Two weeks to 26 November 2021
Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
UK
Tax Day 2 - 30 November 2021
The Government has announced that there will be a Tax Administration and Maintenance day on 30 November 2021 (aka Tax Day 2, following a similar event on 23 March this year). Consultations for announcements made in the Autumn Budget and Spending Review 2021, summaries of responses to recently closed consultations and technical information notices will be among the documents published. None of the announcements will require legislation in Finance Bill 2021-22.
- Live webcast - Exploring the tax announcements impacting businesses
The next live webcast in our Delivering Tax: Creating Value in a Changing World series will take place on Thursday 9 December at 3:00pm (GMT). We’ll discuss the implications of the latest announcements, including any significant developments announced on Tax Day 2 or as part of the OECD’s planned announcements of the more detailed rules on Pillar 2. Register here.
Finance Bill 2021-22
Leader of the House Jacob Rees Mogg has confirmed during today’s Business Statement that the Finance (No. 2) Bill will be considered at committee stage on Wednesday 1 December.
Uncertain Tax Treatment
Large businesses (including partnerships) must comply with a new requirement to disclose to HMRC ‘uncertain tax treatments’ (UTT) in Corporation Tax, VAT and PAYE returns due to be filed on or after 1 April 2022. The legislation published in Finance Bill 2022 has two triggers, rather than the three previously proposed (although the Government is committed to further consultation on the inclusion of a third trigger at a later date). See our video, summarising the key points and actions required, as well as our flyer setting out the impact of the new rule and what it means for your business, in this article.
Tax treaty updates
- UK explains BEPS changes to double tax treaty with Mauritius
The 'Synthesised text of the Multilateral Instrument and the 1981 UK-Mauritius Double Taxation Convention and Protocol – in force' has been added to the HMRC website. - Taiwan clarifies revisions to double tax treaty with the UK
Taiwan's Ministry of Finance has outlined the key changes made by the 2021 protocol to its treaty with the United Kingdom, and explained the revision to the limited tax rate on dividends distributed by real estate investment trusts. See this press release.
Talking Tax: navigating the changing realities of global trade
The realities of global trade are changing fast. After Brexit and the economic shock created by COVID-19, organisations face new challenges to ensure they keep goods flowing efficiently across borders. In addition, emerging climate and resource risks mean supply chains need to be resilient and sustainable. Navigating the new world we are in requires a new approach to business so this edition of Talking Tax will explore this in more detail.
EU sends warning to four countries on tax law implementation
Spain must change the way it charges withholding taxes on royalties paid to non-residents, while Croatia, Denmark, and Lithuania must provide more information on their implementation of value-added-tax rules, the European Commission has said in it’s latest infringement decisions package.
New forms of tax competition in the European Union: an empirical investigation
The EU Tax Observatory has published a report on tax competition, outlining recommended measures, including group code of conduct reform and implementation of a global minimum tax.
CFE Tax Advisers Europe
CFE Tax Advisers Europe – EU Tax Policy News Top 5
The latest edition from 15th November looks at the following: 1) European Parliament Adopts Public Country-by-Country Reporting Legislation; 2) Carbon Trading Mechanism Agreed at COP26: World’s Climate Policy Summit; 3) Register Now: CFE Conference on “Professional Judgment in Tax Planning” on 25 November 2021; 4) Tax Inspectors Without Borders Annual Report 2021; and 5) AMCHAM Global Business Tax Update Conference – 30 November 2021. View previous editions here.
OECD
Belgium, Estonia, the Netherlands and Qatar deposit new notifications under the MLI
Belgium, Estonia, the Netherlands and Qatar have deposited new notifications under the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (Multilateral Convention or MLI) subsequent to their ratification: 1) Estonia has notified, in relation to Article 35(7)(a)(i) of the MLI, the completion of its internal procedures for the entry into effect of the provisions of the MLI with respect to its treaties with Austria, Cyprus, Finland, Latvia, Poland, Slovak Republic and Ukraine in accordance with Article 35(7)(b) of the MLI; 2) The Netherlands and Qatar have notified additional bilateral treaties to which the MLI can apply and made additional notifications with respect to provisions of the MLI; and 3) Belgium made an additional notification with respect to its treaty with the Netherlands. See this OECD item.
OECD and Eurasian officials meet to discuss latest developments in international tax
Over 100 delegates from 18 Eurasian jurisdictions, as well as participants from business and academia, and international organisations, gathered virtually on 18-19 November 2021 for the 7th Regional Meeting on BEPS for Eurasian Countries. The meeting offered participants the opportunity to provide their views and input into the work on the development and monitoring of international tax standards under the OECD/G20 Inclusive Framework on BEPS. See this OECD item.
