Last Updated January 2001 REFACE PREFACE · PREFACE The Worldwide Corporate Tax Guidesummarizes the...

PREFACE

The Worldwide Corporate Tax Guide summarizes the corporate tax sys-tems in more than 130 countries. Except where otherwise noted, thecontent is based on information, current to 1 January 2001, and issupplied by our professionals in the jurisdictions covered. It alsocontains a directory of international tax contacts in offices of ourmember firms around the world.

Ernst & Young is a leading international professional services orga-nization. More than 14,000 Ernst & Young tax professionals arelocated in over 130 countries. In addition, legal services are availablein various parts of the world where permitted.

Tax InformationThis publication should not be regarded as offering a complete expla-nation of the tax matters referred to and is subject to changes in thelaw. Local publications of a more detailed nature are frequently avail-able, and readers are advised to consult their local Ernst & Youngprofessionals for further information.

The Ernst & Young International Business Series also includes acompanion volume on personal tax systems and immigration rulesfor executives and a series of books on doing business in variouscountries. These publications are available on the internet atwww.ey.com/global/tax.

DirectoryOffice addresses, telephone numbers and fax numbers, as well asnames, telephone numbers and e-mail addresses of international taxcontacts, are provided for each country.

Symbols that precede the names of some tax contacts designate thatthe individuals hold the following functions:National director of the listed tax specialty Director of the listed specialty in the local office

The listing for each tax contact includes an office telephone num-ber, which is a direct dial number if available. The office telephonenumber is always shown in bold typeface and is listed in the firstcolumn to the right of the tax contacts name. Mobile telephone num-bers are listed for some tax contacts. These numbers are listed inbold typeface below the office telephone numbers.

The international telephone country code is listed in each countryheading and, if presented as part of a telephone or fax number, is sur-rounded by brackets. Telephone and fax numbers are presented withthe city or area code in parenthesis, and without the domestic prefix(1, 9, or 0) sometimes used within a country.

A Technical Assistance firm is a firm that is not a member of Ernst& Young International.

Internet SiteFurther information concerning Ernst & Young International may befound at www.ey.com.

Ernst & Young InternationalJanuary 2001

Last Updated January 2001 PR E FAC E 1

In the preparation of this guide, every effort hasbeen made to offer current, correct and clearlyexpressed information. However, the informa-tion in the text is intended to afford generalguidelines only. This publication is distributedwith the understanding that Ernst & YoungInternational is not responsible for the result ofany actions taken on the basis of information inthis publication, nor for any errors or omissionscontained herein. Ernst & Young Internationalis not attempting through this work to renderlegal, accounting or tax advice. Readers areencouraged to consult with professional advi-sors for advice concerning specific mattersbefore making any decision.

The information in this publication should beused as a research tool only, and not in lieu ofthe tax professionals own research with respectto client matters.

Ernst & Young offers traditional audit and taxservices, as well as customized services in cor-porate finance, online security, risk manage-ment, the valuation of intangibles and e-busi-ness acceleration. In addition, legal services areavailable in various parts of the world wherepermitted.

Ernst & Young International, Ltd. 2001.

All Rights Reserved.

CONTENTS

Ernst & Young International ........................................................1

Ernst & Youngs Foreign Tax Desk Network...............................2

Albania.........................................................................................6

Angola .........................................................................................9

Argentina ...................................................................................13

Aruba .........................................................................................18

Australia.....................................................................................20

Austria .......................................................................................34

Azerbaijan..................................................................................42

Bahamas.....................................................................................46

Bahrain.......................................................................................48

Bangladesh.................................................................................49

Barbados ....................................................................................55

Belgium .....................................................................................61

Bermuda ....................................................................................69

Botswana....................................................................................72

Brazil .........................................................................................75

British Virgin Islands.................................................................81

Brunei ........................................................................................84

Bulgaria .....................................................................................87

Cameroon...................................................................................92

Canada .......................................................................................96

Cayman Islands........................................................................109

Chile.........................................................................................111

China, Peoples Republic of.....................................................115

Colombia .................................................................................124

Commonwealth of Independent States....................................129

Congo, Peoples Republic of ...................................................129

Costa Rica................................................................................134

Cte dIvoire............................................................................136

Croatia .....................................................................................141

Cyprus......................................................................................145

Czech Republic........................................................................149

Denmark ..................................................................................159

Dominican Republic ................................................................167

Ecuador....................................................................................170

Egypt........................................................................................174

Estonia .....................................................................................180

Ethiopia....................................................................................183

Fiji............................................................................................186

Finland .....................................................................................190

France ......................................................................................199

Gabon.......................................................................................211

Georgia ....................................................................................216

Germany ..................................................................................219

Ghana.......................................................................................235

Greece......................................................................................240

Guam .......................................................................................247

Guatemala................................................................................249

Guernsey, Channel Islands ......................................................252

Guinea......................................................................................255

Guyana.....................................................................................257

Hong Kong ..............................................................................262

Hungary ...................................................................................267

India .........................................................................................276

Indonesia..................................................................................288

Ireland, Republic of .................................................................296

Isle of Man...............................................................................310

Israel ........................................................................................315

Italy ..........................................................................................325

Jamaica ....................................................................................337

Japan ........................................................................................342

Jersey, Channel Islands............................................................349

Jordan.......................................................................................352

Kazakhstan...............................................................................355

Kenya .......................................................................................359

Korea........................................................................................363

Kuwait......................................................................................369

Latvia .......................................................................................376

Lebanon ...................................................................................380

Lesotho ....................................................................................385

Liechtenstein............................................................................387

Lithuania..................................................................................391

Luxembourg.............................................................................396

Macau ......................................................................................403

Macedonia, Former Yugoslav Republic of ..............................407

Malaysia...................................................................................412

Maldives ..................................................................................419

Malta........................................................................................420

Mauritius..................................................................................429

Mexico .....................................................................................434

Monaco ....................................................................................441

Morocco...................................................................................444

Mozambique ............................................................................449

Myanmar..................................................................................453

Namibia ...................................................................................458

Netherlands..............................................................................464

Netherlands Antilles ................................................................482

New Zealand............................................................................487

Nicaragua.................................................................................497

Nigeria .....................................................................................500

Northern Mariana Islands, Commonwealth of the..................509

Norway.....................................................................................512

Oman .......................................................................................519

Pakistan....................................................................................523

Panama.....................................................................................535

Paraguay...................................................................................540

Peru ..........................................................................................542

Philippines ...............................................................................546

Poland ......................................................................................553

Portugal....................................................................................562

Puerto Rico ..............................................................................573

Qatar ........................................................................................578

Romania...................................................................................583

Russian Federation...................................................................590

Saudi Arabia ............................................................................597

Senegal.....................................................................................602

Seychelles ................................................................................606

Singapore .................................................................................610

Slovak Republic .......................................................................622

Slovenia ...................................................................................631

Solomon Islands ......................................................................635

South Africa.............................................................................640

Spain ........................................................................................651

Sri Lanka .................................................................................663

Suriname..................................................................................670

Swaziland.................................................................................672

Sweden.....................................................................................675

Switzerland ..............................................................................683

Taiwan......................................................................................698

Tanzania...................................................................................704

Thailand ...................................................................................708

Trinidad and Tobago................................................................712

Tunisia......................................................................................718

Turkey ......................................................................................723

Uganda.....................................................................................731

Ukraine ....................................................................................734

United Arab Emirates ..............................................................740

United Kingdom ......................................................................741

United States............................................................................760

U.S. Virgin Islands...................................................................792

Uruguay ...................................................................................795

Venezuela.................................................................................798

Vietnam....................................................................................806

Yemen ......................................................................................814

Yugoslavia, Federal Republic of..............................................816

Zambia .....................................................................................821

Zimbabwe ................................................................................825

Foreign Currencies and Exchange Rates.................................833

Ernst & Young Firms Worldwide ............................................837

Index of International Tax Contacts ........................................841

1

ERNST & YOUNG INTERNATIONAL

NEW YORK GMT -5

Ernst & Young International [1] (212) 773-30001133 Avenue of the Americas Fax: [1] (212) 773-6498, 773-6271New York, NY 10036

Andrew B. Jones, Vice Chairman, [44] (20) 7951-4199Tax and Law Mobile: [44] 7771-974-810(resident in London) Fax: [44] (20) 7951-8829

E-mail: [email protected] H. Fouad, Director of Tax [1] (212) 773-3504

Services Mobile: [1] (917) 385-6419E-mail: [email protected]

Claude E. Fusco, Jr., Chairman, [1] (212) 773-6155Global Employment Metropark: [1] (732) 516-4421Solutions (GEmS) Mobile: [1] (908) 794-6297

E-mail: [email protected] L. Harley, Director of [1] (212) 773-8660

Tax Communications E-mail: [email protected] E. Jones, Joint CEO, [1] (216) 583-1445Global GEmS Practice Mobile: [1] (216) 272-9148(resident in Cleveland) International Mobile: [1] (646) 752-6029

Fax: [1] (216) 583-8317David Robinson, Joint CEO, [44] (20) 7951-2693Global GEmS Practice Fax: [44] (20) 7951-2895(resident in London) E-mail: [email protected]

