Shareworks Global Intelligence Newsletter April 2020

Country Updates

As published in the Tax Reform Package on February 24, 2020, a new maximum income tax bracket has been introduced in Chile, increasing the highest tax bracket rate from 35% to 40%, applicable over income of 310 monthly tax units (approximately CLP 186,078,120). 

The change is effective retrospectively from January 1, 2020.

This information has been provided by our collaborating law firm in Chile, Philippi Prietocarrizosa Ferrero DU & Uría(contact: Paulina Miranda at paulina.miranda@ppulegal.com)

On March 5, 2020, the Ministry of Finance opened a public consultation on a draft bill to amend income tax rules regarding equity purchase rights in unlisted companies. According to the proposal, employees would be able to subscribe for shares of their employing company without this benefit being taxable as earned income, provided that:

• Shares are subscribed for at a price not lower than the fair value of the shares;
• The employee and his/her family members, individually or collectively, do not own more than 10% of the shares in the company;
• The share plan is made available to the majority of the employees; and
• The employing company is resident within the European Economic Area and is registered with the Finnish Tax Administration.

If adopted, the new rules will enter into force on July 1, 2020 for employee equity purchase rights offered after that date.

This information has been provided by our collaborating law firm in Finland, Krogerus (contact: Sanna Lindqvist at sanna.lindqvist@krogerus.com)

Effective from January 1, 2020, employees are required to pay social medical contributions at the rate of 1% of gross income, capped at 10 times the monthly minimum salary (which currently equates to KZT 425,000). 

Employees in Kazakhstan are also required to make pension contributions at the rate of 10% of gross income, capped at 50 times the minimum monthly minimum salary (which currently equates to approximately KZT 2,125,000).

Equity plans are not subject to social contribution payments.

This information has been provided by our collaborating law firm in Kazakhstan, Michael Wilson & Partners, Ltd. (contact: Michael Wilson at michael.wilson@mwp.kz)

From February 1, 2020, the Dubai International Financial Center (“DIFC”) Authority has replaced the existing End of Service Gratuity (“ESG”) regime with a defined contribution savings scheme in which contributions are to be made monthly into a default Qualifying Scheme or an alternative regulated scheme. These monthly contributions are to be invested into regulated funds on behalf of employees who can choose how those savings will be managed. 

Employers have until the end of March to enroll in a Qualifying Scheme and take necessary steps to ensure compliance with all requirements going forward. The deadline for the first contribution into the Qualifying Scheme by the employer is April 21, 2020. Employees will also have the ability to make voluntary monthly contributions to the Qualifying Scheme. 

The mandatory monthly contribution made by the employer has been set at a minimum of 5.83% of an employee’s basic wage for employees who have been employed for five years or less. The mandatory monthly contribution increases to 8.33% of an employee’s basic wage for each additional year after five years of service.

Employers making contributions to a regulated benefit scheme that provides benefits in excess of the mandatory contribution are exempt from these new requirements, among other available exemptions. 

This information has been provided by our collaborating law firm in United Arab Emirates, Trowers & Hamlins (contact: Bill Jefferies at bjefferies@trowers.com)

Scotland has released its budget for the next financial year starting on April 6, 2020. 

Effective from April 6, 2020, personal income tax rates and bands in Scotland will be as follows:

The personal allowance will be maintained at GBP 12,500 for all of the UK. 

This information has been provided by our collaborating law firm in United Kingdom, Pinsent Masons (contact: Fleur Benns at fleur.benns@pinsentmasons.com)

The United Kingdom has released its budget for the next financial year starting on April 6, 2020.

As per the budget, the annual lower threshold for National Insurance Contribution is increased from GBP 8,632 to GBP 9,500. As a result, the contribution rates and bands will be as follows effective from April 6, 2020.

This information has been provided by our collaborating law firm in United Kingdom, Pinsent Masons (contact: Fleur Benns at fleur.benns@pinsentmasons.com)

Upcoming Filing And Reporting

April 10, 2020
Affects: Parent Company

Companies offering share plans to employees in Saudi Arabia under the revised securities law exemption must notify the Capital Market Authority (“CMA”) within 10 days after the end of the quarter following grant disclosing the total number and value of all offers made to employees during the preceding quarter. This notification can be made by an authorised person or by the company. Plan amendments or changes may also require additional filings with the CMA.

April 15, 2020
Affects: Local Company

Indian employers are required to file Form 24Q with the Indian tax authorities on a quarterly basis. These quarterly returns report information on employment income paid to employees (including from share-settled awards) as well as taxes withheld.

The quarterly returns must be submitted by:

• May 31 for the quarter ending March 31
• July 31 for the quarter ending June 30
• October 31 for the quarter ending September 30
• January 31 for the quarter ending December 31

May 31, 2020
Affects: Local Company

Employers in India must issue a Tax Deducted at Source (TDS) certificate on Form 16 to employees by May 31 following the end of the financial year. Form 16 sets out any tax withheld by the employer in the previous year, including under any equity plans.

In addition, Form 12BA must also be issued to employees by April 30 of the assessment year. 

June 30, 2020
Affects: Local Company

Employers in Portugal must submit Form Modelo 19 with details of the creation and application of all share plans set up for the benefit of its employees by 30 June following the tax year.