ringing call about the long-term evolution of inequality, the for the global taxation of capital. Whether or not you agree with him on concentration of wealth, and the prospects for the solution, this book presents a stark challenge for those who would economic growth lie at the heart of political econ- like to save capitalism from itself.” omy. But satisfactory answers have been hard to —Dani Rodrik, Institute for Advanced Study find for lack of adequate data and clear guiding theories. In Capital in the Twenty-First Century, CAPITAL Thomas Piketty analyzes a unique collection of “ A pioneering book that is at once thoughtful, measured, and provoca- tive. It should have a major impact on our discussions of contemporary data from twenty countries, ranging as far back inequality and its meaning for our democratic institutions and ideals. I in the Twenty-First Century as the eighteenth century, to uncover key econom- can only marvel at Piketty’s discipline and rigor.” ic and social patterns. His findings will transform debate and set the agenda for the next generation —Rakesh Khurana, Harvard Business School of thought about wealth and inequality. Piketty shows that modern economic growth “ A seminal book on the economic and social evolution of the planet.
    [Show full text]
  • The Future of Personal Wealth and Inheritance Taxation in Norway
    The future of personal wealth and inheritance taxation in Norway Maciej Pekala Master Thesis for master students at Economics Department of University of Oslo May 2013 i ii The future of personal wealth and inheritance taxation in Norway iii © Maciej Pekala 2013 The future of personal wealth and inheritance taxation in Norway Maciej Pekala http://www.duo.uio.no/ Trykk: Reprosentralen, Universitetet iv Summary Many countries have recently abandoned or experienced significant reduction in tax rates and revenues from personal wealth and inheritance taxation. Today, Norway remains one of the few countries that still tax annual wealth and intergenerational wealth transfers. Both taxes however face a substantial opposition and their future remains uncertain. In this paper, a dynamic microsimulation model MOSART developed by Statistics Norway is used to project and discuss future revenues and distributional effects of the annual wealth and inheritance taxes in Norway between year 2010 and 2040. The main questions discussed are: what are the future revenue effects of these taxes and what effect will they have on the distribution of wealth. Different scenarios are analysed and compared. The model predicts that average taxable wealth will significantly increase within the simulation period, which results in substantial increases in revenues from both wealth and inheritance taxes. In order to measure distributional effect I look how the average wealth will change across different percentiles (10 equal size groups divided according to net amount of wealth owned) and I use Gini coefficient as a measure of wealth inequality. The simulation results show that wealth inequality measured by Gini coefficient is going to decline between 2010 and 2040.
    [Show full text]
  • Wealth and Wealth Transfer Taxation: a Survey.1
    Wealth and wealth transfer taxation: a survey.1 Helmuth Cremer2 and Pierre Pestieau 3 July 2009 1Paper to be presented at the conference “Tax systems:whence and whither?”, Malaga Sep- tember 9—11, 2009. 2Toulouse School of Economics (GREMAQ and IDEI). 3CREPP, University of Liège and CORE. Abstract This paper provides a survey of the theoretical literature on wealth and wealth transfer taxation. Both forms of taxation are highly controversial and we present arguments in favor and against them. We adopt a theoretical and normative perspective. Our approach is comprehensive in the sense that wealth taxation is discussed as part of an overall tax system, dominated by income and commodity taxation.We show that a cru- cial factor in designing the tax structure is the motive underlying wealth accumulation and transfers. Keywords: wealth taxation, inheritance taxation, capital income taxation JEL code: H21 1 Introduction Taxes are rarely popular but those on wealth and wealth transfers are particularly controversial. Opponents claim that they are unfair and immoral. Because of many loopholes, people of equivalent wealth pay different amounts of tax depending on their acumen at tax avoidance. They penalize the frugal and the loving parents who accu- mulate wealth for their children, reducing incentive to save and to invest. Concerning the wealth transfer taxes per se, they allegedly hit families that are surprised by death (hence they are sometimes called a tax on sudden death or even a death tax) Supporters of these taxes, in contrast, retort that they are of all taxes the most efficient and the most equitable. They assert that they are highly progressive and coun- terweight existing wealth concentration.
    [Show full text]
  • Taxing Wealth: Past, Present, Future Workshop Proceedings
    ISSN 2443-8022 (online) Taxing Wealth: Past, Present, Future Workshop Proceedings Edited by Caterina Astarita DISCUSSION PAPER 003 | JULY 2015 EUROPEAN ECONOMY Economic and EUROPEAN Financial Affairs ECONOMY European Economy Discussion Papers are written by the staff of the European Commission’s Directorate-General for Economic and Financial Affairs, or by experts working in association with them, to inform discussion on economic policy and to stimulate debate. The views expressed in this document are solely those of the author(s) and do not necessarily represent the official views of the European Commission. Authorised for publication by Lucio Pench, Director for Fiscal Policy. LEGAL NOTICE Neither the European Commission nor any person acting on its behalf may be held responsible for the use which may be made of the information contained in this publication, or for any errors which, despite careful preparation and checking, may appear. This paper exists in English only and can be downloaded from http://ec.europa.eu/economy_finance/publications/. Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): 00 800 6 7 8 9 10 11 (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). More information on the European Union is available on http://europa.eu. Luxembourg: Publications Office of the European Union, 2015 KC-BD-15-003-EN-N (online) KC-BD-15-003-EN-C (print) ISBN 978-92-79-48662-3 (online) ISBN 978-92-79-48661-6 (print) doi:10.2765/257050 (online) doi:10.2765/208355 (print) © European Union, 2015 Reproduction is authorised provided the source is acknowledged.
