Two weeks to 29 April 2022
Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
UK
OECD Pillar 2
Pillar 2 (P2) will establish a global minimum tax regime which will apply to both public and privately held multinational groups with consolidated revenue over €750m. See our latest resources and insights:
- Client webcast: Latest guidance on global minimum tax (Pillar 2)
Where have we reached in this process? What uncertainties remain? And what reactions are we seeing? Members of our Global Tax Policy team and subject specialists came together on Friday 29 April to discuss just that. The recording is available here. - Concern at UK rush to implement multinational tax plan
The Chartered Institute of Taxation has stated its concerns with fast-tracking the implementation of the global corporate tax rules, noting the priority should be to do so correctly. Read more in this CIOT press release.
See further material on the OECD proposals in the OECD section below.
Taxation of cryptoassets
The taxation of cryptoassets is a highly complex and fast moving technical area with chargeable events occurring at many stages in the chain of ownership of the cryptoassets, many of which do not coincide with a disposal of value. You can share our flyer where we explore HMRC’s current position on cryptoassets and discuss some of the complexities that could impact the correct tax treatment.
PwC International Perspectives webcast series
Are you interested in gaining a more international perspective on your tax presence and recent changes to the UK-German tax landscape? From 3 May to 22 June 2022, PwC UK and PwC Germany are partnering to host a series of webcasts, covering areas from UK incentives to German anti-hybrid legislation. You can find out more and register here.
Common Reporting Standard obligations extended
The International Tax Compliance (Amendment) Regulations 2022 (SI 2022/474) extends the application of the International Tax Compliance Regulations 2015 (SI 2015/878) to arrangements entered into by the UK for the exchange of financial account information with other jurisdictions to agreements and arrangements relating to CRS that were entered into at 20 April 2022 (rather than 20 April 2021 as previously). This adds Jamaica, Kenya and Maldives to the list of reportable jurisdictions. The Regulations come into force on 18 May 2022.
See the relevant HMRC guidance here for further information.
Bright Blue: The UK needs a more ambitious tax reforming agenda
Bright Blue, the independent think tank for liberal conservatism, has recently published “A vision for tax reform in the 2020s”, setting out bold principles and policy ideas for an ambitious agenda of tax reform that tackle the leading economic, social and environmental challenges of the 2020s and beyond. Read more in this press release.
Zero tax risk: Where is your organisation on the tax risk curve?
It may not be possible or even desirable to reduce tax risk to zero, given the changing landscape, but businesses need to understand their exposure. Leaders can then ensure all tax governance and risk management frameworks are aligned with their wider governance framework and embedded in the company culture. Read more in this PwC tax blog.
India and UK set October 2022 deadline to draft new FTA
Meeting on 22 April 2022, UK Prime Minister Boris Johnson and India Prime Minister Narendra Modi agreed a joint statement 'Towards shared security and prosperity through national resilience'. They set a target to conclude the majority of talks on a comprehensive and balanced Free Trade Agreement by the end of October 2022.
EU
Differing implementations of the UBO Registers within the EU
This PwC publication (from PwC Netherlands) includes an overview of eight specific aspects in relation to which the obligation for UBO registration shows remarkable differences in 27 EU/EEA countries and builds on the previous PwC publication of December 2020. The obligation for UBO registration derives from the fourth and fifth Anti-Money Laundry Directive (the Directive).
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 includes: 1) EU Parliament Tax Subcommittee: Hearing on Regulating Intermediaries; 2) Register Now: CFE Forum 2022 on 12 May 2022 in Brussels; 3) OECD Public Consultation Meeting on Minimum Tax Implementation Framework; 4) Irish Tax Institute & Harvard Kennedy School Global Tax Conference, 17 & 18 May 2022; and 5) OECD Invites Input on Extractives Exclusion Under Pillar 1. Visit their latest news page here.
OECD
Pillar Two
- Client webcast: Latest guidance on global minimum tax (Pillar 2)
Where have we reached in this process? What uncertainties remain? And what reactions are we seeing? Members of our Global Tax Policy team and subject specialists came together on Friday 29 April to discuss just that. You can watch the recording here. - Public consultation meeting on the Implementation Framework of the global minimum tax
The OECD’s public consultation meeting took place virtually on Monday 25 April. This follows the call for input on the Pillar Two Implementation Framework which closed for comments on 11 April. The event was recorded and you can watch it here. - OECD developments may impact insurance multinationals
Pillar Two is expected to have a significant impact on insurance MNEs. These businesses operate through subsidiaries and branches in various jurisdictions, each of which may have a domestic IIR and UTPR that follow the general OECD framework, but which have certain permitted differences. Intercompany transactions, such as reinsurance, M&A activity, intra-group financing and capital support, and the provision of services that are routine for the MNEs, would complicate the application of Pillar Two. Read more in this PwC tax insights item.
