Europe
What We’re Reading
Europe
Europe
Spain adopts new transfer pricing documentation rules including country-by-country reporting – PWC
In addition to the new documentation rules, the new Spanish law, enacted July 11, revises transfer pricing comparability analysis standards, provides for repatriation following a transfer pricing adjustment, and offers a special advance pricing agreement procedure for Spain’s patent box regime, writes PWC in an August 3 alert. See: PWC. More: EY.
Europe
Luxembourg issues rules on withholding tax rates for dividends paid to German funds
Luxembourg on February 9 released guidance on withholding rates to be applied when a Luxembourg company distributes dividends to German Sondervermögen, writes KPMG in a tax alert. For discussion, see KPMG.
Asia-Pacific
Japan’s ruling parties agree to tax reform
Japan’s ruling coalition on December 30 agreed to policies for a 2015 tax reform bill, which include a reduction in the corporate tax rate to 23.9% percent beginning April 1, restrictions on net operating losses, modifications to research and development tax credits, and limitations on the 95 percent participation exemption, writes EY in a January 7 report. For discussion, see EY.
Multinational
UK/German compromise on IP regimes should be extended to activities not patentable, Netherlands official says
The Netherlands State Secretary of Finance on December 1 expressed support for a UK/German agreement to put limits on preferential intellectual property tax regimes under the OECD/G-20 base erosion profit shifting plan, but said that incentives should not be limited to activities that are legally protected, such as by patent, writes EY in a December 5 tax alert. The Netherlands does not plan major revisions to its innovation box regime, EY reported. For discussion, See EY.
Americas
Mexico issues regulations on deductibility of pro rata expense allocations made by nonresidents to Mexican entities
Mexico issued regulations on October 16 on the deductibility of pro rata expense allocations made by nonresidents to Mexican entities and individuals, including special rules on the deductibility of services incurred between related parties, writes EY in an October 17 alert. For discussion, see, EY.
Americas
Canada Revenue Agency defines “cost” under new thin cap rules
Neal Armstrong of the law firm Davies has reported that the Canadian Revenue Agency, in a July 22 ruling, T.I. 2014-0526631E5, has defined the word “cost” for purposes of new Canadian thin capitalization rules to mean an asset’s original acquisition cost. See, Tax Interpretations
Europe
Asia-Pacific
Multinational
EY analyzes worldwide implementation of BEPS plan transfer pricing output
About 100 EY firms have contributed to an August report on how the OECD/G20 base erosion profit shifting (BEPS) plan transfer pricing guidelines and documentation rules are being implemented throughout the world. See: EY .
Multinational
OECD releases guide for Tax Inspectors Without Borders program
The OECD has released a guide for its Tax Inspectors Without Borders (TIWB) initiative, a program which recruits currently serving or recently retired tax officials to work alongside tax officials in developing nations on international tax audits and audit-related . . .
Europe
Luxembourg law outlines procedure for obtaining private tax rulings, arm’s length standard
Luxembourg’s Parliament on December 18 passed a law which sets out the procedures required to obtain a private tax ruling, thereby formalizing existing administrative practice, and which describes the application of the arm’s length principle in transfer pricing, writes EY in a December 19 tax alert. For discussion of the new legislation, see EY
Multinational
“Should a Multinational Firm Place Part of its Supply Chain in a Tax Haven?: Strategies to Enable International Tax Arbitrage,” by Masha Shunko, Hung Do & Andy Tsay – SSRN
A new paper was released on the SSRN website: “Should a Multinational Firm Place Part of its Supply Chain in a Tax Haven?: Strategies to Enable International Tax Arbitrage,” by Masha Shunko (Purdue), Hung Do (Vermont) & Andy Tsay (Santa Clara) – SSRN
Asia-Pacific
Australia sharing information about tech companies to combat tax avoidance – Financial Times
Australia has begun sharing “information and intelligence” about multinational technology companies with five countries in an effort to crack down on tax avoidance. See, Jamie Smyth, Financial Times.
Europe
Etsy’s Irish subsidiary switches to an unlimited liability company, allowing it to conceal profits shifted to tax havens – Bloomberg Business
“Because of a change in how its Irish subsidiary is registered, Etsy no longer needs to publicly disclose basic financial information about that unit,” write Bloomberg’s Alex Barinka and Jesse Drucker. See: Bloomberg Business
Americas
Americas
Washington State tax subsidies to Boeing challenged by EU
The European Commission on December 19 requested formal consultations with the US in the World Trade Organization (WTO) concerning recent Washington State legislation extending tax subsidies to Boeing and other aerospace firms from 2024 through 2040, estimated at USD 8.7 billion. The Commission maintains that Washington State tax subsidies, originally set to expire in 2024, have already been declared WTO inconsistent. See, EU Commission release.
