On June 12, 2020, Federal Government passed a legislation which introduces a register of directors for Australian companies. Each director will have to register and procure a Director Identification Number (“DIN”). As a result of the government facing coronavirus related challenges in 2020, the implementation of a DIN regime will probably in the first half of 2021. The DIN regime also applies to the directors of foreign companies registered in Australia.
Penalty for contravention of DIN requirement - The criminal and civil penalties for contravention of DIN requirements are broadly consistent with current penalties applicable to comparable provisions in the Corporations Act 2001, the criminal penalties for a director applying for multiple DINs or misrepresenting a DIN could be 12 months’ imprisonment.
Prior to this legislation, directors could have had multiple records within ASIC systems with minor variations of name (with a middle name), address and/or other personal details. The mandatory DIN requirement will prevent the directors from registering under different names. All the existing and proposed directors should obtain these as soon as the same becomes applicable.
From July 1, 2020, the national minimum wage is increased to AUD 753.80 or AUD 19.84 per hour (from AUD 740.80 per week or AUD 19.49 per hour).
From July 1, 2020, the high-income threshold is increased to AUD 153,600 from AUD 148,700.
Employees can have access to unfair dismissal eligibility if their annual earnings are less than the high income threshold. Half the amount of the high-income threshold represents the cap on the amount of compensation available in unfair dismissal proceedings (AUD 76,800 from July 1, 2020).
Employers need to be aware about the increased thresholds while ascertaining risks of dismissing an employee.
Parental leave pay as of July 1, 2020 is AUD 753.80 (previously AUD 740.60 per week and tax for a maximum of 18 weeks.) From July 1, 2020 the employees will now have an option to split Parental Leave Pay over 2 periods within 2 years. The first set period is of 12 weeks which is to be used in one continuous period within 12 months of birth or adoption of child. The second flexible period allows an employee to use up to 30 days of flexible Parental Leave Pay. The flexible Parental Leave Pay period can be taken in flexible periods as negotiated by the employee with their employer and must be taken within 24 months of the birth or adoption of a child and usually starts after the first Parental Leave Pay period ends.
Employer will have to review the employment agreements and employee policies.
The maximum salary ceiling for Super contribution is AUD 57,090 per quarter for the year 2020-21 w.e.f. July 1, 2020. (For the year 2019-20 the salary ceiling was AUD 55,270).
The payrolls will have to be revised accordingly.
Corporate tax rate for base rate entities (small businesses with aggregate turnover of less than AUD 50 million) is reduced to 26% from the previous 27.5% for the financial year 2020-21.
The reduced rate, albeit small, will benefit many entities in Australia.
The Normative Ruling No. 81 consolidating several regulations regarding the registration of Brazilian companies has been published by the Brazilian National Department of Company Registration and Integration (“DREI”), which is effective from July 1, 2020. Some of the changes are as follows:
The move is expected to significantly simplify the set-up process and reduce the set-up time.
Those incorporating LLCs in Brazil can now use foreign language words in the name of Brazilian LLC. The new process is likely to reduce the time for set up, which has been amongst the highest in the world.
The British Columbia (“BC”) has introduced a new type of legal entity as “Benefit Company” by making amendments to the British Columbia Business Corporations Act ("BCBCA"). Post amendment, existing business have an option to convert their businesses into Benefit Company. These changes are made effective from June 30, 2020.
The British Columbia Business Corporations Act ("BCBCA") will be applicable to Benefit Company along with some specific requirements as mentioned below:
A new option is introduced regarding meal vouchers and meal allowances that will enable employers to provide its employees meal allowance directly in cash. This new option is not mandatory; an employer can adhere to its original practice.
Employer’s administrative burden will be eased and will save money from high fees and unnecessary paperwork if they choose to provide meal allowance in cash instead of vouchers.
The Employment Support Scheme (“ESS”) was introduced in Hong Kong on May 18, 2020. ESS provides wages subsidies to eligible employers to retain their employees. The scheme introduced by the government is to provide time-limited financial support to employers to retain employees who could be dismissed during pandemic. The Subsidies will be disbursed in two tranches. The first tranche of subsidies will cover the period from June to August 2020 and the second tranche will cover the period from September to November 2020.
Employers have to undertake that:
All employers who have been making Mandatory Provident Fund (“MPF”) contributions for employees are eligible. ESS subsidies will be calculated at 50% of actual wages paid during the specified month The Subsidy will have a wage cap of HKD 18,000 per month and the maximum wage subsidy per employee is HKD 9,000 per month.
Employers should apply for their ESS subsidy through the Hong Kong government online portal and makes sure that for availing this subsidy there are no violations of ESS provisions otherwise there will be penal implications.
Important changes have been made to Hong Kong anti-discrimination and harassments laws through Discrimination Legislation (Miscellaneous Amendments) Ordinance 2020 (Ordinance) that came into effect from June 19, 2020.
Following are the important changes as per the relevant ordinances:
Employers can make changes in the company policies to have them in line with the newly introduced provisions. Employee awareness will help avoid any violations of these provisions.
Central Board of Indirect Taxes and Customs (“CBIC”) voted its Notification No. 41/2020 (Central Tax) dated May 5, 2020 has further extended the deadline for submission of the GST Annual Return or Reconciliation Statement (GSTR 9 / GSTR 9C) for the financial year 2018-19 until September 30, 2020.
