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China update seminar

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22 May 2012

22 May 2012
Diegem Office

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China update seminar China update seminar Presentation Transcript

  • China Update Seminar22 May 2012
  • Agenda ► Welcome ► Mr. Geert Gemis ► Corporate taxation ► Mr. Jos Reniers ► Personal income tax and expatriate taxation ► Mr. Hendrik Serruys ► Chinese business services ► Ms. Ronghui XuPage 2 China Update Seminar
  • Agenda ► 14.30 – 14.45 Welcome by Mr. Geert Gemis, Partner, Chinese Business Services – Tax ► 14.45 – 15.45 Update on corporate taxation by Mr. Jos Reniers, Director Business Tax ► Update on recent changes of the Belgian tax law (Budget 2012) ► Important new reporting requirements ► 15:45 - 15:55 Summary of contents in Chinese by Mrs. Ronghui Xu (Summer) (Chinese business Service Desk) ► 15:55 – 16:10 Coffee BreakPage 3 China Update Seminar
  • Agenda► 16.10 – 17.00 Update personal income tax and expatriate taxation by Mr. Hendrik Serruys, Senior Manager Human Capital Tax ► individual income tax and expatriate taxation aspects - new tax and case law ► Impact of new tax measures for expatriates in Belgium (company car, housing, tax deductions, other) ► Update expatriate taxation issues & recent trends – feedback from our discussions with the head of expatriate tax department ► Overview of recent Circular letters and tax rulings ► Update on R&D related benefits► 17.00 – 17.10 Summary of contents in Chinese by Mrs. Ronghui Xu(Summer) (Chinese business Service Desk)► 17.10 Closing & CocktailsPage 4 China Update Seminar
  • Jos Reniers UPDATE NEW LEGISLATION DI RUPOPage 5 China Update Seminar
  • Agenda► Update new legislation Di Rupo ► Notional interest deduction ► Thin capitalization ► Benefit in kind – company cars ► Combat against tax fraud► Secret commission tax ad 309%Page 6 China Update Seminar
  • Notional interest deductionPage 7 China Update Seminar
  • Notional interest deduction – old regulation► Deemed deduction on qualifying Belgian GAAP equity (reduced with items such as financial fixed assets and equity related to foreign branches, ...)► Deduction linked to 10 year OLO but capped to 3.8 % for tax years 2011 and 2012 ► Tax year 2012: 3.425% (3.925% for SMEs)► Full carry-forward of excess NID but limited to seven yearsPage 8 China Update Seminar
  • Notional interest deduction – new regulation► Law of 28 December 2011 (B.S. 30 December 2011)► NID rate ► Still based on 10 year OLO but reduction of cap to 3% (3.5% for SME) ► Average 10-year bond rate 2011: 4.191% ► Budget note: reduction of cap to 3% for period 2012-2014 - as from 2015: NID rate will be determined by lawPage 9 China Update Seminar
  • Notional interest deduction – modificationsstill in pipeline► Abolishment of NID carry-forward for future excess NID ► NID may only be deducted from taxable base of the tax year► Limitation of deduction of existing “stock” excess NID ► Last operation of the tax return/calculation (after deduction of tax losses/investment deduction and before application of the tax rate) ► If taxable base =/< 1 mio EUR: no limitation ► If taxable base > 1 mio EUR: maximum deduction = 60% of that part of the taxable base exceeding 1 mio EUR ► Carry-forward still limited to seven years (exception: unlimited period of limitation when excess NID is unused due to 60% limitation) ► Problem when large tax loss carry-forward? ► Effect on deferred tax assets?Page 10 China Update Seminar
  • Thin capitalizationPage 11 China Update Seminar
  • Thin capitalization - general► In many countries to prevent tax avoidance by excessive leveraging► Reduction of interest deductibility for tax purposes, possibility of debt reclassification or a combination thereof► Thin Cap limitations depend on debt/equity, cash-flow, …Page 12 China Update Seminar
  • Thin capitalization - current regime► Two Thin Cap rules in Belgium: 7:1 and 1:1► Current legislation: specific 7:1 Thin Cap (for tax heaven countries) where the beneficial owner of the interest is a person who is ► Not subject to tax, or ► Subject to a tax regime for that income that is significantly more advantageous compared to the Belgian tax regimePage 13 China Update Seminar
