Category: Base Erosion & Profit Shifting

Finland: Transfer pricing documentation rules, country-by-country reporting proposal

The Ministry of Finance on 21 December 2015 released for public comment a proposal to revise the transfer pricing documentation rules and introduce country-by-country (CbC) reporting. The proposal—released as a draft bill—includes CbC reporting, master file and local file requirements, and penalty provisions, and generally follows the recommendations of the...

Budget 2016: Modi government likely to revamp direct taxes to improve ease of doing business

NEW DELHI:The Narendra Modi government, which has pledged a predictable and non-adversarial tax regime, is likely to begin a sweeping revamp of direct taxes in the Budget that Finance Minister Arun Jaitley will present next month. Simplification and rationalisation will be the two themes driving the overhaul, which is aimed...

Luxembourg’s Finances Stable, Says Fitch Ratings

The Organisation for Economic Co-operation and Development’s base erosion and profit shifting process will not have significant implications on Luxembourg-based companies, Fitch Ratings has said. The agency on January 8 re-affirmed Luxembourg’s AAA rating, with a stable outlook. According to Luxembourg for Finance, the territory’s financial services promotional agency, the...

India: Swiss Apex Court Denies Treaty Benefits For Dividend On Securities Acquired For Hedging Derivative Contracts

Federal Supreme Court of Switzerland denies treaty benefits in case of dividend paid on shares acquired for hedging derivative contracts. Court stated that due to the fully hedged nature of ownership, there was economic nexus and interdependency between two independent transactions and therefore, the “intermediary” bank did not have beneficial...

Ireland: the Tax Haven that Dare Not Speak Its Name

‘We’re not a tax haven, we have never been involved in any kind of tax malpractice’ – Michael Noonan, Irish Minister for Finance 5th October 2015 If your top political figures need to constantly state that your country is not a tax haven, then the chances are it probably is...

Outlook for Direct Taxes – flash back 2015 and envision for 2016

The focus has been on increasing global participation in India through liberalisation of foreign direct investment (FDI) laws. It covered easing FDI sectorial caps and conditions in diverse sectors ranging from highly regulated sectors like defence, construction& development, civil aviation to single brand retailing, automatic route for FDI in Limited...

Transfer pricing rules with wider ambit soon

Changes in I-T Act likely to curb tax evasion by multinational companies The government might change transfer pricing provisions in Budget 2016-17 to ensure companies with overseas presence and consolidated revenue of more than Rs 5,000 crore comply with extensive data reporting and documentation. Legislative changes in the Income Tax...

Brazil: Tax Treaty Series: The Bilateral Income Tax Treaty Between Brazil And Canada

This is the first of our series of posts on Brazilian tax treaties. In each post we will provide an overview of a specific tax treaty between Brazil and a particular foreign country, as well as comments on any Brazilian administrative or judicial precedents applying the treaty, and highlights on...

Nigeria: A Review of the Major Tax and Fiscal Policy Events in the Past Year

The year 2015 will be marked as the year of slow economic growth and haphazard fiscal and monetary policies due in part to the uncertainties brought about by the change in government. There were also leadership changes at the FIRS and a number of state tax authorities. This article outlines...

Country-by-country reporting for parent entities of large U.S.-based multinational groups proposed by the IRS

On December 21, 2015, the Internal Revenue Service (IRS) and the U.S. Treasury Department (Treasury) released proposed regulations (REG-109822-15) on country-by-country (CbC) reporting (the Proposed Regulations). In general, the Proposed Regulations are modeled after, and are consistent with, the Organization for Economic Co-operation and Development (OECD) recommendations for CbC reporting,...

Wayne Swan: Tax avoidance impoverishes us all. Fighting it requires challenging the powerful

few days before Christmas, in the full light of an Australian summer, the Australian tax commissioner published the tax details of 1,500 large corporate taxpayers which showed a staggering one-third of these companies paid no tax in 2014. This transparency measure was part of a wider package of ground-breaking legislation...