Effective October 1, 2020, an e-commerce operator* is required to deduct TDS at the rate of 1% of gross amount of sales or services or both, for facilitating any sale of goods or providing services of an e-Commerce participant** through its digital or electronic facility or platform. TDS to be deducted at the time of credit of amount of sale or services or both to the account of an e-commerce participant or at the time of payment thereof to such e-commerce participant by any mode, whichever is earlier.
The e-commerce operators will have additional compliances to report and pay this TDS.
The Income Tax Department (IT Dept.) has introduced a new format for Form 26AS (Tax Credit Statement) w.e.f. June 1, 2020. Brief details of new format of Form 26AS is as under:
The availability of such tax details and other related information in new Form 26AS will help the taxpayers to verify those details and take corrective steps, if any, of the information submitted is incorrect. This may increase work for employers and deductors as there may be additional questions from employees, etc.
The Resident Italian VAT registered businesses in Italy would have to submit electronically to the Italian Tax Authorities the data relating to the transactions with non-registered customers and suppliers (cross border sales and purchase invoices). From January 2020, the electronic filing of such communication must be carried out on a quarterly basis by the end of the month following the relevant quarter instead of monthly filing.
Effective from May 2020, the social security rate for Children Upbringing increased from 0.34% to 0.36%. Company bears this tax liability.
From June 1, 2020, the non-resident providers of digital services are required to withhold VAT on payments received for digital services provided in Mexico. Non-resident providers of digital services in Mexico must electronically issue and send a voucher (in PDF format) clearly indicating that a payment for digital services is subject to VAT, and the VAT amount.
Increased VAT compliance will apply for non-resident digital service providers in Mexico.
The Dutch Senate adopted the Implementatiewet registratie uiteindelijk belanghebbenden (Implementation Act on Registration of Ultimate Beneficial Owner) and accordingly, from September 27, 2020, legal entities will be required to report their Ultimate Beneficial Owner’s (“UBO’s”) within 18 months from the deadline, however, they may start collecting the information from July 8, 2020 onwards.
The new entities have to register their UBO’s within a week from incorporation after the deadline.
An Ultimate Beneficial Owner (“UBO”) is a natural person or persons ultimately owning or controlling the entity (details available in our August 2019 Newsletter). A clarification regarding pseudo ultimate beneficial owner is added. In certain cases, a lower percentage than 25% also may lead a natural person to be qualified as a UBO, for e.g. if, pursuant to a contractual relationship the authority exists to appoint or dismiss the board ( bestuur ), the person so authorized will be deemed UBO subject to other conditions.
Certain UBO information will be publicly available. However, in exceptional circumstances the UBO can request the Chamber of Commerce to block public UBO information in the register.
Initially the implementation deadline was January 10, 2020 as mentioned in our January 2020 Newsletter, but was delayed due to privacy concerns of the UBO’s and the subsequent Dutch Senate’s preliminary inquiry.
The listed companies and their 100% subsidiaries are, however, exempt from the registration requirement.
Singapore Government published the Personal Data Protection (Amendment) Bill 2020 on May 14, 2020 for public consultation. Following are some of key highlights of proposed bill.
Organizations collecting, processing and preserving personal data shall track the effective date of the above-mentioned proposed changes and accordingly change the policies of the organization to make it in line with the existing provisions of the act.
The Swedish Ministry of Finance has proposed a withholding tax on dividends and thereby replacing the current withholding tax law (1970:624). The new tax law will be referred as a withholding tax on dividends. This new withholding tax act on dividends is proposed to be in force for dividends paid after June 30, 2022.
The United Kingdom (“U.K”) has introduced its new Global Tariff (“UKGT”) which will become effective from January 1, 2021. These new tariffs will make it easier and cheaper for UK economy to import and export goods from overseas as it will use sterling pound (“GBP”) instead of EU’s Euro (“EUR”).
The new UKGT will remove unwanted trade barriers, cost pressures and support UK industries on global competitiveness.
The UK House of Commons has approved the introduction of Digital Services Tax (“DST”) as provided by UK’s Finance Bill, 2020 with effect from April 1, 2020. The rate will remain at 2% on the revenues of search engines, social media platforms, and online marketplaces that derive value from UK users.
The DST will be applicable on businesses who have their group’s worldwide turnover from digital activities exceeding GBP 500 million and revenue from UK users exceeding GBP 25 million.
This will lead to increase in cost implications for business with a turnover from digital activities above certain thresholds.
From June 1, 2020 Chile has imposed a new 19% Value-Added Tax (“VAT”) on digital services by foreign digital service providers. Digital services such as the following will be subject to VAT at the abovementioned rate:
The European Commission (“EC”) on July 15, 2020 has adopted a range of Tax reforms along with an action plan for bringing fairness, efficiency and sustainability in European Union’s tax regime. The tax package plans to replace non-resident registrations with single EU VAT registrations, reforms of VAT on financial services, e-invoicing and live reporting of transactions, etc.
The 3 elements in Tax Package includes:
VAT measures within the Tax Package’s Action Plan 2020/21 and 2022/23 include
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