How often is tax law amended and what are the processes for such amendments?
Tax (3rd edition)
Swiss tax laws are not required to be updated or replaced at predetermined intervals. However, almost every year, the Swiss Parliament adds or amends individual provisions of the Swiss Federal Income Tax Act. At a cantonal level, tax law is also regularly amended by the different cantonal parliaments.
Amendments can be introduced by the Swiss people, the Parliament, the Federal Council, the cantons and associations. Both at the federal and the cantonal level, amendments can be introduced by popular initiative or parliamentary motion.
Significant amendments are published in draft form for consultation and include a comment period. The consultation process for tax law amendments usually includes the cantons, political parties, associations and cities, as well as the affected economic sectors. Generally, anyone can generally express his or her view during the consultation period, even if that person has not been specifically requested to provide an opinion.
Congress periodically amends the Internal Revenue Code (the “Code”) through the normal legislative process. Changes to the Code, like other statutes, require approval by both houses of Congress (the House of Representatives and the Senate) and the President to the United States. In recent years, it has been difficult for Congress to pass significant tax legislation where the two major political parties split control of the Presidency or either House of Congress.
In 2017, under Republican control, Congress enacted landmark Tax Reform legislation (the so-called “Tax Cuts and Jobs Act” or “TCJA”). The TCJA was the most significant US tax legislation since 1986 and makes fundamental changes particularly to the taxation of foreign profits of US corporations.
The annual federal budget is the major means of introducing new tax policy measures. Federal income tax legislation is drafted by the Tax Legislation Division of the Tax Policy Branch of the federal Department of Finance. The legislation is usually released in draft form and, accompanied by explanatory notes, made available to the public for comment and consultation before it is finalized. The government may, after the end of the consultation process, amend the legislation before finalizing, but it is not obliged to do so.
Once finalized, the legislation is ordinarily tabled in Parliament by the Minister of Finance. The legislation must be passed by both the House of Commons and the Senate and receive Royal Assent from the Governor General before it becomes law.
Almost every year the Austrian Parliament enacts a Federal Tax Amendment Act which renews existing Federal Tax Acts.
It has to be noted that also the provinces of Austria have a power to enact tax laws, which play however a rather subordinated role (except for special business lines like e.g., tourism levy, advertising tax, etc.).
The legislative process provides that a Federal law is enacted by the Federal Parliament either upon the proposal of the Federal Government, the initiative of a minimum of 5 delegates of the Parliament, proposal of a committee of the Parliament for topics related to its activity or upon the proposal of the Federal Council. During the legislative process several institutions and interest groups like the Chamber of Commerce, the Austrian Chamber of Public Accountants and Tax Advisers, the Bar Association, the Chamber of Labour, the Federation of Austrian Industry and many others may provide input.
In theory, tax law is amended twice a year by two finance laws adopted at the end of each year: (i) the Finance Act which settles the budget of the following year and (ii) an Amendment to the Finance Act 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, the Social Security Financing Act often includes tax provisions, such as the rates of French social contributions (CSG, CRDS). More recently, the law n°2018-727 for a State Serving a trusted company establishes a right to make mistakes in order to improve relations between the administration and the citizen including new possibilities of regularization and strengthen the taxpayer's guarantees during a tax procedure. Finally, an additional amendment to the Finance Act may also be adopted during the year (often in summer).
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 their representative bodies, particularly the main bodies representing business (so called Medef and Afep) during the law-making process.
Apart from implementation of EU directives, amendments to the Cyprus tax laws are generally infrequent. This 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.
Federative Republic of Brazil is composed by 26 states, approximately 5570 municipalities and 1 federal district. Brazilian tax system provides for federal, state and municipal taxes, thus, being very complex since more than 90 taxes are foreseen in our tax legislation.
Therefore, Brazilian legislation is amended on a daily basis, considering all the above public bodies.
From a federal perspective, Bills of Law may be proposed, pursuant to art. 61 of the Brazilian Constitution, by:
- Federal Deputies/Representatives
- Commissions within the House of Representatives, Senate or Congress.
- The President.
- The Supreme Court, Superior Court of Justice and other superior courts.
