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Worldwide Tax News

Approved Changes (5)

Ecuador

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Ecuador Sets Solidarity Contribution Deadlines to Fund Earthquake Reconstruction

On 9 June 2016, the Ecuador Internal Revenue Service (SRI) issued the procedures for the equity and profit-based solidarity contributions introduced to fund reconstruction following the earthquake in the country on 16 April 2016 (previous coverage). The contributions are to be paid in three monthly installments beginning in June 2016 with the specific deadline determined based on the last digit of the taxpayers RUC number as follows:

  • For the first installment, the deadline is:
    • 20 June if RUC ends in 1 to 6;
    • 22 June if RUC ends in 7;
    • 24 June if RUC ends in 8;
    • 26 June if RUC ends in 9;
    • 28 June if RUC ends in 0;
  • For the second installment in July, the deadline is 10 July if RUC ends in 1, with the deadline staggered by 2 days for each digit with a final deadline of 28 July for RUC ending in 0; and
  • For the third and final installment in August, the deadlines follow the same staggered approach as July, with a 10 August deadline for RUC ending in 1 and 28 August deadline for RUC ending in 0.

For taxpayers without an RUC number, the deadlines are the 28th of each month - June, July and August 2016.

Click the following link to the SRI website (Spanish language) for additional information.

India

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Indian Tribunal Holds APA Conditions may be Applied for Years Not Covered by the APA

The Delhi Income Tax Appellate Tribunal recently issued a decision on whether the conditions of an advanced pricing agreement (APA) should be accepted for a previous year not covered by the APA. The case involved Ranbaxy Laboratories Ltd., a pharmaceuticals manufacture that is engaged in transactions with several foreign associated enterprises. For the year at issue, Ranbaxy selected the foreign associated enterprises as tested parties for its transfer pricing study. In reviewing the study, the transfer pricing officer (TPO) rejected the choice of tested parties and made certain adjustments.

Ranbaxy appealed the decision, arguing, among other points, that the approach was agreed to in an APA with the Central Board of Direct Taxes, and although the APA did not cover the year concerned, the approach should be allowed because the circumstances are the same. The case was initially heard by the dispute resolution panel, which upheld the TPO's decision, and was then appealed to the Tribunal.

In its decision, the Tribunal sided with the taxpayer. It found that where the function, asset, and risk profile for international transactions in one year is the same as agreed to under an APA for another year, the concept and method for determining the arm's length price under the APA should be accepted.

Ireland

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Ireland Expands Online Tax Payment Options

Irish Revenue has published two eBriefs announcing that the Revenue Online Service (ROS) has been extended to accept payment of additional taxes, interest and penalties, and that a new on-line payment facility via myAccount is now provided for non-ROS taxpayers.

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ROS extended to accept additional taxes, interest and penalties.

Revenue is extending the Revenue On-Line Service to accept payments in respect of 13 additional taxes, including interest and penalties and certain 'other payments' (see Appendix). It will also be possible to make payments on foot of Audit and Notice of Attachment activity.

ROS is also being upgraded to facilitate the filing (and payment) of Natural Gas Carbon Tax (NGCT) and Solid Fuel Carbon Tax (SFCT).

Full details are set out in Sections 4 and 5 of Tax and Duty Manual: On-line Payments on myAccount and ROS (PDF, 118KB)

On-Line Payment of Taxes - myAccount

myAccount – a new way for Revenue customers to pay their taxes on-line.

With effect from 11 June 2016, Revenue is providing a new on-line payment facility via myAccount. The new facility will enable non-ROS customers to make on-line payments of tax, interest and penalties for a wide range of taxes and 'other payments' (See Appendix for Details). The new system will also facilitate the on-line payment of liabilities arising on foot of Audit (for example, where a part payment is made in advance of the liability being fully agreed/quantified) and where a customer has been served with a Notice of Attachment.

Full details are set out in Section 3 of Tax and Duty Manual: On-line Payments on myAccount and ROS (PDF, 118KB)

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OECD Webcast on BEPS Developments and Tax Transparency

On 16 June 2016, the OECD held a webcast to provide updates on ongoing work regarding the BEPS Project, tax transparency and other matters. The following is a summary of the main areas being worked on.

Multilateral Instrument (BEPS Action 15)

Work on the Multilateral Instrument being developed under Action 15 of the BEPS Project to implement the treaty-related BEPS measures is well underway. A public consultation on the instrument will be held 7 July 2016, with a final draft to be finished by November 2016 and opened for signature in the first half of 2017.

Inclusive Framework for BEPS Measures Implementation

Work continues on the inclusive framework for the implementation of the BEPS measures, with the first meeting of participating jurisdictions to be held 30 June to 1 July 2016 in Japan. The inclusive framework is open to all jurisdictions that are interested and committed to the implementation of the BEPS measures. Participants will work on setting standards, reviewing and monitoring implementation, and supporting implementation. Over 90 jurisdictions are expected to take part.

During the meeting in Japan, a signing ceremony will also be held for participating jurisdictions to sign the Multilateral Competent Authority Agreement for the exchange of Country-by-Country (CbC) reports.

Tax Transparency

Regarding tax transparency, the OECD stated that 101 jurisdictions have committed to implementing automatic exchange of information under the Common Reporting Standard (CRS) by 2017 or 2018, and 82 have signed the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information.