BEPS Action Plan 6: Preventing inappropriate treaty benefit grants

Action Plan 6 of the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) final reports identifies treaty abuse, particularly treaty shopping, as one of the most significant causes of BEPS. It recognizes that existing domestic and international tax rules, including double taxation treaties, should be...

India gears up for changes in tax laws and treaties

The international community led by the G20 initiated the Base Erosion and Profit Shifting (BEPS) project a few years ago with the aim of ensuring that profits are taxed where economic activities are performed and where value is created, the Business Standard reports. Governments, tax authorities and social groups have...

Luxembourg Tax Alert 2016-02

January 2016 You will find below a summary of some of the most important tax developments that have happened since the release of our last newsletter, at OECD, EU or country level, in the area of tax transparency and the fight against tax avoidance. EU – Tax transparency and anti-BEPS...

Gordhan halts SARS revamp

SOUTH African Revenue Service (SARS) commissioner Tom Moyane has been instructed by Finance Minister Pravin Gordhan to halt the implementation of his ambitious restructuring plans. The far-reaching restructuring project for the tax authority was one of the first initiatives undertaken by Mr Moyane following his appointment as commissioner in October...

Netherlands: New transfer pricing documentation rules enacted; country-by-country reporting

Legislation amending the rules governing transfer pricing documentation—to include country-by-country reporting, as well as master file and local file provisions—has been enacted and has an effective date of 1 January 2016. The Dutch Upper House (Eerste Kamer) on 22 December 2015 passed the legislation (the bill is referred to in...

Norway: Country-by-country reporting proposal, public consultation

The Norwegian Ministry of Finance published a public consultation paper regarding country-by country reporting for tax purposes. The proposal suggests that multinational groups—when the ultimate parent company is a resident in Norway—would be required to submit country-by country reports. The reporting requirements could also affect foreign group entities that are...

The Treasury Department and IRS Request Comments on a Potential National Security Exception for Country-by-Country Tax Reporting

The Treasury Department and the Internal Revenue Service have proposed regulations setting out a new requirement for certain U.S. persons that are the ultimate parent of a multinational group (a “U.S. MNE group”) having annual revenue of at least $850 million to file an annual report (the “CbC report”). The...

Korea: Master file and local file; “full” transfer pricing reporting

Rules requiring master file and local file reporting—“full” transfer pricing reporting—are advancing in Korea. 5 January 2016 Korea’s parliament on 2 December 2015 approved legislation (released as draft legislation by the Ministry of Strategy and Finance of Korea in August 2015) to implement the OECD’s base erosion and profit shifting...

European Union: Implementing The Revised Parent Subsidiary Directive Across The EU

A striking example of the EU’s efforts to accelerate the implementation of anti-base erosion and profit shifting (BEPS) measures is the amended Parent Subsidiary Directive (PSD). Originally designed to prevent economic double taxation of profits distributed within an EU corporate, the PSD is now also being deployed to counter undesired...

Dispelling offshore myths

Although the British Virgin Islands is often seen as an offshore tax haven, a closer look shows such opinions may be overstated There is a stereotypical image of the so-called ‘tax haven’ for ‘shady people to put their money’. While it is true that BVI Finance enjoys warm, sunny weather...

Gear up for modifications in tax legal guidelines, treaties

The international community led by the had initiated the (BEPS) project a few years ago with the aim of ensuring that profits are taxed where economic activities are performed and where value is created. Governments, and social groups have been voicing their concern over the past decade that multinational enterprises...

Switzerland: Tax News: Corporate Tax Reform III Approved By Swiss Council Of States

On 14 December 2015, the Swiss Council of States discussed the legislative draft of the Corporate Tax Reform III and in principle approved the reform package. In deviation from the revised draft legislation issued by the Swiss Federal Council on 5 June 2015, the Council of States voted against the...

