Singapore will implement the Global Anti-Base Erosion (GloBE) Rules, that is, Income Inclusion Rule and Undertaxed Profits Rule, and Domestic Top-up Tax from January 1, 2025.Continue Reading
Singapore to implement Pillar 2 tax rules from 2025
Asia Pacific
Transfer pricing news, BEPS news, and international tax news in Asia-Pacific
OECD publishes guidance on global minimum corporate tax rules
The OECD, on February 2, released technical guidance to assist governments with implementation of the 15 percent global minimum corporate tax rate.Continue Reading
Sitharaman’s ‘Amrit Kaal’ Budget proposes key tax changes
Indian Finance Minister, Nirmala Sitharaman, has released the country’s latest Budget proposing a slew of tax measures.Continue Reading
Australia seeking input on implementing tax treaty with Iceland
The Australian Government is consulting stakeholders on draft legislation to implement a new tax treaty with Iceland.Continue Reading
UAE issues corporate tax law
On December 9, 2022, the United Arab Emirates (UAE) issued the federal law on taxation of corporations and businesses.Continue Reading
Netherlands opposes UN international tax framework
The Dutch State Secretary of Finance, Marnix van Rij, has expressed the government’s concerns regarding the recent UN resolution to establish an international tax cooperation framework.Continue Reading
China’s tax authority releases latest APA stats
China’s State Administration of Taxation has published the latest report on advance pricing arrangements (APAs).Continue Reading
MAP statistics revealed for 127 tax jurisdictions
On November 22, 2022, the OECD released the latest mutual agreement procedure (MAP) statistics covering 127 tax jurisdictions.Continue Reading
Pakistan court rules on taxability of EPC contracts
Engineering, procurement and construction (EPC) contracts and split contract arrangements (involving offshore supply contracts and onshore service contracts) have remained a key focus of Pakistani tax authorities. The tax implications for these transactions are influenced by the design of the transaction in question and the provisions of the applicable Double Tax Treaties (DTTs).
Recently, Pakistan’s Appellate Tribunal Inland Revenue (ATIR – second tier appeal forum) has allowed an appeal against the tax authority’s order for recovery of withholding tax, deductible while making payment for the offshore supply of machinery (ITA 377/KB/2019). As per the facts, the appellant, a Pakistani renewable energy project, imported machinery and equipment from a Chinese manufacturer. The onshore contract (construction, assembly and installation services) was signed separately with an associate of the equipment supplier, also resident in China and executed through a branch office registered in Pakistan, constituting a permanent establishment (PE). The taxpayer was held assessee-in-default due to the following facts:
- The supplier of machinery and the provider of onshore service were associates.
- Both offshore and onshore agreements were similar in language and signed by the same person.
- The contract is essentially in the nature of an EPC contract and the location split of the EPC contract was made to avoid taxes due in Pakistan.
The tax authority inferred that the offshore supplier and onshore service provider, being PE of a separate company of the same group, must be considered a single entity for tax purposes. Lastly, the tax authority maintained that the offshore contract is subject to tax in Pakistan as per DTT between Pakistan and China, which is based on the UN Model Tax Convention (UN MTC) and contains a ‘force of attraction’ rule.
ATIR decided the appeal in favor of the taxpayer and relied on precedents involving DTTs with Germany and Italy to conclude that offshore supply contract/portion of composite contract cannot be subject to tax in Pakistan due to overriding effect of relevant DTTs. Moreover, ATIR held that:
- The requirement to obtain specific withholding tax exemption was inapplicable in case of payments for import of goods where title to goods is transferred outside Pakistan and supply is not made between associates.
- Tax authority was not authorized to discard the associated entity and treat Pakistani PE as the PE of offshore supplier for invoking force of attraction rule.
- The so-called force of attraction rule is not applicable for taxation of EPC contracts in view of the guidance provided under the UN MTC.
- The concept of Cohesive Business Operations (CBO) introduced in domestic tax law, including related amendments in the definition of PE and source rules for business income and restriction on exemption from withholding tax, may affect the tax position prospectively, i.e. from 1 July 2018 onwards.
- In case of any conflict between domestic law and a DTT provision, the latter overrides the former. DTT override is applicable insofar as it provides for tax relief otherwise not available under the domestic law. In the context of attribution of profits to a PE, existing DTT does not contain any specific reference to the concept of CBO in Article 5.
ATIR has addressed a key issue involved in the taxability of EPC/splitting of contracts under the Pakistan-China DTT. The amendments relating to CBO are not tested yet, however, the judgement may still apply insofar as it has been held that the definition of PE as per DTT supersedes the domestic law.
Muzammal Rasheed is Chief Executive Officer of Enfoque Consulting (Private) Limited, Pakistan, a member firm of WTS Global.
