International Tax Authority informs BVI Constituent Entities, that are part of Multinational Entity Group, that it will soon be ready to receive filings for CbC reporting.
The report would include CbC financial filings for the information, including profits, taxes, employees, and tangible assets – that these corporations already provide to the IRS on an annual basis.
The corrections are effective on February 19, 2020, and apply from December 6, 2019.
The definition of “significant global entity” to include members of large business groups headed by private companies, trusts, partnerships, investment entities, and individuals.
The OECD analysis shows that Pillar Two could raise a significant amount of additional tax revenues.
The report contains guidance on how the accurate delineation analysis applies to the capital structure of an MNE within an MNE group.
Comments must be received by March 6, 2020.
The “safe harbour” issue is included in the list of remaining work, but a final decision on this issue will be deferred until the architecture of Pillar One has been agreed upon.
Between 2019-2020, HMRC secured GBP 480 million through DPT investigations.
The webcast will be held on January 31, 2020, at 14:00-15:00 (CET).
The BEPS MLI will enter into force for these two countries on May 1, 2020.
The deadline for filing country-by-country reports and master files is December 10-23, 2020.
The BEPS MLI will enter into force for Liechtenstein on April 1, 2020.
The tax treaty applies from January 1, 2020.
The revised transfer pricing reporting threshold for 2020 is DOP11,552,402.
The additional interpretative guidance contains complete set of guidance concerning the interpretation and operation of BEPS Action 13 issued so far.
The OECD on December 23, 2019, released additional interpretative guidance on country-by-country (CbC) reporting.
The guidance is aimed at providing greater certainty to tax administrations and MNE Groups on the implementation and operation of CbC reporting requirement as culminated from the OECD’s work on base erosion and profit shifting (BEPS) Action 13.
It is clarified that, under the BEPS Action 13 minimum standard, the automatic exchange of CbC reports filed under local filing rules is not intended.
The December 23 document contains complete set of guidance concerning the interpretation and operation of BEPS Action 13 issued so far. The document will continue to be updated.
In addition, a summary of CbC reporting notification requirements in BEPS Inclusive Framework member jurisdictions has been posted on the OECD website. The summary is aimed at helping MNE Groups in complying with notification requirements in different jurisdictions where they have constituent entities.
The tax treaty will become effective after both countries have completed their respective domestic procedures.
By Professor William Byrnes (Texas A&M University School of Law)
The OECD will hold a public consultation meeting on December 9.
French Finance Minister, Bruno Le Maire, termed the US’ proposed action as unacceptable.
The Commission may bring the cases before the Court of Justice of the EU if Austria and Ireland do not act by February 1, 2020.
The tax treaty and Protocol implement the BEPS minimum standards to tackle tax planning strategies that exploit gaps and mismatches in tax rules.
International tax veteran Brian Abbey has joined Global Tax Management as Managing Director, International Tax.
Transfer pricing specialist Kevin Norton has joined Deloitte Ireland’s tax team as partner.
Earlier in July 2019, the US Trade Representative opened an investigation into whether the French DST is discriminatory in nature and harms US’ interests.
The tax treaty will enter into force after both countries have completed their respective internal procedures.
Comments must be received by December 16, 2019.
The paper highlights the marked rise in corporation tax receipts and corporate profitability since 2014.
Any proposed tax must be levied on profits and not revenue, Amazon’s Vice President (Global Tax), Kurt Lamp, said.
Comments must be received by December 2.
The protocols contain an anti-abuse clause.
The additional interpretative guidance will help MNE Groups in avoiding common errors made in preparing CbC reports.
For Denmark the BEPS MLI will enter into force on January 1, 2020.
By Ricardo Rendón (Partner, Chevez, Ruiz, Zamarripa y Cía, S.C., Mexico)
On September 8, 2019, the Executive Branch of the Mexican Government submitted to the Congress Tax Reform for 2020, which includes key tax changes to the country’s tax law primarily inspired by the OECD’s base erosion and profit shifting (BEPS) project.
