Two weeks to 10 June 2022
Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
UK
OECD Pillar 2 - latest insights
- The global minimum tax: what it means for treasurers
In this joint webcast with the Association of Corporate Treasurers, PwC specialists will be giving an update on the global minimum tax and what it means for treasurers. Register here to join on Wednesday 22 June at 12.30.
For further insights and resources, visit our new Pillar 2 webpage.
General Court of the EU decision on UK CFC State aid
The General Court of the EU has dismissed both the UK and ITV plc’s applications made in respect of the European Commission’s UK Controlled Foreign Company State aid decision. The General Court judgment was handed down on 8 June, with both applications being dismissed in their entirety. Read more in this PwC EUDTG alert.
PwC International Perspectives webcast series
Are you interested in gaining a more international perspective on your tax presence and recent changes to the UK-German tax landscape? From 3 May to 22 June 2022, PwC UK and PwC Germany are partnering to host a series of webcasts, covering areas from UK incentives to German anti-hybrid legislation. You can find out more and register here.
UK/Luxembourg treaty
The UK-Luxembourg Double Taxation Convention and Protocol was signed on 7 June 2022 and has not yet entered into force. See this HMRC page.
Double taxation treaty passport scheme register updated
HMRC updated the double taxation treaty passport scheme register on 6 June 2022, with 53 additions and 2 amendments. See here.
Inaugural UK-Japan Financial Regulatory Forum
On 9 June 2022, the UK hosted Japan for the first Financial Regulatory Forum, where the UK and Japan signed an Exchange of Letters operationalising key financial services provisions under the UK-Japan Comprehensive Economic Partnership Agreement. Read more in this policy paper.
EU
EU adopts sixth package of sanctions against Russia
The European Union has approved the introduction of a sixth package of new sanctions on Russia and Belarus which includes a prohibition on the provision of certain business-relevant services - directly or indirectly – such as accounting, auditing, statutory audit, bookkeeping and tax consulting services, business and management consulting, and public relations services to the Russian government, as well as to legal persons, entities, or bodies established in Russia. See this press release.
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 30 May includes: 1) EU: EU tables minimum tax directive vote for June; 2) EU: Successful implementation of e-commerce VAT package; 3) EU Commission takes Malta to the ECJ over car tax; 4) EU Spring Semester Reports & EU interest rate rise; and 5) CFE position paper on crypto-assets reporting. Visit their latest news page here.
OECD
Pillar One Model Rules
- OECD launches public consultation documents on Pillar One - Amount A: Tax Certainty
As reported in our last edition, as part of the ongoing work of the OECD/G20 Inclusive Framework on BEPS to implement the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy, the OECD is seeking public comments until 10 June on two consultation documents relating to tax certainty: a Tax Certainty Framework for Amount A and Tax Certainty for Issues Related to Amount A under Pillar One. Read more in our Tax Policy Alert.
MLI
- MLI becomes effective for Bahrain and Romania from 1 June 2022
The BEPS MLI will become effective for the double tax avoidance treaty networks of Bahrain and Romania from 1 June 2022. - Singapore explains upcoming MLI changes to its double tax treaty with Bahrain
The Inland Revenue Authority of Singapore has released a synthesized text of the country's double tax agreement with Bahrain, which was modified by the BEPS multilateral instrument (MLI) from 1 June 2022, when the MLI became effective for Bahrain. The provisions of the MLI came into force on 1 April 2019 for Singapore's covered agreements. - Japan confirms upcoming MLI changes to its double tax treaties with China & Hong Kong
Japan's Ministry of Finance has noted that, as a result of the recent ratification of the BEPS multilateral instrument (MLI) by China, the MLI will enter into force for Japan’s treaties with China and Hong Kong from 1 September 2022. Synthesized texts of the agreements, to explain the changes, are being prepared.
See https://oe.cd/mli.
OECD releases new transfer pricing profiles for Egypt, Liberia, Saudia Arabia and Sri Lanka
These country profiles focus on countries' domestic legislation regarding key transfer pricing principles, including the arm's length principle, transfer pricing methods, comparability analysis, intangible property, intra-group services, cost contribution agreements, transfer pricing documentation, administrative approaches to avoiding and resolving disputes, safe harbours and other implementation measures.