Global Forum members continue multilateral efforts to advance transparency agenda and fight tax evasion
In the three-day 2021 Global Forum plenary meeting, ministers, high-level authorities and delegates from about 130 member jurisdictions will take stock of the progress made on multilateral co-operation in transparency and exchange of information for tax purposes and discuss the future direction of the Global Forum. Read more in this OECD press release.
OECD Tax Certainty Day 2021
This event provided an opportunity for tax policy makers, tax administrations, business representatives and other stakeholders to take stock of the tax certainty agenda and move towards further improvements in both dispute prevention and dispute resolution. The meeting was broadcast live and you can watch the replay here.
New mutual agreement procedure statistics on the resolution of international tax disputes released on OECD Tax Certainty Day
As part of the BEPS Action 14 minimum standard and the wider G20/OECD tax certainty agenda to improve the effectiveness and timeliness of tax-related dispute resolution mechanisms, the OECD has released the latest mutual agreement procedure (MAP) statistics covering 118 jurisdictions and practically all MAP cases worldwide.
2021 Global Forum Annual Report
This year's annual report reflects on the achievements of the Global Forum and its 163 members who have continued to prove their ability to adapt, coordinate their responses and deliver as we recover from the COVID-19 crisis.
Peer Review of the Automatic Exchange of Financial Account Information 2021
This report presents the latest conclusions of the peer reviews of the legal frameworks put in place by each jurisdiction to implement the AEOI Standard. The results relate to the 102 jurisdictions that committed to commence AEOI from 2017, 2018 or 2019.
Pacific Islands Tax Administrators Association joins international efforts for tax transparency
The Pacific Islands Tax Administrators Association (PITAA) is a longstanding partner of the Global Forum in promoting tax transparency and building capacities in the Pacific. As the 21st observer to the Global Forum, PITAA will participate in plenary meetings and other events. It will contribute to the promotion of international exchange of information among tax administrations as a powerful tool to tackle cross-border tax evasion and improve domestic resource mobilisation. See this OECD item.
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 25 November includes further G20 endorsement of the Inclusive Framework Statement on 8 October. US progress on its own domestic tax plans has moved on with House approval of the reconciliation bill and it has reached similar DST compromise agreements with Turkey and India as with other DST countries previously.
Environmental, Social and Governance ESG
- ESG Legal event - Environmental and sustainability
This virtual event taking place on Tuesday 14 December at 11:00 will focus on rapid developments in environmental and sustainability regulation which will accelerate the UK Government’s drive towards net-zero carbon emissions.This is the biggest shift in a generation for General Counsels, Company Secretaries and others in the C-suite, who can play a key role in helping Directors understand these challenges and look for value creation. Register here.
CFE Global Tax Top 10
This edition covers: 1) Historical Agreement on International Taxation Under OECD Auspices; 2) Pandora Papers: Largest Ever Data Leak on Corruption & Illicit Assets; 3) Withholding taxes - new EU system to avoid double taxation; 4) EU updates ‘blacklist’ of non-cooperative jurisdictions; 5) Register now: CFE conference on “Professional Judgment in Tax Planning” on 25 November 2021; 6) OECD publishes country-by-country & MAP peer review reports; 7) US, UK & EU countries agree transitional repeal of unilateral taxes; 8) Platform for collaboration on Tax Publish 2021 report; 9) European Parliament resolution on EU code of conduct for business taxation; and 10) OECD report on carbon pricing in times of Covid-19.
Belgium
See here for latest updates.
Bulgaria
A new tax treaty between Bulgaria and the Netherlands will start to apply as of 1 January 2022
A new tax treaty between Bulgaria and the Netherlands entered into force on 31 July 2021, introducing several important changes that will start to apply as of 1 January 2022. It may require the tax treatment currently applied to transactions with Dutch tax residents to be reassessed and new advance clearance certificates to be obtained from the Bulgarian tax authorities for existing contracts with continuing performance (eg interest, royalties and technical services/consulting fees). Read more in this PwC Tax Alert.
Canada
Alta Energy ─ Supreme Court of Canada finds no misuse/abuse of tax treaty
The SCC’s decision in Alta Energy clarifies the analysis of whether a taxpayer’s choice of a foreign jurisdiction for investment into Canada may be an abuse or misuse of a tax treaty. The SCC has confirmed that the principles of certainty, predictability and fairness require a robust analysis of the intentions of the two sovereign states who have carefully negotiated the treaty instrument. Read more in this PwC Tax Insights.
Cyprus
Protocol amending the Cyprus-Switzerland double tax treaty enters into force
The Protocol amending the Cyprus-Switzerland double tax treaty entered into force on the 3rd of November 2021 (as per information on the Cyprus Ministry of Finance website). Read more in this PwC Tax Insights.
Finland
Tax and Legal News, November 2021
The latest tax and legal news from Finland. Read the latest edition.
