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Approved Changes (5)

Australia

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Australia Sets 2017 Benchmark Interest Rate for Private Company Loans to Shareholders

The Australian Taxation Office has issued Taxation Determination (TD) 2017/17, which sets the benchmark interest rate for private company loans at 5.30% for the income year beginning 1 July 2017. The rate is used for determining required repayments of amalgamated private company loans to shareholders. If repayments do not meet or exceed the determined repayment amount, the difference between the required payment and the actual payment made is treated as a deemed dividend.

The benchmark interest rate is relevant to private company loans made or deemed to have been made after 3 December 1997 and before 1 July 2017, and to trustee loans made after 11 December 2002 and before 1 July 2017.

Click the following link for TD 2017/17.

Ireland

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Irish Revenue Publishes Irish Real Estate Funds Advance Clearance Procedures

Irish Revenue has published eBrief No. 70/17 on Tax and Duty Manual Part 27-01b-01, which sets advance clearance procedures with respect to Irish Real Estate Fund (IREF) withholding tax obligations. The procedure concerns indirect investors in IREFs that would be entitled to seek a refund of tax withheld, including a widely held pension scheme, investment undertaking, or life assurance company (or an EEA equivalent). If a direct investment had been made by such investors, no tax would have been withheld on a taxable event, such as a distribution, redemption, etc. Because of the administrative burden on both Revenue and the taxpayers involved, Irish Revenue is prepared to provide advance clearance procedures in situations where any amount of withholding tax if paid over to Revenue would subsequently be reclaimed in full.

Liechtenstein

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Liechtenstein Government Announces Adoption of Amendments to VAT Act

The Liechtenstein government has announced that amendments to the Value Added Tax (VAT) Act have been adopted as a result of the changes in Swiss VAT law recently brought into force (previous coverage). The amendments are required in Liechtenstein because of its VAT union with Switzerland (Liechtenstein effectively adopted Swiss law for VAT purposes). As a result, Liechtenstein will implement the measures to provide equal treatment to domestic and foreign suppliers, including a VAT registration threshold of CHF 100,000 based on global turnover, as well as the extension of the reduced 2.5% VAT rate to online media and e-books, and other measures.

The amendments, which have been submitted to the Landtag (parliament) for final approval, will apply from 1 January 2018.

Poland-European Union

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European Commission Finds Poland's Retail Tax in Breach of State Aid Rules

On 30 June 2017, the European Commission announced its findings that Poland's retail sales tax is in breach of EU state aid rules. Poland adopted the tax in July 2016, which includes an exemption on monthly retail turnover up to PLN 17 million and a top progressive rate of 1.4% on monthly turnover over PLN 170 million (previous coverage). The tax entered into force on 1 September 2016, but was suspended shortly after following an injunction issued by the Commission pending the completion of the illegal state aid investigation.

The Commission found that the progressive nature of the tax would unduly favor certain companies over others, depending on their turnover and size. With this progressive tax rate structure, smaller companies would either pay no retail tax at all (if their turnover is below PLN 17 million) or face a lower average tax rate than larger competitors, which would give companies with a lower turnover an unfair economic advantage. As a result, Poland is required to remove the unjustified discrimination between companies under the retail tax and restore equal treatment. Because the tax was suspended before any collections were made, there is no tax to be recovered in this case.

With the retail sales tax suspended until 1 January 2018 (previous coverage), it is expected that necessary amendments will be made and the tax will be introduced in a modified form from that date.

United States

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U.S. IRS Releases Final Form 8975 - Country-by-Country Report

On 30 June 2017, the U.S. IRS released the final Form 8975 - Country-by-Country (CbC) Report and Schedule A (Form 8975), as well as the Instructions for Form 8975 and Schedule A (Form 8975). The U.S. CbC reporting requirements apply for reporting periods (fiscal years) beginning on or after 30 June 2016 for U.S.-parented MNE groups with annual consolidated revenue of USD 850 million or more in the preceding reporting period. CbC reports will also be accepted for reporting periods beginning on or after 1 January 2016 for voluntary (parent surrogate) filing, in order for U.S. MNEs to avoid local filing requirements in other jurisdictions.

Although not yet updated at time of writing, additional information will be made available at IRS.gov/Form8975 and the CbC reporting guidance page.

