Two weeks to 1 March 2024
Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
UK
Spring Budget 2024
On 6 March, the Chancellor of the Exchequer Jeremy Hunt will deliver his Spring Budget, accompanied by a full fiscal statement from the Office of Budget Responsibility (OBR).
- Spring Budget 2024 preview
Our PwC specialists and economists explore some of the potential measures that might be on the table and areas of focus here. - On the day
Our live feed will be available on Wednesday 6 March via pwc.co.uk/budget. - Spring Budget 2024: Reactions Webcast
Register here to join our webcast taking place at 9am on Thursday 7 March, where Laura Hinton (PwC’s UK Head of Tax) will be joined by a panel of experts (including Lord Gavin Barwell and Barret Kupelian, Chief Economist) to discuss the announcements made, and the impact on individuals and businesses.
Finance Bill 2023–24 progress
The Finance Bill was debated in the House of Lords on 21 February 2024, received Royal Assent on 22 February 2024 and became the Finance Act 2024.
HMRC Manual & guidance updates
The following changes have recently been made by HMRC following review:
- Double Taxation Relief Manual - updated 27 February
- DT4616 Guidance by country: Canada: Offshore activities - Page archived
- DT4617 Guidance by country: Canada: Withdrawals from Canadian RRSPs/RRIFs - Page archived
- International Manual
- INTM342570 - DT applications and claims - Types of income: Royalties - Page removed on 22 February.
Double Taxation Treaty Passport Scheme register
HMRC has updated the register of overseas corporate lenders who are passport holders for Double Taxation Relief on UK loan interest. The register has been updated as of 4 March with 232 additions, 12 amendments and 92 removals.
EU
Council of the EU approves changes to the EU list of non-cooperative tax jurisdictions
The EU General Affairs Council (acting as the Council of the EU) has approved the recommendations of the EU Code of Conduct Group in relation to the updated list of non-cooperative tax jurisdictions. The Council removed the Bahamas, Belize, Seychelles and Turks and Caicos Islands from the list of non-cooperative jurisdictions for tax purposes. With these updates, the EU list now consists of 12 jurisdictions. Read more in our Tax Policy Alert.
European Commission policy brief explores first 100 days of Foreign Subsidies Regulation reporting
The European Commission’s Directorate-General for Competition (DG COMP) has published a policy brief that provides comments on the Foreign Subsidies Regulation (FSR) requirements and first cases the Directorate has addressed in the 100 days since the reporting regime began. The brief provides statistics on the 53 notifications received in that period, as well as clarifications on some recurring issues that have arisen in the context of notifications, such as how to properly categorise relevant advantages provided by non-EU countries, ie Foreign Financial Contributions (FFCs), how to report those identified as most likely to distort the internal market, and how to interpret some of the exceptions to the obligation to report certain FFCs. Read more in this PwC Tax Policy alert.
European Parliament approves directive for Faster and Safer Relief of Excess Withholding Taxes
On 28 February 2024, the European Parliament approved a significant legislative resolution on the proposal for a council directive aimed at facilitating the Faster and Safer Relief of Excess Withholding Taxes within the European Union, aka the FASTER Directive. The voted text proposes key amendments aimed at ensuring efficiency and integrity in withholding tax relief procedures, including the introduction of digital tax residence certificates, streamlined refund processes, and enhanced monitoring mechanisms. Read more in this PwC alert.
CFE Tax Advisers Europe
EU Tax Policy News Top 5
The latest round-up of EU Tax Policy news from the Confédération Fiscale Européenne (CFE). The latest edition from 26 February includes: 1) OECD Tax & Development Days EU Commission opens first investigation on Foreign Subsidies under new regime; 2) EU Council updates List of Non-Cooperative Jurisdictions for Tax Purposes; 3) Frankfurt to host new EU AML Authority body; 4) Registrations open: CFE Forum | Sharing the Tax Pie | 18 April 2024 | Brussels; and 5) OECD Tax & Development Days. Visit their latest news page here.
OECD
Pillars One and Two
- OECD releases report on Amount B of Pillar One
Following the OECD’s public consultation on Amount B in July 2023, on 19 February the OECD/G20 Inclusive Framework on BEPS (IF) released its report on Amount B of Pillar One - now known as the ‘simplified and streamlined approach’. It has adopted an optional methodology to price certain baseline wholesale marketing and distribution activities that will likely not provide the tax certainty that companies were hoping for. The content from the report has been incorporated into the OECD Transfer Pricing Guidelines (TPG). The IF is developing additional guidance on Amount B and has committed to concluding this work by 31 March 2024, with any additions to be incorporated into the TPG at that time. The list of jurisdictions that opt into Amount B will be made available on the OECD website. Taxpayers with distributors that may fall within scope of Amount B should start to work through these new rules and model their outcomes so they can be prepared if/when countries adopt these rules.
