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Two weeks to 1 October 2021

Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK. 


Notification of uncertain tax treatment - CIOT meeting with HMRC
Representatives from the CIOT met with HMRC last week to discuss the requirement that large businesses notify HMRC about ‘uncertain tax treatments’, which is due to take effect from 1 April 2022, and the key points from the comments the CIOT submitted on the draft legislation and draft guidance (see here). HMRC said that they would improve the guidance for this measure in several areas where the CIOT had raised concerns, including in relation to determining what is HMRC’s ‘known position’ and clarifying how the rules apply in relation to VAT (both in respect of whether gross or net positions should be considered and also how the rules apply to VAT returns). HMRC also reiterated their commitment to accelerate their program of work seeking to improve HMRC’s guidance more generally, recognising its importance in relation to this measure.  

Finance Bill Sub-Committee investigates basis period reform and uncertain tax treatment
The Finance Bill Sub-committee has launched an inquiry into the draft Finance Bill 2021-22 submissions focusing on two areas of the draft Bill: 1) proposals for income tax basis period reform; and 2) notification by large businesses of uncertain tax treatment. The deadline for submissions is 13 October 2021.

UK International Business Reorganizations team - Legal 500 Tier 1 Ranking
PwC Legal's UK International Business Reorganization's (IBR) team has once again been ranked "Tier 1" in the UK Legal 500 Directory, with Georgie Blyth and Cynthia Chan, the partners who lead the team, being named as "Leading Individuals" in the IBR space and Directors Laura Freestone and Harry Wilkins being recognised as a Next Generation Partner and a Rising Star respectively.

State aid and competition policy - Business Committee launch inquiry
The Business, Energy and Industrial Strategy (BEIS) Committee has launched an inquiry on state aid and post-Brexit competition policy, as part of its super-inquiry on post-pandemic economic growth, which will address the new policy and regulatory landscape following the UK’s departure from the EU.

HMRC guidance on identifying tax avoidance enabler penalties and when to appeal
HMRC has updated its guidance for the first time since its initial release in April 2018, with new information about assessments, inspection powers, modifications and restrictions on power to publish information.

Tax Accounting Insights: Year End Preparation 2021
In our next live Tax Accounting Insights webcast taking place on 22 October, we will be discussing the areas we view as critical to your year end preparation, including: 1) Deferred tax asset recognition and forecasting; 2) Approach to provisioning related to uncertain tax positions (UTPs); and 3) Uncertain Tax Treatment (UTT) legislation, and the interaction with your UTP process. Register here.

Tax Treaty updates

  • UK/Iceland & UK/South Korea - synthesised text
    HMRC has published the synthesised text of the UK’s double tax convention with Iceland and South Korea as modified by the BEPS Multilateral Instrument (MLI).
  • UK/Switzerland - memorandum of understanding
    HMRC has published the Switzerland-UK memorandum of understanding (MOU) on arbitration under Article 24 of the UK-Switzerland Double Tax Convention.


EU Tax News - July/August 2021
EU tax news is a bimonthly newsletter with summaries of all the relevant ECJ and national court cases and decisions, and EU policy initiatives related to EU direct tax law and state aid. The newsletter is prepared by members of PwC's EU direct tax group (EUDTG) from across Europe. Read the latest edition here.

Withholding taxes – new EU system to avoid double taxation
This initiative aims to introduce a common EU-wide system for withholding tax on dividend or interest payments. It will include a system for tax authorities to exchange information and cooperate with each other.

Public country-by-country reporting: Council paves the way for greater corporate transparency for big multinationals
The European Council, on 28 September, adopted its position at first reading on the proposed directive on the disclosure of income tax information by certain undertakings and branches, commonly referred to as the public country-by-country reporting (CBCR) directive, paving the way for its final adoption. The adoption of the Council’s position follows a provisional agreement reached with the European Parliament in June. Read more in this press release.

