How often is tax law amended and what are the processes for such amendments?
Amendments to the Cyprus tax laws are infrequent, which means that taxpayers can undertake transactions with a high degree of assurance that the tax environment they anticipated at the time will continue to apply. There is generally advance consultation with stakeholders over a period of several months before legislation is enacted.
Unfortunately, tax law constantly changes in Greece. It is estimated that Parliament produces a new law every 55 hours. During the past three years, more than 20 tax laws have been passed and in 2003 alone 695 ministerial decisions with tax issues. In principle, legislation is subject to prior consultation with industry but not in an efficient manner because consultation time is usually too little. Also, when it comes to new tax burdens, tax rates and other issues for which interests are prima facie conflicting, consultation with industry is not very effective.
There are several tax laws for different kind of areas and the content-interpretation of tax laws are mainly extended through regulations and communiqués stipulated by the Ministry of Finance. The amendments for tax laws take place not so often but the regulations and communiqués are amended more frequently. The tax laws are amended or abolished through other laws legislated by Turkey Grand National Assembly and the regulations/communiques are amended through other regulations/communiqués. The investors, industry and businessmen’s demands have important effect on the amendments of course but commonly The Government takes action depending on the investment market’s position.
An annual Finance Act is passed by the UK Parliament enacting substantive changes to tax law. In some years there may be more than one Finance Act. Procedural or administrative changes to tax law may be included in secondary legislation which may be passed at any time although there may be prior public consultation.
There is public consultation in relation to most substantive changes, often linked to the Autumn Statement of the Chancellor of the Exchequer. Draft clauses to be included in the next Finance Act are often published several months before the Act is introduced to Parliament to allow for comments. On occasion, however, changes are implemented without prior consultation.
Tax laws in Mexico are subject to constant amendments. Any and all dispositions concerning the essential elements of tax law (subject, object, taxable base, tax rate or tariff and time of payment) must be set forth by tax laws issued by the Mexican Congress in order for them to be valid. Moreover, and in terms of the Mexican Constitution, tax laws have to be initially discussed at the House of Representatives.
In this regard, initiatives and amendment proposals must be discussed and approved both by the House of Representatives and the Senate. Once the relevant amendment has been authorised, the executive branch orders its issuance and publishing in the Federal Official Gazette.
Even though bar associations are consulted on some occasions concerning tax law amendments or proposals, it is not deemed as a formal practice, much less, a legal requirement in order for such proposals to be valid.
Notwithstanding the foregoing, it should be noted that the executive branch is entitled to issue provisions or regulations relating to the applicability, construction or enforcement of tax laws without having abide by the amendment procedure for tax laws.
On a different subject, tax laws are often contested by means of the amparo figure (an extraordinary trial that can be initiated once ordinary recourses have been used or directly, in cases where a constitutional violation is claimed). As consequence thereof, tax laws are subject to the interpretation and constitutional review by the competent courts.
Gibraltar laws are contained in Acts of the Gibraltar Parliament. The last wholesale review of the tax legislation in Gibraltar was carried out in 2010 through the introduction of the Income Tax Act 2010 (ITA). Amendments to the ITA can take place at any time by way of the presentation of a Bill to be debated and passed at the Gibraltar Parliament. The ITA, however, provides for amendments to be introduced by way of regulation, and small-scale, operational changes to the ITA are introduced this way.
In Japan, tax laws are amended generally once a year, in the form of an annual tax reform. The process is generally like the following:
- By early fall of a calendar year, various industry groups provide input on their desired tax reform to the governmental authority to which such industry group is relevant (e.g., the Financial Services Agency in the case of banking and securities industry);
- By late fall, various governmental authorities (i.e., ministries and agencies) compile and publish their desired tax reform and provide them to the Ministry of Finance for its consideration;
- Along with the foregoing, the tax commission of the ruling party also considers its desirable tax reform, together with the Ministry of Finance, principally as a political matter;
- In early December, taking into consideration all of the foregoing, the ruling party as well as the Ministry of Finance publishes an outline for the next year’s annual tax reform;
- In February next year, the Ministry of Finance complies and publishes draft tax statute amending the current tax laws for the annual tax reform;
- In March, the draft tax statute is approved by the Japanese diet (to the extent that the ruling party has sufficient majority), and in late March is promulgated, together with the promulgation and publication of the enforcement cabinet orders and ministerial ordinances.
- In general, the amended tax laws take effect as of April 1 of the year.
As such, it is fair to say that the changes (proposed and actual) are given adequate publicity and subject to prior consultation with industry.
Generally, the quantum of certain deductions and allowances changes annually based on the Budget for the year. The Budget is usually delivered in February and the revised amounts will apply in the next taxation year (beginning on 1 April) even if the Budget implementation legislation is passed after 1 April. Preparation of the Budget always involves broad consultation with the public.
Substantive changes such as amendments to the law or introduction of new measures are occasional but have been more frequent in recent times. Generally, a proposed change will be foreshadowed in the Budget and then followed by a policy paper and a public consultation. In due course, a draft legislation will be submitted to the Hong Kong Legislative Council for enactment. Application date can vary but would usually be subsequent to the coming into force of the relevant implementation legislation.
