As part of the ongoing work of the OECD/IGF partnership on BEPS in the mining program, the OECD is seeking public comments on an additional toolkit that is designed to support developing countries in addressing the transfer pricing challenges faced when pricing minerals.
The document provides a framework to identify the primary economic factors that can influence the pricing of minerals ("mineral pricing framework") using transfer pricing principles. The toolkit applies this transfer pricing framework as documented in Determining the Price of Minerals: A Transfer Pricing Framework to a specific mineral (lithium). The South African Revenue Service has published the 2023 issue of the "Taxation in South Africa" guide, providing an overview of the most significant tax legislation administered in South Africa by the Commissioner for the South African Revenue Service.
The updated guide deals, amongst others, with the following: transfer pricing and thin capitalization; withholding tax on royalties and interest; dividends tax; general anti-avoidance rules; dispute resolution; and automatic exchange of information. The updated guide was published on November 1. The OECD's Forum on Tax Administration (FTA) held its annual Plenary meeting in Singapore from 11-13 October 2023, bringing together tax commissioners and delegates from across the globe, including representatives from international organizations, regional tax administration bodies, business and academia.
At the meeting, Commissioners agreed on new areas of collaboration to pave the way for transforming the future of tax administration, namely:
The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (Inclusive Framework) has released the text of a new multilateral convention that updates the international tax framework to co-ordinate a reallocation of taxing rights to market jurisdictions, improve tax certainty, and remove digital service taxes.
The Multilateral Convention to Implement Amount A of Pillar One (the MLC) reflects the current consensus achieved among members of the Inclusive Framework. Amount A of Pillar One co-ordinates a reallocation of taxing rights to market jurisdictions with respect to a share of the profits of the largest and most profitable multinational enterprises (MNEs) operating in their markets, regardless of their physical presence. It also ensures the repeal and prevents the proliferation of digital services taxes and relevant similar measures, secures mechanisms to avoid double taxation, and enhances stability and certainty in the international tax system. The Supreme Court of India has passed a significant judgment regarding interpreting the Most Favoured Nation (MFN) clause in various Indian treaties with OECD member countries.
The court held that the MFN clause can only be invoked when the third country with which India has a Double Taxation Avoidance Agreement (DTAA) is an OECD member when entering into the DTAA. The court also ruled that a separate notification is required for the MFN clause to come into effect. Slovenia and Switzerland have ratified a protocol to the tax treaty in effect between the two countries.
The protocol was signed in May 2023, and was ratified on September 28. More details would be reported when available. The international tax community has adopted the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule.
The Convention is an integral part of the Two‐Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy. The Convention, which is now open for signature, represents a major step forward in concluding the work under Pillar Two. The Subject to Tax Rule (STTR) will enable developing countries to tax certain intra-group payments, in instances where these payments are subject to a nominal corporate income tax rate below 9%. The STTR allows source jurisdictions – those in which covered income arises – to impose a tax where they otherwise would be unable to do so under the provisions of tax treaties. The text of the Convention, along with an explanatory statement, is available on the OECD’s website. New Zealand and Slovakia signed a tax treaty on September 26.
The tax treaty incorporates the OECD’s BEPS proposals and is generally in line with international tax law practice. The details of the treaty would be reported when available. The OECD has released the latest outcomes of the implementation of BEPS Action 13 on the transparency of global operations of large MNEs, demonstrating strong progress in international efforts.
The sixth annual peer review of BEPS Action 13 considers implementation of the CbC reporting minimum standard by jurisdictions as of April 2023 and covers 136 Inclusive Framework members. Highlights include:
The OECD has released public comments received on Amount B under Pillar One relating to the simplification of transfer pricing rules.
Amount B provides for a simplified and streamlined approach to the application of the arm's length principle to in-country baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries. The comments may be viewed on the OECD’s website. The Australian Taxation Office will publish, in early November, the income tax information of large companies for the income year 2021–22.
Information will be published on Australian public or foreign owned entities with a total income of AUD 100 million or more; Australian resident private companies with a total income of AUD 200 million or more; and entities reporting petroleum resource rent tax payable. The Australian Taxation Office said it will write to companies in September with the reported tax information it plans to publish, and outlining the steps companies may take to correct errors. Indian tax authority has signed a record number of bilateral advance pricing agreement (APAs) in the 2022-23 financial year.
According to the latest APA report, the tax authority signed the highest number of APAs in the 2022-23 financial year since the launch of the APA program. More than half of bilateral APA applications are with the US. Other treaty partners with whom large number of applications have been filed in the 2022-23 financial year are Japan, Finland, South Korea, and the UK. New Zealand will implement a digital services tax in 2025 if international agreement on the issue fails to pass through, Finance Minister Grant Robertson has said.
The proposed digital services tax will target large multinational businesses that earn income from New Zealand users of social media platforms, internet search engines, and online marketplaces. The proposed tax would be payable by multinational businesses that make over EUR 750 million a year from global digital services and over NZD 3.5 million a year from digital services provided to New Zealand users. Tunisia has deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.
The Convention will enter into force on November 1, 2023, for Tunisia. Around 650 additional tax treaties will be modified once the BEPS Convention will have been ratified by all Signatories. India’s tax authority has announced that the Boards for Advance Rulings have been operationalized in Delhi and Mumbai.
A non-resident investor can obtain certainty on its liability towards income tax even before undertaking the investment in India. Resident companies may also obtain a tax ruling on the taxability of a transaction and avoid long-drawn litigation. “Creation of mechanisms like the Board for Advance Rulings is a step in this direction,” it said. |
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