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Reforms Reviewed...

Kitty Miv, Editor
30 March, 2022

Having looked in the previous column at less often examined taxes, this week it is the turn of broader tax reform programs, with lots of countries pulling them out of the bag this week.

In Japan, for example, legislation was finally enacted making numerous amendments to the Income Tax Act.

The changes included improvements to the income tax deductions available for large and small- and medium-sized businesses that increase the salaries of employees year-on-year, with an enhanced deductions available for companies that also significantly increase investment in staff education and training. More stringent conditions apply for large companies. The tax deduction is worth up to 40 percent of the increase to salary and training expenses for SMEs and 30 percent for large businesses. Another key measure in the package was a dividend withholding tax exemption for payments received from wholly owned domestic subsidiaries or where the recipient owns at least one-third of the share capital of a domestic payor.

While in the UK, Chancellor of the Exchequer, Rishi Sunak rolled out the Government's Spring Statement, containing various tax relief measures to be introduced in response to the rise in the cost of living.

Sunak stated that the Government would raise the level at which people start to pay National Insurance contributions (NICs), increasing the annual National Insurance Primary Threshold and Lower Profits Limit from GBP9,880 to GBP12,570 from July 2022. The threshold is currently GBP9,568 for the 2021-22 tax year. The UK will continue to proceed, however, with the levying of its Health and Social Care Levy.

The Government has also announced that it would cut income tax by one percent from 2024.

Fuel duty cuts for petrol and diesel by GBP0.05 per litre took effect from March 23.

And last but not least, the Polish authorities put forward proposals for sweeping changes to the country's personal income tax regime, including slashing the bottom rate of personal income tax to 12 percent from 17 percent.

The new rate would apply to income up to PLN120,000, as currently, and the country would retain the PLN30,000 tax-exempt allowance. Single parents with children may potentially use both their and their child's personal income tax allowance, doubling the tax-exempt allowance to PLN60,000, the Government said.

The higher rate of personal income tax in Poland is 32 percent.

There will be changes, however, to the health contribution regime and so-called "middle class tax allowances" will be repealed, with effect for tax due for 2023, the Government has said.
The changes would enter into force from July 1, 2022. A consultation on the measures is to run from March 24 to April 2, 2022.

Until next week!


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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