EU Taxation & Customs Director-General discusses global tax reform
In a speech before the Finnish Chamber of Commerce, Gerassimos Thomas (Head of the Directorate-General for the EU Taxation and Customs Union (TAXUD)) discussed implementation of the OECD's international tax reform proposals and the remaining work that is required. He also discussed the European Union's own plans for corporate tax reforms, including revisiting the proposal for a common corporate tax base in the EU.

Commission Statement on consulting Member States on proposal on the future of the State aid Temporary Framework
The European Commission has sent Member States for consultation, a draft proposal to prolong until 30 June 2022 the State aid Temporary Framework, while setting out the path for the progressive phase-out of crisis support in light of the ongoing recovery of the European economy. Read more in this EC press release.

Commission calls on Cyprus to amend its legislation transposing EU anti-tax avoidance rules
The European Commission has sent a letter of formal notice to Cyprus on the grounds of incorrect transposition of the interest limitation rule of the Anti-Tax Avoidance Directive (Article 4 of the Council Directive (EU) 2016/1164). See Section 6 of this EC September infringements package press release.

Commission challenges Czech Republic on hybrid mismatch rules
The European Commission has sent a letter of formal notice to the Czech Republic for failure to communicate all required national measures fully implementing Council Directive (EU) 2017/952 of 29 May 2017 amending Directive 2016/1164 (ATAD1) as regards hybrid mismatches with third countries (ATAD2). See Section 6 of this EC September infringements package press release. 

CFE Tax Advisers Europe

CFE Tax Top 5 – Round-up of EU Tax Policy News
The latest edition looks at the following: 1) Member States challenge legal basis for public CbCR; 2) Increasing pressure put on countries to reach global tax deal; 3) EU Commission September infringement package; 4) FISC Subcommittee - tax priorities; and 5) Save the Date: CFE Professional Affairs Virtual Conference – 25 November 2021. View previous editions here.


MLI - Andorra, Namibia and Spain take further steps to strengthen their tax treaties
Namibia recently signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI), becoming the 96th jurisdiction to join the Convention, which now covers around 1800 bilateral tax treaties. Andorra and Spain have deposited their instruments of ratification for the MLI and will therefore enter into force on 1 January 2022 for these countries. See this OECD item.

Moldova and Rwanda commit to start automatic exchange of financial account information
Moldova and Rwanda have committed to implement the international Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI) by 2023 and 2024 respectively. Rwanda is the 120th Global Forum member to commit to start AEOI by a specific date, and the ninth African country to do so.

Other territories


International Tax News - August 2021
Among the topics featured in this month's edition are: 1) Cyprus’ positive assessment by the European Commission approved by ECOFIN; 2) Updates for complying with Mexico's outsourcing reform; 3) Additional developments on UK uncertain tax treatment; and 4) India nullifies ‘retrospective applicability’ of tax on indirect share transfers.

Taxation of the digital economy
Keep track of the number of international initiatives that are underway to address the tax problems caused by digitalisation of our economy: 

  • Digital tax byte
    The latest edition from 1 October includes a brief comment from the G7.Presidency (UK) on discussions leading up to a meeting of the OECD/G20 Inclusive Framework on 8 October.
  • Digital Tax megabyte - September 2021
    This edition includes the latest from both sides of the US Congress on international tax reform and from the Philippines Parliament on VAT for digital services, proposals from the Czech Ministry of Finance on reporting by platforms in accordance with DAC7, Vietnam's incoming regime that goes beyond reporting to require withholding at source and Pakistan's application of withholding tax to online marketplaces. Some recent developments in relation to VAT on e-services in South Africa warrant attention. Singapore has clarified aspects of its e-commerce GST regime.

Environmental, Social and Governance ESG
This EMEA AWM ESG newsletter covers a large variety of topics. We hope you find this edition interesting and should there be any areas you would like to discuss, please do get in touch with your PwC contact.

Monthly Tax Update - October 2021 
Welcome to the October edition of Australia's Monthly Tax Update, keeping you up to date on the latest Australian and international tax developments.

See here for latest updates.