Dean L. Ruehle, Tax Regional [52] (5) 283-1498Support Latin America Fax: [52] (5) 283-1393(resident in Mexico City) E-mail: [email protected]

Meg Salzetta, Marketing Director, [31] (20) 5497 646International Tax Services Mobile: [31] (6) 21 25 25 72

Fax: [31] (20) 6612 899E-mail: [email protected]

Robert S. Scolnick, Director of [44] (20) 7951-8786Global Accounts and Pursuits Mobile: [44] 7867-908-659Europe (resident in London) Fax: [44] (20) 7951-8829

E-mail: [email protected] J.M. Terra, Director [31] (20) 5497 391of Indirect Tax Fax: [31] (20) 6426 839(resident in Amsterdam) E-mail: [email protected]

James J. Tobin, Director of [1] (212) 773-6400International Tax Services Mobile: [1] (917) 365-9466

Fax: [1] (212) 773-5116E-mail: [email protected]

Damian Walsh, Director of [44] (20) 7951-8787IMPACT Europe Mobile: [44] 7769-672-037(resident in London) Fax: [44] (20) 7951-8829

E-mail: [email protected] B. Bost, Manager, EYI [1] (212) 773-3635

Tax Publications E-mail: [email protected] Anes, Senior Editor, [1] (732) 516-4551

Tax Publications, Editor of Fax: [1] (732) 516-4277Worldwide Corporate Tax Guide E-mail: [email protected](resident in Metropark)

Robin L. Leong, Editor, Tax [1] (212) 773-7386Publications E-mail: [email protected]

Anna Papatheodorou, Marketing, [1] (212) 773-3953Production and Distribution, E-mail: [email protected] Publications

Andrea B. Smith, [1] (212) 773-1256Global Tax Websites E-mail: [email protected]

ERNST & YOUNGSFOREIGN TAX DESK NETWORK

Ernst & Youngs Foreign Tax Desks represent a unique network of experi-enced international tax experts. Generally at the partner level, theseexperts are assigned to E&Y offices in foreign cities, either major centersof international business, such as New York or London, or other importanttrading centers. The Foreign Tax Desks offer our clients a tremendousresource accessible, timely and innovative tax-planning advice oncross-border investments. In major centers we have developed clustersor groups of Foreign Tax Desks, providing our clients worldwide with aforum for information and idea exchange and offering high-level interna-tional tax reviews for multinationals. Any number of desks may beinvolved in a single project. Our Foreign Tax Desks are on call at the num-bers listed below.

New York Country Code [1] Rubens Toshio Akamine (Brazil) (212) 773-3340Kazuo Ando (Japan) (212) 773-7539Anita Bakos (Hungary) (212) 773-3000Alain Baudeneau (France) (212) 773-0848Ian Beer (United Kingdom) (212) 773-7848Marco Bremer (Netherlands Financial Services) (212) 773-4549Joseph Camacho (Barbados) (212) 773-9390Agnes Claus (Hungary) (212) 773-1395Stephen Davies (United Kingdom) (212) 773-3000Patrick Dewerbe (Portugal) (212) 773-3000Patrick Donsimoni (France) (212) 773-5889Thomas Eckhardt (Germany) (212) 773-8265Alex Fischer (Chile) (212) 773-5327Nigel D. Fleming (United Kingdom) (212) 773-8764Gustavo Flores (Mexico) (212) 773-5762Jonathan Fox (United Kingdom) (212) 773-6564Hector A. Gama (Mexico) (212) 773-9102Jacco Gillis (Netherlands) (212) 773-5287Carlo Gnetti (Italy) (212) 773-7893John Guarin (Barbados/British Virgin Islands) (212) 773-7316Rainer Hausmann (Switzerland) (212) 773-6475Trent H. Henry (Canada) (212) 773-1273Victor Hernn (Spain) (212) 773-2093Werner Huygen (Belgium/Luxembourg) (212) 773-3070Tomas Karlsson (European VAT) (212) 773-6458Hiroshige Kita (Japan) (212) 773-5445Helmar J.D. Klink (Netherlands) (212) 773-6495Simon Knightbridge (European Customs) (212) 773-6802Claudia Krey (United Kingdom) (212) 773-1234Jerome Labrousse (France) (212) 773-9164Michael Longes (Australia) (212) 773-5280Ken Mackenzie (United Kingdom) (212) 773-7506Terry J. McDowell (Canada) (212) 773-3330Jrg Menger (Germany) (212) 773-5250Homi Mistry (India) (212) 773-5161David Mitchell (Australia) (212) 773-6516Robert Moncrieff (United Kingdom Capital Markets) (212) 773-5021Peter Neale-Smith (European VAT) (212) 773-3350Silvain Niekel (Netherlands) (212) 773-1974 Heleen Nijkamp (Netherlands) (212) 773-4088Karen Nixon (Canada) (212) 773-4022Guido Petraroli (Italy) (through April 2001) (212) 773-2865Carl Pihlgren (Sweden) (beginning April 2001) (212) 773-3000Aamer Rafiq (United Kingdom) (212) 773-2769

2

Lynda Sass (United Kingdom) (212) 773-0714Christian Serao (Italy) (212) 773-4602Sharon Shulman (Israel) (212) 773-1984Shane Simmons (Australia) (212) 773-4562Joost Smallenbroek (Netherlands) (212) 773-8905Robert Stahel (United Kingdom) (212) 773-1425Rikard Strm (Sweden) (through June 2001) (212) 773-8597Hans van Haelst (Belgium/Luxembourg) (212) 773-3000Pablo Wejcman (Argentina) (212) 773-5129Jurjan Wouda Kuipers (Netherlands) (212) 773-6464

London Country Code [44] David Allgeier (United States) (20) 7951-8175David Anderson (Australia) (20) 7951-8234Rodolfo Avogadro (Italy) (20) 7951-1057Kenneth A. Bransom (United States) (20) 7951-8109Mike Collett (Australia) (20) 7951-1277Steven Cullimore (United States) (20) 7951-1932Pascal DHont (France) (20) 7951-1490Floris Dirkzwager (Netherlands) (20) 7951-2007Marc Ganz (United States) (20) 7951-8182Klaus Hagenmayer (Germany) (20) 7951-1148Karen Holt (United States) (20) 7951-2792Lee Holt (United States) (20) 7951-2351Brian Jesinkey (United States) (20) 7951-8172Florence Large (France) (20) 7951-1317Guido Lenzi (Italy) (20) 7951-1400Bjrn Lindn (Sweden) (20) 7951-8067Mark Lowry (United States) (20) 7951-4856Larry Mack (United States State and Local Taxes) (20) 7951-4621James E. Malcolm (United States) (20) 7951-1517Eric McMichael (United States) (20) 7951-1586Yumi Morita (United States) (20) 7951-1556Michael Nadler (United States) (20) 7951-1882Chris Nelson (United States) (20) 7951-2474Edward Rieu (United States) (20) 7951-1514Luis Segura (Spain) (20) 7951-1735Jason Sims (United States) (20) 7951-2189Nelly Souchal (France) (20) 7951-1876John Taylor (United States) (20) 7951-8171Robert Tharaeparambil (United States) (20) 7951-1527Frank van Hulsen (Netherlands) (20) 7951-1695Sandra van Loon (Netherlands) (20) 7951-0350Gerald Whelan (United States) (20) 7951-2932

Amsterdam Country Code [31]Merih Cetinkaya (Turkey) (20) 5497-356David Colvin (United States Expatriate Tax) (20) 5497-472Jeanine DiMaria (United States) (20) 5466-397Philip Green (United States) (20) 5497-433Lou Grippo (United States) (20) 5497-222Tobin Hopkins (United States) (20) 5466-024Michael Masciangelo (United States) (20) 5466-453Josh McKniff (United States) (20) 5462-236Chuck Merriman (United States) (20) 5497-222Margarita Moreno (United States) (20) 5497-222Alice Salem (United States) (20) 5466-345Sim Seo (United States) (20) 5492-158Hideki Tominaga (Japan) (20) 5497-567

Auckland Country Code [64]Peter Hills (Australia) (9) 302-8574

Bermuda Country Code [1]James Dockeray (United States) (441) 295-7000

FO R E I G N TA X DE S K S 3

Brussels Country Code [32]Jim Kelly (United States) (2) 774-93-80Kathrine Kimball (United States) (2) 774-95-09

Buenos Aires Country Code [54]Steve Hodge (United States) (11) 4312-0945

Calgary Country Code [1]Greg K. Harris (United States) (403) 206-5179Terry D. Pearson (United States) (403) 206-5182

Chicago Country Code [1]Jeremy Crewdson (United Kingdom) (312) 879-6958Thomas Dangel (Germany) (312) 879-6756Luiz Renato Dardes (Brazil) (312) 879-3218Catherine Gaudin (France) (312) 879-2169David Gregory (United Kingdom) (312) 879-4802Erikjan F. Hinnen (Netherlands) (312) 879-3423Peter Melerski (Germany) (312) 879-2000Mark Melzer (Netherlands) (312) 879-5508Vronique Mnard (France) (312) 879-2169Frank M. Schoon (Netherlands) (312) 879-3283Mark Skeldon (European VAT) (312) 879-5742Ian E. Skinner (Australia) (312) 879-3828John Sloot (European VAT) (312) 879-6919Jan-Gerben Smallenbroek (Netherlands) (312) 879-4622