This process was followed for the recent introduction of the offshore fund profits tax exemption (2006), expanded information exchange in tax agreements (2010), profits tax deduction relating to the purchase of patent rights, rights to know-how, copyrights, registered designs and registered trademarks (2011), profits tax offshore private equity funds (2015), taxation of corporate treasury activity (2016), automatic exchange of information in Hong Kong (2016) and is currently on going for various changes in connection with the OECD Base Erosion and Profits Shifting initiative.
Exceptionally, Hong Kong will proceed to changes of immediate application but it would only do so to deal with an urgent problem. For instance, in the last several years and indeed as recently as November 2016, Hong Kong has introduced with little or no warning various stamp duty measures to rein in an overly buoyant property market. Thankfully the latter are exceptions and, normally, there is ample warning of new tax measure.
Tax legislation have to be passed by the Legislative Council. Bills are then published in the Gazette of the Hong Kong Special Administrative Region and will have to go through three readings before they are adopted. Bills must be voted by simple majority of the members of the Legislative Council and they become law once signed and promulgated by the Chief Executive through a publication in the Gazette (even if the tax measures addressed in a particular legislation may have an earlier application date).
The last comprehensive reform of the U.S. tax code was in 1986. However, almost every year Congress adds or amends individual provisions to the tax code. Amendments to the tax code must be passed by both the House of Representatives and the Senate, and generally must be signed into law by the President.
In addition to the statutory tax code, the Internal Revenue Service (IRS) promulgates regulations on a regular basis that provide the Treasury Department’s official interpretation of the tax code. New or revised regulations can make significant changes in the tax law. Significant IRS regulations are published in draft form and include a notice and comment period that provides for public consultation.
Both Democrats and Republicans for several years have been proposing various versions of comprehensive tax reform. With Republicans controlling both branches of Congress and the presidency after the 2016 elections, the chances of comprehensive tax reform in 2017 is higher.
The annual Budget Act typically contains amendments to tax law. In addition, Parliament approves amendments to existing tax laws or, from time to time, even new legislation.
The Government passes secondary legislation developing the provisions of the law through Royal Decrees and Ministerial Orders.
Sectoral changes are typically discussed with the affected taxpayers but there is not a public and regulated procedure as such.
Usually the tax law is amended annually or every second year. The Ministry of Finance formulates what is called a ministerial proposal, which is sent out to interested parties, entities likely to be affected and expert groups and at the same time published on the parliamentary website. The next step is an expert review, whereby interest groups, authorities and organisations can present their views and criticisms, all of which is also published on the internet.
The draft then goes to parliament in the form of a government bill. After the expert review the ministry may, but is not forced to, modify its draft. If the latter is approved by the federal government it is introduced in the National Council as a government bill and then approved or disapproved with a majority vote by the Parliament.
In Germany there is usually at least one major annual tax act, which includes a variety of changes to different tax laws. In addition, there might be specific acts which amend or introduce a singular rule or provision. Moreover, amendments to tax law are sometimes hidden in bills, which predominantly deal with other areas of law.
The consultation process in connection with the implementation of new tax laws is generally public. Several institutions and interest groups usually get the opportunity to comment on the draft bill and to make proposals for changes. Furthermore, there are hearings or consultations during the legislature process, which give experts in science or economy the possibility to raise theirs concerns.
In addition, German tax law is strongly influenced by decrees of the Federal Finance Ministry, which are continuously published throughout the year, and by case law of the Federal Tax Court.
Belgian tax law is subject to amendments throughout the year. However, it is common to have one or various so-called ‘Program Acts’ enacted at the end of the tax year (i.e. in December) that often include substantial amendments related to tax matters.
As Belgium is a federal state, both the Federal state and the Regions may enact legislative instruments related to tax. Provinces and municipalities may also levy some taxes, but their competences are limited by legislative instruments.
Parliamentary legislative works are available on the internet. The consultation process in connection with the implementation of new tax laws is generally public. Several institutions and interest groups usually have the opportunity to comment on any draft bill and to propose changes. Furthermore, if the law is substantially modified, then there are hearings or consultations during the legislative process, which give legal scholars, industry, and other stakeholders the opportunity to raise any concerns.
In Italy the annual Stability Law (which includes The Budget Law provisions), issued towards the end of any given year, normally includes changes to the tax provisions. In addition, there might be specific acts which amend or introduce a specific rules or provisions. Moreover, amendments to tax law are sometimes hidden in bills predominantly dealing with other areas of law.
The Stability Law normally defers the implementation of new rules to decrees issued by the Government, or to instructions to be issued by the Tax Authorities. Therefore, full implementation of new laws may entail a long process and the need of different levels of regulations.
Tax law is amended every year in Malaysia. The amended is made via a Finance Act which will be tabled before the Parliament usually in the month of October or November each year.
Most of the proposed changes are made public in the Budget Speech that the Finance Minister will table before Parliament in end October. Most tax amendments are not subject to public consultation with industry. In recent years, the only exception was the Goods & Services Act 2014, which involved a considerable amount of discussions with some selected industry players.