  • Thin capitalization - new regime► Program Law of 29 March 2012 (B.S. 6 April 2012) ► Entry into force to be determined but at the latest on 1 July 2012 ► No longer limited to interest paid to beneficial owner who is located in a tax heaven country ► Also for intra-group loans (irrespective of tax treatment of interest at the level of the beneficiary) ► Definition of „group companies‟ in accordance with Art. 11 Companies Code (related companies, consortium) ► Excluded (under certain conditions): loans contracted by leasing companies, factoring companies and companies primarily active in the field of public-private cooperationPage 14 China Update Seminar
  • Thin capitalization - new regime ► Change of Thin Cap ratio from 7:1 now to 5:1 ► Debt ► All loans, with the exclusion of publicly issued bonds, other publicly issued borrowing instruments and loans granted by certain financial institutions (banks, insurance companies and other types of financial institutions listed in Art. 56, §2, 2° ITC 92) ► Look at beneficial owner in case of indirect loans and guaranteed loans when main objective is tax avoidance ► Equity = fiscal equity ► The sum of the taxed reserves at the beginning of the accounting period and the paid-in capital at the end of the accounting periodPage 15 China Update Seminar
  • Combat against tax fraudPage 16 China Update Seminar
  • Combat against tax fraudPage 17 China Update Seminar
  • Secret commission tax ad 309%Page 18 China Update Seminar
  • Secret commission tax ad 309%► In the past administrative tolerance to apply article 219 ITC92► Reporting obligation on specific forms► Internal administrative instruction (27 July 2011): strict application of 309% unless ► BIK is reported on the specific forms and in the beneficiary‟s filed tax return ► BIK is included in the beneficiary‟s filed tax return even though it is not reported on the specific form, or ► The beneficiary pays the invoiced amount of the benefit, or the value of the benefit is added to the beneficiary‟s current account in the year during which the benefit is grantedPage 19 China Update Seminar
  • Secret commission tax ad 309%► Addendum to internal administrative instruction of 27 July 2011: transitory period until 30 June 2012 ► Lump sum benefits in kind and benefits in kinds for the private use of a mobile phone ► Tax authorities may decide not to apply the secret commission tax on benefits which have been discovered during a tax audit prior to 1 July 2012 and which are not (or not sufficiently) reported, provided these benefits can still be taxed in the hands of the beneficiary during the legal assessment period ► Other benefits in kind (and abovementioned benefits which have not been discovered prior to 1 July 2012) ► Application of secret commission tax unless these benefits are spontaneously reported by the beneficiary prior to 1 July 2012Page 20 China Update Seminar
  • Secret commission tax ad 309%► Addendum to internal administrative instruction of 27 July 2011: strict application of 309% as from 1 July 2012 ► No application of secret commission tax on benefits which are recorded on the current account of the beneficiary in the year during which they have been granted ► No longer accepted: not submitting the appropriate forms and waiting until the tax audit to record the amount of the current account ► Elements to take into account by the tax authorities when assessing whether or not to apply the secret commission tax ► Good faith of the taxpayer who has simply forgotten or has mistakenly not reported the benefit ► Exceptional nature of the failure to report and the materiality of the error ► New administrative tolerance: no 309% when no reporting due to reasonable (but wrong) classification as social/cultural advantage by grantorPage 21 China Update Seminar
  • 新的税收政策► 虚拟利息抵扣 ► 虚拟利息抵扣上限由原来的3.8%调整为3%(大型企业)/3.5%(中小型 企业) ► 此措施自2012年生效 ► 欲废除有关虚拟利息抵扣额可向后续7个纳税年度结转的规定► 资本弱化 ► 很多国家避免资本弱化的问题 ► 下调可抵扣的利息,或者债务重新分类,或者两种方法组合 ► 资本弱化的限制,依赖于债务股本比率,现金流,等等 ► 即将出台的新规定,将债务股本比率的要求,由原先的7:1收紧至 5:1Page 22 China Update Seminar
  • 新的税收政策► 打击逃税 ► 在新的税务政策下,税务局将更容易准备材料,而公司要更多收集 证据 ► 税务局可推翻任何法律行为Page 23 China Update Seminar
  • 309%补税处罚金► 309%补税处罚金 ► 受益人申报他们的所得,公司则可以抵扣 ► 公司提供手机(费用): 在2012年7月1号前被发现未申报的,不实施 309% ► 其他应税福利和2012年7月1前未被发现未申报的手机费用,如在7月 1号之前未申报, 309%补税处罚Page 24 China Update Seminar