Dublin Country Code [353]Joseph Lee-Gilligan (United States) (1) 475-0555

Frankfurt Country Code [49]Jacques-Henry de Bourmont (France) (69) 152 08 237Guillaume Rubechi (France) (69) 152 08 187

Kuala Lumpur Country Code [60]Mike Grover (Australia) (3) 242-5611

Lisbon Country Code [351]Carlos Rodriguez (Spain) (21) 791-22-59

Madrid Country Code [34]Gonalo Bastos Lopes (Portugal) (91) 572-73-70

Mexico City Country Code [52]Nicolas Muiz (United States) (5) 283-1488

Miami Country Code [1]Maria V. Apaolaza (Spain) (305) 415-1381Desiree Rodriguez (Spain) (305) 415-1402

Milan Country Code [39]Curt Kinsky (United States) (02) 8514240Takahiro Kitte (Japan) (02) 8514230Alyce Nelson (United States) (02) 8514211Alycia Spitzmueller (United States) (02) 8514564James K. Wall (United States) (02) 8514209

Montreal Country Code [1]Richard E. Felske (United States) (514) 874-4428Dawn Krause (United States) (514) 874-4350Daniel Lundenberg (United States) (514) 874-4411William Moskowitz (United States) (514) 874-4379Michelle Simon (United States) (514) 874-4352George Tsitouras (United States) (514) 874-4427

Moscow Country Code [7]William Henry (United States) (095) 938-6650

Mumbai Country Code [91]Dharmesh Pandya (United States) (22) 287-6485

4 FO R E I G N TA X DE S K S

Munich Country Code [49]Jacques-Henry de Bourmont (France) (89) 55985-0Paul Mitchell (United States) (89) 55985-3665Harry A. Shannon III (United States) (89) 55985-3623Marc Stiebing (Netherlands) (89) 55985-0Antoine van Horen (United Kingdom) (89) 55985-3672

Paris Country Code [33]Manon Capel (Netherlands) (1) 46 93 65 62Peter Doerfuss (Germany) (1) 46 93 81 37Larry Lemoine (United States) (1) 46 93 70 00Lee Oster (United States) (1) 46 93 80 26Lisa Raykovicz (United States) (1) 46 93 70 00Jarrod Ruiz (United States) (1) 46 93 65 45Peter Scholes (United Kingdom) (1) 46 93 60 53Suzie Spaulding (United States) (1) 46 93 70 00Bart Verhagen (Netherlands) (1) 46 93 81 05

San Jose Country Code [1]Thomas Germain (France) (408) 947-5500Roger Krapf (Switzerland) (408) 947-6560Howard Lambert (European VAT) (408) 947-5663Kevin McLoughlin (Ireland) (408) 947-5611Paulus Merks (Netherlands) (408) 947-5451Chiel Smit (Netherlands) (408) 947-5419

So Paulo Country Code [55]Arco P. Bakker (Netherlands) (11) 3841-4244Frank de Meijer (International Customs Planning) (11) 3841-5413Javier Echavarri (Spain) (11) 3841-5481Erik Smith (United States) (11) 3841-4205Jrme van Staden (Netherlands) (11) 3841-4245

Shanghai Country Code [86]William P.C. Seto (United States) (21) 6219-1219

Sydney Country Code [61]Tracy Fink (United States) (2) 9248-5555Jeffrey Greenstein (United States) (2) 9248-4097Matthew Hanley (New Zealand) (2) 9248-4787John Ring (United Kingdom) (2) 9248-4636

Tel-Aviv Country Code [972]Jonathan E. Lubick (United States) (3) 568-8412

Tokyo Country Code [81]Wayne H. Aoki (United States) (3) 3506-2602Eibert de Vries (International Customs Planning) (3) 3506-2440Thomas Hatheway (United States) (3) 3506-2043Tobias J. Lintvelt (Netherlands) (3) 3506-2423Bernie Morris (International Customs Planning) (3) 3506-2424Michael View (United States) (3) 3506-2422

Toronto Country Code [1]James K. Frank (United States) (Buffalo phone number) (716) 843-5022Armand Grunberger (United States) (416) 943-2232George B. Guedikian (United States) (416) 943-3878Steve Jackson (United States) (416) 943-2340James A. Rowling (United States) (416) 864-1234

Vancouver Country Code [1]Dennis C. Wilkerson (United States) (604) 891-8217

Zurich Country Code [41]Donald Dismuke (United States) (58) 286-31-14Frank A. Hahn (United States) (58) 286-31-22James Sanderson (United States) (58) 286-31-49

FO R E I G N TA X DE S K S 5

ALBANIA

(Country Code 355)

TIRANA GMT +1

Romeo Mitri (42) 29500Fiscal and Financial Consulting* Fax: (42) 29500Rruga Dibres P. 312/1, Ap. 19TiranaAlbania* Technical Assistance firm

International Tax/Expatriate TaxRomeo Mitri (42) 29500

Mobile: (38) 20-27-473

Because of frequent changes to the tax law and the rapidly changing eco-nomic situation in Albania, readers should obtain updated informationbefore engaging in transactions. The information in this chapter has notbeen updated since 1 January 2000.

A. At a GlanceCorporate Profits Tax Rate (%) 30/40/50 (a)Capital Gains Tax Rate (%) 30/40/50 (a)Branch Tax Rate (%) 30/40/50 (a)Withholding Tax (%)

Dividends 10/15 (b)Interest 10/15 (b)Royalties from Patents, Know-how, etc. 15 (c)Rental Income from Leases 10 (c)Branch Remittance Tax 0

Net Operating Losses (Years)Carryback 0Carryforward 3

(a) The 30% rate is the standard rate. For details concerning the other rates, seeSection B.

(b) The 10% rate applies to payments to residents; the 15% rate applies to pay-ments to nonresidents.

(c) This tax applies to both residents and nonresidents.

B. Taxes on Corporate Income and GainsCorporate Income Tax. Resident companies are subject to tax ontheir worldwide income. Nonresident companies are subject totax on their Albanian-source income only.

Rates of Corporate Tax. The standard rate of profits tax is 30%.

A 40% rate applies to companies engaged in tourism activities,except for companies exempt from tax for six years under LawNo. 7665 of 21 January 1992. This law provides for the develop-ment of priority touristic zones in accordance with licensesissued by the Ministry of Tourism.

Companies with foreign participation engaged in the explorationand exploitation of oil and gas offshore are subject to tax at a rateof 50%.

6

Capital Gains. Capital gains are included in the ordinary incomeof companies and are subject to profits tax at the regular rates.

Administration. The tax year is the calendar year.

An annual tax return must be filed by 31 March of the yearfollow-ing the tax year. Tax assessments with respect to irregu-larities or violations contained in the return are issued within 15days after the filing of the return.

Companies must pay profits tax in monthly installments duringthe tax year. The installments are due on the 15th day followingthe end of the month for which tax is due. Any balance of tax dueshown on the annual tax return must be paid at the time of filingthe tax return.

Dividends. Dividends paid are subject to withholding tax at a rateof 10% for payments to residents and 15% for payments to non-residents.

Remittances of branch profits are not subject to withholding tax.

Companies must include dividends received from Albanian andforeign companies in taxable income.

Foreign Tax Relief. Under its tax treaties, Albania usually agrees toexempt foreign-source income from tax. Foreign taxes are cred-itable against Albanian tax only as provided in tax treaties.

C. Determination of Trading IncomeGeneral. Taxable income is based on the annual profit reported infinancial statements prepared in accordance with the accountinglaw and regulations issued by the Minister of Finance. Taxableincome does not necessarily equal the profit shown in the finan-cial statements, however, because certain specified adjustmentsare required for tax purposes.

All necessary and reasonable expenses incurred in carrying outbusiness activities are deductible except for the following: Costs of purchasing or improving land; Costs of purchasing, improving, renewing or reconstructing

fixed assets; Depreciation or other expenses in excess of rates set by law or

the Ministry of Finance (see Tax Depreciation below); Fines and penalties paid for the violation of laws or contractu-

al provisions; Interest paid on loans in excess of the rates of the Bank of

Albania; and Interest paid on late payments to the government.

Inventories. The inventory valuation rules provided in the account-ing law also apply for tax purposes. Inventory is valued at histor-ical cost, which is determined by using the weighted-average,first-in, first-out (FIFO) or other specified methods. The local taxauthorities must approve a change in the adopted method.

Provisions. Companies may not deduct provisions.

Tax Depreciation. Depreciation of tangible and intangible assetsmust be computed using the straight-line method. The followingare some of the applicable rates.

AL BA N I A 7

Asset Rate (%)Buildings and structures 5Computers, information systems and software 25Other fixed assets 20Intangible assets 10

Assets that may not be depreciated include land, artistic works,jewelry and precious metals.

Relief for Losses. Tax losses may be carried forward for threeyears. Loss carrybacks are not allowed.

Groups of Companies. The tax law does not contain any clear pro-visions for filing consolidated returns or relieving losses within agroup. As a result, consolidated returns are not allowed.

