The Tax Hub

Daily Tax Newsletter

Worldwide Tax News

Approved Changes (6)

Australia

Responsive image

Australia Publishes Guideline on Simplified Transfer Pricing Record Keeping Options

On 22 February 2017, the Australian Taxation Office published a practical compliance guideline on the simplified transfer pricing record keeping options that are meant to reduce the administrative burden for eligible businesses (PCG 2017/2). The eight simplification options and their availability are as follows:

  • Small taxpayers - available from 1 July 2013;
  • Distributors - available from 1 July 2013;
  • Intra-group services - available from 1 July 2013;
  • Low-level inbound loans - available from 1 July 2013;
  • Materiality - available from 1 July 2015;
  • Management and administration services - available from 1 July 2015;
  • Technical services - available from 1 July 2015; and
  • Low-level outbound loans - available from 1 July 2015.

For taxpayers with substituted accounting periods, the options are available from 1 January of the respective years noted above (2013 or 2015).

Each option includes specific eligibility criteria, which are summarized as follows:

Small taxpayers

  • Turnover of the Australian economic group does not exceed AUD 25 million;
  • Specified service related-party dealings (either as expenses or as income) do not exceed 15% turnover (specified services include those that contribute significantly to the creation, enhancement, or maintenance of value in the Australian economic group); and
  • The taxpayer is not a distributor (subject to separate requirements below).

Distributors

  • Turnover of the Australian economic group does not exceed AUD 50 million; and
  • The profit-before-tax ratio is not less than 3%.

Intra-group services

  • International related-party services dealings must either:
    • Not exceed AUD 1 million, or
    • If exceeding AUD 1 million, the value of services received/provided must not exceed 15% of the total expenses/revenue of the Australian economic group;
  • The mark-up on costs of the relevant services must be 7.5% or less for services received and 7.5% or more for services provided; and
  • Does not have specified service related-party dealings.

Low-Level Inbound Loans

  • The combined cross-border loan balance must be AUD 50 million or less for the Australian economic group at all times throughout the financial year; and
  • For the inbound loans:
    • The interest rate may not be more than the Reserve Bank of Australia (RBA) indicator lending rate for small business; variable; residential-secured term;
    • The funds provided under the loan must be in Australian dollar funds; and
    • The associated expenses paid must be in Australian dollars.

Materiality

  • Total international related-party dealings represent less than or equal to 2.5% of the total turnover for the Australian economic group.

Management and administration services

  • Income from and expenditure on management and administration services must not be more than 50% of the total international related party dealings of the Australian economic group; and
  • The mark-up on costs of the relevant services must be 5% or less for services received and 5% or more for services provided.

Technical services

  • Income from and expenditure on technical services must not be more than 50% of the total international related party dealings of the Australian economic group; and
  • The mark-up on costs of the relevant services must be 10% or less for services received and 10% or more for services provided.

Low-level outbound loans

  • The combined cross-border loan balance must be AUD 50 million or less for the Australian economic group at all times throughout the financial year; and
  • For each outbound loan:
    • The interest rate is not less than the following rates for each of the income years that the loan is in effect: 4.91% in the 2015 income year; 4.37% in the 2016 income year; 4.34% in the 2017 income year;
    • The funds provided under the loan must be in Australian dollar funds; and
    • The associated expenses paid must be in Australian dollars.

In addition to the specific criteria above, there are also common criteria that apply for the different options, including that the taxpayer:

  • Has not derived sustained losses (small taxpayers, distributors, intra-group services, low-level inbound loans, low-level outbound loans);
  • Has not had related-party dealings with entities in specified countries (all options);
  • Has not undergone a restructure within the year (small taxpayers, distributors, intra-group services, low-level inbound loans, low-level outbound loans);
  • Does not have related-party dealings involving royalties, license fees, or research and development arrangements (small taxpayers, distributors, materiality); and
  • Has assessed compliance with the transfer pricing rules (all options).

Taxpayers are to self-assess their eligibility and if meeting the criteria for one or more of the eight options may chose to apply the option(s) to their  international related party dealings. Where a simplified record keeping option is chosen, the ATO must be informed through a disclosure in the International Dealings Schedule (IDS).

Click the following link for PCG 2017/2. The transfer pricing simplification options will be available on an on-going basis subject to review, which will be finalized in September 2017.

Finland

Responsive image

Finland Publishes Updated Guidance for Interest on Withholding Tax Refunds

The Finish tax administration has published updated guidance concerning the payment of interest on withholding tax refunds. In general, Finland will pay interest on withholding tax refunds at a rate equal to the reference interest rate minus 2%, with a minimum rate of 0.5% (current reference rate is 0%, so 0.5% rate applies). The updated guidance notes that from 2017, the time limit for a refund to be claimed is three years from the end of the calendar year in which the tax is charged, while prior to 2017 the time limit is 5 years. In addition, from 2017 the time limit to appeal a decision concerning a refund is 60 days, while prior to 2017 the time limit is five years.

Click the following link for the guidance (Finnish Language).

