Shareworks Global Intelligence Newsletter May 2020

May 21, 2020 Shareworks Marketing

Icon of a globe with a network connecting countries together with the wording "Global Intelligence Newsletter" underneath.

Shareworks Global Intelligence newsletter provides an overview of recent changes affecting employee share plans globally. 

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We have made some exciting changes to our monthly Shareworks Global Intelligence newsletter. Starting with this month’s newsletter, you will receive updates for all countries, regardless of your subscription.This will help you stay ahead globally! You can easily skip to the countries you are currently subscribed to by using the spotlight icon below. 

We also want your feedback! To ensure we are continuously enhancing our products and solutions, to better help you access the information you need, we are planning to set up a few interviews with clients and our user experience (UX) team. If you would like to be a participant in our UX survey, please send us a note and we can coordinate a time that works for you. 

Please find below the Shareworks Global Intelligence overview of certain changes affecting employee share plans globally. This issue also highlights certain upcoming global filing and reporting requirements (for the parent company or local company). 

As always, please feel free to contact us if you need further assistance. 
 

Country Updates

Chile: Stock Option Taxation Point at Sale

As per the Modernisation Tax Bill approved with retrospective effect from January 1, 2020 in Chile, in case of an employee stock option plan agreed to in an employment contract or a collective bargaining agreement, taxation is deferred until sale, with capital gains tax payable on the entire gain at that time, such that no income tax is payable upon grant, vesting or exercise.

In case of an employee stock option plan that is not agreed to in an employment contract or a collective bargaining agreement, the income tax is payable upon exercise of the shares and any further gains are taxed upon sale as capital gains. 

The new law applies regardless of whether there is a recharge agreement in place between the parent company and the local company.

 

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)

 

Egypt: Amendments to Law

On March 17, 2020, amendments to dividend withholding tax and capital gains tax rules have been proposed, with the key changes noted below.

  • Dividend withholding tax has been reduced from 10% to 5% for dividends on listed stocks in Egypt.
  • A permanent capital gains tax exemption has been granted to individuals who are not Egyptian tax residents. Currently, a temporary capital gains exemption is in place until May 17, 2020 for such individuals.

The effective date of the amendments hasn't been announced yet; however, the changes may apply retrospectively.

 

This information has been provided by our collaborating law firm in Egypt, Shalakany Law Office (contact: Emad El Shalakany atess@shalakany.com)

 

South Africa: Income Tax Bands Adjusted for the 2021 Year of Assessment

The income tax bands applicable to individuals have been adjusted in South Africa in respect of the 2021 year of assessment (March 1, 2020 to February 28, 2021), while the rates remain unchanged. The new bands are as follows: 

Annual income (ZAR)

Tax

0 – 205,900

18% of taxable income

205,901 – 321,600

37,062 + 26% of taxable income above 205,900

321,601 – 445,100

67,144 + 31% of taxable income above 321,600

445,101 – 584,200

105,429 + 36% of taxable income above 445,100

584,201 – 744,800

155,505 + 39% of taxable income above 584,200

744,801 – 1,577,300

218,139 + 41% of taxable income above 744,800

1,577,301 and up

559,464 + 45% of taxable income above 1,577,300

 

This information has been provided by our collaborating law firm in South Africa, Edward Nathan Sonnenbergs (contact: Megan McCormack at mmccormack@ensafrica.com)

 

United Kingdom: Entrepreneurs' Relief Reduced to GBP 1 million

With effect from April 6, 2020, the lifetime capital gains exemption limit for the Entrepreneurs' Relief regime has been reduced from GBP 10 million to GBP 1 million and has been renamed the Business Asset Disposal Relief regime.

Under the Business Asset Disposal Relief regime, any gains made on qualifying disposals of shares are subject to capital gains tax at a flat rate of 10%, instead of the general capital gains tax rate of 20%. 

Unqualified gains or qualified gains in excess of the GBP 1 million limit are subject to the general capital gains tax rate of 20%.

 

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

 

Venezuela: Tax Unit Value Increase for 2020

Effective from March 13, 2020, the value of a tax unit in Venezuela increased from VES 50 to VES 1,500 to adjust for the current rate of inflation. The updated individual income tax bands are listed below. (Note that the applicable tax rates did not change.) 

Annual income (VES)

Tax rate

0 - 1,500,000

6%

1,500,001 - 2,250,000

9%

2,250,001 - 3,000,000

12%

3,000,001 - 3,750,000

16%

3,750,001 - 4,500,000

20%

4,500,001 - 6,000,000

24%

6,000,001 - 9,000,000

29%

9,000,001 - up

34%

 

This information has been provided by our collaborating law firm in Venezuela, Rodriguez & Mendoza (contact: Santos Michelena at smichelena@romen.com)

 

Upcoming Filing and Reporting

 

India: Tax Deducted at Source Certificate

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 withholdings under equity plans.

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

 

This information has been provided by our collaborating law firm in India, Little & Co. (contact: Rajni Divkar atrajni.divkar@littlecompany.com)

 

Portugal: Equity Reporting

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.

 

This information has been provided by our collaborating law firm in Portugal, Abreu & Marques Associados (contact: Cidália Conceição atcidalia.conceicao@amsa.pt)

 

China: SAFE Quarterly Reports

July 3, 2020
Affects: Local Company

Companies that have obtained SAFE approval for their equity plans in China are required to file quarterly reports with their local SAFE office within three business days following the end of the relevant quarter.

 

This information has been provided by our collaborating law firm in China, Martin Hu & Partners (MHP) (contact: Kevin Xu atkevin.xu@mhplawyer.com)

 

Saudi Arabia: Quarterly Equity Reporting

July 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.

 

This information has been provided by our collaborating law firm in Saudi Arabia, Tamimi (contact: Grahame Nelson atg.nelson@tamimi.com)

 

Australia: Employee Share Scheme Statement

July 14, 2020
Affects: Local Company

The annual reporting deadline for Australian employers is approaching. Companies that have a presence or employees in Australia and operate an equity plan must issue an Employee Share Scheme Statement to each employee who was granted an equity award that vested in the prior tax year by July 14. In addition, an Employee Share Scheme Annual Report must be electronically filed with the Australian Taxation Office by August 14.

 

This information has been provided by our collaborating law firm in Australia, Minter Ellison (contact: Nicole Sloggett atnicole.sloggett@minterellison.com)

 

India: Employer Tax Filings

July 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

 

This information has been provided by our collaborating law firm in India, Little & Co. (contact: Rajni Divkar atrajni.divkar@littlecompany.com)

 

 

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