Global Forum Secretariat and Switzerland assist Tunisia’s implementation of automatic exchange
Authorities in Tunisia have recently received support from the OECD Global Forum Secretariat and Switzerland, as the country prepares to start the automatic exchange of tax information from 2024. The Global Forum Secretariat and experts from Switzerland held a two-day workshop with 90 officials from Tunisia's tax agency on May 23-24. The workshop is part of a pilot project launched in January 2022 that is funded by the European Union. Another workshop was organised on 25 May 2022, with relevant government authorities to advance the work on the domestic legal framework aimed at implementing the AEOI standard in Tunisia. Read more in this OECD item.
Other territories
International
- Digital tax byte
The latest edition includes an insight into Kenya's new ESS rules and a publication on AsiaPac's ESS and other indirect tax digital development path. - Digital tax megabyte for May 2022
The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of digitalisation of business. This edition includes an OECD announcement on a delay to Pillar One, our latest Africa tax report that includes digital economy insights and a proposed 6% streaming levy in Denmark. There is also insight into the UK's proposal to introduce platform reporting rules with effect from 1 January 2024.
Environmental, Social and Governance (ESG)
- Tax Readiness webcast: How ESG is reshaping the Deals landscape
Register here to watch the replay from 31 May where our specialists discuss the importance of ESG positioning in corporate strategy, buy-side due diligence, sell-side divestiture planning, and credits & incentives.
United Nations Conference on Trade and Development - World Investment Report 2022
Flows of foreign direct investment (FDI) recovered to pre-pandemic levels in 2021, hitting $1.58 trillion – a 64% increase compared with 2020. But the prospects for this year are grimmer, according to the UNCTAD’s World Investment Report 2022. The report, entitled "International tax reforms and sustainable investment”, said that to cope with an environment of uncertainty and risk aversion, developing countries must get significant help from the international community. Read more in this news item.
Australia
Monthly Tax Update - June 2022
Welcome to the June 2022 edition of Australia's Monthly Tax Update, keeping you up to date on the latest Australian and international tax developments.
New law in NSW significantly broadens transactions subject to duty
New legislation has been enacted in New South Wales (NSW) which makes some important amendments to the NSW duties, land tax and tax administration provisions. The Amending Act represents a significant broadening of the types of transactions subject to stamp duty in NSW, as well as making important changes to the anti-avoidance and penalty tax provisions that apply to all NSW State taxes. Read more in this PwC Tax Alert.
Belgium
See here for latest updates.
The Luxembourg Reserved Alternative Investment Fund (RAIF)
Luxembourg RAIFs are increasingly used in order to provide debt funding for acquisitions. Until recently it was uncertain how interest paid by a Belgian company to a RAIF is to be treated from a Belgian withholding tax perspective. Two recent decisions of the Belgian Supreme Court provide more clarity. Read more in this PwC news item.
Canada
FATCA and CRS ─ Canada Revenue Agency outlines audit plans
In the years since the US Foreign Account Tax Compliance Act (FATCA) and then the Common Reporting Standard (CRS) were implemented as Parts XVIII and XIX of the Income Tax Act, respectively, Canadian financial institutions have worked hard to develop and implement systems, policies and procedures to ensure they comply with these complementary information reporting regimes. The Canada Revenue Agency (CRA) is ready to start auditing that compliance and recently provided an update on its audit plans. Read more in this PwC Tax Insights.
China (see also Hong Kong below)
An observation on the development trend of enterprises in the post-pandemic era upon the newly released Action Plan to restore Shanghai's economy
This issue of China Tax/Business News Flash takes Shanghai’s Action Plan as the entry point, to interpret the policy direction of national and local economic initiatives to promote industry, and to analyze enterprises’ strategic layout in the post-pandemic era, to help enterprises to find new economic growth after resuming work and production.
Japan confirms upcoming MLI changes to its double tax treaties with China & Hong Kong
Japan's Ministry of Finance has noted that, as a result of the recent ratification of the BEPS multilateral instrument (MLI) by China, the MLI will enter into force for Japan’s treaties with China and Hong Kong from 1 September 2022. Synthesized texts of the agreements, to explain the changes, are being prepared.
Germany
Free movement of capital inapplicable where German company is fully owned by a Japanese company
In a recent decision, the Regional Tax Court of Düsseldorf dismissed the claim of a Japanese corporation for a refund of withholding tax on the grounds that the case was within the scope of the EU principles for freedom of establishment which the plaintiff, being a resident of a third country, could not invoke. Read more in this PwC tax blog.
German tax administration publishes new decrees on real estate transfer tax (RETT) rules
In May 2022, the Finance Ministries of the German Federal States recently published long-awaited decrees on the interpretation of the RETT transfer rule that was introduced with effect as of 1 July 2021 on transfers in property holding corporate entities. At the same time, an amended decree on the interpretation of transfers in property holding partnerships was published. Read more in this PwC news alert.
UPDATE: Credit of Canadian withholding tax on dividends also for trade tax?
The Regional Tax Court of Hesse held that withholding tax levied in Canada on dividends distributed by a Canadian corporation to a German corporation should be credited against German trade tax. The tax authorities have in the meantime launched an appeal against this judgment and the case is now pending before the Supreme Tax Court for final clarification. Read more in this PwC tax blog.
Hong Kong
Japan confirms upcoming MLI changes to its double tax treaties with China & Hong Kong
Japan's Ministry of Finance has noted that, as a result of the recent ratification of the BEPS multilateral instrument (MLI) by China, the MLI will enter into force for Japan’s treaties with China and Hong Kong from 1 September 2022. Synthesized texts of the agreements, to explain the changes, are being prepared.
India
CBDT notifies procedure for filing appeals against BAR ruling
The Central Board of Direct Taxes (CBDT) has notified a new rule that prescribes the manner of filing an appeal before the High Court against the ruling pronounced by the Board for Advance Rulings (BAR). As per the new rule, the form and manner of filing appeal will be the same as the procedure laid down by the jurisdictional High Court for filing an appeal to the High Court. Read more in this PwC Tax Insights.
Ireland
Corporate taxation rules for resident and nonresident companies
The Irish Revenue has published guidance on corporation tax clarifying that companies resident in Ireland must pay corporate tax (CT) on their worldwide profits if those profits include both income and capital gains. Non-resident companies must also pay CT if they trade through a branch or agency in Ireland or are in receipt of profits or gains in respect of rental property in Ireland.
Irish Fiscal Advisory Council issues assessment report
The Irish Fiscal Advisory Council, Ireland's budgetary watchdog, has issued its Fiscal Assessment Report. The report assesses the fiscal stance that the Government set out in its Stability Programme Update 2022. Council assesses that the overall fiscal stance in SPU 2022 is conducive to prudent economic and budgetary management, but advises that the over-reliance on corporation tax should be gradually unwound. Read the report here.
Japan
Inaugural UK-Japan Financial Regulatory Forum
On 9 June 2022, the UK hosted Japan for the first Financial Regulatory Forum, where the UK and Japan signed an Exchange of Letters operationalising key financial services provisions under the UK-Japan Comprehensive Economic Partnership Agreement. Read more in this policy paper.
Japan confirms upcoming MLI changes to its double tax treaties with China & Hong Kong
Japan's Ministry of Finance has noted that, as a result of the recent ratification of the BEPS multilateral instrument (MLI) by China, the MLI will enter into force for Japan’s treaties with China and Hong Kong from 1 September 2022. Synthesized texts of the agreements, to explain the changes, are being prepared.
Luxembourg
UK/Luxembourg treaty
The UK-Luxembourg Double Taxation Convention and Protocol was signed on 7 June 2022 and has not yet entered into force. See this HMRC page.
Middle East
Financial Services Tax & Legal Update - June 2022
Welcome to the June edition of our Middle East Financial Services Tax and Legal update, picking up on a range of current hot topics relevant to the financial services industry. We have a packed offering this month as the rapid rate of change in the tax and legal area for FS businesses continues.
Saudi Arabia: Exemption from fines and financial penalties initiative
The Zakat, Tax and Customs Authority (‘ZATCA’) has re-launched an initiative to exempt or abolish fines and financial penalties imposed on taxpayers on account of a lapse in fulfilling several procedural aspects related to taxes applicable in the Kingdom of Saudi Arabia. The types of taxes included in this initiative are Excise Tax, Value Added Tax (including E-Invoicing), Real Estate Transaction Tax, Withholding Tax and Corporate Income tax. The exemption will remain applicable for a 6-month period starting from 1 June 2022 tol 30 November 2022. Read more in this PwC Tax Insights.
UAE Ministry of Finance announces new reporting portal for FATCA and CRS
On 17 May 2022, the UAE Ministry of Finance announced the go-live of the new Foreign Account Tax Compliance Act (FATCA) and Common Reporting System (CRS) reporting portal. All UAE Reporting Financial Institutions (“RFIs”) are required to register on the portal. Read more in this PwC news item.
Singapore explains upcoming MLI changes to its double tax treaty with Bahrain
The Inland Revenue Authority of Singapore has released a synthesized text of the country's double tax agreement with Bahrain, which was modified by the BEPS multilateral instrument (MLI) from 1 June 2022, when the MLI became effective for Bahrain. The provisions of the MLI came into force on 1 April 2019 for Singapore's covered agreements.
Singapore
Singapore explains upcoming MLI changes to its double tax treaty with Bahrain
The Inland Revenue Authority of Singapore has released a synthesized text of the country's double tax agreement with Bahrain, which was modified by the BEPS multilateral instrument (MLI) from 1 June 2022, when the MLI became effective for Bahrain. The provisions of the MLI came into force on 1 April 2019 for Singapore's covered agreements.
South Africa
2022 Tax filing season
The South African Revenue Service (SARS) has published a notice to appear in the Government Gazette on 3 June 2022, to notify taxpayers to submit income tax returns for the 2022 year of assessment, as well as the periods within which the returns must be furnished. This PwC Alert summarises the draft notice.
Tax Synopsis - May 2022
This issue includes: 1) SA investment tax incentives; 2) Zero-rating of VAT on the supply of gold; and 3) SARS watch.
Taiwan
Taiwan Tax Update - May 2022
This issue includes: 1) Ministry of Economic Affairs announced draft amendments to regulations governing investment tax credit for smart machinery, 5G network and information security products or services; 2) National Tax Administration - Northern Area’s response to CPA Association: Licensed software paid by enterprises and booked as intangible assets can be eligible for substantive investment deduction from undistributed earnings; 3) Ministry of Finance announced extension of deadline for filing FY2021 CIT return and tax payment to 30 June 2022.
Turkey
Extension of the tax incentive for companies that convert their foreign currencies to Turkish lira
Law number 7407, extending the tax incentive for companies that convert their foreign currencies to Turkish lira was published in the Official Gazette on 28 May 2022. Incentives apply if companies convert the FX available on the balance sheet of 31 March 2022 to liras by year-end and deposit the liras in banks for at least 3 months. Originally the tax exemption applied to FX available on the balance sheet of 31 December 2021 only. Read more in this PwC tax bulletin.
US
Impact of blockers on tax-exempt organizations and investments
Corporate blockers may provide tax-exempt entities an opportunity to enhance certain types of investment returns. With changes in US tax law brought about by the 2017 tax reform legislation, university endowments, foundations, pension trusts, and other tax-exempt entities should analyze whether the use of an alternative investment vehicle (“AIV” or “corporate blocker”) could play an appropriate part in their overall investment strategy. Read more in this PwC Tax Insights.
Demystifying DeFi tax
The exponential growth of decentralised finance (DeFi) has brought access to, and interest in, these platforms to a wider range of users — from individuals to institutional investors and multinational organisations. The technology makes sophisticated finance transactions available to all kinds of users in a variety of locations. Although other jurisdictions (e.g. the UK) have started issuing tax guidance in this area, to date taxation of DeFi transactions has not been specifically addressed in published guidance by US tax regulators. This PwC insight outlines the fundamental features of a DeFi ecosystem, and highlights how they can affect the US taxation of the transactions entered into through the ecosystem.
Managed Services - Turning deal costs into deal value
A recent PwC Pulse Survey found that nearly half of all executives polled expect transactions in their industries to be very important for driving growth in 2022, but an acquisition often means that valued staff, sometimes entire departments, are expected to move or reskill. These added expectations can lead to employee churn, and lost expertise can be a drain of value. One option that can help companies avoid these challenges and recognize deal value sooner, is through managed services. Read more in this PwC article.
Connecticut enacts new tax incentive program
Connecticut recently enacted H.B. 5506 which establishes the JobsCT tax rebate program (JobsCT). JobsCT provides refundable tax credits for companies in targeted industries increasing employment in Connecticut. JobsCT is expected to replace the JobsCT Grant Program currently offered by the Connecticut Department of Economic Community Development (DECD). Companies with potential job growth in Connecticut should analyse whether the JobsCT program may be available for their project. Read more.
Vermont enacts significant corporate income tax changes
S.B.53 makes several changes to Vermont’s corporate income tax applicable to tax years beginning on or after 1 January 2023. These include: 1) the repeal of an overseas business organisation exclusion and its replacement with a foreign corporation exclusion; 2) a minimum tax increase; 3) use of a single sales factor apportionment formula and throwback repeal; 4) requiring informational reporting of payroll and property factors; and 5) migrating from Joyce to Finnigan treatment, and 6) application of federal consolidated return rules. Read more in this PwC Tax Insights.
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- Tax Readiness: Breaking through reporting disruption with a more sustainable strategy
The rapidly changing tax and business landscape requires companies to build a more sustainable data and reporting strategy that addresses both global transparency and digitization trends. Join our panel of specialists on Wednesday 29 June at 7pm as they discuss practical steps for adapting to change and preparing for the future. Register here. - Tax Readiness: Q2 financial reporting considerations
Join our Tax Accounting Services (TAS) specialists on Wednesday 22 June at 7pm as they take a deep dive into relevant tax accounting matters and recent tax developments. Register here. - Tax Readiness webcast: How ESG is reshaping the Deals landscape
Register here to watch this webcast from 31 May where our specialists discuss the importance of ESG positioning in corporate strategy, buy-side due diligence, sell-side divestiture planning, and credits & incentives. - Global disruption and the impact on doing business in the US
We continue to live in challenging times, and recent events underscore how quickly the state of the world can change. From geopolitical tensions to tax policy, significant developments are impacting the business strategy of international companies operating in the US. Watch the replay of this webcast held on 17 May to gain practical insights from PwC’s economic, deals, and tax policy specialists to stay ahead of the curve. - Cross-border tax talks: Back to School: Mindy Herzfeld’s Pillar 2 insights
In this episode from 25 May, Doug McHoney (PwC's US International Tax Services Co-Leader) is joined by Mindy Herzfeld, professor of tax practice at the University of Florida Levin College of Law, where she teaches International Tax, to discuss Pillar Two rules. - Policy on Demand series
- Week in Review
- In this episode from 10 June, Pam Olson explains why we are in a ‘wait and see’ mode with respect to legislation and discusses the importance of getting information to policymakers.
- In this episode from 3 June, Janice Mays shares her takeaways from this week, looks ahead to Secretary Yellen’s testimony next week, and explains why companies should be vocal about Section 163(j) now. She also answers the question that she received most this week: Is Build Back Better still in play?
A back catalogue of previous webcasts and other resources are available on our US tax reform hub here.
Vietnam
Decree 34/2022 extending deadline for tax payments in 2022
On 28 May 2022, the Government released Decree 34 regarding the extension of deadlines for payments of taxes and land rental fee applicable for the 2022 tax year. The Decree took effect from the signing date. Read more in this PwC NewsBrief.