On December 30, 2023, the tax treaty between France and Greece entered into force.
The treaty generally applies from January 1, 2024, for withholding and other taxes. From this date, the new treaty replaced the existing tax treaty. The OECD's Committee on Fiscal Affairs (CFA) has elected Tim Power, Deputy Director for Business and International Tax in His Majesty's Treasury of the United Kingdom, as the Chair of the Committee beginning on 18 December 2023.
He replaces Gaël Perraud, who resigned in December 2023 following his move to a new position within the French Ministry of Finance. As Chair of the CFA, Power will also serve as Co-Chair of the OECD/G20 Inclusive Framework on BEPS, alongside Marlene Nembhard-Parker of Jamaica, who became Co-Chair in March 2022. The OECD/G20 Inclusive Framework on BEPS (Inclusive Framework) released further technical guidance to assist governments with implementation of the global minimum tax under Pillar Two and a statement on the timeline of the Multilateral Convention (MLC) under Pillar One.
The Agreed Administrative Guidance for the Pillar Two GloBE Rules (December 2023) supplements the Commentary to the Global Anti-Base Erosion Model Rules in order to clarify their application, including guidance on the application of the Transitional Country-by-Country Reporting Safe Harbour and a mechanism for allocating taxes arising in a Blended Controlled Foreign Corporation (CFC) Tax Regime when some of the jurisdictions the MNE operates in are eligible for the safe harbour. The Inclusive Framework also released a statement updating the timeline to finalise the text of the MLC to implement the coordinated reallocation of taxing rights over the profits of the world’s largest and most profitable companies (Amount A of Pillar One). The statement expresses the continued and strong commitment of Inclusive Framework delegates to resolve the outstanding issues, achieve a consensus-based solution and finalise the text of the MLC as swiftly as possible. The OECD/G20 Inclusive Framework on BEPS released the latest peer review assessments for 131 jurisdictions in relation to the compulsory spontaneous exchange of information on tax rulings.
This is the seventh annual peer review of the implementation of the BEPS Action 5 minimum standard on tax rulings, which aims to provide tax administrations with the necessary information concerning their taxpayers to efficiently tackle tax avoidance and other BEPS risks. The 2022 Peer Review Reports on the Exchange of Information on Tax Rulings indicates that over 54 000 exchanges of information have taken place in respect of the over 24 000 tax rulings that have been identified. Vietnam’s National Assembly, on November 29, approved the resolution on the application of a global minimum tax in Vietnam.
The new rules will apply in Vietnam from 2024, and will cover over 120 foreign companies. The resolution was approved at the 6th session of the 15th National Assembly. Over 420 delegates from 115 jurisdictions and 13 international organizations convened in Lisbon, Portugal, to discuss the progress so far and chart the future work to promote international tax co-operation.
The Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) concluded its 16th plenary meeting (November 29-December 1), marking significant advances in its efforts to deliver transparency and exchange of information (EOI) for tax purposes for all. The Global Forum underscored its unwavering commitment to inclusivity, its collective resolve to furthermore promote EOI based on an equal footing and a level-playing field and its commitment to ensure all jurisdictions benefit from the progress made. The Australian Taxation Office (ATO) has won a first of its kind case that considered the diverted profits tax – a new tool to ensure multinationals pay the right amount of tax.
The decision was given by the Federal Court in PepsiCo, Inc. vs. Commissioner of Taxation. This decision confirms is liable for royalty withholding tax and, in the alternative, diverted profits tax would apply. A review petition has been filed in the controversial most-favored-nation (MFN) judgment delivered by the Indian Supreme Court last month.
India’s top court, on October 19, handed down a controversial ruling concerning MFN clauses in India’s tax treaties with countries including France, the Netherlands and Switzerland. The tax authority had refused to accept the taxpayers’ request for invoking the MFN clauses in the tax treaties, under which a reduced withholding tax rate were to be applied. The top court, however, found in favour of the tax authority. As per sources, a review petition has now been filed asking the court to review its decision. Barbados will levy an increased corporate tax rate of nine percent for most corporations from January 2024.
Prime Minister Mia Amor Mottley has announced a suite of changes to the country’s corporate tax regime to be implemented in 2024. The 9 nine corporate tax rate will not apply to insurance and shipping entities, and to businesses with revenue at or below BBD2million, which are registered under the Small Business Development Act. On November 22, 2023, the Swiss Federal Council adopted the dispatch on the approval and implementation of an additional agreement supplementing the country’s tax treaty with France.
The additional agreement includes provisions to bring the tax treaty into line with the results of the OECD’s efforts to prevent base erosion and profit shifting. The additional agreement must be approved by both countries to come into force. Bermuda has issued a third public consultation paper on the proposed corporate income tax that would be apply to MNEs with annual revenue of EUR750m or more.
The Finance Ministry conducted two previous consultations in August and October. As a result of stakeholders’ feedback, the current proposal would introduce a corporate income tax that would be a covered tax under the OECD’s GloBE rules. This approach aims to minimize Top-Up taxes levied on Bermuda MNEs in other jurisdictions where they operate. The corporate income tax legislation is intended to come into force in its entirety in January 2025, providing MNEs time to make transition adjustments. The Government has proposed a statutory tax rate of 15 percent and is developing a robust package of Qualified Refundable Tax Credits (QRTCs) to maintain Bermuda’s attractiveness. Denmark has gazetted regulation terminating its tax treaty with Russia.
The regulation was published in the Official Gazette on November 15. The termination will take effect from January 1, 2024. The Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) has published new peer review reports on transparency and exchange of information on request (EOIR) for six of its members.
The reports concern Latvia, Mauritania, Pakistan, Poland, Serbia, and Thailand. The Forum has also published supplementary reports that reflect progress made by two members (Botswana and Dominica) in implementing the EOIR standard. More than half of the Global Forum members have now been fully reviewed in the second round of EOIR peer reviews and the ratings assigned are generally very good, with 88% of the jurisdictions obtaining satisfactory overall ratings (“Compliant” or “Largely Compliant”), 10% assessed as "Partially Compliant" and 2% as "Non-Compliant". Philippines has joined the OECD/G20 Inclusive Framework on BEPS, an international collaboration with over 140 member countries and jurisdictions.
Through its membership, Philippines has committed to addressing the tax challenges arising from the digitalization of the economy by participating in the Two-Pillar Solution to reform the international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate. Collaborating on an equal footing with all other members of the Inclusive Framework, Philippines will participate in the implementation of the BEPS package of 15 measures to tackle tax avoidance, improve the coherence of international tax rules, and ensure a more transparent tax environment. 48 countries intend to implement the OECD’s global tax transparency framework for the reporting and exchange of information with respect to crypto-assets by 2027.
The Crypto-Asset Reporting Framework (CARF) is a key component of the International Standards for Automatic Exchange of Information in Tax Matters developed by the OECD under a G20 mandate. It provides for the automatic exchange of tax-relevant information on crypto-assets and comes against the backdrop of a rapid adoption of the use of crypto-assets for a wide range of investment and financial uses. Unlike traditional financial products, crypto-assets can be transferred and held without the intervention of traditional financial intermediaries, such as banks, and without any central administrator having full visibility on either the transactions carried out or on crypto-asset holdings. |
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