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Approved Changes (5)

Germany

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Germany Publishes Amended Transfer Pricing Documentation Ordinance

The German Ministry of Finance has announced the publication of the amended transfer pricing documentation ordinance in the Official Gazette. The main amendments to the ordinance are in relation to the new transfer pricing documentation requirements resulting from the OECD BEPS project, in particular, the Master and Local file requirements. The requirements were introduced via BEPS legislation approved the end of 2016 (previous coverage), resulting in the need to amend the prior documentation ordinance. The Master file is a new requirement that applies for taxpayers with revenue in excess of EUR 100 million, while the Local file is essentially an expansion of existing documentation requirements based on the OECD Local file guidelines.

The amended ordinance applies for the 2017 and future tax years.

Ireland

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Ireland Announces Planned Recovery of State aid in Apple Case

The Irish Department of Finance has published a statement from Minister Donohoe on the launch of the procurement process in relation to Apple state aid recovery. The statement notes that despite the appeal lodged in the case, Ireland is committed to the recovery of the state aid, which will be paid into an escrow fund with final release when there has been a final determination in the European Courts on the validity of the European Commission’s Decision. The size of the escrow fund is not yet confirmed, but may be around EUR 13 to 15 billion (including EU interest).

Malaysia

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Malaysia Announces Effective Date of Updated Transfer Pricing Guidelines

The Inland Revenue Board of Malaysia has announced that the recent updates to the 2012 Transfer Pricing Guidelines are effective from 15 July 2017. The updates are mainly based on the results of the OECD BEPS project, and include new guidance regarding the application of the arm's length principle, transfer pricing for intangibles and commodity transactions, and new documentation requirements (previous coverage).

Norway

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Norway Requires Non-Resident to File Returns Regardless of Taxable Revenue

According to recent reports, Norway has instituted the policy of requiring non-residents to submit a tax return when deriving revenue from Norway even if the non-resident has no permanent establishment in Norway or the revenue is otherwise exempt under a tax treaty. The requirement has technically been in place for some time, but the tax authority generally granted an exemption if there was no permanent establishment in the country. The new policy applies in respect of the 2016 and future tax years.

United States

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U.S. Final and Temporary Regulations Published on Return Due Date and Extended Due Date Changes

U.S. IRS final and temporary regulations (TD 9821) were published in the Federal Register on 20 July 2017, which update the due dates and extensions of time to file certain tax returns and information returns. The dates are updated to reflect the new statutory requirements set by section 2006 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (the Act) and section 201 of the Protecting Americans from Tax Hikes Act of 2015, including for the corporation income tax return (Form 1120), among others.

As provided in the Act (previous coverage), the deadline for filing for corporation tax return was changed for tax years beginning after 31 December 2015  from the 15th day of the third month following the close of the tax year to the 15th day of the 4th month, with a six-month automatic extension. For calendar tax years, however, the Act provided for an extension of five months, and for tax years ending 30 June, the standard due date is kept at the 15th day of the third month with an extension of seven months. These exceptions are for years ending before 1 January 2026. TD 9821 generally confirms these changes, but provides that for any tax years not ending 30 June, the automatic extension is six months, i.e., the extension for calendar tax years is not limited to five months in practice.

Although TD 9821 was only recently published, the IRS already reflected the six-month extension policy in the instructions for the automatic extension application (Form 7004) for the 2016 tax year.

Proposed Changes (2)

Australia

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Australia Publishes Draft Guideline on Business Continuity Test for Comment

On 21 July 2017, the Australian Taxation Office published a draft Law Companion Guideline (LCG 2017/D6) on the business continuity test concerning company loss rules introduced in the pending Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Bill 2017. The new business continuity test maintains the existing same business test, while introducing a new similar business test for the purpose of utilizing tax losses following a change in ownership or control (previous coverage). Pending enactment of the Bill, which is currently before the Senate, the similar business test will apply to income years starting on or after 1 July 2015.

Click the following link for LCG 2017/D6. Comments on the draft should be submitted by 21 August 2017.