- The Attorney General and/or
- A group of Brazilian citizens, which initiative is presented to the Chamber of Deputies. The bill of law should be subscribed by at least one percent of the national electorate, distributed throughout at least five states, with not less than three-tenths of one percent of the voters in each of them.
Bills of law must be approved by both houses (Senate and Chambers of Deputies).
Afterwards, it has to be sanctioned by the Brazilian President. Both houses can propose a bill and once a house approves a bill, it will be sent to the other house for approval purposes.
Bills must be reviewed by at least two commissions:
i) the Constitution and Justice Commission, which reviews the constitutionality of the bill.
ii) another specific commission related to the subject matter of the bill, which reviews its convenience and relevance (for instance, a special commission was created to propose and discuss a “tax reform” in Brazil)
The bill is then put forward to the members of the house to vote on. As far as ordinary laws are concerned, voting can only take place if the majority of deputies or senators are present. The bill is approved in case of favorable vote of the majority of those present.
Certain matters (including the following tax matters: establishment of criteria to solve a conflict between two states in relation to tax matters, amendment to the Brazilian Tax Code; definition of a tax and its triggering event, tax calculation basis, taxpayer, among others) must be the subject of supplementary law and therefore must be approved by the majority of all deputies or senators.
If a bill is approved by the first house, the bill is consequently submitted for approval by the second house. If it is amended by the second house, it shall return to the first house for approval of the amended section.
Once approved by both houses of Congress, the bill must be sanctioned by the President. The President may veto the bill in whole or in part. If the President vetoes the bill, Congress will hold a special joint session to discuss whether to overturn the presidential veto. A quorum of the majority of all senators and deputies is required for this purpose. If the President does neither approve or veto the bill in 15 days, the bill will be considered approved.
Laws are enacted by the President and then published in the Official Gazette.
It is important to point out, that depending on the type of the amendment and the nature of the tax, the new amended tax law may only be effective after a determined time frame (90 days or in the following fiscal year), pursuant to the principal of prospective application.
Note: Provisional Measures
In certain relevant and urgent cases, the Brazilian President can enact provisional measures which have the force of law. Such measures must be immediately submitted to the National Congress for deliberation (C.F. art. 62).
Except as provided for in sections 11 and 12 of article 62 of the Federal Constitution, provisional measures lose their effectiveness as of the day of their issuance if they are not converted into law within a period of 60 days, which may be extended once for an equal period of time. It is the responsibility of the National Congress to regulate, by legislative decree, the legal relations stemming from such measures. The referred 60-day runs from the date of publication of the provisional measure, not counting periods in which the National Congress is in recess.
In addition, a provisional measure that involves the institution of a tax or an increase in existing taxes, except as provided for in articles 153(I), (II), (IV), (V), and 154(II) of the Constitution, may only have effect in the following fiscal year if it has been converted into law by the last day of the fiscal year in which it was issued (C.F. art. 62 § 2).
German tax law is not amended at a specific date. However, there is usually at least a so-called Annual Tax Act (Jahressteuergesetz) each year containing a number of amendments to the German tax laws. This is also the case for 2018.
The process for the legislative amendments on the federal level typically comprises a draft bill which is commented on by political parties and certain interested stakeholder groups, such as tax associations or industry groups affected by such amendments.
The direct competence of the German Federal States and municipalities for amendments of German tax law is very limited. They have the competence to determine the locally applicable trade tax rate, the real estate transfer tax rate and local consumption and expenditure taxes like the accommodation tax only. The underlying material law is determined at the federal level.
In addition, the German tax authorities regularly issue statements on the interpretation of certain individual German tax provisions. Even though not binding for the courts, in practice, such statements of the German tax authorities have a great significance.
In December each year an annual Finance Act is passed by the Irish Parliament enacting substantive changes to tax law. This follows a budget statement by the Minister for Finance in October and a number of weeks of parliamentary debate and amendments. Very rarely, there may be more than one Finance Act in a calendar year.
Implementing legislation for relevant EU Directives is usually passed as part of the annual Finance Act. Other implementing legislation (regulations or orders) may be issued at other times throughout the year where authorized under the primary Finance Act.
Substantive changes to tax law are typically preceded by a period of public consultation and legislation may be released in advance for public comment and debate.
Procedural or administrative changes to Irish Revenue Commissioners’ practices issue regularly throughout the year.