    [Show full text]
  • France Tries a Wealth Tax
    ARTICLES FRANCE TRIES A WEALTH TAX GILBERT PAUL VERBIT* 1. INTRODUCTION Despite my best advice,1 the French National Assembly enacted an annual tax on individual net wealth, impbt sur les grandes fortunes, ("IGF")2 on October 30, 1981.1 The tax went into effect on January 1, 19824 and was repealed on July 11, 1986. 5 A new annual tax on indi- * Professor of Law, Boston University School of Law. 1 An article published in 1980, written by the author, examined the forms a French wealth tax might take in light of studies within France and French fiscal his- tory, as well as the experience of other countries with such a tax. See Verbit, Taxing Wealth: Recent Proposalsfrom the United States, France, and the United Kingdom, 60 B.U.L. REv. 1 (1980). " The name for the tax has a polemical quality. It has been variously referred to in the literature as the tax on patrimony (patrimoine), a wealth (richesse) tax, and a tax on capital. See Grosclaude, L'Impbt Sur les Grandes Fortunes, 15 FASCiCULE para. 3 (1986). ' Loi No. 81-1160 du 30 Decembre 1981, De finances pour 1982, 1981 J.O. 3539, 1982 D.S.L. 22 [hereinafter 1982 Finance Law]. " Detailed regulations implementing the law were issued on May 11, 1982 and May 19, 1982. See INSTRUCTION DU 11 MAX 1982: IMP6T SUR LES GRANDES FOR- TUNES (Bulletin Officiel de la Direction G~n~rale des Impts No. 7 R-1-82) [hereinaf- ter INSTRUCTION DU 11 MAI 1982]; IMP6T SUR LES GRANDES FORTUNES: COMPLt- MENTS DPTAILLPS A L'INSTRUCTION GtNfERALE ET EXAMPLES PRATIQUES, para.
    [Show full text]
  • Overview of International Tax Measures in Response to Covid-19 & Future
    OVERVIEW OF INTERNATIONAL TAX MEASURES IN RESPONSE TO COVID-19 & FUTURE DEVELOPMENTS JUNE 2021 INTRODUCTION The information contained in this summary is for general guidance only. The application and impact of laws can vary widely based on the specific facts involved. Accordingly, the content of this summary is provided for information purposes. As such, it should not be used as a substitute for consultations with professional tax, legal or other competent advisers. Given the current context, there may be delays, omissions or inaccuracies in the information contained in this summary. For updated developments regarding the measures implemented in each country, please refer directly to our local firms’ websites and governmental official websites. www.taxand.com CONTENTS Argentina Denmark Israel Poland Australia Finland Italy Portugal Belgium France Luxembourg Romania Brazil Germany Malaysia Russia Canada Greece Malta Slovakia Chile Hungary Mexico South Korea China India The Netherlands Spain Cyprus Indonesia Norway Sweden Czech Republic Ireland Peru United Kingdom ARGENTINA USEFUL LINKS OVERVIEW OF PUBLISHED COVID-19 MEASURES https://www.taxand.com/wp- Reduction in tax rates on Debits and Credits content/uploads/2020/10/Medi das-anunciadas-19-10-vf.pdf The Federal Government has reduced Debits and Credits Tax on Bank Accounts rates for transactions carried out by employers ofinstitutions and establishments carrying out specific activities in the healthcare sector. The general rate was reduced from 0.6% to 0,25%. The reduction was in forceuntil 31 December 2020. Extension of deadlines for administrativeproceedings We flag for awareness that the Federal Government enacted a Decree that suspended the course of terms for all administrative proceedings until 29 November 2020, except for those proceedings related to the national public health emergency.
    [Show full text]
  • Solidarity Taxes in the Context of Economic Recovery Following the COVID-19 Pandemic
    Solidarity Taxes in the Context of Economic Recovery Following the COVID-19 Pandemic Research Paper Solidarity Taxes in the Context of Economic Recovery Following the COVID-19 Pandemic Attiya Waris MAY 2021 Solidarity Taxes in the Context of Economic Recovery Following the COVID-19 Pandemic About the Author Attiya Waris is the only Professor of Fiscal Law and Policy in Eastern and Central Africa. She is currently the first female Ag. Deputy Principal, College of Humanities and Social Sciences and first female Director of Research and Enterprise at the University of Nairobi. She holds a PhD in Law and is a specialist in Fiscal Law, Policy and Development. She is an advocate, company secretary, and arbitrator of over 20 years and was the founding Chair of the Fiscal Studies Committee from 2017-2020. She spearheaded the first agreement on sharing of data between a University and a revenue agency globally in 2016. Attiya teaches at the Law School, University of Nairobi, Kenya, the Law School, University of Rwanda and the Centre for Human Rights, University of Pretoria and has previously taught in Malaysia and the United Kingdom. She has researched and published on global, African, Asian, European as well as Latin American issues. Her book 'Tax and Development’ (2013) is the first publication globally that links the areas of tax and human rights, and her more recent publication ‘Financing Africa’ is the first publication globally to map out African fiscal systems. She was a nominee in 2017 for the position of UN Special Rapporteur on Development and is an Observer to the UN Tax Committee.
