Two weeks to 14 May 2021
Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
UK
Responding to the business impacts of COVID-19
Visit our global crisis centre webpage and our COVID-19 hub on TheSuite to continue to keep up to date with developments on this topic. Of particular relevance to multinational companies operating in the UK, navigate the global tax, legal and economic measures in response to COVID-19 by territory here. In relation to the UK:
- Preparing for recovery: overcome the challenges ahead
UK businesses are feeling optimistic, but need a clear strategy and the right tools for the hurdles still to come. After 12 months of uncertainty and challenge, UK business leaders have spoken and they’re ready to return to growth. We surveyed 400 business leaders and management to see how businesses were preparing for their recovery and their view of the path back to normality. You can download the report here. - Business in Focus podcast series - Why you need to rethink mental health risk
Every year, Mental Health Awareness week represents an opportunity for us all to recognise the importance of our mental wellbeing. This year, the social isolation imposed on many of us by the COVID-19 pandemic has made it more important than ever to look after ourselves and those around us. In this episode, host Emily Khan is joined in our virtual studio by Poppy Jaman and Ben Higgin to discuss this important issue. Poppy is CEO of the City Mental Health Alliance (CMHA), and Ben is a PwC UK Executive Board Member with responsibility for Technology and Investments, and one of PwC's Mental Health Advocates.
HMRC seek agent input on tax avoidance consultations
HMRC are calling for input on two consultations concerning offshore income and gains and international debt. The consultations Helping Taxpayers Get Offshore Tax Right and Preventing and Collecting International Tax Debt were launched on 23 March 2021 as part of the Government’s No Safe Havens 2019 Strategy. Both consultations run until 15 June 2021.
Double Taxation Treaty Passport Scheme register
HMRC has updated the double taxation treaty passport scheme register which shows details of companies registered for the scheme, with 45 additions and four amendments.
FCA supports switch from LIBOR to SONIA
The Financial Conduct Authority (FCA) and the Bank of England have encouraged participants in the sterling exchange traded derivatives market to switch to SONIA instead of LIBOR from 17 June 2021. See this Bank of England news item.
EU
EU General Court delivers two State aid judgments - Amazon annulled & Engie upheld
The EU General Court has annulled the European Commission’s 2017 decision that advance pricing agreements approved by Luxembourg granted Amazon €250 million in state aid, holding that the Commission’s transfer pricing analysis was fundamentally flawed and that Amazon was not provided with ‘selective advantage’. See this press release.
In a second decision, delivered on the same day, the Court upheld the Commission’s 2018 decision that tax rulings issued by Luxembourg to the French fuel supplier Engie conferred a selective tax advantage to the group, in breach of EU law. See this press release.
The European Commission's Executive Vice-President, Margrethe Vestager, has responded to these two rulings, see this European Commission press release.
New Learning Portal for tax and customs professionals
The European Commission has launched a new learning portal for tax and customs professionals which aims to build common expertise and improve professional skills among EU Economic Operators and their Customs representatives. Key benefits include building a common skillset to address shared challenges such as tax fraud, tax evasion and tax avoidance. See this European Commission news item.
CFE Tax Advisers Europe
CFE Tax Top 5 – Round-up of EU Tax Policy News
The latest edition looks at the following: 1) OECD to introduce cryptocurrency reporting by end 2021; 2) EU Commission proposes new regulation to address distortion by foreign subsidies in single market; 3) CFE statement on EU consultation on Insurance & Financial Services VAT Rules; 4) UN releases updated Transfer Pricing Manual; and 5) OECD publish Inheritance Tax Report. View previous editions here.
OECD
OECD and CREDAF renew partnership to strengthen tax co-operation
The Organisation for Economic Co-operation and Development (OECD) and the Cercle de réflexion et d’échange des dirigeants des administrations fiscales (CREDAF) signed a renewal of their Memorandum of Understanding (MoU) agreeing to extend their collaboration in promoting fair and efficient tax systems and enhancing the efficiency and effectiveness of tax administrations for a further three years. See this OECD item.
Other territories
International
International Tax News - March 2021
Among the topics featured in this month’s edition are: 1) Tax measures proposed in the 2021-22 Hong Kong Budget; 2) Spain enacts ATAD 2 anti-hybrid rules; 3) Brazilian tribunal considers municipal service tax over complex contracts; and 4) COVID-19 - ATO compliance approach for permanent establishments of foreign companies extended.
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:
- Global Digital Tax Online
In a time when information is key and compliance is vital, GlobalDigitalTaxOnline (GDTO) is an essential tool to help navigate the complex world of tax and the reporting of various digital/electronic services. Read more about our new online subscription service. - Digital tax byte
The latest edition from 14 May, which includes (1) announcements on India's SEP thresholds (2) Australia's proposed sharing economy reporting regime; (3) revised USTR hearings on DSTs; (4) impact on Pillars One and Two of progress on US domestic proposals; (5) African Tax Administration Forum (ATAF) puts forward alternative proposals for Pillar One; and (6) Kenya's 2021 Finance Bill has proposed some changes to the definition of a PE, the DST and VAT rules.
