Two weeks to 19 February 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:
- Business in Focus podcast series
As the world responds and adapts to COVID-19, our podcast series invites industry experts to look at the steps businesses can take. Our ‘In conversation with’ series will see our host Teresa Owusu-Adjei, along with members of our Clients and Markets Executive, speak to our clients about the issues that are front-of-mind for them. You’ll learn how different organisations have responded to the pandemic and hear about their priorities for the future. In this first instalment, Teresa is joined by Susan Armour (Group Ethics and Compliance Officer at Oxford University Press) and Sam Samaratunga (PwC’s EMEA and UK Risk Assurance Leader) who discuss their lessons learnt from 2020 and how to draw on these to navigate future challenges. - COVID-19 Impact Survey results: Is finance emerging stronger from the pandemic?
PwC spoke to their global finance consulting leaders and clients to get a snapshot of how CFOs and finance functions have been impacted by COVID-19. The findings provided some clear messages, consistent across industry sectors and geographies, as well as a number of areas of focus for 2021. - HMRC update Eat Out to Help Out guidance
The Eat Out to Help Out Scheme: receiving payments you were not entitled to (CC/FS58) guidance has been updated by HMRC.
Budget 2021 - the roadmap for recovery
After a challenging 12 months, Chancellor Rishi Sunak will deliver his much anticipated second budget on Wednesday 3 March 2021.
- Marissa Thomas (PwC’s Head of Tax) shares her thoughts on what the Chancellor could include in this year's Budget here.
- Keep an eye on our Budget2021 web page, which will be updated for more predictions, and check back on 3 March for our in-depth analysis of the Chancellor’s announcements.
- Register for this live session on Thursday, 4 March 2021, where we will explore the latest tax issues and how they will impact businesses, following the Chancellor's budget announcements.
Government to publish range of tax consultations and calls for evidence on 23 March
The government will publish a number of tax-related consultations and calls for evidence at the end of March. To allow for more transparency and scrutiny, documents and consultations that would traditionally be published at a Budget will be published on 23 March. Several consultations are an important part of the government’s 10-year tax administration strategy to create a tax system fit for the challenges and opportunities of the 21st century. Read more in this HM Treasury press release.
International tax and treasury issues in 2021
The evolving treasury and international tax landscape makes it important to revisit the tax treatment of finance and treasury transactions. In particular, a group should review its CIR position in light of the impact of the covid-19 pandemic. In this article for Tax Journal, PwC’s John Webb, Andrew Cotterill and Mairead Murphy review the key UK tax considerations for financing transactions and global treasury functions.
Double Taxation Treaty Passport scheme register updated
HMRC have updated the double taxation treaty passport scheme register with 83 additions and four amendments.
EU
EU Direct Tax Group Newsletter - November/December 2020
Welcome to our latest EUDTG bimonthly newsletter, featuring 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.
Parliament gives go-ahead to €672.5 billion Recovery and Resilience Facility
The European Parliament has approved the Recovery and Resilience Facility, designed to help EU countries tackle the effects of the COVID-19 pandemic. Funds will support key policy areas such as green transition, digital transformation, crisis preparedness as well as children and youth. Read more in this European Parliament 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) CFE Tax Advisers Europe Annual Report; 2) EU Commission launches consultation on State aid enforcement; 3) Council to discuss Financial Transactions Tax; 4) EU Commission Publishes Digital Targets Roadmap; and 5) Save the Date: CFE European Register Webinar on the Tax Implications of Brexit – 25 February 2021. View previous editions here.
OECD
Tax in a digital world: Why new international rules matter for everyone
The OECD has been leading international talks to address the tax challenges arising from the digitalisation of the economy, and is aiming towards a landmark agreement on new tax rules in 2021. Grace Perez-Navarro, Deputy Director of the OECD Centre for Tax Policy and Administration, explains the issues in this OECD podcast.
Croatia and Malaysia ratify MLI
Croatia and Malaysia have deposited their instruments of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (Multilateral Convention or MLI), which now covers over 1700 bilateral tax treaties. For Croatia and Malaysia, the MLI will enter into force on 1 June 2021. For the latest list of signatories and parties to the MLI see here.