Proposed Changes (2)

Australia

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Australia Public Consultation on GST Treatment of Digital Currency

On 29 June 2017, the Australian Treasury launched a public consultation on the Treasury Laws Amendment (2017 Measures No. #) Bill 2017. The legislation would amend the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) to ensure that supplies of digital currency receive equivalent goods and services tax (GST) treatment to supplies of money and address issues of double taxation. Currently, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST. The following is a summary of the proposed legislation as provided in the explanatory memorandum:

  • The proposed amendments would provide that supplies and acquisitions of digital currency are generally disregarded for the purposes of GST. Consistent with supplies of money, supplies of digital currency would only be recognized for the purposes of GST if the supply is made in exchange for money or digital currency. Also consistent with supplies of money, supplies of digital currency that are recognized for the purposes of GST would be input taxed.
  • For the purpose of these amendments, digital currency means fungible digital units of consideration that do not have a value based on the value of any other thing or associated entitlements.
  • The amendments make a number of additional changes to ensure consistent treatment between money and digital currency.  

As proposed, the draft legislation would have a retrospective start date of 1 July 2017.

Click the following link for the Treasury consultation page, which includes links to the draft legislation and the explanatory memorandum. The closing date for submissions is 26 July 2017.

Slovenia

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Slovenian Minister for Finance Proposes Tax Measure to be Taken in 2017

On 30 June 2017, Slovenian Minister for Finance, Mateja Vraničar Erman, presented an overview of proposed tax measures to be taken in 2017. The proposed measures fall into three main categories:

  • Restructuring of tax burdens for both individuals and companies;
  • Improving the efficiency of collection and reducing the administrative burden; and
  • Reducing the costs associated with paying taxes in order to improve the business environment.

Measures include:

  • Various individual income tax improvements, including an improved tax regime for non-resident workers;
  • The establishment of new anti-abuse mechanisms;
  • The extension of the tonnage tax scheme;
  • Implementation and administration of measures regarding tax transparency and avoidance, including related EU Directives and the OECD BEPS Minimum standards;
  • Ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, which Slovenia signed 7 June 2017; and
  • Expanding the availability of e-payment options.

Click the following link for a power point presentation on the proposed measures (Slovenian language). Consultations are to be launched in July and the legislative procedure is to start in the fall. Additional details will be published once available.

Treaty Changes (5)

Brazil-Luxembourg

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Brazil Ratifies Pending SSA with Luxembourg

On 27 June 2017, The Brazilian Senate approved the ratification of the pending social security agreement with Luxembourg. The agreement, signed 22 June 2012, will enter into force on the first day of the third month following the exchange of the ratification instruments, and once in force, will replace the 1965 agreement between the two countries.

Croatia-Untd A Emirates

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Tax Treaty between Croatia and the U.A.E. to be Negotiated

On 29 June 2017, the Croatian government approved the negotiation of an income tax treaty with the United Arab Emirates. Any resulting treaty would be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.

Namibia-Zimbabwe

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Tax Treaty between Namibia and Zimbabwe to be Negotiated

According to recent reports, the Namibian cabinet has authorized the negotiation of an income tax treaty with Zimbabwe. Any resulting treaty would be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.

New Zealand-Anguilla-Bahamas-B Virgin Isl-St. Vincent-Turks Caics-Vanuatu

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New Zealand TIEAs with Anguilla, Bahamas, British Virgin Islands, Saint Vincent and the Grenadines, Turks and Caicos Islands, and Vanuatu in Force

According to a 27 June 2017 update from New Zealand Inland Revenue, tax information exchange agreements with the following jurisdictions have entered into force:

  • Anguilla - entered into force on 6 January 2017 and applies from 1 April 2017
  • Bahamas - entered into force on 10 January 2017 and generally applies from that date
  • British Virgin Islands - entered into force on 23 December 2016 and applies from 1 January 2017
  • Saint Vincent and the Grenadines - entered into force on 17 October 2016 and applies from 1 January 2017
  • Turks and Caicos Islands - entered into force on 23 December 2016 and applies from 1 April 2017
  • Vanuatu - entered into force on 27 October 2016 and applies from 1 January 2017

Click the following link for the Inland Revenue tax treaty / TIEA webpage.

Panama-OECD

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Mutual Assistance Convention has Entered into Force for Panama

On 1 July 2017, the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 protocol entered into force for Panama. The Convention generally applies in Panama from 1 January 2018. However, it may apply for earlier periods with another signatory if agreed to, and applies in relation to any period regarding criminal matters.

Click the following link for the signatories to the Mutual Assistance Convention to date.

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