Corporate income tax reform adopted — Orbitax Tax News & Alerts
On 1 June 2007, the Ministry of Taxation announced that the revised bill amending the Corporate Income Tax Act was enacted by the parliament). The most significant changes are:
| - | the corporate tax rate is reduced from 28% to 25%; |
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| - | the CFC regime is adjusted to be compliant with EC law following the judgment of the European Court of Justice (ECJ) in the case of Cadbury Schweppes (C-196/04); | |
| - | a ceiling for interest deduction is introduced; | |
| - | the tax depreciation of long-life assets is tightened; and | |
| - | the taxation of dividends is amended |
The government is looking at a longer-term perspective with the aim to stop aggressive tax planning and to make the tax rules stronger in an international environment. The new corporate tax rate will be effective from the tax year 2007. The rules on the interest ceiling along with the CFC regime will apply from 1 July 2007, and the depreciation rules from the tax year 2008.
More details of the new tax regime will be reported shortly.