Tunisia Embarks On Comprehensive Tax Reform

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Tunisian Finance Minister Elyes Fakhfakh has announced that the Government has now launched its planned reform of the country's tax system. Working groups have been set up tasked with putting forward proposals to overhaul and radically modernize Tunisia's outdated tax laws, the Minister explained.
The Government intends to reform direct, indirect, and local taxation, as well as to combat tax evasion, to modernize and streamline the country's tax administration, and to integrate Tunisia's informal economy into the tax system, to ensure that everyone contributes to the state budget. The Government aims to simplify procedures, to improve fiscal transparency, to increase state revenues, and to ensure fiscal and social justice.
Tunisia's tax system has come under increasing criticism for being unfair, complex, and opaque, and for yielding paltry levels of tax revenues. Other objections relate to the disparity between the on-and offshore tax regimes. There is currently a marked difference between the two sectors, particularly in terms of tax advantages. For example, exports currently benefit from 80 percent of all tax  incentives.
Experts insist that the country's tax laws are a barrier to investment and fail to stimulate investment in the most vulnerable regions.
The working groups are due to present their findings in October.

Guernsey Expands Tax Cooperation Network

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Guernsey has confirmed the signing of its seventh double tax agreement since the beginning of 2012, with Luxembourg, adding to its network of agreements with provisions for the exchange of information on request in line with international best standards.
Guernsey's Treasury Minister, Gavin St Pier signed the agreement with Luxembourg's Charge d'Affaires to the UK, Beatrice Kirsch, and commented : "This is an important further component in Guernsey's network of tax agreements. Following on so closely from the signing of our double tax agreement with Hong Kong, it is further demonstration of Guernsey meeting the highest global standards of international tax co-operation."
Rob Gray, Director of Income Tax said : " This double tax agreement will create a mechanism for alleviating double taxation and exchanging tax information with Luxembourg relating to both corporate and personal incomes. It also means that Guernsey's network of agreements continues to cover the majority of EU Member States and G20 countries."
In addition to agreements with major international finance centers such as Luxembourg, Guernsey is also continuing to conclude tax information exchange agreements with developing economies in order to assist them in protecting their tax revenue. While in London, St Pier also signed a Tax Information Exchange Agreement with Botswana at the Botswana High Commission, and a further Tax Information Exchange Agreement - Guernsey's 43rd - with Swaziland is to be concluded shortly.
"Guernsey tax team has built strong relationship with Southern African Development Community ( SADC ) countries, including Botswana and Swaziland, over the past couple of years. The Organization for Economic Cooperation and Development's Global Forum has emphasized the importance of working with developing countries to share expertise on tax information exchange, thereby helping them to protect their tax revenues", continued St. Pier.
"In October 2011, Ron van der Merwe, the Chair of the Tax Agreements Working Group of the SADC, said that the negotiation of tax agreements between SADC Member States and Guernsey was a major step forward in creating the basis for exchange of information for SADC members."
Rob Gray added : "The conclusion of agreements with Botswana and Swaziland shows that Guernsey retains commitment to working with and sharing best practice with SADC members and other developing economies."

Antigua Reins In Budget Deficit

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The International Monetary Fund has commended the significant progress achieved by authorities in Antigua and Barbuda in implementing broad fiscal reforms and slashing the territory's sizable deficit.
The International Monetary Fund reported that the fiscal out-turn for March 2013 was well above program targets, largely on account of strong revenue performance during the first quarter due to a large one-off reduction in tax arrears.
The IMF reported that with technical assistance, local authorities completed a tax expenditure study, and the formation of an institutional oversight and reporting framework for state-owned enterprises within the Ministry of Finance to constrain spending.
The IMF said that, with the recent passage of the Tax Administration and Procedures Act, by the end of the program in June, Antigua and Barbuda will have accomplished 24 out of the 28 fiscal, debt, civil service and public enterprise reforms targeted by the IMF program, "a noteworthy accomplishment," the IMF mission said, "that will help sustain positive fiscal and macroeconomic results going forward."
Under the International Monetary Fund program, the territory's budget deficit has fallen from 18% of GDP, and a debt-to-GDP ratio of 102%, to an average budgetary deficit of 1.7% of GDP during 2010-2012, and debt-to-GDP ratio of 89% at the end of 2012.
The head of the IMF mission, Geoffrey Bannister stated : "The authorities' reform commitment started to pay dividends in 2012 when the economy saw positive growth for the first time in three years. For 2013, we expect this positive trend to continue, with a further recovery in growth and a small overall fiscal surplus. Despite these successes, the road ahead will not be easy and it is important that the authorities maintain fiscal discipline to secure the hard-won gains of the past three years."
" The authorities have demonstrated strong commitment to the policies and objectives of their Fiscal Consolidation Program, and recognize the importance of strong macroeconomic, financial and structural policies in achieving the goals of their National Economic and Social Transformation plan. Although the program ends on June 6, 2013, the International Monetary Fund will continue to maintain its close policy dialogue with the Government of Antigua and Barbuda in the context of the Fund's Post-Program Monitoring Framework."

