Two weeks to 20 August 2021
Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
UK
Disclosure of Uncertain Tax Treatments to HMRC
Large businesses must comply with a new requirement to disclose ‘uncertain tax treatments’ (UTT) to HMRC in Corporation Tax, VAT and PAYE returns due to be filed on or after 1 April 2022. This is a significant change, including for those businesses with a ‘low risk’ rating. HMRC has recently issued draft guidance relating to this new requirement. Read more in our flyer.
HMRC update UK–USA double tax treaty information
HMRC have added Competent Authority Agreements relating to this treaty, signed in July 2021, to their online guidance. These Agreements were reported in our last edition and are analysed in this PwC Tax Insights item.
UK ratifies protocol to UK/Germany double tax treaty
A new protocol to this double tax treaty is expected to come into force shortly following its recent ratification in the UK and incorporation into domestic legislation in Germany. Read more in our flyer.
Approved offshore reporting funds
HMRC’s list has been updated to include the funds that have entered the Reporting Fund Regime as at 9 August 2021.
Talking Tax: harnessing opportunities from tax policy changes
In the last 10 years, international corporate taxation has morphed from a technical topic into one of the most publicly debated topics. This edition explores some of the most significant recent policy proposals, as well as how to make the most of the opportunities they present.
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 COVID related tax developments. 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.
- Could your business be caught up in the COVID-19 claims fraud crackdown?
An HMRC taskforce of more than 1,000 officers is in pursuit of fraudulent claims for coronavirus (COVID-19) support. HMRC is pursuing criminal sanctions, which means that notification of investigation shouldn’t be ignored. However past issues may have arisen, a proactive approach with HMRC is vital - as is a forensic understanding of how and where problems crept in. In this blog we seek to answer: Who’s at risk? What’s at stake? How should your business respond if issues come to light? Read more.
- Responsible growth: Why it's time to go beyond the financials
The innovation displayed during COVID-19 has meant businesses have grown quickly, but have they grown responsibly? In this episode, Colin Light and Caitroina McCusker join host Rowena Morris to discuss how businesses can successfully embrace responsible growth and who’s doing it well..
Brexit & other international trade developments
The UK has left the EU and negotiations on the future trading relationship of the UK and the EU have concluded with a deal agreed. So what next for businesses as we enter this new trading world?
Visit our Beyond Brexit webpage for the latest updates.
PwC webcast 16 August 2021: Plastic Packaging Tax - are you ready?
In this webcast hosted by Jayne Harrold, our UK Environmental Taxes leader - along with colleagues from other countries where PPT is to be introduced - topics included identifying who is liable for the tax, the products which are specifically included in, or excluded from, the scope of PPT, and at what point in the chain the liability to PPT arises. We also discussed how businesses may wish to review their packaging strategy in order to manage the impact of PPT. Register here to watch the recording.
EU
EBIT response to the European Commission's Questionnaire on fighting the use of shell entities and arrangements for tax purposes
As reported previously, EBIT (The European Business Initiative on Taxation) submitted a response to the EC’s Questionnaire on 6 August. This response (plus additional comments made) can now be viewed on their website here.
CFE Tax Advisers Europe
CFE Tax Top 5 – Round-up of EU Tax Policy News
The latest edition looks at the following: 1) OECD’s Forum on Harmful Tax Practices publishes peer reviews; 2) UK consultation on reporting rules for digital platforms; 3) Global minimum corporate tax rate not a significant concern for the Irish Central Bank; 4) US Revenue seize & sell over 1 billion in crypto-assets in 2021; and 5) EU Commission approves suite of NextGenerationEU financing. View previous editions here.
OECD
Barbados joins agreement to address the tax challenges arising from the digitalisation of the economy
Barbados has joined the two-pillar plan to reform the international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate, bringing to 133 the total number of jurisdictions participating in the agreement. Read more in this OECD item.