Americas
US IRS publishes final guidance on reporting foreign financial assets
The US IRS on December 12 published final regulations on reporting of specified foreign financial assets (TD 9706) and removed associated temporary regulations. According to a summary provided . . .
Europe
Luxembourg defends its tax practices
Luxembourg’s Ministry of Finance on December 10 defended its tax rulings practice and its record on tax transparency, claiming that “Luxembourg is a constructive, reliable player in the move towards greater transparency in tax matters.” Though not mentioning the matter directly, the Ministry also responds allegations stemming from the “Lux leak” . . .
Czech Republic
Czech court addresses burden of proof in transfer pricing and incentive regime disputes
The Czech Republic Supreme Administrative Court elaborated on the burden of proof in transfer pricing and incentive regimes cases in a ruling which concluded that a taxpayer did not qualify for incentive regime tax relief because it failed to prove it priced transactions with its subsidiary at arms length, writes KPMG in a November 17 report. For discussion, see KPMG.
Europe
ECJ rules VAT place of supply for processed goods is where processing took place
The European Court of Justice on Oct. 2 ruled that where goods are sold by a company established in State A to a person in State B, and where the vendor does finishing work on the goods performed by a service provider in State B before the goods are transferred to the purchaser, the place of supply is State B. See, Fonderie 2A v. Ministre de l’Économie et des Finances, C-446/13.
Americas
Whistleblower alleges that Valeant should continue to pay U.S. tax after inversion
Canadian billionaire Eugene Melnyk has confirmed that, in 2012, he made a presentation to U.S. tax authorities as an “official whistleblower,” alleging that Valeant Pharmaceuticals, formerly a U.S. company, should have continued to pay U.S. tax following its merger with Canada-based Biovail and change of headquarters to Canada, writes Nicolas Van Praet of the Financial Post. See, Financial Post.
Europe
Europe
Asia-Pacific
China ratifies multilateral convention on tax avoidance – People’s Daily
China’s National People’s Congress Standing Committee on June 1 ratified the Multilateral Convention on Mutual Administrative Assistance in Tax Matters the People’s Daily reports. See, People’s Daily.
Americas
Asia-Pacific
Australia finalizes guidance on deductibility of support payments to foreign subsidiaries
The Australian Taxation Office, on June 4, released TD 2014/14, on the deductiblity of capital support payments made by an Australian parent company to its overseas subsidiary. TD 2014/14, For analysis, see report by EY
Europe
Americas
Jeb Bush tax plan calls for territorial tax system, deemed repatriation of existing overseas profits
US presidential candidate Jeb Bush unveiled his tax plan in The Wall Street Journal on September 8, proposing a 20 percent corporate tax rate, limits on tax deductions, and a move to a territorial tax system coupled with “a one-time tax of 8.75%, payable over 10 years, on the more than $2 trillion in corporate profits sitting overseas.” See: The Wall Street Journal.
Americas
Ecuador releases new transfer pricing documentation regulations – EY
Ecuador’s Internal Revenue Service has released regulations outlining new transfer pricing documentation requirements, EY writes in a July 31 tax alert. See: EY
Americas
US IRS requires foreign-owned corporations to file info return with tax return
The US IRS on December 24 released final regulations, TD 9707, under sections 6038A and 6038C of the tax code providing that the Form 5472, “Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business,” must be filed in all cases only with the . . .
Americas
US IRS updates list of jurisdictions with in-force TIEAs for nonresident deposit interest reporting
The US IRS on December 16 has updated the list of jurisdictions with which the US has an information exchange agreement for purposes of the bank deposit interest reporting requirements of sections 1.6049-4(b)(5) and 1.6049-8(a) of the Income Tax Regulations. The guidance . . .
Europe
British MP says UK shoppers should boycott Amazon
Influential chair of the UK Public Accounts Committee, Margaret Hodge, has urged British shoppers to boycott Amazon following revelations that the online retailer paid only £4.2m in tax last year on sales of £4.3bn, according to an article by Juliette Garside, The Guardian. See also, Peter Campbell, Daily Mail; Sarah Shaffi, The Bookseller; he Independent; Sean Martin International Business Times UK
United Kingdom
Asia-Pacific
Ethiopia
Americas
India/US transfer pricing deal anticipated
The India expects to sign an agreement with the US on Sunday that sets out a framework to resolve mutual agreement procedure disputes concerning the appropriate markup to apply to related-party transactions, and hopes to sign similar agreements with the UK, France, and other European nations, writes Jayshree P. Upadhyay of Business Standard in a January 24 article, quoting an unnamed tax official. See, Business Standard.
Europe
Swiss Federal Council issues dispatch on potential revisions to taxation withholding tax on earned income
The Swiss Federal Council on November 28 issued a dispatch discussing proposed changes to the taxation of residents and nonresidents currently subject to withholding tax on earned income. See, release.
