Archive for December, 2017

Circular No. 27/2017 of the Department of Merchant Shipping on the Cyprus Tonnage Tax System (Law 44(I)/2010): Calculation of the Global Share for the Owners of Foreign Ships, Charterers and Ship Managers – applied for the fiscal year 2018

As per Circular No. 27/2017, issued by the Department of Merchant Shipping,  for the purpose of assessment of the Community-flagged Share of each company or group of companies under the Tonnage Tax system, the Director of the Department of Merchant Shipping (DMS) shall carry out an assessment upon the expiry of the third year (on 31st December) as from the date of opting to be taxed under the Tonnage Tax System (TTS) (i.e. on 31st December 2017 for the companies which entered the TTS on 01 January 2015 or during the period 02 January 2014 – 01 January 2015 (as per DMS Circular No. 13/2011) and thereafter a further assessment every three years throughout the duration of validity of the Law 44(I)/2010.

In the case of a company or group of companies whose Community-flagged Share at the time of assessment is less than its Reference Share (unless it is over 60%) then no additional non-Community ships can enter the TTS until it raises its Community-flagged Share back to its Reference Share as minimum.

However as provided by sections 15(3) (a), 25(3) (a) and 35(2) (a) of the Merchant Shipping (Fees and Taxing Provisions) Law of 2010 (Law 44(I)/2010 – the “Law”) and by paragraphs 8 and 10 of The Tonnage Tax (Special Provisions for the Calculation of the Community Flagged Share) Notification of 2010 (P.I. 536/2010- the “Notification”) those companies or group of companies may take advantage of the sectoral Global Share to include additional non-Community ships in the TTS.

In this case, the said owner, charterer or ship manager shall be subject to an increase of ten per cent (10%) on the total amount of tonnage tax payable for all the qualifying non- Community ships in his fleet, by virtue of the provisions of sections 15(4), 25(4) and 35(3) of the Law respectively.

As provided by paragraph 10 of the Notification and for the purposes of implementing sections 15(3) (a), 25(3) (a) and 35(2) (a) of the Law, the DMS has calculated, in accordance with paragraph 11 of the Notification, the Community-flagged Share of the relevant global tonnage eligible for tonnage tax in the Republic of Cyprus (Global Share) on a sectoral basis for 2016.

Upon the results of the calculations, the Director of the DMS informs that for 2016:

  • The Global Share for Owners of foreign ships has decreased in comparison to 2015 (from 27.29% to 24.52%),
  • The Global Share for Charterers has increased in comparison to 2015 (from 62.39% to 64.15%),
  • The Global Share for Ship Managers has decreased in comparison to 2015 (from 51.97% to 49.04%).

Therefore, Owners of foreign ships and Ship Managers whose Community-flagged Share is at the time of assessment (i.e. on 31st December 2017) below their Reference Share (unless this is over 60%) shall not include additional non-Community ships in the TTS until they raise their Community-flagged Share back to their Reference Share as minimum. The said ships cannot be considered as qualifying ships and will be taxed with corporate-income tax by the Department of Taxation and the company shall maintain separate books, records and accounts for those ships as provided by section 44 of the Law.

Charterers whose Community-flagged Share is at the time of assessment (i.e. on 31st December 2017) below their Reference Share (unless this is over 60%), may, for the fiscal year 2018, include additional non-Community ships in the tonnage tax system. In that case an increase of 10% on the tonnage tax on all non-Community ships will apply.

For further information or assistance, please do not hesitate to contact us.

Мальта предлагает внесение изменений в систему налогообложения на основе ремитирования

Одно из изменений, предложенных в последнем проекте Бюджета, относится к налогообложению на основе ремитирования, при котором физические лица могут рассчитывать на минимальный ежегодный налог – 5 000 евро. Мальта предлагает чрезвычайно привлекательную систему налогообложения на основе ремитирования, в соответствии с которой, лица не имеющие домициля на Мальте, облагаются налогом только на доходы  возникшие или полученные на Мальте.

Для лиц, не имеющих домициля, минимальный налог оплачивается, когда лицо:

а) не является налогоплательщиком на Мальте в соответствии с одной из схем, устанавливающих минимальную сумму налога на Мальте, включая Программу по получению вида на жительство, Глобальную программу резидентства, Программу для лиц-пенсионеров и Положения о получении резидентства; а также

б) получает доход в размере как минимум 35 000 евро или эквивалент в другой валюте, возникающий за пределами Мальты. В случае супружеской пары будет учитываться совокупный доход.

  • При расчете минимального налога учитывается любой мальтийский подоходный налог, уплаченный путем удержания или иным образом, за исключением налога, уплаченного с прироста капитала.
  • Если доход лица, не имеющего домициля, в течение одного налогового года, образует налоговое обязательство менее 5 000 евро, то  минимальный налог в размере 5 000 евро все равно должен быть оплачен. Например, если физическое лицо обязано уплатить 2 500 евро по возникшим или полученным на Мальте доходам, , эта сумма налога должна будет еще быть «дополнена» на 2 500 евро.
  • В отношении налога на доход от прироста капитала, возникающего за пределами Мальты, никаких изменений не предлагается. Независимо от того, приведен ли этот доход на Мальту или нет, налог не уплачивается.
  • Ожидается, что эти изменения вступят в силу с 1 января 2018 года и будут введены в середине 2018 года.

