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Worldwide Tax News

Approved Changes (3)

Argentina

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Argentina Publishes Resolution on CbC Reporting Requirements

On 20 September 2017, Argentina published General Resolution 4130-E, which sets out the country's Country-by-Country (CbC) reporting requirements. The main aspects of the resolution, which is in line with Action 13 guidelines, are summarized as follows:

  • CbC reporting requirement apply for fiscal years beginning on or after 1 January 2017 for MNE groups meeting a EUR 750 million consolidated revenue threshold in the previous year (or equivalent in local currency as at 31 January 2015);
  • The requirement to submit a CbC report applies for ultimate parent entities resident in Argentina and designated surrogate parent entities;
  • Secondary local filing requirements will apply for non-parent constituent entities resident in Argentina if:
    • The ultimate parent is not required to submit a CbC report in its jurisdiction of residence;
    • The ultimate parent's jurisdiction does not have a competent authority agreement with Argentina for the exchange of CbC reports (list of jurisdictions with agreements will be published on the tax administration (AFIP) website); or
    • There has been a systemic failure for exchange by the ultimate parent's jurisdiction (such jurisdictions will also be listed on the AFIP website);
  • Where multiple non-parent entities would be required to file in Argentina, one may be designated to fulfill the requirement;
  • Where a non-parent entity would be required to file in Argentina and that entity is owned or operated by more than one MNE group, a CbC report must be filed for each MNE group;
  • The non-parent local filing requirements will not apply if a surrogate parent entity has been designated to file a CbC report in another jurisdiction and certain conditions are met, including that the report will be exchanged with Argentina and proper notification to the tax authorities has been made;
  • Where all the information necessary for the submission of the CbC report is not available to the reporting entity, a report must be submitted based on available information along with detailed reasons for the omitted information, including details of the entities that were non-cooperative in providing information (penalties may still apply);
  • The CbC report must be filed electronically through a CbC report service on the AFIP website - system will issue affidavit form F.8097 as proof of submission;
  • The deadline for the CbC report is the last business day of the twelfth month following the close of the ultimate parent's fiscal year;
  • Constituent entities resident in Argentina must provide notification via the AFIP website by the last business day of the third month following the close of the fiscal year, including details of the ultimate parent, revenue of the group, whether the entity is a reporting entity, details of the reporting entity, etc. - system will issue affidavit form F.8096 as proof of submission;
  • Additional notification on the jurisdiction in which a CbC report has been submitted is required by the last business day of the second month following the CbC report deadline;
  • Where multiple constituent entities would be required to provide notification in Argentina, one may be designated to fulfill the requirement;
  • Failure to comply with the CbC reporting and notification obligations will result in certain negative actions against the entity, including an increased audit risk, as well as sanctions provided for in Law No. 11,683 (as amended), which includes a penalty of up to ARS 45,000 for failure to provide required information (may be increased by up to ten times for entities with gross income of ARS 10 million or more).

Click the following link for General Resolution 4130-E (Spanish language), which includes two annexes: the Definitions of Terms and the CbC Report Model Tables and Instructions.

Malaysia

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Malaysia Updates CbC Guidance including Sample Notification Forms

The Inland Revenue Board of Malaysia has published an updated Country-by-Country (CbC) guidance page including two sample notification letters to be used to notify the tax authority on the CbC reporting entity: notification as reporting entity and notification as non-reporting entity. Malaysia's CbC reporting requirements apply for financial years beginning on or after 1 January 2017 for MNE groups meeting a consolidated revenue threshold of MYR 3 billion in the previous year (previous coverage). Notification of the reporting entity, which should be made in writing, is due by the last day of the reporting financial year, e.g., 31 Dec 2017 for the first year.

OECD-Belgium-Canada-Netherlands-Switzerland- UK-United States

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OECD Releases First Batch of MAP Peer Review Results

On 26 September 2017, the OECD released the first batch of the stage 1 peer review reports on implementation of the minimum standard for dispute resolution under mutual agreement procedures (MAP), which was developed as part of BEPS Action 14. The first batch includes peer reviews of Belgium, Canada, the Netherlands, Switzerland, the United Kingdom, and the United States, all of which meet most of the elements of the Action 14 minimum standard. The main areas where some countries need additional work include the resolution of MAP cases within the pursued average of 24 months, the need for some improvement on MAP guidelines, and the need to align certain tax treaties with the Action 14 minimum standard. After the stage 1 peer reviews are completed, the stage 2 review will begin, which will include an evaluation of each country's efforts to address the issues identified in stage 1.

Proposed Changes (2)

Costa Rica

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Costa Rica Publishes Draft Resolution on Criteria for Large Taxpayer Classification

On 18 September 2017, the Costa Rica Directorate General of Taxation published a draft resolution on updated criteria for the classification of a taxpayer as a Large Taxpayer or Large Territorial Taxpayer, as well as certain related rules. In general, such taxpayers are subject to increased reporting requirements and scrutiny from the tax authority.