Tax laws in Israel are constantly amended in order to implement various policy decisions (e.g., granting incentives) as well as aligning the tax system to the ongoing challenges and changes in the global tax arena.
To amend an existing tax law (or to adopt a new law), the Israeli Knesset (Israel’s parliament) generally needs to enact the amending or new law by a majority vote. Certain matters are dealt with through regulations which are promulgated based on statutory grants of authority.
In the past couple of years, the Knesset adopted some significant changes to the tax laws that are expected to influence many domestic and multinational taxpayers. Such changes include reduction of the standard corporate income tax rate, a comprehensive reform in the tax-free reorganisation rules, and the introduction of a new intellectual property regime.
Tax laws in Malaysia typically undergo amendments every year after the annual Budget announcement.
Generally, primary legislation in Malaysia are amended by way of a Bill proposed by the House of Representatives, which is read and subsequently passed by them and endorsed by the House of Senate. Once the Bill is passed by both Houses, it will be presented to the Yang Di-Pertuan Agong (the King) for royal assent.
On top of that, persons authorised such as the Minister of Finance and Director General of Inland Revenue under the Income Tax Act 1967 (“ITA”) are empowered to make subsidiary legislation such as rules, regulations and orders.
In general, amendments to federal tax laws may be proposed by the President, members of the Federal Congress (i.e., the House of Representatives and the Senate), Sate Congresses and Mexican citizens (i.e. at least 0.13% of registered voters) and must be passed by both houses. After discussed and approved, the amendment must be then signed and published by the President if it agrees on the final terms of the proposed amendment.
Federal tax law amendments may take place at any time of the year. Generally speaking, major tax amendments are presented by the President to the Federal Congress in September of every year, alongside the Federal Revenue Act and the Annual Federal Budget for the incoming year. If approved by Congress, these amendments will usually enter into force by January of the next year.
Any other minor amendments to federal tax laws, once approved by Congress, signed by the President and officially published, will usually enter into force a few days after their publication in the Federal Official Gazette.
It is important to bear in mind that Mexican tax authorities periodically issue the Tax Administration Rules (each year), which contains tax regulations that are intended to clarify tax obligations, and which is modified periodically throughout the year.
Tax laws may in principle be amended at any given time during the year, and the Parliament (Stortinget) is thus not bound by specific timing issues or deadlines. However, usually most tax law amendments are presented in a dedicated proposition document prepared by the Ministry of Finance at the same time as the national budget for the coming year is presented in October each year. In addition tax law amendments may be presented in connection with the revised national budget in April or May each year.
An amendment to a tax law is introduced by the Government (in the case of tax laws by the Ministry of Finance) in the form of a proposition, which is the product of thorough preparatory work. In the case of a major item of legislation or an extensive revision of existing tax law – i.a. a tax reform – the Government generally appoints an expert committee or commission to study the matter. The commission submits a green paper report including a draft bill (Official Norwegian Report, NOU) to the Ministry of Finance.
The Ministry of Finance usually distributes the report for hearings, in order to get comments and opinions from relevant government agencies, organisations, institutions and associations. When comments from the consultation round has been received, the Ministry prepares the proposition. This is first presented to the King in Council, and, if approved there, it is sent to the Parliament (Stortinget) for debate and voting.
The last stage is for the bill to be submitted to the King in Council for the Royal Assent. When the King has signed the Act and the Prime Minister has countersigned, it becomes Norwegian law from the date stated in the Act or decided by the Government.
Panama tax law are amended almost every five (5) years. Amended of the law is a governmental initiative. For changes in the Panama Tax Code a formal Law approve by the National Assembly is require. There are some other regulations that are amended by the emission of Cabinets Decrees and Executives Decree. Regarding regulations about tax administrative process there are modified by Resolutions issued by the Internal Revenue Office as is known the Panama Tax Administration.
Philippine Tax laws are relatively stable. It usually take years before a tax law is amended and it requires a number of factors such as current economic condition, revenue requirement and government spending, among others, to initiate it. As it is a legislative function, amendment of tax laws is a tedious process as it has to comply with the requirements of the Philippine Constitution. This means that it should be approved by both houses of Congress and signed by the President of the Philippines.
