Worldwide Tax News
Belarus Announces Simplified VAT Registration for Foreign E-Service Suppliers
On 23 June 2017, the Belarus Deputy Minister for Taxes and Duties, Ella Syalitskaya, announced simplified value added tax (VAT) registration procedures for foreign suppliers of e-services to Belarusian individual consumers (B2C). Such suppliers, as well as intermediaries collecting services fees, will be liable for VAT from 1 January 2018 (previous coverage). The simplified registration process and the application form were approved as part of a Ministry of Taxes and Duties decision published in the Official Gazette on 9 June. The decision also includes the template for the VAT return, which will be due quarterly. Although the templates published are only provided in Russian, the Deputy Minister has stated that English versions will also be made available.
Brazil Clarifies PIS/COFINS on Royalty and Technical Service Payments and Payments for Services under Cost Sharing Agreements
Brazil has published Private Ruling 316 of 20 June 2017, which clarifies the payment obligations for social security contributions (PIS/COFINS) on technical service and technical assistance payments to non-residents in connection with royalty payments. The ruling provides that royalty payments on their own are not subject to PIS/COFINS, but technical service/assistance payments are. Where the royalties and technical service/assistance are covered under a single contract and the payment amounts for each are clearly specified, the payment amount for the service/assistance will be subject to PIS/COFINS accordingly. If the payment amounts for each under contract are not clearly specified, the total amount will be considered as payment for technical service/assistance and subject to PIS/COFINS.
Colombia Clarifies Taxation of Joint Ventures
Colombia's National Tax Authority (DIAN) recently issued a ruling on the tax treatment of operations under a joint venture agreement. The ruling clarifies that for income tax purposes, taxpayers taking part in a joint venture agreement are to report the assets, liabilities, income, costs and expenses derived from the joint operations in their tax return in proportion to their percentage of participation. With respect to value added tax (VAT), however, general VAT rules apply and the taxpayer acting as the manager for the agreement is responsible for collecting and remitting any VAT due.
Google Fined EUR 2.42 billion by European Commission for Breach of EU Antitrust Rules
The European Commission has announced its decision to fine Google EUR 2.42 billion for breaching EU antitrust rules. The decision is based on the Commission's findings that Google abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service. In particular, the Commission found that:
- Google has systematically given prominent placement to its own comparison shopping service: when a consumer enters a query into the Google search engine in relation to which Google's comparison shopping service wants to show results, these are displayed at or near the top of the search results.
- Google has demoted rival comparison shopping services in its search results: rival comparison shopping services appear in Google's search results on the basis of Google's generic search algorithms. Google has included a number of criteria in these algorithms, as a result of which rival comparison shopping services are demoted. Evidence shows that even the most highly ranked rival service appears on average only on page four of Google's search results, and others appear even further down. Google's own comparison shopping service is not subject to Google's generic search algorithms, including such demotions.
Google now has 90 days to stop its illegal conduct and refrain from any measure that has the same or an equivalent object or effect. Non-compliance will result in additional penalties of up to 5% of Google's average daily worldwide turnover.
Gibraltar Budget 2017 Delivered
On 26 June 2017, Gibraltar's Chief Minister Fabian Picardo delivered the Budget Address 2017. The tax-related measures of the Budget are relatively limited and include:
- An increase in the individual income tax threshold from GIP 11,050 to GIP 11,150 from 1 July 2017 for taxpayers in both the allowance based system and the gross income based system;
- Increases in individual income tax allowances, including an increase in the standard personal allowance from GIP 3,215 to GIP 3,300 from 1 July 2017;
- Import duty rate changes for various products with immediate effect, and the introduction of an import duty deferral scheme for high value retail items (over GIP 25,000) sent to retailers on consignment, which provides for the payment of import duty upon sale instead of import; and
- Extension of the deduction for the installation of solar panels for residential premises to also apply for commercial premises.
Click the following link for the full text of the Budget Address 2017.
European Commission Publishes Draft Supplemental MoU on Greece Financial Assistance Conditions
The European Commission has published a draft Supplemental Memorandum of Understanding (MoU) dated 21 June 2017 that supplements the MoU signed by Greece in August 2015 setting out the conditions attached to the financial assistance facility Greece obtained from the European Stability Mechanism. With respect to tax policy reforms, the Supplemental MoU includes that the Greek government commits to:
i. (a) reviewing the corporate tax law covering mergers and acquisitions and implementing the Income Tax Code (ITC) provisions concerning mergers (articles 52-55 ITC) and transfer pricing fines (article 56 Tax Procedure Code, TPC); (b) extending the temporary voluntary contribution of the shipping community to 2018; (c) undertake a review and reform of tax administration procedures for enforced sale of assets at public auctions aligning KEDE with the Code of Civil Procedure; (d) abolish article 6 of the law 2523/1997 for transitional cases.
