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Approved Changes (5)


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Brazil Clarifies Application of PCI and PECEX Methods for Commodities Transfer Pricing

On 14 July 2015, Brazil published Private Ruling 176/2015 in the Official Gazette. The ruling clarifies that use of the price under import quotation (PCI) and price under export quotation (PECEX) methods is required for:

  • Products listed in the commodities and futures exchanges that are listed in Appendix II of Normative Instruction RFB 1,312/2012; and
  • Products listed in Appendix I of RFB 1,312/2012 that are subject to public prices in the internationally recognized research institutions that are listed in Appendix III of RFB 1,312/2012.

If a specific price quotation is not available for an imported or exported product, the declared price is to be compared with prices obtained from independent databases provided by the internationally recognized research institutions listed in Appendix III. Prices for exported items may also be compared with prices set by regulatory agencies or bodies that are published in the Official Gazette.

The ruling also clarifies that the use of the PCI and PECEX methods is still required when no specific price quote can be obtained for a particular product, provided that a price can be determined through adjustments to similar products that are quoted.


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Greece Issues Guidance on Related Parties and other Transfer Pricing Matters

Greece's Public Revenue Authority recently published Circular POL 1142/2015, which provides guidance on the rules regarding the determination of related parties for transfer pricing (TP) purposes, and rules on TP documentation and comparables.

Related Parties

Parties are deemed to be related when:

  • One party directly or indirectly holds the shares, rights to profits, or voting rights representing at least 33% of the total shares of the other party; or
  • When one party has control of or dominant influence over the other party, or when a third party has control or influence over both parties.

To determine if the 33% holding threshold is met for indirect holdings, the percentage is calculated by multiplying the holding percentage of each tier.

TP Documentation

The Circular clarifies a number of issues regarding TP documentation, including that:

  • Transfer pricing documentation rules apply to legal persons and joint ventures, but do not apply to individuals and certain exempt legal entities;
  • The documentation rules do not apply to payments of dividends to shareholders or remuneration paid to members of boards of directors;
  • TP documentation must be maintained by a non-resident company deriving income from immovable property in Greece if the company is resident in a country with which Greece has entered into a tax treaty; whether the non-resident has a permanent establishment in Greece or not; and
  • Only the amount of interest or guarantee fees are considered in determining whether financial transactions between related parties reach the aggregate transaction threshold for the documentation requirement. (threshold is EUR 100,000 if annual revenue does not exceed EUR 5 million, EUR 200,000 if annual revenue does exceed EUR 5 million)

TP Comparables

Concerning comparables, the Circular states that:

  • Any database may be used for choosing TP comparables as long as details of the database used are provided in the transfer pricing file;
  • When using the comparable uncontrolled price method, the comparable uncontrolled transactions must be from the same period; and
  • A new benchmarking study for comparables must be made once every three years, although financial data must be updated annually.


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Nigeria Establishes FCT Internal Revenue Service

Nigeria has enacted the Federal Capital Territory (FCT) Internal Revenue Service Act 2015, which provides for the establishment of the FCT Internal Revenue Service (IRS). The FCT IRS is charged with the responsibility of assessing and collecting certain taxes in the FCT, including those under:

  • The Personal Income Tax Act;
  • The Capital Gains Tax Act;
  • The Stamp Duties Act; and
  • The Federal Capital Property Tax Regulations.

The law also provides for the establishment of a Tax Appeal Committee to hear disputes between taxpayers and the FCT IRS.

No provisions are included in the law concerning a commencement date or a transition from the Federal Inland Revenue Services to the FCT IRS. Therefore the change is assumed to be immediate.


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Ukrainian President Vetoes Individual Income Tax Amendments

Ukraine's President Petro Poroshenko has reportedly vetoed a law adopted by parliament in May 2015 that would have increased the upper individual income tax bracket threshold from 10 minimum salaries to 17 minimum salaries. Currently 1 minimum salary is equal to UAH 1,218, although this will increase to UAH 1,378 from 1 December 2015.

The law would have also extended the 0.4 coefficient used to decrease the social security contribution for qualifying companies that meet certain minimum salary conditions and have expanded payroll from the previous year. Instead, the coefficient will be increased to 0.6 from 1 January 2016 as early planned.


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Uruguay Sets New Amortization Rules

On 6 July 2015, Uruguay's Ministry of Economy and Finance issued Decree no. 181/2015, which sets new rules for the amortization of intangible assets.

According to the Decree, from 1 July 2015, an intangible asset must be amortized on a straight-line basis over its expected useful life, which must be established when the first tax return is filed following the assets acquisition. If the expected useful life can't be determined, the amortization period is 10 years. In either case, the useful life established may not be changed without approval from the tax authority.

The new rules do not affect goodwill, which remains ineligible for depreciation/amortization.

Proposed Changes (2)

Costa Rica

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Costa Rica Considering Alternate Tax Year for Certain Taxpayers

Costa Rica is considering the introduction of an alternate calendar tax year (1 Jan to 31 Dec) for certain taxpayers. Costa Rica's standard tax year is 1 October to 30 September.

Taxpayers that would be eligible for the alternate tax year include:

  • Public institutions that are obliged to set their budget period between 1 January and 31 December;
  • National airlines and related companies;
  • Institutions obliged to prepare financial statements following the calendar year, including political parties, religious institutions, cooperatives, and others;
  • Certain financial and securities trading entities;
  • Enterprises engaged in the cultivation of bananas or rice and related activities; and
  • Subsidiaries, branches or agencies in Costa Rica of a foreign company when the foreign company does not follow Costa Rica's standard tax year.

In order to change the tax year, a taxpayer would be required to submit an application to the tax administration including evidence that it meets the criteria of one of the taxpayer types listed above. If approved, the taxpayer would be required to file a return for the period 1 October to 31 December, and the new calendar tax year would begin from the following 1 January.


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Luxembourg to Adopt Amendments to Parent-Subsidiary Directive and other Tax Changes

The Luxembourg Council of Ministers has adopted a bill to implement into domestic law the amendments made to the EU Parent-Subsidiary Directive. Those amendments include that the participation exemption provided for in the Directive will not be granted if:

  • A profit distribution made by a subsidiary to its parent company is deductible in the Member State of the subsidiary; or
  • An arrangement or a series of arrangements are put in place with the main purpose or one of the main purposes of receiving a tax benefit and not for valid commercial reasons that reflect economic reality.

The bill also includes changes to the group taxation regime and exit tax deferral.

The group changes would allow permanent establishments in an EEA Member State to be included in a group as long as the PE is subject to tax similar to Luxembourg corporate income tax.

The change in exit tax deferral would expand the availability of the deferral on the migration of a company from Luxembourg to another EEA Member State to include migrations to any country with which Luxembourg has signed a tax treaty or tax information exchange agreement that is in line with the OECD standard for information exchange.

The bill must be approved by parliament before entering into force.

Treaty Changes (1)


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New Tax Treaty between the Netherlands and Zambia Signed

On 15 July 2015, officials from the Netherlands and Zambia signed an income tax treaty. Once in force and effective, the new treaty will replace the 1997 income tax treaty between the two countries, which currently applies.

Additional details will be published once available.


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