Thai Tax Authority Issues Notification on Transfer Pricing Methods
By Varapa Aurat (Consultant, Tilleke & Gibbins, Thailand)
On May 6, 2021, a new transfer pricing notification from Thailand’s Tax Department was officially published in the Government Gazette. The Notification of the Director-General of the Tax Department Re: Income Tax (No. 400), which was first announced earlier in the year, prescribes the criteria, methods, and conditions for Tax Department officials on how to assess income and adjust expenses for transactions between related parties (as defined in Section 71 bis of the Tax Code) that engage in intercompany transactions where conditions between the two parties in their commercial or financial relations differ from those that would be made between independent parties (i.e., where the transaction is not an “arms length” transaction).Continue Reading
Tax administrations discuss transfer pricing issues
The WCO facilitator focused on the Customs valuation treatment of related-party transactions and instruments adopted by the Technical Committee on Customs Valuation. The OECD facilitator elaborated on the arm’s length principle and its application, comparability analysis, and transfer pricing documentation. Continue Reading
Pakistan’s appellate tribunal rules on tax treaty override
By Muzammal Rasheed (Co-founder, CEO & Head of Practice, WTS Global, Pakistan)
The Appellate Tribunal Inland Revenue of Pakistan (ATIR) has disapproved applicability of Section 111 on Non-Residents in the case (2020) 122 TAX 10 (Trib.).
ATIR is the second forum of appeal against the Tax Assessment Orders issued by the Tax Authority. The appeal was filed by a Non-Resident Individual, challenging the best judgment assessment finalized by the Inland Revenue Department under section 121/111 of the Income Tax Ordinance, 2001 on ex parte basis.
Apart from the technical grounds raised before ATIR, the major thrust of the arguments on behalf of appellant involved the contention that the taxpayer was a non-resident person, having no Pakistan source income during the relevant tax year. Continue Reading
Advance Pricing Agreements to bring tax, transfer pricing certainty in Maldives
By Zaina Zahir (Senior Associate, CTL Strategies, Maldives)
Transfer Pricing Landscape
With the commencement of the Income Tax Act in January 2020, the transfer pricing landscape has significantly changed in the Maldives. Within the past 12-months, the Maldives tax administration – Maldives Inland Revenue Authority – has published the Transfer Pricing Regulation, the Country-by-Country Reporting Regulation and the Advance Pricing Arrangement Regulation.
Through the Transfer Pricing Regulation and the Country-by-Country Reporting Regulation, the Maldives – aligning its practices with the OECD’s Transfer Pricing Guidelines – implements the three tiers of transfer pricing documentation which require qualifying enterprises to prepare the Master File, the Local File, and Country-by-Country Reports.
Hence, the subsequent issuance of the APA Regulation on 16 March 2021 has provided taxpayers with the much-needed certainty in the domain of transfer pricing in the Maldives. Taxpayers now have the option to enter into an ahead of time arrangement with the Maldives tax administration, agreeing on the transfer pricing methodology and the prices to be applied to a set of related party transactions for a period not exceeding 5 consecutive years. Taxpayers can enter into unilateral, bilateral or multilateral APAs. This is expected to provide a more promising, non-adversarial environment for investors.
APA Regulation
The APA Regulation sets out the procedure to be followed in entering into an APA and introduces several provisions on the administration of the APA. This includes the imposition of an annual compliance report filing requirement, details on circumstances under which the arrangement can be revoked or cancelled and more significantly, introduction of a roll back provision which would allow taxpayers to enter into APAs retrospectively.
The application process
The Maldives, similar to many other jurisdictions, implements a 3-phase process in entering into an APA. Initially, a pre-filing consultation is required, through which the scope of the arrangement is identified, the controlled transaction in question is understood and discussions are held in relation to the broader terms of the arrangement.
Subsequently, a formal application requesting for an APA can be lodged with detailed information on the elected transfer pricing methodology, comparability analysis, company’s group structure, and other relevant information. From thereon, the application is passed through evaluation and a final decision is made. Once the parties have successfully entered into an APA, an annual compliance report is to be filed along with the income tax return.
The APA process is comprehended to be a lengthy and comprehensive process. While the regulation does not specify a time frame within which the Maldives tax administration is to complete the process, it is still believed to be less time consuming than dealing with hefty transfer pricing audits and the resulting dispute resolution efforts.
Rollback to prior years
The regulation states that having considered certain factors, an APA can give coverage to tax years for which the deadline for submission of the income tax return has already elapsed. Overall, the allowability of such a retrospective coverage can be viewed as a more efficient method to administer and resolve unsettled transfer pricing disputes.
However, the application of the provision is unclear – the Regulation merely states that in permitting a roll back, the tax administration will look into the APA duration of participating jurisdictions; surrounding circumstances of the transaction in question; whether a tax audit or investigation is being carried out; or whether any legal actions are being taken in relation to the transaction in question.
Hence, a complete guideline on the applicability and limitations of the roll back provision is still awaited.
Other considerations
The Regulation comprises provisions on possible revisions or cancellation of an APA in case of a material change in any of the critical assumptions or conditions or changed economic circumstances. On the other hand, in cases of fraud, deliberate misrepresentation of information or non-compliance, the arrangement may even be declared void ab-initio.
Takeaways
The inclusion of the option to enter into an APA with the Maldives tax administration is viewed as a diversion from the customary audit techniques applied to related party transactions which often results in robust assessments – paving the way to reduce the much frequent transfer pricing disputes in the Maldives.
It may be beneficial for multinational enterprises doing business in the Maldives to enter into an APA especially if the underlying set of related party transactions involve complex business restructuring, intercompany financing and intangibles. Though, when entering into an APA, consideration should always be put on whether the surrounding facts will remain constant for the coming years.