  • Hendrik Serruys CHINA UPDATE SEMINARPage 25 China Update Seminar
  • Update personal income tax and expatriatetaxation► Introduction – new government, new tax budget► Taxation of company cars► Stock option income► Personal income tax measures► Bik housing/utility► Pension taxation► Combat of tax fraud► R&D incentives► Expatriate tax regime – feedback meetingPage 26 China Update Seminar
  • Introduction► Tax measures: impact in 2012 (EUR 3,449 mio) EUR (in mio) Percentage Notional interest deduction 1,620 + 45.6% Taxation of capital gains on shares 150 + 4.2% Company car taxation 200 + 5.7% Externalization pension provisions 30 + 0.8% Stock options 20 + 0.5% Benefit in kind housing, etc. 170 + 4.8% WHT increase and solidarity levy 917 + 26.0% Stock exchange tax 50 + 1.4% VAT pay-TV 84 + 2.4% VAT notaries and bailiffs 100 + 2.8% Excises 158 + 4.5%► Related measures (combat fraud, …): EUR 3,220 mio (2012-2014)Page 27 China Update Seminar
  • Company cars► Adopted (applicable as from 1 January 2012) ► Change to the calculation formula for benefits in kind (BIK) for company cars ► Limitation to deduction of lump sum commuting cost ► Additional disallowed item related to company car costsPage 28 China Update Seminar
  • Company cars► Change to the calculation formula for BIK company cars BIK = car‟s list price x CO2 coefficient x 6/7 ► Car list price: amount invoiced, including VAT and options, but excluding rebates and discounts ► Amount invoiced: also for second hand cars and leased cars ► Leased cars: amount invoiced, including price of the option to buy ► Private kilometers are not relevant anymore► Regular changes and adjustments to tax lawPage 29 China Update Seminar
  • Company cars► Change to the calculation formula for BIK company cars (cont‟d) ► CO2 coefficient ► Basic coefficient ► 5.5% for emission ► 95 g/km (diesel engine) ► 115 g/km (fuel engine) ► Higher CO2 emission levels ► Increase with 0.1% per gram (maximum coefficient: 18%) ► Lower CO2 emission levels ► Decrease with 0.1% per gram (minimum coefficient: 4%) ► Minimum amount BIK ► EUR 1,200 (2012 – tax year 2013) ► Formula will be reviewed annually to take into account the evolution of the CO2 emission levelsPage 30 China Update Seminar
  • Company cars - impact► Commuting >25 # Type Company cost Individual cost Total / car 100 Mini One 88,46 -299 -210,54 80 BMW X1 138,76 188 326,76 50 Citroen C5 137,95 -107 30,95 60 BMW 520d 105,84 545 650,84 10 Audi Q7 -186,2 2645 2458,8 300► Commuting < 25 # Type Company cost Individual cost Total / car 100 Mini One 68,43 14 82,43 80 BMW X1 48,14 663 711,14 50 Citroen C5 73 302 375 60 BMW 520d 40,39 957 997,39 10 Audi Q7 -343,29 3263 2919,71 300 ► Weighted average > 25 km = EUR 234,24 tax gain ► Weighted average < 25 km = EUR 662.73 tax gain ► Commuting more or less than 25 km resp. 30% and 70% : new average = EUR 534Page 31 China Update Seminar
  • Company cars► May 1, 2012 – Change is clear► Certain percentage of list price to reflect age of car. Age of the car Percentage of list price 0 – 12 months 100% 13 – 24 months 94% 25 – 36 months 88% 37 – 48 months 82% 49 – 60 months 76% 61 – … months 70% New formula BIK = car‟s list value x CO2 coefficient x 6/7 x age-correction. 32Page China Update Seminar
  • Company cars► Pro-rata rule changed ► Monthly calculated depends on the # of days ► For example: if the taxable benefit in kind is EUR 3,000 per annum, the monthly taxable benefit included in the payslip shall be EUR 254.10 for the month of May (3,000 x 31/366) and EUR 245.90 for June (3,000 x 30/366)► Deduction professional costs for commuting distance ► EUR 0.15 x commuting distance x working days limited to BIK company car ► Professional lump sum expenses lost► Disallowed item company car costs (corporate tax) ► 17% of benefit in kind (car‟s list price x CO2 coefficient x 6/7) ► Disallowed item is minimum taxable base ► No tax deductions : DRD, NID, tax losses, investment deduction, …Page 33 China Update Seminar
  • Company cars► Action points / points of attention ► Review your car fleet and car policy – consider alternatives ► Reconsider the remuneration package of employees/directors involved ► Consider having the lease taken on by the employee, reimbursing the employee for the lease and reimburse the professional mileage of the employee (if the amount is considerable) instead of providing free use of a company car ► Compare effect on BIK with calculation tool on our website (http://www.ey.com/BE/en/Services/Tax/Calculate_new)► General remark ! ► Budget 200 mioPage 34 China Update Seminar