OECD releases the final batch of the stage 1 peer review reports for BEPS Action 14 on dispute resolution mechanisms
The stage 1 peer review assessments for Aruba, Bahrain, Barbados, Gibraltar, Greenland, Kazakhstan, Oman, Qatar, Trinidad and Tobago, Saint Kitts and Nevis, Thailand, United Arab Emirates and Viet Nam evaluate the efforts made by each jurisdiction to implement the Action 14 minimum standard of the OECD/G20 BEPS Project, which aims to improve the resolution of tax-related disputes between jurisdictions. Read more in this OECD item.
Uganda commits to start automatic exchange of financial account information by 2023
Uganda has committed to implement the international Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI) by 2023. This makes Uganda the 116th Global Forum member to commit to start AEOI by a specific date. Read more in this OECD item.
How to Implement Effective Transfer Pricing Documentation Requirements: A Practical Toolkit to Support Developing Countries
This recent webinar featured a presentation by the toolkit authors, followed by a panel discussion on how the toolkit can help countries address issues on implementing effective transfer pricing documentation requirements. Panelists included country practitioners and expert speakers. You can watch the recording of the livestream.
Taxing energy use for sustainable development
Why should low-income countries implement carbon pricing policies to reduce carbon emissions when the world’s most advanced economies are falling woefully short of the prices needed to reach the objectives of the Paris Agreement? Read more in this OECD blog.
Other territories
International
Taxation of the digital economy
- Digital tax byte
The latest edition, from 15 February, includes some changes in India's Union Budget, the announcement of a Polish advertising tax, and Maryland being the first State in the US to introduce a digital advertising tax. The G7's current Presidency (UK) also calls on the group to work constructively with the G20 and OECD to meet the mod-2021 deadline for a consensus solution to the digitalisation project. - Tax in a digital world: Why new international rules matter for everyone
As noted above, the OECD has been leading international talks to address the tax challenges arising from the digitalisation of the economy, and is aiming towards a landmark agreement on new tax rules in 2021. Grace Perez-Navarro, Deputy Director of the OECD Centre for Tax Policy and Administration, explains the issues in this OECD podcast.
Key Takeaways from PwC's 2021 Global Manufacturing Survey
Please join us on Wednesday 24 February 2021 at 7pm for this webcast where we will align certain survey results to the value chain with a tax lens. Among other topics, we will discuss demand chains, supply chains, procurement, IP considerations, BEPS and digital services taxes, and transfer pricing. Register here.
Transfer pricing podcast: TP Automation – efficiencies for projects of any size
This podcast features a discussion of how companies can utilise automation for both large and small scale transfer pricing transactions, including automation of transfer pricing adjustments, profit monitoring and allocation, and specific processes and transfer pricing calculations.
Australia
ATO guidance on costs of travelling
The Australian Taxation Office (ATO) has released new guidance in relation to whether an employee is “travelling on work” or otherwise, and the income tax and fringe benefits tax (FBT) treatment of associated travel expenses. Read more in this PwC Australia tax alert.
Austria
Austria publishes new draft Transfer Pricing Guidelines for consultation
Ten years after first publication of the Austrian Transfer Pricing Guidelines, the Austrian Federal Ministry of Finance has issued its long-awaited update of the Austrian Transfer Pricing Guidelines for consultation (draft TPG 2020). An extensive revision of the 2010 guidelines, the draft TPG 2020 aim to reflect in the latest jurisprudence and administration practice in Austria, including recent developments related to the Base Erosion and Profit Shifting (BEPS) project from the OECD/G20 Inclusive Framework. Read more in this PwC Tax Insights.
Belgium
See here for latest updates.
Ruling of the Constitutional Court regarding the Cayman Tax applicable to legal constructions without legal personality
The Belgian Constitutional Court recently ruled in favour of an annulment of a modification of article 18, 3° BITC by the Program Law of 25 December 2017 which, in the context of the Cayman Tax, had aligned the tax regime of distributions made by the legal constructions without legal personality (“type A constructions”) with the tax regime applicable to distributions made by legal constructions with legal personality (“type B constructions”). The Court has indeed considered that the modification at hand was discriminatory. Read more in this PwC Belgium tax news item.
