[World Tax News] Swiss Government Urges Voters to accept Global Minimum Tax and More

Editorial Team – [2023] 149 taxmann.com 469 (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. Swiss Government urges voters to accept Global Minimum Tax

The Swiss Federal Councilor Karin Keller-Sutter presented arguments urging voters to accept implementing the Pillar 2 global minimum tax ahead of a referendum vote. Switzerland is one of the 140 countries that have signed an OECD/G20 project aiming to apply a minimum tax rate of 15% on multinational corporations.

The Swiss Federal Government unveiled its plan in June 2022 to integrate the GloBE Rules into its domestic legislation, thus establishing their applicability from 1st January, 2024. On 16th December, 2022, the Swiss parliament endorsed an amendment to the Swiss constitution, which will be put to a popular vote scheduled for 18th June, 2023.

If the referendum is successful, the Federal Government will be authorized to proceed with its implementation plan.

The referendum pertains to a Federal Decree passed by the Swiss Parliament, which calls for a constitutional amendment to enable the implementation of a 15% global minimum tax.

If the referendum is passed, the Swiss Federal Council will phase in the global minimum tax, starting with an initial ordinance temporarily regulating the minimum tax in Switzerland through a “supplementary tax”.

This will ensure that the corporate groups with consolidated global revenue surpassing EUR 750 million are subject to a minimum level of taxation. The temporary ordinance will take effect from 1st January 2024, and federal law will eventually supersede it.

Source: Press Release dated 24-04-2023

2. UAE announces Corporate Tax Exemption for entities contributing to public and community benefit

The Ministry of Finance-UAE has published a new Cabinet Decision No. 37 of 2023 for providing an exemption from the Corporate Tax Law to the Qualifying Public Benefit Entities.

The decision mentioned around 500 Entities considered Qualified Public Entities, including Federal Entities, Entities of Abu Dhabi, Dubai, the Government of Sharjah, Ajman, Umm Al Quwain, RAK and Fujairah. The Cabinet may amend the schedule of Qualifying Public Benefit Entities at the suggestion of the Minister by modifying, adding, or removing entities.

The major takeaways of the decision are as follows:

(a) Who are qualifying Public Benefit Entities?
These entities are established for the welfare of the public and society at large, focusing on the activities that contribute to the fabric of the UAE. These entities must meet the conditions under Article 9 of the Corporate Tax Law.

(b) Registration for Corporate Tax
Entities listed in the schedule that qualify for public benefits must complete registration with the Federal Tax Authority and acquire a registration number for Corporate Tax purposes.

(c) Any changes to the Qualifying Public Entity
Qualifying Public Entities must continue to comply with all relevant federal and local taxes and notify the Ministry of Finance of any changes. The Government Entities shall inform the Ministry of Finance about any changes occurring to these entities that impact their continuity in meeting the conditions set out in the Corporate Tax Law.

(d) Request for Information
A Qualifying Public Benefit Entity shall provide all relevant documents, data and information to the Ministry and the Authority to verify that the Qualifying Public Benefit Entity meets the requirements stipulated in the Corporate Tax Law.

Source: Cabinet Decision No. 37 of 2023

3. Egypt to disallow the expenses not supported by e-invoices

The Egyptian Tax Authority published an alert on its website announcing that expenses will not be considered deductible in tax returns unless they are supported by electronic invoices from 1st July 2023.

The same rule will also apply to the deduction and refund of value-added tax. It is important to note that the deadline for the electronic invoice requirement for deductions and refunds was initially set for 1st April 2023 but has now been postponed to 1st July 2023.

Source: Egyptian Tax Authority Homepage