Tax Bites Podcast: Recovering from COVID-19 – can tax play a role?
In this episode, we explore how tax can play a role in the economic recovery after the COVID-19 pandemic. Our experts use their experience in the Belgian market to explore the risks and pitfalls in relation to taxation and post-COVID recovery. They share valuable insights, relevant beyond Belgium, on how business can recapitalise or restructure.

COVID-19 and cross-border employment update: Agreements with the neighbouring countries extended until 31 December 2021
We’ve reported previously on the extension of the mutual agreements between Belgium and The Netherlands, France, Germany and Luxembourg, which includes a “force majeure tolerance” for cross-border workers in relation to government imposed COVID-19 (travel) restrictions. A further extension until 31 December 2021 has now been announced with respect to these agreements. See this PwC news item.

Liberal party tax platform ─ What it could mean for you and your business
On 20 September 2021, Canadians re-elected a federal Liberal minority government. The Liberals’ election platform does not propose any sweeping general corporate or personal income tax or GST/HST rate changes. When the Canadian parliament was dissolved in August 2021 due to the federal election call, many proposed measures from the minority Liberal government’s 2021 federal budget had not yet been implemented and it is unclear whether, or to what extent, the Liberals will be able to obtain the support of another federal party to allow legislation implementing election platform measures (and 2021 budget measures) to be passed in the House of Commons. Read more in this PwC Tax Insights

Commission calls on Cyprus to amend its legislation transposing EU anti-tax avoidance rules
As reported above, the European Commission has sent a letter of formal notice to Cyprus on the grounds of incorrect transposition of the interest limitation rule of the Anti-Tax Avoidance Directive (Article 4 of the Council Directive (EU) 2016/1164). See Section 6 of this EC September infringements package press release.

Cyprus to waive penalties for late DAC6 filings
The Cyprus Tax Authority recently issued an announcement extending further the deadline for submission of DAC6 reports without any penalties to the end of 30 November 2021. See this brief PwC Tax Insights.

Decree extending the deadline for submission of certain direct tax returns
On 24 September 2021, the Minister of Finance issued a decree extending further the deadline for submission of certain direct tax returns. The deadline for electronic submission of the 2019 corporate tax return (T.D.4) has been extended to 30 November 2021. Read this brief PwC Tax Insights.

Czech Republic
Commission challenges Czech Republic on hybrid mismatch rules
The European Commission has sent a letter of formal notice to the Czech Republic for failure to communicate all required national measures fully implementing Council Directive (EU) 2017/952 of 29 May 2017 amending Directive 2016/1164 (ATAD1) as regards hybrid mismatches with third countries (ATAD2). See Section 6 of this EC September infringements package press release. 

Tax and Legal News, September 2021
The latest tax and legal news from Finland. Read the latest edition.

Supreme Court holds no interest liability under section 234B of the Act for payee, where payer defaulted to withhold tax on payments made prior to 1 April 2012
In a recent decision, the Supreme Court of India held that there is no liability to pay interest on the default in payment of advance tax by the payees, for the years prior to the assessment year (AY) 2013–14 (financial year [FY] 2012–13), where the payer has not withheld tax on income chargeable to tax in India. Read more in this PwC Tax Insights.

Budget 2022, taking place on 12 October, will be set against an ongoing backdrop of significant economic, political and societal uncertainty. In addition to the continuing fallout from COVID-19, the unprecedented challenges the country faces include climate change, housing, healthcare, international tax reform as well as the scale of our fiscal indebtedness, one of the highest in the developed world. Visit our PwC Ireland Budget page for the latest news. 

Government Plan 2022-2025 invests in Jersey’s future
The government of Jersey has released its 2022-2025 plan with Chief Minister, Senator John Le Fondré, saying: “This plan establishes the basis for a strong financial legacy, with recurring savings of £54 million out of a target of £60 million. We will refinance past pension liabilities to save more than £3.6 billion and have moved from prior year (PYB) to current year (CYB) taxation, which will result in £345 million of additional receipts over the next 20 years, including the transition for taxes to be paid on a current-year basis, rather than a prior-year basis.” Read more in this Jersey press release.