Canada
Annual tax filing and remittance deadlines for corporations 2021
Canadian corporations are required to file annual income and capital tax returns (due six months1 following each taxation year-end), and to meet several other Canadian annual filing and remittance deadlines. This Tax Insights outlines some of the more common compliance requirements to be considered at this time of year. Others also may apply (e.g. T4A information return to report certain benefits to shareholders).
Germany
German IP nexus rules: Ministry of Finance issues circular to simplify withholding tax and capital gains tax procedures in certain treaty cases
The circular dated 11 February 2021 covers royalty payments and capital gains in foreign-to-foreign cases where the German nexus is purely based on a registration of rights in a German public register. Read more in this PwC Germany tax news flash.
Draft Bill ‘Tax Haven Defence Act’
The German Federal Ministry of Finance has published a draft bill for a so-called “Tax Haven Defence Act”, which provides for the implementation of defense measures in regard to business relationships or shareholdings with reference to certain non-cooperative states. Read more in this PwC Germany tax blog.
ECJ referral: Input tax deduction of a management holding company
The Supreme Tax Court has asked the European Court of Justice (ECJ) for a preliminary ruling on the input tax deduction of a functional (operating) holding company from certain input costs. Read more in this PwC Germany tax blog.
Issue of shares as part of corporate action (spin-off)
The Lower Tax Court of Lower Saxony ruled that the allocation of shares in the course of a restructuring of Hewlett-Packard Company meets the requirements of a spin-off within the meaning of Sec. 20 (4a) Sentence 7 of the German Income Tax Act. Thus, there is no taxable distribution in kind at the time of the share allotment. Read more in this PwC Germany tax blog.
Hong Kong
2021/22 Budget
Financial Secretary Paul Chan Mo-po will announce the 2021/22 Hong Kong Budget on 24 February, outlining the government's plan for the economy and proposals for taxation developments. To help you get prepared and stay ahead of change, see here for our budget predictions on factors that could potentially affect you and your business.
India
India budget 2021 — Impact on foreign investors and multinationals
The Indian Finance Minister recently presented the Union Budget 2021-22 (Budget 2021) against the backdrop of a challenging economic environment due to COVID-19. In view of India’s tax reform measures to date, Budget 2021 maintains the same overall tax structure, but contains several measures that aim to attain tax certainty, facilitate tax administration, and reduce tax disputes. Multinational entities should analyse the impact of key Budget proposals on their operations, including a helpful provision to create a new board for advance rulings. This insight highlights key Budget 2021 tax proposals affecting foreign investors and multinational entities doing business in India.
Italy
500m fund for technology transfer and other urgent measures for the defence and support of innovation
The aim of the Technology Transfer Fund is to promote initiatives and investments useful for the exploitation and the use of research results in companies operating in Italy, with particular reference to innovative start-ups and innovative SMEs. Read more in this PwC Italy tax blog.
Korea
Korean Tax Update - February 2021
This edition includes: 1) National Tax Administration Policy for 2021; 2) Korea enters into income tax treaties with all 10 ASEAN members; and 3) Rulings update.
Middle East
Qatar: Transfer Pricing Declaration Form now required on Dhareeba
On 2 February 2021, the Qatar General Tax Authority verbally confirmed that a Transfer Pricing Form will be required for taxpayers with either total value of assets or total revenues in excess of 10 million QAR for the financial years beginning 1 January 2020 onwards. The Transfer Pricing Form should be submitted alongside a taxpayer’s income tax returns on the Qatar Online Tax Portal, namely Dhareeba. Read more in this PwC Middle East tax news item.
