Worldwide Tax News
The G20 Finance Ministers Communiqué has been published following the meeting held 17 to 18 March 2017 in Baden-Baden, Germany. The following is the main text of the communiqué concerning tax and transparency issues.
9. We will continue our work for a globally fair and modern international tax system. We remain committed to a timely, consistent and widespread implementation of the Base Erosion and Profit Shifting (BEPS) package, welcome the growing membership of the Inclusive Framework on BEPS and encourage all relevant and interested countries and jurisdictions to join. We ask the OECD to report back on the progress of BEPS implementation, including on all the four minimum standards, by the Leaders Summit in July 2017. We look forward to the first signing round on 7 June 2017 of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS and to the first automatic exchange of financial account information under the OECD Common Reporting Standard (CRS), which will commence in September 2017. We call on all jurisdictions to sign and ratify the multilateral Convention on Mutual Administrative Assistance in Tax Matters and urge all relevant jurisdictions including financial centres which have not yet done so to commit without delay to implementing the CRS and to take all necessary actions, including putting in place domestic legislation, in order to start exchanges under the CRS at the latest by September 2018. Furthermore, we look forward to the OECD's preparation of a list by the Leaders Summit in July 2017 of those jurisdictions that have not yet sufficiently progressed towards a satisfactory level of implementation of the agreed international standards on tax transparency. Defensive measures will be considered against listed jurisdictions. We continue to support targeted assistance to developing countries in building their tax capacity, following in particular the principles of the Addis Tax Initiative, and support the work of the Platform for Collaboration on Tax, which will deliver a progress update by mid-2017.
10. We welcome the international cooperation on pro-growth tax policies and the work on tax and inclusive growth and tax certainty conducted by the OECD and the IMF. We acknowledge the report on Tax Certainty submitted to us and encourage jurisdictions to consider voluntarily the practical tools for enhanced tax certainty as proposed in that report, including with respect to dispute prevention and dispute resolution to be implemented within domestic legal frameworks and international tax treaties. We ask the OECD and the IMF to assess progress in enhancing tax certainty in 2018. As part of the BEPS project, we have undertaken a discussion on the implications of digitalisation for taxation in the OECD Task Force on the Digital Economy (TFDE). We will further work on this issue through the TFDE and ask for an interim report by the IMF and WBG Spring Meetings 2018.
11. As an important tool in our fight against corruption, tax evasion, terrorist financing and money laundering, we will advance transparency of legal persons and legal arrangements via the effective implementation of international standards and the availability of beneficial ownership information in the domestic and cross-border context. In this regard, we welcome the work by the Financial Action Task Force (FATF) and the Global Forum on Transparency and Exchange of Information for Tax Purposes. We look forward to a progress report from the OECD on its work in complementary tax areas relating to beneficial ownership by the time of the Leaders Summit in July 2017.
Click the following link for the full text of the communiqué.
On 20 March 2017, the Indian Union Cabinet approved the final four Bills needed for the implementation of the new Goods and Services Tax (GST):
- The Central Goods and Services Tax Bill 2017 (The CGST Bill), which provides for the levy of GST on intra-state supplies of goods and services by the Central Government;
- The Integrated Goods and Services Tax Bill 2017 (The IGST Bill), which provides for the levy of GST on inter-state supplies of goods and services by the Central Government;
- The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill), which provides for the levy of GST on intra-UT supplies of goods and services in Union Territories without legislature; and
- The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill), which provides for compensation to the states for the loss of revenue arising on account of the implementation of GST for a period of five years.
The Bills will now go to Parliament for final approval, while separate state GST bills will need to be approved by the state legislatures. According to an announcement from the Ministry of Finance, with the Cabinet approval of the four Bills, the implementation of the GST regime in India is in the final stages and will most likely be implemented from 1 July 2017 as planned.
