iSP Global Tax Newsletter December 2017
LOCAL TAX NEWS
Italy - European Delegation Law 2016-2017 Published
The European Delegation Law 2016-2017 was published on 6 November 2017. The law empowers the government to implement certain EU Directives without further approval by the parliament. These directives determine framework for automatic exchange of information in the field of taxation, measures against tax avoidance practices, access to anti-money-laundering information by tax authorities and treatment of vouchers. Parliamentary commissions will only have a consultative function. The law enters into force on 21 November 2017.
Latvia - New Rules on Tax Havens
Latvia issued new regulations on the blacklist of countries and territories treated as tax havens. The new rules shorten the list of tax havens, in view of Latvia's membership in the OECD and participation in the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which provides for the exchange of information. Latvia does not include in the blacklist countries and territories with which the exchange of information is ensured. One of the countries which was removed from the black list is Liechtenstein. New rules are effective from 1 January 2018.
Romania - Tax Code Amendments Approved
To implement some of the main provisions of the Council Directive (EU) laying down rules against tax avoidance practices 2016/1164 (2016) into local legislation, the Romanian government approved amendments to the Tax Code. The amendments will implement the interest limitation rule, the exit taxation rule, the general anti-avoidance rule and the CFC rules. The amendments will enter into force on 1 January 2018.
Sweden - Group Contributions Not to Be Included in CbC Reporting
The Swedish Tax Authority issued updated guidance on CbC reporting. According to the guidance group contributions, i.e. profit transfers used to offset losses of one group company against the profits of another group company or a related party, must be included in the profit/loss reporting before income taxes, but do not have to be included in CbC reporting.
India - Final Rules for CbC reporting and master file enforced
On 1 November 2017 India issued the applicability criteria and requirements for maintaining and furnishing transfer pricing documentation. CbC-reporting and master files should be prepared according to the following:
A CbC report should be filed if a parent company of a multinational group resident in India has total consolidated group revenue of at least INR 55 billion. The due date for the CbC reporting is 30 November, but for the first year of CbC reporting the period has been extended to 31 March 2018.
A master file should be prepared if:
• total consolidated group revenue of more than INR 5 billion; and either:
• an aggregate value of international transactions of more than INR 500 million; or
• an aggregate value of international transactions in respect of intangible assets of more than INR 100 million.
A multinational group which has multiple constituent entities in India may appoint one of the entities to file the master file on its behalf. The deadline for submitting the master file for financial year 2016-17 has also been extended to 31 March 2018.
OECD - 2017 Update to OECD Model Tax Convention
OECD released 2017 update to the Model Tax Convention, which primarily comprises changes to the OECD Model that were approved as part of the BEPS Package or were foreseen as part of the follow-up work on the treaty-related BEPS measures. The 2017 Update, which was previously approved by the Committee on Fiscal Affairs on 28 September 2017, and by the OECD Council on 21 November 2017, will be incorporated in a revised version of the OECD Model that will be published in the next few months. A draft of the 2017 Update was previously released on 11 July 2017.
Panama - Panama Intends to Sign Multilateral Instrument
Panama takes further actions showing its commitment to take the necessary steps to meet international expectations in the combat against tax evasion. In October 2017 Panama signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, and expressed its intent to sign the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS ("Multilateral Instrument").
Chile - Czech Republic
The most favoured nation (MFN) clause embodied in the Income and Capital Tax Treaty Article 11(7) with Czech Republic was activated by way of the Chile - Japan Income Tax Treaty (2016). According to the MFN clause the adjusted interest rate is to be applicable between Chile and Czech Republic if Chile enters into a treaty with any OECD country and if that treaty contains lower tax rates. Lower withholding tax rate on interests stipulated in the treaty between Chile and Japan has entailed tax rates adjustment between Chile and Czech Republic starting from 1 January 2017.
Finland - Germany
Finland and Germany have signed a new Treaty for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. The new treaty replaces the existing Income Tax Treaty which was signed in 1979 and becomes effective from 1 January 2018.
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