Ecovis in Australia

OIB Croatia: Prerequisite for doing business in Croatia

11.08.2022

Croatia is introducing a personal identification number, called OIB (Croatian: Osobni identifikacijski broj). It is allocated free of charge by the authorities. It is a prerequisite for starting business activities in Croatia.

The personal identification number will provide permanent identification of each natural person or legal entity. It will be used by public authorities in the day to day work of official records and in the exchange of data, explain the Ecovis experts.

Reasons for introducing the OIB in Croatia

The personal identification number is being introduced:

• For the general digitalisation of public administration
• For the purpose of connecting and automatically exchanging data between all official records
• As the most effective measure in the fight against corruption
• To ensure the preconditions for a fair system of social benefits
• To harmonise Croatian legislation with EU legislation

To set up a company in Croatia, you need a personal identification number.

Marija Jandrečić, account manager, ECOVIS FINUM, Zagreb, Croatia

How companies can obtain the OIB

The personal identification number is given to Croatian citizens at birth or during acquisition of Croatian citizenship. It is given to legal entities when they establish their registered office in the territory of the Republic of Croatia and is given to foreign natural persons or legal entities when there is a reason for their monitoring in the territory of the Republic of Croatia.

It is unique, unchangeable, unrepeatable and consists of 11 digits determined by random selection. It does not contain any private information.

No additional fees or liability is generated due to the possession of an OIB but not possessing an OIB can significantly slow down the process of setting up an investment venture in Croatia.

For further information please contact:

Marija Jandrečić, account manager, ECOVIS FINUM, Zagreb, Croatia
Mail: zagreb@ecovis.com

US corporate tax rate increase: What companies must expect in the future

09.08.2022

On 28 March 2022, the US Treasury Department issued “General Explanations of the Administration’s Fiscal Year 2023 Revenue Proposals.” This is President Biden’s second “Green Book” detailing the administration’s tax policy proposals. The most important proposal for companies is the possible increase in the corporate tax rate from 21% to 28%.

The tax provisions of the FY23 budget are intended to create a fairer domestic tax code while ensuring that corporations and high-income individuals “pay their fair share.” The budget reiterates the Biden administration’s commitment to the OECD’s Pillar Two proposal. It also requests a total of USD 14.1 billion in funding for the IRS, including investments in IRS tax enforcement, to increase tax compliance.

The increase in the corporate tax rate in the USA and the consequences for companies

The proposal suggests an increase in the corporate tax rate from 21% to 28% for taxable years beginning after 31 December 2022. This increase would have implications in the case of GILTI (Global Intangible Low Taxed Income) tax exposure. GILTI remains the primary method used by the US to subject low-taxed income of US-controlled foreign entities to immediate US tax.

The referenced foreign tax rate for US corporate shareholders to be protected from GILTI tax is 13.125% under current law. Under the proposed changes, the referenced GILTI rate would increase to approximately 20%. This rate increase would also affect the “GILTI high tax exemption.” Thus, if the foreign effective corporate income tax rate measured (on a qualified business unit basis) exceeds 90% of the US corporate rate, that business unit can be completely excluded in computing GILTI exposure.

The corporate tax rate in the USA is set to rise. You can discuss the consequences for your company with us.

Kristina Albarella, CPA, Marcum LLP*, New York, USA

The “GILTI high tax rate” would now be 25.2% instead of 18.9%, measured on a qualified business unit basis. US multinational corporations would therefore need higher effective foreign tax rates to avoid GILTI or meet the high tax exception.

These Green Book increases would increase the tax cost of engaging in taxable corporate transactions while simultaneously increasing the economic value of tax attributes that are tied to the corporate rate, such as net operating losses (NOLs) and disallowed interest carryforwards, explain the Marcum* experts.

US taxpayers should consider strategies to accelerate recognition of income and built-in gains into 2022 and defer otherwise deductible costs and expenses into 2023 or beyond.

The final bill that is passed can often look very different than the original proposal as it works its way through Congress and the relevant committees.

For further information please contact:

Kristina Albarella, CPA, Marcum LLP, New York, USA
Email: kristina.albarella@marcumllp.com

*Marcum LLP is the exclusive associated partner of ECOVIS International for accounting, tax and audit in the United States of America.

Malaysia Digital Economy Corporation: SME Digitalisation Grant available

28.07.2022

Companies in Malaysia can receive a government subsidy of 50 percent, up to a maximum of MYR 5,000, to digitalise their business processes. Interested companies can apply until 17 February 2025. The experts at Ecovis in Kuala Lumpur know who is eligible and how the application process works.

The SME Digitalisation Grant is an initiative by the Malaysia Digital Economy Corporation (MDEC) to encourage SMEs to adopt digitalisation in their business operations. Through this initiative, the government will provide companies with a 50% matching grant, up to MYR 5,000 (approx. EUR 1,100) for the subscription of digital services that will enhance their productivity and competitiveness.

Which digitalisation projects does the MDEC support?

There are several areas of digitalisation services available, including:

• Procurement
• Enterprise resource planning (ERP) / accounting and taxation
• E-commerce
• Remote working

The scheme is worth MYR 500 million over 5 years and is limited to the first 100,000 SMEs. As part of the lead agency’s three strategic framework pillars – digital jobs, digital businesses and digital investments – the MDEC aims to empower companies to take full advantage of digitalisation and automation to supplement their business.

Together we can apply for digitalisation funding for your company.

Lim Hoey Ling, Director Business Process Outsourcing, ECOVIS MALAYSIA BPO SDN BHD, Kuala Lumpur, Malaysia

Criteria for the funding application and required documentation

SMEs which meet the following criteria are eligible and encouraged to apply:

• Must be at least 60% Malaysian-owned
• Must be registered under the relevant Malaysian laws and classified as an SME
• Must have been in operation for at least one (1) year
• SMEs which have been in operation for one (1) year are required to have an annual minimum sales turnover of MYR 100,000 for the first year
• SMEs which have been in operation for two (2) years or more are required to have a minimum sales turnover of MYR 50,000 for the preceding two (2) consecutive years

Documents required for the application:

• Completed SME Digitalisation Grant application form
• A copy of the identification card or passport of the director(s) / partner(s) / proprietor(s) of the SME / applicant appointed by the co-op, whichever is applicable
• A copy of the business registration licenses (CTC required)
• A full set of audited financial statement for 2020, with the company stamp and signature on every page, including the cover page OR the latest continuous management account from the latest audited accounts with company stamp and signature OR bank statements for the last two (2) months (with company stamp and signature, CTC not required)
• Company profile
• Invoice/billing details (with company stamp and signature, CTC not required)
• Service agreement (service order form) from an authorised vendor listed by the MDEC (with company stamp and signature, CTC not required)
• Additional information and documents as and when required by the bank

The COVID-19 pandemic has highlighted the importance of managing uncertainty and the growing need for businesses to digitalise their services. In time, those who fail to adapt may find themselves unable to compete. As Malaysia is now on the road to recovery from the pandemic, it is a critical time for SMEs to leverage on technology to increase their productivity and ensure business continuity.

For further information please contact:

Lim Hoey Ling, Director Business Process Outsourcing, ECOVIS MALAYSIA BPO SDN BHD, Kuala Lumpur, Malaysia
Email: hoeyling.lim@ecovis.com.my