Three more countries join the multilateral Convention to tackle tax evasion and avoidance
The Maldives, Papua New Guinea and Rwanda recently signed the multilateral Convention on Mutual Administrative Assistance in Tax Matters (the Convention) at the OECD Headquarters in Paris, bringing the total number of jurisdictions that participate in the Convention to 144. Read more in this OECD item.
Other territories
International
Taxation of the digital economy
Keep track of the number of international initiatives that are underway to address the tax problems caused by digitalisation of our economy:
- Digital tax byte
The latest edition from 2 August includes a consultation document on the UK implementation of the OECD’s Model Reporting Rules for Digital Platforms.
Environmental, Social and Governance issues (ESG)
- PwC webcast 16 August 2021: Plastic Packaging Tax - are you ready?
This client webcast discussed the plastic packaging tax (PPT) which is to be introduced in the UK (effective from 1 April 2022) and elsewhere. Register here to view the recording. - Tax Readiness: ESG - Bringing your reporting & investment strategy to life
In this US webcast taking place Wednesday 25 August at 7pm, we will explore two key focus areas of Environmental, Social, and Governance (ESG) Reporting and Investment - and how they relate to tax and the increased demands for transparency. Register here.
Updated ATO guidance dealing with residency and source of income for COVID-19 impacted mobile employees
The Australian Taxation Office (ATO) has provided an update to its previously published guidance in relation to residency and the source of income for individuals who have been working remotely in Australia for an extended period as a result of the COVID-19 pandemic. The updated guidance draws a distinction between someone who is able to depart Australia but chooses to remain in Australia working remotely and someone who is unable to leave Australia. An individual who chooses to remain in Australia is more likely to be a resident of Australia and their employment income will be considered to have an Australian source. Read more in this PwC Alert.
ATO seeks input on tax implications of Inter-bank Offered Rate reform
The Australian Taxation Office has released a discussion paper which outlines the common tax consequences of changes made to financial arrangements driven by Inter-bank Offered Rate (IBOR) reform (including the cessation of LIBOR).
Barbados
Barbados joins agreement to address the tax challenges arising from the digitalisation of the economy
As reported above, Barbados has joined the two-pillar plan to reform the international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate, bringing to 133 the total number of jurisdictions participating in the agreement. Read more in this OECD item.
Belgium
See here for latest updates.
Antwerp Court of Appeal limits temporal scope of the general anti-abuse measure
The Court of Appeal of Antwerp refused the application of the general anti-abuse provision of article 344, §1 ITC92 in its current version as the case at hand concerned a set of legal acts, part of which had already been performed before the formal entry into force of this ‘new’ provision. This judgement is in line with previous case law of the Court of Appeal of Ghent. Read more in this PwC news item.
China (excluding Hong Kong)
China State Taxation Administration publishes Public Notice on matters regarding the application of simplified procedures of unilateral advance pricing arrangements
China's federal tax authority has set out the eligibility conditions and rules for taxpayers seeking to use the country's new simplified procedure for obtaining a unilateral advance pricing agreement, effective from 1 September. Read more in this PwC News Flash.
Cyprus
Interpretative Circulars issued by the Cyprus Tax Department relating to the tax treatment of Covid-19 related government grants
Three Interpretative Circulars have been issued by the Cyprus Tax Department relating to the Tax treatment of Covid-19 related government grants. For grants provided by the Ministry of Finance to companies or self-employed individuals relating to the payment of rent or other running costs, the Cyprus tax authorities have clarified that these are not subject to corporate/personal income tax. Read more in this brief PwC Tax Insight.
Finland
Tax and Legal News, August 2021
The latest tax and legal news from Finland. Read the latest edition.
Germany
UK/Germany double tax treaty to be ratified soon
As noted above, a new protocol to this double tax treaty is expected to come into force shortly following its recent ratification in the UK and incorporation into domestic legislation in Germany. Read more in our flyer.