Jordan issues Executive Instructions for Transfer Pricing regulations
In June 2021, the Hashemite Kingdom of Jordan published Regulation No. 40 for the year 2021 in its Official Gazette, which introduced formal transfer pricing requirements and came into effect 30 days after the date of publication in the Official Gazette. On 16 September 2021, Jordan issued Executive Instructions No. 3, providing additional implementation considerations relating to those TP regulations, demonstrating the intention of the tax authorities in Jordan to implement the TP requirements effectively. Read more in this PwC Tax news item.

2022 Tax Plan
Dutch Budget Day was 21 September, and since the Netherlands does not yet have a fully authorized new government (elections were held earlier this year), the 2022 proposals are limited in scope. Although the impact on MNEs is not expected to be significant, MNEs should still follow the legislative process, and consider how the proposals’ could impact their operations. Read more in this PwC Tax Insights. Highlights are: 

  • Introduction of corporate income tax liability for reverse hybrid entities
    As of 1 January 2022, reverse hybrid entities will be subject to corporate income tax. Read more here.
  • Preventing mismatches when applying arm's length principle
    The bill aims to prevent double non-taxation in corporate income tax caused by transfer pricing differences (arm's-length principle) as of 1 January 2022. Read more here.
  • Stock options more attractive as remuneration
    Liquidity problems at the exercise of stock options caused by a lock-up are now solved by deferring the taxable moment. This change has been especially made with innovative start-ups and scale-ups in mind, as it will be easier to attract foreign talent. Read more here.
  • Tax accounting considerations
    These envisaged tax changes and plans, when (substantively) enacted, are likely to have tax accounting implications that will also impact the financial statements under IFRS or Dutch GAAP. Key tax accounting takeaways of the Tax Plan 2022 are outlined here.

New Zealand
Government introduces omnibus tax bill
On 8 September 2021, the Government introduced the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill to Parliament. The Bill will be referred to the Finance and Expenditure Select Committee shortly for public consultation, and is expected to be passed by 31 March 2022. The Bill contains a variety of policy and technical changes. This Tax Tips alert covers some of the key proposals.

The tax authorities propose new sales and purchase reporting as of 2024
The Norwegian tax authorities have issued a discussion paper proposing that all booked sales and purchases shall be reported on a transactional level as of 2024. The obligation to submit the sales and purchase list is proposed to apply to all bookkeeping liable entities, with a turnover over a minimum threshold, and will concern almost all companies in Norway. The deadline for submitting comments is 26th November 2021. In this blog we will give you an overview of the most important points in the paper.

Polish Deal - a practical guide to the new minimum income tax
In this PwC article, we show how to navigate through the new regulations in practice – especially how to check whether an entity will be subject to the minimum income tax and what needs to be done to calculate the amount of any liability.

Tax audits regarding withholding tax
Withholding tax (WHT) has recently become one of the areas particularly exposed to questioning by the Tax Authorities in Poland. See this PwC flyer on why WHT is attracting increasing interest.

COVID-19 webinar series
See here for upcoming and recorded webinars. For the latest updates on current topics, see this PwC Switzerland Insights page.

House Ways and Means Committee “Build Back Better” reconciliation legislation
As reported in our last edition, House Ways and Means Committee Chairman Richard Neal (D-MA) released his ‘chairman’s mark’ of tax increase and tax relief proposals which was approved by the House Ways and Means Committee on 15 September as part of “Build Back Better” reconciliation legislation that the committee currently is developing. Congressional Democratic leaders are seeking to complete action on the legislation so it can be signed into law by President Biden before the end of this year.

  • State corporate tax implications
    This PwC Tax Insight provides an overview of certain provisions in the bill with observations as to potential state tax impacts.
  • ESG tax proposals
    According to the section-by-section summary of the bill, it would structure many new and existing renewable-energy and energy-efficiency tax incentives as two-tiered incentives with a ‘base rate’ and a ‘bonus rate.’ Read more in this PwC Tax Insights.
  • Significant fuel excise tax provisions
    The bill language includes the reinstatement of the hazardous substance superfund fee on crude oil and petroleum product imports, the creation of a nonrefundable income tax sustainable aviation fuel mixture credit and a refundable excise tax credit and payment for sustainable aviation fuel mixture credits, and an extension of the biodiesel mixture credit, alternative fuel mixture credit, and alternative fuel credits through December 31, 2031. Read more in this PwC Tax Insights.