This PwC Tax Policy alert provides a short summary of the report. An additional Alert containing more in-depth analysis and observations is being prepared. - Transfer Pricing and the Pillar Two Transitional CbCR Safe Harbor: What do you need to know to transform?
For Pillar Two CbCR safe harbour rules, using a Transfer Pricing lens can help companies comply with the necessary data requirements. How do you prepare for CbCR? See this PwC US Transfer Pricing blog.
OECD Secretary-General Tax Report
Prepared by the OECD ahead of the first meeting of G20 Finance Ministers and Central Bank Governors held under the Brazilian G20 Presidency held on 28-29 February in São Paulo, this report provides an update on international tax reform. It presents developments on the Two-Pillar Solution, the status of implementation of the BEPS minimum standards, tax transparency, tax and development, tax and crime, and indirect tax.
OECD - A transfer pricing framework for lithium
The OECD and the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) have published the public comments received following a public consultation document outlining a mineral pricing framework for lithium, as part of the ongoing work of the partnership on base erosion and profit shifting (BEPS) in the mining programme.
Update to the Commentary on Article 26 of the Model Tax Convention
On 19 February 2024, the OECD Council approved an update to the commentary on Article 26 (Exchange of information) of the OECD Model Convention. This update clarifies that information received through administrative assistance can be used for tax matters concerning persons other than those in respect of which the information was initially received. It also provides interpretative guidance on confidentiality, in particular regarding the access of taxpayers to information exchanged when such information has a bearing on their tax situation and regarding reflective non-taxpayer specific information, including statistical data, about or generated on the basis of exchanged information.
OECD makes historic decision to open accession discussions with Indonesia
The Council of the OECD has decided to open accession discussions with Indonesia. This follows many years of increased engagement and co-operation with Indonesia as an OECD Key Partner country since 2007 and through successive Joint Work Programmes covering the broad spectrum of economic, social and environmental policy reform. Read more in this OECD item.
MLI
Latest updates, the text of the BEPS Convention, the explanatory statement, background information, database, and positions of each signatory and parties are available at https://oe.cd/mli
Other territories
International
International Tax News
International Tax News is designed to help multinational organisations keep up with the constant flow of tax developments. Among the topics featured in this month's edition are: 1) India Interim Budget 2024 highlights; 2) Australian Tax Office releases draft Taxation Ruling on royalties and software and intellectual property rights; 3) Mexican Tax Authority reveals collection plan for 2024; and 4) French court rules that company does not have a PE in Belgium.
Geopolitics Unravelled: Trends for 2024
In this episode of Cross-Border Tax Talks from 28 February, Doug McHoney (PwC’s International Tax Services Global Leader), interviews Craig Stronberg (a Senior Director in PwC's Intelligence Team) about major geopolitical trends impacting business leaders and the operating environment. They discuss topics such as protectionism, the US-China rivalry, distrust, the shift in global power, tech disruption, labour, and the Middle East. They also highlight the importance of business leaders taking stock of lessons learned from the COVID-19 pandemic and the potential risks associated with the ongoing conflict in Ukraine.
Digital tax byte
The latest edition in our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of digitalisation of business. In this edition, from 19 February, we cover:
- the European Commission's regulation determining Canada's digital platform reporting regime as equivalent in reducing required reporting under the EU's DAC7 regime;
- we also refer to progress on the Philippines’ adoption of new VAT rules on digital services (which include the supply of digital goods); and
- the extension of the DST deal between the US and Austria, France, Italy, Spain and UK.
Environmental, Social and Governance (ESG)
Hold your nerve to maintain momentum: our 2024 actions for sustainability leaders
Sustainability leaders must help boards continue to follow through on their net zero ambitions over the coming year, in the face of perceived uncertainty around public policy. That’s the message from political and ESG experts, as they look ahead to what the rest of 2024 may hold. Read our article on key actions to take.
Australia
Revised draft legislation released for public country-by-country reporting in Australia
Australia’s Treasury recently released updated draft legislation that seeks to give effect to the Australian Government’s proposal to require large multinationals to publicly disclose certain tax information on a country-by-country (CbC) basis, and a statement on their approach to taxation. Interested parties are invited to comment on this consultation until 5 March.