Raising revenue off Caribbean backs

THE COUNCIL OF THE DISTRICT OF COLUMBIA (DC) recently enacted, as part of its budget, provisions that force entities doing business in any of 39 arbitrarily designated “tax havens” to report their income on worldwide combined reporting. Eighteen are Caribbean jurisdictions. A tax haven is defined by the DC code...

2015: Transfer Pricing Round-Up

The year 2015 was arguably a momentous one for transfer pricing (TP). A combination of local and international developments will mark it as a period which defined the future direction of this subject. Key Developments The Organization for Economic Cooperation & Development (OECD) released final reports as part of its...

Luxembourg: Year-end provisions enacted, affecting corporate and individual taxpayers

The Luxembourg Parliament in December 2015 approved tax measures affecting both corporate and individual taxpayers. These provisions generally are effective beginning 2016, with a few measures applying retroactively as from 2015. Among the measures in the tax legislation are the following provisions: Transposition of amendments to the EU Parent-Subsidiary Directive...

2015: A Watershed Year in Corporate Tax?

Multinational companies have enjoyed a sustained period of falling corporate tax rates around the world. However, with the conclusion of the OECD’s base erosion and profit shifting project earlier this year marking the start of fundamental changes to the international tax system, and with governments more determined than ever to...

Dutch tax treatment of Brazilian ‘interest on equity’ payments as of 2016

On 15 September 2015, the Dutch government released its budget for 2016, containing the Tax Plan 2016, which includes certain amendments to Dutch tax law. One of the proposed amendments was the inclusion of an anti-hybrid rule in the Dutch participation exemption regime (“PER”). On 22 December 2015, the amendments...

Mexican Tax Reforms for 2016

On Nov. 18, 2015, reforms to the Mexican Income Tax Law (MITL), Tax Code, Excise Tax and Federal Income Law for 2016 (collectively, the Tax Reform) were published in the Federal Gazette. The Tax Reform reestablishes measures to promote savings and increase incentives for doing business in Mexico, some of...

B&E | Measures to Control the Abuse of Offshore Tax Havens

“Cash Booked Offshore for Tax Purposes by U.S. Multinationals Doubled between 2008 and 2014” In recent years, U.S. multinational companies have sharply increased the amount of money that they book to foreign subsidiaries. An April 2015 study by research firm Audit Analytics found that the Russell 1000 list of U.S....

BEPS Action Plan 2: Neutralizing the effects of hybrid mismatch arrangements

Hybrid mismatch arrangements are the focus of the 2-part Action Plan 2 of the Organisation for Economic Co-operation and Development’s (OECD’s) Base Erosion and Profit Shifting (BEPS) initiative. Hybrid Mismatch Arrangements abuse differences in the tax treatment of an instrument (i.e., a hybrid instrument) or an entity (i.e., a hybrid...

Boustany introduces BEPS Act to protect U.S. companies’ country-by-country reporting

Legislation introduced on Tuesday by U.S. Rep. Charles Boustany (R-LA) would safeguard companies in country-by-country reporting requirements. The Bad Exchange Prevention Act follows the issuance by the Treasury Department on Monday of guidelines for adhering to the country-by-country reporting requirements under the Organization for Economic Cooperation and Development’s (OECD) Base...

Tax body welcomes collaborative approach to improving the tax practice of large companies

The Chartered Institute of Taxation (CIOT) has welcomed a change to the Government’s approach1 to improve tax compliance by large companies but remains sceptical about the effectiveness of a ‘special measures’ regime to target tax abuse. John Cullinane, Tax Policy Director, said: “We are pleased that the framework for improving...

Developed countries erode BEPS Action Plan on Digital Economy

IT is ironic that what was almost at the centre of the BEPS project has ended up in not having a concrete agreement and with a vague promise of some review by the year 2020. One may recall that it was the big digital companies and their tax affairs that...