The predominant way in which tax law is amended in Ireland is by the annual publication of the budget statement and related legislation which is published in October each year and passed into law by the end of the calendar year having been scrutinised by the Irish Oireachtas (Parliament). Measures announced in the budget can become effective at different stages:
- from midnight on the date the changes are announced as part of the budget statement;
- from the date the related legislation comes into effect often 1 January of the following year; or
- upon the future passing of a Ministerial commencement order.
Typically, the period between changes being announced as part of the budget statement and legislation being enacted allows for discussions on draft legislation and policy issues between the legislature and industry. Where major changes are announced (excluding anti-avoidance measures) there is usually lengthy consultation with interested stake holder bodies. Any legislation is subject to the full rigours of parliamentary scrutiny.
Tax practice can also be amended at any stage during the year by the Irish Revenue Commissioners issuing or updating published practice. Depending on the circumstances, this may be done unilaterally by the Irish Revenue or after consultation with industry.
In theory, tax law is amended twice a year by two Finance laws adopted at the end of each year: (i) the Finance Bill which settles the budget of the following year and (ii) an Amending Finance Bill correcting the budget of the finishing year.
Tax law may also be, and in practice often is, amended by specific tax provisions contained in more general laws. For example, in 2013, the French Parliament voted a law against tax fraud and serious economic and financial crime (Law n°2013-1117 of 6 December 2013) which amended several provisions of the French Tax Code (“FTC”). More recently, in 2015, the law for business growth and equal opportunities (Law n°2015-990 of 6 August 2015 for business growth and equal opportunities) included specific tax provisions (for example, regarding the allotment of bonus shares). Finally, an additional amending finance bill may also be adopted during the year (often in spring) and this is always the case right after a general election to introduce the tax program of the new government (this will be the case this year after the general elections to take place in May and June).
Bills are not subject to systematic prior consultation with industry stakeholders. In France, companies or individuals do not have an official say in the law-making process and are not consulted either by the French government or the legislator. However, there are ongoing discussions about tax law between the French tax authorities (“FTA”) and taxpayers and there representative bodies, particularly the main bodies representing business (so called Medef and Afep) during the law making process.
There is no set time at which amendments to the Australian tax laws are made. Nor is there a set process for consultation. Legislative amendments are typically made on the advice of the Commonwealth Treasury to the Federal Treasurer and Assistant Treasurer. Depending on the nature of the amendments, an Exposure Draft (draft legislation) may be released for consultation prior to the introduction of the relevant amending Bill into Parliament. For time sensitive measures, Commonwealth Treasury can make announcements of the intention to introduce new taxation measures which will take effect from the date of the announcement even though draft legislation has not been prepared at the date of the announcement.
The Federal Government prepares an annual Federal Budget each May and often reforms to the Australian tax laws are announced as part of the Budget process. This may involve new revenue measures (such as a new tax or rate increase) or expenditure measures (such as tax concessions). The number and nature of changes will vary depending on the year and the political priorities of the Government.
There is however a set Parliamentary procedure for the amendment of tax laws. The Australian Constitution mandates that laws imposing taxation shall only be concerned with taxation generally and concern only one subject of taxation. This requirement is designed to ensure Parliament separately considers different taxation measures by requiring separate laws. The consequence is that more legislation is required to give effect to a particular taxation measure than may be expected in other jurisdictions.
Revenue laws must originate in the House of Representatives where they undergo Parliamentary debate and amendment. If passed, the tax laws proceed to the Senate where they must be approved by a majority. The Australian Constitution does not permit the Senate to make any amendments to revenue laws. They can only refer the measure back to the House of Representatives to make the amendments. A proposed law becomes an Act of Parliament once it passes both houses of Parliament by majority and receives Royal Assent.
Consultation in relation to the amendment of tax laws will usually include the Australian Taxation Office (responsible for administering the laws), the Board of Taxation and other consultative groups made up of taxpayers, accountants and lawyers.
Exposure Drafts and consultation papers are made available through the website of the Commonwealth Treasury and Bills (once introduced into Parliament) are made available through the Australian Parliament House website.
State based taxes (stamp duty, land tax, payroll tax) are not constrained in the same manner. However, the basic mechanisms are similar.
There is no set time at which amendments to the Switzerland tax laws are made. However, almost every year the Swiss Parliament adds or amends individual provisions to the Swiss federal law on direct tax (“DBG”). At a cantonal level, tax laws are also amended on a constant basis by the different cantonal Parliaments.
The Swiss process for legislative amendments typically include various actors that can initiate the legislative process such as the Swiss people, the Parliament, the Federal Council, the Cantons and also associations. At a federal and cantonal level, such amendments can be initiated for example by a popular initiative or a motion from the Parliament.
Significant amendments are published in draft form for consultation and include a comment period. Consultation in relation to the amendment of tax laws will usually include cantons, political parties, associations, cities as well as the economical areas concerned. Anybody can generally express his opinion regarding a project in consultation, even without being requested first.