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Approved Changes (2)
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OECD Issues Discussion Draft for BEPS Project Action 11

On 16 April 2015, the OECD released a discussion draft for Action 11 (Improving the analysis of BEPS) of the Base Erosion and Profiting Shifting (BEPS) Project.

Action 11 focuses on improving the availability and analysis of data on BEPS and actions to address it. Specifically to: Develop recommendations regarding indicators of the scale and economic impact of BEPS and ensure that tools are available to monitor and evaluate the effectiveness and economic impact of the actions taken to address BEPS on an ongoing basis. This will involve developing an economic analysis of the scale and impact of BEPS (including spillover effects across countries) and actions to address it. The work will also involve assessing a range of existing data sources, identifying new types of data that should be collected, and developing methodologies based on both aggregate (e.g. FDI and balance of payments data) and micro-level data (e.g. from financial statements and tax returns), taking into consideration the need to respect taxpayer confidentiality and the administrative costs for tax administrations and businesses.

The discussion draft sets out the context and background to the work on Action 11, and includes chapters that focus on three key areas:

  • Chapter 1 is an assessment of existing data sources relevant for BEPS analysis, describing the available data and their limitations for undertaking an economic analysis of the scale and impact of BEPS and BEPS countermeasures;
  • Chapter 2 provides potential indicators of the scale and economic impact of BEPS and their various strengths and limitations; and
  • Chapter 3 sets existing empirical analyses of BEPS and proposes two complementary approaches to estimating the scale of BEPS

Click the following link for the Action 11 discussion draft.

Comments should be submitted by 18 May 2015. A public consultation meeting will be held 12 May 2015 at the OECD Conference Centre in Paris.

Turkey

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Turkey Introduces Notional Interest Deduction on Equity

On 7 April 2015, the Turkish Parliament enacted Law No. 6637 introducing a notional interest deduction for capital contributions. Under the new rules, companies will be allowed a deduction of up to 50% of their deemed interest expense on capital increases registered with the Turkish Trade Registry. The notional interest deduction will also be available based on capital contributions for newly established companies. However, companies operating in the insurance, finance and banking sectors will not be eligible for the deduction.

The notional rate will be the rate set by the Turkish Central Bank that applies for lira-denominated commercial loans. The rate will be applied from the date of the capital increase until the end of the financial year. For any subsequent capital decrease, the notional amount of interest on the decreased amount will not be deductible. Any unused deduction may carried forward indefinitely.

The new rules apply from 1 July 2015.

Treaty Changes (3)

Korea, Rep of-Turkmenistan

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Tax Treaty between South Korea and Turkmenistan Signed

On 13 April 2015, officials from South Korea and Turkmenistan 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.

Morocco-Saudi Arabia

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Tax Treaty between Morocco and Saudi Arabia Signed

On 14 April 2015, officials from Morocco and Saudi Arabia signed an income tax treaty. The treaty is the first of its kind between the two countries.

Withholding Tax Rates

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

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.

Additional details will be published once available.

Romania-Bulgaria-Norway

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Romania to Sign New Tax Treaties with Bulgaria and Norway

On 15 April 2015, the Romanian government approved the signature of new income tax treaties with Bulgaria and Norway. The new treaty with Bulgaria will replace the 1994 tax treaty between the two countries, which is currently in force. The new treaty with Norway will replace the 1980 tax treaty between the two countries, which is currently in force.

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