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Germany Update New double-taxation treaty between Germany and Switzerland The finance ministers of Germany and Switzerland have reached an agreement on a new double-taxation treaty that resolves open questions for the taxation of capital and investment income which have existed for decades. The goal was to reach fairness in taxation, especially for German tax payers. Both countries are satisfied with the outcome of the negotiations. The privacy protection for Swiss banks remains and the German tax claim is warranted. The regulations of the OECD-model convention for the exchange of information’s are implied. With this treaty the bordering counties also try to diminish the distortion of competition. German citizens should no longer be prevented to open a bank account in Swiss banks, but at the same time tax evasion should no longer be an element of the investment for Germans. However the most important parts of the new doubletaxation treaty are the taxation for past and future capital and investment income in Switzerland. People who had money on deposit in Switzerland on 31 December 2010 have to make a single payment to satisfy their tax responsibilities for the past years. The tax rate will be 19% - 34%. There are different components which determine the exact tax rate. This will be done with the help of a calculation formula. The bank will collect the money and will transfer the money to the German authority. There will be no further prosecution. 2 billion Swiss francs in guaranteed money. This money will be absorbed with incoming tax payments of German taxpayers and will be repaid to the credit institutes. For future capital and investment income there will be a flat-rate withholding tax in amount of 26.375%, which equals the German flat-rate withholding tax for capital and investment income. Again the Swiss bank will retain the tax and transfer the money to Germany. Another not inconsiderable part of the double-taxation accord is the simplification of requests for further information on possible investors. The only requirement will be the name and a plausible reason for the request. For the first two years after the treaty comes into force, each country is allowed to make 750 to 999 requests. After the two year span, this margin will be adjusted. There is still no permission to perform ‘fishing expeditions’, which means that Germany cannot select random people and request further information about possible deposits. The treaty is still awaiting the approval of both parliaments but there few doubts that the new double taxation treaty will be approved. After the approval by both parliaments, the treaty will come into force on 1 January of the following year. It is expected that this approval will come in 2012 so that the double taxation treaty will come in to force on 1 January 2013. For more information please contact: PKF Deutschland GmbH Wirtschaftsprüfungsgesellschaft There will also be another option for the investor. He can voluntarily reveal all his deposits. In this case, the Swiss bank will send the balance of accounts for each 31 December from 2002 up to the day that the agreement comes in to force. These assets will be taxed. To save the minimum German income for this past taxation and in recognition of their willingness to co-operate with agreement, Swiss credit institutes pledge to contribute 15 // PKF International Tax Alert All Regions Issue 8 November 2011
Ghana Update Highlights of the tax proposals in 2011 fiscal year budget. Domestic Tax (Direct taxes) Withholding Tax ■ ■ Threshold is now GH¢ 500 instead of GH¢50 Foreign suppliers of service now at 15% instead of 5%. Gift Tax rate increased from 5% to 15% so as to be in line with the Capital Gains tax rate. National Fiscal Stabilisation Levy which was introduced in mid 2009 intended to last for 18 months is now extended for an additional year to end 2011. Institutions with tax-free status due to their non-profit making objectives are now to have their incomes from commercial activities subjected to tax. The Commissioner- General of the GRA is to initiate an amendment of the tax law to enable Government tax all commercial activities undertaken by such institutions. Taxation of Professionals ■ A special desk in the Domestic Tax Division of GRA is set up from January 2011 to monitor compliance of professionals in their tax payment. These include accountants, surveyors, building contractors, medical doctors, lawyers, economists, bankers, insurers and consultants. Mining Royalties to be paid monthly instead of quarterly All NGOs and charitable organisations are to re-apply for tax exempt status on periodic basis with their audited financial statements and a certified record of their activities by the appropriate sector ministry. The following items, which were zero-rated, have been re-classified as VAT exempt items: a) Locally produced pharmaceuticals b) Locally produced textbooks and exercise books c) Locally manufactured agricultural and machinery and other agricultural implements and tools. Haulage and vehicle hiring are now taxable under the VAT Law. Communication Service Tax Communication Service Tax is extended to all companies and persons across the communication industry and now includes the following: a) Public Corporate Data Operators b) Providers of Radio(FM) broadcasting services c) Providers of Free-to-air television services. For more information please contact: Emmanuel Afoakwah Tax Manager PKF Ghana T: +233 21 221 266 M: +233 (0)20 8191932 E:eafoakwah@pkfghana.com Domestic Tax (Indirect taxes) VAT The threshold is increased from the current GH¢ 10,000 to GH¢ 90,000 for both goods and services. VAT taxpayers whose annual business turnover fall between GH¢ 10,000 and GH¢90,000 will now operate VAT Flat Rate Scheme, charging a flat rate of 3%. 16 // PKF International Tax Alert All Regions Issue 8 November 2011
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