Worldwide Tax News
On 1 July 2016, Argentina published National Decree no. 824/2016 in the Official Gazette. The Decree extends to 31 December 2016 the incentive provided under Decree No. 379/2001 for the domestic manufacture of certain goods, including capital goods, IT, telecommunications equipment, and agricultural machinery. The incentive is in the form of a tax credit equal to 14% of the value of the goods produced that can be applied against value added tax, income tax, excise taxes and minimum presumed income tax payments.
For the incentive to apply, taxpayers must submit an affidavit by 31 December 2016 confirming that the number of registered employees has not decreased from the number of employees registered as of December 2011. Taxpayers have until 31 March 2017 to apply for the credit for sales invoiced by 31 December 2016 in respect of goods delivered to the purchaser after 30 June 2014.
On 4 July 2016, Belgium published tax reform legislation in the Official Gazette that, among other measures, introduces Country-by-Country (CbC) reporting and Master and Local file requirements (previous coverage). As published, the new requirements are largely unchanged from the initial draft and apply for fiscal years beginning on or after 1 January 2016.
The CbC reporting requirements apply for MNE groups operating in Belgium with consolidated annual revenue in the previous year meeting a EUR 750 Million threshold. When required, the CbC report must be filed within 12 months following the close of the ultimate parent entity's fiscal year.
The Master and Local file requirements apply for Belgian resident companies and permanent establishment in Belgium of MNE groups when meeting any of the following thresholds based on the financial statements of the Belgian entity:
- EUR 50 million operational and financial income;
- EUR 1 billion balance sheet total; or
- 100 annual average full-time equivalent employees.
When required, the Master file is due within 12 months following the end of the reporting period and the Local file is due with the annual tax return.
Penalties for failing to meet the new requirements range from EUR 1,250 to 25,000.
Additional details of the new requirements are to be provided via Royal Decree in the near future.
On 5 July 2016, Irish Revenue published eBrief No. 65/2016 on arrangements implemented for the exchange of tax rulings.
Revenue Arrangements for Implementing EU and OECD Exchange of Information Requirements In Respect of Tax Rulings
In 2015, two initiatives were adopted at international level to improve transparency in the area of tax rulings, as follows:
- Council Directive (EU) 2015/2376 of 8 December 2015 which amends Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation; and
- the Organisation for Economic Co-operation and Development’s (OECD) framework for the compulsory spontaneous exchange of information in respect of rulings that was adopted as part of Action 5 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project.
These initiatives will apply to certain opinions issued by Revenue to companies and other entities in respect of taxes other than VAT, Customs Duties and Excise Duties. An overview of these new exchange of information requirements and details on how they will be implemented by Revenue are set out in a new Tax and Duty Manual Part 35-00-01 (PDF, 333KB). The arrangements for implementing these initiatives apply from 1 April 2016.
OECD Publishes Comments Received on Technical Issues for the Multilateral Instrument to Implement Tax-Treaty Related BEPS Measures
The OECD has published comments received on the discussion draft on the Multilateral Instrument to implement the tax-treaty related measures of the BEPS Project, which is being developed to provide for a consistent and efficient implementation of the measures (previous coverage). The discussion draft concerns the technical issues that may arise in relation to the implementation of the measures through the Multilateral Instrument.
On 24 June 2016, Pakistani President Mamnoon Hussain signed into law Finance Act for 2016/17, which includes a number of measures of the 2016/2017 Budget (previous coverage). One of the major changes is the introduction of three-tiered documentation requirements based on Action 13 of the OECD BEPS Project.
Although details in the Finance Act are limited, the requirements include that any taxpayer that has entered into related party transactions must maintain:
- A Master file and a Local file containing documentation and information as may be prescribed,
- A Country-by-Country (CbC) report, where applicable; and
- Any other documentation and information that may be prescribed.
The documentation must be submitted within 30 days if required by the Commissioner, with a possible extension of up to 45 Days.
Click the following link for Finance Act 2016/17, which generally applies from 1 July 2016, although certain measures regarding sales and excise tax apply from 25 June.