D. Other Significant TaxesThe following table summarizes other significant taxes.

Nature of Tax Rate (%)Value-added tax; exempt supplies include leases of land and buildings and financial servicesStandard rate 20Exports, services rendered outside Albania for Albanian recipients byAlbanian residents and supplies ofgoods and services relating tointernational transportation 0

Excise duties on specified goodsTobacco 60Alcoholic drinks 50Soft drinks 5Benzene Super 90Oil 50

Social security contributions, on monthly salary; paid byEmployer 34.2Employee 11.7

E. Foreign-Exchange Controls The Albanian currency is the leke (no symbol is provided for theleke). In Albania, the currency market is a free market and theleke is fully convertible internally.

Residents and nonresidents may open foreign-currency accountsin Albanian banks or foreign banks authorized to operate inAlbania. Residents may open accounts in banks located abroadonly if they obtain the prior approval of the Bank of Albania (thecentral bank). No limits are imposed on the amount of foreigncurrency that may be brought into Albania. Hard-currency earn-ings may be repatriated, and no tax is imposed on the repatriationof such earnings.

F. Treaty Withholding Tax RatesThe rates of withholding tax in Albanias tax treaties are describedin the following table.

8 AL BA N I A

Dividends Interest Royalties% % %

Croatia (c) 10 10 10Czech Republic 5/15 (a) 5 10Greece (c) 5 5 5Hungary 5/10 (a) 0 5Italy 10 5 (b) 5Malaysia 5/15 (a) 10 10Malta (d) 5/15 (a) 5 5Poland 5/10 (a) 10 5Romania 10/15 (a) 10 (b) 15Russian Federation (c) 10 10 10Switzerland (d) 5/15 (a) 5 5Turkey (c) 5/15 (a) 10 (b) 10Nontreaty countries 15 15 15

(a) The lower rate applies if the beneficial owner of the dividends is a companythat holds at least 25% of the capital of the payer; the higher rate applies toother dividends.

(b) Interest on government and central bank loans is exempt from withholdingtax.

(c) These treaties have been ratified by the Albanian parliament but not by theparliaments of the other countries.

(d) These treaties have been negotiated, but not signed.

Albania is negotiating tax treaties with several other countries.

ANGOLA

(Country Code 244)

LUANDA GMT +1

Ernst & Young (2) 336-295Mail Address: [351] (21) 791-20-00 (Lisbon)Apartado 50602 Fax: (2) 336-2951700 Lisbon [351] (21) 795-75-92 (Lisbon)Portugal E-mail: ernst.young-angola%

netangola.comStreet Address:Avenue 4 de Fevereiro95 2nd FloorLuandaAngola

International TaxAntnio Guimares [351] (21) 791-20-66(resident in Lisbon) E-mail: [email protected]

Mrio Barber (2) 336-295

Natural ResourcesFilomena Oliveira(resident in Lisbon) [351] (21) 791-20-60

A. At a GlanceCorporate Income Tax Rate (%) 35 (a)Capital Gains Tax Rate (%) 35Branch Tax Rate (%) 35 (a)Withholding Tax (%)

Dividends 10 (b)(c)Interest 15 (c)

AL BA N I A AN G O L A 9

Royalties 10Branch Remittance Tax 0


(a) Income from certain activities, such as agriculture, forestry and cattle raising,is subject to tax at a rate of 20%. Oil companies are taxed at special rates (seeSection B).

(b) Certain dividends are exempt from tax (see Section B).(c) A 2.5% rate applies to income derived from companies in fundamental areas

of the economy.

B. Taxes on Corporate Income and GainsCorporate Income Tax. Companies carrying out industrial andcommercial activities in Angola are subject to Industrial Tax(income tax) on all profits derived from Angola. An Angolancompany, which is a company that has its head office or effectivemanagement and control in Angola, is subject to Industrial Taxon its worldwide profits.

Foreign entities with a permanent establishment in Angola aresubject to Industrial Tax only on profits derived from the perma-nent establishment. A generally applicable definition of perma-nent establishment follows the definition in the Organization forEconomic Cooperation and Development (OECD) model treaty.

All companies, regardless of whether they have a permanent placeof business in Angola, that perform contracts or subcontracts orrender services in Angola are subject to Industrial Tax.

Foreign companies, regardless of whether they have a permanentestablishment in Angola, are subject to withholding tax on pay-ments with respect to contracting and subcontracting, contractsfor technical assistance and other contracts for services renderedin Angola. The rate of the withholding tax is the normalIndustrial Tax rate of 35% (see Rates of Corporate Tax below).The 35% rate is applied to 10% of the value of the contract forconstruction contracts and related activities and to 15% of thevalue of the contract for other activities. The tax is considered tobe a payment on account if the foreign company has a permanentestablishment in Angola.

Rates of Corporate Tax. The ordinary Industrial Tax rate is 35%.

Income from certain activities, such as agriculture, forestry andcattle raising, is subject to tax at a rate of 20%.

Income from oil extraction is subject to Oil Income Tax at a totalrate of 65.75%. In addition, companies engaged in explorationfor and production of oil, gas and similar products must pay roy-alties on concession rights and production at a rate of 16.67%.

Contracts, such as production-sharing agreements, entered intoby oil companies with the Angolan government may override theoil extraction tax and the royalty provisions and may set forth dif-ferent taxes and applicable rates.

The Minister of Finance may decide, on a case-by-case basis, toprovide tax exemptions or tax reductions for companies investingin fundamental areas of the Angolan economy. The minister may

10 AN G O L A

grant tax exemptions for periods ranging from three to five yearsto new companies investing in new industries or in fundamentalareas of the Angolan economy (sectors that contribute to theincrease of exports and reduction of imports).

Under the Foreign Investment Code, certain foreign investorsmay negotiate special tax regimes for the following investments: Investments of amounts equivalent to US$50 million or more; Investments in sectors that require authorization for foreign

investment; and Investments that are considered essential for the development

of the Angolan economy.

Capital Gains. Capital gains on profits derived from the saleof fixed assets are subject to Industrial Tax at the regular rateof 35%.

Administration. The tax year is the calendar year.

Companies, including foreign companies with a permanentestablishment in Angola, must file tax returns together with theirfinancial statements by 31 May in the year following the tax year.

Companies must make monthly advance tax payments. The taxbase for the monthly payments is 10% of the preceding monthsturnover. The Industrial Tax rate of 35% is applied to this taxbase to compute the amount of the advance payment. The pay-ments are due on the last day of each month. If the total of theadvance payments exceeds the tax due for the tax year, the excessmay be carried forward as a tax credit to the following threeyears.

Penalties are imposed for failure to file tax returns and otherrequired documents. On final assessment, if the tax authoritiesdetermine that a further payment is required and that the taxpayeris at fault, interest is imposed on the amount of the additionalpayment. If the tax due is not paid, additional interest of 2.5% amonth is imposed from the date of the tax authorities notice thatan additional payment is due.

All companies engaging in activities in Angola must register orreregister with the tax department to obtain a taxpayer number.

Dividends. In general, companies are subject to tax on the grossamount of dividends received.

Dividends received from Angolan companies subject toIndustrial Tax are exempt from tax if, at the time of the distribu-tion, the recipient owns at least 25% of the payer and has held theshares for at least two years or since the incorporation of thepayer. In addition, dividends paid by Angolan companies to cer-tain insurance companies or their holding companies are exempt.

A 10% withholding tax is imposed on taxable dividends and maybe credited against Industrial Tax due on the annual return. A re-duced rate of 2.5% applies to dividends derived from companiesoperating in fundamental areas of the Angolan economy.

AN G O L A 11

Foreign Tax Relief. No relief is granted for foreign taxes paid by anAngolan taxpayer.

C. Determination of Trading IncomeGeneral. Taxable income is the income reported in companiesfinancial statements, subject to certain adjustments. Expensesconsidered indispensable in the production of income and themaintenance of a production unit are deductible. Representationexpenses, such as travel expenses, deemed to be overstated by thetax authorities, as well as fines and penalties, are not deductible.

Inventories. Inventories may be valued by any currently accept-able method provided that the method is consistently applied andis based on documented purchase prices.

Provisions. Provisions for the following items are allowable: Bad debts, which cannot exceed 6% of the balance of receiv-

ables; Noninsurable risks that may have to be paid; and Depreciation in the value of inventory, which cannot exceed

2.5% to 6% of the value of the inventory.

Tax Depreciation. Depreciation rates are fixed by law. The fol-lowing are some of the currently applicable rates.

Asset Rate (%)Vehicles 33.33Office buildings 2Industrial buildings 4Electric motors and mechanical engines 16.66Furniture 10

These rates may vary depending on the industrial sector.

Relief for Losses. Companies may carry forward tax losses forthree years. No carryback is allowed.

Groups of Companies. There are no tax regulations governinggroups of companies (but see Section E).

D. Other Significant TaxesThe following table summarizes other significant taxes.

Nature of Tax RateTraining levy, on oil and gas explora-tion and production companies and their subcontractorsProduction companies US$0.15 per barrelExploration companies US$200,000 a yearSubcontractors under a contract with a term exceeding one year;levied on annual gross income 0.5%

Social security contributions, on salaries and additional remuneration; paid byEmployer 5%Employee 2%

12 AN G O L A

E. Miscellaneous MattersForeign-Exchange Controls. The Banco Nacional de Angolasupervises all foreign-exchange operations. For certain transac-tions, such as the payment of dividends, prior authorization fromthe Ministry of Finance is required.