Pillar One Model Rules
- OECD issues public consultation document on Pillar One - Amount A: Extractive Exclusion
As reported in our last edition, the OECD released the public consultation document on the Pillar One - Amount A: Extractive Exclusion on 14 April 2022, with comments due by 29 April 2022. This PwC tax policy alert provides a short overview of the proposed approach to the Extractives Exclusion and some initial observations. - Public comments received on the draft rules for scope under Pillar One Amount A
The OECD has published the public comments received following the consultation on the Draft Model Rules for Domestic Legislation on Scope under Pillar One Amount A to assist members in further refining and finalising the relevant rules. - Business at OECD responds to consultations
MLI
Belize and Cameroon deposit instruments for the ratification and Japan extends the application of the Multilateral BEPS Convention
Belize and Cameroon have deposited their instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS Convention). The Convention will enter into force on 1 August 2022 for those jurisdictions. In addition, Japan has notified an additional bilateral treaty to which the BEPS Convention will apply. 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
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:
- OECD Pillars 1 and 2
See comments in OECD section above.
- Digital tax byte
The latest edition from 28 April includes an OECD release on the IT format for sharing digital platform reporting information and an update on the EU attempts to adopt a Directive to implement Pillar Two. It also considers the relevance of 'nudge' letters being sent by the Indian tax authorities and the CJEU decision on Belgian tax reporting on tourist accommodation not being contrary to EU law.
Environmental, Social and Governance (ESG)
- UK Plastic Packaging Tax - are you ready?
The UK Government introduced a new tax on plastic packaging from 1 April 2022 and the first registrations are due by 30 April 2022. Whether you manufacture plastic packaging or import packaged goods, the UK's Plastic Packaging Tax could have implications for you. Find out more about the tax on our webpage here. - ESG & Tax - Sustainability & Transformation
The second of our ESG & Tax virtual webinars took place on Tuesday 5 April, with the focus on the key role tax plays as part of the Business Sustainability and Transformation agenda. View the recording here. - The role of tax in getting to net zero
The Institute of Chartered Accountants of Scotland (ICAS) has issued a briefing paper on the role of tax in getting to net zero. Read it here.
International Tax News - March 2022
International Tax News is designed to help multinational organisations keep up with the constant flow of tax developments. Among the topics featured in this month's edition are: 1) Canada proposes mandatory disclosure legislation; 2) Tax measures proposed in the 2022-23 Hong Kong Budget; 3) Singapore explores a new minimum effective tax rate regime; and 4) Spain approves corporate income tax and non-resident income tax modifications.
Australia
AusIndustry releases new software specific guidance for the R&D Tax Incentive
AusIndustry has released new software specific guidance for the R&D Tax Incentive. The new guidance outlines the requirements for core and supporting R&D activities, the evidence that is required to support an R&D Tax Incentive application and includes specific extended software case studies. Read more in this PwC alert.
Monthly Tax Update - May 2022
Welcome to the May 2022 edition of Australia's Monthly Tax Update, keeping you up to date on the latest Australian and international tax developments.
Belgium
See here for latest updates.
Belize
Belize deposits MLI ratification instrument
Belize has deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI will enter into force for Belize on 1 August 2022. See https://oe.cd/mli.
Cameroon
Cameroon deposits MLI ratification instrument
Cameroon has deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI will enter into force for Cameroon on 1 August 2022. See https://oe.cd/mli.
Canada
2022 Ontario budget: Tax highlights
On 28 April 28, 2022, Ontario’s Minister of Finance, Peter Bethlenfalvy, presented the province’s budget. The budget does not change corporate or personal income tax rates, but does extend the temporary increase to the regional opportunities investment tax credit rate. This PwC Tax Insights discusses this and other tax initiatives outlined in the budget.
Germany
PwC International Perspectives webcast series
Are you interested in gaining a more international perspective on your tax presence and recent changes to the UK-German tax landscape? From 3 May to 22 June 2022, PwC UK and PwC Germany are partnering to host a series of webcasts, covering areas from UK incentives to German anti-hybrid legislation. You can find out more and register here.
