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Approved Changes (2)

Korea, Rep of

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Korea Issues Final Master file and Local file Requirements and Templates

Korea’s Ministry of Strategy and Finance has recently issued the final Master file and Local file requirements and templates. The two files are part of a Combined Report on International Transactions based on the guidelines developed as part of Action 13 of the OECD BEPS Project.

For tax years beginning on or after 1 January 2016, all Korean domestic entities and Korean establishments of foreign entities are required to submit a Combined Report if:

  • Its sales revenue exceeds KRW 100 billion (~USD 84 million); and
  • Its cross border related-party transactions exceed KRW 50 billion (~USD 42 million).

In determining if the cross border transactions threshold is met, the total amount of all goods, services, and loan transactions are to be included. When a single entity in Korea meets the thresholds, it must submit both the Master file and Local file. However, if multiple entities of a taxpayer group meet the thresholds, only the entity maintaining the highest level of control in each business segment is required to submit the Master file.

When required, the Combined report is due on the filing deadline for the annual tax return (generally 31 March of the following year if following calendar tax year). Both the Master file and Local file are to be submitted in Korean, although an English version of the Master file is acceptable as long as a Korean translation is submitted within one month of the submission of the English version.

Failure to comply with the requirements may result in penalties of up to KRW 30 million.

Click the following links for unofficial English translations of the Master file template and Local file template as provided by KPMG Samjong Accounting Corp.


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Nigerian Tax Tribunal Confirms VAT Obligations of Non-resident Suppliers and Nigerian Recipients

The Lagos Tax Appeal Tribunal recently issued its decision concerning the value added tax (VAT) obligations for services supplied by a non-resident supplier to a Nigerian recipient. The case involved a Dutch supplier providing satellite-network bandwidth capacities from outside Nigeria to a Nigerian resident taxpayer. In the invoice for the service, the Dutch supplier did not include VAT and no VAT was withheld by the Nigerian taxpayer. As a result, the Nigerian Federal Inland Revenue Service (FIRS) assessed the Nigerian taxpayer for VAT on the transaction.

When appealing the assessment, the taxpayer argued two main points:

  1. No VAT liability existed since the services were provided outside Nigeria; and
  2. Even if VAT was due, the taxpayer could not be held liable because the Dutch supplier was not registered for VAT in Nigeria and therefore could not include VAT in the invoice.

However, the Tribunal dismissed both points. It found that because the bandwidth capacities were received by the taxpayer's earth-based satellite in Nigeria, the service was effectively imported into Nigeria and therefore can be considered supplied in Nigeria. Since the service was supplied in Nigeria, the Dutch supplier has an obligation to register for VAT in Nigeria and include the required amount of VAT in the invoice, and the Nigerian taxpayer has an obligation to withhold the VAT and remit it to FIRS. In addition, the Tribunal found that the Dutch supplier's failure to fulfill its obligations does not relieve the Nigerian taxpayer of its obligation to pay the VAT due.

Proposed Changes (3)


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Australian Prime Minister Proposes State Personal Income Tax

Australian Prime Minister Malcolm Turnbull has proposed allowing individual states and territories to levy their own personal income taxes. Currently, personal income tax is levied by the federal government, which then provides grants to individual states and territories to provide funding as needed. Under the proposal, each state and territory would be allowed to set its own personal income tax rates, with the federal personal income tax rate decreased in order to maintain the tax burden on individuals. The total personal income tax would continue to be collected by the Australian Taxation Office, and the share of revenue would be transferred accordingly to each state and territory.

As proposed, the change would apply from 2020.


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Danish Government Proposes Amendments to Capital Gains and Dividends Taxation

Denmark's Minister of Taxation Karsten Lauritzen has presented a bill to parliament that would amend the country's taxation of capital gains and dividends. The legislation includes an expansion of the participation exemption for dividends and capital gains received, and a reduction in the withholding tax on dividend payments.