In general, repatriation of profits is permitted for approved for-eign-investment projects. In certain cases, a time schedule forrepatriation of profits may be imposed. Proceeds from the sale orliquidation of an investment may not be repatriated until six yearsafter the capital was initially imported.

Antiavoidance Legislation. The tax authorities may adjust the tax-able income of related parties.

F. Tax TreatiesAngola does not have any tax treaties in force. However, taxtreaties with France and Portugal are expected to enter into forcein the near future.

Angola has entered into an agreement with Portugal on the reci-procal promotion and protection of investments.

ARGENTINA

(Country Code 54)

The e-mail addresses for the persons listed below who are resident inArgentina are in the following standard format:

[email protected] e-mail addresses for persons who are not resident in Argentina or whohave e-mail addresses varying from the standard format are listed belowthe respective persons names.

BUENOS AIRES GMT -3

Ernst & Young Henry Martin, (11) 4311-8162, 4312-0945Lisdero y Asociados Fax: (11) 4315-4948Maip 942 - 3rd to 8th Floor1340 Buenos AiresArgentina

National Director of Tax Jorge Gebhardt (11) 4315-0958

International Tax ServicesCarlos Casanovas (11) 4311-8162Daniel Rybnik (11) 4311-8162Gustavo Scravaglieri (11) 4311-8162Daniel Vanrell [1] (212) 773-9372(resident in New York) E-mail: [email protected]

Pablo Wejcman [1] (212) 773-5129(resident in New York) E-mail: [email protected]

Transfer PricingDaniel Rybnik (11) 4311-8162Gustavo Scravaglieri (11) 4311-8162Manuel Marcelo Val Lema (11) 4311 8162

AN G O L A AR G E N T I NA 13

Mergers and Acquisitions/Corporate FinanceEduardo Cariglino (11) 4312-0360

Oil and Gas/MiningJorge Gebhardt (11) 4315-0958

InsuranceRubn Malvitano (11) 4315-0958

Legal ServicesJuan Carlos Pace (11) 4315-0958

E-mail: [email protected]

Expatriate TaxFlorencia Fernandez (11) 4311-8162Jorge Gebhardt (11) 4315-0958

Foreign DeskSteve Hodge, United States (11) 4312-0945

Atlanta Voice Mail: [1] (404) 817-5638

A. At a GlanceCorporate Income Tax Rate (%) 35 (a)Capital Gains Tax Rate (%) 35Branch Tax Rate (%) 35 (a)Withholding Tax (%)

Dividends 0 (b)Interest 15.05/35 (c)Royalties from Patents, Know-how, etc. 21/28/31.5 (c)Branch Remittance Tax 0 (b)


(a) A Tax on Minimum Presumed Income is payable to the extent it exceeds reg-ular corporate income tax for the year. For details, see Section B.

(b) If the amount of a dividend distribution or a profit remittance exceeds theafter-tax accumulated taxable income of the payer, a final withholding tax of35% is imposed on the excess.

(c) These are final withholding taxes imposed on nonresidents only. For detailsconcerning the rates, see Section B.

B. Taxes on Corporate Income and GainsCorporate Income Tax. Resident companies are taxed on world-wide income. Any profits, including capital gains, are taxable.Resident companies are those incorporated in Argentina.

Rates of Corporate Tax. Corporate tax is payable at a rate of 35%.

Tax on Minimum Presumed Income. The Tax on MinimumPresumed Income (TMPI) is imposed on resident companies andbranches of foreign companies. The TMPI is payable to the extentit exceeds regular corporate income tax for the year.

The tax base for the TMPI is the resident companys or branchsworldwide assets at the end of the tax year. Certain specifiedassets are excluded from the calculation of the tax base.

The standard rate of TMPI is 1%, but special rates apply to cer-tain types of companies.

TMPI that is paid may offset regular income tax in the followingfour tax years.

14 AR G E N T I NA

Capital Gains. Capital gains are included in the taxable income ofa corporation and taxed at the regular corporate rate.

Administration. The tax year for a company is its accounting year.Companies are required to make 10 advance payments of corpo-rate income tax. The first payment is equal to 25% of the pre-ceding years tax and the other payments are each equal to 8.33%of such tax. The payments are due monthly beginning in the sixthmonth after the end of the accounting year. The due dates dependon the companys taxpayer registration number.

Under certain circumstances, advance payments of TMPI (seeTax on Minimum Presumed Income above) may be required.

Companies must file their tax returns and pay any balance due bya specified date in the fifth month after their accounting year. Ifthe payment is late, interest is charged.

Dividends. In general, dividends and branch remittances are notsubject to tax. However, if the amount of a dividend distributionor a profit remittance exceeds the after-tax accumulated taxableincome of the payer, a final withholding tax of 35% is imposedon the excess.

Withholding Taxes on Interest and Royalties. Final withholdingtaxes are imposed on interest and royalties paid to nonresidents.

A withholding tax rate of 15.05% applies to the following typesof interest payments: Interest on loans obtained by Argentine financial entities; Interest on loans granted by foreign financial entities if the

Argentine authorities consider the central bank of the homecountry of the financial entity to have adopted the standards ofthe Basle Banks Committee;

Interest on loans for the importation of movable assets, exceptautomobiles, if the loan is granted by the supplier of the goods;and

Under certain conditions, interest on investments in Argentinefinancial entities.

The withholding tax rate for all other interest payments to non-residents is 35%.

The general withholding tax rate for royalties is 31.5%. If certainrequirements are satisfied, a 21% rate may apply to technicalassistance payments and a 28% rate may apply to certain royalties.

Foreign Tax Relief. Resident companies may credit foreign incometaxes against their Argentine tax liability, up to the amount of theincrease in that liability resulting from the inclusion of foreign-source income in the tax base.

C. Determination of Trading IncomeGeneral. Tax is applied to taxable income, which is the account-ing profit earned in the tax period after adjustments provided forby tax law. Exemptions are usually insignificant.

Expenses are deductible to the extent incurred in producing tax-able income, subject to certain restrictions and limitations, suchas those applicable to representation expenses and directors fees.

AR G E N T I NA 15

Depreciation, rental payments and all other automobile expenses,such as license fees, insurance, fuel and maintenance, are alsodeductible, subject to certain restrictions. In general, certain lim-itations apply to the deductibility of interest payments subject tothe withholding tax rate of 15.05% (see Section B).

Inventories. Stock is valued according to procedures establishedby the tax law, which result in values nearly equivalent to marketvalue at the end of the tax period.

Provisions. A provision for bad debts is allowed. However, it mustbe computed according to rules prescribed by the tax law.

Depreciation. Tangible assets may be depreciated using thestraight-line method over the assets expected lives. A methodbased on effective use may also be acceptable. In general, build-ings are depreciated at an annual rate of 2%. However, a higherrate may be acceptable if it is established that, because of thematerials used to construct the building, the expected useful lifeis less than 50 years. The law does not specify rates for movableassets. Intangible property may be depreciated, with exceptionssuch as goodwill and trade names.

Relief for Losses. Tax losses may be carried forward for five taxperiods. Losses from foreign sources and from sales of shares orstockholdings may offset only the same types of income. Losscarrybacks are not permitted.

Except for hedge transactions, losses resulting from the rightscontained in derivative instruments or contracts may offset onlythe net income generated by such rights during the fiscal year inwhich the losses were incurred or in the following five fiscalyears. For this purpose, a transaction or contract involving deriv-atives is considered a hedge transaction if its purpose is to reducethe impact of future fluctuations in market prices or fees on theresults of the primary economic activities of the hedging company.

D. Other Significant TaxesThe table below summarizes other significant taxes.

Nature of Tax Rate (%)Value-added tax, on goods delivered andservices rendered in Argentina, on servicesrendered outside Argentina that are used or exploited in Argentina, and on importsStandard rate 21Other rates 10.5/27

Various local taxes on gross receipts, realestate and other items Various

Social security taxes, on monthly salaries upto $6,000; paid by employer; the rate may besignificantly reduced depending on where the employees render services 33

Tax on interest paymentsIssuers of negotiable obligations and entitiesborrowing from Argentine financial entities 15

Entities borrowing from Argentine individuals 35

16 AR G E N T I NA

E. Miscellaneous MattersForeign-Exchange Controls. Foreign-exchange controls have beeneliminated. Consequently, transactions are carried out in a freemarket at prices set by supply and demand.

Debt-to-Equity Rules. Under general principles, transactionsbetween related parties must be made on an arms length basis. Ifa corporation is thinly capitalized, a portion of funds loaned toit by a related party could be recharacterized as equity.

Transfer Pricing. The Argentine law includes transfer-pricingrules that apply to transactions between related parties. Theserules generally follow the Organization for Economic Cooper-ation and Development (OECD) rules. Transactions with entitiesand individuals located in low-tax jurisdictions (the ExecutiveBranch will publish a list of countries qualifying as low-tax juris-dictions) are deemed to be not carried out at arms length. The lawprovides for the following transfer-pricing methods: Comparable uncontrolled price method; Resale price method; Cost-plus method; Profit-split method; Residual profit-split method; and Transactional net margin method.

The tax authorities request special tax returns in which the tax-payer must demonstrate the reasonableness of its transfer-pricing policy.

