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Approved Changes (4)

OECD- G20

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OECD Publishes Report to G20 Finance Ministers

The OECD has published the Secretary-General Report to the G20 Finance Ministers, which was presented during the July 23 to 24 meeting in Chengdu, China. The key aspects of the report are as follows.

Update on the OECD/G20 BEPS Package

Regarding the implementation of the BEPS measures, the reports notes:

  • The establishment of the new inclusive framework on BEPS with 85 member jurisdictions committed to the implementation of the four minimum standards, which include those developed under Action 5 (Countering Harmful Tax Practices), Action 6 (Preventing Treaty Abuse) and Action 14 (Dispute Resolution), as well as Country-by-Country (CbC) reporting under Action 13 (Transfer Pricing Documentation);
  • That concrete steps have been taken by over 50 countries for the implementation of CbC reporting;
  • The adoption of the EU Anti Tax Avoidance Directive in June, which includes measures relating to Action 2 (Hybrid Mismatches), Action 3 (Strengthen CFC rules), and Action 4 (Interest deductions); and
  • The tax treaty-related BEPS actions being incorporated in the Multilateral Instrument on BEPS implementation, which is expected to be initialed by November 2016 and open for signature by the end of the year.

Update on Tax Transparency

Regarding work on tax transparency, the report notes:

  • That all countries and jurisdictions that had been asked to commit to automatic exchange of information (AEOI) under the Common Reporting Standard (CRS) have done so, and 83 have signed the multilateral competent authority agreement for AEOI (CRS MCAA);
  • That agreement has been reached on a Common Transmission System designed to allow the exchange of tax information in a secure environment for AEOI, as well as other tax information exchange such as CbC Reports; and
  • That agreement has been reached on the objective criteria for identifying non-cooperative jurisdictions, which includes that a jurisdiction must meet at least two of the following criteria to be deemed cooperative:
    • Has obtained a "Largely Compliant" rating for the implementation of the Exchange of Information on Request (EOIR) standard (a non-compliant rating or being blocked from moving on to phase 2 of the rating process will automatically result in a jurisdiction being deemed non-cooperative);  
    • Has committed to the AEOI standard, with first exchanges in 2018 (with respect to the year 2017) at the latest; and
    • Participates in the multilateral Convention on Mutual Administrative Assistance in Tax Matters, or a sufficiently broad exchange network permitting both EOIR and AEOI.

Other Matters

The report also covers:

  • The Symposium on the use of tax policy to drive innovation and support inclusive growth, as well as to enhance tax certainty to promote investment and trade; and
  • The report on the effective implementation of capacity development programs and the related toolkits developed to address issues with tax incentives, lack of transfer pricing comparables, transfer pricing documentation, tax treaty negotiations and other issues.

Click the following link for the full report.

Russia

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Russia Clarifies that Double Taxation Relief Not Available under Simplified Taxation System

The Russian Ministry of Finance recently published Letter No. 03-08-13/31219, which clarifies the availability of double taxation relief when using the simplified taxation system provided in Chapter 26.2 of the Tax Code. Under the system, which may be adopted by certain qualifying companies, a single reduced tax rate applies on total income or total income less qualifying expenses. According to the letter, the simplified tax is not considered identical or substantially similar to taxes covered by Russia's tax treaties; therefore, the double taxation relief provided in treaties does not apply. In addition, because Chapter 26.2 does not contain any specific provision on the elimination of double taxation, foreign taxes paid are not considered a qualifying expense.  

United Kingdom

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New UK Chancellor of the Exchequer Responds to Tax Issues Raised by Parliament

In a recent meeting with members of parliament, the UK's new Chancellor of the Exchequer Philip Hammond responded to a number issues, including those related to business taxation. Some of the main comments regarding the government's position/action on taxation are summarized as follows:

  • The government is committed to ensuring that the UK has a competitive corporate tax system that encourages innovation and business investment, including a reduction in the corporation tax rate to 17% (no mention of predecessors position that a reduction to 15% was needed following Brexit);
  • The government is reducing the business rates burden by GBP 6.7 billion;
  • The government has increased the rate of research and development tax credits and set the annual investment allowance at its highest ever permanent level;
  • In evaluating the corporate tax environment, the government will be looking at the marginal effective rates of corporate tax for investors in the UK with a focus on promoting investment; and
  • The government will continue to tackle the issue of profit shifting on a global basis through support of the work of the OECD and G20.

Click the following link for all comments, which are grouped by topic.

Vietnam

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Vietnam Announces Circular on Implementation of Corporate Tax and other Incentives

On 21 July 2016, the Vietnam General Department of Taxation announced the issuance of Circular No. 83/2016/TT-BTC, which guides the implementation of investment tax incentives prescribed in the Investment Law and government decree No. 118/2015/ND-CP. The main corporate income tax (CIT) incentives include:

  • A four-year CIT exemption followed by a nine-year 50% CIT reduction for qualified scientific and technological enterprises investing in high-tech zones;
  • CIT exemption or reduction for increased revenue of qualifying enterprises that expand their scope of business, upgrade production capacity or change to new production technology; and
  • Investment projects meeting conditions for multiple incentives may choose the most favorable.

Other incentives include import tax and non-agricultural land use tax exemptions/reductions for various qualifying projects. Click the following link for the announcement.

Treaty Changes (3)

Argentina-Japan

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Argentina and Japan to Negotiate Tax Treaty

During a meeting held 15 July 2016, officials from Argentina and Japan expressed their intent to begin negotiations for an income tax treaty. Any resulting treaty would be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.

India-Japan

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SSA between India and Japan to Enter into Force

According to an announcement from Japan's Ministry of Health, Labor and Welfare, the social security agreement with India will enter into force on 1 October 2016. The agreement, signed 16 November 2012, is the first of its kind between the two countries and will generally apply from the date of its entry into force.

Moldova-Untd A Emirates

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Tax Treaty between Moldova and the U.A.E. under Negotiation

According to recent reports, officials from Moldova and the United Arab Emirates will meet in the near future for the first round of negotiations for an income tax treaty. Any resulting treaty would be the first of its kind between the two countries, and must be finalized, signed and ratified before entering into force.

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