- Digital tax megabyte for April 2021
A round-up of the brief insights throughout April 2021 of the type provided on an ad hoc basis in our digital tax byte updates.
Australia
Federal Budget 2021
The Treasurer delivered the Federal Budget on Tuesday 11 May 2021. What does this year’s budget mean for business, the economy, our society and you? See here for our detailed analysis of the tax and superannuation measures announced.
Belgium
See here for latest updates.
Tax Bites podcast - In pursuit of a new tax equilibrium
In the week of 26 April, PwC Belgium held its Tax webinar week. Over five days, five hot topics were discussed in five one hour sessions. This Tax Bites podcast reviews some of the tax challenges companies face, that were discussed during the sessions.
Cyprus
Cyprus addresses EU MDR, prevention of tax abuse, and treaties with Egypt and Germany
This PwC Tax Insights discusses a number of recent tax developments in Cyprus: (1) Parliament approves draft Bill implementing EU MDR (aka DAC6); (2) Ministry of Finance submits two bills to Parliament to strengthen Cyprus’ tax framework for preventing tax abuse, tax evasion, and tax avoidance; (3) new tax treaty agreed with Egypt; and (4) new protocol to treaty with Germany ratified.
Finland
Tax and Legal news - May 2021
The latest tax and legal news from Finland. Read the latest edition.
Germany
Bundestag passes the Act to Modernise the Relief of Withholding Taxes and the Certification of Capital Gains Tax
On 5 May 2021, the Bundestag passed the Act to Modernise the Relief of Withholding Taxes and the Certification of Capital Gains Tax. The law as passed is based on the resolution recommended and passed by the Bundestag Finance Committee on 21 April 2021. The approval of the Bundesrat is still pending. The appointed date for this is 28 May 2021. Read more in this PwC Germany tax blog.
German real estate transfer tax (RETT) reform: Bundestag and Bundesrat have adopted amendments
After the Bundestag approved a slightly revised bill on 21 April 2021, the Bundesrat also approved the bill on 7 May 2021. As soon as the Federal President has signed the amended law and it has been published in the Federal Gazette, which is expected shortly, the amendments can enter into force on 1 July 2021. Real estate investors should immediately review their holding structures with a very long term view to understand and respond to consequences. Read more in this PwC Real Estate news alert.
Ireland
Considerations for Irish transfer pricing documentation
Updated Irish Transfer Pricing (TP) guidance provides additional detailed guidance to taxpayers on the application of changes introduced by Finance Act 2019. This insight discusses those aspects of the guidance pertaining to TP documentation and what this means for taxpayers that satisfy the de minimis consolidated group revenue threshold and hence fall within the scope of the enhanced TP documentation requirements. (It also gives a link to our previous insight giving an overview of those enhanced requirements and the new penalty regime.)
Ireland updates guide on taxation of REITs
The Irish Revenue has updated its guide on real estate investment trusts to reflect changes introduced by Finance Act 2019. The changes are in respect of: (1) applying the "wholly and exclusively" test when calculating profits available for distribution as provided by section 705HA of the Taxes Consolidation Act (TCA); and (2)use of funds raised and disposal proceeds as provided for by section 7051 and section 7051A. The guidance also now addresses the interaction of the Parent/Subsidiary Directive and the special REIT provisions in respect of the taxation of non-resident shareholders.
Why tax should be part of a finance transformation
Finance transformation presents risks and opportunities for tax functions. Both organisational and finance change programmes impact on the tax function's ability to continue to remain tax compliant. The data, systems and processes which the function relies on to deliver compliance and reporting will be impacted. Read more in this PwC Ireland tax insights.
Italy
Decreto Sostegni – amendments approved
The Senate’s Budget and Finance Committees concluded their work on the conversion of Decree Law no. 41/2021 (“Decreto Sostegni“, which came into force on 23 March 2021) and approved, among others, the following amendments: 1) total postponement of one year for “external” warning procedures; and 2) possibility to modify “closed” debt restructuring agreements. Read more in this PwC Italy tax blog.
Malta
Further measures to support business in Malta in light of the COVID-19 pandemic
In a continued effort to alleviate challenges encountered by businesses in Malta as a result of the COVID-19 pandemic, various authorities have recently announced new or extended fiscal and other measures. This PwC Malta page sets out some information on these measures, with further information expected to be made available over the course of the coming weeks.
