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Approved Changes (4)

Brazil

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Brazil's New Tax Regularization Program Regulated

On 1 February 2017, Normative Instruction RFB No. 1687 (NI 1687) was published in Brazil's Official Gazette. NI 1687 regulates the new tax regularization program (Programa de Regularizacão Tributária - PRT) introduced by Provisional Measure 766/2017. The program is available for both individuals and legal entities with unpaid tax debts up to 30 November 2016, with payments made using one of four options (previous coverage). Taxpayers wishing to take part must apply via the Federal Revenue Department website, from 1 February to 31 May 2017.

Click the following links for Normative Instruction RFB No. 1687 (Portuguese language) and a related media release (Portuguese language).

Canada

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Canada CbC Reporting Form Published

On 3 February 2017, the Canadian Revenue Agency published the form and instructions for submitting Country-by-Country (CbC) reports. Canada's CbC reporting requirements were adopted the end of 2016 and are generally in line with BEPS Action 13 guidelines (previous coverage). The requirements apply for fiscal years beginning after 2015 for MNE groups meeting a consolidated group revenue threshold of EUR 750 million in the previous year. The requirement applies for ultimate parent entities resident in Canada, as well as non-parent constituent entities if certain conditions are met.

When required, the report is due within 12 months following the close of the fiscal year concerned. In the event there is a systemic failure for the exchange of a CbC report from the ultimate parent's jurisdiction, a Canadian constituent entity will be notified, and a CbC report will be due within 30 days of notification. Failing to complete and file the CbC report by the due date will result in penalties of up to CAD 1,000 per month.

Click the following link for RC4649 Country-by-Country Report, which includes both basic and fillable/saveable versions of the form.

Ireland

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Ireland Publishes eBrief on Tax Ruling Exchange

On 2 February 2017, Irish Revenue published eBrief No. 12/2017 concerning the exchange of information in respect of tax rulings.

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Revenue Arrangements for Implementing EU and OECD Exchange of Information Requirements In Respect of Tax Rulings

You may wish to note the following updates to the Tax & Duty Manual Part 35-00-01 (362KB).

  • Section 1 of the tax and duty manual has been updated to reflect the fact that the EU Directive has been transposed into Irish law.
  • Paragraph 6 of section 2.1, which provided details in relation to the optional exception that applied to the look-back element of the EU Directive, has been deleted as it is not relevant.
  • Section 3.1, paragraph 2, bullet point 3 has been updated to reflect the fact that unilateral downward adjustments made by taxpayers under informal capital contribution or excess profit regimes should not arise under Irish tax law.
  • Sections 3.3 has been updated to reflect the fact that rulings were due to be exchanged under the look-back element of the OECD framework by 31 December 2016 and section 4.3 has been updated to reflect the fact that Revenue has exchanged opinions under the look-back element of the OECD framework.
  • The references to Revenue guidelines on the provision of opinions in sections 4.1 and 4.5 have been updated as appropriate.
  • Contact details in section 4.8 have been updated.
  • The list of countries in Annex 3 has been updated to reflect the fact that additional countries have joined the Inclusive Framework under the Base Erosion and Profit Shifting Project.

United States

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IRS Releases Practice Unit on Basket Transactions

On 31 January 2017, the U.S. IRS published an international practice unit on basket transactions. A basket transaction is a type of structured financial transaction in which a taxpayer attempts to defer and treat ordinary income and short-term capital gain as long-term capital gain through a contract denominated as an option, notional principal contract, forward contract or other derivative contract. Basket Transactions typically involve a hedge fund or a high net-worth individual and the IRS is concerned that taxpayers may be using such transactions inappropriately. The practice unit covers two notices issued by the IRS in 2015 to address these transactions, Notice 2015-73 and Notice 2015-74.

International practice units are developed by the Large Business and International Division of the IRS to provide staff with explanations of general international tax concepts as well as information about specific transaction types. They are not an official pronouncement of law and cannot be used, cited, or relied upon as such.

Click the following link for the International Practice Units page on the IRS website.

Proposed Changes (2)

United Kingdom

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Scotland to Freeze Individual Income Tax Rates and Retain Higher Rate Threshold

According to a release from the Scottish government, all individual income tax rates will be frozen next year and the higher rate (40%) threshold will remain unchanged at GBP 43,000. The freeze forms part of an agreement with the Scottish Green party to secure the passage of the Scottish budget, which initially included an increase in the higher rate threshold to GBP 43,430 (previous coverage). With the revisions, the Scottish income tax brackets and rates will be as follows for 2017-18:

  • over GBP 11,500 up to 43,000 - 20% basic rate (assumes standard UK personal allowance of GBP 11,500)
  • over GBP 43,000 up to 150,000 - 40% higher rate
  • over GBP 150,000 - 45% additional rate

Note - In the rest of the UK, the higher rate threshold will be GBP 45,000 for 2017-18.

United States

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Joint Resolution Introduced in U.S. Congress Disapproving Treasury Debt-Equity Regs

On 31 January 2017, a joint resolution (H.J.Res.54) was introduced in the U.S. House of Representatives which provides that the Congress disapproves the rules submitted by the Treasury and the IRS relating to documentation requirements for certain related-party interest in a corporation to be treated as indebtedness, and that such rule shall have no force or effect. The controversial debt-equity regulations were introduced under section 385 to mainly address corporate inversions and earnings stripping, and were published in the Federal Register on 21 October 2016. (previous coverage). The resolution was introduced by Representative Todd Rokita (R-IN) and is currently before the House Ways and Means Committee.

Treaty Changes (4)

Albania-United Kingdom

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Albania to Negotiate SSA with the UK

According to a release from the Albanian Embassy in the UK, Albania has requested that the two sides begin negotiations for 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.

Hong Kong-Nigeria

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Tax Treaty between Hong Kong and Nigeria under Negotiation

According to recent reports, officials from Hong Kong and Nigeria will meet 6 to 10 February 2017 for the first round of negotiations for an income tax treaty. Any resulting treaty would be the first of its kind between the two jurisdictions, and must be finalized, signed, and ratified before entering into force.

Morocco-South Sudan

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Tax Treaty between Morocco and South Sudan Signed

On 1 February 2017, official from Morocco and South Sudan signed an income tax treaty. The treaty is the first of its kind between the two countries, and the first of its kind for South Sudan with any country. It will enter into force after the ratification instruments are exchanged. Additional details will be published once available.

Saudi Arabia-Turkmenistan

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Saudi Arabia Approves Pending Tax Treaty with Turkmenistan

On 30 January 2017, the Saudi Cabinet approved the pending income and capital tax treaty with Turkmenistan. The treaty, signed 1 May 2016, is the first of its kind between the two countries and will enter into force after the ratification instruments are exchanged. Additional details will be published once available.

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