  • Stock options► Adopted (applicable as from 1 January 2012) ► Increase of benefit in kind from 15% to 18% of the value of the underlying shares ► Increase of reduced benefit in kind from 7.5% to 9% of the value of the underlying shares ► Applicable to stock options offered as from 1 January 2012 ► Reference point is date of offer (text of the law: “offertes / aangeboden”), not date of grant (text of justification to the amendment: “toegekend / attribuées”)Page 35 China Update Seminar
  • BIK housing/utilities► Increase of BIK for free housing and utilities ► Increase of the BIK for heating from EUR 1,480 to EUR 1,820 ► Increase of the BIK for electricity from EUR 740 to EUR 910 ► Increase of the BIK for free housing for house with a notional income (cadastral income) exceeding EUR 745 ► Currently: 100/60 x notional income x 2 ► 2012 : 100/60 x notional income x 3.8 ► Amounts to be subject to indexation annually► Difference rental contract signed by employer or employee? ► CalculationPage 36 China Update Seminar
  • BIK housingGross based BIK Housing Tax paid on BIK housingKI=850 (old) 4,632.22 2,478.24KI=850 (new) 8,801.21 4,708.65Rent = EUR 850/month 10,200.00 5,457.00Net based BIK Housing Tax paid on BIK housingKI=850 (old) 4,632.22 5,329.54KI=850 (new) 8,801.21 10,126.12Rent = EUR 850/month 10,200.00 11,735.48Page 37 China Update Seminar
  • Tax deductions► Adopted (applicable as from TY 2013) ► Abolishment of tax reductions for ecological investments (solar panels, …), except for investments in isolation of roofs► Further modification ► Conversion of deductions into tax reduction at 45% ► Deduction for only own dwelling, deduction for child care expenses and gifts ► Exception: alimony payments remain tax deduction ► Other tax reductions (life insurance, own dwelling taxation (old regime), etc.): tax reduction at 30% instead of tax reduction at adjusted average tax rate (between 30% and 40%)Page 38 China Update Seminar
  • Group insurance / Pensions► Modification of treatment of payments and contributions ► Pension payments (second pillar): increase of tax rate on payments (part relating to employer contributions) ► Old situation ► Payment at ages 60 to 64: 16.5% ► Payment at age 65: 10% ► New situation ► Payment at age 60: 20% ► Payment at age 61: 18% ► Payment at age 62 to 64: 16.5% ► Payment at age 65: 10%Page 39 China Update Seminar
  • Pensions► Modification still in the pipeline: adaptation of 80%-rule ► Limitation of deductibility of complementary pension contributions based on amount of pension payment upon retirement ► Currently: cap of 80% of last annual gross salary ► Introduction of an additional cap: pension of the highest public official (gross EUR 72,480.72 per year or EUR 6,040.06 per month)Page 40 China Update Seminar
  • Combat against tax fraudf.e. Abuse of management companies► Tougher approach towards abuse of management companies ► Not aimed at management companies in se ► Aimed at abuse of management companies ► Combat of turbo-usufruct transactions ► Combat against avoidance of social security regime for employees and abuse of benefits ► Private expenses ► Company cars, BIK for heating and electricity ► Tougher application of secret commission taxPage 41 China Update Seminar
  • R&D incentives have not been modified► R&D incentives: confirmation of continuation (and, insofar possible, extension) even increase of tax measures ► Withholding tax exemption ► Investment deduction for R&D ► Patent income deduction ► Exemption of regional grants► Belgium remains attractive R&D/IP locationPage 42 China Update Seminar
  • Expatriates in Belgium – Meeting notes► Key notes and matters of attention 1. Review application file after 10 years ► Verification if basic conditions are still met ► Temporary stay in Belgium ► Economic interest abroad ► Prepare file and documentation ► Review also possible on special occasions ► Purchase of real estate in Belgium ► Marriage with Belgian national 2. In case of re-qualification into resident tax payer: applicable as from next income year 3. Belgian nationality: immediate change to resident tax status ► Practically as from next monthPage 43 China Update Seminar
