Iceland aims to cut corporate tax rate by 3%

High speed train between Valencia and Madrid finally agreed

Construction slowing in Bulgaria, except in Bourgas

Poland to build 3,000km of motorway by 2012

FDI in Mexico increased to $23bn in 2007

Indonesia planning to introduce a flat tax rate of 25%

New South Korean government proposes corporate tax cuts

Dubai is World’s fastest growing airport

Construction slowing in Bulgaria, except in Bourgas

Bulgarian authorities issued 4,637 construction permits in the last quarter of 2007, a decrease of 4.9% over the previous three months and 2% lower than in the same period of 2006, data from the National Statistical Institute data showed.

Residential developments continued to account for the largest share of the total, with 2,884 permits granted for total area of area of 2.4m sqm, compared to 3,110 permits for 2.1m sqm in the previous quarter.

The Bourgas region received the largest number of permits for a second quarter running, rising from 635 permits in Q3 2007 to 875 in Q4. Varna saw the number of permits drop from 568 to 516, a trend that was mirrored in Plovdiv (498 to 433) and Sofia (406 to 380).

Bourgas accounted for 19% of the total number of permits issued in Bulgaria in Q4 2007, but with 1.24m sqm, it accounted for 27.9% of total space.

Poland to build 3,000km of motorway by 2012

Poland ’s infrastructure minister, Cezary Grabarczyk, has announced that Poland will build more than 3,000km of motorway by June 2012. Road investments will require around €23bn in funding, which in the long term will come from EU subsidies.

In the next four years Poland plans to complete 900km of motorway and over 2,100km of express roads. These investments will include roads linking Warsaw with Poland’s western border, the whole of the A1 motorway from the north down to the southern border, express roads linking cities hosting Euro 2012 matches as well as routes between Poland and Ukraine. Mr Grabarczyk promised that Poland will complete all the necessary motorways before the inauguration of Euro 2012.

High speed train between Valencia and Madrid finally agreed

After four years of negotiations, an agreement has finally been reached regarding the arrival of Spain’s much heralded high speed train between Valencia and Madrid. The train link will start in 2010, initially entering Valencia’s main railway station ‘Estacion del Norte’ above ground but from 2014 onwards it will be underground. When the train station’s rail-yard is placed underground it will be replaced with a park, to be named ‘Central Park’.

The travel time from Madrid to Valencia is currently 3.5 hours. With the new train link this will be drastically reduced to 1 hour and 25 minutes resulting in a huge increase in visitors to Valencia.

Last December saw the inauguration of the Madrid-Malaga and Madrid-Valladolid lines, which resulted in an increase in people traveling from Madrid to those destinations of 100% and 75% respectively.

Valencia at present is getting in the region of 2m visitors a year and is the fastest growing city in Europe regarding tourists, 10% of whom visit the city via cruise ships, a market that was almost non existent just 10 years ago. The arrival of the fast train will not only see a marked increase in Spanish tourists visiting the city but will also see workers commuting to and from Valencia as well as making the city more attractive to tourists who at present don’t have direct flights to Valencia but can fly directly to Madrid.

The new Valencia station will measure 166,000sqm, 46,000sqm of which will be given over to the station itself with 32,000sqm given over to multi usage, 11,000sqm to offices, 7,000sqm to terraces, 6,000sqm to coffee shops and restaurants and 61,000sqm for parking which will allow 1,880 cars to park in the station. Work on the project is scheduled to commence next April.

Prices in Madrid are currently over 50% more expensive than in Valencia (€4,262sqm compared to €2,849sqm at the end of 2007, according to www.idealista.com). 

Valencia is also welcoming the arrival of Formula 1 this year, with the first race ever taking place in the city on 24 August.

Iceland aims to cut corporate tax rate by 3%

Iceland, which has one of the lowest corporate tax rates in the world, is planning to reduce it further by another three percentage points. This would mean that the jurisdiction would have a flat tax rate of 15% for companies, meaning that all companies pay the same irrespective of size.

Advisers in Reykjavik say that the government is making the tax cuts in order to encourage foreign investment. Iceland compares its attractiveness for investors with other Nordic countries – Norway, Sweden, Finland and Denmark – where the average corporate tax rate is 25%.

A spokesperson at PricewaterhouseCoopers commented: “This tax cut will apply to fiscal year 2008 and take effect from January 1 2009.”

The Invest in Iceland Agency said that the government has been successful in attracting international data centres. It argues that the simplified tax structure has played a major part in winning this business.

New South Korean government proposes corporate tax cuts

The new government in South Korea has proposed a phased introduction of corporate income tax cuts. At the moment there are two levels of corporate income tax in the country - 13% on taxable income up to W100m ($106,000) and 25% thereafter.

The plans are reported to be ‘almost finalised ’ and will go before the National Assembly in September this year. Any changes are likely to be phased in between now and 2013.

The new proposals are for a 12% tax on income up to W200m ($212,000) and 24% on anything above that in 2009. The following year, the lower rate will remain but the upper rate will be cut to 23%.

In 2011, an 11% rate will be applied on income to W200m and 22% on higher amounts. The lower band holds in 2012 but the upper level goes down to 21%. In the final year of the plan, a 10% tax will be applied to incomes up to W200m and 20% on those higher.

However, a 10% ‘local tax’ is added to the above rates so the effective rate for 2008, for example, would be 14.3% and 27.5%, respectively and the same will be applicable to all other rates that are introduced.

President-elect Lee Myung-bak has stated that the corporate tax reduction is a ‘matter of life and death’ for South Korea. The economy is performing poorly and he believes that its corporate tax rates need to be more competitive to stimulate investment.

Dubai is World’s fastest growing airport

Dubai International Airport continues to see increased international passenger arrivals. The airport recorded its highest growth rate ever in 2007 with international arrivals up 19.3%, handling a total of 34.3m passengers, well above the projected 33m for 2007.

The airport achieved 10th ranking in 2006’s Airport Council International’s list of the world’s busiest airports with 28.8m passengers, therefore new ranking expectations are high. Likewise, this high growth rate means Dubai International has maintained an average growth rate of well over 15% per year for the last six years.

Dubai has connections with over 205 destinations across six continents through 120 airlines, handling an average of 725 aircraft a day. Over 95,000 people a day use the airport for their travel needs.

The airport will see a new terminal and associated facilities completed in mid-2008 at a cost of $4.5bn. Dubai is expected to receive 60m passengers a year by 2010.

However, a project to create the world’s largest airport is already underway less than 40km away. Upon completion, Dubai World Central – Al Maktoum International will have the capacity to handle a further120m passenger’s annually.

FDI in Mexico increased to $23bn in 2007

Mexico received $23.23bn in foreign direct investment (FDI) in 2007, a rise of 22.7% over the previous year, according to its economy ministry.

Foreigners have poured money into Mexican operations since a free trade deal with the US and Canada came into effect in 1994. The figure for last year was the second highest after 2001.

Mexico ’s government expects FDI to ease slightly to $20bn this year as the US economy slows, tapering demand for Mexican exports. About 80% of Mexico’s exports go to the US.

Indonesia planning to introduce a flat tax rate of 25%

Corporate taxpayers in Indonesia may soon be paying a flat tax rate of 25% following a proposal by the Indonesian government to reduce the country’s corporate income tax rate.

At the moment the rate is between 15% and 30% depending on a company’s profitability.

The flat rate is said to be for simplification purposes only and is following the example of other developing countries that have benefited from the easy to calculate system. The rate is still being discussed between the government and the parliament but is expected to be introduced at a flat rate of 28% next year and then down to 25% in 2010.