Greece

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Legislation to Transpose EU Directive on Exchange of CbC Reports Submitted to Greek Parliament

Draft legislation was submitted to the Greek Parliament on 21 July 2017 to transpose into domestic law the amendments made to the EU Administrative Cooperation Directive (2011/16/EU) by Council Directive (EU) 2016/881 concerning the exchange of Country-by-Country (CbC) reports. As required by Directive (EU) 2016/881, CbC reporting will apply in Greece for fiscal years beginning on or after 1 January 2016 for MNE groups meeting the standard EUR 750 million consolidated revenue threshold in the previous year. Notification requirements will also apply with the notification reportedly due the end of the fiscal year concerned, with a first-year extension to the due date of the CbC report (12 months after the close of the reporting fiscal year). Additional details will be published once available.

Treaty Changes (5)

Argentina-Brazil

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Protocol to Tax Treaty between Argentina and Brazil Signed

On 21 July 2017, officials from Argentina and Brazil signed a protocol to the 1980 income tax treaty between the two countries. The protocol is the first to amend the treaty and will enter into force after the ratification instruments are exchanged. It reportedly includes new provisions regarding information exchange and the prevention of treaty abuse, as well as changes in double taxation relief and a reduction in rates for certain passive income. Additional details will be published once available.

China-Portugal

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Agreement between China and Portugal on Interest Exemption Provisions in Force

The mutual agreement between China and Portugal concerning the interest tax exemption provided under para 3 of Article 11 (Interest) of the 1998 China-Portugal income tax treaty entered into force on 7 May 2017 and generally applies from 1 June 2017.

The agreement, signed 7 April 2017, provides that the following institutions are considered within the scope of the exemption with respect to China:

  • the National Council for Social Security Fund;
  • the China Investment Corporation;
  • the China Export & Credit Insurance Corporation; and
  • the China Development Bank.

With respect to Portugal, the Central Bank of Portugal (Banco de Portugal) is considered an institution within the scope of the exemption.

China-Serbia

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SSA between China and Serbia under Negotiation

According to a release from the Serbian Ministry of Labour, Employment, Veteran and Social Affairs, officials from China and Serbia met 21 July 2017 to discuss bilateral cooperation, including the conclusion of negotiations for a social security agreement. The agreement will be the first of its kind between the two countries, and must be finalized, signed, and ratified before entering into force.

Pakistan-Bangladesh-Iran-Japan-Kuwait-Mauritius-Oman-Saudi Arabia-Serbia-South Africa-Sudan-Sweden-Tajikistan-Thailand-Turkmenistan-Ukraine-United Kingdom-Vietnam-Yemen

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Pakistan to Negotiate Revisions to Several Tax Treaties

On 13 July 2017, the Pakistan Cabinet reportedly approved the negotiation of revisions to several income tax treaties, including:

  • The 1981 treaty with Bangladesh;
  • The 1999 treaty with Iran;
  • The 2008 treaty with Japan;
  • The 1998 treaty with Kuwait;
  • The 1994 treaty with Mauritius;
  • The 1999 treaty Oman;
  • The 2006 treaty with Saudi Arabia;
  • The 2010 treaty with Serbia;
  • The 1998 treaty with South Africa;
  • The 1985 treaty with Sweden;
  • The 2004 treaty with Tajikistan;
  • The 1980 treaty with Thailand;
  • The 1994 treaty with Turkmenistan;
  • The 2008 treaty with Ukraine;
  • The 1986 treaty with the United Kingdom;
  • The 2004 treaty with Vietnam; and
  • The 2004 treaty with Yemen.

The Cabinet also approved the negotiation of revisions to an income tax treaty with Sudan, which was initialed in 2010, but not yet signed.

Any revisions would be the first to the respective tax treaties, and must be finalized, signed, and ratified before entering into force.

Pakistan-Senegal

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Pakistan and Senegal Agree to Sign Tax Treaty

On 23 July 2017, officials from Pakistan and Senegal met to discuss bilateral cooperation. During the meeting,  both sides agreed to sign an income tax treaty as soon as possible. The treaty will 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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