A Mixed Bag of Budgets
Kitty Miv, Editor
15 October, 2020
Having concentrated our attention last week on VAT and other indirect taxes, this week, we will be focusing on budgets, starting with the recent submission to Parliament by the Finnish Government of the 2021 Budget, which included measures such as an increase in the VAT registration threshold from EUR10,000 to EUR15,000 on January 1, 2021, in addition to moves on 'green' and 'sin' taxes, such as reducing the tax value of fully electric company cars and exempting the provision of electric car charging facilities from tax between 2021 and 2023, increasing the taxes on fuels used for manufacturing and hearing, and hiking alcohol and tobacco taxes. I feel that it may be a long, cold winter in Finland!
Meanwhile, in sunnier climes, the Australian Government announced in its Budget that it would be bringing forward personal tax cuts that had been scheduled for 2022.
The Australian authorities additionally unveiled new reliefs for businesses, announcing that from October 6, 2020, until June 30, 2022, businesses with turnover up to AUD5bn will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
The Government also outlined plans for enhanced incentives for research and development, and revealed that companies with turnover up to AUD5bn will be allowed to offset losses against previous profits on which tax has been paid, to generate a refund.
The Greek authorities recently announced their budget plans for the coming period, although the 2021 Budget submitted to Parliament for scrutiny contained a number of already announced tax relief measures as well.
Under the Budget measures as outlined, social security contributions for private sector employees will be reduced by three percentage points from 2021. Additionally, businesses hiring new workers will receive a social security tax holiday for six months beginning October 1, 2020. Solidarity contribution payments will be also be suspended for 2021.
With regard to value-added tax, the Government is extending the temporary reduction in VAT from 24 to 13 percent on passenger transport, coffee and non-alcoholic beverages, cinema tickets, and tourist activities by six months to April 30, 2021.
Then in Norway on October 7, 2020, the Budget for 2021 was tabled in Parliament, and notably included a proposed 15 percent withholding tax on interest, royalties, and rents associated with physical assets such as oil rigs made to related companies in low-tax jurisdictions, which is intended to prevent profit shifting, and is due to enter into effect on July 1, 2021.
In the area of value-added tax, the Budget removes the VAT exemption for cosmetic surgery and alternative health treatments. These services will in future be taxed at the 25 percent standard rate. Additionally, the timing rules for VAT for the building and construction industry will be amended.
The Government also provided details on proposals to boost liquidity in the oil and gas sector by converting the hydropower resource rent tax into a cashflow tax so that hydropower enterprises can immediately deduct investment costs instead of deducting these through depreciation and uplift over periods of up to 67 years.
The power sector was also a key focus in Trinidad and Tobago's newly released 2021 Budget, in relation to which, the Budget stated: "We are keenly focused on improving the investment climate in the energy sector through a review of the Petroleum Taxes Act with a view to simplifying the existing oil and gas fiscal regime and making it more competitive to investors. We are also reviewing the application of the Supplemental Petroleum Tax (SPT), particularly for small producers and mature fields with a view to encouraging investment and job creation."
And last but by no means least, there is the Irish Budget, delivered on October 13. This contained very few surprises, given that the government had already stated that, following the recent reduction in the standard VAT rate, there would be no further significant changes to headline tax rates. However, a temporary reduction in the rate imposed on hospitality and tourism from 13.5% to 9% in order to mitigate the impact of the Coronavirus pandemic on this sector is likely to be welcomed when it enters into force on November 1.
Until next week then... Sláinte!
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