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Approved Changes (5)

Brazil

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Brazil Reestablishes Payroll-based Social Security Tax for Most Companies

Brazil published Provisional Measure 774/2017 (PM 774) in the Official Gazette on 30 March 2017. PM 774 amends Law 12,546/2011, which introduced the social security tax on gross income (CPRB) that replaced the standard 20% social security tax on payroll (INSS) for eligible companies. The amendments introduced by PM 774 limits the companies eligible to apply CPRB to those engaged in passenger transport, construction, broadcasting, and certain others. The applicable INSS rates are 1.5% to 4.5%. For non-eligible companies, the 20% INSS tax on payroll applies.

PM 774 is effective 1 July 2017.

Croatia

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Croatia Notice on CbC Reporting Requirements

The Croatian Tax Administration has published a notice on the country's Country-by-Country (CbC) reporting requirements, which are in line with BEPS Action 13 and the EU requirements concerning the exchange of Country-by-Country (CbC) reports as per Council Directive (EU) 2016/881. The notice covers the main notification and reporting requirements for MNE groups whose consolidated revenue in the previous year amounts to at least EUR 750 million. The requirements, which generally apply in respect of fiscal years beginning on or after 1 January 2016, are as follows

  • Each constituent entity of the MNE group resident in Croatia must provide notification on whether it is the ultimate parent or surrogate parent entity of the group by their annual tax return deadline (4 months after year-end - for example 30 April for 31 December year-end);
  • Each constituent entity of the MNE group resident in Croatia that is not the ultimate parent or surrogate parent must provide notification on the identity and tax residence of the entity that will submit a CbC report on behalf of the MNE group by their annual tax return deadline;
  • Ultimate parent or surrogate parent entities resident in Croatia must submit a CbC report within 12 months following the last day of the reporting fiscal year - applies for fiscal years beginning on or after 1 January 2016; and
  • Non-parent constituent entities must submit a CbC report within 12 months following the last day of the reporting fiscal year, subject to standard local (secondary) filing conditions - applies for fiscal years beginning on or after 1 January 2017.

Notifications are to be submitted by post to:

The Ministry of Finance, Tax Administration, Central Office, Department for Normative Affairs and International Cooperation, Boškovićeva 5, 10000, Zagreb, Croatia

CbC reports are to be submitted electronically, with instructions to be published on the official website of the Tax Administration in the future.

France

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France Issues Interest Rate Limits for Shareholder Loan Interest Deductions for Fiscal Years Ending between 30 March 2017 and 29 June 2017

On 29 March 2017, France published the interest rates used in determining the deductibility of interest payments to shareholders for companies whose fiscal year ends between 30 March 2017 and 29 June 2017.

The portion of interest payments exceeding the following rates are generally not deductible unless documentation is provided demonstrating that the interest rate applied is at arm's length. The period in which the fiscal year ends and the applicable rates are as follows:

  • Between 30 March 2017 and 29 April 2017 - 1.93%
  • Between 30 April 2017 and 30 May 2017 - 1.91%
  • Between 31 May 2017 and 29 June 2017 - 1.89%

The interest rates are determined by the Central Bank of France based on the average annual interest rates charged by financial institutions on medium-term variable rate loans of 2 years or more.

United Kingdom

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Update - UK CbC Notification Requirements Interim Guidance

As previously reported, the UK Country-by-Country (CbC) reporting regulations have been amended to provide for new notification requirements. HMRC has provided interim guidance on notification in the HMRC International Exchange of Information Manual section on CbC reporting, which includes that Ultimate Parent Entities (UPEs) and top UK entities (UKEs) of MNE groups are required to notify HMRC for each period covered by a CbC report on:

  • Which entity (including the unique taxpayer reference or equivalent) in the MNE group will file the CbC report and where; and
  • The names and unique taxpayer references for all of the MNE group’s entities that are resident in the UK, are UK permanent establishments, or are UK partnerships.

To avoid duplication UPEs and UKEs will not have to notify if another UPE or UKE of the MNE group has provided a notification that contains all the information that would have been required and it has provided HMRC with the identity of the UPE or UKE that has notified and the date that took place by the deadline. The deadline for notification is the later of the end of the period to which the report relates or 1 September 2017.