Income derived from exports of a company in Argentina is sub-ject to tax. If the price of the export from Argentina is less thanits wholesale price at the location of the buyer, such wholesaleprice is considered to be the price for tax purposes (under certaincircumstances, the tax authorities may use the wholesale price atthe place of origin). Imports into Argentina are not subject to tax.However, if the import price is more than the sum of the whole-sale price at the location of the seller plus freight and insurance,the excess is subject to tax (under certain circumstances, the taxauthorities may use the wholesale price at the destination). Theserules apply to transactions between unrelated parties.

F. Treaty Withholding Tax RatesSome of Argentinas tax treaties establish maximum tax rateslower than those under general tax law. To benefit from a reducedtreaty withholding tax rate, certain formal requirements must bemet. The following table shows the lower of the treaty rate andthe rate under domestic tax law.

Dividends (a) Interest (c) Royalties% % %

Australia 10/15 (b) 0/12 10/15Austria 15 0/12.5 15Belgium 10/15 (b) 0/12 3/5/10/15 (d)Bolivia 35 15.05/35 21/28/31.5 (f)Brazil 35 15.05/35 21/28/31.5 (f)Canada 10/15 (b) 0/12.5 3/5/10/15 (d)Chile 35 15.05/35 21/28/31.5 (f)Denmark 10/15 (b) 0/12 3/5/10/15 (d)

AR G E N T I NA 17

Dividends (a) Interest (c) Royalties% % %

Finland 10/15 (b) 0/15 3/5/10/15 (d)France 15 15.05/20 18Germany 15 10/15 15Italy 15 15.05/20 10/18 (e)Netherlands 10/15 (b) 0/12 3/5/10/15 (d)Spain 10/15 (b) 0/12 3/5/10/15 (d)Sweden 10/15 (b) 0/12 3/5/10/15 (d)United Kingdom 10/15 (b) 0/12 3/5/10/15 (d)Nontreaty countries 35 15.05/35 (f) 21/28/31.5 (f)

(a) The rates shown in the table apply to the amount of the dividend distributionexceeding the after-tax accumulated taxable income of the payer. Because taxtreaties generally limit the withholding tax rate that may be applied to thegross amount of the dividends, it is not clear that the reduced rates in the tablewill be applied to the excess amount referred to in the preceding sentence.However, it appears that taxpayers will be able to apply the reduced treatywithholding tax rates listed in the table to the excess amount, even if theapplication of the statutory rate of 35% to the excess would result in a with-holding tax that is less than the withholding tax resulting from application ofthe treaty rate to the gross amount of dividends.

(b) The 10% rate applies if the beneficial owner of the dividend is a companythat controls, directly or indirectly, at least 25% of the voting power of thepayer. The 15% rate applies to other dividends.

(c) The rates listed are the lower of the treaty or statutory rates. For details con-cerning the domestic rates, see Section B.

(d) In general, the rates apply to the following categories of payments: 3% for theuse of, or right to use, news; 5% for the use of, or right to use, copyrights ofliterary, dramatic, musical or other artistic works (but not royalties withrespect to motion picture films and works on film or videotape or othermeans of production for use in connection with television); 10% for the useof, or right to use, industrial, commercial or scientific equipment or patents,trademarks, designs, models, secret formulas or processes, or for the use ofor information concerning scientific experience, including payments for therendering of technical assistance; and 15% for other royalties. These cate-gories may differ slightly from treaty to treaty.

(e) The 10% rate applies to royalties for the use of, or the right to use, copyrightsof literary, artistic or scientific works. The 18% rate applies to other royalties.

(f) For details concerning these rates, see Section B.

ARUBA

(Country Code 297)

ORANJESTAD GMT -5

Moret Ernst & Young 824050Mail Address: Fax: 826548P.O. Box 197 E-mail: [email protected]

Street Address:Caya E.O. Petronia #17OranjestadAruba

International TaxAngel R. Bermudez 824050Ronald R. Davelaar 824050Maarten F. Koper 824050

18 AR G E N T I NA ARU BA

A. At a GlanceCorporate Income Tax Rate (%) 31 to 39*Capital Gains Tax Rate (%) 31 to 39*Branch Tax Rate (%) 31 to 39*Withholding Tax (%)

Dividends 0Interest 0Royalties from Patents, Know-how, etc. 0Branch Remittance Tax 0


* Reduced rates apply to certain companies. See Section B.

B. Taxes on Corporate Income and GainsCorporate Income Tax. Domestic corporations are taxed on world-wide income. A domestic corporation is one that is established inAruba. Branches of foreign companies are taxed on Aruban-source income.

Tax is levied on total profits earned from all sources during thecompanys accounting period. Profit means the total of netgains, under any name or any form.

Rates of Corporate Tax. Limited liability and foreign companiesare taxed at progressive rates from 31% to 39%. The 31% brack-et has a ceiling of Afl 40,000. Between Afl 40,000 and Afl100,000, the rate increases for each bracket of Afl 10,000. Therate on profits from Afl 100,000 through Afl 1 million is 37.95%.For profits exceeding Afl 1 million, the rate is 39%.

Tax exemptions and holidays are granted to new enterprisesengaged in certain industries, especially the manufacturingindustry. Companies operating in the free zone are subject to afixed corporate income tax of 2% on their export activities. Thefree zone is a defined trade territory where no duties are leviedon imports, provided the goods are modified and then exported.Aruba-exempt corporations (AVVs) are exempt from corporateincome tax.

Branch Profits Tax. Branches of foreign corporations are taxed atthe same rates as resident corporations. No additional withhold-ing taxes are imposed on the remittance of profits.

Offshore Income. Special incentives are available for limitedcompanies owned by nonresidents if the companies perform theiractivities entirely abroad. For example, revenue earned from realestate abroad is exempt; investment, trading, finance and patent-holding companies are taxed at a rate of 2.4% to 3%; and capitalgains are exempt. In addition, offshore banks, captive insurancecompanies and mutual funds can obtain an advance ruling fromthe local tax inspectorate to reduce their tax burden substantially.

Capital Gains. Capital gains are taxed as ordinary income.

Administration. The profit tax return for the previous accountingperiod must be filed within 60 days after distribution of the taxreturn forms. The profit tax due is payable two months afterreceipt of the assessment.

ARU BA 19

Dividends. Dividends received by domestic corporations fromother domestic corporations are tax-exempt. If received from for-eign corporations, the dividends are fully taxed, or they are taxedat 10% of the normal rate if the recipient company owns at least10% of the authorized paid-up capital of the distributing entity.

Foreign Tax Relief. Foreign tax relief is available through the TaxRegulation for the Kingdom of the Netherlands of which Arubais a partner.

Recipients of dividends from foreign companies may deduct asan expense withholding tax imposed on the dividends.

C. Determination of Trading IncomeGeneral. Commercial profits must be calculated in accordancewith sound business practice and are determined as follows:Gross income minus returns, rebates and discounts equals netincome; net income minus costs and expenses equals commercialprofits before taxes.

Inventories. Inventories are generally valued using the historical-cost, first-in, first-out (FIFO) or weighted-average methods.

Provisions. Provisions are not allowed as deductions in arriving attaxable income.

Depreciation. Depreciation may be calculated by the straight-line,declining-balance or flexible methods.

D. Foreign-Exchange ControlsThe foreign-exchange market is regulated by the Central Bank,which carries out the necessary transactions as executor ofexchange policy. Remittances abroad require an exchange licenseissued by the Central Bank.

E. Tax TreatyCurrently, the only provisions for double tax relief are found inthe Tax Regulation for the Kingdom of the Netherlands, whichcontains provisions to avoid double taxation between theNetherlands, Aruba and the Netherlands Antilles regarding taxeson income, capital and so forth.

AUSTRALIA

(Country Code 61)

The e-mail addresses for the persons listed below who are resident inAustralia are in the following standard format:

[email protected] e-mail addresses for persons who are not resident in Australia are list-ed below the respective persons names.