Israel cabinet to vote on 2013 austerity budget

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 The Israeli government was meeting on Monday to vote on the 2013 austerity budget proposal after the security cabinet backed plans for a smaller-than-expected $840 million cut in defence spendin.
The decision to reduce the defence budget by 3.0 billion shekels came after a marathon session by the seven member security cabinet which run late into the night and continued on Monday mornong.
Ministers ended up overturninig Finance Minister Yair Lapid's demand for a cut of 4.0 billon shekels, with Prime Minister Benjamin Netanyahu stressing that defence funding was "essential to the security of Israel." a statement from his office said. He pledged that the difference of a billion shekels "would not come at the expense of the public."
" We need the Israel Defence Forces to continue its process of streamlining, but we also need more Iron Domes," said  Prime Minister, referring to Israel's vaunted anti-missile system.
He said : " I believe the way I am proposing today provides the correct balance between security needs and the needs of the economy."
 Israel,s newly-appointed finance chief had wanted to cut defence spending to help plug a budget deficit expected to be capped at 4.65% of GDP this year and 3% in 2014.
His austerity proposals for 2013, which have already sparked an angry public backlash, include an increase of 1.5 percentage points in personal income tax, one point in corporate tax and a one-point rise in VAT, together with a cut in family allowances.
 On Saturday, thousands took to the streets of Israel's main cities to demonstrate against Lapid's austerity budget in an echo of the mass cost-of-living protests which swept the country in summer 2011.
 At Monday's session, Netanyahu and his 21-member cabinet were discussing the full budget proposal for 2013-2014 with a vote likely to take place later in the day.
" We will do this today and by the end of the day, Israel will have the budget," Prime Minister said as the cabinet meeting got under way.
 Meanwhile outside his office, hundreds of tourism industry employees protested over Lapid's plans to eliminate the VAT exemption currently enjoyed by tourists. VAT currently stands at 17%.
 Tourism Minister Uzi Landau of Netanyahu's Likud-Beitenu faction warned that such a move could cause Israel significant financial losses and give a major blow to an industry that employs 200,000 Israelis.
" Tourism is a positive growth engine for the economy," he said in remarks relayed  his spokeswoman.
" More tourists mean more employment in the periphery and income for the state; a drop in tourism would means thousands unemployed," he said, warning he would vote against the budget unless the measure was removed.
 If the budget is approved, it must then be presented to the Knesset. or parliament, for approval by the end of July. The measures will come into effect on August 1.
Lapid has warned that if he was unable to push through the defence cuts, the axe would fall on health, education and social spending.
 The telegenic former TV anchor shot to prominence in the January elections at the helm of his newly-formed Yesh Atid by tapping into middle class grievances over the cost of living and social injustice.
The centrist party pull off a shock win, becoming the second-largest party in parliament and a central partner in Netanyahu's coalition government.

Israel and China sign $400 million trade agreement

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 Israeli and Chinese officials signed a $400 million trade agreement during meetings on Wednesday, expanding trade between the two nations to $2.05 billion.
 The agreement was signed by Israeli and Chinese finance ministers during a meeting attended Israeli Prime Minister Benjamin Netanyahu and Chinese Prime Minister Li Keqiang.
According to the Prime Minister's office, Netanyahu said : "This is a very important agreement for expanding bilateral cooperation. China is a vast market and if we even slightly increase our market share here it will significantly help the Israeli economy."
 Israeli Prime Minister also held a live video-chat with millions Chinese Web surfers on Xinhuanet, China's official news agency. Most of the questions revolved around Israel-China relations. Netanyahu told the online participants that he was "impressed by the development, progress and tremendous growth" of China since his last visit to the country, in 1998.
 Israel and China first established relations in 1992. Since then trade between the two countries has rapidly expanded, with China becoming a major purchaser of Israeli high-tech, military and agricultural goods and services.