ATO statement on debts on hold program
The Australian Taxation Office (ATO) has released a statement on the recovery of historic tax debts. The agency said: ”The ATO has heard the concerns raised by the community. The ATO is not taking any action to recover or offset debts that were placed on hold prior to 2017. The ATO has paused all action in relation to debts placed on hold prior to 2017 whilst we review and develop a pragmatic and sensible way forward that takes into account concerns raised by the community.”
Austria
Eco-social Tax Reform Act 2022 published in Federal Law Gazette
The three parts of the Austrian Eco-social Tax Reform Act 2022 were published in the Federal Law Gazette on 14 February 2022. In relation to the bill, the final version of the Eco-Social Tax Reform Act Part I 2022 contains only minor adjustments to § 124 subpara 393 Austrian Income Tax Act (EStG) and § 40 para 1 Austrian Transparency Database Act (TDBG). The changes made since the consultation draft are listed in this PwC new item.
Bahamas
Announcement of Qualified Domestic Minimum Top-Up Tax (QDMTT)
The Prime Minister and Minister of Finance (Hon. Philip Edward Davis KC, MP) recently announced the introduction of the Qualified Domestic Minimum Top-Up Tax (QDMTT), a significant measure under the OECD’s Pillar Two tax framework aimed at ensuring multinational enterprises (MNEs) operating within The Bahamas pay their fair share of taxes. This initiative specifically targets MNEs with annual turnovers exceeding EUR 750 million, aligning with our international obligations and efforts to combat tax base erosion and profit shifting. Read more in this press release.
Belgium
See here for latest updates.
Stock options granted by a Personal Service Company to its company director – not always tax deductible for the company
In a recent judgement, the Court of Appeal of Antwerp ruled on a case regarding the deductibility of costs of stock options and upheld the lower court’s decision, confirming that remunerations (stock options income in this case) may not always be treated as deductible expenses. Read more in this PwC news item.
Canada
Enhanced reporting rules for trusts and bare trusts: Trustees ─ are you ready?
Legislative amendments enacted in December 2022 introduced enhanced tax return filing and information reporting requirements for trusts, as well as penalties for non-compliance with these rules. The enhanced rules, which are effective for taxation years ending after 30 December 2023, will require more trusts, including “bare trust” arrangements, to file: 1) a T3 “Trust Income Tax and Information Return,” and 2) new Schedule 15, “Beneficial ownership information of a trust”. This PwC Tax Insights provides an overview of the enhanced rules, including new Schedule 15, and details on what could be considered a bare trust arrangement.
Cyprus
Qualified extension of the deadline for filing the Income Tax Return to 30 November 2024 for tax year 2022
The Council of Ministers has issued an order to extend the deadline for filing of the Income Tax Return for the tax year 2022 to 30 November 2024. This extension applies only for persons that have the obligation to submit a Summary Information Table as required by Section 33(10) of the Income Tax legislation. Read more in this PwC alert.
Germany
Growth Opportunities Act: Dispute to continue despite compromise reached by Mediation Committee
In its session of 21 February 2024, the Mediation Committee of the Bundestag and Bundesrat concluded its negotiations in relation to the Act to Strengthen Growth Opportunities, Investment, and Innovation as well as Tax Simplification and Fairness. An amended legislative package for the so-called Growth Opportunity Act was finally adopted without the agreement of the conservative party CDU/CSU. The Bundesrat originally referred the draft Act to the Mediation Committee on 24 November 2023. Read more in this PwC blog.
Hong Kong
2024/25 Hong Kong Budget
The 2024/25 Hong Kong Budget was unveiled by Financial Secretary Paul Chan Mo-po on 28 February under the theme ‘Advance with confidence. Seize opportunities. Strive for high-quality development’. The Budget serves as a roadmap for the Government, laying out targeted and effective strategies, fiscal consolidation programmes, and a comprehensive approach to nurture sector-specific talents, solidify city’s recovery and spur economic growth. Read the Budget highlights here. Further insights and viewpoints can be found on this dedicated Budget page.
Hong Kong removed from European Union’s tax watchlist
Following a meeting of the Council of the European Union (EU) on 20 February 2024, Hong Kong was removed from the EU watchlist regarding international tax co-operation. A press release issued by the Council of the EU on the same date confirms that Hong Kong fulfilled its commitments to strengthening tax good governance by amending its foreign-sourced income exemption (FSIE) regime. This brings an end to Hong Kong’s two-year stint on the watchlist. Read more in this PwC alert.
