How often is tax law amended and what are the processes for such amendments?
Tax (4th edition)
There are no standard periods for purposes of amendment of tax laws. Pursuant to the Angolan Constitution, any amendment must be duly approved or authorized by the National Assembly. Since 2014 the tax laws have been significantly amended under a major tax reform in the country in order to replace the existing tax codes (The tax regime was still based on the Portuguese colonial tax system).
Additionally, the annual State Budget Law may also foresee amendments to tax Codes, as well as authorizations for the Government to legislate within a certain tax matter.
Tax laws must be enacted by the President, and then published in the Official Gazette (“Diário da República”), to enter into force.
Brazilian tax legislation is composed of several different rules, from tax-related rules contained in the Federal Constitution to normative regulations enacted by the federal, state and municipal tax authorities.
Each type of rule is subject to different procedures for amendment purposes and, despite the fact that more important and higher-level legislation is modified at a slower pace considering the quorum required to such end (example: a federal supplementary law must be approved by the absolute majority of Congress members), as per the survey conducted by the Brazilian Institute of Tax Planning, Brazil enacts approximately 800 new tax rules per day.
Every spring, Canada’s Minister of Finance tables a budget that contains the Federal Government’s fiscal policy in general terms as well as a detailed list of amendments to the Income Tax Act, the Excise Tax Act and other tax statutes. The Income Tax Act is administered by the Minister of National Revenue, but amendments are proposed by the Minister of Finance and they must be approved by both houses of Parliament (House of Commons and Senate). A budget is a matter of confidence, which means that the government must resign should the budget not be approved by the House of Commons. Typically, once the budget is approved, the statute applies retroactively to the date on which the budget was originally tabled. The Minister of Finance can also announce other changes to tax laws in press releases, subject to legislative measures to be adopted later with retroactive effect.
The Colombian Tax Code has been amended, in average, every two years since its formal enactment in 1989.
Ordinary tax laws are enacted, amended and repealed by Congress, based on tax bills which are discussed in at least four debates that are conducted first in the House of Representatives, and then in the Senate.
Extraordinary tax laws are enacted directly by the President of the Republic under states of emergency and, as a general rule, have a limited duration.
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.
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 will also be the case for 2019.
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.
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.
Tax law is amended at least two or three times per year through tax bills proposed by the Government and voted by the Parliament and much more frequently through amending provisions, contained in laws regulating other, non-tax related matters. Bills are accompanied by explanatory memorandums which explain the purpose of the law and can be used for interpretation. The tax authorities issue circulars and guidelines for the interpretation of the tax law, with circulars being binding on the tax authorities.
Amendments to the Indian Income tax Act (“IT Act”) are made by the Government of India by introducing a Finance Bill before the Parliament annually which once approved has to receive the assent of the President of India.
Further, wherever provided under the provisions of IT Act, the Central Board of Direct Taxes (“CBDT”), Ministry of Finance, can issue notification for the purpose of implementation of existing provisions and issue Circulars, to provide clarification or remove difficulties in the administration of taxation laws.
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 draft 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.
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.
Austrian tax laws are amended constantly. Rather minor amendments may be part of a bill directed at a totally different matter. Further, a Federal Tax Amendment Act making more substantial amendments to Austrian tax laws is enacted almost every year. In addition major amendments generally take the form of a reform bill. For instance, a comprehensive tax reform including the reduction of income and corporate income tax rates was implemented this year. It has to be noted that besides the Federal legislative 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 bill is passed by the Federal Parliament (Nationalrat) either upon proposal of the Federal Government, the initiative of a minimum of 5 members of Parliament, proposal of a parliamentary committee for topics related to its activity or upon the proposal of the Federal Council (Bundesrat). During the legislative process several institutions and interest groups like the Chamber of Commerce, the Austrian Chamber of Tax Advisers and Public Accountants, the Bar Association, the Chamber of Labour, the Federation of Austrian Industry and many others may provide input.
In general tax laws are amended once a year as a regular process. Major tax laws, for example, corporate tax law, income tax law, inheritance tax law and consumption tax law, are amended once a year, however, minor tax laws such as the stamp duty law and tobacco tax law are not amended annually.