There is currently no specific form for the notification and HMRC would prefer the notification be on a spreadsheet. A dedicated mailbox has been set up for this purpose: notification.cbcfiling@hmrc.gsi.gov.uk. Where the UKE and UPE are dealt with by HMRC Large Business, a copy of the notification is to be sent to the customer relationship manager.

Uruguay

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Uruguay List of Low or No Tax Jurisdictions Issued

Uruguay's Directorate General of Taxation has issued Resolution No. 1315/2017, which sets out the list of low or no tax jurisdictions and regimes for tax purposes. The list primarily applies in relation to the measures regarding low tax entities introduced in Law No. 19.484 (previous coverage), and includes the following:

Andorra, Angola, Anguilla, Antigua and Barbuda, Aruba, Ascension Island, Bahamas, Bahrain, Barbados, Belize, Bermuda, British Virgin Islands, Brunei, Caymans Islands, Christmas Island, Cocos (Keeling) Islands, Cook Islands, Cyprus, Djibouti, Dominica, Falkland Islands, French Polynesia, Fiji, Gibraltar, Grenada, Guam, Guernsey, Guyana, Honduras, Hong Kong, Isle of Man, Jamaica, Jersey, Jordan, Kiribati, Labuan, Lebanon, Liberia, Macau, Maldives, Marshall Islands, Mauritius, Monaco, Montserrat, Nauru, Niue, Netherlands Antilles, Norfolk Island, Oman, Pacific Islands, Palau, Panama, Pitcairn Island, Puerto Rico, Samoa, San Marino, Seychelles, Saint Helena, Saint Lucia, Saint Pierre and Miquelon, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Solomon Islands, Svalbard, Swaziland, Tokelau, Tonga, Tristan da Cunha, Turks and Caicos Islands, Tuvalu, U.S. Virgin Islands, Vanuatu, and Yemen.

Proposed Changes (1)

Australia

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Australian Government Compromise on Corporate tax Rate Reduction

The Australian government has reportedly reached a compromise with the Senate on its planned reductions in the corporate tax rate. As originally proposed, the government sought a reduction in the tax rate to 27.5% for the current year for companies with annual revenue below AUD 10 million, followed by a year-on-year increase in the revenue threshold for the reduced rate so that it would become the standard rate for all companies in 2023-24. The standard rate would then be further reduced to 25% by 2026-27. However, such a reduction for larger companies was opposed. As a result, the compromise includes that the rate would be cut to 27.5% for the current year for companies with annual revenue below AUD 10 million, followed by an increase in reduced rate threshold to AUD 25 million for the 2017-18 year, and to AUD 50 million for the 2018-19 year. After that, there would be no further increase in the threshold to make the reduced rate the standard rate. The plan to reduce the rate to 25% would be maintained, but only for companies with revenue below AUD 50 million. The tax plan legislation must now be amended to reflect the compromise and sent back to the House of Representatives.

Treaty Changes (4)

Azerbaijan-Kazakhstan

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Protocol to Tax Treaty between Azerbaijan and Kazakhstan Signed

On 3 April 2017, officials from Azerbaijan and Kazakhstan signed an amending protocol to the 1996 income and capital tax treaty between the two countries. The protocol is the first to amend the treaty and will enter into force after the ratification instruments are exchanged. Additional details will be published once available.

Marshall Isl-Monaco-Pakistan-OECD

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Mutual Assistance Convention has Entered into Force for Marshall Islands, Monaco, Pakistan

On 1 April 2017, the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 protocol entered into force for the Marshall Islands, Monaco, and Pakistan. The Convention generally applies in each country 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.

San Marino-Serbia

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Tax Treaty between San Marino and Serbia under Negotiation

Officials from San Marino and Serbia held the first round of negotiations for an income tax treaty on 27 to 29 2017. 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.

Spain-Qatar

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Spain Approves Pending Tax Treaty with Qatar

On 31 March 2017, the Spanish Cabinet approved the ratification of the pending income tax treaty with Qatar (previous coverage). The treaty, signed 10 September 2015, is the first of its kind between the two countries and will enter into force three months after the ratification instruments are exchanged.

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