India
No disallowance warranted on payment to nonresident AEs with PE in India due to double tax treaty
The tax officer disallowed the payment made to non-resident associated enterprises (AEs) based in Japan and the US under section 40(a)(i) of the Income-tax Act, 1961, concluding that the taxpayer was liable to deduct tax from such payments. The Delhi High Court opined that the provisions of disallowance of payment to non-residents are not at par vis-à-vis payment to residents. Hence, the taxpayer was justified in invoking the provisions of the non-discrimination clause in India’s double tax treaties with Japan and the US. Consequently, the disallowance under section 40(a)(i) of the Act is not warranted. Read more in this PwC alert.
Mere holding of an office is not sufficient for an individual to be a principal officer
The Delhi High Court has set aside the order under section 2(35) of the Income-tax Act, 1961 treating the petitioner, a Managing Director (MD) of the company, as the ‘principal officer’ for the purpose of the initiation of the proceedings under section 276B of the Act on the company in respect of default to deposit tax deducted at source. The court observed that merely holding an office in a corporate entity was not sufficient to treat a person as a principal officer, unless it was established that the person was connected with the corporate entity’s management or administration. Accordingly, the court directed the Revenue to examine the issue afresh after considering the petitioner’s response and conducting an inquiry into whether the petitioner could be said to be a person connected with the management or administration of the company. Read more in this PwC alert.
Indonesia
OECD makes historic decision to open accession discussions with Indonesia
The Council of the OECD has decided to open accession discussions with Indonesia. This follows many years of increased engagement and co-operation with Indonesia as an OECD Key Partner country since 2007 and through successive Joint Work Programmes covering the broad spectrum of economic, social and environmental policy reform. Read more in this OECD item.
Ireland
Trust payment not subject to Capital Gains Tax
In McMahon v Revenue Commissioners, [2024] IEHC 85, the High Court of Ireland ruled in favour against a determination by a Tax Appeals Commissioner and held that the EUR1.2 million payment received from a discretionary trust established in the Isle of Man, following a disposal of shares, is not subject to capital gains tax under sections 590 and 579A of the Taxes Consolidation Act 1997. Read the decision here.
Japan
Japan and Ukraine sign new double tax treaty
Japan and Ukraine signed a new replacement double tax treaty on 19 February in Tokyo. The new treaty wholly amends the two countries' agreement from 1986, between Japan and the USSR. It will not affect the current treaty applicable between Japan and some of the other former Soviet Union countries. Read more in this press release.
Malta
The Malta Tax & Customs Administration issues amended rules and guidelines in relation to transfer pricing
The Malta Tax & Customs Administration has updated the transfer pricing rules with a sunset clause, making all agreements (regardless of when they were entered into) in scope from 1 January 2027. Read more in this PwC alert.
Middle East
UAE - Corporate Tax: FTA Decision No. 3 of 2024 - registration timeline
On 22 February 2024, the Federal Tax Authority (“FTA”) issued Decision No. 3 of 2024 with regards to the Timeline for Registration of Taxable Persons for Corporate Tax (“CT”). Article 51 of the UAE CT Law indicates that any Taxable Person should be registered for CT with the FTA within the timeline prescribed by the FTA and obtain a Tax Registration Number. The timeline has now been prescribed in FTA Decision No. 3 of 2024. Read more in this PwC alert
Saudi Arabia: Tax Rules for Regional Headquarters
Another big step has been taken towards developing the tax practices and landscape in line with Saudi 2030 Vision to make Saudi Arabia a pioneering investment hub. The long-awaited Tax Rules for the Regional Head Quarters (RHQs) have now been published by ZATCA with an immediate effect from the date of publishing (ie 16/08/1445 AH corresponding to 16 February 2024). The rules clarify several key matters to the tax and investment society, including: 1) Key definitions regarding the RHQ; 2) Tax incentives; 3) Exemption duration and criteria; 4) Economic substance rules for the RHQs; 5) Tax compliance requirements; 6) Fines and penalties in case of violating the rules; and 7) Rights of both ZATCA and the RHQ in case of tax audits and disputes. Read more in this PwC alert.
Netherlands
List of low-tax jurisdictions for 2024 published
The Dutch State Secretary of Finance has released the “'Regulation on low-tax states & non-cooperative jurisdictions for tax purposes” for 2024, which contains the Dutch list of designated low-tax jurisdictions for the application of the Dutch Controlled Foreign Corporations (CFC) legislation, and with regard to the conditional withholding tax on interest and royalty payments and (as of 1 January 2024) dividend payments. Read more in this PwC news item.