Russia has published Federal Law 244-FZ of 3 July 2016, which amends Russian value added tax (VAT) rules concerning foreign supplies of electronic services and content (e-services) (previous coverage). With the amendments, foreign suppliers of e-services will be required to register and account for VAT on e-services supplied to Russian resident customers (B2C) from 1 January 2017 using an estimated rate of 15.25%, which assumes VAT inclusive fees (standard rate 18%). For B2B supplies, the reverse charge will apply.
The Inland Revenue Authority of Singapore (IRAS) has recently published the following new and updated e-Tax guides:
- GST: Advance Ruling System (Second edition), which explains the advance ruling system and procedures for application, and includes updates to the fee structure;
- GST : Assisted Compliance Assurance Programme (ACAP) (Eighth edition), which was introduced to facilitate GST-registered businesses to better manage their GST risks, and includes amendments regarding monitoring and changes after ACAP status is awarded and a new section on renewal of ACAP status;
- GST: Renewal of Assisted Compliance Assurance Programme (ACAP) Status, which provides a more detailed overview of ACAP status renewal; and
- Income Tax and Stamp Duty: Mergers and Acquisitions Scheme (Fourth edition), which covers the allowance, stamp duty relief and double tax deduction on transaction costs for qualifying M&A transactions, and is updated to reflect the increase in the cap on the value of qualifying acquisitions from SGD 20 million to SGD 40 million from 1 April 2016.
The IRAS regularly publishes new and updated e-Tax guides to provide clarity on certain issues or reflect changes in tax rules.
U.S. IRS Publishes Practice Units on Corporate Inversions and Failure to File Return of Transfer of Property to Foreign Corporation
The U.S. IRS has recently published two international practice units, including:
- Corporate Inversions - Overview of Major Issues, which covers the application of IRC 7874 and the treatment of a new foreign parent corporation of the domestic target as a surrogate foreign corporation, and the related tests; and
- Failure to File the Form 926 – Return by a U.S. Transferor of Property to a Foreign Corporation – Monetary Penalty, which covers the determination process for the penalty for failing to comply with transferred property reporting requirements (10% of the fair market value of the property)
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.
EU Parliament Approves TAXE 2 Committee Recommendations on Tax Haven Blacklist, Patent Box Rules, CCCTB and Other Actions
The European Parliament issued a press release on 6 July 2016, announcing the approval of a non-legislative resolution on the recommendations included in the report prepared by the Special Committee on tax rulings and other measures similar in nature or effect (TAXE 2). The recommendations were approved by a vote of 514 to 68, with 125 abstentions. The recommendations include a common EU blacklist of non-cooperative jurisdictions, measures to counter the misuse of patent box regimes, a Common Consolidated Corporate Tax Base (CCCTB), an EU-wide withholding tax, and several others (previous coverage).
Click the following link for the Parliament press release.
On 29 June 2016, Finnish President Sauli Niinistö authorized the signature of a draft income tax treaty with Chile. The treaty will be the first of its kind between the two countries, and must be signed and ratified before entering into force.
Additional details will be published once available.
On 4 July 2016, officials from Romania and Uzbekistan signed a protocol to the 1996 income and capital tax treaty between the two countries. The protocol reportedly updates Articles 2 (Taxes Covered) and 3 (General Definitions), replaces Article 27 (Exchange of Information) and adds Article 27A (Assistance in Tax Collection).
The protocol is the first to amend the treaty, and will enter into force after the ratification instruments are exchanged.
Swiss Federal Council Adopts Dispatch on Automatic Exchange of Tax Information with Eight States and Territories
The Swiss Federal Council announced on 6 July 2016 that it has adopted the dispatch on the introduction of the automatic exchange of financial account information with Canada, Guernsey, Iceland, Isle of Man, Japan, Jersey, Norway, and South Korea, and submitted it to Parliament for approval. The automatic exchange is to begin in 2018 based on the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information.
Click the following link for the press release.