Category: Base Erosion & Profit Shifting

Multinationals may have to provide global income, tax details to taxman

Budget to implement some of OECD’s standards on profit-shifting NEW DELHI, JANUARY 21: Large multinational enterprises (MNEs) may be required post-Budget to furnish to Indian tax authorities information on their global incomes and taxes. This move — a fallout of India agreeing to OECD’s Action Plan on Base Erosion and… – Continue reading

Budget 2016 may introduce BEPS to make tax evasion difficult for MNCs

MUMBAI: In what could lead to an increase in domestic tax liabilities of many Indian conglomerates and multinationals, the government is set to introduce a framework for Base Erosion and Profit Shifting (BEPS), a global agreement to check tax avoidance by multinationals, in the upcoming Budget. Industry sources expect the… – Continue reading

Anger at plans to curb UK’s business-friendly tax regime

Plans to restrict the generous tax treatment of interest costs — a key aspect of Britain’s business-friendly taxation regime — are unnecessary and potentially damaging, companies have told the Treasury. Professional bodies and business groups are voicing fears about the restrictions that are set to be introduced as part of… – Continue reading

FSC calls for 22% company tax

The Financial Services Council has proposed a new tax package calling for company tax to be cut to 22% from its current 30%. The industry body also wants to see “lower, flatter, indexed” income tax rates. The FSC said its tax reform package is designed to “grow the economy and… – Continue reading

Companies anticipate tax authorities to turn aggressive: Survey

NEW DELHI: Indian businesses are anticipating a “more aggressive” stance by tax authorities as their tax arrangements come under greater scrutiny, says a survey. The findings are part of leading consultancy Deloitte India’s BEPS (Base Erosion and Profit Shifting) survey titled ‘Anticipating BEPS India impact’. Indian businesses are anticipating a… – Continue reading

BEPS could cost property industry £660m a year

The introduction of government measures to clamp down on tax avoidance could cost the UK development sector as much as £600m, according to a new study Plans to restrict the tax deductibility could harm investment in debt-reliant industries, the British Property Federation (BPF) warned. Despite supporting the initiative, the BPF… – Continue reading

Dutch EU Presidency To Prioritize BEPS Action

The Netherlands will prioritize action against corporate tax avoidance during its Presidency of the Council of the European Union, from now until the end of June. In a report detailing its plans for its six-month term, the Dutch Government said: “The Netherlands Presidency will prioritize action against tax evasion and… – Continue reading

Property groups say Beps will cost UK sector £660m

UK property companies are seeking changes to the proposed implementation of a global agreement to fight tax avoidance that is set to add £660m to their annual tax bill. Private equity and infrastructure companies are also among those groups facing additional payments under OECD rules on base erosion and profit… – Continue reading

Bloomberg BNA Provides Insights into 2016 U.S and International Tax Policy

ARLINGTON, Va., Jan. 14, 2016 /PRNewswire-USNewswire/ — Bloomberg BNA today announced the publication of the Daily Tax Report’s 2016 Outlook on tax and accounting policy. Dozens of policy experts, along with current and former members of Congress, congressional staffers and federal agency officials provided insights on the year ahead regarding… – Continue reading

2016 CHALLENGES FOR COMPANIES OPERATING IN JERSEY

Last year Jersey cemented its position as a leading centre for companies looking to list – as reflected in the rise in volume and value of Jersey companies listed on exchanges around the world. Here are some challenges that lie ahead in this jurisdiction over the next 12 months. In… – Continue reading

EU to revive common tax base plan, propose binding corporate tax rules

Reforms to corporate tax rules and fiscal transparency will be pursued by EU policy makers in 2016, the EU’s tax commissioner Pierre Moscovici has said. “We have a serious problem with tax avoidance and lack of transparency. Too many people have looked the other way,” Moscovici said. Moscovici told a… – Continue reading

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… – Continue reading

Commission receives 170 submissions on corporate tax

Information will feed into relaunch of the revised common consolidated corporate tax base The European Commission has received more than 170 submissions on its proposal for a revised common consolidated corporate tax base (CCCTB) ahead of its re-launch later this year. The closing date for the commission’s three-month public consultation… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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,… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

New Australia/Germany Double Tax Treaty shows Australia’s policy response to BEPS

On 13 November 2015 the Treasurer and Minister of Finance jointly announced that a new double tax treaty had been negotiated with Germany, replacing the 1972 agreement. The new treaty has not yet been formally adopted as part of Australian law, as a change to the International Tax Agreements Act… – Continue reading

The OECD’s BEPS Project: The Emperor Has No Clothes

With all due respect, the OECD’s BEPS project was a fiasco, accomplishing little of any positive value and opening up a Pandora’s box with its focus on “value creation” in the context of transfer pricing. Despite all the “happy talk” coming out of the OECD and all the talk of… – Continue reading

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… – Continue reading

Playing the Principal Role in Creating a Permanent Establishment

Now that the final report on BEPS Action 7 has been released, “Preventing the Artificial Avoidance of Permanent Establishment Status” (Final Report), taxpayers are able to consider the final language to be incorporated into Article 5(5) of the OECD Model Tax Convention.1 This language also will be incorporated into the… – Continue reading

The Implications of BEPS for CEOs and Boards

On October 5, the OECD issued it formal recommendations on the Base Erosion and Profit Shifting (BEPS) Action Plan. These recommendations have been subsequently adopted by the G20. We acknowledge the monumental effort that has been put forth to produce a modernized international system of tax rules through the BEPS… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

The challenge of transfer pricing can be solved with key technology

Increasing regulation has made transfer pricing complex for multinational enterprises. Technology can help simplify the process In recent years there has been an increasing focus on transfer pricing, in line with the proliferation of transfer pricing requirements from a growing number of countries around the world, and the OECD’s project… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading

Legal trends: tax

ONE | A NEW LIBERAL GOVERNMENT Elected in October 2015, Canada’s new Liberal government has proposed a tax platform featuring significant changes, including a four per cent increase (to 33 per cent) in the federal tax rate for individuals on income over C$200,000 and a 1.5 per cent drop in… – Continue reading

St Kitts’s 2016 Budget Responds To BEPS

The Caribbean territory Saint Kitts and Nevis has set out plans to amend the territory’s international tax rules in its 2016 Budget. The Budget is said to target “the potential for abuse through the use of transfer pricing techniques,” which the Government said “not only affects the withholding tax regime… – Continue reading

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… – Continue reading

Tax regime on royalties from intellectual property to be revised

The Administration of the Ministry of Finance has announced the upcoming amendment of the Intellectual Property tax regime. The said amendment will incorporate the recommendations of Action 5 of the Organisation for Economic Co-operation and Development (OECD), which were issued on 5 October 2015 for the Action Plan against ‘Base… – Continue reading

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… – Continue reading

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… – Continue reading

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… – Continue reading