Gibraltar is no tax haven, minister says in rebuff to Spain

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In a interview with AFP in Madrid, Fabio Picardo said : " Gibraltar does not see itself as a tax haven, perhaps more importantly Gibraltar is not regarded as a tax haven by the international community."
Making his argument, Picardo said the territory had done more than enough to put it on the Organization for Economic Cooperation and Development's "white list" of jurisdictions that comply with global rules.
Gibraltar earned its spot on the list at the end of 2009 and has signed 26 information agreements with other jurisdictions to comply with the standard.
To get on the "white list" a territory needs to have signed 12 or more such agreements, a criterion decided by the OECD and the Group of 20 richest nations in the wake of the financial crisis that began in 2008.
The minister said : "If we look at the treatment that Gibraltar gets from the OECD, which I think is the best barometer of whether countries should considered tax havens or not, then the OECD listings tell you very clearly that it is not a tax heaven."
"The reality is the world regards Gibraltar...as being a fully compliant financial services jurisdiction much as Frankfurt, London, Paris or Madrid might regard themselves and it is only Spain that continues beating Gibraltar with that description for its own nefarious purposes," Picardo said.
But Madrid continues to regard Gibraltar as an offshore centre which allows Spanish firms to pay taxes in the territory even though they operate in Spain.
Spain's tax office has set up a working group to analyse tax payments made in Gibraltar, daily Spanish newspaper El Pais reported last month.
It said hundreds of millions of euros in Spanish company earnings escape Spain's control each year through Gibraltar, the newspaper said.
Picardo said : "It is just not happening, there is no evasion, and certainly no evasion on that scale because if there were, the government of Gibraltar would detect it and it would stick out like the sorest thumb in the jungle.
Gibraltar, a peninsula in southern Spain ceded to the British in 1713, abolished in January 2011 its "exempt status tax regime" under which some companies avoided tax and instead introduced a single 10 percent levy.
"Ten percent is the rate which the OECD considers is the real rate of tax which a jurisdiction must have before it is considered not to be a tax haven..."said Picardo.
The spat is part of a long-running dispute over Gibraltar, which houses traditional British red phone boxes, pubs and fish and chip shops.
Spain argues that the 1713 Treaty of Ultrecht under which Madrid ceded Gibraltar to Britain, only granted waters in the port and did not cede the three nautical mile stretch claimed by Britain.
Police boats from the two sides have faced off several times in the waters around Gibraltar, which is strategically located at western mouth of the Mediterranean.
Picardo urged Spain to take its claim to the Hamburg-based International Tribunal for the Law of the Sea, which has the jurisdiction to settle maritime disputes.
He said : " I am the fifth chief minister of Gibraltar to issue that challenge in the past 50 years. Spain has never had the courage of her convictions to take it up. I think that demonstrates that they don't stand a snowball's change in hell of ever demonstrating that those are anything other than British Gibraltar territorial waters."

German finance minister softens stance on EU banking union

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 German  Finance Minister Wolfgang Schaeuble signaled a softening of his stance on a European banking union on Tuesday, saying the euro zone should press ahead on the bassis of current law without waiting for a controversial overhaul of the EU's Lisbon treaty.
The banking union is a crucial part of Europe's drive to overcome its financial and sovereign debt crisis. In a first step, it involves the creation of a Europe-wide banking supervisor under the hood of the European Central Bank. This is to be followed by a so-called resolution scheme to close or salvage struggling banks.
Just last month, Schaeuble appeared to slam on the brakes by saying the European Union needed to consider treaty change before proceeding, due to the "doubtful legal basis" on which the project rested. Those comments sparked a backlash from EU officials and German partners like France.
On Tuesday however, at a Berlin university event with his French counterpart Pierre Moscovici, Schaeuble ahead with it "quickly".
He said that while Europe needed institutional change in the medium-term, it should not wait for this to solve its current problems.
 "We must make the best of it on the basis of the current treaties, and where we do not manage to achieve things institutionally, then we will work inter-governmentally or even bilaterally, " he said.
Germany, which holds an election in September, has in recent months stressed the need for caution and careful preparation in the drive for a banking union, anxious about exposing its citizens to the liabilities of Europe's weakened banking sector.
 Chancellor Angela Merkel has insisted on tough austerity measures to cut the euro zone's public debt, but France's Moscovici urged Berlin to show more understanding for the plight of struggling southern countries.

FRANCE URGES FLEXIBILITY

The French Socialist said : "It is true that Germany is very attached traditionally to rules and discipline, which are things we need - but at the same time we have to be capable of flexibility, of understanding and of respecting our diversity."
He joked that Wolfgang Schaeuble "would perhaps not have spontaneously advised me to get an extension" to the French deficit goals from the European Commission, adding that his German colleague had expressed his understanding.
Last week, the Commission, the EU's executive body, granted France-the euro zone's second largest economy - two more years to cut its public deficit to below 3% of Gross Domestic Product.
Unlike Germany, where the economy remains relatively robust and unemployment is near two decade lows, France has seen jobless numbers soar to record levels.
Moscovici said countries had to reduce their public debt but at an appropriate pace, adding that Paris did not see the Commission's decision as an excuse to neglect sorely needed stuctural reforms.
He said : " We will continue our efforts to tackle the structural deficit. France is a serious country conducting a credible policy, we do not renounce(fiscal responsibility)."
But Moscovici stressed that the most pressing challenge for France and many of its euro zone peers was job creation.
 " Of course, we have to make sure public finances are put right, but you have to carry out this exercise carefully, talking into account the national situations and defining the right rhythm for preserving growth prospects," he said.