By Catherine O’ Meara (Partner, Matheson, Dublin)
The Irish Government recently published a Transfer Pricing Rules Feedback Statement, which confirms that changes to the country’s transfer pricing rules and their implementation are forthcoming.
The rulings practically resulted in over 50 percent and in some cases up to 90 percent of those companies’ accounting profit being tax exempt.
According to the statistics, transfer pricing cases continue to take more time with average time being approximately 33 months (30 months in 2017).
Comments must be received by October 4, 2019.
Gurría also described the delivery of the OECD’s BEPS package in 2015 as one of the two “big bang” developments that transformed the global tax landscape in recent years.
Japan and Peru have “in principle” agreed to conclude a tax treaty.
Amazon is a major UK employer and currently employs over 27,500 UK people. The company said that this number would increase to over 29,500 this year.
Global law firm Shearman & Sterling has roped in Jay Singer as partner to the firm’s tax practice. Jay will be based in the firm’s Washington, D.C. office.
The tax authority is considering whether to appeal the decision.
The review reveals that countries have largely adopted their domestic CbC reporting rules in line with the BEPS Action 13 minimum standard.
The proposals would be included in Finance Bill, 2019 and, if enacted, would apply for chargeable periods commencing January 1, 2020.
Mandatory binding arbitration clause is included in the tax treaty protocols to resolve tax treaty disputes.
A former US Treasury international tax Counsel, Brian Jenn, has joined McDermott Will & Emery as its partner.
Jenn will be based out of the firm’s Chicago office.
Hong Kong issues guidance to ensure compliance with the country’s transfer pricing documentation requirements.
The BEPS MLI will enter into force in both countries on December 1, 2019.
While members of the Inclusive Framework on BEPS did not yet agree on the conclusions, they committed to work together to deliver a final report in 2020, with an update in 2019
Members of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) today adopted a work plan setting out a process for reaching a new global agreement on addressing tax challenges posed by the digital economy.
The work plan explores the technical issues relating to digital economy taxation to be resolved through the two main pillars.
The first pillar will explore potential solutions for determining where tax should be paid and on what basis (nexus), as well as what portion of profits could or should be taxed in the jurisdictions where clients or users are located (profit allocation).
Three proposals have been articulated in particular: the user participation proposal, the marketing intangibles proposal, and the significant economic presence proposal.
These proposals allocate more taxing rights to the market jurisdictions in situations where value is created by a business activity through (possibly remote) participation in that jurisdiction that is not recognized in the current framework for allocating profits, the report notes.
Further, these proposals contemplate the existence of a nexus in the absence of physical presence, contemplate using the total profit of a business, contemplate the use of simplifying conventions (including those that diverge from the arm’s length principle) to reduce compliance costs and disputes, and would operate alongside the current profit allocation rules, the report adds.
The second pillar pertains to the design of a system to ensure that MNEs pay a minimum level of tax. This pillar would provide countries with a new tool to protect their tax base from profit shifting to low or no-tax jurisdictions, and is intended to address remaining issues identified by the BEPS project.
The report confirms that members of the Inclusive Framework on BEPS agree that any rules developed under this Pillar should not result in taxation where there is no economic profit, nor should they result in double taxation.
While members of the Inclusive Framework on BEPS did not yet agree on the conclusions to be drawn, they committed to continue working together to deliver a final report in 2020 aimed at providing a consensus-based long-term solution, with an update in 2019, the report notes.
The work plan was approved during the May 28-29 plenary meeting of the Inclusive Framework on BEPS, which brought together 289 delegates from 99 member countries and jurisdictions and 10 observer organizations.
OECD Secretary General Angel Gurría said: “Important progress has been made through the adoption of this new ‘Programme of Work,’ but there is still a tremendous amount of work to do as we seek to reach, by the end of 2020, a unified long-term solution to the tax challenges posed by digitalization of the economy.”
“Today’s broad agreement on the technical roadmap must be followed by a strong political support toward a solution that maintains, reinforces, and improves the international tax system. The health of all our economies depends on it.”