New Zealand
Pillar One: New Zealand will not adopt ‘Amount B’
New Zealand will not adopt “Amount B” under the OECD’s proposed Pillar One transfer pricing methodology. Instead, New Zealand will continue to apply its existing transfer pricing methodologies and there will be no changes to the current transfer pricing rules or practices. Read more in this PwC alert.
Singapore
List of CbCR exchange partners updated
The Inland Revenue Authority of Singapore (IRAS) has updated the list of territories with which it has an agreement for the automatic exchange of country-by-country reports. Papua New Guinea has been added with effect for financial years from 1 January 2024, Kenya for financial years from 1 January 2022 and Montserrat for financial years from 1 January 2024.
South Africa
South African Budget 2024
The Minister of Finance, Enoch Godongwana, delivered his Budget speech on 21 February 2024. The Budget confirmed that South Africa will introduce a Pillar Two minimum tax on large multinational enterprises, based on the GLoBE rules, to ensure the application of a minimum tax rate of at least 15% on corporate profits. National Treasury and the South African Revenue Service (SARS) has released draft legislation for public comment by 31 March, as well as an explanatory memorandum.
Download the 2024 Budget Tax Card and visit our dedicated webpage to see what the 2024 Budget Speech will mean for you and your business.
Switzerland
For the latest updates on current topics, see this PwC Switzerland Insights page.
SFTA published detailed set of transfer pricing questions and answers
Following on from the joint article on transfer pricing that the SSK (Schweizerische Steuerkonferenz) and the SFTA (Swiss Federal Tax Authorities) published a month ago, the SFTA has published a detailed set of transfer pricing questions and answers on its website. Another publication, so soon after the last, serves to highlight the increasing importance of transfer pricing here in Switzerland and the resources that the Swiss tax authorities are focusing on it. Read more in this PwC blog.
Trinidad and Tobago
The Base Erosion and Profit-Shifting Inclusive Framework (Country-by-Country) Reporting Bill, 2023
This Bill seeks to provide country-by-country reporting (CBCR) legislation to meet Trinidad and Tobago’s obligations to the Base Erosion and Profit Shifting (BEPS) Inclusive Framework and to assist with compliance with one criteria of the EU’s list of non-cooperative jurisdictions for tax purposes.
Ukraine
Japan and Ukraine sign new double tax treaty
Japan and Ukraine signed a new replacement double tax treaty on 19 February in Tokyo. The new treaty wholly amends the two countries' agreement from 1986, between Japan and the USSR. It will not affect the current treaty applicable between Japan and some of the other former Soviet Union countries. Read more in this press release.
US
IRS to undertake “dozens” of audits of corporate aircraft usage
The IRS has announced in IR-2024-46 its intention to audit dozens of companies regarding personal use of corporate aircraft as part of a larger effort to improve tax compliance by large partnerships, large corporations, and high-income individuals. Read more in this PwC Tax Insights.
Policy on Demand series
- After recess, Congress faces critical agenda
In this episode from 26 February, Todd Metcalf and Mark Prater discuss the 1 March deadline to fund the federal government, its potential impact on the House-passed tax package and the upcoming State of the Union address. - 2024 report: Trends shaping corporate governance
PwC’s Governance Insights Center recently released a report on trends shaping corporate governance. In this episode from 19 February, Paul DeNicola discusses the implications for corporate boards. - Pam Olson on Pillar One’s path forward
In this episode from 19 February, Pam Olson discusses the latest Pillar One developments, expected Pillar Two guidance, and how companies might prepare for Pillar Two implementation. - Week in Review
- 1 March – Congressional leaders reached an agreement to avoid a partial government shutdown, but questions remain about passage of the bipartisan tax bill. Watch more in this episode with Janice Mays.
- 23 February – The OECD moves forward with additional Pillar One guidance, but Congress is stalled as it approaches government funding deadlines. Watch more in this episode with Chairman Dave Camp.
Tax Readiness webcast series
- Tax Readiness: How trusted tax data powers reporting and strategic business planning
How much time does your tax team spend wrangling with data? Many companies are looking to “standardise” processes, but this may be difficult if the data is so disparate and not well understood. Join our specialists on Tuesday 27 February at 7pm, as they discuss actions to build trusted, accessible data for complex compliance challenges and strategic C-suite initiatives, yielding high-value results for years to come. Register here.
Further information
You can sign up for Tax Alerts issued by the US to be emailed to you. Subscribe using the link on this page.
Vietnam
Vietnam Pocket Tax Book
Welcome to our 2024 Vietnam Pocket Tax Book which is a useful reference tool as it covers the most updated information on current taxation regulations and practices, including certain legislative proposals under review as at 31 December 2023.