Mexico
Outsourcing services reform
Legislation recently published in Mexico will reform labor laws related to the legal permissibility and tax treatment of outsourced services from related or third-party service providers. Under the reform, and with certain exceptions, outsourced services are generally prohibited, and payments for outsourcing are neither deductible for tax purposes nor creditable for VAT purposes. Failure to comply with the outsourcing limitations could result in significant penalties or charges of tax fraud. Entities have very limited time to comply, and some may need to undertake significant restructuring to avoid severe consequences.
- US webcast: Mexico's outsourcing services reform significantly impacts multinationals
Join us by registering here for a webcast on Thursday 27 May 2021 at 7pm where we will discuss legislation recently published in Mexico to introduce outsourcing services reform that will significantly impact multinational entities with operations or investments in Mexico.
- Acción Inmediata: Mexico adopts labor subcontracting rules
In this episode of our Cross-border Tax Talks series from 12 May, Doug McHoney (PwC's US International Tax Services (ITS) Leader) and David Cueller (PwC Mexico’s Tax and Legal Services Leader) discuss Mexican developments, including outsourcing reform and Mexico's current position in the OECD BEPS Project.
Middle East
UAE: Amendment of administrative penalties imposed for violation of Tax Laws and reduction of previously imposed penalties
The UAE Cabinet of Ministers recently issued Resolution No. 49/2021 to amend the provisions of Cabinet Resolution No. 40/2017 relating to administrative penalties imposed for violation of Tax Laws in the UAE. The new resolution grants the UAE Federal Tax Authority the right to reduce previously unpaid administrative penalties to 30% of the total penalties where the registrant has paid all taxes due by 31 December 2021. The new resolution is applicable effective sixty (60) days as of the date of its issuance. Read more in this PwC tax news item.
Norway
Revised national budget 2021
The Norwegian Revised National Budget was presented on 11 May 2021. See this PwC tax blog for details of the announcements including additions and clarifications of the rules on withholding tax on interest and royalties as well as other corporate tax, personal tax and VAT announcements.
Serbia
Singapore and Serbia sign new double tax treaty
Singapore and Serbia have signed a double tax treaty which clarifies the taxing rights of both countries on income flows arising from cross-border business activities. See this Singapore Revenue press release.
Singapore
Singapore and Serbia sign new double tax treaty
As reported above, Singapore and Serbia have signed a double taxation treaty which clarifies the taxing rights of both countries on income flows arising from cross-border business activities. See this Singapore Revenue press release.
Tax News - April 2021
This publication aims to share bite-sized information and updates from Singapore and around the region. Some of the updates in this issue include: 1) The Inland Revenue Authority of Singapore (IRAS) issued a revised circular on ""Tax Treatment of Foreign Exchange Gains or Losses for Businesses"" on 31 March 2021; 2) The IRAS issued the circular “Transfer Pricing Guidelines Special Topic – Centralised Activities in Multinational Enterprise Groups” on 19 March 2021 and 3) The protocol amending the Agreement for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital (tax treaty) signed on 28 June 2004 between the Republic of Singapore and the Federal Republic of Germany entered into force on 29 March 2021.
South Africa
Tax Synopsis - April 2021
This monthly publication by PwC South Africa gives informed commentary on current developments in the tax arena, both locally and internationally. This edition includes: 1) taking SARS’ decisions on review; 2) changes in the law concerning emigration and the liquidation of certain retirement funding; and 3) SARS watch.
Switzerland
COVID-19 webinar series
See here for upcoming and recorded webinars. For the latest updates on current topics, see this PwC Switzerland Insights page.
Taiwan
Tax update - April 2021
This edition covers: 1) Legislative Yuan passed the third reading of Joint Property Tax System 2.0 which is effective from 1 July 2021 onwards; and 2) Ministry of Finance announces income query service for tax year 2020 shall start from 28 April 2021 to 31 May 2021.
Thailand
Tax Newsletter - Issue 2, May 2021
In this issue: 1) Possible issues arising from Digital service tax; and 2) Tax developments between January and April 2021.
Extension of deadline for online filing of corporate income tax returns and related information
Listed and non-listed corporate entities and juristic partnerships have been granted an extension to the deadline for the online filing and payment of tax and certain related information. See this brief PwC Tax Insight.
US
Behind the scenes: a tax policy discussion with Chip Harter
In this episode from his Cross Border Tax Talks series on 5 May, Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Chip Harter (Senior Policy Advisor in PwC's Washington National Tax Services Practice and former Deputy Assistant Secretary for International Tax Affairs in the Office of Tax Policy at the US Department of the Treasury) discuss Chip's experiences at Treasury and the latest outlook for tax policy.
Florida enacts remote seller and marketplace provider collection requirements
Florida has enacted legislation that requires remote sellers and marketplace providers to collect and remit sales and use taxes (and applicable local option surtaxes) when they have more than $100,000 in annual sales to Florida buyers. The requirement is effective 1 July 2021. Affected businesses must prepare to collect and remit tax with only a little over two months’ notice. Read more in this PwC Tax Insights.