Germany
Traffic Light Coalition Agreement
The SPD, Greens and FDP concluded their coalition talks on 24 November. See this PwC tax blog for a summary of the main tax-related measures in the Coalition Agreement. The membership of each of the parties have yet to approve the Agreement, but will be voting on whether to do so shortly.
Income from convertible bonds subject to limited tax liability
Interest of a US limited liability company from convertible bonds issued by a German debtor is subject to German withholding tax, and this also applies if partial debentures were issued for these bonds. With its decision, the Federal Tax Court has put an end to discussions and differing opinions in the professional literature regarding the correlation of two provisions in the Income Tax Act on that subject. Read more in this PwC tax blog.
Ireland
Minister Donohoe welcomes Government amendments to Finance Bill 2021
The Minister for Finance, Paschal Donohoe T.D. has welcomed the approval by Government of a number of Government amendments to be put down at Committee Stage of the Finance Bill 2021. The Minster has decided not to proceed with section 62 of the Bill relating to the tax treatment of interest-free or low interest loans, as he believes greater consideration needs to be given to the proposal. Read more in this press release.
Italy
Taxation of non-EU/EEA dividends - the effective tax rate test
This tax blog discusses the taxation of non-EU/EEA dividends, specifically how the effective tax rate test is applied where the overseas payer has tax losses (arising either pre or post 2019).
Korea
Korean Tax Update - November 2021
This edition includes: 1) Taxpayers filing reports of overseas financial accounts increase 16.6% from a year ago; 2) The threshold for tax-exempt gains from exercising stock options in venture businesses is proposed to be increased to KRW50 Million in 2022; 3) NTS launches Investigation of unfair tax evasion practices; 4) Korea’s National Assembly Budget Office publishes a report analyzing the tax reform proposals for 2021; and 5) Rulings update.
Middle East
Qatar issues Economic Substance Regulations
The Ministry of Finance has issued Decision No. 20 of 2021 (concerning Economic Substance Regulations in Qatar), requiring “qualifying entities” that carry on specified activities to demonstrate economic substance in Qatar from 4 November 2021 if they want to benefit from a preferential tax regime. Depending on the date of incorporation, qualifying entities would be required to comply on an immediate basis. Sanctions for non-compliance and filing requirements will be determined in due course. All entities in Qatar should assess whether they fall into ESR scope and take immediate steps to comply. Read more in this PwC news alert.
Double tax treaty between Oman & Qatar
Oman and Qatar signed a double tax treaty (DTT) on 22 November 2021. This is the first DTT concluded by Oman with another Gulf Cooperation Council (GCC) country, and only the second DTT to be concluded between two GCC member states after the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) signed a treaty back in 2018. Read more in this PwC news alert.
Netherlands
Update: conditional withholding tax on dividends (CWHT)
On 2 November 2021, the Dutch Upper House of Parliament adopted the legislative proposal on conditional withholding tax on dividends and it was also published in the Government Gazette on 11 November 2021, which means that it is considered “enacted” under IFRS as per 2 November. The new CWHT rule will enter into force on 1 January 2024. Read more in this PwC news item.
Report on conduit companies presented in the Netherlands
The Commission on Conduit Companies recently presented their report called: "The road to acceptable conduit activities". Part of the publication is the "Comparative analysis of the taxation of conduit companies", prepared by PwC. The tax recommendations cover withholding tax benefits or securities, improving the exchange of information and tightening up the Dutch stance in treaty and multilateral negotiations on tax matters.
Poland
Significant corporate tax changes arriving in 2022
Polish President Andrzej Duda recently signed legislation commonly referred to as the ‘Polish Deal’, which includes provisions expected to impact the taxation of investments and business activity in Poland. These include a 10% minimum tax on corporations, changes to withholding tax regulations, extension of the definitions of a controlled foreign entity and a Polish tax resident, and introduction of a ‘shifted income’ tax. The new provisions are generally expected to be effective 1 January 2022. Read more in this PwC Tax Insights
South Africa
Taxation Laws Amendment Bill
The Taxation Laws Amendment Bill was tabled on 11 November 2021. Notably, it includes amendments to the limitation on the set-off of the balance of an assessed loss and the interest deduction limitation rules, but these will only come into operation on the date on which the corporate income tax rate is reduced by the Minister of Finance and will apply in respect of years of assessment commencing on or after that date. See this PwC Tax Alert.
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 clarifies revisions to double tax treaty with the UK
As reported above, Taiwan's Ministry of Finance has outlined the key changes made by the 2021 protocol to its treaty with the United Kingdom, and explained the revision to the limited tax rate on dividends distributed by real estate investment trusts. See this press release.
