[World Tax News] Netherlands Unveils Budget and Tax Plan for 2024 and More

Editorial Team – [2023] 154 taxmann.com 474 (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. Netherlands unveils Budget and Tax plan for 2024

On 19 September 2023, the Dutch Budget and the Tax Plan for 2024 were unveiled, featuring key measures such as:

(a) Increased tax rate for Box 1 income:

The individual income tax rate for Box 1 income (comprising employment and specific other earnings) has been adjusted, rising from 36.93% to 36.97%. Moreover, the threshold for the top tax bracket (49.50%) has been lowered from EUR 73,031 to EUR 75,624.

(b) Enhanced general tax credit:

The general tax credit has been raised from EUR 3,070 to EUR 3,374, and the employment (labor) tax credit has increased from EUR 5,062 to EUR 5,553.

(c) Increased tax rate for Box 3 income:

The individual income tax rate for Box 3 income (taxable income from savings and investments) has been adjusted upward from 32% to 34%, deviating from the initial plan of 33%. The tax-free allowance remains at EUR 57,000.

(d) Payment discount for provisional income tax abolished:

The removal of the payment discount associated with paying provisional income tax assessments in full before the initial payment deadline, a benefit previously applicable to corporate income tax but now discontinued.

(e) Reduced SME profit exemption:

A decrease in the Small and Medium-sized Enterprises (SME) profit exemption, lowering it from 14% to 12.7%.

(f) Elevated dividend stripping rules:

Enhanced regulations regarding dividend stripping, involving a change in the evidential responsibility to the taxpayer/withholding agent to substantiate the recipient’s status as the beneficial owner. Additionally, new provisions have been introduced to establish an official registration date for identifying the beneficial owner.

(g) New method for classification of entities introduced:

New approaches for categorizing foreign legal entities and partnerships in terms of tax transparency will be implemented starting from 1 January 2025. These methods encompass:

• A primary comparative approach utilized when adequate parallels exist with Dutch legal entities/partnerships.
• Two alternative approaches to be used in cases where the comparisons are inadequate, involving a set classification method and a symmetrical classification method.

Source: Budget and Tax Plan 2024

2. South Africa Brings New Measures For Beneficial Owners of Trusts

South African Revenue Services’ (SARS) aim is to record all beneficial owners of registered Trusts to comply with the Financial Action Task Force (FATF) requirements. In this regard, certain information must be submitted via e-filing. These information may include, but are not necessarily limited to, the following:

(a) An organogram, illustrative, or schematic diagram depicting effective control of the Trust. Where the Beneficial Ownership is in the form of other legal arrangements or legal entities, this should be provided in a separate attachment.

(b) An Excel spreadsheet containing the above information; or

(c) Such other documents that elaborate on Beneficial Ownership in relation to the Trust.

When capturing the beneficial ownership information, it is mandatory for the current year’s return to submit at least one document related to beneficial ownership information. If there are more than 20 beneficial owners, the taxpayer must upload a supporting document that reflects the additional beneficial owner(s).

Source: Comprehensive Guide To The Income Tax Return For Trusts

News dated 15-09-2023