Loss on exchange of profit participation rights can be offset against investment income
The Regional Tax Court of Muenster has held that a loss from the exchange of profit participation rights for shares in a registered cooperative (“eG”) and bonds may be set off against income from capital investments. Thus, the tax office’s attempt to regard the loss as belonging to the non-taxable private asset portfolio of the plaintiff failed. Read more in this PwC tax blog.
Credit of Canadian withholding tax on dividends also for trade tax?
The Regional Tax Court of Hesse has 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.
Statutory interest rate levied on late payment or refund of taxes unconstitutional
In a recently published decision on two joint cases, the Constitutional Court decided that interest incurred on late payment of taxes (back taxes) and the interest paid for tax refunds pursuant to Sections 233a and 238(1) sentence 1 of the German Fiscal Code is not in line with the German Constitution insofar as the interest rate is set at 0.5% per month and for interest periods from 1 January 2014. Read more in this PwC tax blog.
Hong Kong
Court held transfer of Hong Kong stock upon an overseas merger not chargeable with stamp duty
The Court of Appeal (COA) handed down its judgement on Nomura Funds Ireland Plc v The Collector of Stamp Revenue (the Collector) on 14 January 2021 and delivered its written judgement on 21 July 2021. The COA held in this case that the transfer of Hong Kong stock upon a merger effected under the merger law of Luxembourg is not chargeable with Hong Kong stamp duty. However, the COA also held that the duty payer is not entitled to interest on the overpaid stamp duty refunded to it. Read more in this PwC News Flash.
India
India nullifies ‘retrospective applicability’ of tax on indirect transfer of shares
The Indian Government has ended the retrospective applicability of tax on indirect share transfers. The retrospective amendment introduced in 2012 had far-reaching consequences on indirect transfers undertaken prior to the 2012 introduction and led to litigation with significant amounts of tax contested. The 2021 amendment will nullify all tax-related demands pertaining to indirect transfers of transactions made before 28 May 2012. Further, it is expected to provide relief to prior investors subject to the tax because of the retrospective 2012 amendment. Read more in this PwC Tax Insights
Mauritius
The Finance (Miscellaneous Provisions) Act 2021
The Finance (Miscellaneous Provisions) Act 2021 (“Finance Act”) has been enacted following debate at the National Assembly. See this PwC summary of the Tax and Regulatory measures.
New Zealand
Wage Subsidy August 2021 - key changes for New Zealand employers
Following recent Alert Level 4 announcements, the Government has advised that financial assistance will be made available for eligible businesses. PwC New Zealand have summarised some of the key support available to businesses and the relevant eligibility criteria in the latest Tax Tips alert.
Serbia
Singapore-Serbia double tax treaty enters into force
The Inland Revenue Authority of Singapore has announced that the double tax treaty signed earlier this year with Serbia entered into force on 16 August. The DTT caps the withholding tax rate that can be charged in the source country for cross-border dividend income at 10%. A 5% rate is applicable where the recipient directly holds at least 25% of the capital of the company paying the dividends.
Singapore
Singapore-Serbia double tax treaty enters into force
The Inland Revenue Authority of Singapore has announced that the double tax treaty signed earlier this year with Serbia entered into force on 16 August. The DTT caps the withholding tax rate that can be charged in the source country for cross-border dividend income at 10%. A 5% rate is applicable where the recipient directly holds at least 25% of the capital of the company paying the dividends.
Singapore issues updated transfer pricing guidelines
The Inland Revenue Authority of Singapore (IRAS) has issued a major update to its transfer pricing guidelines. This is the first update to the guidelines since February 2018.
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
Taiwan adopts updated double tax treaty policy regulations
Taiwan's Ministry of Finance has announced the promulgation of new regulations that set out the territory's policies with regards to double tax treaties and their interpretation. The changes to the regulations are intended to reflect the recommendations of the OECD on tackling BEPS, focusing on preventing treaty abuse, as well as changes to the OECD Model Tax Convention commentaries
US
Senate passes bipartisan infrastructure bill - debate to begin on FY 2022 budget resolution
The US Senate has voted 69 to 30 to pass a $1 trillion bipartisan infrastructure bill (H.R. 3684, the INVEST in America Act) that includes $550 billion in new spending on highways, bridges, waterways, transit, airports, the electric grid, and broadband.