Philippines
Taxwise or Otherwise: CREATE’s amendatory provision on withholding tax
More than three years after the start of its legislative journey, and having undergone several rebrandings - from TRABAHO to CITIRA and now CREATE - the government’s second tax reform package has finally been ratified by Congress. Now touted as an economic relief measure rather than a fiscal reform, this tax reform package was originally intended to have a revenue-neutral effect. Under the proposed Corporate Recovery and Tax Incentives for Enterprises Act or CREATE, the corporate income tax rate is reduced to 25% (or 20% for small businesses), with tax incentives that are performance-based, time-bound, and transparent offered to targeted enterprises. Read more in this PwC Philippines tax news item.
Seychelles
National Budget 2021
The Minister for Finance, Economic Planning and Trade, Naadir Hassan, presented the Budget 2021 to the National Assembly on 16 February 2021. See the Ministry of Finance budget page for links to the budget speech and related documents.
Singapore
Singapore Budget 2021
The Singapore 2021 Budget Statement was delivered on 16 February 2021 and shifts gears from emergency COVID-19 support to accelerating Singapore firms and workers’ transformation for the new normal. Visit our PwC Singapore Budget 2021 page for our commentary and response, including a link to a recording of our webinar in which our panel were joined by Ms Indranee Rajah (Minister in the Prime Minister's Office and Second Minister for Finance and National Development) for a deep dive into how the Budget measures will help businesses address the near-term challenges and long-term needs.
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.
Thailand
Digital service tax law has been enacted
The Act amending the Revenue Code No. 53, 2021 (B.E. 2564) (the digital service tax law) was published in the Royal Gazette on 10 February 2021 and came into force on 11 February 2021. However, the VAT liability under this law will apply to overseas digital service providers or operators of electronic platforms on revenue received from 1 September 2021 onwards. Read more in this PwC Tax Insight.
US
US House Ways and Means Committee advances COVID relief bill
The House Ways and Means Committee recently advanced legislation to implement budget reconciliation instructions regarding COVID-19 relief. The budget resolution passed by Congress included reconciliation instructions for 12 House committees to draft legislation to implement President Joe Biden’s proposed $1.9 trillion COVID-19 relief plan. Read more in this PwC Tax Insights.
Pandemic accelerates migration of corporate America
Many companies and individuals began to consider reducing their presence in high-cost business hubs (e.g., New York City, San Francisco, and Los Angeles) prior to the pandemic. The pandemic has accelerated these trends, giving individuals and organizations another reason to consider other markets. For companies considering moves outside of large metropolitan areas, decision-making requires a balance between costs, talent, and regulations. We consider the various factors that need to be taken into consideration in this PwC Tax Insights.
SALT trends, Opportunities for US inbound companies in 2021
We expect several state and local tax trends to impact US inbound companies in 2021. These trends include: 1) President Biden’s tax proposals and continued conformity; 2) an increase in state and local taxation, specifically at the local level; 3) enhanced state focus on transfer pricing; 4) greater opportunity for tax credits and incentives changes in consumption taxes; and 5) telecommuting nexus. Read more in this PwC Tax Insights.
More US states considering passthrough entity taxes
In 2021, state legislatures have accelerated their consideration of new pass-through entity (PTE) level tax regimes. The November 2020 release of IRS Notice 2020-75 may be partially spurring the recent state legislative activity. Notice 2020-75 validated the position that a PTE-level state tax deduction passed on to PTE members would not be limited by the $10,000 individual state and local itemized deduction limit set by the 2017 federal tax reform. Based on the IRS guidance, certain PTE owners may see significant benefits from the implementation of state PTE tax regimes. Read more in this PwC Tax Insights.
Alabama enacts single-sales factor, tax reform relief, and other significant changes
Alabama has enacted significant changes to its income tax, including the following effective for tax years beginning on or after 1 January 2021: 1) single-sales factor apportionment; 2) throwback repeal; 3) specified treatment for calculating Section 163(j) limitations; and 4) implementation of an elective pass-through entity tax. Read more in this PwC Tax Insights.