Parity for All? Delhi High Court upholds trigger of MFN clause, bats for ‘common interpretation’ of Tax Treaties
By Aditi Sharma (Partner, Khaitan & Co, India) & Krutika Chitre (Principal Associate, Khaitan & Co, India)
The Delhi High Court in its recently pronounced decision in the case of Concentrix Services Netherlands BV WP (C) 9051/2020 and Optum Global Solutions International BV WP (C) 882/2021 invoked the ‘Most Favoured Nation’ (MFN) clause under the India-Netherlands double taxation avoidance agreement (Tax Treaty) and applied a reduced 5% withholding rate on dividend income paid by Indian companies to Dutch shareholders.
New Zealand clarifies tax treatment of trusts under tax treaty with Australia
Comments on the Issues Paper on the tax treatment of trusts under the New Zealand-Australia tax treaty must be received by March 1, 2021.Continue Reading
Singapore sets indicative margin for related party loans for 2021
If taxpayers choose to apply the indicative margin, they will apply the indicative margin on the appropriate base reference rate selected for the related-party loan.Continue Reading
Singapore to participate in International Compliance Assurance Programme from 2021
The MNE’s suitability for ICAP will be considered on a case-by-case basis. The MNE may propose for participating tax administrations it wishes to involve in its ICAP risk assessment, which will be subject to the participating tax administrations’ agreement.Continue Reading
Australia to focus on tax avoidance schemes
The Australian Taxation Office said that the multinational anti-avoidance law has been successfully implemented, with the restructures resulting in more than AUD 8 billion additional taxable sales being booked in Australia.Continue Reading
Singapore tax authority clarifies deductibility of digital services taxes
The Inland Revenue Authority of Singapore stated that some jurisdictions have implemented unilateral measures to address the tax challenges of digitalization adding that “companies may have incurred additional taxes overseas due to such measures.”Continue Reading
Shackling the FTAs by New Rules of Origin
By Ajinkya Gunjan Mishra (Partner, L&L Partners) & Avani Tewari (Associate, L&L Partners).
International trade and commerce are critical to sustaining the economic development of a country. To attain high growth momentum, a Country must engage in trade negotiations and agreements at multilateral, regional, and bilateral levels. India has been a party to several bilateral and regional trade agreements, and quite a few important ones are under negotiations and slated to be finalised soon.
However, India’s experience with the trade agreements has so far been mixed: favourable trade balance mostly in the case of smaller partners, and deficit with the larger ones. This coupled with the fact that trade agreements have been misused by availing preferential duty rate against the import of goods that did not meet the originating criteria have only added to the government’s list of concerns.
Thailand moves to apply VAT to foreign digital services
By Varapa Aurat (Consultant, Tilleke & Gibbins, Thailand) & Natthanit Mallikamal (Consultant, Tilleke & Gibbins, Thailand)
The rise of global digital economies has introduced uncertainties and exposed many loopholes in our existing tax system, with the most significant issues being the difficulties in collecting tax from those conducting digital activities without a physical presence in a jurisdiction. Thailand has long considered reforming its traditional tax system to better cover the digital economy and digital transactions, believing that foreign companies engaged in the same transactions in Thailand as local companies should also pay tax to the country. This includes value added tax (VAT) on the provision of digital services.Continue Reading
Maldives promulgates its first Transfer Pricing Regulation
By Husam Shareef (Partner, CTL Strategies, Maldives)
On June 10, 2020, the Maldives tax administration, Maldives Inland Revenue Authority (MIRA), issued the country’s first transfer pricing regulation. The Regulation is made pursuant to the new Income Tax Act, which came into effect from January 1, 2020. The Regulation sets out the rules to be followed by enterprises that are required to maintain transfer pricing documentation and stipulates the criteria which exempt enterprises from maintaining such documentation. The Maldives has had a corporate tax regime since July 18, 2011, however, this is the first time that taxpayers are required to follow a specific transfer pricing documentation requirement.Continue Reading
Australia broadens definition of ‘significant global entity’
The amendments generally apply from July 1, 2019.
Philippines introduces bill to tax digital economy
The Bill seeks to give effect to five key changes to the way the digital economy is currently taxed, to better capture value created into the tax system.Continue Reading
Equalisation Levy in India
By Lokesh Shah (Partner, L&L Partners, New Delhi) & Devashish Poddar (Advocate, L&L Partners, New Delhi)
Technology, considered as a factor of production, has virtually been adopted in all sectors of the economy in order to enhance productivity, enlarge market reach, and reduce operational costs. The adoption of technology is demonstrated by the spread of broadband connectivity in businesses, which in almost all countries of the Organisation for Economic Co-operation and Development (“OECD”) is universal for large enterprises and reaches 90% or more even in smaller businesses.Continue Reading
Customs valuation and related party transactions
By Shilpa Goel (Tax Lawyer, India)
I am currently working on a case that involves questions of huge significance when it comes to related-party transactions and customs valuation. It is always good to begin with a caveat and I have two. The first is that the import in question pertains to the years 2002-2006, when the Indian custom valuation rules were somewhat different (from what they are now). The second is that I will not comment on the exact merits of the case but provide a broad overview of the legal and practical side of things.Continue Reading
How international tax landscape changes in India from April 1, 2020
By Ritu Shaktawat (Partner, Khaitan & Co, India) Raghav Kumar Bajaj (Principal Associate, Khaitan & Co, India)
India’s Union Budget for the fiscal 2020-21 was announced in February 2020 and the tax proposals, after undergoing some important changes, were approved by the Indian Parliament and received Presidential assent on March 27, 2020. With this, the annual exercise of amending India’s tax law was completed, and the tax changes are effective from April 1, 2020.