- The legislation resulted from months of negotiations by President Biden and a group of Democratic and Republican Senators to reach an agreement to increase spending on infrastructure without tax rate increases. The Senate bill includes other tax and non-tax offsets, including a new cryptocurrency information reporting requirement that is the subject of ongoing debate and a measure reinstating Superfund excise taxes on chemicals. Read more in this PwC Tax Insights.
- Following the Senate’s 10 August approval of the bipartisan infrastructure bill, early in the morning of 11 August the Senate completed action on a fiscal year 2022 budget resolution that would provide reconciliation instructions for up to $3.5 trillion in spending and tax relief provisions that would be offset in part by corporate and individual tax increases. On late 10 August, House leaders announced that the House would return early from its August recess to consider the Senate budget resolution during the week of 23 August. The House had not been scheduled to return until 20 September. Read more in this PwC Tax Insights.
MTC policy would limit protections from state tax under P.L. 86-272
The Multistate Tax Commission (MTC) recently adopted a revised “statement of information” on the application of Public Law 86-272, which bars states and localities from imposing net income taxes where in-state business activities are limited to solicitation of sales of tangible personal property and ancillary activities. The revised statement takes the position that taxpayers generally engage in unprotected in-state business activities “when a business interacts with a customer via the business’s website or app.” Read more in this PwC Tax Insights.
Pennsylvania updates tax credit and deduction programs
Enacted on 30 June 2021, H.B. 952 provides an update to Pennsylvania’s Qualified Manufacturing Innovation and Reinvestment Deduction (QMIRD). Applicable to tax years beginning after 31 December 2020, the deduction applies to Pennsylvania taxable income (i.e. post-apportionment). H.B. 952 provides updated deadlines for a number of credit and incentive programs in the state and also makes changes to the administration of tax credit programs. Read more in this PwC Tax Insights.
Subscribe for US tax alerts
You and your clients can sign up for Tax Alerts issued by the US to be emailed to you. Subscribe using the link on this page.
Webcasts & podcasts
- Tax Readiness: ESG - Bringing your reporting & investment strategy to life
In this webcast taking place Wednesday 25 August at 7pm, we will explore two key focus areas of Environmental, Social, and Governance (ESG) - Reporting and Investment - and how they relate to tax and the increased demands for transparency. Register here. - Cross-border tax talks
- A hundred year storm: BEPS 2.0 Update
In this episode from 20 August, Doug McHoney (PwC's US International Tax Services (ITS) Leader) is live at the Westminster Studios with Calum Dewar (Integrated Global Structuring Leader) to discuss the OECD’s Two Pillar solution to address the taxation of the digitalization of the economy.
Previous episodes in this fabulous series of podcasts can be found here, as well as on Spotify, YouTube and other streaming services.
- 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. This episode was released on 13 August:
Previous episodes in this series are available here, as well as on Spotify and other streaming services.
Replays
A number of previous webcasts are available for replay in our US tax reform hub here, including:
- Tax Readiness: Crypto Market Insights 2021 - Latest trends
Register here to watch the replay of this webcast held on Thursday 12 August 2021, where our Trust and Consulting panel will examine corporate strategies, operational effects, regulatory restrictions, risk factors, accounting implications, and future policy changes. - Tax Readiness: Are uniform corporate tax rules finally on the horizon?
Watch this replay from Tuesday 20 July 2021, where we provided an update on the recent OECD and G-20 negotiations to help those in Tax, Treasury, Operations and the C-Suite navigate this complicated landscape.
Other updates
For regular updates on this topic, check out our US tax reform hub on The Suite here.