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    Wednesday 26 June 2019

    A round-up of changes to banking, accounting and tax laws from around the world

    Russia bans foreign bank branches
    New legislation has been introduced preventing foreign banks from opening branch offices in Russia. The changes form part of a strategy to develop the country’s domestic banking sector.
    Branches of foreign banks have previously operated beyond the control of the Russian banking regulations, prompting concerns that they have benefitted from an unfair competitive advantage compared to Russian banks.
    While they will no longer be able to open branch offices, foreign banks will be able to open subsidiary banks and representative offices established under Russian law and within the jurisdiction of the national banking regulators.
    For more information, contact:
    Elena Yuzhakova
    ICLC, Russia
    T +7 495 623 9346
    E yuzhakova@iclcgroup.com
    Changes to Swiss accounting law
    Switzerland has introduced a new accounting law, which sets out financial reporting and accounting principles for companies based on their size and financials rather than their legal form. For example, small and medium-sized enterprises with less than CHF500,000 in revenues will only need to provide an annual report with balance sheet, profit and loss statement and notes. By comparison, larger companies with more than CHF20m in assets, CHF40m in revenues and 250 full-time employees are obliged to carry out an audit and provide additional documentation including a management report, expanded notes and cashflow statement.
    For more information, contact:
    Guido Schmid
    ABT Treuhandgesellschaft AG, Switzerland
    T +41 41 748 62 00
    E guido.schmid@abt.ch
    Tax changes in Ukraine
    Ukraine has introduced new rules for transfer price setting including for ‘controlled operations’. These cover transactions with non-residents where the corporate tax rate in their state of registration is 5% or lower than in Ukraine.
    An environmental tax for vehicle recycling has also come into effect. It will apply to vehicles that are imported within the customs territory of Ukraine, manufactured and sold in Ukraine, or purchased from someone who is not liable for this tax.
    The Tax Code of Ukraine has also been amended as of August 2013. Tax relief on residential property will now be based on size, with a 2.7% tax charge applying to any area over the stated parameters, from 2014. Tax relief will not apply if residential property is leased or used in business activities.
    For more information, contact:
    Romana Shchur
    Nexia DK, Ukraine
    T +38 032 298 8540
    E romanashchur@dk.ua
    Tax reform in Puerto Rico
    Puerto Rico has introduced the Tax Burden Adjustment and Redistribution Act, resulting in substantial changes to the 2011 Tax Code. Most of the amendments apply to tax years beginning after 31 December 2012 and include a change to the range of progressive tax rates from 20% to 39% (compared to 20% to 30% under the 2011 Tax Code); a decrease in the deduction to determine tax from $750,000 to $25,000; and the disallowance of intercompany expenses.
    For more information, contact:
    Gabriel J Viera Pina
    Nexia Cardona & Co, Puerto Rico
    T +1 787 522 0300
    E gabriel.viera@nexiacardona.com
    UK tax treatment of high-value residential property
    UK residential properties worth more than £2m and owned by a ‘non-natural person’ – usually a company, partnership or collective investment scheme – will now be subject to an annual tax charge. The Annual Tax on Enveloped Dwellings (ATED) will be based on the market value of the interest in the property owned by the non-natural person, on the relevant valuation date. Property owners liable for the tax will need to file their first online self-assessment tax return by 1 October 2013, with payment due by 31 October 2013.
    Capital gains tax will now also be charged at 28% on gains realised on the disposal of UK residential property worth more than £2m and owned by non-natural persons. The charge will only apply to the ATED-related gain (i.e. the gain which accrues after 5 April 2013 for a period in which the property was subject to the ATED) on a disposal, part disposal or a grant of an option over such property. It will not apply to indirect interests in UK residential property, such as shares in property-owning companies.
    For more information, contact:
    Clare Cromwell
    Saffery Champness, UK
    T +44 20 7841 4000
    E clare.cromwell@saffery.com
    UK Statutory Residence Test in force
    Individuals will need to consider very carefully how the newly introduced UK Statutory Residence Test will apply to their own personal circumstances in determining whether they are resident or non-resident in the UK for tax purposes.
    There are three main parts to the test, which must be applied in the order below. So, if an individual meets any of the automatic overseas tests, the other tests are no longer relevant.
    1. Automatic overseas tests, i.e. for non-UK residence
    2. Automatic UK tests, i.e. for UK residence
    3. Sufficient ties tests, i.e. ongoing ties to the UK.
    In view of the potential complexity involved with some of these new tests, it is important for individuals to maintain records to support the self-assessment of their residence status, in the event that the UK tax authorities should question this.
    For more information, contact:
    Clare Cromwell
    Saffery Champness, UK
    T +44 20 7841 4000
    E clare.cromwell@saffery.com
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