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Worldwide Tax News

Approved Changes (3)

Argentina

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Argentina VAT Incentive for Investment in Renewable Energy

Argentina has published General Resolution 4101-E in the Official Gazette, which implements a value added tax (VAT) incentive for investment in approved renewable energy production projects in Argentina. The incentive provides that for the VAT invoiced for new capital goods (including imports) and for the execution of infrastructure, electromechanical, and assembly works for approved projects, the VAT may be credited against other federal taxes due, or otherwise refunded. The VAT credit incentive must be applied for monthly and is subject to verification.

General Resolution 4101-E is effective from 10 August 2017.

Brazil

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Brazil Extends New Tax Regularization Program

On 8 August 2017, Brazil published National Congress Act 41/2017 in the Official Gazette, which extends the validity of Provisional Measure 783/2017 for 60 days. The Provisional Measure, published 31 May 2017, introduced a new program for the regularization of tax (Programa Especial de Regularização Tributária - PERT). The program is available for both individuals and legal entities with unpaid tax and non-tax debts up to 30 April 2017, and includes different options for the settlement of debts with varying interest/penalty relief (previous coverage).

Latvia

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Latvia Announces CbC Reporting Regulations

On 8 August 2017, the Latvian State Revenue Service (SRS) announced the country's Country-by-Country (CbC) reporting regulations, which were approved by the Latvian Cabinet in July following an amendment to the Law on Taxes and Duties to require CbC reports. The CbC reporting regulations are in line with Council Directive (EU) 2016/881 on the exchange of CbC reports, including that:

  • The CbC reporting requirements apply for fiscal year beginning on or after 1 January 2016 for MNE groups meeting the standard EUR 750 million consolidated group revenue threshold in the previous year, with the report due within 12 months following the close of the reporting fiscal year;
  • The requirement to submit applies for ultimate parent entities resident in Latvia, as well as non-parent constituent entities if standard secondary filing requirements are met: ultimate parent not required to submit a CbC report in its jurisdiction of residence, parent's jurisdiction does not have a CbC exchange agreement with Latvia, or there is a systemic failure for exchange;
  • Where a non-parent constituent entity is required to submit, the ultimate parent is to provide all required information for the CbC report, and if the information is not provided, a report must still be submitted based on available information and notification of the parent's failure to provide the information must be made to the SRS;
  • Where there are one or more non-parent constituent entities resident in the EU, one may be designated to submit the report for the group;
  • Secondary filing will not be required if a surrogate parent entity has been designated to submit a CbC report in another jurisdiction for the reporting fiscal year and certain conditions are met, including that the designation has been notified and the report will be exchanged with Latvia;
  • All constituent entities of an MNE group resident in Latvia must provide notification to the SRS by the end of the reporting fiscal year on whether they are the ultimate parent, surrogate parent, or other reporting entity (secondary filing), or if not a reporting entity, must provide notification of the identity and residence of the reporting entity for through group (for the first reporting fiscal year, the deadline is 31 August 2017);
  • The CbC report and related notifications must be submitted via the SRS's Electronic Declaration System (EDS) (eds.vid.gov.lv)

According to the SRS announcement, notifications can currently be submitted in the EDS, while the CbC report submission form will be available in the fourth quarter of 2017.

Click the following link for the CbC Reporting Regulations (Latvian language).

Proposed Changes (3)

European Union

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EU Taxation Paper on R&D Provisions under a Common Corporate Tax Base

The European Commission has published a working paper entitled, Taxation paper No 69: Towards a European R&D Incentive? An assessment of R&D Provisions under a Common Corporate Tax Base. The paper provides an overview of the effect and the need for R&D incentives in relation to the proposal for a Common Consolidated Corporate Tax Base in the EU. The proposal includes a two-step approach that would begin with a Council Directive on a Common Corporate Tax Base (CCTB), which includes an R&D incentive (up to 150% super-deduction), followed by a Council Directive on the Common Consolidated Corporate Tax Base (CCCTB) (previous coverage). The paper essentially concludes that the inclusion of an R&D incentive in the CCCTB is required and must be ambitious enough for the EU to stay globally competitive and reach a target of investing 3% of GDP in R&D.

