I hope 2016 has been a great year so far!
Despite the holiday season a lot happened during the second half of December and a number of laws have come into effect with the start of the new year, so here is a little recap of what has been going on.
The newsletter continues to be a reminder of important changes in some of the countries around the world, so if anything is relevant to you and your projects I would really encourage you to look further into it. If I can be of any assistance, then please do not hesitate to contact me.
Subclass 457 Temporary Skilled Migration Income Threshold reviewed
Just before Christmas the Ministry of Immigration and Border Protection announced a review of the Subclass 457 Temporary Skilled Migration Income Threshold (TSMIT). The review should be concluded by the end of April 2016 and until then the current TSMIT of AU$53,900 will be retained.
The TSMIT is used to protect Australian workers as it determines the minimum salary to be paid to subclass 457 visa holders, who can only undertake skilled employment.
2016 starts with a number of tax and employment laws
The tax law reform that came into effect on 1 January 2016 , affects, amongst other things, the progressive income tax which should benefit around six million taxpayers (employees and entrepreneurs). This means that those earning more than €11,000 will be taxed at 25% instead of 36.5%. Also the rate of 50% will now apply to income over €90,000 instead of the previous €60,000 and those earning over €1 million are now taxed at the new rate of 55% (which is going to be in place until 2020).
Employment legislation has also had some relevant changes such as the following:
- Non-compete provisions will only apply to individuals earning more than €45,360 gross per year (and the restrictive period cannot exceed one year following the termination of the employment contract);
- Working time rules are amended to allow up to 12 hours a day (instead of the previous 10 hours), including overtime, in situations where the employee is driving a car while travelling on business. This seeks to accommodate specific requirements of sales personnel who often had to stay overnight in a hotel instead of driving back home just to comply with the previous working time regulations. This excludes professional drivers and pilots who remain under the previous limits as per separate set of statutory rules.
- Employers must first offer jobs to part-time staff internally if they plan to fill a position requiring more working hours. Job offers can be posted on the company intranet or a bulletin board and only after an internal search is conducted can an employer post the position externally.
Bogus self-employment continues to be targeted
It has been reported that between January 2011 and September 2015 some 4371 bogus self-employed individuals were removed from the Belgian register by Inasti (l’Institut National d’Assurances Sociales pour Travailleurs). In this case the authorities targeted individuals who register with the Banque-Carrefour des Entreprises (a database register of businesses) without ever carrying out occupational activities. Following that, said individuals attempted to benefit from CPAS (which provides social assistance) as well as from health and family allowance benefits. Inasti’s figures show that Romanian (53.6%) and Bulgarian (24.9%) nationals are responsible for the majority of fraud cases.
Whilst this reveals that fraud has increased greatly over the last five years, it also shows that the Belgian authorities continue to fight bogus self-employment in country, meaning those operating in Belgium should be careful to correctly classify their workforce.
Tax reforms and business procedure simplifications
China’s growth may be set to slow down faster than many anticipated, but the government continue to work on tax reforms and business procedures simplifications. Here is what happened and what’s still to come in the next few months.
- Instead of having to complete three separate procedures from different authorities (Business Licence, Organisation Code Certificate and Tax Registration Certificate), companies wanting to operate in China can now submit a single set of documents to the AIC (Administration for Industry and Commerce) and obtain a three-in-one licence. The single licence has a unified social credit code consisting of 18 digits and the registration is made public on the national enterprise credit information disclosure system.
- There have also been a few immigration changes, with foreigners from certain nationalities now being able to apply for a Z Visa upon arrival at Pudong Airport. Expatriates can now also apply for a five-year residence permit or a Green Card.
As the government tries to change the nation from a production-based economy into a more service-oriented economy, the VAT reform was identified as one of the ways to help with the transition. The initial reform plans were formally approved back in 2008, with the first conversion project from Business Tax to VAT being implemented from January 2012 in Shanghai. The structural changes are finally expected to reach the final stage within the next 6 to 12 months. It is worth noting that whilst the Chinese authorities expect to complete the nationwide VAT reform projects during 2016, lawmakers are expected to pass a formal and comprehensive VAT Act only by the end of 2018. The Beijing authorities may release a preliminary draft of the VAT regulations for some services and it is anticipated the proposal will be formally introduced still this year.
The challenge for companies operating in China is that the new VAT system is already considered as one of the most complicated in the world as there is no simple VAT rate approach for all sectors of the economy and some industries will remain exempt from the tax. A number of new VAT taxpayers involved in the Shanghai Pilot admit they underestimated the financial and operational impact of the change on their companies, so other businesses can learn from their mistake in order to prepare themselves for the transition. An assessment of their processes to see whether changes have to be made or not is possibly the first obvious step. It is also advisable for businesses to maintain a dialogue with the relevant authorities to understand what the expected developments are and what sets of VAT rules will apply to each sector.
New regulations have been published regarding the employment of foreign experts, with the maximum duration for the initial period of employment being increased to two years. The legislation also stipulates that salaries paid to foreign experts must be paid into a bank account in Israel.
Individuals who qualify to participate in Israel’s visa waiver programme have to be aware of two new requirements – a medical examination and a police clearance will have to be completed prior to the issuance of a B-1 work visa. The regulations include a stipulation that persons suffering from or carrying AIDS are inadmissible to Israel on medical grounds.
Finally, the processing fees for foreign expert visas, work permits and B-1 visas have all been reduced. The annual foreign expert fee is now NIS 9,500; the work permit application fee is now NIS 1,190; and the B-1 visa processing fee is now NIS 350.
