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Worldwide Tax News

Approved Changes (5)

Argentina-United Kingdom

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Argentina Commits to Exchange of Beneficial Ownership Information

According to a recent update from UK HM Treasury, Argentina has committed to the initiative for the automatic exchange of beneficial ownership information, which was originally proposed by Finance Ministers from France, Germany, Italy, Spain, and the UK (G5) in April (previous coverage). To date, 46 jurisdictions have committed to exchange beneficial ownership information, although a global standard must still be developed and implemented before exchanges can begin.

Costa Rica

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Costa Rican Court Holds Requirement to Pay Tax before Challenging an Adjustment is Unconstitutional

The Constitutional Court of Costa Rica issued a decision on 31 August 2016 concerning the requirement that taxpayers pay or guarantee the amount of tax due resulting from an audit adjustment before the adjustment may be challenged. According to the Court, the requirement is unconstitutional and may no longer be applied by the tax administration as a precondition for a taxpayer's challenge of an assessment.

Ireland-European Union

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Ireland Confirms Appeal of Apple EU State Aid Decision

On 2 September 2016, Ireland's Department of Finance issued a statement announcing that the Government has decided unanimously to bring an appeal before the European Courts to challenge the European Commission’s decision on the Apple State aid case (previous coverage). Click the following link for the announcement.

Liechtenstein

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Liechtenstein Adopts Multilateral Competent Authority Agreement for Exchange of CbC Reports and Associated Law

The Liechtenstein government has announced the approval of a report and proposal to adopt the Multilateral Competent Authority Agreement (MCAA) for the exchange of Country-by-Country (CbC) reports, as well as the law for the international automatic exchange of CbC reports (CbC Act), which includes the CbC reporting requirements. The requirements are largely in line with BEPS Action 13 and will apply for fiscal years beginning on or after 1 January 2017 for MNE Groups meeting a CHF 900 million consolidated revenue threshold in the previous year (previous coverage). In order to allow Liechtenstein-based MNE groups to meet earlier CbC reporting requirements in other jurisdictions (secondary reporting), Liechtenstein will accept voluntary filing for fiscal years beginning on or after 1 January 2016.

The CbC Act will enter into force on 1 January 2017, provided the referendum period expires unused.

Click the following link for the announcement (German language).

Singapore

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Singapore Introduces new Digital Platform for Government Business Services

On 2 September 2016, the Inland Revenue Authority of Singapore announced the introduction of a new digital one-stop platform for businesses to access government e-services, such as applying for trade licenses, filing corporate taxes, and others.

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Singapore Corporate Access or CorpPass is a single corporate digital identity for business users to conduct Government-2-Businesses (G2B) transactions.

CorpPass will be progressively rolled out from Sep 2016 to Dec 2017, with more digital services added in each phase. It will replace SingPass/EASY and agency-issued login IDs for businesses to transact online with Government agencies by end 2017. Self-employed persons (e.g. taxi drivers and hawkers) can continue to use their SingPass to transact with the Government.

Before CorpPass is the required login method for businesses to transact with IRAS by Q3 2017, business users can continue to use their SingPass or IRAS PIN to log in to myTax Portal.

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Click the following link for the CorpPass site.

Proposed Changes (3)

Brazil

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Brazil Getting Set for Multilateral Automatic Exchange of Information including CbC Reports and Tax Rulings

On 30 August 2016, Brazil's Federal Revenue Department (RFB) announced the publication of Decree No. 8842 in the Official Gazette, which promulgates the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters. The announcement notes that the Convention, which is effective in Brazil from 1 January 2017, provides for the automatic exchange of information including financial account information under the OECD Common Reporting Standard (CRS), Country-by-Country reports based on BEPS Action 13, and tax rulings based on BEPS Action 5.

Although Brazil has not yet finalized the regulations for the specific types of information to be automatically exchanged, the announcement along with Brazil's commitment to CRS and participation in the Inclusive Framework for the global implementation of the BEPS Project are a clear indication that the required regulations will be adopted in the near future.

Click the following link for the announcement (Portuguese language).

Norway

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Norway Planning New Standard Chart of Accounts Requirement

Norway's  tax administration is planning the introduction of a standard chart of accounts (SAF-T) requirement that would apply for most Norwegian entities and foreign entities with a physical presence in Norway that are obliged to keep accounting records for their Norwegian business activities. An exemption will apply for entities with less than NOK 5 million turnover excluding value added tax.

Entities subject to the requirement will be required to use a standard Norwegian chart of accounts, and if not using the standard, must convert their existing chart into a standard chart in XML format. The new requirement is expected to be finalized in October 2016, and be effective from 1 January 2017.

United Kingdom

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UK Explains Amendments to Finance Bill 2016 Concerning the Patent Box, Capital Gains Tax Reduction and Hybrid Mismatches

On 1 September 2016, UK HM Treasury published explanatory notes for amendments to the Finance Bill 2016 concerning changes to the patent box, the capital gains tax reduction, and the anti-avoidance legislation for hybrids and other mismatches. The main amendments are summarized as follows.

Amendments 1-131 and 154-160 to Clause 65: Hybrid and other mismatches

The hybrid and other mismatches amendments are intended to clarify the scope and application of this anti-avoidance legislation, and include:

  • Amendments in relation to mismatches involving permanent establishments (PEs), which clarify the interaction between the hybrid mismatch rules and the existing UK foreign PE exemption rules;
  • Amendments that clarify the treatment of income and expenses allocated within a company;
  • Amendments that clarify the interaction between the hybrid mismatch rules and the existing UK rules in relation to foreign PE losses to ensure that excess deductions incurred in an overseas PE can continue to be claimed against other UK profits, so long as those excess deductions are not used overseas against the profits of another person;
  • Amendments which deal with certain timing differences, which clarify the circumstances in which timing differences are outside the scope of the hybrid and other mismatches legislation; and.
  • Amendments which deal with a number of technical issues, including the treatment of certain investment funds, the application of existing UK loan relationship legislation, and the interaction with existing UK anti-avoidance rules.

Amendments 152 and 153 to Clause 63: Profits from the Exploitation of Patents, etc

The patent box amendment is a technical amendment to ensure that the definition of "Qualifying Residual Profit" under the current patent box legislation will continue to apply to companies that only have grandfathered IP income.

Amendments 149 to 151 to Clause 82 and Schedules 11 and 12: Reduction in rate of capital gains tax

The capital gains tax (CGT) reduction amendments include the introduction of the concept and definition for a carried interest gain, which will not be eligible for the CGT reduction (18% rate to 10% and 28% rate to 20%).

Treaty Changes (2)

Pakistan-OECD

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Pakistan to Sign Mutual Assistance Convention

On 31 August 2016, the Pakistan Cabinet approved the signing of the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 protocol. The signing will reportedly take place 14 September 2016. Once signed, Pakistan must complete the ratification procedures and deposit the ratification instrument before the Convention will enter into force in the country.

Uruguay-Guernsey

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Uruguay Approves Pending TIEA with Guernsey

On 29 August 2016, the Uruguayan Senate approved the pending tax information exchange agreement with Guernsey. The agreement, signed 2 July 2014, is the first of its kind between the two jurisdictions and is in line with the OECD standard for information exchange. It will enter into force 30 days after the ratification instruments are exchanged, and will generally apply from that date.

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