Applications for new California Competes Grant Program due by 24 January 
California has created a new California Competes Grant (CalCompetes Grant) Program, with the first application period occurring from 3 January to 24 January 2022. $120 million of funds will be available, with $36 million potentially available to a single awardee. A business of any size is eligible to apply if it satisfies at least one of the following criteria: 1) creates at least 500 new full-time jobs in California, 2) makes capital investments of at least $10 million, or 3) the project will take place in an area of high unemployment or poverty as defined in the California Competes Tax Credit regulations. The grant program may be attractive to taxpayers because of the $5 million annual credit limitation during tax years 2020 to 2022. Read more in this PwC Tax Insights.

New Jersey appellate court denies full unreasonable addback exception refund
A New Jersey appellate court recently held in an unpublished opinion that the Division could apply the state’s unreasonable addback exception only to the extent of New Jersey taxes paid by the recipient of royalty payments. Read more in this PwC Tax Insights

Third quarter 2021 state and local tax developments
This publication presents a brief summary of significant SALT Insights published this quarter with links to PwC Insights that provide analysis and observations.

Accounting Methods Spotlight Q3 2021
This quarter's Accounting Methods Spotlight discusses recent developments and guidance on tax accounting issues.

IRS issues final regs on corporate distributions to shareholders
The IRS has issued final regulations, effective from 22 September 20201, which provide that the amount of a distribution of property made by a corporation to its shareholder is the fair market value of the distributed property. The regulations affect shareholders that receive a distribution of property from a corporation.

Subscribe for US tax alerts
You can sign up for Tax Alerts issued by the US to be emailed to you. Subscribe using the link on this page.

Webcasts & podcasts:

  • Washington explained: Infrastructure, tax reform, and more
    In this podcast, leaders discuss the latest in Washington - focusing on the current bipartisan infrastructure bill and budget reconciliation working its way through Congress, as well as other policy developments CFOs will want to know about.
  • Tax Readiness: The strategic value of tax technologies (State and local perspective)
    Due to challenges such as inconsistent formats and manual manipulation of data from different sources, Tax functions spend over 50% of their time gathering and managing tax data. In this episode, PwC professionals from the State and Local Tax practice sit down to explain how technologies can be used as a strategic asset, allowing Tax functions to use much of their time working on value-added activities.

A number of previous webcasts are available for replay in our US tax reform hub here, including:

  • Tax Readiness: Elevating Tax in a Hot Deal Market
    In this replay from Wednesday 29 September, PwC professionals from our Tax, Deals and Value Chain Transformation practices had a timely discussion on the important role tax plays in the current deals environment including a discussion of opportunities for the tax department to add value as an integral part of the deal process. 
  • Tax Readiness: Q3 financial reporting considerations
    In this webcast which took place on Wednesday 22 September, our panel of Tax Accounting Services (TAS) specialists took a deep dive into relevant tax accounting matters and recent tax developments. Watch the replay here.
  • Tax Readiness: US tax legislation advances under budget reconciliation
    Watch the replay from this webcast held on Tuesday 21 September 2021, where our policy specialists explored the tax proposals being considered by the House of Representatives as part of “Build Back Better” reconciliation legislation, potential issues and challenges facing tax executives, and what companies should be doing in anticipation of potentially large scale changes. 

Other updates
For regular updates on this topic, check out our US tax reform hub on The Suite here.

Further Government support proposed for businesses impacted by COVID-19
The Vietnamese Government recently issued Resolution 105/NQ-CP to provide additional measures to support businesses affected by the COVID-19 pandemic. Under Resolution 105, many ministries and local authorities are instructed to implement more effective measures to fight the pandemic, and at the same time to create favourable conditions for businesses to recover, maintain and develop their production. Read more in this PwC NewsBrief.