tax – praag.org

Finland to tax rich to pay for refugees

Finland’s government on Thursday proposed increasing capital gains tax and income tax on high earners to help pay for a 10-fold increase in refugees expected to arrive this year, its finance minister said.

The EU migrant crisis proposes a political as well as a financial challenge for the coalition, whose foreign minister, Timo Soini, heads the Eurosceptic party, The Finns, which campaigned for tighter controls on immigration.

Finance Minister Alexander Stubb said the highest bracket of capital gains tax would be raised by 1 percentage point while people earning more than 72,300 euros ($81,000) would be required to pay a so-called solidarity tax for two years, lowering the threshold from 90,000 euros.

“These will help to cover higher immigration costs which we estimate to be about 114 million euros this year,” Stubb told a news conference.

The centre-right coalition, which took office in May, is struggling to cut government spending quickly in a shrinking economy where unemployment is on the rise.

Finland last week doubled its estimate for the number of asylum seekers expected this year to up to 30,000, compared with just 3,600 last year.

The government agreed before the summer that any EU plan to apportion asylum seekers among EU states should be voluntary. Nevertheless, its interior minister, from the pro-EU National Coalition party, agreed in July to take about 800 refugees from among those who had arrived in Greece and Italy.

The government is due to decide on Friday on how to respond to a new EU quota proposal.

The tax proposals may also be aimed to counter accusations that the poor and middle class have been hit worst by government policies. The government also announced that members of parliament would be required to take a week’s unpaid holiday and all ministers would forgo a week’s pay.

Finland’s economy is shrinking for a fourth year in a row due to weak demand from European and Russian markets and problems affecting its main export industries, including technology.

Source: Reuters

Shuttleworth loses tax battle

Billionaire Mark Shuttleworth has lost his six year battle for a R250 million refund from the Reserve Bank.

The Constitutional Court has had the final say in the matter, finding that the 10% exit levy he was charged was not a tax.

Shuttleworth was made to pay the amount when he applied to move all his capital, some R2,5 billion out of the country. He emigrated to the Isle of Man.

In a majority decision, penned by Deputy Chief Justice Dikgang Moseneke, Shuttleworth will not get a refund.

“I have found that the dominant purpose of exit charge was not to raise revenue but rather to regulate conduct by discouraging the exit of capital and to protect the domestic economy,” says Moseneke.

The decision to impose the 10% exit charge on capital exceeding R750 000 was announced in a budget speech delivered in 2003 by the then Minister of Finance as a condition to the export of that capital.

Naspers attacks Google over international tax practices

Google is once again under fire for its international tax practices. This time though, the flak isn’t coming from an international government, but South Africa’s largest online publisher.

In a statement issued to the press 24.com CEO Geoff Cohen said: “In the digital age, we accept that we compete with businesses from all over the world.

“However, it is clearly wrong that, as we invest in building a tax-paying business employing hundreds of South Africans, we are competitively disadvantaged through aggressive tax planning strategies of global businesses.”

The publisher, which is a division of emerging markets media and internet giant Naspers, says that Google’s use of various off-shore accounts for its transactions means that it’s not paying anywhere near as much tax in the country as it should be.

This it says, means that South African publishers are simply unable to operate on a level playing field with the internet giant.

As Memeburn pointed out in mid 2013, Google pulls in around R1 billion in advertising a year in South Africa.

That’s about as much as South Africa’s digital ad industry makes as a whole. Google makes this revenue with very little infrastructure development needed and with only a small satellite office of about 30 or so people.

24.com reckons that this puts lost tax revenue from Google at an estimated R140 million per annum in corporate taxes, and possibly a further R100 million in PAYE.

They resort to tax-avoidance strategies known as the ‘Double Irish’ or ‘Dutch Sandwich’.

Google however strongly denies that this is the case, especially when it comes to PAYE, noting that it pays that tax for every employee it has in South Africa.

When Memeburn approached Google for comment on Cohen’s statement, a Google spokesperson said the company “complies with tax laws in South Africa and every country where we operate.

Google has come under fire for its international tax policies in the UK after it emerged that it had paid just £6 million on £2.5 billion worth of sales in the country in 2012.

A number of countries have now instituted special Google taxes in a bid to curb that kind of behaviour.

The most recent country to institute a Google tax is Italy, which did so in December 2013.

Other countries, such as France, have issued Google with massive fines for tax non-compliance.

24.com is in favour of applying the former approach in South Africa. Significant legislative changes will be required before South African internet businesses will be able to compete with some of their global counterparts on a level tax playing field, it says.

The state appears to be heading in that direction, as it readies legislation that will force overseas companies selling digital goods to South Africans to pay VAT on those sales.

In a 2012 interview, Google Chairman Eric Schmidt said he was “proud” of the way Google had avoided paying taxes. “It’s called capitalism,” he said, “We are proudly capitalistic. I’m not confused about this.”

Source: Memeburn.com

SARS denies Malema secret meeting

The SA Revenue Service has denied it had a “secret meeting” with Economic Freedom Fighters leader Julius Malema.

“Sars does not conduct secret meetings with any taxpayer,” spokesman Adrian Lackay said.

“Any taxpayer has the right to seek remedies from Sars when a tax dispute arises between the taxpayer and Sars, as well as the right to meet with Sars with suitably qualified legal or other representatives.”

Malema said in a statement on Sunday that he, his lawyer and accountant met with Sars officials when he was still president of the ANC Youth League.

“In this meeting, my personal tax matters were briefly discussed in the presence of all. My lawyer and accountant, together with Mr Van Loggerenberg [a Sars official] were then requested by the commissioner to excuse themselves from the meeting and an indication was given on their departure that Mr Van Loggerenberg will be helping us to resolve my issues.”

He said he remained behind with the Sars commissioner and his deputy.

“In this closed session between the three of us, the details of the ‘intelligence dossier’ were discussed, and in what looked like their defence I was told that [President] Jacob Zuma had a similar Sars problem and they helped him with it,” Malema alleged.

“…They both offered to help me with my tax matters because they have done it before with Mr Zuma and other comrades.

“[The then Sars deputy commissioner Ivan] Pillay added that they would do this also because both of them are comrades and that he in particular was from exile.”

Malema claimed to have an “intelligence dossier” which, in his view, proved Sars had a special unit focusing on him and other persons because of their association with and support for Zuma.

Lackey said Sars did not provide preferential treatment.

“Taxpayer behaviour determines what course of action Sars institutes,” he said.

“If the taxpayers needs assistance and is willing to comply with his or her obligations, Sars will provide assistance. If the taxpayer demonstrates no willingness to contest or rectify instances of non-compliance, Sars takes stronger punitive actions.”

He said the matter with Zuma had gone to court and Zuma’s tax affairs were regularised.

“This is all on public record.”

Sars said on Friday Malema had failed to “refrain from making false public statements about the state of his tax affairs and his engagements with Sars”.

As a result it invoked section 67(5) of the Tax Administration Act and revealed a history of Malema’s interaction with it. The act allows it to disclose taxpayer information that would otherwise be confidential.

According to Sars, Malema ultimately accepted that he owed it R16 million in tax. He did not offer to convert any of his assets to pay his tax debt and never asked for any form of payment arrangement.

Sars attached some of Malema’s properties to recoup the R16 million debt.

In May, his incomplete mansion in Sandton, Johannesburg, was sold on auction for R5.9 million.

His farm in Limpopo fetched R2.5 million at an auction in June. Several of his household goods were also auctioned off earlier this year. – Sapa