Tax law is amended on an annual basis. In fact, since the Portuguese Constitution foresees the need for the Parliament’s approval for legislation on tax issues, the Government usually includes tax law amendments in the State Budget Law Proposal presented to the Parliament each year which will then be submitted to discussion and approval. Thus, the annual State Budget Law foresees amendments to most of tax Codes, as well as authorizations valid for one year for the Government to legislate within a certain tax matter.
The Government may also occasionally create a committee composed of highly considered individuals with an in-depth knowledge of a certain tax matter for the preparation of substantial tax reforms, which will then be submitted for Parliament’s discussion and approval.
In either case, after obtaining Parliament’s approval, tax laws must be enacted by the Portuguese President, being afterwards published in the National Gazette (“Diário da República”), when they finally enter into force.
According to Constitutional principles, new tax legislation can be introduced only by Law which shall be approved by both houses of the Parliament. The Parliament can approve a law setting forth the guidance and framework of new tax provisions and delegating the Government to implement them (in such a case, the Government will issue a Legislative Decree). In cases of exceptional urgency and necessity, the Government may approve, without prior consent of the Parliament, Law Decrees introducing new tax provisions. A Law Decree shall, in any case, be approved by the two chambers of the Parliament within 60 days from when it is issued.
The Ministry of Finances can issue decrees aimed at introducing implementing provisions when so required by law provisions.
Tax law is usually amended each year. Particularly the main new provisions are usually introduced by the Budget Law presented by the Government and approved by the Parliament in December every year.
Tax law is quite frequently amended in Turkey. All basic tax laws have been amended several times throughout the years.
Turkish constitution requires that all taxes should be imposed, abolished or altered by parliamentary acts. Law making process is defined separately in the Constitution and Parliament’s Rules of Procedure. Briefly, a bill proposed either by the government or MPs is discussed first in the relevant commissions of the Parliament and then in the general assembly. Final bills passed by the Parliament are approved by the President, who has a very limited veto power, and published in the Official Gazette to become law.
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; and
- In general, the amended tax laws take effect as of April 1 of the year.
The Dutch tax laws are amended regularly. The frequency depends on the priorities of the government. The government publishes law proposals in any case every year on Dutch budget day (in September). Proposed tax law amendments may be subject to a public internet consultation, before sending the proposed tax bills to the House of Representatives.
The Ministry of Finance sends the proposed tax bills to the House of Representatives (Second Chamber). The House of Representatives has the right of amendment and can thus make changes to proposed legislation. After the House of Representatives approves the proposed tax bills, the proposal is sent to the Senate (First Chamber). The Senate does not have the right to amend, it can only approve or reject the proposed tax bills. During the parliamentary process stakeholders like the Dutch Order of Tax Advisors (NOB), Employers Organizations and the Labour Unions may provide input. The (written) discussions in both Chambers of Dutch parliament typically provide further guidance on the purpose and interpretation of the proposed legislation.
After approval of the House of Representatives and the Senate, the bill will be signed into law by the King and published in the state Gazette. Generally, new Dutch tax legislation enters into force as of 1 January, although this can be deviated from.
Tax and tax procedural law are often amended in Romania, in some instances even several times during the course of one year. Usually, the amendments are made by Emergency Government Ordinances, which are used by authorities in order to bypass the more lengthy procedures of the Romanian Parliament. Such normative deeds are subsequently approved by the Parliament, yet their entry into force is not conditioned by the existence of such approval. When the amendments are significant (e.g. such as the enactment of the new Fiscal Code and Fiscal Procedure Code as of January 1st, 2016), they are made under laws issued by the Parliament.
Apart from the transposition of EU directives into our laws, tax law is amended by instigation from the Government of Gibraltar, or as an initiative driven by the industry itself. at any time. Normally, a bill of legislation incorporating the proposed amendments is presented to the Gibraltar Parliament who will ultimately decide if the new law is passed.
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, previously often linked to the Autumn Statement to the House of Commons of the Chancellor of the Exchequer which was followed by a Budget Statement the following March or April. However, with effect from autumn 2017, there will now be a single major fiscal event each year, the annual Budget. For 2017, which will be a transitional year, there will be a spring Budget and an autumn Budget. From 2018, there will be a Budget in the autumn and a Spring Economic Statement.
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.