The Intra-European Organisation of Tax Administrations (IOTA) has terminated the membership of Russia and Belarus.
The decision was made by the 27th General Assembly of IOTA in Tbilisi, Georgia. The termination of membership resulted from an absolute majority vote of IOTA members and came into effect on June 27, 2023. Denmark’s Finance Ministry is consulting on a draft bill that would implement the EU Directive on Pillar Two into Danish tax law.
The draft bill proposes to introduce an income inclusion rule, an undertaxed profit rule and rules on a qualified domestic top-up tax. The new rules are intended to come into force on January 1, 2024. The OECD has launched an updated version of the BEPS MLI matching database used to make projections on how the MLI modifies a specific tax treaty.
The updated database includes significant improvements that will enhance user experience and provide additional features to support the implementation and application of the BEPS MLI. One of the key updates is the inclusion of historical data, which allows users to view the application of the BEPS MLI at specific points in time. The upgrade also offers a more intuitive interface that makes it easier for users to search for and access information. Pakistan has amended its domestic tax law to expand the definition of permanent establishment to include virtual presence.
The amendment was enacted on June 26, 2023. The amended law omits the term ‘fixed’ from the main definition of permanent establishment, which refers to place of business. The new law also provides that services provided through an ‘entity’ will also give rise to a permanent establishment. The OECD has published new results on preferential tax regimes noting that tax jurisdictions continue making progress on implementing the international standard under BEPS Action 5 to address harmful tax practices.
The results are as follows:
The OECD will soon commence its annual monitoring of substantial activities requirements for no or only nominal tax jurisdictions and review any new and outstanding regimes of Inclusive Framework members. The European Commission is proposing to make withholding tax procedures in the EU more efficient.
A common EU digital tax residence certificate is being proposed to make withholding tax relief procedures faster and more efficient. Member States currently rely on paper-based procedures. The Commission is proposing to complement the existing standard refund procedure with a two fast-track procedures: a “relief at source” procedure and a “quick refund” system. A standardized reporting obligation is being proposed to provide national tax administrations with the necessary tools to check eligibility for the reduced rate and to detect potential abuse. UK government is seeking stakeholders’ views on potential reforms to the UK international tax legislation on transfer pricing, permanent establishment, and Diverted Profits Tax.
The chief objective of the consultation is to clarify and modernize the legislation, and ensure it achieves its objectives, while developing simpler, legislation that is easier to understand, and supports growth by improving tax certainty. Comments must be received by August 14. Today, the OECD's Forum on Tax Administration (FTA) Pillar Knowledge Sharing Network held its first virtual meeting of what will be a series of peer-to-peer knowledge-sharing events where experts from tax administrations in 'early implementer' jurisdictions will offer high-level practical advice and share lessons learned on administrative and implementation aspects of the Two-Pillar Solution.
The first meeting, gathering more than 250 delegates from over 70 countries and jurisdictions, looked at Pillar Two implementation from a change management perspective and how officials are working across policy, operations and technology to prepare for and implement the necessary changes. Further meetings will be held over the course of the year. The new Pillar Knowledge Sharing Network will complement the OECD's wider strategy for supporting developing countries in implementing Pillar One and Pillar Two through a multifaceted program including training, guidance and hands-on country engagements. Uzbekistan joins international efforts against tax evasion and avoidance by joining the OECD/G20 Inclusive Framework on BEPS.
Through its membership, Uzbekistan has also committed to addressing the tax challenges arising from the digitalization of the economy by joining the two-pillar plan 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, Uzbekistan 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. As part of the Fiscal Transition Support Program in West Africa (FTSP), the OECD organized a training workshop on transfer pricing from 30 May to 1 June 2023 in Lomé, Togo, for representatives of the 15 Member States of the Economic Community of West African States (ECOWAS), the Islamic Republic of Mauritania, as well as the Commissions of ECOWAS and the West African Economic and Monetary Union (WAEMU).
This training workshop is part of a three-year training cycle on transfer pricing organized by the OECD under the FTSP and intended to train thirty tax auditors from West African countries. The training focused on the Mutual Agreement Procedure which aims to eliminate double taxation resulting from transfer pricing upward adjustments and consisted of presentations by OECD experts alongside practical cases and role plays designed to expose the participants to concrete transfer pricing issues. Held in French, English and Portuguese, it provided opportunities for participants to share their experience for the benefit of their respective tax administrations. On May 23, 2023, the UAE tax authority published Decision No. 126 of 2023 on the general rules for limiting the deduction of interest for corporate tax purposes.
The ruling includes provisions on the definition of interest. It states that the amount of interest that may be deducted from taxable income is the greater of AED 12,000,000 or 30% of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). This Decision came into effect the day following the date of its publication. Vietnam has deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS Convention), which now covers around 1 850 bilateral tax treaties, underlining its strong commitment to prevent the abuse of tax treaties and base erosion and profit shifting (BEPS) by multinational enterprises.
The BEPS Convention will enter into force on 1 September 2023 for Vietnam. On 1 June 2023, around 1 200 treaties concluded among the 81 jurisdictions which have ratified, accepted or approved the BEPS Convention will have already been modified by the BEPS Convention. Around 650 additional treaties will be modified once the BEPS Convention will have been ratified by all Signatories. The governments of Guernsey, Jersey and the Isle of Man have reached a decision on a joint approach to the OECD’s Pillar Two framework, based on current international implementation of Pillar Two and discussions at the OECD.
The approach will comprise the implementation of an 'Income Inclusion Rule' and a domestic minimum tax to provide for a 15% effective tax rate for large in-scope multinational enterprises, from 2025. The Islands will continue to work together, monitoring implementation internationally and adapt accordingly to developments which may require adjustments to our own implementation plans, and remain committed to continuing to offer attractive and globally competitive investment environments. The Ministry of Finance today announced the release of the Green Paper on “Corporate Income Tax Strategies for The Bahamas”, which aims to solicit feedback from stakeholders on the government’s proposals to achieve greater efficiency and equity in the business tax regime and achieve alignment with global tax developments.
The CIT strategies identified by the government in the Green Paper include four (4) options: Option 1 represents the OECD 15% compliant Pillar Two regime; Option 2 adds to Option 1 a 10% rate for other firms; Option 3 adds to Option 1 a 12% rate for firms above B$0.5 million and maintains the BLF for firms below this threshold and Option 4 applies a 15% CIT across all firms, except for those below the B$0.5 million which would attract a 10% rate. The Green Paper contains a series of questions, intended to help with refining these options and other design features of the proposed CIT regime in the next phase of the exercise. Interested parties are invited to comment on the proposals by July 3, 2023. As part of the ongoing work of the OECD/IGF partnership on base erosion and profit shifting (BEPS) in the mining program, the OECD is seeking public comments on two toolkits.
The first toolkit provides a framework that is designed to support developing countries in addressing the transfer pricing challenges faced when pricing minerals. The second toolkit applies this transfer pricing framework to a specific mineral (bauxite). Comments on the toolkits must be received by July 14. |
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