Kuwait

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Kuwait Approves Draft Bills to Ratify GCC Agreements on VAT and Selective Excise Tax Regimes

On 7 August 2017, Kuwait's Cabinet approved draft bills for the ratification of the Gulf Cooperation Council (GCC) agreements for the introduction of value added tax (VAT) and selective excise tax regimes. The agreements provide the framework for the implementation of the regimes as agreed by all GCC member states. This includes a standard 5% VAT rate with registration threshold of approximately USD 100,000, and a selective (excise) tax on products deemed harmful to health at a rate of 100% on tobacco and tobacco products and 50% on energy and carbonated drinks. The new tax regimes are to apply from 2018, although Kuwait must still ratify the agreements in the National Assembly (legislature) and finalize its own legislation/regulation for the implementation of the regimes.

Additional details will be published once available.

Ukraine

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Ukraine to Introduce Simplified Tax and Fee Payment through Single Account

On 11 August 2017, the Ukraine Ministry of Finance announced that the Government has approved a draft law for the implementation of a single account for the payment of taxes and fees. The single account option is meant to simplify procedures, reduce errors and misunderstandings, improve conditions for business, and improve transparency. The law would allow any taxpayer to elect to open a single account with the State Treasury Office to be used for the payment of income tax, corporate profit tax, rent fee, environmental tax, and other taxes and fees set by the Tax Code, as well as the single social tax. Value added tax and excise tax on fuel sales would not be payable through the single account, however, as these are administered electronically via dedicated systems.

Treaty Changes (4)

India

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Multilateral CbC Exchange Agreement in Force for India

India's Ministry of Finance has issued Notification No. 75/2017, which announces that the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbC MCAA) entered into force for India on 12 May 2016 and is effective between India and other jurisdictions as per para. 2 Section 8 (Terms of Agreement) of the CbC MCAA. Para. 2 Section 8 provides that the CbC MCAA is effective between two competent authorities on the later of the following dates: (i) the date on which the second of the two competent authorities has provided notification to the Co-ordinating body secretariat that includes the other competent authority’s jurisdiction and (ii) the date on which the Mutual Assistance Convention has entered into force and is in effect for both Jurisdictions.

India's basic CbC reporting requirements were introduced as part of Finance Act 2016, and apply for fiscal years beginning on or after 1 April 2016, with the first reports to be due 30 November 2017. However, detailed instruction/guidance is currently pending.

Morocco-Congo, DRC-Tanzania

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Morocco holds Tax Treaty Negotiations with Congo (DRC) and Tanzania

Morocco's General Tax Administration has recently announced that tax treaty negotiations were held with the Democratic Republic of the Congo on 3 to 7 July 2017 and with Tanzania on 11 to 14 July 2017. During the negotiations officials from the respective sides agreed to conclude negotiations as soon as possible. Any resulting treaties would be the first of their kind between Morocco and the respective countries, and must be finalized, signed, and ratified before entering into force.

Slovenia-United States

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Slovenia Ratifies Pending SSA with the U.S.

On 4 August 2017, Slovenia published in the Official Gazette the law for the ratification of the pending social security agreement with the United States. The agreement, signed 17 January 2017, is the first of its kind between the two countries and will enter into force after the ratification instruments are exchanged.

United States-Malta

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U.S. Publishes CbC Exchange Arrangement with Malta

The U.S. IRS has published the bilateral competent authority arrangement signed with Malta on the exchange of Country-by-Country (CbC) reports. The agreement was signed 20 July 2017 and is effective from that date.

The arrangement provides that pursuant to the provisions of Article 26 (Exchange of Information and Administrative Assistance) of the 2008 income tax treaty between the two countries, each competent authority will automatically exchange CbC reports received from each reporting entity resident for tax purposes in its jurisdiction, provided that, on the basis of the information provided in the CbC report, one or more constituent entities of the MNE group of the reporting entity are resident for tax purposes in the jurisdiction of the other competent authority, or are subject to tax with respect to the business carried out through a permanent establishment situated in the other jurisdiction.

With respect to fiscal years beginning on or after 1 January 2016, CbC reports are to be exchanged as soon as possible and no later than 18 months after the last day of the fiscal year of the MNE Group to which the CbC report relates. With respect to fiscal years beginning on or after 1 January 2017, reports are to be exchanged no later than 15 months after the last day of the fiscal year.

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