Chicago releases economic nexus guidance for personal property lease transaction, amusement taxes
The Chicago Department of Finance recently released an information bulletin providing guidance on the City’s nexus requirements and establishing an economic nexus safe harbor for the City’s Personal Property Lease Transaction and Amusement taxes. The information bulletin indicates that out-of-state entities with less than $100,000 of sales to customers in the City may not be required to collect these taxes as of July 1, 2021. Read more in this PwC Tax Insights.
Maryland enacts first-in-the-nation digital advertising tax
Maryland has enacted the nation’s first tax targeting digital advertising. Maryland’s new tax applies to annual gross revenue derived from digital advertising in the state and is imposed at scaled rates between 2.5% and 10% (beginning with taxpayers that have at least $100 million of global annual gross revenue). Read more in this PwC Tax Insights.
Massachusetts Appellate Tax Board grants sales tax refund for pre-Wayfair periods
The Massachusetts Appellate Tax Board recently granted summary judgment to a taxpayer challenging the Department of Revenue’s sales tax economic nexus policy for the nine months preceding the US Supreme Court’s Wayfair decision. As a result of the decision, taxpayers may wish to review their compliance history in Massachusetts and where appropriate seek abatement of tax for pre-Wayfair periods. Read more in this PwC Tax Insights.
San Francisco taxes - Filings due 30 April 2021
Companies engaging in business in San Francisco (the city) must register in the city and pay an annual registration fee. Additionally, businesses may be subject to up to four local San Francisco taxes: the San Francisco Gross Receipts, Homelessness Gross Receipts, Commercial Rents, and/or Payroll Expense tax. To provide COVID-19 pandemic relief, the 2020 filing and final payment deadline for these taxes has been moved to 30 April 2021, and the deadline to make payment of license fees both for the 2020-2021 and 2021-2022 periods has been moved to 1 November 2021. Read more in this PwC Tax Insights.
Webcasts, blogs and podcasts:
- Tax Readiness: State and Local Tax implications of a remote workforce
Join us on Wednesday, 3 March 2021 at 7pm for this latest webcast. Register here. - Tax Readiness: International tax planning post-election
Register here to join us for this webcast on Wednesday, 17 March 2021 at 6pm. - Q1 Financial Reporting Considerations
Join us for this webcast on Wednesday, 24 March at 7pm. Register here. - Tap into Tax
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. Listen to the latest episode:
Further episodes in this series are available here, as well as on Spotify and other streaming services.
- Cross-border tax talks
- Grab your passport: global tax policy update
In this episode, Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Will Morris (PwC's Deputy Global Tax Policy Leader) discuss important updates to international tax policy. - More items of interest: The final 163(j) regulations
In this episode, Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Rebecca Lee, ITS Partner, take a deep dive into the recently released final regulations under Section 163(j).
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:
- Tax Readiness: Settlements and judgements - Review of Section 162(f)/6050X final regulations
You can watch the replay here of this webcast from 16 February 2021. - 2021 Tax Policy Outlook: The Changing Horizon
Watch the replay from this webcast on 28 January 2021. - Tax Readiness: Renewed interest - What to know about the Final Section 163(j) Regulations
Watch the replay from this webcast on 26 January 2021. - Tax Readiness: Embracing the future of mobility
You can watch the replay from this webcast held on 21 January 2021. - Tax Readiness: New tax legislation and what it means
Watch this replay from this webcast held on 7 January. - US Inbound Insights: US Economic, Policy and Tax Webcast
In this webcast our PwC panel shared potential implications of the US elections on US operations of global companies headquartered outside the United States. Watch the replay here. - Are you prepared for the tax & accounting implications in the transition from LIBOR?
Register here to watch the on demand replay of this webcast.
Other updates
For regular updates on this topic, check out our US tax reform hub on The Suite here.
Vietnam
New guidance issued by the Ministry of Finance on Law on tax administration rules relating to exported and imported goods
The Ministry of Finance recently issued Circular 06/2021/TT-BTC providing implementation guidance on the Law on tax administration no. 38/2019/QH14 (i.e. the new law on tax administration) in relation to the tax management of exported and imported goods. Circular 06 will enter into force on 8 March. Read more in this PwC Vietnam News Brief.