  • Expatriates in Belgium – Meeting notes 4. Specialists ► Minimum salary threshold ► Labor law ► Immigration (gross before application of expat circular) 5. Researchers ► Withholding tax exemption ► Apply expat status correctly in Belgian payroll ► Intention: review expat status for researchers (higher limit of EUR 29,750) includes review of withholding tax exemption for researcher 6. C-levels ► Expat status still possible ► However, day to day management activities should be in BelgiumPage 44 China Update Seminar
  • Expatriates in Belgium – Meeting notes 7. Coordinating and controlling activities ► Should be separate division ► No operational activities ► Coordinating and controlling activities required ► Proposal to present an approved „list‟ ► Spread of costs within the group? 8. Moving ► 62.5% of first month salary ► Past: accepted without proof ► New: (minimum) proof of documents, costs made ► Upfront and to be approved 9. Cola/Coha ► Residence in Belgium required. „Commuter‟ not!Page 45 China Update Seminar
  • Expatriates in Belgium – Meeting notes 10. Temporary housing ► Cost proper to the employer ► Until sign of lease contract or family arrives in Belgium ► If longer, part of technical note 11. Technical note – Hypothetical housing ► I.p.12.5% of ABS ► In case expat has double housing (Belgium and home country), no hypo housing to be deducted in technical note (NTA) 12. Two employers in different countries ► Different activities! ► Expat status on Belgian part possible, with exclusion of foreign part ► Only travel on Belgian part to be included ► Director activities abroadPage 46 China Update Seminar
  • Expatriates in Belgium – Meeting notes 13. Travel ► Documents ► Evolution: f.e. Boarding pass -> Smartphones ► Proof still required by any means ► Work at home (in home country) ► = not qualified as foreign day ► However, double tax treaty rules could become applicable! 14. Personal tax credits – broken year ► Full calendar year with abode or 75%-rule : IY 2010 ► Retro-active implementation ► Abode on 1/1Page 47 China Update Seminar
  • Expatriates in Belgium – Meeting notes 15. Temporary project outside Belgium ► Relocation -> ip expat status lost ► If „short‟ stay outside Belgium: expat regime can be continued ► Short = max six months ► Family remains in BelgiumPage 48 China Update Seminar
  • 个人收入所得税和外派人员的税务政策► 公司车 ► 员工个人税务上如何计算应税福利:计算公式改变 购车目录价格x二氧化碳排放系数x6/7x车龄系数 ► 每年最低应税福利为1200欧元 ► 通勤费用可抵扣,金额不超过应税福利本身 ► 应税福利的17%不能作为费用在企业所得税税前列支 ► 重新审核公司内部的相关政策► 应税福利 ► 公司替员工支付供暖费:1480欧元提高到1820欧元 ► 公司替员工支付电费:740欧元提高到910欧元 ► 公司替员工支付租金:应税福利是以前的1.9倍 ► 在新旧税务政策下, 都是公司签租房合同成本最低, 但二者差距在缩 小Page 49 China Update Seminar
  • 个人收入所得税和外派人员的税务政策► 税务抵扣 ► 投资于节能项目将不再减税 ► 把抵扣变成减税► 养老金 ► 提前退休支取,个人所得税率将更高► 研发相关的政策:没有取消,甚至更优惠 ► 比利时仍是对研发和知识产权有吸引力的国家Page 50 China Update Seminar
  • 同税务局高层会议纪要 ► 外派资格每10年会重新审核 - 条件是否仍满足 - 特殊情况会提前审核:如购房,同比利时人结婚 ► 专家:工资最低限额 ► 研发人员:预提所得税的减免必须在工资单中正确体现 ► 经理级别:可适用此政策,但日常办公地点要在比利时 ► 协调和控制活动 ► 搬家费:事先提供证据 ► 居住地必须在比利时 ► 临时住所:雇主的费用 ► 双重住所:不能抵扣 ► 出差:证据 ► 外派中断的税收抵免:75%原则 ► 比利时境外短期项目:少于6个月,家人仍住在比利时Page 51 China Update Seminar
  • We thank you for yourattention
  • Ernst & Young Geert Gemis Tel.: +32 3 270 14 57Assurance | Tax | Transactions | Advisory Email: geert.gemis@be.ey.com2012 Ernst & Young Transaction Advisory ServicesAll rights reserved.About Ernst & Young Jos ReniersErnst & Young is a global leader in assurance, tax, Tel.: +32 3 270 12 38transaction and advisory services. Worldwide, our Email: jos.reniers@be.ey.com152,000 people are united by our shared valuesand an unwavering commitment to quality. Wemake a difference by helping our people, ourclients and our wider communities achieve theirpotential. Hendrik SerruysErnst & Young refers to the global organization ofmember firms of Ernst & Young Global Limited, Tel.: +32 3 270 14 68each of which is a separate legal entity. Email: hendrik.serruys@be.ey.comErnst & Young Global Limited, a UK companylimited by guarantee, does not provide services toclients.For more information about our organization,please visit www.ey.com/be. Ronghui XuFollow us: twitter.com/EY_Belgium Tel.: +32 3 270 12 58 Email: ronghui.xu@be.ey.comPage 53 China Update Seminar