Hong Kong
Court concludes limited onshore activities mean trading profits sourced offshore
The Court of First Instance (CFI) handed down its judgement on Newfair Holdings Limited v The Commissioner of Inland Revenue (CIR) on 20 April 2022 concerning whether the taxpayer’s profits were sourced in Hong Kong and therefore chargeable to Hong Kong profits tax. The CFI ruled that the Board erred in law to conclude the trading profits derived by the taxpayer were chargeable to Hong Kong profits tax despite only limited activities performed by the taxpayer in Hong Kong, and thus overturned the Board’s decision. The CFI held that the taxpayer did not carry on a business in Hong Kong and that the trading profits derived by the taxpayer were sourced offshore. Read more in this PwC newsflash.
Ireland
A new era in tax transparency
PwC Ireland has published a detailed report “A new era in tax transparency”, which outlines the complex tax transparency landscape in which corporate entities now operate.
Japan
Japan extends MLI
Japan has notified an additional bilateral treaty to which the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) will apply. See: https://oe.cd/mli.
Middle East
UAE launches tax whistleblowers regime
The United Arab Emirates is now offering financial rewards for information on tax evaders, under a new whistleblower regime that launched on 15 April 2022. Read more in this PwC alert.
Russia
Russia/Ukraine crisis
- Significant amendments to the Russian Tax Code
The Federation Council has approved a draft law introducing multiple amendments to Russian tax legislation in response to the economic challenges that have arisen in February and March 2022. Following the first reading, the text was substantially revised. Read more.
Switzerland
For the latest updates on current topics, see this PwC Switzerland Insights page.
Taiwan
Taiwan Tax Update April 2022
Where a company with reasonable commercial purpose undertakes a merger or acquisition, the excess of acquisition cost over the fair value of net identifiable assets can be recognized as goodwill and amortised. In this issue we consider a new tax ruling which sets out the relevant accounting principles and valuation standards etc. used to measure and recognize net identifiable assets in the valuation report or purchase price allocation report, and adds a requirement to fill out a Checklist of Identifiable Intangible Assets. Companies planning a merger or acquisition should plan ahead and prepare evidentiary documents in accordance with relevant valuation standards, and also take advantage of tax concessions.
US
Global disruption and the impact on doing business in the US
We continue to live in challenging times, and recent events underscore how quickly the state of the world can change. From geopolitical tensions to tax policy, significant developments are impacting the business strategy of international companies operating in the US. In this webcast taking place on Tuesday 17 May at 4pm, gain practical insights from PwC’s economic, deals, and tax policy specialists to stay ahead of the curve. Register here.
Tax Readiness webcast: The Future of Tax Controversy - How companies should prepare
Join our panel of specialists on Wednesday 4 May at 7pm as they discuss the controversy challenges companies are facing and ways they can minimise risk to their business operations. Register here.
Tax Readiness: Supply Chain, Business Disruption, and Unlocking Cash through Tax
Register here to watch the replay of our webcast from 13 April, where our panel of specialists discuss the current global and economic environment and illustrate the challenges through various case studies to demonstrate how tax might offer some pathways to clarity and improved cash flow.
Cross-border tax talks: Pillar 2 Commentary: A knowledge GAAP?
In this episode from 27 April, Doug McHoney (PwC's US International Tax Services Co-Leader) is joined byPwC’s Calum Dewar, Leader of PwC’s Integrated Global Structuring practice. They discuss the Pillar Two Model Rules & Commentary and its potential impacts on the global tax system, transfer pricing adjustments, deals and more.
The Biden Budget: Build Back Better Again?
In this TaxNotes podcast, PwC’s Rohit Kumar discusses the Biden administration’s fiscal 2023 budget, explaining the new proposals and how the budget is different to the Build Back Better Act.
Policy on Demand series
- US Election Watch: Primaries, trends, and money
In this episode, Rohit Kumar and Todd Metcalf share their insights on upcoming primary races, fundraising, and other trends as we approach the 2022 midterm elections. - Week in Review
- In this episode from 29 April, Janice Mays shares her thoughts on the status of legislation and looks ahead to President Biden’s State of the Union address next week.
- Congress returns the week of 25 April for a 5-week work period. In this episode from 22 April, Rohit Kumar shares why a corporate rate increase is unlikely and what to watch for in the coming weeks. He also answers the question that he received most this week: Are Democrats going to take another run at reconciliation legislation?
You can sign up for Tax Alerts issued by the US to be emailed to you. Subscribe using the link on this page. A back catalogue of previous webcasts and other resources are available on our US tax reform hub here.
Vietnam
New Circular amending Circular 48/2019 on making provisions
On 7 April, the Ministry of Finance issued Circular 24/2022 amending Circular 48/2019 regarding making provision for devaluation in investment in government bonds, municipal, government-guaranteed bonds. Circular 24/2022 takes effect from 25 May 2022. Read more in this PwC Alert.