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Worldwide Tax News

Approved Changes (3)

Cyprus

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Cyprus Issues Notice on CbC Reporting Notification and Additional Guidance

The Cyprus Tax Department has published an English-language notice that the submission for the CbC reporting notification for the 2016 year has started via the Government Gateway Portal Ariadni. The notice also includes that the deadline for the initial notification has been further extended to 20 November 2017.

In addition, the Tax Department has published Interpretative Circular No. 10 (Greek language), which clarifies that all notifications and CbC report are submitted electronically via the Ariadni portal and that a representative may be appointed for this purpose. The Circular also clarifies that both notifications and CbC reports should be submitted in English.

Czech Rep

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Czech Republic Launches Online Form for CbC Notification and Publishes New Guidance

The Czech Republic has launched the online form for submitting CbC reporting notifications via the Daňový Portál. The online form includes four pages, which require the input of information on the reporting period, the reporting entity, contact details, details of the ultimate parent entity, and status of the notifying entity. The final page of the form provides for validation and the ability to save/download the notification prior to submission. Under the Czech CbC reporting requirements, notification is due by the last day of the reporting fiscal year, but for the first year, the notification is due by 31 October 2017.

In addition, the Czech Financial Administration has published additional guidance on CbC reporting, including the three tables of the CbC report template and general guidance in accordance with Decree 306/2017 published 19 September (previous coverage), as well as a Q&A document. One of the key points of the additional guidance is that the CbC report will also be submitted via the Daňový Portál using a ZIP-compressed XML format based on the OECD schema. The guidance also notes that the law does not specify a required language for CbC reports, but that English is favored.

European Union

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EU Council (ECOFIN) Approves Directive on Dispute Resolution

On 10 October 2017, the EU Economic and Financial Affairs Council (ECOFIN) adopted the Council Directive on Tax Dispute Resolution Mechanisms in the European Union. As previously reported, the Directive is meant to ensure effective resolution of disputes concerning the interpretation and application of such bilateral tax treaties and the Union Arbitration Convention, and in particular, disputes leading to double taxation. The Directive will enter into force on the twentieth day following its publication in the Official Journal of the European Union and will generally apply from 1 July 2019 in respect of disputes relating to tax years beginning on or after 1 January 2018.

Proposed Changes (2)

Malta

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Malta 2018 Budget Delivered

On 9 October 2017, Malta's Minister for Finance, Edward Scicluna, presented the Budget for 2018. The tax-related aspects of the budget include:

  • No tax increases;
  • Tax reductions for individuals making less than EUR 60,000 a year;
  • An increase in the value added tax (VAT) registration threshold from EUR 14,000 to EUR 20,000;
  • Increased penalties for tax evasion and additional efforts by the Joint Enforcement Task Force to identify companies and businesses engaged in evasion;
  • A new VAT grouping concept for the financial services and gaming sectors (supplies within group would be exempt); and
  • Extension of online filing of VAT returns to companies with 10 or more employees (currently applies for those with 30 or more employees).

Click the following link for the Budget webpage for more information.

Netherlands

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Dutch Coalition Government Issues Policy Paper including Tax Proposals

On 10 October 2017, the newly formed Dutch four-party coalition government issued its policy paper, including tax proposals. The main proposals include:

  • Reducing the corporate tax rate from 25% to 24% in 2019, 22.5% in 2020, and 21% in 2021 (also reduce lower rate accordingly from 20% to 16%);
  • Eliminating the standard 15% dividends withholding tax, except for distributions in abusive situations to low-tax jurisdictions;
  • Introducing a withholding tax on interest and royalties paid to low-tax jurisdictions (currently, no withholding tax is levied on interest and royalties in any case);
  • Increasing the reduced 6% VAT rate to 9%;
  • Introducing interest deduction restrictions rules as per the EU Anti-Tax Avoidance Directive that would include a general 30% of EBITDA restriction with a EUR 1 million safe harbor threshold, as well as a rule for banks and insurers limiting interest expense deductions on debt exceeding 92% of the total commercial balance sheet value;
  • Limiting the allowed carry forward of losses to six years (currently nine years); and
  • Increasing the effective innovation (IP) box regime tax rate from 5% to 7%.

Aside from the corporate tax rate reductions, it is uncertain what the expected timing of the tax proposals would be.

Treaty Changes (6)

Brazil-Norway

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Brazil Approves Pending Protocol to Tax Treaty with Norway

On 5 October 2017, Brazil's Chamber of Deputies (lower house of congress) approved the ratification of the pending protocol to the 1980 income and capital tax treaty with Norway. The protocol, signed 20 February 2014, replaces Article 27 (Exchange of Information) to bring it in line with the OECD standard for information exchange. It will enter into force 30 days after the ratification instruments are exchanged and will apply on that date.

Isle Of Man-Turkey

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TIEA between Isle of Man and Turkey has Entered into Force

The tax information exchange agreement between the Isle of Man and Turkey entered into force on 7 October 2017. The agreement, signed 21 September 2012, is the first of its kind between the two jurisdictions and applies for criminal tax matters on the date of its entry into force and for other matters for tax periods beginning on or after that date.

Italy-Costa Rica

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Italian Senate Approves TIEA with Costa Rica

On 4 October 2017, the Italian Senate approved the bill for the ratification of the pending tax information exchange agreement with Costa Rica. The agreement, signed 27 May 2016, is the first of its kind between the two countries and will enter into force once the ratification instruments are exchanged. It will apply for criminal tax matters on the date of its entry into force, and for other matters for tax periods beginning on or after that date, or where there is no taxable period, all charges to tax arising on or after that date.

Liberia-Qatar

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Liberia and Qatar to Sign Tax Treaty

According to a release from the Liberian Ministry of Foreign Affairs, officials from Liberia and Qatar met 28 September 2017 to discuss bilateral relations, including the signing of an income tax treaty. Any resulting treaty would be the first of its kind between the two countries and must be finalized, signed, and ratified before entering into force.

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OECD Announces Update on Activations of Automatic Exchange Relationships for CbC Reports

On 11 October 2017, the OECD announced an update on the activations of automatic exchange relationships for CbC reports. The announcement notes that over 1000 automatic exchange relationships have now been activated and that more are expected in the coming weeks. The list of activated exchange relationships is available on the OECD Country-by-Country exchange relationships page.

Ukraine-Turkey

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Protocol to Tax Treaty between Ukraine and Turkey Signed

On 9 October 2017, officials from Ukraine and Turkey signed an amending protocol to the 1996 income and capital tax treaty between the two countries. According to a Ukraine government release on the signing, the protocol amends Articles 4 (Resident), replaces Article 26 (Exchange of Information), and adds a new Article on assistance in the collection of taxes. The protocol is the first to amend the treaty and will enter into force after the ratification instruments are exchanged.

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