In addition, the government commits to:
ii. Tax reforms. The authorities will by September 2017: (a) revise TPC provisions to provide for reduced fines imposed in connection of an audit taking account of the cooperation of the taxpayer; (b) revise the fines provisions of pre-TPC legislation in line with TPC fines; (c) complete the assessment of a possible increase in the VAT threshold; and (d) review KEDE to ensure effective collection enforcement actions and consistency with revenue administration reforms including SSC collection, and by November 2017, revise the law as appropriate.
iii. Tax codes. The authorities will review by June 2017 legislation on VAT deregistration procedures and re-registration to protect VAT revenue. The authorities will (key deliverable) by December 2017: a) review with the aid of technical assistance all business income tax incentives and integrate the tax exemptions, eliminating those deemed inefficient or inequitable; b) review with the aid of technical assistance the tax framework for collective investment vehicles and their participants in line with best practices in the EU; c) codify and simplify the VAT legislation, aligning it with the Tax Procedure Code and eliminating outstanding loopholes, including those identified in the review of the legislation relating to VAT deregistration and reregistration; d) undertake a technical review of the ITC provisions after its 3-year application, identifying problems and loopholes and proposing amendments with the objective of clarifying and ameliorating its application and eliminating conflicting provisions, e) review preferential tax treatments for the shipping industry in the light of the indications of the European Commission by January 2018.
iv. Property taxes. The authorities with the aid of technical assistance will legislate to ensure the alignment of property tax assessment zonal values with market prices by December 2017 (key deliverable). The authorities could postpone the implementation of the capital gains tax on real estate until 1 January 2018.
Click the following link for the draft Supplemental MoU.
Japan NTA Publishes Transfer Pricing Guidebook for Taxpayers
Japan's National Tax Agency (NTA) has published the NTA Transfer Pricing Guidebook for Taxpayers, which is in relation to the country's new transfer pricing documentation requirements introduced as part of the 2016 tax reform (previous coverage). The 2016 reform introduced CbC report and Master file requirements from 1 April 2016 and new contemporaneous documentation and Local file requirements from 1 April 2017. The guidebook is mainly focused on the contemporaneous documentation and Local file requirements and includes three main sections:
- NTA transfer pricing policy and initiatives, which include the establishment of transfer pricing documentation help desks and the introduction of non-audit visits by examination officers to review a taxpayer's Local file;
- Key points on the application of the transfer pricing regulations, which includes guidance on the items to be considered in transfer pricing compliance and case studies; and
- A contemporaneous documentation guide, which includes a summary of changes and an example Local file.
Click the following link for the NTA Transfer Pricing Guidebook for Taxpayers (Japanese language). While the NTA does publish English translations of issued guides, it is uncertain if or when an English version of the Transfer Pricing Guidebook will be published.
UK Regulations on Scottish Limited Partnerships in Force including Beneficial Ownership Disclosure Requirements
The UK Government has announced that the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 came into force on 26 June 2017. The regulations bring Scottish limited partnerships into line with other limited partnerships in the UK, including new disclosure requirements on ownership and control. The information needs to be disclosed on People with Significant Control (PSCs), which include a person who:
- Directly or indirectly holds the right to more than 25% of the surplus assets on winding up of the partnership;
- Directly or indirectly holds more than 25% of the voting rights in the partnership;
- Directly or indirectly holds the right to appoint or remove the majority of those entitled to take part in the management of the partnership;
- Otherwise has the right to exercise, or actually exercises, significant influence or control over the partnership;
- Has the right to exercise or actually exercises, significant influence or control over the activities of a trust and the trustees of the trust hold, directly or indirectly, any of the rights set in the first four bulletin points above; or
- Has the right to exercise or actually exercises, significant influence or control over the activities of a firm and the members of the firm hold, directly or indirectly, any of the rights set in the first four bulletin points above.
While disclosure is mainly focused on individual PSCs, information on certain registrable relevant legal entities and other registrable persons also needs to be disclosed.
Click the following link for additional guidance on PSC registration requirements for companies and limited liability partnerships, including Scottish partnerships.
Bolivia to Introduce New Penalties for Tax Fraud and Bring Existing Tax Penalties into the Criminal Code
According to recent reports, draft legislation was submitted to the Bolivian Chamber of Deputies (lower house of parliament) on 23 June 2017 for the introduction of new penalties for tax and customs fraud into the Criminal Code. The legislation would also amend current tax and customs related penalties by repealing them from the respective tax and customs laws and bringing them into the Criminal Code. Additional details will be published once available.