European Union Direct Taxes

Permanent Establishment is a vital concept in international taxation. While for direct taxes, it is mainly defined by the OECD Model Convention, the European VAT Directive and its implementing Regulation provide an EU-wide approach for VAT.
Difficulties arise as terminology and definitions in indirect and direct tax diverge. Moreover, countries have implemented and interpreted the EU and OECD rules in a different way, impacting on issues like cross-border reorganisations, transfer pricing, taxation of dividends and interest and royalties, tax residence, temporary and permanent transfer of assets, place of supply and VAT liability.
In both direct and indirect tax, the concept of Permanent Establishment has undergone very recent changes: The 2010 changes to the OECD Model Convention and Commentary, and in particular the new Art. 7, will be adopted in national law, as speakers from the Netherlands and Germany will report. The effect of the new definition on treaties with other countries will also be considered.
Some of this topic is addressed in the new book "European Union Direct Taxes", by the International Tax Professor Salvador Trinxet Llorca.
In indirect tax, the current more important issue is the practical consequences of the adoption of the Regulation implementing the EU VAT Directive in January 2011.

Business in Hong Kong

The press recently wrote about Hong Kong's stamp duty increase in reaction to the yuan renminbi influx. The Hong Kong Monetary Authority reported that yuan renminbi deposits increased 29 percent at the end of November, compared with October 2010, and that year on year, at the end of October yuan renminbi deposits in Hong Kong increased 246 percent. If you want to see what this means, come to Hong Kong and look at prices! That's why Hong Kong had to do something.
Effective November 20, Hong Kong's new stamp duties covered all properties resold within 24 months of acquisition. This levy is enforced even if there is no sale but the property changes hands by way of a gift - if the transferee sells that property within 24 months or if it is an inheritance and the inheritor sells within 24 months. Even if the buyer made the wrong gamble and has to sell at a loss (unlikely unless there is a bubble burst), the stamp duty will still be in effect.
There are three levels of Hong Kong stamp duty:
15 percent if the property is held for six months or less;
10 percent if the property is held between six and 12 months; and
5 percent for property held between one and two years.

I doubt that this will have any real effect on the Hong Kong property market. The South China Morning Post reported on January 29 that prices soared so much last year that luxury flats are now 112 percent more expensive than their comparables in London, Moscow, and New York. A lot of people cannot afford to live in Hong Kong.
What the price spiral is doing, though, is creating another humongous Hong Kong surplus - to the tune of HKD 75 billion when the fiscal year-end of March 31 comes. Stamp taxes are indeed profitable. What will happen because of this? I'd bet that Hong Kong's corporate tax rate will go down from 16.5 percent to 15 percent. We won't know until the Hong Kong budget is presented on February 23.
The Hong Kong Institute of Certified Public Accountants (HKICPA) issued its recommendations to the Hong Kong financial secretary on January 28. Instead of asking the government to give tax rebates, the HKICPA asked that the surplus be used to fund an otherwise nonexistent old-age fund and to raise allowances (tax exemptions) by 20 percent for dependent parents, grandparents, brothers, sisters, and the disabled.
To encourage hiring of disabled persons, the HKICPA asked the government to grant employment tax credits of 150 percent. It also asked for a reduction of the corporate tax rate to 15 percent for corporate income under HKD 2 million.
A year ago, Hong Kong was neither on the OECD blacklist nor the white list. I called Hong Kong gray. Boy, did I get flack for that one even though it was 100 percent correct. As of today, Hong Kong has 18 double tax avoidance agreements with tax information exchange agreements. The most recent signings were with France, Japan, New Zealand, and Switzerland, and more are on the way. Yet no matter how many are signed, Hong Kong simply will not catch up with Singapore in this area. What is notable, though, is that neither Hong Kong nor Singapore has anything on the books with the United States - and a U.S. double tax avoidance agreement for either jurisdiction appears highly unlikely.

OECD talks about SME Internationalization

This realisation was at the heart of the 2007 OECD-APEC study on Removing Barriers to SME Access to International Markets, which provided general findings on the major barriers to SME internationalization as perceived by SMEs and policymakers in OECD and APEC member economies. The need to obtain a greater depth of understanding and an updated view of the issues raised by the OECD-APEC study provided a raison d'être for this follow-up project. Other value adding features include the additional focus on motivations for SME internationalization ; the coverage of recently available documentation from economies involved in the OECD enlargement (Chile, Estonia, Israel, Russia, and Slovenia) and enhanced engagement process (Brazil, China, India, Indonesia, and South Africa); and the sub-national and sectoral insights offered on SME internationalization barriers, motivations and support programs.

 Internationalization and international entrepreneurship among small and medium-sized enterprises (SMEs) has remained a topic of considerable contemporary relevance, principally owing to the observed growth effects of cross-border venturing, and the demonstrated capacity of SMEs to drive economic development at national, regional, and global levels (European Commission, 2007).

Braxton Tax Law

Braxton Tax Law

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