Law 383, published in the Official Gazette of 14 July 1997, introduced amendments to the income tax, VAT, stamp duties and tax procedures. The main changes to the income tax and VAT are summarized below.
Income tax
As from 1 January 1998, income derived by nonresidents from technical assistance and technical services rendered from abroad are subject to a final withholding tax of 10%, which covers both the income tax and remittance surtax.
New rules regulate the use of tax benefits, including:
- a general limitation according to which the same economic fact cannot give rise to more than one tax benefit for each taxpayer; and
- introduction of a minimum income tax rule to limit the effects of tax credits. Under the rule, a taxpayer's income tax liability after all pertinent credits have been taken cannot be less than 3.75% of the taxpayer's net worth (2.5% for taxpayers whose only credits are CERTs).