On the tax front, some significant amendments have been made – such as widening the scope of digital tax, abolition of dividend distribution tax, more stringent tax residency rules for non-resident Indians etc.
We have analyzed here the key international tax changes impacting non-residents (MNEs and others having Indian business or nexus).Continue Reading
OECD issues further guidance on country-by-country reporting
The additional interpretative guidance contains complete set of guidance concerning the interpretation and operation of BEPS Action 13 issued so far.Continue Reading
Tax treaty between Japan, Morocco signed
The tax treaty will become effective after both countries have completed their respective domestic procedures.Continue Reading
OECD seeking input on MAP peer reviews of 13 jurisdictions
Comments must be received by December 16, 2019.Continue Reading
Another MNC under the ‘Permanent Establishment’ scanner in India
By Ritu Shaktawat (Partner, Khaitan & Co, India) and Sneh Shah (Senior Associate, Khaitan & Co, India)
Hong Kong, Estonia sign tax treaty
The tax treaty will enter into effect after both countries complete their respective ratification procedures.
Transfer pricing MAP cases on the rise: OECD
According to the statistics, transfer pricing cases continue to take more time with average time being approximately 33 months (30 months in 2017).Continue Reading
Australian tax board consulting on corporate tax residency rules
Comments must be received by October 4, 2019.Continue Reading
Japan, Peru to conclude a tax treaty
Japan and Peru have “in principle” agreed to conclude a tax treaty.Continue Reading
Glencore wins $92m transfer pricing dispute with ATO
The tax authority is considering whether to appeal the decision.Continue Reading
US releases details about tax treaty protocols with Japan, Spain
Mandatory binding arbitration clause is included in the tax treaty protocols to resolve tax treaty disputes.Continue Reading
Hong Kong issues guidance on transfer pricing documentation requirements
Hong Kong issues guidance to ensure compliance with the country’s transfer pricing documentation requirements.Continue Reading
Hong Kong tax authority notes CbC reporting deadline details
Hong Kong Inland Revenue Department has clarified that starting from April 2019, the Department will not accept voluntary filing of a country-by-country (CbC) report for an accounting period ended on or before March 31, 2018.Continue Reading
Indian tax authority sets new CbC reporting deadline for US subsidiaries
By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Senior Manager, SKP Group)
In India, the 2016 Finance Act introduced a three-tiered transfer pricing documentation regime with a view to aligning the Indian transfer pricing documentation rules with Action 13 of the OECD’s base erosion and profit shifting (BEPS) project.
Accordingly, Indian subsidiaries of multinational groups were required to comply with new “master” and “local” files requirements and a new country-by-country reporting requirement from the 2016-17 financial year.Continue Reading
Hong Kong, Finland tax treaty to take effect in April 2019
The treaty will be effective from April 1, 2019.Continue Reading
BEPS MLI to enter into force in Australia in January 2019
From January 1, 2019, the BEPS MLI will operate to modify six of Australia’s 44 bilateral tax treaties. These include tax treaties with France, Japan, New Zealand, Poland, the Slovak Republic, and the UK.Continue Reading
Singapore Ratifies BEPS MLI to tackle MNE tax avoidance
The BEPS MLI will enter into force for Singapore on April 1, 2019.Continue Reading
Australia sees improved corporate tax compliance
In the 2015-16 income year, the estimated tax gap for large corporate taxpayers was 4.4 percent, as compared to 5.8 percent tax gap in the 2014-15 income year.Continue Reading
Indian tax authority undergoing ratification process for BEPS MLI
Important process of ratifying the BEPS MLI is on. In 2019-2020, the provisions will come into effect, says Akhilesh Ranjan.
Continue ReadingNew tax treaty between Switzerland, Pakistan effective from January 2019
An arbitration clause is included in the new tax treaty to resolve double taxation disputes.Continue Reading
Mauritius tax authority issues guidance on place of effective management
The majority of the Board of Directors’ meetings must be held in Mauritius, or the executive management of the company must be regularly exercised in Mauritius.
India, Hong Kong tax treaty to take effect from April 2019
The tax treaty provides for a low withholding tax rate of five percent for dividend payments. Interest, royalties, and fees are subject to a low withholding tax rate of ten percent.Continue Reading
Australian tax authority extends deadline to file CbC reports
The Australian tax authority has allowed “significant global entities” time until January 15, 2019, to lodge their country-by-country (CbC) reports.
Continue Reading
Australia reviewing MNE tax arrangements concerning intangible assets
The Australian Taxation Office is reviewing international arrangements that mischaracterize intangible assets to understate Australian profits.
Continue Reading
BDO Melbourne Gets New Tax Partner in Michael Smith
Michael Smith has joined BDO Melbourne’s transfer pricing team as a partner.
Smith has nearly 20 years’ of transfer pricing experience from around the world. He has worked in London, New York, and Sydney. Continue Reading
India, China Sign Tax Treaty Protocol to Implement BEPS Minimum Standards
India has signed a Protocol to amend its tax treaty with China.
The Protocol incorporates changes required to implement tax treaty-related minimum standards agreed under the base erosion and profit shifting (BEPS) project.
