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Approved Changes (3)

Italy

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Italy Issues Implementing Provisions for CbC Reporting

The Italian Revenue Agency has issued the implementing provisions for the purpose of Country-by-Country (CbC) reporting introduced in the 2016 Budget Law (Law No. 208/2015), as well as the amendments made by Council Directive (EU) 2016/881 to the administrative cooperation Directive (Directive 2011/16/EU) for the exchange of CbC reports in the EU (previous coverage). Italy's CbC reporting requirements are in line with OECD guidelines, including that the requirements apply for fiscal years beginning on or after 1 January 2016 for MNE groups meeting the standard EUR 750 million consolidated revenue threshold in the previous year.

The implementing provisions provide an overview of the CbC reporting requirements in terms of which entities are required to file, the information required in the CbC report, the method of submission, and other related details. Some of the key points include:

  • Ultimate parent resident in Italy must submit a CbC report if the EUR 750 million threshold is met (or EUR 750 million equivalent in other currency as of 1 January 2015 if other currency is used in consolidated financial statements);
  • Where the ultimate parent is resident in a jurisdiction that has set a CbC reporting threshold in local currency that is a near equivalent of EUR 750 million as of 1 January 2015, then such local currency threshold will apply for the purpose of secondary local filing in Italy;
  • CbC reports voluntarily filed by the ultimate parent in its jurisdiction of residence may serve to relive constituent entities resident in Italy of the secondary local filing obligation;
  • The data source for the preparation of the CbC report must be used consistently year-on-year, and any change in data source must be explained, including the reasons for the change and related impacts;
  • For CbC reports submitted in Italy, the information included in Table III (additional information) must be provided in Italian and English;
  • Amounts disclosed in the CbC report should be in the currency used in the reporting entities financial statements or the currency of the ultimate parent;
  • The deadline for the submission of the CbC report is 12 months after the end of the reporting fiscal year, although for years beginning on or after 1 January 2016 but ending before 31 December 2016, the deadline is 31 December 2017;
  • The CbC report must be submitted via the Entratel or Fisconline electronic services of the Revenue Agency in an XML format, after which a receipt will be provided indicating a positive or negative result within five days;
  • In the event of a negative result for a submission made at least 15 days prior to the deadline, corrected submissions will not be considered late if submitted within 15 days of receiving the receipt; and
  • In the event an error is reported by a competent authority with which Italy has exchanged a CbC report, the error will be notified to the reporting entity by the Revenue Agency, after which the reporting entity will have 60 days to submit a corrected report (reporting entities may also spontaneously submit corrected reports).

Click the following links for the implementing provisions and the guidance page for CbC reports.

Russia

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Russia Publishes Order to Remove Hong Kong from Tax Haven List

Russia has published Order No. 175n of 2 November 2017, which removes Hong Kong from the list of states and territories that provide preferential tax treatment and/or do not provide the disclosure and provision of tax information to Russia originally approved by Order No. 108n of 13 November 2007 (tax havens list). The main impact of a jurisdiction being listed is that Russia's participation exemption will not apply with respect to dividends from companies resident in such jurisdiction. The removal from the list is a result of the 2016 Hong Kong-Russia tax treaty, which entered into force on 29 July 2016 and generally applies from 1 January 2017. The Order enters into force on 1 January 2018.

South Africa

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South Africa Provides Deadline Extension for CbC Report, Master File, and Local File Returns

On 1 December 2017, the South African Revenue Service issued a public notice extending the deadline to 28 February 2018 for the submission of Country-by-Country report, master file, and local file returns by reporting entities with reporting fiscal years beginning before 1 March 2016. South Africa's CbC report return requirements generally apply from 1 January 2016, while the master file and local file return requirements apply from either 1 January or 1 October 2016, depending on the circumstances of the reporting entity as set out in Notice 1117 (previous coverage).

Proposed Changes (2)

Philippines

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Philippines Senate Passes Reform Legislation

According to a release from the Philippine Department of Finance, the Senate passed its version of the Tax Reform for Acceleration and Inclusion Act (TRAIN) on 28 November 2017. The House of Representatives passed its version of the legislation in May 2017 and it is hoped that both chambers can wrap up bicameral deliberations in time for the submission of the final version in December so that a new law to this effect could be signed and implemented as scheduled by January 2018. The reform measures include changes in the individual income tax brackets, including an exemption for income up to 250,000 annually, as well as the removal of certain VAT exemptions, the introduction of a tax on sugary beverages, the increase of documentary stamp taxes, and the increase of certain excises taxes.

Click the following link for additional information on the government's tax reform plans.

United States

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U.S. Senate Passes Tax Reform Bill

In the early hours of 2 December 2017, the U.S. Senate passed its version of the Tax Cuts and Jobs Act with a vote of 51 for and 49 against. Some of the last-minute changes to the legislation include allowing a USD 10,000 property tax deduction, maintaining the Alternative Minimum Tax threshold (AMT) with a small increase in the threshold, increasing the proposed deduction for pass-through entities from 17.4% to 23%, and increasing the tax rates on deemed repatriations to 7.5% on earnings held in illiquid assets and 14.5% on earnings held in liquid assets (5% and 10% originally proposed).

Work must now begin to resolve differences between the House and Senate versions of the legislation, which include, among others, the individual income tax brackets, the year the corporate tax rate reduction would apply (2018 or 2019), the rate of tax on the one-time repatriation of foreign earnings, the way an effective minimum tax on future foreign earnings would apply, and the treatment of pass-through entities (lower rate vs. deduction). A vote in the House to go to conference on the tax bills is expected on Monday.

Treaty Changes (6)

Antigua-Belgium

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TIEA between Antigua and Barbuda and Belgium has Entered into Force

The tax information exchange agreement between Antigua and Barbuda and Belgium entered into force on 9 November 2017. The agreement, signed 7 December 2009, applies for criminal tax matters from the date of its entry into force and for other matters in respect of taxable periods beginning on or after that date, or where there is no taxable period, all charges to tax arising on or after that date.

Brunei-Faroe Isl

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TIEA between Brunei and the Faroe Islands has Entered into Force

According to a recent update from the Brunei Ministry of Finance, the tax information exchange agreement with the Faroe Islands entered into force on 26 March 2016. The agreement, signed 27 June 2012, is the first of its kind between the two countries. It applies for criminal tax matters on the date of its entry into force and for other tax matters or taxable periods beginning on or after 1 January 2017, or where there is no taxable period, for all charges to tax arising on or after 1 January 2017.

Bulgaria-Saudi Arabia

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Tax Treaty between Bulgaria and Saudi Arabia Signed

On 29 November 2017, officials from Bulgaria and Saudi Arabia signed an income tax treaty. The treaty is the first of its kind between the two countries, and will enter into force after the ratification instruments are exchanged. Details of the treaty will be published once available.

China-Luxembourg

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SSA between China and Luxembourg Signed

On 27 November 2017, officials from China and Luxembourg 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.

Kazakhstan-Kuwait

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Kazakhstan and Kuwait to Sign Tax Treaty

According to recent reports, officials from Kazakhstan and Kuwait will sign an income tax treaty in 2019. The treaty will be the first of its kind between the two countries and must be signed and ratified before entering into force. Details of the treaty will be published once available.

Korea, Rep of-Uruguay

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South Korea and Uruguay to Negotiate SSA

On 24 November 2017, officials from South Korea and Uruguay met to discuss bilateral relations, including the negotiation of a social security agreement. Any resulting agreement would be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.

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