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Worldwide Tax News

Approved Changes (4)

Belarus

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Belarus Publishes Draft VAT Registration and Declaration Forms for Foreign E-Service Suppliers

The Belarusian Ministry of Taxes and Duties has published VAT registration and declaration (return) forms for foreign e-service suppliers for a brief consultation running 22 to 31 March. From 1 January 2018, foreign suppliers making e-service supplies to individuals in Belarus (B2C) are required to register for VAT in Belarus, file returns, and pay the amount of VAT due at the standard 20% rate. The requirements may also apply for foreign intermediaries.

The registration form is broken down into three main sections, including: details of the supplier/organization; details of the services provided, including the relevant websites and mobile applications; and details of the director or authorized representative. The VAT declaration, which will be required quarterly, is a fairly straightforward form providing details of supplier/intermediary, supplies made, VAT due, etc.

Canada

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2017 Tax Rate Changes for British Colombia, New Brunswick, Quebec, and Saskatchewan

The following are summaries of the tax rate changes for 2017 in the Canadian provinces of British Colombia, New Brunswick, Quebec, and Saskatchewan.

British Colombia

Effective 1 April 2017, the small business income tax rate is reduced from 2.5% to 2.0%.

New Brunswick

Effective 1 April 2017, the small business income tax rate is reduced from 3.5% to 3.0%.

Quebec

Effective 2017, the corporate income tax rate is reduced to 11.8%, and will be further reduced as follows: 11.7% in 2018, 11.6% in 2019, and 11.5% in 2020.

Saskatchewan

Effective 23 March 2017, the provisional sales tax (PST) rate is increased from 5% to 6% (combined 11% with Federal GST).

Effective 1 July 2017, both the general corporate income tax rate and the personal income tax rates are reduced by 0.5%, and will be further reduced by 0.5% from 1 July 2019 (pro-rated for taxation years that straddle the effective dates).

Isle Of Man

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Isle of Man Publishes CbC Reporting Regulations

The Isle of Man government has published the Income Tax (Country-by-Country Reporting) Regulations 2017, which were approved by the Tynwald (parliament) on 21 March 2017 and came into operation on 24 March. The regulations are based on the OECD model and introduce the necessary domestic legislative framework required for CbC reporting to take place. Key aspects of the CbC regulations are summarized as follows.

CbC Report Filing Requirement

  • The requirements apply for fiscal years beginning on or after 1 January 2017 for MNE groups meeting a EUR 750 million consolidated group revenue threshold in the previous year (voluntary filing will be accepted for 2016 year);
  • The requirement to submit a CbC report applies for ultimate (surrogate) parent entities resident in the Isle of Man;
  • The requirement to submit also applies for non-parent constituent entities resident in the Isle of Man if:
    • The ultimate parent entity of the MNE group is not obligated to file a CbC report in its jurisdiction of residence; or
    • The jurisdiction in which the ultimate parent entity is resident does not have a qualifying competent authority agreement in effect to which the Isle of Man is a party by the time a CbC report would be due in the Isle of Man for the reporting fiscal year; or
    • There has been a systemic failure of the jurisdiction of residence of the ultimate parent entity that has been notified to the constituent entity resident in the Isle of Man;
  • If there are multiple resident constituent entities in such case, one may be designated to submit the CbC report on behalf of the others (notification that a CbC report is intended to satisfy obligation for all Isle of Man resident entities is made when the report is submitted); and
  • The local filing requirement will not apply if a surrogate parent entity has filed a CbC report for the year in another jurisdiction, and certain conditions are met, including that the report will be exchanged with the Isle of Man and the required notifications have been provided to both the Isle of Man and the other jurisdiction.

Notification Requirements

  • Any constituent entity of an MNE group resident in the Isle of Man must notify the tax authority on whether it is the ultimate parent entity or the surrogate parent entity by completing a registration form to enable filing (see electronic submission below) no later than 6 months following the last day of the reporting fiscal year of the MNE group; and
  • All other constituent entities resident in the Isle of Man that are not the ultimate or surrogate parent must notify the tax authority of the identity and tax residence of the reporting entity, no later than one year and a day following the last day of the reporting fiscal year of the MNE group (in the required form to be issued).

CbC Report Content and Submission

  • The content of the CbC report is in line with the OECD guidelines and is to be filed in a form identical to and applying the definitions and instructions contained in the standard template set out at Annex III of the OECD’s Transfer Pricing Documentation and Country-by-Country Reporting Action 13: 2015 Final Report;
  • The CbC report must be submitted electronically using the Online Information Providers Service available through the Isle of Man online services website, or such other website that may be made available; and
  • The deadline for filing the CbC report is 12 months and a day after the last day of the reporting fiscal year.

