Worldwide Tax News
The French Ministry of Finance and Public Accounts has announced that the additional depreciation allowance for investments in qualifying industrial, manufacturing and scientific research equipment is extended for one year. The allowance, introduced in 2015, is an additional 40% added to the depreciable base for assets acquired between 15 April 2015 and 14 April 2017 (originally 14 April 2016).
On 4 April 2016, the Greek parliament adopted legislation for the implementation of amendments made by EU Directives 2014/107/EU and 2014/86/EU regarding the expanded scope of automatic information exchange and the dividends exemption restriction for hybrid mismatches respectively (previous coverage). The amendments are effective from 1 January 2016.
Indian Tribunal Holds that Change in Definition of International Transaction Cannot be Applied Retrospectively for Loan Guarantees
The Mumbai Income Tax Appellate Tribunal recently issued its decision concerning the retrospective application of the definition of the term international transaction for transfer pricing purposes. The case concerned the 2009-10 year of assessment for an Indian taxpayer that had provided guarantees to third party lenders on behalf of its associated enterprises in Germany and Singapore. No fee or commission was charged by the taxpayer to its associated enterprises for the guarantees.
At the time the loan guarantees were provided, they were not included in the definition of international transaction. However, the Finance Act 2012 inserted an explanation to clarify the transaction types that qualify as an international transaction, which includes guarantees. The explanation also includes that it is to apply with retrospective effect from 1 April 2002. Based on this, the assessing officer referred the taxpayer's guarantees to a transfer pricing officer, who determined that an arm's length commission of 3% should have been charged.
In reviewing the case, the Tribunal focused mainly on whether the explanation of international transactions inserted by the Finance Act 2012 could be applied retrospectively. It found that, although stated as a clarification and to be effective from 1 April 2002, in the case of the taxpayer's loan guarantees, the explanation can only be treated as prospective in effect, i.e. with effect from 1 April 2012 onwards.
Click the following link for the full text of the decision.
Malta's Inland Revenue Department (IRD) has issued a notice that the deadlines for filing tax returns electronically in the 2016 year of assessment have been extended by two months, although for taxpayers with a 31 March deadline, the extension is three months. This applies only for electronic tax return filing, and any payment due must still be made by the standard deadlines.
Click the following link for the IRD page with the deadlines notice.
Germany's Ministry of Finance has reportedly issued draft legislation for the implementation the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of Country-by-Country (CbC) reports. Germany was one of 31 countries that signed the CbC MCAA during the signing ceremony on 27 January 2016 (previous coverage).
Although Germany has not yet released its CbC reporting requirements, it is expected the requirements will be in line with the guidelines developed as part of Action 13 and the requirements set out in the draft Directive for the exchange of CbC reports in the EU (previous coverage). This includes the requirement that CbC reports be submitted for fiscal years beginning on or after 1 January 2016 with the standard reporting threshold of EUR 750 million group revenue in the previous year.
Hungary's Ministry of Economy has announced planned reductions in the value added tax (VAT) rates for basic foodstuffs and restaurants. From 1 January 2017, The VAT rate for basic foodstuffs, including eggs, milk, etc., is to be reduced from 18% to 5%, and the rate for restaurant food and services, excluding alcohol, is to be reduced from 27% to 18%, and further reduced to 5% in 2018. The changes will be included in the upcoming budget for 2017.
On 10 April 2016, officials from Algeria and France signed a protocol to the 1980 social security agreement between the two countries. The protocol is the first to amend the agreement since its signing, and will enter into force after the ratification instruments are exchanged.
On 14 April 2016, officials from Iceland and Liechtenstein initialed an income and capital tax treaty. The treaty will be the first of its kind between the two countries, and must be signed and ratified before entering into force.
On 20 April 2016, Japanese Prime Minister Shinzo Abe and Panamanian President Juan Carlos Varela jointly announced that the two countries would begin negotiations for a tax information exchange agreement. Any resulting agreement would be the first of its kind between the two countries, and would need to be finalized, signed and ratified before entering into force.
On 20 April 2016, officials from Jersey and the United Arab Emirates signed an income tax treaty. The treaty is the first of its kind between the two jurisdictions, and will enter into force after the ratification instruments are exchanged.
Additional details will be published once available.