Greece

Responsive image

Greece Non-Cooperative Jurisdictions List for 2016

Greece has published the list of jurisdictions that are considered non-cooperative for the 2016 tax year. Inclusion in the list affects a number of tax matters, including restrictions on the deductibility of payments to such jurisdictions, restrictions on the participation exemption for dividends received, and the application of CFC rules. The list includes:

Andorra, Antigua and Barbuda, the Bahamas, Bahrain, Barbados, Brunei, the Cook Islands, Dominica, Grenada, Guatemala, Hong Kong, Lebanon, Liberia, Liechtenstein, Macedonia, Malaysia, the Marshal Islands, Monaco, Nauru, Niue, Panama, the Philippines, St. Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Samoa, Uruguay, the U.S. Virgin Islands, and Vanuatu.

Ireland-European Union-United States

Responsive image

Action brought Against EU Commission by Apple Regarding Ireland Decision Published

The action brought on 19 December 2016 by Apple against the European Commission seeking to annul the Ireland State aid decision (in full or in part) has been published in the EU Official Journal. The 14 pleas in law and main arguments in support of the action are as follows:

1. First plea in law, alleging that the Commission erred in its interpretation of Irish law.

— The applicants consider that as non-resident Irish companies, they were only liable to Irish corporation tax under Section 25 of the Taxes Consolidation Act 1997 on 'chargeable profits' attributable to activities performed by their Irish branches. The Opinions properly reflected the branches' 'chargeable profits' and did not therefore confer an advantage. The Commission also erred by finding that profit allocation under Section 25 must be under the 'arm's length principle' (the 'ALP').

2. Second plea in law, alleging that the ALP does not operate as the test for State aid in tax assessments under Article 107 TFEU.

— The Commission was wrong to find that Article 107(1) TFEU required Ireland to calculate the applicants' taxable profits under Section 25 in accordance with the Commission's ALP.

3. Third plea in law, alleging that the Commission made fundamental errors relating to the applicants' activities outside of Ireland.

— The Commission made fundamental errors by failing to recognise that the applicants' profit-driving activities, in particular the development and commercialisation of intellectual property ('Apple IP'), were controlled and managed in the United States. The profits from those activities were attributable to the United States, not Ireland. The Commission wrongly considered only the minutes of the applicants' board meetings and ignored all other evidence of activities.

4. Fourth plea in law, alleging that the Commission made fundamental errors relating to the applicants' activities in Ireland.

— The Commission failed to recognise that the Irish branches carried out only routine functions and were not involved in the development and commercialisation of Apple IP which drove profits.

5. Fifth plea in law, alleging that the Commission's presumptions are contrary to the burden of proof, OECD guidelines and unanimous expert evidence; the conclusion is self-contradictory.

— The Commission presumed that all of the applicants' critical profit-making activities were attributable to the Irish branches without properly assessing the evidence, including extensive expert evidence showing that the profits were not attributable to activities in Ireland.

6. Sixth plea in law, alleging that the applicants were treated in the same way as other non-resident taxpayers in Ireland and were not afforded selective treatment.

— The Commission failed to prove selectivity: it has wrongly treated the applicants as if they were Irish resident companies and as if they should be taxed on their worldwide profits.

7. Seventh plea in law, alleging that the primary line must be annulled for a breach of an essential procedural requirement.

— The opening decision did not articulate the primary line of reasoning. If it had, Apple would have been able to present evidence which could and should have changed the outcome.

8. Eighth plea in law, alleging that there were errors of fact and assessment in the Commission's application of the TNMM to the Irish branches under the subsidiary line.

— The Commission's subsidiary line wrongly rejects expert evidence and fails to articulate what a correct profit attribution analysis would be.

9. Ninth plea in law, alleging that the alternative line is vitiated by breach of essential procedural requirements and manifest error of assessment.

— The Commission was wrong to compare the opinions with other opinions issued by Irish Revenue to third parties since the factual circumstances were different.

10. Tenth plea in law, alleging that the subsidiary and alternative lines do not enable calculation of a recovery amount.

— The decision does not contain any explanation of how much is to be recovered under the subsidiary or alternative lines, contrary to State aid rules and the principle of legal certainty.

11. Eleventh plea in law, alleging that the Commission violated the principles of legal certainty and non-retroactivity by ordering recovery of the alleged aid.

12. Twelfth plea in law, alleging a failure to conduct a diligent and impartial investigation.

13. Thirteenth plea in law, alleging a breach of Article 296 TFEU and Article 41(2)(c) of the Charter of Fundamental Rights of the European Union.

14. Fourteenth plea in law, alleging that the decision exceeds the Commission's competence under Article 107(1) TFEU.

— The Commission has violated legal certainty by ordering recovery under an unforeseeable interpretation of State aid law; failed to examine all relevant evidence contrary to its obligation of due diligence; failed to reason the decision adequately; and exceeded its competence under Article 107 TFEU by attempting to redesign Ireland's corporate tax system.