The OECD Centre for Tax Policy and Administration will hold a webcast on 28 March 2017 to provide updates on recent and upcoming developments, including:
- Outcomes of G20 Finance Ministers meeting in Baden-Baden, Germany;
- Update on the Inclusive Framework on BEPS, including progress on transfer pricing, the Multilateral Instrument, and ongoing peer reviews; and
- The OECD’s latest work on tax certainty.
Click the following link for the OECD webcast page to register.
Topics to be covered during the webcast are also covered in the OECD Secretary-General Report to G20 Finance Ministers, which was published following the meeting in Baden-Baden.
On 17 March 2017, the Swedish Tax Agency (Skatteverket) updated its declarations and reporting guidance to provide details of the new Country-by-Country (CbC) reporting requirements as approved by parliament on 1 March 2017 (previous coverage). In addition to the main requirements as previously reported, the new CbC guidance also notes that Sweden will not require resident non-parent entities to file a CbC report if the group's ultimate parent has voluntarily filed a CbC report in its jurisdiction (parent surrogate filing), provided that the report will be exchanged with Sweden and a reporting notification has been submitted to the Tax Agency.
Click the following link for the CbC reporting guidance (Swedish language).
The UK government has announced that it intends to invoke Article 50 of the Treaty on European Union on 29 March 2017, which will begin the process for the UK's exit from the EU. The legislation granting the government the power to invoke Article 50 received Royal Assent and was enacted on 16 March. Once Article 50 is invoked, preliminary negotiations will begin, with full negotiations expected to be concluded in autumn 2018 and the final agreement for the exit expected to be ratified in early 2019.
On 16 March 2017, the Bolivian Chamber of Deputies (lower house of parliament) approved Project Law No. 029/2017-2018, which increases the rate of additional tax that applies for certain financial institutions regulated by the Supervisory Authority of the Financial System (ASFI). The legislation would increase the tax rate from 22% to 25% and would apply for profits generated from 2017. The increase must be approved by the Senate and published in the official gazette before entering into force.
The Lebanese parliament reportedly approved an increase in the VAT rate from 10% to 11% on 15 March 2017 as part of several tax increases meant to balance the country's budget, and will approve other budget-related measures in the coming weeks. The approval of the tax increases, which must still be signed into law by the president, has resulted in public protests lead on by various civil society groups and certain political parties. Additional details of the tax increases will be published once available.
On 16 March 2016, the Norwegian Ministry of Finance published draft amendments to provide for specific provisions for corporate residency with effect from the 2018 fiscal year. Currently, corporate residence is not defined under Norwegian tax law, but companies are generally treated as resident in Norway if incorporated in Norway or if effective management and control is in Norway.
The draft amendments would amend paragraph 1 of Section 2-2 of the Tax Act to provide that companies will be subject to tax if established in Norway or with effective management in Norway. However, this would not apply to companies resident in jurisdiction with which Norway has a tax treaty. The Tax Administration Law would also be amended to reflect the changes in the Tax Act.
Click the following link for the consultation page (Norwegian language). Comments are due by 16 June 2017.
The UK government has published the Finance (No. 2) Bill 2017, which includes measures announced in the Spring Budget 2017 (previous coverage), as well as certain measures announced in Budget 2016 and Autumn Statement 2016. Some of the main measures include changes in the tax treatment of carried forward losses, new corporate interest restrictions, provisions for the Northern Ireland corporation tax rate, a new soft drinks industry levy, and digital reporting and record-keeping requirements (Making Tax Digital).
Click the following links for the Finance (No. 2) Bill 2017 as introduced in the House of Commons, the Explanatory Notes, and the Notes on Finance Bill 2017 Resolutions. The Bill must now be passed by both houses of parliament and receive Royal Assent before entering into force.
According to an announcement from the Serbian government, negotiations for a new social security agreement with the Slovak Republic were concluded on 13 March 2017. The agreement must be signed and ratified before entering into force, and once in force and effective, will replace the agreement signed in 2012.