Continue Reading
OECD’s Work on Harmful Tax Practices on Track
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
The OECD has published a report covering the assessment of 53 preferential tax regimes as part of its work under base erosion and profit shifting (BEPS) Action 5, on harmful tax practices.
Continue Reading
Australian Taxation Office, BHP Settle Transfer Pricing Dispute
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
The Australian tax authority has settled a transfer pricing dispute with BHP in relation to the mining giant’s marketing operations in Singapore.
Continue Reading
Transfer Pricing Compliance in China: Preventing Disputes is Key
China’s colossal economy and its predominant role within the global market result in the emergence of an increasing interest towards China’s transfer pricing regime. Since China is not a member of the OECD, any transfer pricing endeavor goes far beyond the classic transfer pricing practices, though.Continue Reading
OECD Seeks Input on MAP Peer Reviews of Further Eight Jurisdictions
The OECD is seeking taxpayers’ input for the seventh round of base erosion and profit shifting (BEPS) Action 14 Stage 1 peer reviews of further eight jurisdictions.
Continue Reading
Countries Discuss Implementation of BEPS Minimum Standards
More than 60 delegates from 16 countries met recently at the regional meeting of the Inclusive Framework on base erosion and profit shifting (BEPS) in Eastern Europe and Central Asia to discuss implementation of the BEPS measures.Continue Reading
Hong Kong Gazettes Enhanced R&D Deduction
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
Hong Kong Government has gazetted law to allow enhanced tax deduction for expenses incurred by business enterprises on research and development (R&D) activities in Hong Kong.
The measure was announced by Carrie Lam, Chief Executive of Hong Kong, in her 2017 Policy Address.Continue Reading
Indian Tax Tribunal Allows Claim of Expenses by Mauritian PE
By Ritu Shaktawat (Partner, Khaitan & Co, India) and Shabnam Shaikh (Principal Associate, Khaitan & Co, India)
In a decision delivered on October 5, India’s Income Tax Appellate Tribunal, New Delhi ruled that the Indian Income Tax Act cannot limit the claim of expenses of a permanent establishment in the absence of such limitation in the India-Mauritius tax treaty.Continue Reading
New Japan, Spain Tax Treaty to Include MAP Arbitration
Japan and Spain signed a new tax treaty on October 16. The tax treaty wholly amends the existing tax treaty between Japan and Spain, which entered into force in 1974.
As per the new tax treaty, a withholding tax exemption applies to investment income from interest and royalties. Withholding tax on dividends is also exempt in certain situations.Continue Reading
Japan, Croatia Sign New Tax Treaty
Japan and Croatia signed a new tax treaty on October 19.
The new tax treaty provides for a reduced withholding tax on dividends, interest, and royalties. In some case, these are exempt.Continue Reading
Mutual Agreement Procedure Statistics Published for 2017
The OECD on October 10 published its 2017 mutual agreement procedure (MAP) statistics covering 85 tax jurisdictions.
According to the 2017 MAP statistics, new transfer pricing MAP cases are up by 25 percent and other MAP cases by 50 percent. Anecdotal evidence suggests that the increase in new MAP cases is due to a range of factors including the effects of the new reporting framework and increased awareness of and expectations from taxpayers about MAP, the OECD noted.Continue Reading
Australia Updates Mutual Agreement Procedure Guidance
The Australian Taxation Office has updated its guidance on the mutual agreement procedure (MAP) framework contained in tax treaties to resolve disputes.Continue Reading
Japan-Iceland Tax Treaty to Take Effect From January 2019
The tax treaty between Japan and Iceland will enter into force on October 31, 2018, Japan’s Finance Ministry has announced.Continue Reading
Australia Seeking Input on Digital Economy Taxation
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
The Australian Government on October 2 launched for public comments a consultation document aimed at creating a fairer and more sustainable corporate tax system for the digitalized economy.Continue Reading
Countries Share Ideas on Country by Country Reporting Implementation
Senior tax officials from over 20 countries recently met at a workshop to share experiences from the first year of country-by-country (CbC) reporting and explore how information can be used most effectively in the tax risk assessment of MNE groups.Continue Reading
More Countries Ratify BEPS Convention
Australia, France, Japan, and the Slovak Republic have deposited their instruments of ratification of the OECD’s Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting (BEPS).
For these four countries, the BEPS Convention would enter into force from January 1, 2019. The Convention entered into force last month for New Zealand, Serbia, Sweden, and the UK.Continue Reading
BEPS Convention to Enter into Force in Japan from January 2019
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
Japan on September 26 deposited to the OECD the instrument of acceptance of the Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting.
The BEPS Convention will enter into force for Japan on January 1, 2019.Continue Reading
Israel Introduces New Transfer Pricing Safe Harbor Rules
By Adv. (Eco.) Eyal Bar-Zvi (Partner and Head of Transfer Pricing, Herzog Fox & Neeman)
The Israel Tax Authority, on September 5, 2018, published two safe harbor Circulars (which remained in draft mode for several months), noting the tax authority’s expected profit levels for marketing services and for low-risk distributorship activities carried out in Israel by multinational entities (MNEs), and providing guidance on non-value-added services.Continue Reading
Saudi Arabia Signs OECD’s BEPS Multilateral Instrument
Saudi Arabia has become the 84th tax jurisdiction to sign the base erosion and profit shifting (BEPS) Multilateral Convention.