Responsive image

Oman Royal Decree Issued to Enact Income Tax Law Changes

According to recent reports, the Sultan of Oman Qaboos bin Said issued Royal Decree 9/2017 on 19 February 2017 to enact a number of changes to the Income Tax Law 2010. Changes include:

  • The standard corporate tax rate is increased from 12% to 15%;
  • Tax exemptions for certain industries and small businesses are removed;
  • A 3% flat tax rate is introduced for small business; and
  • A 10% withholding tax is introduced on interest and dividend payments to non-residents.

The Royal Decree is to be published in the Official Gazette before the end of February. Additional details will be published once available.

United Kingdom

Responsive image

Scottish Parliament Passes Income Tax Rates and Bands for 2017-18

The Scottish government has announced that parliament passed the individual income tax rates and bands for 2017-18. As previously proposed, the rates will be frozen and the threshold at which people start paying the higher tax rate will remain GBP 43,000. The rates and bands for 2017-18 apply from 6 April 2017 as follows:

  • over GBP 11,500 up to 43,000 - 20% basic rate (assumes standard UK personal allowance of GBP 11,500)
  • over GBP 43,000 up to 150,000 - 40% higher rate
  • over GBP 150,000 - 45% additional rate

Note - In the rest of the UK, the higher rate threshold will be GBP 45,000 for 2017-18, although the rates are the same.

Proposed Changes (2)

South Africa

Responsive image

South African 2017 Budget Delivered to Parliament including New Top Individual Income Tax Rate and Increased Dividends Withholding Tax Rate

South African Finance Minister Pravin Gordhan delivered the 2017 Budget to parliament on 22 February 2016. The main tax proposals are:

  • The introduction of a new top personal income tax bracket with a rate of 45% with an overall increase in existing bracket thresholds as follows from 1 March 2017:
    • up to ZAR 189,880 - 18%
    • ZAR189,881 up to 296,540 - 26%
    • ZAR 296,541 up to 410,460 - 31%
    • ZAR 410,461 up to 555,600 - 36%
    • ZAR 555,601 up to 708,310 - 39%
    • ZAR 708,311 up to ZAR 1,500,000 - 41%
    • ZAR 1,500,001 and over - 45%
  • An increase in the dividend withholding tax rate from 15% to 20% from 22 February 2017;
  • Implementation of the proposed tax on sugary beverages once the necessary legislation is finalized and approved (expected later in 2017);
  • The introduction of a revised carbon tax bill that is to be published for consultation in mid-2017; and
  • Increases in fuel taxes and alcohol and tobacco excise duties.

The budget also notes certain BEPS actions, including that:

  • South Africa will sign the multilateral instruments for the implementation of the tax treaty-related BEPS measures;
  • The automatic exchange of financial account information will begin in September 2017; and;
  • Large multinationals will be required to file Country-by-Country reports with SARS from 31 December 2017 (previous coverage).

Click the following links for the 2017 Budget documents published by the National Treasury and the draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill.

Switzerland

Responsive image

Swiss Council Announces Plans for New Tax Reform Proposal by Mid-2017

The Swiss Federal Council has announced that it has instructed the Federal Department of Finance to draw up the substantive parameters for a new corporate tax reform proposal by mid-2017. The previous proposal had passed in parliament but failed to pass the public referendum held 12 February 2017 (previous coverage). According to the announcement, the parameters for a new proposal are to be drawn up following talks with the political parties and in collaboration with the cantons, including the cities and communes, as well as consultations with business and workforce umbrella associations.

Treaty Changes (3)

India-Portugal

Responsive image

SSA between India and Portugal to Enter into Force

According to an announcement from India's Ministry of External affairs, the pending social security agreement with Portugal will enter into force on 8 May 2017. The agreement signed 4 March 2013, is the first of its kind between the two countries and generally applies from the date of its entry into force.

Norway-Untd A Emirates

Responsive image

TIEA between Norway and the U.A.E. has Entered into Force

The tax information exchange agreement between Norway and the U.A.E. entered into force on 15 February 2017. The agreement, signed 3 November 2015, is the first of its kind between the two countries and applies for criminal tax matters from the date of its entry into force, and for other matters from 1 January 2018.

Russia-Uruguay

Responsive image

Tax Treaty between Russia and Uruguay to be Negotiated

During a meeting held 16 February 2017, officials from Russia and Uruguay agreed to begin negotiation for an income tax treaty. Any resulting treaty will be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.

Sitemap

Powerful Tax Tools

NEW

FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.

NEW

Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.

NEW

Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.

NEW

Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.

NEW

Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.

NEW

OECD BEPS Project

Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.

NEW

Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.

NEW

Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

NEW

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

NEW

Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.

NEW

Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.

NEW

Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.

NEW

VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.

NEW

NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.

NEW

Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.

NEW

Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

Get an immediate FREE trial of Orbitax ITRCE

Get Started with Orbitax Today

With Orbitax, you get reliable and comprehensive solutions for international tax research, compliance and planning. Contact us today to get started with Orbitax.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More