Congressional tax writers are getting behind a major new tax break for profits made on patent portfolios as part of their ongoing quest to identify ways to make the U.S. tax code business-friendlier. Source: Lawmakers Embrace Patent Tax Breaks – WSJ
Ecuador has adopted new tax measures curtailing tax deductions for transactions between related parties, including limits on expenses for royalties, technical services, and advisory services, writes EY in a February 27 report. The new law also eliminates a tax exemption for income derived from the sale of stock in Ecuadorian entities. See, EY.
Switzerland’s Federal Council on Sept. 9 adopted report on the tax treatment of fines including fines that arise in an international context. The report concludes that fines, including tax penalties and financial administrate sanctions, are putative in nature and therefore can not be deducted. Profit disgorgement sanctions, on the other hand, which require repayment of taxable profits obtained by illegal acts, can be deducted. For more details, see release, report (in German).
Professor Allison Christians of McGill University provides an update of the lawsuit. See: Tax, Society & Culture. Related: MNE Tax.
The legislation, released September 11 and 15 also includes provisions that reduce withholding tax on dividends that follow a cross-border merger into a Dutch company. See: Loyens & Loeff. For just the transfer pricing aspects of the bill, See: Otterspeer Haasnoot & Partners.
The Switzerland and Italy have reached an agreement in principle to sign a protocol to their double tax treaty to make provision for the OECD standard for the exchange of tax information upon request, the Swiss government announced January 16. The countries have also initialed a roadmap . . .
Macedonia will soon release draft legislation that will create a financial zone and tax breaks to companies that locate their headquarters there, said Prime Minister Nikola Gruevski, according to a July 18 article by Sinisa Jakov Marusic of BalkanInsight. For details, see BalkanInsight.
“Powerful vested interests will be very upset about this,” Australia’s Treasurer Joe Hockey said, according to a September 7 article by Adam Creighton of the Business Spectator. See: Business Spectator. Related: MNE Tax.
Advancing the common consolidated corporate tax base (CCCTB) proposal in Europe is a “high priority,” for new Commissioner for Economic Affairs, Pierre Moscovici. The CCCTB would shut off major channels of tax avoidance, ensuring a closer . . .
The Polish government on Sept 10 released draft general antiavoidance legislation as well as procedures for obtaining advance tax rulings to confirm that intended transactions do not qualify as abusive, write Karina Furga-Dąbrowska and Rafał Mikulski of Dentons in a Sept. 15 post. For a detailed discussion of the tax proposal, see Dentons.
The Czech Tax Administration has announced new reporting obligations applicable to companies that engage in transactions with related parties located in foreign countries, reports PwC in an August 11 newsletter. For details, see PwC.
China will replace its turnover tax on the telecom sector with value-added tax (VAT) effective June 1, the government announced on April 30. “Basic telecom services such as voice calls and bandwidth leasing or sales will be subject to 11 percent VAT while value-added services such as messaging, data transfer and Internet access will be subject to a 6 percent rate. Telecom services for overseas clients will be exempt,” state-run news agency Xinhua reported. See, Xinhuaet
Pharmaceutical companies could be the next target of an Australian Senate inquiry into tax avoidance, according to a May 22 report by the Brisbane Times. See, Brisbane Times
In an October 24 letter, William J. Sample, Chair, Taxation Committee of the United States Council for International Business (USCIB) states that if adopted, the UN’s proposed modification to the commentary to Article 9 of the UN Model will lead to increased disputes and double taxation. Sample condemned the lack of input by stakeholders in the UN process and argues that is inappropriate for non-OECD countries that participated in OECD transfer pricing guideline negotiations and obtained concessions to “undercut” those negotiations by arguing elsewhere for positions that were rejected. USCIB
Related article:
Luxembourg’s draft budget 2015, presented to Parliament on October 15, includes provisions that formalize and charge a fee for advance tax rulings, that modify transfer pricing provisions to make an explicit reference to the arm’s length standard, and that extend documentation requirements to related party transactions, writes KPMG’s member firm in Luxembourg. For details, see KPMG.