The BEPS Convention, negotiated by over 100 countries and jurisdictions, updates the existing network of 1,400 bilateral tax treaties and reduces opportunities for tax avoidance by multinational enterprises.Continue Reading
OECD Transfer Pricing Profiles for 7 More Countries Published
The OECD has published new transfer pricing country profiles for Costa Rica, Greece, Republic of Korea, Panama, Seychelles, South Africa, and Turkey. The OECD has also updated the information contained in Singapore’s profile.Continue Reading
Hybrid Mismatch Rules Enacted in Australia
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
The Treasury Laws Amendment (Tax Integrity and Other Measures No.2) Act, 2018 – which gives effect to the OECD Hybrid mismatch rules in Australia – received Royal Assent on August 24.Continue Reading
India Concluding More Bilateral Advance Pricing Agreements
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
The Indian tax authority, Central Board of Direct Taxes, has published its second annual report on advance pricing agreement (APA) highlighting the progress made in 2017-18.Continue Reading
Indian Tax Authority Extends ‘Significant Economic Presence’ Consultation Deadline
India’s tax authority has extended the earlier deadline of August 10 to submit comments on the newly introduced “significant economic presence” test to tax profits of foreign businesses.Continue Reading
MNE Tax Avoidance Law a ‘Major Victory’ for Australia
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
Over 40 multinational enterprises (MNEs) have restructured their business operations in response to Australia’s crack down on MNE tax avoidance law, ATO Deputy Commissioner Mark Konza has said.Continue Reading
Australia Passes Law to Give Force to BEPS Convention
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
The Australian Parliament on August 16 passed a legislation to give the force of law to the OECD’s Multilateral Convention to implement tax treaty-related measures to tackle base erosion and profit shifting (BEPS).Continue Reading
Singapore’s Tax Authority Updates Country by Country Reporting Guidance
Taxpayers can report rounded figures in their country-by-country (CbC) reports, Singapore’s tax authority has clarified.Continue Reading
India’s CBDT Signs More APAs
India’s Central Board of Direct Taxes (CBDT) entered into nine new unilateral advance pricing agreements (APAs) in July 2018, the tax authority has announced.Continue Reading
Australian Taxation Office Issues Draft Guidance on Related Party Financing Arrangements
The Australian Taxation Office (ATO) has published for public comments Schedule 2 to Practical Compliance Guideline (PCG) 2017/4DC, which discusses the tax authority’s compliance approach to tax issues relating to cross-border, related-party financing arrangements and related transactions.Continue Reading
Tax Treaty between Japan, Colombia: Negotiations Completed
Japan and Colombia have completed tax treaty negotiations, Colombia’s Finance Minister, Mauricio Cárdenas, announced on July 30.Continue Reading
Tax Treaty between Singapore, Nigeria: Read Key Provisions
The tax treaty between Singapore and Nigeria will enter into force on November 1, 2018, and will take effect on January 1, 2019.Continue Reading
New Zealand Government Ratifies BEPS Convention
New Zealand’s Inland Revenue today announced that the Government has ratified the OECD’s Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting (BEPS).Continue Reading
Taiwan Begins International Tax Training for 2018
Taiwan’s Finance Ministry is holding the 2018 International Tax Academy from July 30 to August 17 this year.
The event was launched in 1984 and is conducted every year in cooperation with the School of Law of Southern Methodist University.Continue Reading
‘Significant Economic Presence’ – Missing Pieces of the Indian Tax Puzzle!
By Ritu Shaktawat (Associate Partner, Khaitan & Co, India) and Krutika Chitre (Associate, Khaitan & Co, India)
Ritu Shaktawat and Krutika Chitre of Khaitan & Co discuss the consultation document addressing the tax challenges of digital economy released by Indian’s Central Board of Direct Taxes on July 13, 2018.
Soon after having introduced ‘Google Tax’ in 2016, India becomes one of the first tax jurisdictions to treat ‘significant economic presence’ of a foreign enterprise as its taxable presence in India (effective from April 1, 2018 (that is, from assessment year 2019-20)).Continue Reading
Taxpayer Input Sought on Fresh Round of MAP Peer Reviews
The OECD is seeking taxpayers’ input for the sixth round of base erosion and profit shifting (BEPS) Action 14 Stage 1 peer reviews of eight new jurisdictions.Continue Reading
Malaysia Revising Tax Rules to Adopt BEPS Action 5 Minimum Standard
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
The Government of Malaysia has said that it will not grant new approvals to companies in respect of tax incentives provided under MSC Malaysia Bill of Guarantee No.5.Continue Reading
Countries Discuss Ways to Implement BEPS Measures
Senior tax officials from 20 countries in Europe and Central Asia recently met in Georgia to discuss ways to tackle tax avoidance and to implement the base erosion and profit shifting (BEPS) proposals.Continue Reading
Baker McKenzie Elects New Tax Partners
Law firm Baker McKenzie has announced the election of 13 new tax partners.