In summer each year, various industry groups make requests for tax reform to the competent governmental authorities (e.g., the Ministry of Economy Trade and Industry in the case of manufacturing, trade and IT industries). Such governmental authorities then consider the tax requests from industry groups and summarize the requests for tax reform and commence negotiations with the tax department of the Ministry of Finance. In parallel, the Research Commission on the Tax System considers and discusses tax amendments in relation to such tax reform requests. In around December of each year, the Research Commission on the Tax System publishes an outline of the tax reform for the following year. The bill of amended tax statutes drafted by the Ministry of Finance is subsequently deliberated by the Diet in around March and the amended tax statutes are published around the end of March each year.
With regard to tax matters, the Luxembourg legal framework is relatively stable compared to other European jurisdictions and, except for the decrease of the corporate income tax rate over the past years, no material changes have been made to Luxembourg tax law. Since 2016 however, and due to the several European directives implementing the OECD BEPS action plan, Luxembourg has had to adapt its tax law to introduce or align certain rules, such as the interest deduction limitation rule, CFC rules, a general anti abuse rule, the exit tax, etc..
With regard to the legislative process, usually tax law amendments are embedded in the so called budget law. The budget law is submitted to the Luxembourg parliament in fall or winter of each year. Luxembourg laws may be submitted to the Parliament’s vote either (i) by way of a draft bill issued by a member of the government or (ii) by a law proposal introduced by one or several members of Parliament. In both cases, the amendment is assigned to one or more parliamentary commission(s). Further, the bill is discussed and may be amended upon request of at least five members of the Parliament. During the parliamentary process, several professional organisations and the Council of State may produce comments, which are often taken into account in the final bill. The bill must be voted twice with a 3 month interval minimum by the Parliament. The second vote may be disregarded if the Council of State gives its approval. Following the approval of the Parliament and of the Council of State, the Grand Duke signs and passes the law which enters into force 3 days after its publication in the official gazette unless the law states otherwise.
Tax laws in Malaysia typically undergo amendments every year after the annual Budget announcement.
Generally, primary legislation in Malaysia is 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 (“DGIR”) under the Income Tax Act 1967 (“ITA”) are empowered to make subsidiary legislation such as rules, regulations and orders.
Tax laws in Mexico are subject to constant amendments, usually on a yearly basis. Any and all statutes concerning the essential elements of tax law (subject, object, taxable basis, 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. What is more, the Mexican Constitution expressly states that tax laws must be initially discussed at the House of Representatives (failing to comply with said mandate could lead to the unconstitutionality of the relevant law).
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 authorized, 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 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 (but not concerning the essential elements of tax laws) without having to abide by the amendment procedure reserved 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 either once ordinary recourses have been used or directly, in cases where a constitutional violation is claimed). Generally speaking, the effects of judicial rulings produced as a result of an amparo trial are limited to the plaintiff seeking legal remedy, that is, not erga omnes. Nonetheless, precedents or jurisprudence crystallized under the procedure set forth in the applicable laws renders tax laws subject to the interpretation and constitutional review by the competent courts.
A tax law of relevance is the Ley de Ingresos de la Federación, which regulates the annual income that the Mexican state foresees to obtain from different sources, including taxation. In 2019, this law had a tremendous impact on taxpayers in Mexico since it drastically changed the mechanism in order to contribute with federal taxes – the compensation between different federal taxes was forbidden.
Lastly, it is important to bear in mind that tax regulations known as Resolución Miscelánea Fiscal are published annually by the Treasure Ministry, establishing particular rules and facilities for the taxpayers in order to comply with their fiscal obligations.
Generally, tax law is amended and/or proposed on Budget Day (the third Tuesday of September). However, tax proposals are not limited to this day; they may also follow case law, as recently was the case with the Dutch fiscal unity.
Legislative proposals are generally drafted by the Dutch Ministry of Finance (although they may also be drafted by Members of the House of Representatives (Tweede Kamer der Staten Generaal), after which the proposals may be released for public consultation before they are formally proposed. During such a public consultation, stakeholders such as the Dutch Order of Tax Advisors (NOB), the Confederation of Netherlands Industry and Employers (VNO-NCW) and others typically provide a response.
After the legislative proposal is sent to the Dutch House of Representatives, it is generally first debated in the House Finance Committee, before it goes to the floor of the House to be voted upon. The House can amend the legislative proposal.