In addition to progress with the implementation of CRS, the OECD is also working on:

  • Developing objective criteria to assess jurisdictions as non-cooperative with regard to tax transparency;
  • Developing a proposal to improve implementation of standards on transparency with regard to beneficial ownership; and
  • Developing a common transmission system for the exchange of information under CRS, for CbC reports, for tax rulings, and other information.

BEPS Peer Review and Monitoring

A peer review process is being development to ensure that the minimum standards included in the final BEPS reports are being implemented, which will include public reporting on implementation status. The minimum standards that will be subject to peer review include those developed under Action 5 (Countering Harmful Tax Practices), Action 6 (Preventing Treaty Abuse) and Action 14 (Dispute Resolution), as well as CbC reporting under Action 13 (Transfer Pricing Documentation).

For the other measures of the BEPS Project, a monitoring process is being developed to follow how countries are implementing the measures and to assess the impact.

Taxation of the Digital Economy

The task force on the digital economy will continue its work under BEPS Action 1. Regarding unilateral actions taken by various countries to address taxation of the digital economy, OECD Director for the Centre for Tax Policy and Administration Pascal Saint-Amans stated that it is not surprising that unilateral actions have been taken and hopefully the task force's continued work will provide concrete consensus-based solutions.

Assisting Developing Countries

Work is being carried out to as part of the platform for collaboration on taxation to assist developing countries in strengthening tax systems. This involves developing recommendations for effective implementation of capacity building and technical assistance programs, including the development of eight toolkits to provide simplified approaches to implement BEPS project measures and address other related issues.

Click the following link to view a recording of the webcast on the OECD website.

Poland

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Poland's New GAAR in Effect from 15 July

On 14 June 2016, Poland published the law for the new general anti-avoidance rule (GAAR) in the Official Gazette. With the new GAAR (previous coverage), the tax authorities are allowed to recharacterize or disregard certain transactions if it is determined that the main purpose of the transaction was to obtain a tax benefit. The new GAAR is effective from 15 July 2016 and may be applied in respect of any tax benefits received from that date, regardless of when the related transaction was entered into.

Proposed Changes (3)

Nigeria

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Nigeria Expected to Adopt CbC Reporting in the Near Future

According to recent reports, Nigeria is expected to adopt Country-by-Country (CbC) reporting in the near future in order to collect information on targeted MNE's headquartered in the country and to exchange CbC reports with other jurisdictions under the Multilateral Competent Authority Agreement for the exchange of CbC reports, which Nigeria signed in January 2016. Nigerian CbC reporting requirements will be based on the BEPS Project Action 13 guidelines, although Nigeria may need to implement a lower reporting threshold due to the fact that only a limited number of Nigerian-based MNE groups would meet the EUR 750 million threshold recommended by the OECD.

Additional details on the timing and specific rules will be published once available.

Switzerland

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Swiss Federal Council Adopts Dispatch on Tax Administrative Assistance Act Amendments Concerning Stolen Data

The Swiss Federal Council has issued a media release announcing that it has adopted a dispatch to parliament on amending the Tax Administrative Assistance Act. With the amendments, Switzerland will relax its administrative assistance practices with regard to stolen data by making it possible to respond to requests if a foreign country obtained the stolen data via normal administrative assistance channels or from public sources. However, Switzerland will continue to reject administrative assistance requests based on stolen data actively acquired by the requesting state outside of administrative assistance proceedings.

Click the following link for the media release.

United Kingdom

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UK Publishes Finance Bill 2016 GAAR Amendments

On 14 June 2016, UK HM Treasury published amendments of the Finance Bill 2016 concerning the application of the General Anti-Abuse Rule (GAAR). These include:

  • Amendments to Clauses 144 and 145: Provisional counteractions and binding of tax arrangements to lead arrangements:
    • To ensure that GAAR procedural changes work as intended, and ensure that consequences that already result from a GAAR counteraction apply equally under the new GAAR counteraction procedures; and
    • To ensure that those who engage in abusive arrangements concerning National Insurance Contributions (NICs) are subject to the procedural changes under Clause 145 and the GAAR Penalty under Clause 146;
  • Amendments to Clause 146: General Anti-Abuse Rule Penalty:
    • To ensure that those who are successfully counteracted under the GAAR will be subject to a GAAR Penalty when they submit a return, claim or other document to HMRC on the basis that a tax advantage arises from the tax arrangements where all or part of that tax advantage is later counteracted under the GAAR; and
    • To ensure the smooth running of the GAAR Penalty and to reflect the amendments made in respect of Clause 145.

Click the following links for the details of the amendments to Clauses 144 and 145, and to Clause 146.

Treaty Changes (2)

Cape Verde-Luxembourg

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SSA between Cape Verde and Luxembourg to be Revised

According to a recent announcement from the Cape Verde government, officials from Cape Verde and Luxembourg have agreed to begin negotiations for a protocol to the social security agreement between the two countries. Any resulting protocol will be the first to amend the agreement, and must be finalized, signed and ratified before entering into force.

India-Switzerland

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India and Switzerland Sign Joint Statement on the Automatic Exchange of Financial Account Information

The Indian Ministry of Finance has announced the signing of a joint statement with Switzerland on the automatic exchange of financial account information under the OECD common reporting standard. According to the statement, the first round of negotiations will be held no later than mid-September 2016 with the view to reaching an agreement by the end of the year at the earliest.

Click the following link for the announcement and the text of the joint statement.

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