Non-Compliance Penalties and Anti-Avoidance

Penalties for failing to comply with the CbC reporting requirements will apply as follows:

  • GBP 300 for failing to file a CbC report, provide notification, or meet any other obligation under the regulations;
  • GBP 60 per day for continued failure to meet any obligation after being notified of the initial penalty (daily penalty may be increased up to GBP 1,000 if the failure continues for more than 30 days from the date of notification); and
  • GBP 3,000 for providing inaccurate information in the CbC report if inaccuracy is deliberate, is known to be inaccurate at the time of filing, or is subsequently discovered and no action is taken to correct.

The regulations also include an anti-avoidance provision to provide that if any arrangement is entered into for the main purpose, or one of the main purposes, of avoiding any obligation of the regulations, then the regulations are to have effect as if the arrangement had not been entered into.

United States

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U.S. Publishes Annual APA report for 2016

The U.S. IRS has published the annual Announcement and Report Concerning Advance Pricing Agreements for the 2016 year. The report provides an overview of the Advance Pricing and Mutual Agreement (APMA) Program and various statistics on APA applications filed, APAs executed, APAs renewed, and APAs revoked. The report also provides a general description of the APAs executed in 2016, including information on the relationships between the controlled parties, the transaction types covered, the transfer pricing methods used, sources of comparables, time to complete, and others. Lastly, the report includes the U.S. Model APA and the details for the annual report and summary form.

Proposed Changes (1)

Jersey

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Jersey Consults on New Tax Penalties

The Jersey government has launched a public consultation on the tax compliance framework, particularly the penalties for error, avoidance, and evasion. The consultation also discusses administrative penalties for failing to file and pay, and the introduction of charging late payment interest on tax debts.

Click the following link for the consultation page. The deadline for comments is 16 June 2017.

Treaty Changes (4)

Cyprus-Iran

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Tax Treaty between Cyprus and Iran has Entered into Force

The income tax treaty between Cyprus and Iran entered into force on 5 March 2017. The treaty, signed 4 August 2015, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Cyprus income tax, corporate income tax, special contribution for the defence of the republic, and capital gains tax. It covers Iran income tax.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise 10%
  • Interest - 5%
  • Royalties - 6%

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 in a company deriving more than 50% of their value directly 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.

Effective Date

The treaty generally applies from 1 January 2018.

Ghana-Morocco

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Update - Tax Treaty between Ghana and Morocco

The income tax treaty between Ghana and Morocco was signed on 17 February 2017. The treaty is the first of its kind between the two countries.

Taxes Covered

The treaty covers Ghana income tax, and Moroccan income tax and corporation tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through employees or other engaged personnel if the activities continue for the same or connected project within a Contracting State for a period or periods aggregating more than 6 months within any 12-month period.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 10% of the paying company's capital; otherwise 10%
  • Interest - 10%
  • Royalties - 10%
  • Fees for Technical Services (managerial, technical, or consultancy) - 10%

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 of the capital stock of a company, or of an interest in a partnership, trust or estate, the property of which consists directly or indirectly principally (exceeding 50%) of immovable property situated in the other State (not applicable where the immovable property is used by such company, partnership, trust, or estate in its business activities).

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. In addition, for dividends received by Ghana resident company that holds at least 10% of the paying company's capital, Ghana will also provide a credit for the tax payable by the company in respect of the profits out of which the dividends are paid.

A provision is also included for a tax sparing credit for tax that has been waived or reduced in a Contracting State in accordance with the laws of that State for tax incentives.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.

Latvia-Japan

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Latvia Ratifies Pending Tax Treaty with Japan

According to a release from the Latvian parliament, the bill to ratify the pending income tax treaty with Japan was passed on 30 March 2017. The treaty, singed 18 January 2017, is the first of its kind between the two countries (previous coverage). It will enter into force once the ratification instruments are exchanged and will generally apply from 1 January of the year following its entry into force, although Articles 26 (Exchange of Information) and 27 (Assistance in the Collection of Taxes) will apply from the date of its entry into force.

Slovenia-Singapore

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Slovenia to Conclude Financial Account Information Exchange Agreement with Singapore

The Slovenian government has authorized the conclusion of a competent authority agreement for the automatic exchange of financial account information with Singapore as per the OECD Common Reporting Standard. The agreement must be finalized and signed and the required notifications exchanged before entering into force.

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