Get an immediate FREE trial of Orbitax's International Tax Research & Compliance Expert (ITRCE) software for 7 days.

The Tax Hub

Daily Tax Newsletter

Worldwide Tax News

Approved Changes (3)

Colombia

Responsive image

Colombia Sets Late Payment Interest Rate for October 2017

The Colombian Tax Authority (DIAN) has announced that the annual interest rate for late tax payments for 1 to 31 October 2017 is reduced from 30.22% to 29.73%. The rate is based on the rate set by the Financial Superintendence of Colombia through Resolution No. 1298 of 29 September 2017.

Isle Of Man

Responsive image

Isle of Man Reduces Minimum Tax Rate for Residence Rules

The Isle of Man government has published the Income Tax Legislation (Amendment) Act 2017, which was approved by the Tynwald (parliament) and entered into force on 18 July 2017. One of the main amendments of the Act is the bringing into force of amendments to Section 2N of the Income Tax Act 2017 to provide that for the purpose of treating an Isle of Man incorporated company as tax resident in another country, the highest rate at which a company may be charged to tax in the other country must be at least 15% (reduced from 20%). This change is basically needed with respect to the UK's reduction in its corporation tax rate and has effect in relation to accounting periods ending on or after 6 April 2017.

Taiwan

Responsive image

Taiwan Notice on Implementation of CFC Rules

On 20 September 2017, the Taiwan Ministry of Finance (MoF) published a notice that they will be implementing the CFC rules approved by the Legislative Yuan in July 2016. Key aspects of the CFC rules as provided in the notice are as follows:

  • A foreign company located in a low-tax jurisdiction will be considered a CFC of a Taiwan company if the Taiwan company, together with related parties, directly or indirectly holds more than 50% of the foreign company's shares/capital or otherwise has significant influence (substantial management, control) of the foreign company;
  • For CFC purposes, low-tax jurisdictions include jurisdictions where:
    • The corporate tax rate, including special rates for certain regions/industries, is below 70% of the Taiwan rate (11.9% given current Taiwan rate of 17%); or
    • The jurisdiction only taxes on a territorial basis or only taxes overseas source income when remitted;
  • Exemptions from the CFC rules will apply where:
    • The foreign company has sufficient substance and an active trade or business in the foreign jurisdiction as evidenced by a fixed place of business and permanent staff;
    • The total amount of investment (passive) income from dividends, interest, royalties, rental income, and capital gains is less than 10% of total income, with certain income excluded in determining if the 10% condition is met; or
    • The total CFC profit per jurisdiction is less than TWD 7 million (takes into account multiple CFCs in a single jurisdiction);
  • Where the CFC rules apply, the investment income of a CFC is apportioned to the Taiwan shareholder(s) based on the shareholding ratio and holding period; and
  • For the avoidance of double taxation:
    • Dividends and other profit distributions actually made to the Taiwan shareholder will not be included in taxable income if already taxed on the CFC rules;
    • Foreign taxes paid on CFC distributions are creditable within five years from the year the profit is attributed; and
    • Where a CFC participation is disposed of, the profit and loss calculation will be deducted from the original acquisition cost and the amount of the balance of the investment income of the CFC will be recognized at the disposal rate.

The notice does not indicate for which years the CFC rules will be applied, although it is expected they will apply from 2018.

Proposed Changes (3)

Canada

Responsive image

Quebec Planning to Tax Foreign Digital Goods and Service Providers

On 3 October 2017, Quebec’s National Assembly approved a motion to subject foreign suppliers of digital goods and service to Quebec sales tax from 2018, beginning with Netflix. The motion follows a recent deal between Netflix and the Canadian federal government that entails a CAD 500 million production investment commitment by Netflix while remaining exempt from federal sales tax (GST). How the Quebec sales tax would be collected still needs to be sorted out, however, with the Quebec government reportedly planning to collect tax from Netflix directly. Quebec's Finance Minister Carlos Leitao has stated that he must first better understand the deal the federal government made with Netflix before moving forward with the tax plan.

