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Approved Changes (2)

Slovak Republic

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Slovakia Tax Authorities Issue New Transfer Pricing Documentation Guidelines

Slovakia's tax authorities recently released new transfer pricing documentation guidance inspired by the OECD's transfer pricing guidelines and the EU Code of Conduct. The new guidelines expand upon those issued in 2014, and apply for both domestic and cross border transactions with related parties. Either full documentation or basic documentation requirements apply.

Under the new guidelines, full documentation (similar to OECD master file requirements) is required for companies:

  • Preparing their financial statements in accordance with international financial reporting standards;
  • Having transaction with affiliated entities located in non-tax treaty jurisdictions;
  • Applying for an APA;
  • Claiming a deduction for carried-forward losses of at least EUR 300,000 from profits in one specific year;
  • Claiming a deduction for carried-forward losses of at least EUR 400,000 from profits in one specific year and the following year; or
  • Claiming a tax deduction under R&D and investment incentives

The full documentation (master file) requirements include:

  • General Documentation:
    • Details of the taxpayer's group members and organizational and ownership structure;
    • Details of the group's business and business strategy;
    • General description of the functions and risks within the group; and
    • Any other relevant information substantiating arm's length compliance
  • Specific Documentation:
    • Details of the taxpayer, including the identity and legal form, its organizational and ownership structure, and its business activity and business strategy;
    • Detailed list of controlled transactions, including the identification of related parties involved in controlled transactions and the transaction values;
    • Details on intragroup financial transactions;
    • Description of intangible assets owned or used by the taxpayer;
    • Description of the functions performed by the taxpayer, including assets used and risks assumed;
    • Description of the transfer pricing methods used, including the reasons for their selection and the determination of the pricing levels;
    • Internal and/or external comparable data and a comparability analysis;
    • List of cost-sharing agreements; and
    • Any other relevant information substantiating arm's length compliance

Basic documentation is required for taxpayers not subject to the full documentation (above). The basic documentation requirements include:

  • General Documentation:
    • Details of the taxpayer's group, including the identity and legal form of members of the group, and the organizational and ownership structure; and
    • General description of the functions and risks within the group
  • Specific Documentation:
    • Description of the taxpayer, including the identity and legal form and its business activity and business strategy;
    • Description of the functions performed by the taxpayer, including assets used and risks assumed;
    • List of controlled transactions and a description of operations performed with related parties; and
    • Description of the transfer pricing policy, methods used and pricing calculation

The new guidelines apply with retroactive effect from 1 January 2015.

Ukraine

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Ukraine's New Low-Tax Jurisdiction List

On 14 May 2015, the Ukrainian government issued a new list of low-tax jurisdictions for transfer pricing purposes. If a jurisdiction has a corporate tax rate at least 5 percentage points lower than the Ukraine's general corporate rate of 18%, it is considered a low tax jurisdiction. The decision repeals the list of low-tax jurisdictions approved on December 25, 2013.  

The new list includes, Andorra, Anguilla, Antigua and Barbuda, Aruba, Austria, Bahamas, Bahrain, Barbados, Belize, Bermuda, Bosnia and Herzegovina, British Virgin Islands, Brunei, and Bulgaria, Canary Islands, Cape Verde, Cayman Islands, Cook Islands, Curacao, Cyprus, East Timor, French Guyana, Georgia, Gibraltar, Grenada, Guadeloupe, Guernsey, Hong Kong, Jamaica, Jersey, Isle of Man, Ireland, Kosovo, Kyrgyzstan, Lebanon, Lesotho, Liberia, Liechtenstein, Luxembourg, Macau, Macedonia, Malaysia, Maldives, Malta, Marshall Islands, Martinique, Micronesia, Moldova, Montenegro, Montserrat, Morocco, Nauru, Niue, Northern Mariana Islands, Oman, Palau, Panama, Paraguay, Portugal, Qatar, San Marino, St. Vincent, the Grenadines, St. Kitts, Nevis, St. Lucia, St. Maarten, Sao Tome, Principe, Seychelles, Singapore, Sudan, Switzerland, Turkmenistan, Turks, Caicos Islands, U.S. Virgin Islands, United Arab Emirates, Uzbekistan, and Vanuatu.

Treaty Changes (3)

Bahrain-Portugal

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Tax Treaty between Bahrain and Portugal Signed

On 26 May 2015, officials from Bahrain and Portugal signed an income tax treaty. The treaty is the first of its kind between the two countries, and will enter into force after the ratification instruments are exchanged. It provides a 10% withholding tax rate on dividends if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise the rate is 15%. A 10% withholding tax rate applies for interest, and the rate for royalty payments is 5%.

Additional details will be published once available.

Chile-Germany-Italy-Japan

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Chile Negotiating Tax Treaties with Germany, Italy and Japan

On 25 May 2015, the Chilean Ministry of Finance announced that it has begun tax treaty negotiations with Germany, Italy and Japan. Any resulting treaties will be the first of their kind between Chile and the respective countries, and must be finalized, signed and ratified before entering into force.

Netherlands-Germany

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Netherlands Approves Ratification of Tax Treaty with Germany

On May 19 2015, the Dutch parliament approved a draft law for the ratification of the pending income tax treaty with Germany. The treaty, signed 12 April 2012, will enter into force after the countries exchange ratification instruments and will generally apply from 1 January of the year following its entry into force. Once in force and effective it will replace the 1959 tax treaty between the two countries, which currently applies.

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