On 13 October 2016, the Icelandic parliament passed legislation on government actions against tax evasion. Two of the main measures include new interest deduction limitations rules based on BEPS Action 4 and Country-by-Country (CbC) reporting requirements based on BEPS Action 13.
The legislation includes the introduction of an interest deduction limitation equal to 30% of EBITDA. However, certain exemptions are provided, including where:
The interest deduction limitation will enter into force on 1 January 2017. Additional regulation on the implementation of the deduction limit will be issued by the Minister of Finance in the future.
The legislation includes the requirement that MNE groups operating in Iceland must submit a CbC report if meeting an ISK 100 billion (~USD 875 million) consolidated annual revenue threshold. The requirement to submit primarily applies to ultimate parent entities resident in Iceland. In cases where the ultimate parent of the group is not resident in Iceland, an Icelandic constituent entity of the group will be required to submit the CbC report if:
If there is more than one Icelandic constituent entity, only one is required to submit the report.
Whether the CbC report will be filed locally or overseas, notice of the reporting entity must be submitted to the tax authority by the end of the fiscal year concerned.
The CbC reporting requirements will enter into force 1 January 2017. Additional details of the requirements, such as content requirements, are not included in the legislation and will be issued through regulation from the Minister of Finance in the future.
The legislation also includes a number of other measures, including:
Click the following link for the legislation on government actions against tax evasion (Icelandic language).
We’re here to answer any questions you have about the Orbitax products and services.
We’re committed to providing high value, low cost tax research and management solutions.
Our Twitter account is where you can find latest information, news updates, offers and lots more.