Kansas enacts significant corporate income tax changes
Pursuant to a legislative override of the governor’s veto, recently enacted S.B. 50 provides the following changes applicable for tax years beginning after 31 December 2020: 1) 100% subtraction modification for GILTI and 163(j) disallowed interest; 2) decoupling from IRC Section 118 capital contribution changes enacted by the 2017 tax reform act (the 2017 Act); and 3) modifying business meal expense deductions. Additionally, for net operating losses incurred in tax years beginning after 31 December 2017, Kansas replaces its 10-year NOL carryforward with an unlimited carryforward. Finally, Kansas extends the filing deadline for 2020 corporate income tax returns to be one month following the federal deadline. Read more in this PwC Tax Insights.
Webcasts & podcasts:
- Tax Readiness: Preparing for Deals in a Changing Environment
Please join us on Wednesday 26 May 2021 at 8pm where PwC professionals from our Tax and Deals practices will be having a timely discussion of the many factors impacting the current deals environment including the prevalence of ESG, the use of SPACs, and anticipated tax changes. Register here. - Mexico's outsourcing services reform significantly impacts multinationals
As reported above, please register here to join us for this webcast on Thursday 27 May 2021 at 7pm where we will discuss the legislation recently published in Mexico that will significantly impact multinational entities with operations or investments in Mexico. - Tax Readiness: Key state tax legislation and trends - What you need to know to navigate change
This webcast on Tuesday 8 June 2021 at 7pm will focus on key state legislation impacting corporate, passthrough entity, individual, and indirect taxes. Speakers will highlight trends, what’s driving legislation, the potential impact and what companies should look out for and be thinking about to stay ahead of the changes. Register here. - Tax Function of the Future: R&D Innovation and Cloud
Cloud’ use is accelerating across the business... what’s the impact for Tax? Join us for this webcast on Wednesday 16 June 2021 at 7pm where we will explore why quantifying the bottom line tax impact of cloud computing while serving as a strategic partner for cloud efforts, such as R&D and ERP, are both critical tasks for Tax. - Q2 financial reporting considerations
Register here to join us on Wednesday 23 June 2021 at 7pm where our panel of Tax Accounting Services (TAS) specialists will take a deep dive into relevant tax accounting matters and recent tax developments. - Tap into Tax podcast
This PwC podcast series combines perspectives from our tax technical specialists and our professionals focusing on the evolving tax function for a holistic look at tax. Since our last edition, two episodes have been released:
Previous episodes in this series are available here, as well as on Spotify and other streaming services.
- Cross-border tax talks
- Acción Inmediata: Mexico adopts labor subcontracting rules
In this episode from 12 May, Doug McHoney (PwC's US International Tax Services (ITS) Leader) and David Cueller (PwC Mexico’s Tax and Legal Services Leader) discuss Mexican developments, including outsourcing reform and Mexico's current position in the OECD BEPS Project. - Behind the scenes: a tax policy discussion with Chip Harter
In this episode from 5 May, Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Chip Harter (Senior Policy Advisor in PwC's Washington National Tax Services Practice and former Deputy Assistant Secretary for International Tax Affairs in the Office of Tax Policy at the US Department of the Treasury) discuss Chip's experiences at Treasury and the latest outlook for tax policy.
Previous episodes in this fabulous series of podcasts can be found here, as well as on Spotify, YouTube and other streaming services.
Replays:
A number of previous webcasts are available for replay in our US tax reform hub here, including:
- Zeroing in on your trade and supply chain strategy: How ready is your business?
If you missed this webcast, you can watch the replay from Wednesday 12 May 2021 where we examined potential steps that businesses can take in the near-term to proactively prepare for any changes in trade policy. - Tax Readiness: The intersection of ESG and Tax
Register here to watch this webcast from Wednesday 5 May 2021 to learn more about environmental, social and governance (ESG) and how tax leaders can engage with the C-suite to align tax with ESG transformation. - Tax Function of the Future: Keeping pace with the new operating tempo
Watch this replay from 20 April 2021 to explore how high priority policy changes and other disruption are shaping the C-suite agenda and impacting Tax functions. Together, we will walk through tangible examples of how companies can operationalize to meet new Tax function challenges now and beyond. - Tax Readiness: Are digital taxes here to stay?
You can register here to watch the replay from 28 April 2021, in which we discussed the rapidly evolving environment, and how Digital Services Taxes (DSTs) are expanding beyond Europe, not just in geography, but also in scope. - Q1 Financial Reporting Considerations
You can watch the replay here of this webcast held on Wednesday 24 March 2021. - Tax Readiness: International tax planning post-election
Register here to watch the replay from this webcast on Wednesday 17 March 2021.
Other updates
For regular updates on this topic, check out our US tax reform hub on The Suite here.