SOUTHEAST REGION GMT +10

20 ARU BA AU S T R A L I A

(A)Ernst & Young (2) 9248-5555The Ernst & Young Building Fax: (2) 9262-6565321 Kent StreetSydney, New South Wales 2000Australia

(B)Ernst & Young (3) 9288-8000120 Collins Street Fax: (3) 9654-6166Melbourne, Victoria 3000Australia

(C)Ernst & Young (2) 6247-388854 Marcus Clarke Street Fax: (2) 6248-5176CanberraAustralian Capital Territory 2601Australia

Managing Partner, TaxAnthony Verzi (A) (2) 9248-4910

Mobile: 413-750-546

International Tax Services CoreTim Carberry (B) (3) 9288-8795Mike Collett (resident in London) [44] (20) 7951-1311

E-mail: [email protected] Hills (resident in Auckland) [64] (9) 302-8574

Mobile: [64] (25) 899-096E-mail: [email protected]

Michael R. Johnston (A) (2) 9248-4911Mobile: 413-943-380

Michael Longes [1] (212) 773-5280(resident in New York) Mobile: (914) 953-3552

E-mail: [email protected] E. Skinner (resident in Chicago) [1] (312) 879-3828

Mobile: [1] (847) 571-5104E-mail: [email protected]

Michael Whyte (A) (2) 9248-4721Mobile: 419-233-181

International Tax Services Transfer Pricing David Lewis (B) (3) 9288-8700

Mobile: 417-113-892

International Tax Services Capital MarketsTony Happell (A) (2) 9248-5561

Mobile: 403-246-879

Global Employment SolutionsGs Choong (A) (2) 9248-4919

Mobile: 413-943-374 Ron Crowe (A) (2) 9248-4720

Foreign DesksTracy Fink, United States (A) (2) 9248-5555Jeffrey Greenstein, United States (A) (2) 9248-4097

Mobile: 411-692-948Matthew Hanley, New Zealand (A) (2) 9248-4787

Mobile: 413-739-019John Ring, United Kingdom (A) (2) 9248-4636

Banking and FinancePaul ODonnell (A) (2) 9248-4887

Mobile: 413-943-386 Richard R. Snowden (A) (2) 9248-4894

Mobile: 413-943-370

AU S T R A L I A 21

Indirect TaxesRichard Cant (A) (2) 9248-4880

Mobile: 413-943-371 Carolyn Mall (A) (2) 9248-5760

Mobile: 407-493-388

Insurance Peter Capodistrias (A) (2) 9248-4624

Mobile: 411-649-114Tom Limburg (A) (2) 9248-4623

Mobile: 413-752-408

Mining and PetroleumGraham Frank (A) (2) 9248-4810

Mobile: 411-641-397

ADELAIDE, SOUTH AUSTRALIA GMT +91/2

Ernst & Young (8) 8233-7111Level 21 Fax: (8) 8231-805091 King William StreetAdelaide, South Australia 5000Australia

International TaxLutz K. Heim (8) 8233-7003

Mobile: 413-739-012

BRISBANE, QUEENSLAND GMT +10

Ernst & Young (7) 3011-3333Levels 4, 5 and 6 Fax: (7) 3011-3100Waterfront Place1 Eagle StreetBrisbane, Queensland 4000Australia

International TaxChris Ball (7) 3011-3201

Mobile: 411-691-856

Indirect TaxesLindsay Somerville (7) 3011-3236

Mobile: 419-996-908

Financial ServicesChris Ball (7) 3011-3201

Mobile: 411-691-856

Minerals and EnergyDesley Grundy (7) 3011-3243

Mobile: 419-706-664

PERTH, WESTERN AUSTRALIA GMT +8

Ernst & Young (8) 9429-2222Level 34 Fax: (8) 9429-2433Central Park152-158 St. Georges TerracePerth, Western Australia 6000Australia

International TaxBruce Blackall (8) 9429-2256

Mobile: 413-056-904

Indirect TaxesTasso Papaelias (8) 9429-2283

Mobile: 413-056-911

Minerals and EnergyMichael Minosora (8) 9429-2259

Mobile: 413-056-909

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A. At a GlanceCorporate Income Tax Rate (%) 34Capital Gains Tax Rate (%) 34Branch Tax Rate (%) 34Withholding Tax (%)

Dividends (a)Franked 0Unfranked 30 (b)

Interest 10 (c)Royalties from Patents, Know-how, etc. 30 (d)Branch Remittance Tax 0

Net Operating Losses (Years)Carryback 0Carryforward Indefinite

(a) Franking of dividends is explained in Section B.(b) Final tax that is imposed on payments to nonresidents only. A reduced rate

(generally 15%) applies to residents in treaty countries. An exemption fromdividend withholding tax is available for unfranked dividends paid byAustralian resident companies to nonresidents. The exemption applies if thepayer of the dividends satisfies certain specified conditions.

(c) In general, this is a final withholding tax that is imposed on payments to non-residents only. However, withholding tax is imposed in certain circumstanceson interest paid to residents carrying on business overseas through a perma-nent establishment (branch).

(d) In general, this is a final withholding tax that is imposed on gross royaltiespaid to nonresidents. A reduced rate (generally 10% or 15%) applies toresidents of treaty countries.

B. Taxes on Corporate Income and GainsCorporate Income Tax. An Australian resident corporation is sub-ject to income tax on its nonexempt worldwide income. Noncashbusiness benefits may be included as income in certain circum-stances. A nonresident corporation is subject to Australian taxonly on Australian-source income.

Corporations incorporated in Australia are residents of Australiafor income tax purposes, as are corporations carrying on busi-ness in Australia with either their central management and con-trol in Australia or their voting power controlled by Australianresidents.

The government intends to enact legislation implementing aunified entity tax regime. This regime, which would be effec-tive from 1 July 2001, is designed to tax most companies, trustsand limited partnerships on a consistent basis. It is also designedto apply a consistent tax treatment to distributions made by suchentities to their members.

Rates of Corporate Tax. For the 2000-2001 tax year, resident cor-porations are subject to tax at a rate of 34%. Income of nonresi-dent corporations from Australian sources that is not subject towithholding tax or treaty protection is similarly taxable at 34%.However, a nonresident corporation not operating in Australiathrough a permanent establishment is generally subject to taxonly on Australian-source passive income, such as rent, interest,royalties and dividends.

The corporate tax rate will be reduced to 30% for the 2001-2002and subsequent tax years.

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Capital Gains. Gains resulting from a capital gains tax (CGT)event may be subject to tax. The income tax law provides for 36CGT events, including disposals of assets, and grants of optionsand leases. Capital gains or losses on the occurrence of CGTevents may be disregarded if the asset was acquired before 20September 1985 or if a lease was granted or renewed before thatdate. Capital gains are determined by deducting the cost base ofan asset, indexed for inflation, from the capital proceeds (moneyreceived or receivable or the market value of property received orreceivable) with respect to the CGT event. Gains derived fromsales of assets purchased and sold within 12 months are general-ly fully taxable without indexation of the acquisition cost forinflation. The indexation of the cost base of CGT assets wasfrozen at 30 September 1999, and indexation is denied for assetsacquired after that date.

Capital gains and losses on disposals of plant on or after21 September 1999 are not subject to the CGT provisions.Instead, these amounts are treated as additional balancing adjust-ments under the depreciation rules (see Section C). The cost baseof plant may be indexed to 30 September 1999 only.

Assets acquired before 20 September 1985 are deemed to havebeen acquired on or after that date unless the Commissionerof Taxation is satisfied or considers it reasonable to assumethat continuity of majority beneficial ownership in the assets ofthe company exists. Public companies must test periodically onprescribed dates to determine if a change in the majority benefi-cial ownership in the assets of a company has occurred since19 September 1985.

Public companies that passed the test up to 30 June 1999 aredeemed to fail the test on that date unless they can demonstratecontinuity of ownership. A company that passes the test on30 June 1999 will be deemed to have a change in its majoritybeneficial interest every five years thereafter or on the happeningof abnormal trading in its shares unless it satisfies the Com-missioner of Taxation that the majority beneficial interest in theassets of the company has not changed.

Rollover relief may be elected on certain specified transfers, withtaxation deferred until the occurrence of a subsequent disposalfor which the relief is not available. Under recent legislation,CGT rollover relief now covers scrip-for-scrip transactionsoccurring on or after 10 December 1999. The new rules providethat rollover relief may be available for share-for-share exchangesand trust unit-for-trust unit exchanges. However, exchanges ofshares for trust units do not qualify for relief. The new rules alsocover convertible notes and options.

Capital losses are calculated using the reduced cost base of assetswithout indexation for inflation. Capital losses are deductibleonly from taxable capital gains, not from ordinary income.However, trading losses are also deductible from net taxable cap-ital gains, which are included in assessable income.

Nonresidents are subject to tax on capital gains only on assetswith the necessary connection to Australia, which include thefollowing:

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Real property in Australia; Shares in resident private companies; Assets of a business conducted through a permanent establish-

ment in Australia; and Shares in a resident public company if, in general, the taxpayer

was the beneficial owner of at least 10% of the issued sharecapital of the company at any time in the preceding five years(a similar provision governs units held in a resident unit trust).

Administration. The Australian tax year ends on 30 June. If theannual accounting period of a corporate taxpayer does not end on30 June, the taxation authorities may agree to use a substitutedperiod (instead of a tax year ending 30 June) if special circum-stances exist.

A self-assessment tax collection system applies for companies,superannuation funds, approved deposit funds and pooled super-annuation trusts. Under this system, a company or fund isrequired to file a return of income by the date on which the finalinstallment of the tax liability is due. An assessment is deemed tobe made on the filing date.

A quarterly installment system applies to companies. Under thissystem, companies are classified as large companies (companieswith likely tax of A$300,000 or more), medium-size companies(companies with likely tax of at least A$8,000 but less thanA$300,000) and small companies (companies with likely tax ofbelow A$8,000).

Likely tax is the latest estimate made by the taxpayer of taxpayable in the current tax year. If no estimate is made, likely taxis the tax assessed in the preceding tax year. If no tax wasassessed in the preceding tax year, likely tax is the tax assessedin the most recent year for which tax was assessed. If tax hasnever been assessed on the company, likely tax is zero.

The following schedules of payments apply under the installmentpayment system: Large companies must pay 25% of likely tax on the first day of

the following months: month 9 (the ninth month of the taxyear); month 12 (the twelfth month of the tax year); and month15 (the third month after the end of the tax year). On the firstday of month 18 (the sixth month after the end of the tax year),they must pay a final installment, which is equal to assessed taxless prior installments.

