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Worldwide Tax News

Approved Changes (2)

Nigeria

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Nigeria Publishes Updated Transfer Pricing FAQ and Forms

The Nigerian Federal Inland Revenue Service has published an updated transfer pricing FAQ on its transfer pricing page, as well as updated declaration and disclosure forms and guidelines for 2016 (to be filed in 2017). Nigeria's transfer pricing rules require taxpayers with controlled transactions to annually submit the disclosure form along with their annual tax return (generally within 6 months of financial year end), while the declaration form is generally only required with the first annual tax return and when there are any significant changes. Contemporaneous transfer pricing documentation is to be prepared at the time controlled transactions are executed (no later than the tax return deadline), and is to be submitted within 21 days of request.

United States

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IRS Publishes Model Competent Authority Agreements for Exchange of CbC Reports

The U.S. IRS has updated its Country-by-Country Reporting Guidance page with the addition of two model competent authority agreements for the exchange of Country-by-Country (CbC) reports. The model bilateral agreements provide for the automatic reciprocal exchange of CbC reports based on either Article 6 (Exchange of Information and Administrative Assistance)] of a tax treaty or Article (Object and Scope of this Agreement)] of a tax information exchange agreement. Since the U.S. has decided not to sign the Multilateral Competent Authority Agreement on the exchange of CbC reports, a bilateral agreement will need to be signed with each jurisdiction with which the U.S. intends to exchange CbC reports. Negotiations are ongoing with relevant jurisdictions based on the model CbC exchange agreements, although no agreement have been signed to date. In general, for U.S. MNEs to avoid local filing obligations in foreign jurisdictions, a CbC exchange agreement must be concluded by the CbC report filing deadline of the relevant jurisdiction.

Proposed Changes (2)

Canada

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Ontario to Introduce Non-Resident Speculation Tax for Residential Property

The Government of the Canadian Province of Ontario has announced the introduction of a non-resident speculation tax (NRST) of 15% on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe region, which includes Toronto and other main areas along Lake Ontario. The NRST will apply in addition to the general land transfer tax for both foreign nationals and foreign entities. It will also apply for taxable trustees, including a foreign entity holding title in trust for beneficiaries or Canadian residents holding title in trust for foreign entity beneficiaries.

Pending approval of the legislature, the NRST will apply for all transfers registered on or after 21 April 2017, with binding agreements signed before that date not subject to the tax. Click the following link for details of the NRST from the Ontario Ministry of Finance.

Estonia

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Draft Estonian Legislation Published to Encourage Profit Distributions and Discourage Hidden Distributions through Loans

The Estonian Ministry of Finance has announced draft legislation meant to encourage regular profit distributions and discourage hidden distributions through loans made by Estonian subsidiaries to foreign parents. Regarding profit distributions, the legislation introduces a reduced tax rate of 14% on distributions up to the average distribution amount in the previous three years, with the excess subject to the standard 20% rate. Regarding hidden distributions, the legislation provides for 20% tax deposit on loans exceeding the subsidiaries paid-in capital and loans received, with the deposit becoming a final tax if the loan is not repaid within two years (previous coverage). Where the loan has been partially repaid, a pro rata amount of the tax deposit will be refunded.

As proposed, the measures would enter into force on 1 January 2018. Click the following link for the draft legislation page (Estonian language) for the draft text and explanatory note

Note - Estonian corporate tax applies when profits are distributed. The tax is not a withholding tax on the recipient.

Treaty Changes (4)

Bahrain-Thailand

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Protocol to Tax Treaty between Bahrain and Thailand to be Signed

According to recent reports, Bahrain and Thailand are planning to sign a protocol to the 2001 income tax treaty between the two countries. The protocol will be the first to amend the treaty, and must be finalized, signed, and ratified before entering into force. Additional details will be published once available.

China-Switzerland

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SSA between China and Switzerland to Enter into Force

According to an announcement from the Swiss Federal Department of Home Affairs, the pending social security agreement between China and Switzerland will enter into force on 19 June 2017. The agreement, signed 30 September 2015, is the first of its kind between the two countries and generally applies from the date of its entry into force.

Hong Kong-Switzerland

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Hong Kong to Sign Agreement for Automatic Exchange of Financial Account Information with Switzerland

According to a press release from the Hong Kong government, officials from Hong Kong and Switzerland met 19 April 2017 to discuss bilateral issues, including the signing of an agreement for the automatic exchange of financial account information in tax matters. Once signed and in force, the agreement will allow Hong Kong and Switzerland to automatically exchange information on accounts held in their respective jurisdiction by tax residents of the other jurisdiction based on the OECD Common Reporting Standard (CRS).

India-Portugal

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India to Sign Protocol to Tax Treaty with Portugal

According to a 19 April 2017 press release from the Indian government, the Union Cabinet has approved the signing of a protocol to amend the 1998 income tax treaty with Portugal. The protocol will update the treaty's exchange of information provisions to help the tax authorities of both countries curb tax evasion. It will be the first protocol to amend the treaty and must be finalized, signed, and ratified before entering into force.

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