Once the legislative proposal is approved by the Dutch House of Representatives, the proposal is sent to the Dutch Senate (Eerste Kamer der Staten Generaal), where it is debated in the Senate Finance Committee before going to the Senate floor to be voted upon.
If the Senate approves the legislative proposal, the law is signed by the King and the responsible minister and published in the Government Gazette. Generally Dutch tax law enters into force on January 1 of the year following its acceptance.
In Peru, tax law is generally amended on a yearly basis, although the amendments introduced frequently consist in corrections to the existing rules. Tax amendments can occur at any time of the year and are effective as from the date immediately after their publication in the Official Gazette, although those relating to yearly taxes are effective from the following January.
Proposed amendments are commonly announced closed to yearend and, in most of the cases, they are prepared by the Executive branch, with little, if none, intervention by the Congress.
Pursuant to our Constitution and the Act of the Congress, amendments may be proposed by (i) the congressmen, acting through their corresponding parliamentary group, (ii) the Executive branch, acting through the Ministry of Economy and Finance, (iii) the Judicial branch, the Ombudsman, the Constitutional Court, the Regions and the Municipalities, on matters related to their scope of competence, and (iv) 0.3% of the registered voters.
There are two ways to amend a tax law in Peru, namely:
a) The approval by the Congress of a law.
b) The delegation of legislative powers into the Executive branch for the latter to issue tax law on behalf of the Congress.
It is worth mentioning that the Tax Authority issues from time to time regulations to the tax law that while are in principle intended to clarify aspects from the legislation that may be obscure, sometimes set forth conditions or requirements that go beyond those set out in the tax law.
Philippine tax laws are relatively stable. To initiate amendments, amendments, several factors need to be met, such as current economic condition, revenue requirement and government spending, among others. As it is a legislative function, amendment of tax laws 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.
An important weakness of the Polish tax system is its high variability. Almost 1/3 of all tax regulations are changed during the calendar year. The PIT, CIT and VAT Acts since its introduction in the 1990s have been amended over 140 times. According to the Constitutional principles, new tax legislation may be introduced to the Polish tax system only by Law which shall be adopted by Parliament and the Senate and then shall be approved and signed by the President.
The Act comes into force after 14 days from its publication, unless an another date for its entry into force is specified. According to the guidelines of the Constitutional Tribunal stipulated in the judgement dated February 15, 2005 (K 48/04), minimal vacatio legis for unfavorable for taxpayers changes in tax regulations should be at least a month. In practice, such changes are introduced with the beginning with the fiscal year.
Usually the tax law (such as the General Tax Lax, the Personal Income Tax Code, the Corporate Income Tax Code, the VAT Code) is amended yearly with the State Budget Law. The amendments are proposed by the Government and submitted to vote in the Parliament. Members of the Parliament proceed to a thorough analysis of the amendments and may present alternative provisions and/or other amendments to the law. Afterwards, all amendments are discussed and a vote is held. The approved amendments to the law are required to be enacted by the Portuguese President and are published in the Official Gazette (Diário da República).
Although amendments to the tax law are usually made with the State Budget Law, they may also occur during the year with a specific law.
The amendments introduced with the State Budget Law generally correspond to technicalities, related with tax deductions limits and compliance rules, such as the deadline to submit tax returns.
Amendments resulting in significant changes of tax law policy or taxpayers guarantees are less frequent. For instance, the Personal Income Tax Code has been significantly amended in 2000 and suffered several amendments in 2014.
Amendments to South African tax law occur annually. The amendments are not limited to a specific area of tax law and may cover direct and indirect tax laws.
The process to amend the tax law is set out below:
i. Stakeholders suggest proposed amendments to National Treasury under the "Annexure C" (to the Budget Review) submission process.
ii. Proposed amendments to primary legislation are announced by the Minister of Finance in his annual Budget Review in February each year.
iii. National Treasury releases two draft bills that contain the wording to give effect to the proposed amendments. A draft explanatory memorandum, which sets out and explains the proposed changes to the tax law introduced in the Budget Review, accompanies the draft bills in June / July each year. The draft bills propose amendments to both the substantive tax law, by way of a "money bill" and administrative tax law, by way of an "ordinary bill".
