Worldwide Tax News
OECD Publishes Compliance Ratings on Beneficial Ownership Transparency for 10 Jurisdictions under New Peer Review Process
On 21 August 2017, the OECD announced that the Global Forum on Transparency and Exchange of Information for Tax Purposes has published the first 10 outcomes of a new and enhanced peer review process for compliance with international standards for the exchange of information on request between tax authorities. The new process is focused on the availability of and access by tax authorities to beneficial ownership information of all legal entities and arrangements.
As announced, three jurisdictions – Ireland, Mauritius, and Norway – received an overall rating of "Compliant." Six others – Australia, Bermuda, Canada, Cayman Islands, Germany, and Qatar were rated "Largely Compliant." Jamaica was rated "Partially Compliant," leading the Global Forum to launch a supplementary report on follow-up measures to ensure a higher level of compliance.
Saudi Arabia Issues Decree on Tax Authority's Right to Impose Penalties and Amended Appeals Procedures
Saudi Arabia has issued Royal Decree No. M/113 of 25 July 2017, which amends the country's income tax law with regard to penalties and appeals procedures. Main changes include:
- The General Authority of Zakat and Tax is explicitly granted the power to impose tax penalties (legal basis not previously clear);
- The time limit to appeal an assessment and an initial appeal decision is reduced from 60 days to 30 days;
- The requirement to pay the tax in dispute or provide a guarantee prior to an appeal is removed, with payment required only for the amount of tax not in dispute;
- The procedure to further appeal to the Board of Grievance is removed - taxpayers may still attempt to appeal to the Board, but the Board is not obligated to accept;
- Two new appeal committees will be established:
- The Committee for Resolution of Tax Violations and Disputes, which will replace the current Preliminary Appeal Committee; and
- The Appeal Committee for Tax Violations and Disputes, which will replace the current Higher Appeal Committee; and
- The time limit to make an appeal is set at within five years of the due date for the tax in dispute or within five years of the related notification, although the committees may accept appeals beyond the time limit in certain cases if the taxpayer presents valid reasons.
Until the new appeal committees are established, the current appeal committees will continue to function.
Ukraine List of Legal Forms and Jurisdictions with which Transactions are Deemed Controlled
On 16 August 2017, the Ukraine State Fiscal Service published a letter on the enactment of Cabinet Resolution No. 480 of 4 July 2017, which approves the list of legal forms and jurisdictions with which transactions are deemed controlled for transfer pricing purposes. The list applies with respect to Ukraine's expanded transfer pricing rules, which include that transactions with a non-resident are deemed controlled when the non-resident is not subject to tax in the jurisdiction in which it is based or is not resident for tax purposes in the jurisdiction in which it is registered (previous coverage). The list mainly includes various partnership forms (general, limited, etc.), as well as certain other legal forms in 26 jurisdictions, including:
Australia; Austria; Belgium; Canada; Czech Republic; Denmark; Estonia; France; Germany; Israel; Italy; Japan; Luxembourg; Malta; Mauritius; Netherlands; New Zealand; Poland; Singapore; Slovak Republic; South Korea; Switzerland; Turkey; United Arab Emirates; United Kingdom; and United States (including Delaware, California, Florida, Nevada, New Jersey, New York, and Texas).
The letter also notes that transactions with the listed legal forms and jurisdictions will not be automatically deemed controlled if the non-resident has actually paid corporate income tax for the year. However, the other standard controlled transaction conditions still apply, such as the non-resident is a related party or the transaction is through a non-resident commission agent. In order to prove tax has in fact been paid, a Ukraine resident should request from the non-resident a confirmation of payment issued by the relevant tax authority.
The list is in force from 27 July 2017 and applies in relation to transactions carried out from that date.
U.A.E. Decree-Law Issued for Selective Excise Tax on Products Deemed Harmful to Health
On 21 August 2017, the United Arab Emirates Ministry of Finance announced the issuance of Federal Decree-Law No. 7 of 2017 for the introduction of the selective excise tax on products deemed harmful to health, as agreed to by the Gulf Cooperation Council (GCC) Member States. The Decree-Law provides for an excise tax of up to 200% for the production, importation, or stockpiling of excise goods, which include tobacco products, energy drinks, and soft drinks.
The tax is to be paid by the person engaged in the related activity with returns filed for specified periods. The payable tax amount will be equal to the total excise tax due on the goods for the period, less deductible tax, which includes tax paid on excise goods that have been exported, tax paid on excise goods that have been incorporated into another excise good on which tax is or will be payable, and any amounts paid in error. Excess tax paid is carried forward to offset tax due in future periods, with the possibility to claim refunds.
Click the following link for the Decree-Law, which is to be effective 1 October 2017. A separate executive regulation will be issued that sets out the specific details, including the tax period, the registration requirements, exemptions, the specific return requirements and procedures, the refund procedures, and other matters for the implementation of the Decree-Law.
Croatia and New Zealand to Negotiate Tax Treaty and SSA
On 21 August 2017, officials from Croatia and New Zealand met to discuss bilateral relations, including the negotiation of an income tax treaty and a social security agreement. Any resulting agreements would be the first of their kind between the two countries, and must be finalized, signed, and ratified before entering into force.
SSA between India and Serbia to be Negotiated
According to recent reports, officials from India and Serbia met 10 August 2017 and agreed to the negotiation of a social security agreement. Any resulting agreement would be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.
Kenya Ratifies Pending Tax Treaty with the Netherlands
On 18 August 2017, Kenya published Legal Notice No. 169 of 2017 in the Official Gazette, which ratifies the pending income tax treaty with the Netherlands. The treaty, signed 22 July 2015, is the first of its kind between the two countries (previous coverage). It will enter into force on the last day of the month following the month in which the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.
U.S. Publishes CbC Exchange Arrangement with Jamaica
The U.S. IRS has published the bilateral competent authority arrangement signed with Jamaica on the exchange of Country-by-Country (CbC) reports. The arrangement was signed 20 July 2017 and will apply once each competent authority notifies the other that it has the necessary laws in place to require CbC reports.
The arrangement provides that pursuant to the provisions of Article 27 (Exchange of Information and Administrative Assistance) of the 1980 income tax treaty between the two countries, each competent authority will automatically exchange CbC reports received from each reporting entity resident for tax purposes in its jurisdiction, provided that, on the basis of the information provided in the CbC report, one or more constituent entities of the MNE group of the reporting entity are resident for tax purposes in the jurisdiction of the other competent authority, or are subject to tax with respect to the business carried out through a permanent establishment situated in the other jurisdiction.
With respect to fiscal years beginning on or after 1 January 2016, CbC reports are to be exchanged as soon as possible and no later than 18 months after the last day of the fiscal year of the MNE Group to which the CbC report relates. With respect to fiscal years beginning on or after 1 January 2017, reports are to be exchanged no later than 15 months after the last day of the fiscal year.
Note, however, that although Jamaica has committed to the implementation of CbC reporting, it has not yet issued requirements for submission.