Expanding the Participation Exemption

Currently, Denmark's participation exemption applies for capital gains and dividends received on shareholdings that represent at least 10% of the capital in subsidiaries resident in other EU Member States as well as subsidiaries resident in jurisdictions with which Denmark has entered into a tax treaty.

The proposed amendment would expand this to include subsidiaries resident in jurisdictions with which Denmark has entered into an agreement for the exchange of tax information, which in addition to tax treaties, would also include tax information exchange agreements and the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters. The change would potentially provide the participation exemption for subsidiaries in over 40 additional jurisdictions. However, the exemption would not apply if a subsidiary is not subject to corporate income tax in its jurisdiction of residence or the rate effectively applied is 0%.

If approved, the change is to apply retroactively from 2007.

Dividends Withholding Tax

The standard withholding tax rate on dividends paid by Danish companies to foreign companies would be reduced from 27% to 22% to bring it in line with the corporate tax rate. This change would not have retroactive effect.

United Kingdom

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UK Publishes Draft Guidance on Public Disclosure of Large Business Tax Strategies

On 31 March 2016, UK HMRC published draft guidance on a proposed requirement that all large businesses publically disclose their tax strategies. The public disclosure was initially proposed as part of public consultation launched in July 2015 on improving large business tax compliance and strengthening sanctions for tax avoidance (previous coverage). The main points of the draft guidance are summarized as follows.

Qualifying Criteria for Publishing a Tax Strategy

Businesses that would be required to publish a tax strategy generally include businesses administered by the Large Business Directorate at HMRC and UK members of non-UK headed groups if annual group revenue in the previous year exceeds EUR 750 million.

When and Where a Tax Strategy Should be Published

When required, a company's tax strategy is to be published annually on the internet and anywhere else that may be appropriate. The tax strategy must be publically available without charge at least until the next year's strategy is published.

The first tax strategy should be published in the beginning of the financial year following the Royal Assent of the legislation introducing the requirement. Once published, the next year's strategy must be published no less than 9 months and no more than 15 months after the previous year's strategy was published.

What the Published Tax Strategy Must Contain

The tax strategy must set out:

  • The approach to risk management and governance arrangements in relation to UK taxation;
  • The attitude towards tax planning (so far as affecting UK taxation);
  • The level of acceptable risk in relation to UK taxation that it is prepared to accept; and
  • The approach towards dealings with HMRC.

The tax strategy may deal with these matters by reference to a UK group as a whole or to individual members based/located in the UK of non-UK headed groups.

The draft guidance specifically states that no commercially sensitive information or details of taxes paid are required.


If a company fails to publish a tax strategy when required, penalties of up to GBP 7,500 per month will apply depending on the length of delay.

Relation to CbC Reporting

Although the tax strategy disclosure requirement targets large business that may also be subject to Country-by-Country (CbC) reporting requirements, the draft guidance specifically states that the public disclosure is separate to and distinct from CbC reporting.

Click the following link for the draft tax strategy disclosure guidance.

Treaty Changes (3)


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Protocol to the Tax Treaty between France and Switzerland has Entered into Force

A protocol to the 1966 income and capital tax treaty between France and Switzerland entered into force on 30 March 2016. The protocol, signed 25 June 2014, amends the final protocol to the treaty concerning the exchange of information. It is the fourth protocol to amend the treaty and generally applies for any calendar year or fiscal year beginning on or after 1 January 2010.


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Japan Negotiating SSAs with Finland and Turkey

Japan's Ministry of Foreign Affairs has announced the negotiations are ongoing for social security agreements with Finland and Turkey. The agreements will be the first of their kind between Japan and the respective countries, and must be finalized, signed and ratified before entering into force.


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SSA between Jordan and Turkey Signed

On 27 March 2016, officials from Jordan and Turkey signed a social security agreement. The agreement is the first of its kind between the two countries, and will enter into force after the ratification instruments are exchanged.


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