[World Tax News] Saudi Arabia Announces Four New SEZs to Attract Foreign Investment and More

Editorial Team – [2023] 149 taxmann.com 351 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Saudi Arabia announces four new Special Economic Zones to attract foreign investment

The Crown Prince and Prime Minister Mohammad bin Salman bin Abdulaziz announced the launch of four new Special Economic Zones (SEZs) in Saudi Arabia to enhance Saudi Arabia’s position as a global investment destination.

These SEZs are in Riyadh, Jazan, Ras al-Khair, and King Abdullah Economic City. SEZs are launched to provide opportunities for foreign investment and facilitate the acceleration of the required reforms to enable doing business in all parts of the country.

The SEZs will reinforce existing national strategies and establish new linkages with international frameworks while capitalizing on the competitive advantages of each region to support key sectors such as logistics, advanced manufacturing, technology, and other priority sectors for the Kingdom.

Companies operating in the new SEZs will benefit from a range of advantages, including competitive corporate tax rates, exemption from customs duties on imports, production inputs, machinery, and raw materials, 100% foreign ownership of companies, and the flexibility to attract and hire the best talent from around the world.

Source:

• Release, dated 13-04-2023
• Release, dated 14-04-2023

2. South Africa releases interpretation note on the definition of “Associate Enterprise”

On 17th April 2023, the South African Revenue Service (SARS) released an Interpretation Note 128 defining the meaning of “Associated Enterprise” for the purpose of Section 31 of the Income-tax Act that contains transfer pricing rules.

An “associated enterprise” is defined in Section 31 as “an associated enterprise as contemplated in Article 9. Whereas Article 9 describes two enterprises as being “associated enterprises” where:

(a) An enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or

(b) The same persons participate directly or indirectly in the management, control or capital of an enterprise of one Contracting State and an enterprise of the other Contracting State.

Article 3 provides that “the term ‘enterprise’ applies to the carrying on of any business”.
For example, if one or more persons participate in the management of an enterprise of a Contracting State and the same person or persons participates in the management of an enterprise of the other Contracting State, the two enterprises are associated enterprises in relation to one another.

According to Interpretation Note 128, the meaning of “associated enterprise” defined in Section 31 of the Income Tax Act is not limited to enterprises covered with a relevant double tax agreement. In this context, the terms “Contracting State” and “other Contracting State” refer to different countries.

It is also clarified that to be classified as an associated enterprise in relation to another enterprise, any of the three criteria, namely participation in management, participation in control or participation in the capital, must be met.

Source: Interpretation Note on the Definition of “Associate Enterprise”

3. Jamaican government approves legislation dealing with money laundering

The Senate has approved the Companies (Amendment) Act, 2023, which will enable Jamaica to meet international obligations in countering money laundering and combatting the financing of terrorism.

The Bill was approved without amendments. It aims to address three of the four outstanding actions agreed upon in Jamaica’s action plan with the Financial Action Task Force (FATF) for the anti-money laundering and combatting the financing of terrorism framework.

The Companies (Amendment) Act, 2023, ensures that provisions of the Companies Act conform with the financial action task force standards relating to beneficial ownership of companies and empower the Registrar of Companies with regulatory oversight to verify beneficial ownership information for companies.

It also seeks to provide for a mutual exchange of information between the registrar, competent authorities and law enforcement authorities, including foreign authorities, and to provide effective and proportionate sanctions to deter non-compliance by companies in relation to their obligations to declare beneficial owners.

Source: Press Release