За дополнительной информацией или содействием пожалуйста обращайтесь к нам.

Мальта вводит систему вычета условного процента ВУП (Notional Interest Deduction (NID)

На презентации бюджета Мальты за 2017 год, Министр финансов рассказал о введении режима вычета условного процента (Notional Interest Deduction (NID)). ВУП является новой налоговой льготой, направленной на приравнивание долевого и заемного финансирования.

ВУП – это инновационный инструмент сокращения налоговой нагрузки для компаний. Он позволяет компаниям вычитать  сумму условного процента на основании «рискового»капитала компании. Такие компании смогут прибегнуть к вычету условного процента в отношении их налогооблагаемого дохода, который считается начисленным на их собственный капитал.

Основные особенности ВУП

  • ВУП не будет обязательным для компаний.
  • Расчет: условная процентная ставка Х остаток рискового капитала компании на конец года.
  • Условная процентная ставка определяется как «безрисковая ставка»; текущая доходность к погашению по государственным облигациям Мальты с оставшимся периодом около 20 лет плюс премия в размере 5%.
  • Рисковый капитал определяется как: акционерный капитал, эмиссионный доход, нераспределенная прибыль, беспроцентный долг и любой другой капитал.
  • Заявленный к вычету ВУП в течение одного года не может превышать 90% от налогооблагаемого дохода компании. Любое превышение может быть перенесено на неопределенный срок для вычета из налогооблагаемого дохода в последующие годы. Оставшаяся сумма дохода облагается налогом по стандартной ставке 35%.
  • В рамках ВУП не производится возврат налога акционерам , что освобождает от необходимости двухуровневой структуры компании.
  • В целях налогообложения на Мальте при использовании ВУП, будет считаться, что акционер получает ту же сумму условного процентного дохода. Если акционер не является резидентом Мальты, то предполагаемый процентный доход не будет облагаться налогом на Мальте, при условии соблюдения определенных критериев.
  • В целях предотвращения злоупотребления режимом существуют специальные правила, направленные на противодействие уходу от налогообложения.
  • Налогоплательщики смогут претендовать на ВУП в отношении доходов за 2017 год, так как эти доходы облагаются подоходным налогом в 2018 году.

За дополнительной информацией или содействием пожалуйста обращайтесь к нам.

Circular No. 26/2017 of the Department of Merchant Shipping on The Protection of Cyprus Ships against Acts of Piracy and Other Unlawful Acts Law of 2012

The Department of Merchant Shipping (‘DMS’), based on the provisions of the Protection of Cyprus Ships against Acts of Piracy and Other Unlawful Acts Law of 2012 (“the Law”), issued  the following instructions under Circular No. 26/2017:

  1. The maximum total number of firearms a Private Ship Security Company (‘PSSC’) is entitled to register on its Cyprus certificate has been increased from four hundred (400) (as indicated previously by Circular No. 1/2016) to six hundred (600); and
  1. The number of firearms shall be proportional to the number of guards at a ratio of two (2) to one (1). That is, for each approved private ship security guard, the PSSC can register on its Cyprus certificate up to two (2) firearms and not vice versa as indicated by Circular No. 1/2016.

For further information or assistance, please do not hesitate to contact us.

Malta proposes changes to the Remittance Basis of Taxation

Malta offers an extremely attractive remittance basis, whereby an individual ordinarily resident but not domiciled in Malta (“non-domiciled person”) is only taxed on income arising or received in Malta. One of the changes suggested in the Budget Bill 2018, relates to the remittance basis of taxation, where “non-domiciled person” may be subject to a minimum annual tax of €5,000.

The minimum tax of €5,000 will apply if the individual:

  1. Is Ordinarily resident in Malta but Non-domiciled therefore taxable on a source and remittance basis; and
  2. Is not taxable in Malta in accordance with a scheme establishing a minimum amount of tax in Malta, including The Residence Programme, Global Residence Programme, Malta Retirement Programme and the Residents Scheme Regulations; and
  3. Derives income arising outside Malta of at least €35,000 (not received in Malta), or its equivalent in another currency. In the case of a married couple, the €35,000 will be considered as a total.
  • In computing the minimum tax, one should take to consideration any tax paid in Malta, whether by withholding or otherwise, excluding tax paid on capital gains.
  • If the income of a non-domiciled individual in any single tax year results in a tax liability of less than €5,000, the minimum tax of €5,000 will be payable. For example, if an individual is liable to pay €2,500 on income arising or received in Malta, they will be required to ‘top up’ that tax by an additional €2,500.
  • No changes are proposed regarding tax payable on capital gains arising outside of Malta. Irrespective of whether this income is brought into Malta or not, no tax is payable.
  • It is anticipated that these changes will be implemented in the Maltese Income Tax Act with effect from 1st January 2018 upon approval by Parliament and will be introduced mid-2018.