iv. Stakeholders, including business, tax advisers, civil society organisations and the general public are given an opportunity to consider and provide written comments on the draft bills. National Treasury and the South African Revenue Service ("SARS") facilitate workshops to engage with stakeholders and ensure that public comments are properly considered.
v. The draft bills are then presented to Parliament where the Standing Committee on Finance (in the National Assembly) and the Select Committee on Finance (National Council of Provinces) consider the draft bills. The parliamentary committees also request public comment on the draft bills and convene public hearings.
vi. National Treasury prepares and presents a response document to the written comments and input received during the workshops, at the parliamentary committee hearings.
vii. National Treasury then revises the draft bills, taking the public comments and recommendations of the parliamentary committees into account. The bills are tabled in Parliament again for its consideration and then the amendment bills are sent to the President for assent.
viii. Once the President has assented to the amendment bills, they are promulgated as Acts of Parliament. The promulgation date of an Amendment Act serves as the implementation date for all the sections of that particular Amendment Act where a specific commencement date is not stated. Where a specific date (which can be retrospective) is provided for a section in an Amendment Act, that will be the commencement date of that particular section on promulgation.
The Spanish tax laws have not a fixed modification term. The frequency depends on the need of the Country and the political will.
However, Spanish tax laws are modified quite often and usually every year.
Budget Law to be approved yearly usually amends tax laws, yet according to Spanish Constitution Budget Law modifications cannot be substantial.
Sometimes modifications are included in all types of law and not necessarily in specific tax laws.
When there is a major modification of the tax laws, the Ministry of Finance publishes a draft of the bill of Law for public comments. After a reasonable period of time, the Government sends the proposed tax bills to the Parliament that could approve, reject or amend the bill before it became a Law.
In case of extremely urgent need, the Government can approve a Royal Decree-law that is a law and becomes immediately applicable, however this Royal Decree-law shall be ratified by the Parliament within 30 days after approval by the Government. The Constitutional Court can review to what extent there was an extremely urgent need.
In recent years the Government has considered that a situation of deficit constitutes an extremely urgent need and on this basis approved Royal Decree-law increasing existing taxes.
After approval of the Parliament, the bill will be signed into law by the King and published in the state Gazette. Generally, new laws enter into force the day after the publication.
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 laws are also regularly amended by the different cantonal parliaments.
Amendments can be introduced by the Parliament, the Federal Council, the cantons, the associations and by the Swiss people. Indeed 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, cities, as well as the affected economic sectors. Generally, anyone can 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 usual cycle of amendment is once a year. This usually follows revenue measures announced by the Government in its annual budget which is presented in the last quarter of the year. The Amendment proposals are presented to parliament in the forms of what are known as Bills of Parliament. They are usually approved in December but the amendments take effect on the 1st of January of each fiscal year.
In rare circumstances it is possible that an amendment will be made in the middle of the fiscal year however, this is extremely rare. In 2019 the Government made an attempt to change the fiscal regime of consumption tax from value added tax (VAT) to sales tax midway in the fiscal cycle however, due to practical reasons this failed and the introduction of sales tax is scheduled to take effect on 1st January, 2020 assuming there is no change in Government policy not to abolish VAT.
The process of amending tax legislation like any other legislation is by submitting the proposed amendments to Parliament through Parliament. It is usual for the Minister of Finance to invite for proposals in the third quarter of the year that should be considered for amendment. This however, is not a mandatory procedural legal requirement. Once presented to Parliament the Bills are then deliberated upon. Should Parliament approve the proposed amendments, after passing through the three stages, namely, first reading (Presentation Stage), second reading (Committee and Report Stage) and third reading (Approval stage) the amendments are then incorporated in the existing legislation and published as amended law in the Government Gazette.
At this stage the law either takes effect on publication in the Government Gazette or on issue of a Commencement Order by way of Statutory Instrument.
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. Since 2018, the major fiscal event each year is 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.
Belgian tax law can be amended at any time throughout the year. Amendments are in practice often grouped in so-called program laws, which are usually voted at the end of the tax year.
Both the Federal State and the Regions may, within their area of competence, draft and adopt own legislative measures. Provinces and municipalities also have a limited competence to issue certain tax regulations.
The legislative process is public and usually allows institutions, interest groups and academics to comment on the draft bills.
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.