The newly elected partners are: Michael Nixon (Singapore), Simone Bridges (Sydney), Kirill Vikulov (Moscow), David Jamieson (London), Jessica Eden (London), Rodrigo Castillo Cottin (Bogota), Paul F. DePasquale (New York), Tatyana Johnson (New York), Victor Alejandro Morales-Chavez (Mexico City), Jonathan Welbel (Chicago), Joshua Nixt (New York), Andrew C. O’Brien-Penney (Chicago), and Ivan Tsios (Chicago).Continue Reading
Hong Kong Implements BEPS Minimum Standards
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
The Hong Kong Government today gazetted the Inland Revenue (Amendment) (No.6) Ordinance 2018, to implement the minimum standards agreed under the base erosion and profit shifting (BEPS) project and to codify the transfer pricing principles into the Inland Revenue Ordinance (Cap. 112).Continue Reading
No Indian Permanent Establishment for Nokia, But Concerns Remain
By Daksha Baxi (Head of International Taxation, Cyril Amarchand Mangaldas) and Jyoti Anumolu (Associate, Cyril Amarchand Mangaldas)
India’s Income Tax Appellate Tribunal (ITAT) at New Delhi last month delivered a significant decision in the case of Nokia Networks OY (taxpayer) on the issue of whether it’s Indian subsidiary, Nokia India Private Limited (NIPL) (which was assigned installation contracts by the taxpayer or entered into independent installation contracts with customers) constituted a permanent establishment (PE) for the taxpayer.Continue Reading
Indian Tax Authority Signs Three New Unilateral APAs
India’s Central Board of Direct Taxes (CBDT) entered into three new unilateral advance pricing agreements (APAs) in the months of May and June 2018, the tax authority revealed.Continue Reading
Further Three Tax Jurisdictions Sign BEPS Convention
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
Kazakhstan, Peru, and the UAE have signed the base erosion and profit shifting (BEPS) Multilateral Convention, the OECD has announced, adding that Estonia intends to sign the Convention on June 29.Continue Reading
India’s CbC Reporting Requirement Clarified
By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Senior Manager, SKP Group)
As an active participant in the OECD’s base erosion and profit shifting (BEPS) project, India has implemented nearly all the BEPS recommendations and has taken several steps to amend the country’s domestic tax laws appropriately. The Indian Finance Act, 2016 implemented BEPS Action Item 13 by introducing a three-tiered transfer pricing documentation structure and made it effective from the 2016-17 financial year.Continue Reading
Indian Tax Authority Consulting On BEPS Action 5 Changes
The Indian tax authority has published for public comments a draft Notification, which will implement the OECD’s proposals under Action 5 of the base erosion and profit shifting (BEPS) project.Continue Reading
Revised India-Qatar Tax Treaty to Include BEPS Minimum Standards
India’s Union Cabinet has approved revision of the country’s tax treaty with Qatar.
The revised tax treaty includes a limitation of benefits clause to prevent treaty shopping. It meets the base erosion and profit shifting (BEPS) minimum standards on treaty abuse (BEPS Action 6) and mutual agreement procedure (BEPS Action 14).Continue Reading
Indian Cabinet Approves Tax Treaty with Iran
The Indian Government has approved the country’s tax treaty with Iran.
The tax treaty is in line with the ones entered into by India with other countries. The proposed treaty also meets tax treaty-related minimum standards proposed under the OECD’s base erosion and profit shifting project, in which India is participating on an equal footing.Continue Reading
Hong Kong CbC Reporting Portal Launched
On March 5, 2018, the Hong Kong Government launched an online portal to enable Hong Kong entities to file their country-by-country (CbC) reports. The Portal can be accessed through: https://aeoi.ird.gov.
Protocol to UK-Mauritius Tax Treaty Signed
An amending Protocol to the UK-Mauritius tax treaty was signed on February 28, 2018.Continue Reading
Singapore Signs Tax Treaty with Tunisia
Singapore and Tunisia have signed a tax treaty, which provides for low withholding tax rates and a detailed exchange of information provision.Continue Reading
Indian Tax Authority Enters Into More APAs
India’s Central Board of Direct Taxes (CBDT) entered into a further seven unilateral advance pricing agreements (APAs) in February 2018, taking the total number of APAs signed to 203.Continue Reading
Accountants Concerned About New Zealand’s BEPS Tax Bill
Chartered Accountants Australia and New Zealand (CA-ANZ) has stressed that by implementing the Taxation (Neutralising Base Erosion and Profit Shifting) Bill in its current form, the New Zealand Government would be “going further than most other OECD countries.”Continue Reading
Singapore Updates Transfer Pricing Guidance
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
On February 23, 2018, the Inland Revenue Authority of Singapore (IRAS) published key updates and amendments to the country’s transfer pricing guidelines, including new transfer pricing documentation requirements.Continue Reading
India Gazettes Revised Tax Treaty With Kenya
On February 19, 2018, India gazetted a revised tax treaty with Kenya. The revised treaty was signed by both countries in July 2016.Continue Reading
Japan, Spain Agree to Sign New Tax Treaty
Japan and Spain have agreed in principle to the text of a new tax treaty.
