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Approved Changes (3)

Bolivia

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Bolivia Publishes Law Increasing Additional Tax on Financial Sector to 25%

On 30 March 2017, Bolivia published Law 921 of 29 March 2017 in the Official Gazette edition 951NEC. The Law increases the rate of additional tax that applies for financial institutions regulated by the Supervisory Authority of the Financial System (ASFI) when the return on equity index is higher than 6%. The rate is increased from 22% to 25% effective from 2017.

Estonia

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Estonia Publishes English Translation of Tax Information Exchange Act as Amended for Exchange of Tax Rulings and CbC Reports

Estonia has published an English translation of the Tax Information Exchange Act as amended for the exchange of cross border tax rulings and Country-by-Country (CbC) reports. The amendments were made by Bill 322 SE, which was signed into law by the president on 22 March and entered into force on 1 April 2017 (previous coverage). The tax ruling exchange provisions generally apply from 1 January 2017, including for certain past rulings. The CbC reporting requirements apply for fiscal years beginning on or after 1 January 2016, although for non-parent reporting entities, the requirements apply for fiscal years beginning on or after 1 January 2017.

Ukraine

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Ukraine Clarifies Treatment of Capital Contributions of Fixed Assets for Transfer Pricing Purposes

The Ukraine State Fiscal Service (SFS) recently published guidance letter No. 5898/7/99-99-14-01-02-17 concerning the treatment of a capital contribution of fixed assets as controlled for transfer pricing purposes. The letter notes that one of the conditions for a transaction to be deemed controlled is that the transaction impacts the taxation of the taxpayer. While the contribution (increase in capital) itself does not impact taxation, the subsequent depreciation of the fixed assets does, and therefore the contribution of fixed assets may be deemed controlled. As a result, the contribution of fixed assets should be included in the annual report on controlled transactions for the period in which ownership of the assets was transferred and/or reflected in the balance of fixed assets.  

Proposed Changes (2)

Hungary

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Draft Legislation for CbC Reporting Submitted to Hungarian Parliament

Draft legislation (Bill T/14679) has been submitted to the Hungarian parliament to transpose into domestic law the amendments made to the EU Administrative Cooperation Directive by Council Directive (EU) 2016/881 concerning Country-by-Country (CbC) reporting. Main points include:

  • Standard reporting threshold of EUR 750 million consolidated group revenue in the previous year (or equivalent in HUF based on exchange rate published by Hungarian National Bank);
  • Hungarian ultimate (surrogate) parent entities required to submit CbC report for fiscal years beginning on or after 1 January 2016;
  • Hungarian non-parent entities required to submit CbC report for fiscal years beginning on or after 1 January 2017, subject to standard local filing conditions: foreign ultimate parent not required to submit; no CbC exchange agreement with parent's jurisdiction; or systemic failure for exchange;
  • When a non-parent entity is required to submit, information is to be requested from the ultimate parent for a complete CbC report, and if not provided, a report must still be submitted based on available information and the tax authority must be notified of the parent's refusal to provide all information;
  • A non-parent entity will not be required to submit a CbC report if another member of the group has submitted a report in another jurisdiction for the reporting year, subject to certain conditions including that the report will be exchanged with Hungary;
  • Group entities resident in Hungary must notify the tax authority on whether they are the ultimate parent or surrogate parent, and if neither, the identity and tax residence of the reporting entity for the group;
  • CbC reports are due within 12 months following the close of the reporting fiscal year and notifications are due by the end of the reporting fiscal year (extension to be granted for notification on first year - 2016);
  • A penalty of up to HUF 20 million (~EUR 64,000) will apply for late/non filing of CbC report and notification, as well as for incomplete/incorrect filing.

Click the following link for the CbC reporting legislation (Hungarian language). The legislation is scheduled to be voted on in parliament in May, and will enter into force 16 days after it is officially published.

Switzerland

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Switzerland on Schedule with New Corporate Tax Reform Proposal

According to a release from the Swiss Federal Council, the new corporate tax reform proposal is on schedule with the steering body having held their first round of hearings on the proposal with stakeholders. The new reform, entitled tax proposal 17 (TP17), will restore international acceptance, maintain Switzerland's appeal as a location, and safeguard tax receipts. It follows the failure of the prior reform package (CTR III) to pass a public referendum held 12 February 2017 (previous coverage). The steering body will hold additional hearings on TP17 in May, with the key points and next steps to be decided on by the Federal Council in June.

Treaty Changes (5)

Cameroon-South Africa

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Cameroon Approves Pending Tax Treaty with South Africa

On 6 April 2017, the Cameroon Senate approved the law for the ratification of the pending income tax treaty with South Africa. The treaty, signed 19 February 2015, is the first of its kind between the two countries (previous coverage). It will into force once the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.

Denmark-Japan

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Denmark and Japan to Amend Tax Treaty

According to a release from Japan's Ministry of Finance, the first round of negotiations to amend the 1968 income tax treaty with Denmark was held 11 April 2017. Any resulting amendments would be the first to the treaty, which has been effective since 1 January 1968.

Estonia-Kyrgyzstan

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Tax Treaty between Estonia and Kyrgyzstan Signed

On 10 April 2017, officials from Estonia and Kyrgyzstan signed an income tax treaty. The treaty 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.

Guernsey-Singapore

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Guernsey and Singapore Sign Agreement for Automatic Exchange of Financial Account Information

According to an update from the Inland Revenue Authority of Singapore, a competent authority agreement for the automatic exchange of financial account information was signed with Guernsey on 7 April 2017. Under the agreement, each country will automatically exchange information on accounts held in the respective country by tax residents of the other country based on the OECD Common Reporting Standard (CRS). The automatic exchange is to begin by September 2018 for information collected on the 2017 reporting year.

Luxembourg-Italy

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Luxembourg Corrects Entry into Force Date of Protocol to Tax Treaty with Italy

The Luxembourg government has published a correction to the entry into force date of the 2012 protocol to the 1981 income and capital tax treaty with Italy. The protocol entered into force on 20 January 2015, and not 25 October 2014 as originally published in the Official Gazette.

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