For further information or assistance, please do not hesitate to contact us.

Malta introduces Notional Interest Deduction (NID)

By virtue of a Legal Notice No 262 of 2017 (published on 5 October 2017) Malta introduced a Notional Interest Deduction (“NID”) mechanism. The NID is a new tax incentive, which aims to approximate neutrality between debt and equity financing.

NID is an innovative way for companies to reduce their tax liabilities. It allows companies to deduct a notional interest amount based on the ‘risk capital’ of a company. Such companies will be able to claim a deduction against their chargeable income for NID deemed to be incurred on their equity capital.

Main features of NID

  • The NID will be optional for companies.
  • Calculation: notional interest rate X balance of risk capital that the undertaking has at year end.
  • Notional interest rate is defined as the ‘risk free rate’; the current yield to maturity of Malta Government stocks, with a remaining term of approximately 20 years, plus a 5% premium.
  • Risk capital is defined as: share or partnership capital of a company or partnership, any share premium, positive retained earnings, interest free loans or other debt, any other reserves resulting from a contribution to the company or partnership and any other item which is shown as equity in the financial statements of the undertaking.
  • An equivalent deduction is permitted to Maltese permanent establishment of a foreign company or partnership (resulting from a contribution to the Maltese permanent establishment).
  • NID claimed in any one year cannot exceed 90% of the company’s taxable income (before grossing up for FRFTC). Any excess can be carried forward indefinitely, to be deducted against taxable income in future years. Remaining income is taxed at the standard rate of 35%.
  • Where NID is claimed, the shareholder will be considered to receive the same amount of notional interest income, for Maltese tax purposes. If a shareholder is not resident in Malta, the deemed interest income will, however, be exempt from tax in Malta, providing that certain criteria are met.
  • Specific anti-avoidance rules are included to prevent abusive application of the regime.
  • Taxpayers will be able to claim NID on profits relating to the tax year 2017, as these profits are assessable for income tax in 2018.

For further information or assistance, please do not hesitate to contact us.

The Agreement between the Government of the Republic of Cyprus and the Government of the Republic of India on Merchant Shipping

The Agreement on Merchant Shipping between the Government of the Republic of Cyprus and the Government of the Republic of India, signed in New Delhi on 28th April 2017 (hereinafter referred to as “the Agreement”) came into force on 29th November 2017, repealing the previous Agreement on Merchant Shipping between Cyprus and India which had been signed on 11 February 1997.

The said Circular highlights some of the most important provision of the Agreement as follows:

ARTICLE 5: Either Contracting Party shall afford to vessels of the other Contracting Party the same treatment as it affords to its own vessels engaged in international voyages with regards to free access to ports, use of ports for loading and unloading of cargoes and for the embarking and disembarking of passengers, payment of dues and taxes based on tonnage or otherwise, in accordance with the national laws and regulations, exercising normal commercial operations and the use of services related to navigation.

ARTICLE 7: Each of the Contracting Parties shall recognize the identity documents issued by the competent authorities of the other Contracting Party to members of the crew who are nationals of that Contracting Party.

ARTICLE 8: During the time a vessel of the one Contracting Party is in a port of the other Contracting Party, each crew member of that vessel shall be permitted temporary shore leave in the territory of the municipality to which the port belongs, as well as in the territories of adjacent municipalities, without the requirement of a visa, provided he can show a relevant identity document as mentioned in Article 7 of the Agreement. However, such leave shall only be permitted if the master has submitted to the appropriate authorities at the port a crew list on which the names of the crew members appear, in accordance with the regulations in force in that port.

ARTICLE 10: If a vessel of the one Contracting Party is shipwrecked, runs aground, is cast ashore or suffers any other accident off the coast of the territory of the other Contracting Party, the vessel and the cargo shall enjoy in the territory of the latter Party the same benefits and privileges and accept the same liabilities as are accorded to a vessel of that Party and its cargo. The crew and passengers as well as the vessel itself and its cargo shall be granted, at any time, help and assistance to the same extent as in the case of a national vessel.

ARTICLE 11 (1): The taxation of income of any kind derived from the use of vessels in international traffic shall be regulated by the provisions of the Agreement between the Republic of Cyprus and the Republic of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital.

ARTICLE 11 (2): Residents of the one Contracting Party who are employed on board vessels of the other Contracting Party as masters, officers or other members of the crew should be taxed on income derived from wages or other benefits in respect of paid services rendered, only by the Contracting Party where the vessel is registered and is flying its flag.

ARTICLE 11 (3): The freight income obtained from the operation, in international traffic, of vessels of the one Contracting Party, by organisations or enterprises established in accordance with its national legislation, will be exempted from fees and taxes of any kind in the territory of the other Contracting Party

ARTICLE 11(4): Shipping organisations or enterprises of either Contracting Party shall have the right to use income and other revenue obtained in freely convertible currency within the territory of the other Contracting Party and deriving from maritime transport operations, for the purpose of making payments in the territory of that other Contracting Party. Any surpluses, after settlement of all amounts due locally, if any, are remittable abroad.