The new tax treaty will replace the existing treaty between both countries, which entered into force in 1974.Continue Reading
New Zealand to Modify Transfer Pricing Rule in BEPS Bill
By Alex Cooper
The New Zealand Inland Revenue is seeking to rectify a drafting error in a new rule to limit the rate of deductible interest on related-party, cross-border debt (the restricted transfer pricing rule) in the Taxation (Neutralising Base Erosion and Profit Shifting) Bill.Continue Reading
US Treasury Urged to Revise Tax Treaty with Armenia
By Alex Cooper
US Congressman David Valadao has urged Treasury Secretary Steven Mnuchin to renegotiate the US tax treaty with Armenia with a view to ending double taxation currently imposed on businesses in both countries.Continue Reading
Australia to Retrospectively Amend MAAL
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
On February 12, 2018, the Australian Government published for stakeholders’ comments a draft Bill, which would retrospectively amend the Multinational Anti-Avoidance Law (MAAL) to prevent multinationals from avoiding the application of the MAAL through the use of foreign trusts and partnerships in corporate structures.Continue Reading
Australia Consulting on Draft Legislation to Implement BEPS Convention
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
The Australian Government today published for stakeholders’ comments a draft legislation to implement the OECD’s Multilateral Convention to implement tax treaty-related base erosion and profit shifting (BEPS) measures in Australia.Continue Reading
India Approves Protocol to Amend Tax Treaty with China
By Alex Cooper
On February 7, 2018, the Indian Government approved the signing and ratification of a protocol to amend the country’s tax treaty with China.Continue Reading
UAE Ratifies Tax Treaty with Paraguay
By Alex Cooper
On February 5, 2018, the UAE President issued a federal decree ratifying the country’s tax treaty with Paraguay.Continue Reading
Indian Tax Authority Enters Into Two Further Bilateral APAs
On February 7, 2018, the Indian tax authority announced that it entered into two bilateral advance pricing agreements (APAs) in the month of January 2018.Continue Reading
Australian Tax Authority Issues CbC Reporting Reminder
The Australian Taxation Office (ATO) has reminded significant global entities to file, by February 15, 2018, their country-by-country (CbC) reporting statements for the year ending December 31, 2016.Continue Reading
Indian 2018 Budget Introduces Virtual PE Concept to Tax Business Profits
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
On February 1, 2018, India’s Finance Minister, Arun Jaitley, issued the country’s 2018 Budget, which introduces a new permanent establishment (PE) nexus based on virtual economic presence to tax business profits of foreign enterprises.Continue Reading
Indian Budget 2018: Transfer Pricing Expectations
By Maulik Doshi (Partner, Head of Transfer Pricing & International Tax, SKP Group) and Kamlesh Kaltari (Senior Manager, SKP Group)
The Indian Government has, in recent past, taken bold and practical measures to align the Indian transfer pricing regulations with global best practices by introducing country-by-country reporting and “master” file regulations; interest limitation provisions; revising the rates under the safe harbor rules; rationalizing specified domestic transactions; and introduction of range concept and use of multiple-year data. Additionally, the Government has made several attempts on the administrative side to reduce litigation and introduce a taxpayer-friendly regime. Having said that, there are certain ambiguities that need to be resolved.
In the 2018 Budget, which is due to be presented on February 1, 2018, we hope to see appropriate steps being taken to address these ambiguities, some of which are listed below.Continue Reading
UK, US, Six Others Launch Multilateral Tax Risk Assurance Program For MNEs
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
Eight tax administrations, including the UK and the US, have launched a pilot program for the multilateral risk assessment of multinational corporations.Continue Reading
Panama, Malaysia, Four Others Sign OECD’s BEPS Convention
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama, and Tunisia have newly signed the base erosion and profit shifting (BEPS) Multilateral Convention, the OECD announced on January 24, 2018.Continue Reading
Hong Kong, French Tax Administrations to Exchange CbC Reports
On January 15, 2018, the Government of Hong Kong announced that it has entered into a bilateral arrangement with France to automatically exchange country-by-country (CbC) reports filed by multinational corporations.Continue Reading
Hitesh Gajaria to join KPMG India as Tax Head
KPMG India to newly appoint Hitesh Gajaria as Head of Tax from April 2018. Gajaria will succeed Girish Vanvari.
Revised Singapore, Sri Lanka Tax Treaty In Force
A revised tax treaty between Singapore and Sri Lanka entered into force on December 31, 2017. Continue Reading
Malaysian Tax Authority Issues Taxpayer Guidance On MAP
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
On January 11, 2018, the Inland Revenue Board of Malaysia released detailed taxpayer guidance on the mutual agreement procedure (MAP) framework contained in tax treaties.Continue Reading
Indian IT Giant Infosys Signs APA with US
Indian IT giant Infosys Limited has announced the successful conclusion of an advance pricing agreement (APA) with the US Internal Revenue Service (IRS), a move that will enhance predictability of the company’s tax obligations in respect of its US operations.Continue Reading
Hong Kong Implements Country-by-Country Reporting Requirement
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
On December 29, 2017, Hong Kong gazetted the Inland Revenue (Amendment) (No. 6) Bill, 2017, which provides for an implementation framework for country-by-country (CbC) reporting in Hong Kong.Continue Reading
Hong Kong Gazettes Transfer Pricing Changes
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email (editor@transferpricingnews.com) and by phone (+447808558597).
On December 29, 2017, Hong Kong gazetted the Inland Revenue (Amendment) (No. 6) Bill, 2017, which codifies transfer pricing principles into the Inland Revenue Ordinance (Cap. 112) and implements the OECD’s BEPS minimum standards.Continue Reading
Mongolia Joins BEPS Inclusive Framework
Mongolia has joined the OECD’s Inclusive Framework on BEPS, bringing the total number of countries participating in the project on an equal footing to 111.
Members of the framework work together with other OECD and G-20 countries on implementing the BEPS package consistently and on developing further standards to address BEPS issues.