New sponsor labour contract launched
Companies in the Kuwaiti private sector wanting to hire foreigners to work in country need to use a new labour contract. The unified labour contract was launched by the Public Authority for Manpower and took effect last month. It regulates sponsor-worker relations and includes 16 new clauses including a definition of the parties, a probationary period, contract term and other specific details. It also introduces a requirement for mutual agreement for any renewals, paid annual leave after 9 months of work and an obligation on the sponsor to pay for expenses in order to return a worker to his/her country of residence upon conclusion of the contract, amongst other obligations. Three copies of the contract should be issued so that each party can receive one; the third copy is to be filed with the relevant manpower authorities. Whilst the contract can be issued in Arabic as well as a foreign language, it is worth noting that in the case of a legal dispute, the Arabic version will prevail.
Those operating in Kuwait through local partners should clarify, if not done already, how the changes will affect project costs given the new obligations imposed on local sponsors.
DBA finally voted and approved
After much debate, the Dutch Senate has finally voted and agreed to proceed with the Deregulation of Assessment of Employment Status (DBA) which replaces the VAR declaration as of 1 May 2016. There will be a transitional period of one year, during which it is expected that there will be a lenient enforcement of the legislation so to give companies a chance to implement new processes. The leniency will be appreciated by many, especially as there is still a lot of uncertainty regarding the new rules.
With the DBA there will be no certificates or declarations that offer indemnity to hirers in advance. Instead, specific model agreements that have been designed and approved by the Dutch Tax Authorities will be signed between independent contractors and clients/hirers. If the work is performed in accordance with the relevant model agreement – with practice matching in full what is described on paper – there is no employment relationship between the parties. However should that not be the case, the tax authorities can conclude there was an actual employment relationship and therefore charge the client/hirer for any social security contributions and income tax for up to five years after the work was provided. Consequently the professional loses out in terms of self-employed tax deductions (retroactively) and is deemed an employee of the hirer.
Companies operating in the Netherlands and using independent contractors should familiarise themselves with the new legislation and identify model agreements that are applicable to industries and professions/situations relevant to them. After that businesses can determine whether they will use the model agreements provided by the authorities or have their own drafted and submitted for approval. It is also imperative that businesses audit their existing independent contractor population to ensure none of the workers has been incorrectly classified.
New contract rules take effect
As mentioned in our June Newsletter, as of this month changes to the fixed-term contract regime comes into effect, allowing a maximum period of 33 months, during which a maximum of three contracts (original and two extensions) may be concluded. For periods longer than 33 months an employer will be required to inform the regional labour inspectorate and obtain approval prior to issuing the contract.
Also the contracts for the duration of a specified task ceases to exist whilst the notion of garden leave is introduced, allowing an employer to unilaterally release an employee from the obligation of performing his/her duties during the notice period. The employee will retain the right to normal remuneration for the duration of the garden leave.
UNITED ARAB EMIRATES & GULF COOPERATION COUNCIL
The Undersecretary of the UAE Ministry of Finance (MoF) has confirmed in January that VAT will be introduced across the country as well as the GCC (Gulf Cooperation Council) in 2018. Mr. Younis Haji Al Khoori advised that all six GCC countries had agreed to unify their tax policies before the introduction of the VAT. Following a meeting of the Undersecretaries of the Arab Ministries of Finance, which was organised by the UAE MoF in cooperation with the Arab Monetary Fund, it was announced that the suggested VAT rate will be between 3 and 5 per cent for the various sectors, with exception of healthcare, education and 94 food items on which there will be no VAT.
Despite rumours of disagreements amongst the GCC countries, Mr Al Khoori stressed there was complete agreement and added that each country would need to put in place a domestic tax law structure before a GCC-wide implementation of VAT.
With regard to other possible taxes, there are definitely different views on the matter though, as the UAE is still considering a corporate tax, whilst Saudi Arabia, for example, has already ruled out the imposition of any income tax there.
Visa Waiver Program Changes Become Law
Effective December 18, 2015, changes to the Visa Waiver Program became law meaning individuals who in the past five years have travelled to Iraq, Syria, Iran, Sudan or any other country designated by the Department of State as supporting terrorist activities are no longer eligible for the Visa Waiver Program. This restriction does not apply to individuals who travelled to these countries as part of the military or in an official capacity as an employee of a Visa Waiver Program country government.
Dual nationals who are citizens both of a Visa Waiver country and of either Iraq, Syria, Iran or Sudan also lose the eligibility for the Visa Waiver Program. Countries that do not adhere to new security and screening processes may be suspended from participating in the program.
Protection for workers against dismissal extended once again
President Maduro announced an extension of the Presidential Decree on Bar Against Dismissal for another 3 years effective from the 28th December 2015, m. Under the Bar employers cannot dismiss, impair the labour conditions or transfer a worker without just cause until 2018. In order to dismiss, impair the labour conditions or transfer a worker, employers must obtain previous authorisation from the Office of the Labour Inspector through a dismissal qualification process. Should the employer fail to make a request to dismiss a worker the latter will have the right to ask for reinstatement and payment of unpaid wages and labour benefits.
For those not familiar with the legislation, the following are under the protection of the Bar:
- Hired employees for an indefinite term, after one month of services for an employer;
- Hired employees for a fixed-term agreement, provided that the term specified in the agreement has not expired, and;
- Hired employees for a specific task or work, as long as all of it or the portion under his/her responsibility has not been completed.
Employees in management positions as well as temporary and occasional workers are excluded from the legislation and therefore not protected.Share this article on: