Two weeks to 12 April 2024
Welcome to the latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
UK
Pillar Two
Client webcast: Pillar Two - From readiness to reality, 18 April
Our latest webinar session on Pillar Two is taking place this Thursday 18 April (between midday and 1pm). Matt Ryan, UK Pillar Two Leader, will be joined by Andy Wiggins, our Global Tax Accounting Leader and specialists from our International Tax Practice to discuss three key areas, as well as exploring how UK-parented businesses are implementing the necessary steps for Pillar Two financial reporting through to compliance. Register here to join the discussions.
Case law update
Blackrock - Court of Appeal decision
The Court of Appeal (CoA) handed down its judgment in the Blackrock case [2024] EWCA Civ 330 on 11 April. The taxpayer won the transfer pricing arguments but lost the unallowable purpose arguments (s442 CTA 2009). The CoA was critical of the First Tier Tribunal and Upper Tribunal approach and remade those decisions. We are currently preparing more detailed commentary which we will share in our next edition.
UK CFC State aid case - AG recommends annulment of Commission finding
The Advocate General's opinion in the UK's Finance Company Partial Exemption (FCPE) CFC state aid case was published on 11 April. The AG is recommending that the Court of Justice should annul the Commission decision finding that the United Kingdom granted illegal tax rulings (tax advantages to certain multinational groups) between 2013 and 2018.
Finance (No2) Bill 2024
- Finance (No2) Bill 2024
The Finance Bill will have its second reading on 17th April. Further dates will be announced in due course. Also see this link to the Explanatory Notes. - Tax Administration and Maintenance Day
As announced on Budget Day, the government will bring forward a further set of tax administration and maintenance announcements on 18 April 2024 at a Tax Administration and Maintenance Day.
Northern Ireland Enhanced Investment Zone
High-level plans for an Enhanced Investment Zone (EIZ), tailored to the economy of Northern Ireland, have been published by the UK Government. The Government recently announced it will support Northern Ireland to capitalise on its unique opportunities by providing £150 million to develop an Enhanced Investment Zone.
HMRC Manual & guidance updates
- Corporate Intangibles Research and Development Manual
- Updated 3 April
CIRD274400 Patent Box : Terms of the Fraction: R&D Direct expenditure CTA10/s357BLB - Overseas Expenditure Provisions and Contracted Out Expenditure
CIRD220130 Patent Box: relevant IP profits: finance income and excluded income - inclusion of Income arising from Audio Visual Expenditure Credits or Video Games Expenditure Credits as excluded income
CIRD220450 Patent Box: relevant IP profits: routine return figure: deductions that are not routine deductions - Addition of guidance relating to AVEC and VGEC
- Updated 3 April
- International Manual - updated 4 April
INTM524010 - Thin capitalisation: practical guidance: the use of credit ratings: what is a credit rating? Page reissued as not previously published.
EU
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 8 April includes: 1) “EU – US AI Research Alliance & Report on “AI For Public Good”; 2) EU Opens Investigations Into Tech Companies Under DMA; 3) OECD Publishes 6th Peer Review Report on Prevention of Treaty Shopping; 4) CFE Forum | 18 April 2024 | Brussels : Sharing the Tax Pie; and 5) EU Commission to Examine Austria’s Complaint Against Hungary’s Retail Tax. Visit their latest news page here. - Global Tax Top 10 - March 2024
The March edition includes: 1) European Parliament Adopts The World’s First AI Law; 2) US House Hearing on Pillar 1 and Digital Taxes & EU FISC Chair: Enact Digital Services Tax in Absence of US Pillar 1 Implementation; 3) United Nations (UN) 28th Session of the Committee of Experts on International Cooperation in Tax Matters; 4) TAXUD Consultation on Tax Dispute Resolution Mechanisms in the EU; 5) CFE Forum | Sharing the Tax Pie | 18 April 2024 | Brussels; 6) OECD Publishes 6th Peer Review Report on Prevention of Treaty Shopping; 7) DAC6 Not In Breach of EU Law, Advocate General Contends; 8) G20: Discussion on Global Minimum Wealth Tax; 9) CFE Opinion Statement on Engie Case: State Aid in Deduction/Non-Inclusion Structure in Luxembourg; and 10) EU Commission Updates Carbon Border Adjustment Mechanism Q&A Document.
OECD
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
As the world turns: Macroeconomic trends
In this Cross-border Tax Talks episode from 10 April, Doug McHoney (PwC’s International Tax Services Global Leader) is at PwC’s International Tax Conference in Dana Point, California with Dr. Alexis Crow, PwC’s Geopolitical Investing Practice Leader. Doug and Alexis discuss the recession outlook and economic activity, the impact of inflation, central banking policy, including interest rates, commercial real estate and financial stability, currencies and the future of the US Dollar, energy transition, the US election outlook, and outlooks for some significant economies, including Japan, India, Singapore, Brazil, the Middle East, and Europe.
Environmental, Social and Governance (ESG)
- How can businesses reduce energy costs, bolster efficiency and improve commercial performance?
From harnessing green growth to leveraging digital transformation, discover how businesses can move away from short-term, reactive measures and embrace a transformative approach to energy management. Read more.
Australia
Australia’s strengthened thin capitalisation rules now law
The Treasury Law Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Act 2024, which applies to income years commencing on or after 1 July 2023, received Royal Assent on 8 April 2024. The thin capitalisation rules apply to most multinational businesses operating in Australia with at least $2 million in debt deductions, on an associate inclusive basis.
Belgium
See here for latest updates.
Belgian draft law amending the investment deduction and innovation income deduction regime
On 29 February 2024, a draft law was submitted covering (amongst others) the investment deduction regime. On 22 March 2024, a number of amendments were proposed with regard to the draft law containing various tax provisions (which includes the proposed changes to the investment deduction regime), including a number of amendments in relation to the innovation income deduction (“IID”) regime. Read more in this PwC news item.
Germany
Contribution for general partner not part of trading profit if attributable to periods after dissolution of partnership
In a recent decision, the Supreme Tax Court held that profits from special compensation for the general partner of a limited partnership pursuant to Section 5a (4a) sentence 3 Income Tax Act attributable to the period following the cessation of the commercial and promotional activity of a partnership are not part of the trading profit subject to trade tax. Read more in this PwC blog.
Hong Kong
Patent box tax incentive Bill introduced
On 28 March 2024, the Inland Revenue (Amendment) (Tax Concessions for Intellectual Property Income) Bill 2024 (Bill) was gazetted to implement Hong Kong’s highly anticipated patent box regime, following a one-month consultation conducted in September 2023. This comes on the heels of the various initiatives announced in the 2024/25 Budget intended to make Hong Kong a more attractive location for research and development (R&D) and intellectual property (IP) trading (buying/selling and licensing) activities. The Bill sets out the proposed design of the patent box regime, which implements a concessionary tax rate of 5% for eligible IP income that is sourced in Hong Kong and derived from an eligible IP developed through R&D activities with effect from the year of assessment 2023/24. Read more in this PwC alert.
India
Payment for sale of online advertisement space not a royalty or FTS under the India-Ireland double tax treaty
In a recent ruling, the Bangalore bench of the Income-tax Appellate Tribunal concluded that the amount received by a non-resident taxpayer from the sale of online advertisement space cannot be characterised as a royalty or fee for technical services (FTS). Moreover, the Tribunal re-affirmed its earlier view that, in the absence of a taxpayer’s permanent establishment (PE) in India, such receipts cannot be taxed as business income in India. Read more in this PwC alert.
Ireland
Irish dividend exemption regime - consultation launched
Minister for Finance Michael McGrath TD has published a consultation document (a ‘feedback statement’) on 5 April, setting out a strawman proposal for the introduction of a participation exemption for foreign dividends, linked here. This is in line with the Roadmap published in September 2023 , which committed to the introduction of the participation exemption in Finance Bill 2024, to come into effect from 1 January 2025. This consultation is open for comments until 8 May. Read more in this press release.
Standard for Automatic Exchange of Financial Account Information in Tax Matters - The Common Reporting Standard (CRS)
The Irish Revenue recently updated Tax and Duty Manual Part 38-03-23 Standard for Automatic Exchange of Financial Account Information in Tax Matters - The Common Reporting Standard (CRS). In particular, Question 16 has been updated to give further detail on what is required as part of the reasonableness test of self certificates, and question 19 has been inserted to address the date of deregistration from CRS for Irish regulated Funds.
Tax Appeals to the High Court: The Case Stated Procedure
In this PwC article, we explain the main steps and challenges in the case stated procedure; highlight some recent High Court decisions that have clarified and refined rules and principles; and
provide insights into the process.
Korea
Korean Tax Update - April 2024q
The latest edition includes: 1) Government Unveils Plans to Reduce Corporate Income Tax and Dividend Income Tax Burden for Companies Enhancing Shareholder Returns; 2) Government Plans to Revive the Construction Industry, Offering Tax Benefits for CR REITs Purchasing Unsold Units of New Housing in Local Areas; 3) Korea’s Tax Expenditure Plan for 2024 was Approved; 4) NTS Revenue Collection Declines 12.6% to KRW335.7 Trillion in 2023; 5) Changes in Tax Law; and 6) Rulings update.
Luxembourg
Luxembourg referred to CJEU over interest limitation rule in ATAD1
The European Commission has referred Luxembourg to the Court of Justice of the European Union (CJEU) to rule that Luxembourg has failed to fully implement the interest limitation rules of the anti-tax-avoidance directive (ATAD1). “The Commission submits that the Grand Duchy of Luxembourg added securitisation special purpose entities to the types of financial undertakings listed in Article 2(5) of Directive 2016/1164 with a view to allowing their exclusion from the scope of the interest limitation rules of Article 4 of that directive,” the commission said.
Malaysia
Companies Amendment Act 2024: Beneficial ownership reporting
The Companies (Amendment) Act 2024 was enforced on 1 April 2024 in relation to section 2 and Division 8A, with the exceptions of sections 68 and 576. All companies registered under the Companies Act 2016 are required to lodge their beneficial ownership (BO) information to the Companies Commission of Malaysia within 3 months from 1 April 2024 through e-BOS. No enforcement action will be taken for non-compliance for lodgements up until 30 June 2024. Following the enforcement of the Amendment Act, a revised guideline on BO reporting framework has been issued by the SSM to assist companies in fully complying with the framework. Full text of PwC alert.
New Zealand
New Zealand 2024 International tax disclosure exemption
New Zealand's Inland Revenue Department has released a determination on the criteria for taxpayers to be exempt from the international tax disclosure requirement. Section 61 of the Tax Administration Act 1994 (TAA) requires taxpayers to disclose interests in foreign entities. It states that a person who has a control or income interest in a foreign company or an attributing interest in a foreign investment fund (FIF) at any time during the income year must disclose the interest held. In the case of partnerships, disclosure needs to be made by the individual partners in the partnership. The partnership itself is not required to disclose. Section 61(2) TAA allows the Commissioner of Inland Revenue to exempt any person or class of persons from this requirement if disclosure is not necessary for the administration of the international tax rules (as defined in section YA 1) contained in the Income Tax Act 2007.The new determination explains which taxpayers benefit from the reporting exemption for the tax year ended 31 March 2024.
Law change for disposal of or a donation of trading stock to approved donee organisations
New Zealand's Inland Revenue Department has released guidance relating to businesses disposing of or donating trading stock to an approved donee organisation(s) at less than market value. From 1 April 2024, the disposal can be treated at its discounted or zero value. Previously a business had to treat such disposals or donations as being a sale at market value.
Singapore
Corporate Income Tax Compliance
The Inland Revenue Authority of Singapore has updated its webpage on tax compliance by companies, adding withholding tax to its focus areas of upcoming compliance programmes. The IRAS expects to continue its compliance efforts for the digital economy sector in the coming years and on issues surrounding the deductibility of interest expenses and borrowing costs.
South Africa
PwC Tax Synopsis - March 2024
This latest edition includes: 1) SARS wants to have its cake and eat it too; 2) Requests for relevant material and redacted documentation ; and 3) SARS watch.
Taxation Laws Amendment Act, 2023: Amendments to provisions dealing with preference shares
A recent amendment of section 8EA of Income Tax Act No. 58 of 1962 will affect any dividend (including foreign dividends) received or accrued during years of assessment commencing on or after 1 January 2024. Companies that have not yet considered the potential impact of this change on preference dividends received for years of assessments commencing on or after 1 January 2024 still have some time to do so. Read more in this PwC alert.
Sweden
Increased transparency with country-by-country reporting and GRI 207
In 2017, the Swedish Parliament adopted the government's legislative proposal regarding documentation for submitting country-by-country reporting to the Swedish Tax Agency. However, new regulations are now being introduced that require certain parts of this information to be made public. This article compares the current and upcoming rules on country-by-country reporting with the information that should be included in accordance with the global sustainability standard GRI 207-4. Read more in this PwC blog.
Switzerland
For the latest updates on current topics, see this PwC Switzerland Insights page.
Taiwan
Taiwan Tax Update March 2024
This edition covers: Ministry of Economic Affairs announce draft amendment to Act for Development of Small and Medium Enterprises, whereby expiry date of tax incentives offered is extended to 31 December 2033.
Thailand
Legal update on the amendments of listing rules
The Stock Exchange of Thailand (SET) recently announced amendments to the listing rules in respect of the qualifications for companies applying to be listed on the SET and the Market for Alternative Investment. These amendments will be implemented to strengthen trust in the Thai capital market and to tighten the screening process for the offering of securities to the public (IPO) as the thresholds for the operating result and shareholders’ equity will be higher. These amendments will also encourage smaller companies with strong profitability to be listed on the SET, since the requirements for paid-up capital after the IPO will be reduced. The proposed amendments will be effective for listing applications submitted from 1 January 2025 onwards. Read more in this PwC alert.
US
Pillar Two: a US perspective
- In depth: Accounting for Pillar Two - Frequently asked questions
This In depth includes our responses to frequently asked questions on US GAAP accounting considerations related to the implementation of Pillar Two, including interim considerations applicable for calendar year end companies beginning in the first quarter of 2024, valuation allowance impacts, and other questions. - Pillar Two is here! How businesses are responding to the new GloBE rules
Beginning in 2024, Pillar Two became effective in many jurisdictions just after more OECD administrative guidance was published in December 2023. This new guidance is intended to clarify the operation of the GloBE rules. In this webcast replay from 27 March, our panellists will explore some common traps for the unwary, the new anti-arbitrage rules for the Transitional CbCR Safe Harbour; how businesses are developing a holistic data and technology strategy, and what steps businesses should be taking to ensure compliance.
Extensive package of stock repurchase excise tax proposed regulations just released
Enacted as part of the Inflation Reduction Act of 2022, the Excise Tax is a nondeductible 1% tax imposed on the fair market value of any stock of publicly traded US corporations that is repurchased by the corporation or certain affiliates. There are limited exceptions provided where the Excise Tax does not apply. Treasury and the IRS recently issued two sets of proposed regulations on the excise tax on certain repurchases of corporate stock. The first addresses the application of the Excise Tax, while the second provides rules on procedure and administration. Read more in this PwC Tax Insights and watch our 12 April Week in Review episode.
2025 and the Tax Cuts and Jobs Act: Building your tax story
The spotlight may be on the US 2024 presidential election, but tax executives can’t afford to take their eyes off 2025 and beyond. That’s when federal and global tax policies will come to a head. Key individual provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 expire, and changing TCJA international provisions could result in US corporate tax increases even as other countries are moving to collect higher corporate taxes. Now is the time to evaluate how these changes may affect your organisation’s bottom line and to take that message to decision-makers. Read more in this PwC blog.
Policy on Demand series
- Unlocking more ROI with AI
In this episode from 12 April, Nolan Ogden, PwC’s US Tax Technology Leader, discusses how AI technologies not only optimise cost and efficiency but also enhance strategic insights and decision-making capabilities. - What’s new – and changing – for the 2024 proxy season
The 2024 proxy season is in full swing and the issues showing up on shareholder ballots are an evolution of changes in company – and customer – priorities. In this episode from 11 April, Matt DiGuiseppe discusses what to look for and what to know. - Prospects not good for prioritising tax bill
Congress returns after a two-week recess with the House-passed tax bill as one of many items on its busy schedule. In this episode from 8 April, Andrew Prior talks about what we can expect in this Congressional work period. - Week in Review
- 12 April - This week, Treasury released stock buyback excise tax regulations that may signal the end of a regulatory logjam on corporate guidance. And with House Republicans finding it hard to govern with a narrow majority, Chairman Camp encourages companies to focus on the Senate, where the bipartisan tax bill remains in limbo. Watch here.
- 5 April - It’s crunch time and all attention is on the tax extenders bill as Congress comes back next week from a two-week recess. In this episode, Pat Brown talks about that and the number of “what if” questions he’s hearing about the bill and where companies should focus their attention in the coming week.
Tax Readiness webcast series
- Tax Readiness: Operationalizing your AI strategy
Join our panel of specialists on Thursday 25 April at 7pm, as they share on this webcast how to build an effective AI strategy for your tax operations. Explore real-world examples of successful AI implementation and discover practical steps to unlock the full potential of AI, drive value, and develop a strategic approach. Register now to gain valuable insights and take your tax operations to the next level with AI. - Tax Readiness: Understanding the Office of Appeals as IRS expands enforcement
Our panel of PwC specialists, with decades of Appeals experience, discuss what you should know about resolving tax disputes involving large corporations and high-income individuals with the Office of Appeals, with a particular focus on changes over recent years. View the webcast replay from 3 April. - Tax Readiness: Pillar Two is here! How businesses are responding to the new GloBE rules (New DF 01b)
Beginning in 2024, Pillar Two became effective in many jurisdictions just after more OECD administrative guidance was published in December 2023. This new guidance is intended to clarify the operation of the GloBE rules. In this webcast replay from 27 March, our panellists explored some common traps for the unwary, the new anti-arbitrage rules for the Transitional CbCR Safe Harbour; how businesses are developing a holistic data and technology strategy, and what steps businesses should be taking to ensure compliance.
Further information
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