US
Revised Build Back Better Bill
On 19 November, the House voted 220 to 213 to pass the “Build Back Better” reconciliation bill (H.R. 5376) that includes more than $1.5 trillion in business, international, and individual tax increase provisions. All but one Democrat voted for H.R. 5376; all Republicans voted against the bill. Read more in this PwC Tax Insights.
- Reconciliation bill could limit BEAT application to inbounds
The ‘Build Back Better’ bill includes modifications of certain provisions related to the base erosion and anti-abuse tax (BEAT) dealing with payments made by US corporations to foreign companies. These changes could prove particularly complex for foreign companies operating in the United States, particularly if they transact (directly or indirectly) with countries with lower effective tax rates. In contrast, the proposed modifications to the BEAT, taken together, would appear to have the effect of both excluding most (if not all) US-based multinationals from BEAT liability, and bringing many more inbound (foreign-owned) companies within the scope of the BEAT. Read more in this PwC article. - Revised ‘Build Back Better’ bill retains most ESG tax proposals, adds new credits
The ‘Build Back Better’ reconciliation bill currently under consideration in the House retains, with some modifications, nearly all of the clean energy incentives included in the version of the bill approved by the House Ways and Means Committee in September along with several new credits. This PwC Tax Insight highlights the changes. - Recent legislation address digital asset issues
On 15 November President Biden signed into law a $1.2 trillion infrastructure bill that includes $550 billion in new spending on highways, bridges, waterways, transit, airports, the electric grid, and broadband. Tax and non-tax offsets in the legislation include new digital asset information reporting requirements. The ‘Build Back Better’ reconciliation bill also includes two tax provisions addressing digital assets. Read more in this PwC Tax Insights. - Key individual tax provisions
This Tax Insights provides an analysis of some of the key tax provisions of the revised Build Back Better bill affecting high net-worth individuals and families.
Louisiana voters approve income, franchise tax changes
Louisiana voters recently defeated a constitutional amendment that would have centralised sales tax administration at the state level (eliminating a warren of parish sales tax assessors and audits) but approved another constitutional amendment significantly impacting individual income, corporate income, and corporate franchise taxpayers. Read more in this PwC Tax Insights.
North Carolina enacts corporate income tax phase-out
Recently enacted North Carolina legislation phases out the corporate income tax starting with tax years beginning in 2025, updates conformity to the Internal Revenue Code, simplifies the corporate franchise tax calculation, lowers personal income tax rates, and provides an elective passthrough entity tax, among other changes. Read more in this PwC Tax Insights.
New York maintains rate of MTA surcharge
The New York Department of Taxation and Finance has announced that the rate of New York’s metropolitan transportation business tax surcharge will stay at 30%, effective for tax years beginning on or after 1 January 2022, and before 1 January 2023. Read more in this PwC Tax Insights.
Oregon Tax Court finds Subpart F income is a “sale” for apportionment purposes, ultimate sales factor inclusion unresolved
The Oregon Tax Court’s Regular Division recently reversed its prior decision and held that Subpart F income included in Oregon taxable income qualifies as a “gross receipt” for sales factor apportionment purposes. This finding allowed the Tax Court to evaluate whether a sales factor statutory provision operates to include or exclude such Subpart F income from the sales factor. Read more in this PwC Tax Insights.
Subscribe for US tax alerts
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Webcasts & podcasts:
- Tax Readiness: Q4 financial reporting considerations
In this webcast taking place on Thursday 9 December at 7pm, we will discuss financial reporting impacts of enacted and proposed tax law changes in the US and around the world. We will also cover key tax accounting reminders related to the year-end reporting cycle. Register here. - Puerto Rico's tax landscape and investing nuances (State and local tax perspective)
In this podcast, PwC professionals from the State and Local Tax practice explore Puerto Rico's unique laws and regulations and the implications for the asset and wealth management industry.
Replays
A number of previous webcasts are available for replay in our US tax reform hub here, including:
- Tax Readiness: Cloud Transformation - Leveraging Tax to Drive Change and Increase ROI
Register here to watch the replay from this webcast held on 17 November, where our panel of PwC specialists discussed how aligning with tax can help reduce the costs of cloud transformations by utilizing technology, identifying refund opportunities, and maximizing incentives such as R&D credits and applicable state and local tax benefits. - Tax Readiness: Simplifying the complexity of tax reporting
In this webcast held on 20 October, we explored effective solutions to meet extensive tax reporting requirements in a prioritised, cost efficient manner, as well as planning for what's around the corner in this ever-changing regulatory environment. Watch the replay here.
Other updates
For regular updates on this topic, check out our US tax reform hub on The Suite here.
Vietnam
Decree 85 amending e-commerce regulations
Following on from the new rules to tighten up the taxation of e-commerce, the Government has issued Decree 85/2021 setting out new rules on e-commerce. Read more on the key points in this PwC NewsBrief.