India’s Competent Authority Akhilesh Ranjan discusses mandatory arbitration, country-by-country reporting, other BEPS topics with Mukesh Bhutani of BMR Advisors and Arun Giri of Taxsutra in a report published in The Firm on September 7. See: The Firm.
The Indian government on December 19 introduced a constitutional amendment in the Lok Sabha, India’s lower house of parliament, to pave the way for the introduction of a goods and services (GST) tax. The GST would be a simplification measure, replacing numerous taxes levied by individual states, including VAT, entertainment tax, octroi, entry tax, luxury tax, and purchase tax on goods and services. See, Economic Times, The Indian Express, The Times of India, Tax Guru.
The UK, on December 10, released a draft Finance Bill modifying the taxation of the loan relationships and derivatives contracts. The bill updates the computation of profits and losses on these instruments and the detailed rules by which they are taxed. See: Corporation tax: modernising the taxation of corporate debt and derivative contracts
Malaysia’s 2015 budget, announced October 10, includes a reduction to the corporate tax rate, an expansion of the list of items not subject to GST, corporate tax incentives, an extension of the statue of limitations for transfer pricing adjustments, and increased withholding for real property gains tax writes EY in an October 16 report. For details, see EY.
The U.S. IRS and Caterpillar, Inc., on July 31, filed a stipulated settlement, ending their U.S. Tax Court dispute over whether royalty income should be allocated to Caterpillar from the company’s Belgium and French subsidiaries. Tax Court Docket No. 010790-13, For analysis of the dispute, see post by Jerald David August of Fox Rothschild, LLP.
VAT refunds owed Procter & Gamble, Unilever, and Colgate totaling hundreds of millions of dollars were withheld by the Mexican government while the companies were under investigation for tax avoidance, writes Henry Romero of Reuters in a September 1 article. See: Reuters.
Criminals have allegedly duped Denmark’s tax authority into inappropriately refunding DKK 6.2 billion (approx. €830 million), causing the agency to temporarily suspend payout on pending refund claims, writes EY in an August 27 tax alert. See: EY
The Swiss Federal Council on December 17 submitted for consultation a bill proposing to replace its current debtor system of withholding to a system based on a paying agent principle. The consultation will run until March 31, 2015. See, release.
Draft guidance released November 3 would modify the OECD transfer pricing guidelines to provide elective, simplified, transfer pricing rules for low value-adding intra-group services. The guidance was released in response to Action 10 of the OECD Base Erosion and Profit Shifting (BEPS) plan, which directs the OECD to develop transfer pricing rules or special measures “to provide protection against common types of base eroding . . .
The South African Revenue Service, on August 14, released a binding private ruling involving the proposed restructuring of a multinational group, concluding that a German Kommanditgesellschaft is a company for South African tax purposes and that the proposed restructuring did not give rise to tax, including capital gains tax. BPR 178
The Canadian government on January 7 announced that launch of the Canada Revenue Agency’s (CRA) Electronic Funds Transfer (EFT) initiative, which effective January 1, requires financial intermediaries, including banks, to report to the CRA incoming and outgoing international EFTs of $10,000 or more. The. . .
The Isle of Man on December 15 published revised Guidance Notes relating to intergovernmental agreements to improve international tax compliance signed in 2013 with the UK and US. Release.
The Slovak Ministry of Finance has modified is rules on transfer pricing documentation, writes Zuzana Blažejová of KPMG in an October 22 report. For discussion of the new provisions, see KPMG.
For a WSJ interview of House Ways and Means Chairman Kevin Brady, see: The Wall Street Journal.
For discussion of the October 15 decision, 9 Afs 57/2015 – 120, see, EY.
“Ireland will probably face censure from European authorities within months in relation to its tax dealings with Apple Inc.,” write Gaspard Sebag and Joe Brennan of Bloomberg Business, quoting unnamed sources. See: Bloomberg Business.
Copyright © 2021. DISCLAIMER: The information provided herein is general and may not be applicable in all situations. It should not be acted upon without legal advice accounting for a particular situation.