The draft provides that a taxpayer will be classified as a Large Taxpayer if meeting any one of the following criteria:

  • Average tax paid in the previous three fiscal periods is equal to or greater than CRC 450 million;
  • Average gross income in the previous three fiscal periods is equal to or greater than CRC 40 billion;
  • Average total assets declared in the previous three fiscal periods is equal to or greater than CRC 50 billion;
  • The taxpayer is regulated by the Superintendencies of Financial Entities, of Securities, of Pensions, of Insurance, or of Telecommunications, or the  taxpayer forms part of a financial conglomerate that is not supervised by the listed regulators but is of interest to the tax authority;
  • The taxpayer is linked in their operations with a Large Taxpayer and represents a fiscal interest for the tax authority; or
  • The taxpayer has been identified as a risky taxpayer based on significant deviations in tax behavior as compared to their sector or economic activity, including a relatively low tax contribution.

For classification as a Large Territorial Taxpayer, the following criteria apply:

  • Average tax paid in the previous three fiscal periods is equal to or greater than CRC 120 million;
  • Average gross income in the previous three fiscal periods is equal to or greater than CRC 20 billion;
  • Average total assets declared in the previous three fiscal periods is equal to or greater than CRC 25 billion;
  • The taxpayer is linked in their operations with a Large Territorial Taxpayer and represents a fiscal interest for the tax authority; or
  • The taxpayer has been identified as a risky taxpayer based on significant deviations in tax behavior as compared to their sector or economic activity, including a relatively low tax contribution.

When the tax authority has determined that a taxpayer should be classified as a Large Taxpayer or Large Territorial Taxpayer based on the above criteria, a resolution will be issued to notify the taxpayer and the classification will take effect from the first day of the month following the notification. Once the initial notification is made, the classification as a Large Taxpayer or Large Territorial Taxpayer will apply for at least two years.

Ireland

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Irish Finance Minister Comments on Taxation of the Digital Economy and Opposition to Majority Voting for EU Tax Policy Decisions

In a speech given to the Dublin Economics Workshop on 23 September 2017, Ireland's Minister for Finance and Public Expenditure & Reform, Paschal Donohoe, addressed a number of areas, including the taxation of the digital economy and a move from unanimity to qualified majority voting for the way tax policy decisions are taken in the EU. With respect to the digital economy, Minister Donohoe commented that it is best to take action having considered the OECD interim report that will be published in spring 2018 and that any solution must be built on a shared understanding of where value is actually created by digital business. With respect to moving from unanimity to qualified majority voting on EU tax decisions, which is supported by Commission President Jean-Claude Juncker, Minister Donohoe noted that such a move would require a unanimous decision and that the Irish Government will not support any change.

Treaty Changes (5)

Andorra-Malta

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Tax Treaty between Andorra and Malta has Entered into Force

The income tax treaty between Andorra and Malta entered into force on 27 September 2017. The treaty, signed 20 September 2016, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Andorran corporate tax, individual income tax, tax on income of non-residents, and real estate capital gains tax. It covers Malta income tax.

Withholding Tax Rates

  • Dividends - 0%
  • Interest - 0%
  • Royalties - 0%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
  • Gains from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Entitlement to Benefits

Article 26 (Entitlement to Benefits) provides that a resident of a Contracting State will not receive the benefit of any reduction in or exemption from tax provided for by the treaty if it is reasonable to conclude that the principal purpose of such resident was to obtain the benefits of the treaty, unless it is established that granting the benefits would be in accordance with the object and purpose of the relevant provisions of the treaty.

Article 26 also provides that if an item of income is taxed in a Contracting State by reference to the amount remitted or received in that State and not by reference to the full amount, then any exemption from tax provided for the income by the treaty in the other State will be limited to the amount subject to tax in the first-mentioned State.

Effective Date

The treaty applies from 1 January 2018.

Belarus-Ethiopia

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Tax Treaty between Belarus and Ethiopia under Negotiation

According to recent reports, officials from Belarus and Ethiopia met 21 to 22 August 2017 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.

Czech Rep-Mongolia

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Czech Republic Approves Negotiation of SSA with Mongolia

On 25 September 2017, the Cabinet of the Czech Republic approved the negotiation of a social security agreement with Mongolia. 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.

Morocco-Togo

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Tax Treaty between Morocco and Togo to be Negotiated

According to a release from Morocco's General Tax Administration, the first round of negotiations for an income tax treaty between Morocco and Togo will be held in October 2017. 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.

Norway-Panama

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Norway and Panama Sign Competent Authority Agreement for Exchange of Financial Account Information

On 21 September 2017, officials from Norway and Panama signed a competent authority agreement for the automatic exchange of financial account information under the OECD Common Reporting Standard (CRS). The first exchanges are to take place by September 2018.

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