Medium-size companies must pay 25% of likely tax on the firstday of month 12, month 15 and month 18. On the first day ofmonth 21 (the ninth month after the end of the tax year), theymust pay the assessed tax less prior installments.

Small companies must pay 100% of assessed tax by the firstday of month 18.

A pay-as-you-go (PAYG) installment system replaces the com-pany tax payments system discussed above, effective from the2000-2001 income year. Broadly, the PAYG installment systemrequires companies to make quarterly payments of income taxwithin 21 days after the end of each quarter of the tax year. Theamount of each installment is based on the income earned in the

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quarter. To ease the potential cash burden for companies, transi-tional rules apply to defer payment of all or part of the finalinstallment for the 1999-2000 income year.

Dividends. Franked dividends received by a resident companyfrom other Australian resident companies are effectively freefrom tax through a tax rebate equal to the tax on dividendsreceived. However, an intercorporate dividend rebate is not avail-able for the unfranked portion of dividends received by residentcompanies unless the dividends are paid within a wholly ownedcorporate group. In addition, certain rules discourage companiesfrom streaming imputation credits to those shareholders who canmake the most use of the credits.

Dividends paid by Australian resident corporations are frankedwith an imputation credit to the extent that Australian income taxhas been paid by the corporation at the full corporate rate on theincome being distributed. Application of the imputation systemvaries depending on the category of the recipient shareholder.

Resident Corporate Shareholders. Resident corporate shareholdersinclude franked dividends received from other resident compa-nies in taxable income. They also include in taxable incomethe unfranked portion of dividends received from other residentcompanies that are paid within a corporate group. The total taxliability of the recipient corporation for the relevant year isreduced by a rebate that is calculated as follows:

Total tax liabilityDividend received x

Taxable income

In addition, the corporation can treat any dividends it pays to itsshareholders as franked, that is, already taxed, to the extent of thesurplus (the credit balance) in its dividend franking account. Thefollowing illustrates the computation of the dividend rebate andthe dividend franking account:

DividendFranking Account

Trading income A$100Dividends received(fully franked) 66 A$66 credit

Taxable income A$166

Tax at 34% A$56Less: Dividend rebate 66 x 56 22

166

Tax payable A$34 (x 66/34) = A$66 credit

Net profit after tax for distribution (A$166 A$34) A$132 A$132 credit__ ____ ___ __

Consequently, the corporation in this example can pay a fullyfranked dividend of A$132 to its shareholders without anyadverse tax implications.

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A recipient of unfranked dividends that has been denied an inter-corporate dividend rebate may claim a deduction with respect tosuch dividends if the dividends are in turn paid to its nonresidentparent company and if certain other conditions are satisfied.

Imputation credits are not lost if the recipient company suffers atax loss; they can be carried forward indefinitely. However, divi-dend rebates are lost if a recipient company incurs a tax loss inthe year the dividend is paid.

Resident Individual Shareholders. The shareholder includes thedividend received plus the full imputation credit in assessableincome. The imputation credit can be offset against personal taxassessed in the same year, up to the amount of tax payable.Excess credits relating to dividends paid on or after 1 July 2000are refunded to the shareholder.

Nonresident Shareholders: Corporate and Noncorporate. Divi-dends paid or credited by resident companies to nonresidents aregenerally subject to a final 30% withholding tax (unless the rateis reduced by a tax treaty), deducted at source on the grossamount of the dividend. An exemption from dividend withhold-ing tax is available for unfranked dividends paid by Australianresident companies to nonresidents. The exemption applies if thepayer of the dividends satisfies certain specified conditions.

To the extent that dividends are franked, they are free fromdividend withholding tax. No refund of an imputation credit isavailable.

Foreign Tax Relief. Australian residents are subject to Australiantax on their worldwide income, but they receive a foreign taxcredit for the lesser of foreign taxes paid and Australian tax pay-able on foreign-source income. For controlled foreign companies(CFCs; see Section E), a modified system of foreign tax creditsapplies.

C. Determination of Trading IncomeGeneral. Taxable income equals assessable income less deduc-tions. Assessable income includes income determined to be ordi-nary income under case law and statutory income, which consistsof amounts that the tax law specifically includes in assessableincome.

Significant categories of tax-exempt income include profits fromforeign branches of Australian companies in other than low-taxcountries, amounts paid out of income that was previously taxedunder the CFC rules or under the foreign investment fund (FIF)regime (see Section E), and nonportfolio dividends (paid toshareholders holding at least 10% of the voting power of thepayer) received from other than low-tax foreign countries.

Expenses are generally deductible to the extent they are incurredin the production of assessable income or are necessary in carry-ing on a business for the purpose of producing assessable income.However, expenses of a capital nature or those incurred in theproduction of exempt income are not deductible. Apportionmentof expense items having dual purposes is possible.

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Fringe benefits tax (see Section D) is deductible. Entertainmentexpenses are not deductible unless they represent fringe benefitsprovided to employees. Penalties and fines are not deductible.

Under rules dealing with the forgiveness of commercial debts,the net amount of debts forgiven during an income year (normal-ly the same as an accounting period) reduces the debtors accu-mulated revenue tax losses, capital losses, certain undeductedexpenditure and cost bases of assets. The net amount forgiven isapportioned among companies related to the debtor in certain cir-cumstances.

Inventories. In determining trading income, inventories may bevalued at cost, market selling value (the current selling value ofan article of trading stock in the particular taxpayers tradingmarket) or replacement price at the taxpayers option. The last-in,first-out (LIFO) method may not be used. If the cost method iselected, manufactured inventories must be valued using the full-absorption cost method.

Provisions. Provisions for leave entitlements of employees andsimilar accruals are generally not deductible until payments aremade. Similarly, provisions for doubtful trading debts are notdeductible until the debt, having been previously brought toaccount as assessable income, becomes bad and is written offduring an income year.

Depreciation and Amortization Allowances

Plant and Equipment. Companies may determine the effectivelife of plant in calculating tax depreciation. Alternatively, theymay adopt the effective life determined by the Commissioner ofTaxation. Companies then apply a basic broadband depreciationrate that varies according to the effective life of the asset. Thefollowing are the broadband rates.

Effective Life Straight-Line Declining-BalanceYears % %

Less than 3 100 1003 to less than 5 40 605 to less than 62/3 37 4062/3 to less than 10 20 3010 to less than 13 17 2513 to less than 30 13 2030 or more 7 10

Special rates apply to eligible artwork, employee amenities andmotor vehicles. Motor vehicles are also subject to a depreciationcost limit, which changes each tax year. The limit for the 1999-2000 tax year is A$55,134.

Companies may elect to use either the straight-line or declining-balance method for different items of plant that become depre-ciable in a year.

Accelerated depreciation (this is depreciation at rates that resultin plant being written off over a period shorter than its effectivelife) is no longer available (other than for small businesses) forplant acquired on or after 21 September 1999. For plant acquiredafter that date, depreciation rates are determined by reference to

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the plants effective life. Companies may rely on the Com-missioner of Taxations determination of the effective life ormake their own estimate of the effective life.

Plant with a unit value of A$300 or less acquired on or after1 July 2000 is no longer immediately deductible. Instead, com-panies, other than small businesses, may elect to pool items ofplant costing less than A$1,000 for depreciation purposes. Thepool balance is depreciable over four years using the declining-balance method. Alternatively, these items of plants are depreci-ated over their effective lives. Companies, other than small busi-nesses, will be able to reestimate the effective life of plant andequipment acquired on or after 30 September 1999 if market,technological or other factors require a revision of the previousestimate.

Buildings. Buildings are depreciated using the straight-linemethod. The capital allowances granted for buildings vary,depending on the type of structure and the date when construc-tion began.

The cost of nonresidential income-producing buildings com-menced between 20 July 1982 and 21 August 1984 may be writtenoff at a rate of 2.5% over 40 years. If construction began between22 August 1984 and 15 September 1987, the cost may be writtenoff at a rate of 4% over 25 years. The cost of such buildingsbegun between 16 September 1987 and 26 February 1992 may bewritten off at a rate of 2.5% over 40 years. If building construc-tion began on or after 27 February 1992, the building may bewritten off at a rate of 2.5% over an unlimited time period.

For residential income-producing buildings begun between18 July 1985 and 15 September 1987, the cost may be written offat a rate of 4% over 25 years. If construction began between16 September 1987 and 26 February 1992, the cost may be writ-ten off at a rate of 2.5% over 40 years. For buildings begun on orafter 27 February 1992, the cost may be written off at a rate of2.5% over an unlimited time period.

The cost of short-term travel accommodation buildings (such ashotels) begun between 18 July 1985 and 15 September 1987 maybe written off at a rate of 4% over 25 years. If construction beganbetween 16 September 1987 and 26 February 1992, the cost maybe written off at a rate of 2.5% over 40 years. The cost of suchbuildings begun on or after 27 February 1992 may be written offat a rate of 4% over an unlimited time period.

For buildings used for research and development that were begunbetween 21 November 1987 and 26 February 1992, the cost maybe written off at a rate of 2.5% over 40 years. If constructionbegan on or after 27 February 1992, the same rate applies, but thecost may be written off over an unlimited period.

The cost of buildings used for e

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