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 at firstname.lastname@example.org
On July 4, 2018, Hong Kong’s Inland Revenue Department passed the country’s final Inland Revenue (Amendment) (No. 6) Bill 2017, (the Amendment Bill).
This Amendment Bill (which became law on July 13, 2018) specified the documentary requirements from a transfer pricing perspective and also introduced measures to address various recommendations under BEPS Action Plans.
Austria proposes to impose a five percent digital tax to close tax loopholes and ensure that large digital corporations are called to account.
For Georgia the BEPS MLI will enter into force on July 1, 2019.
Armenia has newly joined the OECD’s Inclusive Framework on base erosion and profit shifting.
Transfer pricing advisory Questro International has hired Chris Whitehouse as a transfer pricing partner for its Zurich office.
For Ireland, the BEPS MLI will enter into force in May 2019.
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.
The treaty protocol provides for a low withholding tax rate of five percent for royalty and interest payments. An arbitration clause is also included to increase legal certainty for taxpayers.
Transfer pricing specialist Questro International has hired Manuel Koch as a Partner for the firm’s office in Stuttgart, Germany.
Koch brings significant experience of over ten years specialization in transfer pricing consulting. Koch has wide experience in international tax planning engagements for international corporates including holding and principal structures as well as Swiss finance branches and IP boxes.
Global advisory firm Duff & Phelps has announced that Jill Weise will succeed Michael Heimert as the Global Leader for the firm’s transfer pricing practice.
Weise has nearly 25 years of expertise in transfer pricing. She previously served as the firm’s transfer pricing practice leader for North America.
The Commission is looking into five tax rulings issued by the Dutch tax authority to Nike group companies in the Netherlands between 2006 to 2015.
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.
Transfer pricing expert Mark Madrian has joined Valentiam Group as a Partner in the firm’s West Coast practice.
Madrian has advised clients on complex cross-border transfer pricing and other international tax issues. He was recently recognized as a Leading Transfer Pricing Adviser by Legal Media.
The treaty will be effective from April 1, 2019.
By Anas Salhieh (Senior Tax Executive, Al Tamimi & Company, Riyadh, Saudi Arabia)
Saudi Arabia’s General Authority for Zakat and Income Tax has published for public comments draft transfer pricing bylaws as part of the Kingdom of Saudi Arabia’s commitment to the OECD’s base erosion and profit shifting (BEPS) project.
The new anti-abuse measures entered into force on January 1, 2019.
The BEPS MLI will enter into force for Singapore on April 1, 2019.
Gibraltar must recover unpaid taxes of around EUR100m from companies that benefited from the corporate tax exemption regime for interest and royalties as well as from the five tax rulings.
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.
The OECD has made 60 jurisdiction-specific recommendations on issues such as improving the timeliness of the exchange of information and ensuring that exchanges of information are made with respect to preferential tax regimes that apply to income from intellectual property.
By Elizabeth Sidi (Senior Tax Consultant, PwC, Bulgaria)
Bulgaria is introducing new interest limitation rules and a new controlled foreign corporation regime from January 1, 2019.
Important process of ratifying the BEPS MLI is on. In 2019-2020, the provisions will come into effect, says Akhilesh Ranjan.
The legislation is intended to enter into force in July 2019.
According to IMF Chief Christine Lagarde, governments should figure out a world-wide answer on tax.
The legislation seeks to incorporate the OECD’s proposals under Action 5 of the base erosion and profit shifting (BEPS) project, on countering harmful tax practices, as well as the new EU substance requirements.
On November 27, 2018, Ireland’s Finance Minister Paschal Donohoe announced the details of a Competent Authority Agreement between Ireland and Malta (Agreement). The clear aim of the Agreement is to end what is referred to as the “Single Malt” tax structure.
France and Germany urged the EU Council to adopt the proposed digital services tax by March 2019.
By Bram Markey (Director, Transfer Pricing, PwC Belgium)
The Belgian tax authority has issued a draft Circular on the 2017 update to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.