iSP Global Tax Newsletter July 2017
LOCAL TAX NEWS
Denmark - New Withholding tax procedure on Dividends in Denmark
On 12 June 2017, the Ministry of Finance announced that a new dividend withholding tax procedure will be introduced.
The current refund system used for compensating the difference between 27% withholding tax on dividends and tax treaty rates will be abolished and replaced by immediate application of treaty rate if certain conditions are satisfied. Up to now, foreign investors have to apply for a refund of tax from Danish tax authorities. Further implementation of the procedure will be reported in the due course.
Sweden - Ministry of Finance Proposes Changes on CIT
The Ministry of Finance proposed changes on CIT which will be subject to consultation. According to the press release, the changes, if implemented, will be effective from 1 January 2018. The most important aspects are:
• reduction in the corporate income tax rate from 22% to 20%;
• introduction of interest deduction limitations based on EBITDA at 25% and EBIT at 35% ; and
• implementation of provisions targeting hybrid mismatches in relation to deduction of interest as specified in Directive amending Directive (EU) 2016/1164.
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Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS
On 7 June 2017, nearly 70 jurisdictions signed the Multilateral Instrument (BEPS Action 15). The MLI offers modifications of existing tax treaties in order to comply with BEPS minimum standard preventing treaty abuse and limiting the scope of hybrid mismatches.
Currently following jurisdictions has signed the MLI:
Andorra, Argentina, Armenia, Australia, Austria, Belgium, Bulgaria, Burkina Faso, Canada, Chile, China (People’s Republic), Colombia, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Fiji, Finland, France, Gabon, Georgia, Germany, Greece, Guernsey, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Korea (Rep.), Kuwait, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Monaco, Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, Romania, Russia, San Marino, Senegal, Serbia, Seychelles, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom, Uruguay.
MLI in respective jurisdiction will enter into the force after domestic ratification process is completed. The first modifications to bilateral tax treaties are expected to enter into effect in early 2018.
Gibraltar introduced regulations regarding country-by-country (CbC) reporting. CbC reports must be submitted by multinational groups with total consolidated group revenue of EUR 750 million or more. The reporting period for ultimate parent entities is 1 January 2016 and for constituent entities - 1 January 2017. The reports will have to be submitted within 12 month from the end of the relevant fiscal year. Notifications have to be submitted in writing by the date of filling the tax return (9 months after the end of an accounting period).
On 29 May 2017, the Secretary of State for Fiscal Affairs announced that the country-by-country reporting deadline has been extended from 31 May 2017 to 31 October 2017.
Belarus - Spain
On 14 June 2017, Belarus and Spain signed an income and capital tax treaty in Madrid. Once in force and effective, the new treaty will replace the former USSR - Spain Income and Capital Tax Treaty (1985), in relations between Belarus and Spain. Further developments will be reported as they occur.
Jordan - United Arab Emirates
On 10 January 2017, the Jordan - United Arab Emirates Income Tax Treaty (2016) entered into force. The treaty generally applies from 1 January 2018. Details of the treaty will be reported subsequently.
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