India

Responsive image

India Publishes Draft CbC Reporting and Master File Rules for Comment

On 6 October 2017, India's Central Board of Direct Taxes published a draft notification on Country-by-Country (CbC) reporting and Master file documentation rules for public comment. The Indian tax authority was enabled to require CbC reports and Master file documentation through amendments to the Income Tax Act 1961 made by Finance Act 2016, but the amendments lacked necessary details. The draft notification provides those details, including the addition of rules 10DA (Master file) and 10DB (CbC report), as well as the related forms.

Master File

The draft notification provides that Indian constituent entities of MNE groups meeting an INR 5 billion annual revenue threshold in the previous year are required to maintain documentation for a Master file (Form 3CEBA) if the aggregate value of international transactions exceeds INR 500 million in general or INR 100 million for intangible transactions. The content of the Master file is generally in line with the guidelines included in the final Action 13 report, although additional detail is required in relation to certain areas, including in relation to research and development and intangibles, as well as financing arrangements.

The Master file is to be submitted by the tax return deadline of the relevant entity, although for the first year (2016-17), the draft notification provides a 31 March 2018 deadline. A procedure for the electronic filing of the Master file will be established. Where there are multiple constituent entities resident in India that would be required to submit a Master file, one may be designated to submit and this designation must be notified (Form 3CEBE) to the tax authority at least 30 days before the Master file is due.

CbC Reporting

The draft notice clarifies the CbC report requirements already added by the Finance Act 2016. Key points include:

  • Every constituent entity of foreign-parented groups resident in India must provide notification (Form 3CEBB) to the tax authority at least 60 days prior to the tax return deadline that includes whether it is the alternate (surrogate parent) reporting entity for the group; or the details of the parent entity or alternate reporting entity, as the case may be;
  • Every parent entity or alternate reporting entity resident in India must furnish the CbC report (Form 3CEBC) by the tax return deadline;
  • Non-parent constituent entities are required to submit a CbC report by the tax return deadline if the jurisdiction of residence of the parent entity does not have a CbC exchange agreement with India or there is systemic failure for exchange (not required if a report filed by an alternate reporting entity in another jurisdiction will be exchanged with India);
  • If more than one constituent entity would be required to submit a CbC report, one may be designated to fulfill the requirement and notification of the designation must be made (Form 3CEBD);
  • The threshold for the CbC reporting requirements is set at INR 55 billion; and
  • A procedure for the electronic filing of the notifications and CbC report will be established.

Comments on the draft notification should be sent to dirtpl1@nic.in by 16 October 2017.

Responsive image

OECD Publishes Comments Received on Attribution of Profits to Permanent Establishments and Revised Guidance on Profit Splits

On 6 October 2017, the OECD published the comments received on the public discussion drafts on Attribution of Profits to Permanent Establishments, which deals with work in relation to BEPS Action 7 (Preventing the Artificial Avoidance of Permanent Establishment Status) and on Revised Guidance on Profit Splits, which deals with work in relation to BEPS Actions 8-10 (Assure that transfer pricing outcomes are in line with value creation). Click the following links for the comment documents as published:

A public consultation on the discussion drafts will be held 6 to 7 November 2017 at the OECD Conference Centre in Paris.

Treaty Changes (6)

Croatia-Kosovo

Responsive image

Update - Croatia Approves Pending Tax Treaty with Kosovo

On 5 October 2017, the Croatian government approved the pending income and capital tax treaty with Kosovo. The treaty, signed 6 March 2017, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Croatian profit tax, income tax, and the local income tax and any surcharges. It covers Kosovo personal income tax and corporate income tax

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise 10%
  • Interest - 5%
  • Royalties - 5%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
  • Gains from the alienation of shares deriving more than 50% of their value from immovable property situated in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.

France-Portugal

Responsive image

France Approves Pending Protocol to Tax Treaty with Portugal

On 4 October 2017, the French National Assembly (lower house of parliament) approved the law for the ratification of the pending protocol to the 1971 income tax treaty with Portugal. The protocol, signed 25 August 2016, is the first to amend the treaty and will enter into force on the first day of the month following the exchange of the ratification instruments (previous coverage).