    [Show full text]
  • Minimum Asset Tax - Proposed Model for Pakistan
    MINIMUM ASSET TAX - PROPOSED MODEL FOR PAKISTAN ADDRESS 408, 4th Floor, Continental Trade Centre, Clifton Block-8, Karachi Email: [email protected] Ph# 35303294-6 Website: www.tolaassociates.com TABLE OF CONTENTS Page S. No. Description No.s Preamble 1 1 Roots of Minimum Asset Tax 1 2 Wealth Tax versus MAT 1 3 Wealth Tax in Other Jurisdictions 2 4 History of Wealth Tax in Pakistan 3 5 Proposed Model 4 5.1 Salient Features of MAT 4 5.2 Income 4 5.3 Resident Pakistani (Section 82) 4 5.4 Major Income types and Rates in Pakistan 4 5.5 Agricultural Income Tax in Pakistan 5 6 Expected Rates 5 7 Impediments 5 8 Way Forward 5 9 Conclusion 5 10 Illustration (Annexure A) 7 11 Valuation Table (Annexure B) 8 12 Major Types of Income & Rates (Annexure C) 10 Preamble On the brink of formation of new Government after general elections, there are reports circulating in print and electronic media with respect to a possible Minimum Asset Tax model to be implemented in Pakistan to recover the economy after the formation of new parliament. In this backdrop, we have inked this article for general public to understand the concept of Minimum Asset Tax, its (non) similarity with wealth tax and its possible features if implemented in Pakistan. This model is much effective to eradicate the disparity in tax payments enjoyed by select few elites like agriculturists who enjoy sacred discriminatory exemptions against the working middle class of the country. However, the model may only be effective if implemented in its true spirit as envisaged in forthcoming article.
    [Show full text]
  • Mise En Page 1
    ACTION PLAN FOR investment and growth Official visit of the Prime Minister to Niort on 11 September 2017 11 September 2017 Contact Matignon Press Office 57, rue de Varenne 75007 Paris - France Tel: +33 (0)1 42 75 50 78/79 Action plan for business growth and investment Contents Progressive lowering of the corporate tax rate to 25% ........................................................ 3 France has the highest corporate tax rate in the EU ................................................................. 3 The corporate tax rate will be cut from 33.33% to 25% by 2022 and the 3% contribution on distributions will be abolished ................................................................................................... 4 Conversion of the CICE into a reduction in employers’ contributions ............ 5 The CICE is an unsustainable tax credit that is not bearing sufficient fruit................................ 5 The CICE will be abolished for wages paid from 2019 and replaced with a lasting reduction in employers’ contributions ............................................ 5 Establishment of a single flat-rate tax on capital income – Replacement of the ISF with a real-estate tax ............................................... 7 French capital taxation is hampering businesses and the economy ......................................... 7 The Government intends to introduce a single flat rate of around 30% on capital income and replace the solidarity tax on wealth (ISF) with a real-estate tax ............ 9 Launch of an action plan
    [Show full text]
  • European Tax Report Confédération Fiscale Européenne (CFE) October - November 2010 / Edition 9
    European Tax Report Confédération Fiscale Européenne (CFE) October - November 2010 / Edition 9 NEWS - DIRECT TAX tablished in the Czech Republic, these contributions do not need to be included in the taxpayers‘ income tax base. In contrast, similar contributions paid to a foreign pension scheme are not deductible if paid by Council agrees on administrative the taxpayer and are considered as taxable income cooperation directive if paid by the employer. The Commission considers that this regime is contrary the free movement of wor- On 7 December 2010, the Ecofin Council reached a kers (Article 45 TFEU), to the freedom of establish- political agreement on the draft directive on admini- ment (Article 49 TFEU) and to the freedom to provide strative cooperation (COM(2009)29). The text shall services (Article 56 TFEU). be adopted without further discussion at the forthco- ming Ecofin meeting. In Sweden, according to the Commission, non-resi- dent pension funds are subject to discriminatory divi- Among the most discussed issues were the following: dends tax rules. Dividends paid to non-resident pen- sion funds are subject to a withholding tax of 15% or - Requests for information to other member states 30% in Sweden, depending on whether Sweden has will have to specify the identity of the person under a double tax treaty with the country of establishment investigation and the tax purpose for which the infor- of the pension fund. Pension funds established in mation is sought; these requirements that serve to Sweden, however, are exempt from tax on dividends avoid so-called „fishing expeditions“ (random collec- as well as from corporation tax.
    [Show full text]