Greece

Responsive image

Greek Parliament Passes Law to Ratify Multilateral CbC Exchange Agreement

On 4 October 2017, the Greek Parliament passed the law for the ratification of the Multilateral Competent Authority Agreement (MCAA) on the Exchange of Country-by-Country (CbC) Reports. Greece's CbC reporting requirement apply for fiscal years beginning on or after 1 January 2016, with the first reports to be exchanged in 2018.

Mexico-Saudi Arabia

Responsive image

Update - Mexico Approves Pending Tax Treaty with Saudi Arabia

On 3 October 2017, Mexico's Senate approved the pending income tax treaty with Saudi Arabia. The treaty, signed 17 January 2016, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Mexican federal income tax and covers Saudi Zakat and income tax, including the natural gas investment tax.

Permanent Establishment

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through employees or other engaged personnel if the activities continue for the same or connected project within a Contracting State for a period or periods aggregating more than 183 days within any 12-month period.

The treaty also includes the provision that a permanent establishment will be deemed constituted when an enterprise carries on activities consisting of, or relating to, the exploration, production, refining, processing, transportation, distribution, storage, or commercialization of hydrocarbons for a period or periods aggregating more than 30 days within any 12-month period.

Limited Force of Attraction Provision

Article 7 (Business Profits) includes a limited force of attraction provision whereby taxing rights are granted to a Contracting State on profits attributable to the sale of goods or merchandise or other business activities carried on in that Contracting State by a resident of the other State if the same or similar goods or merchandise or business activities are also sold or carried out by a PE maintained by that resident in the first-mentioned Contracting State.

Withholding Tax Rates

  • Dividends - 5%
  • Interest - 5% if paid to a financial institution or pension fund; otherwise 10%
  • Royalties - 10%

Note - A maximum rate of 5% is included in Article 10 (Dividends) for the additional taxation of repatriated profits attributed to a permanent establishment.

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State;
  • Gains from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other State; and
  • Gains from the alienation of shares of a company resident in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Entry into Force and Effect

The treaty will enter into force on the first day of the second month following the exchange of the ratification instruments and will apply from 1 January of the year following its entry into force.

Poland

Responsive image

Poland Lower House of Parliament Approves BEPS MLI

On 29 September 2017, the Polish Sejm (lower house of parliament) approved the law for the ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). The law is now before the Senate. Once the ratification process is complete and Poland deposits its instrument of ratification, the BEPS MLI will become effective for a particular Polish bilateral tax treaty:

  • With respect to withholding taxes from 1 January of the year following the MLI's entry into force for both parties to the particular treaty; and
  • With respect to all other taxes for tax periods beginning on or after the expiration of a period of six months following the MLI's entry into force for both parties to the particular treaty.

Note - For the BEPS MLI to apply for a particular treaty, it must be included in Poland's list of covered agreements, as well as in the list of covered agreements of the respective treaty partner. Click the following link for Poland's MLI position, which includes a provisional list of covered agreements (78) and Poland's reservations/notifications on the application of the MLI. The definitive position will be provided when the instrument of ratification is deposited.

Uruguay-United States

Responsive image

Uruguay Approves SSA with the U.S.

On 3 October 2017, the Uruguayan Senate approved the pending social security agreement with the United States. The agreement, signed 10 January 2017, is the first of its kind between the two countries and will enter into force on the first day of the third month following the exchange of the ratification instruments.

Sitemap

Powerful Tax Tools

NEW

FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.

NEW

Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.

NEW

Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.

NEW

Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.

NEW

Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.

NEW

OECD BEPS Project

Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.

NEW

Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.

NEW

Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

NEW

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

NEW

Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.

NEW

Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.

NEW

Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.

NEW

VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.

NEW

NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.

NEW

Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.

NEW

Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Translate Documents

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

Get Started with Orbitax Today

With Orbitax, you get reliable and comprehensive solutions for international tax research, compliance and planning. Contact us today to get started with Orbitax.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More