Two weeks to 3 September 2021
Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
UK
Exploring the most significant corporate tax change in 60 years
In the last 10 years, international corporate taxation has morphed from a technical topic into one of the most publicly debated topics. Even by these standards, the last few months have been exceptional. In short succession, the G7, 132 countries of the Inclusive Framework and, on 10 July in Venice, all the G20 countries agreed on the most significant change in corporate income tax of the last 60 years. In this PwC webcast we will answer your questions, exploring in detail these proposals along with the interconnectivities with the proposals from the Biden administration in the US. Register here to access the recording.
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.
- Guidance on trading with the UK as a business based in the EU
The government has published new guidance which provides details of the rules to follow for trading with the UK if you run an EU-based business.
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.
- Companies House updates cut off time for same day service
Companies House has adjusted the cut off time from 11am to 3pm for using a same day service to electronically file a change of company name or incorporate a company (software filing only). Further information can be found on this government page here.
Approved offshore reporting funds
HMRC has updated its list to include the funds that have entered the Reporting Fund Regime as at 1 September 2021.
EU
EU Tax News - May/June 2021
EU tax news is a bimonthly newsletter with 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. The newsletter is prepared by members of PwC's EU direct tax group (EUDTG) from across Europe. Read the latest edition.
PwC responds to EU public consultation ‘Fighting the use of shell entities and arrangements for tax purposes’
The objective of this consultation was to collect data and evidence needed to design new rules in the European Union to fight the abuse of shell entities and arrangements for tax avoidance purposes. You can view our response here.
OECD
Algeria joins Global Forum on Transparency and Exchange of Information for Tax Purposes
Algeria has joined the international fight against tax evasion by becoming the 163rd member of the Global Forum on Transparency and Exchange of Information for Tax Purposes. See this OECD item.
Ukraine commits to start automatic exchange of financial account information by 2023
Ukraine has committed to implement the international Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI) by 2023. This commitment makes Ukraine the 118th Global Forum member to commit to start AEOI by a specific date. See this OECD item.
Togo joins the Inclusive Framework on BEPS and participates in the agreement to address the tax challenges arising from the digitalisation of the economy
Togo has joined international efforts against tax evasion and avoidance by joining the OECD/G20 Inclusive framework on BEPS as its 140th member. Togo has committed to address the challenges arising from the digitisation of the economy by joining the two-pillar plan thereby becoming the 134th jurisdiction to participate in the agreement. Read more in this OECD item.
Other territories
International
International Tax News - July 2021
Among the topics featured in this month's edition are: 1) Hong Kong - Revising the statutory framework to prepare for tax return e-filing; 2) Spain - New anti-fraud legislation entered into force; 3) United Kingdom - The end of patent box grandfathering; and 4) Uruguay - Tax measures in response to COVID-19.
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 September includes updates on reporting by platforms with the draft legislation on Australia's new Bill, UK consultation on its proposals and Malaysia's guidance on its tourism tax. On Pillars 1 and 2, the US Senate committee on finance has published for consultation its proposals on relevant international tax reform, Barbados has signed up to the IF Statement and Switzerland has reiterated conditions for signing. And Pascal St Amans has noted that not all taxes on digital transactions may be considered the same. - Digital tax megabyte - August 2021
A collection of the brief insights throughout August 2021 of the type provided on an ad hoc basis in our Latest digital tax byte update. Read the latest edition. - Business in Focus podcast
The sudden push to a digital day-to-day wasn’t only experienced by businesses, but also by their customers. And while digital and ecommerce offer a new way to connect, getting it right across operating models, supply chains and reporting isn’t easy. In this episode, Herculano Rodrigues from THG Ingenuity and PwC’s Carl Sizer, join host Teresa Owusu-Adjei to discuss how digital transformation - for both businesses and consumers - offers new routes to success for those who can overcome the challenges.
Environmental, Social and Governance issues (ESG)
- Tax Readiness: ESG - Bringing your reporting & investment strategy to life
This US webcast held on Wednesday 25 August explored 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. Watch the replay. - Tap into Tax podcast: How does climate and carbon emissions relate to tax?
In the latest episode from this series, released on 24 August, Scott McCandless (US) explores the relationship between climate change and tax. He discusses the carbon related tax proposals in the US and elsewhere, and how they differ from traditional means of taxation and other carbon pricing systems. Gain a better understanding of the issues you need to consider as these initiatives continue to move forward.
Algeria
Algeria joins Global Forum on Transparency and Exchange of Information for Tax Purposes
As reported above, Algeria has joined the international fight against tax evasion by becoming the 163rd member of the Global Forum on Transparency and Exchange of Information for Tax Purposes. See this OECD item.
Australia
Australia - Monthly tax update: September 2021
Welcome to the September edition of Australia's Monthly Tax Update, keeping you up to date on the latest Australian and international tax developments.
Corporate Collective Investment Vehicle – draft tax law released
The Australian Government recently released revised draft tax legislation for the proposed Corporate Collective Investment Vehicle (CCIV), as well as a draft legislation in relation to the proposed regulatory framework for the CCIV. See this PwC Tax Alert.
Austria
Recent developments in the Austrian tax administration and (proposed) changes to the Austrian Tax Guidelines
Following the recent reorganisation of Austrian tax administration, Austrian Ministry of Finance updated the income tax, regoransation tax, and VAT guidelines. A draft update of the Austrian transfer pricing rules is available; however, it is still under review. Read more in this PwC tax news item.
Belgium
See here for latest updates.
The reconstitution reserve allows to exempt profits from corporate tax
The reconstitution reserve was introduced as part of the COVID-19 economic, tax and financial support package for companies to restore their equity level and safeguard cash flow and solvency. It is is an optional measure, which allows companies to create a temporary tax-free reserve during the assessment years 2022 - 2024 (i.e. with the profits of the 3 financial years, ending as of 31 December 2021). Read more in this PwC News item.
Cross-border employment Belgium-Luxembourg: “24-days” rule becomes “34-days” rule
On 31 August 2021, the Prime Ministers of Belgium and Luxembourg announced a further relaxation of the 24 days rule for a post-COVID-19 “home working” era. The number will increase from 24 to 34 in 2022. Read more in this PwC Belgium news item.
Canada
New Canadian GST/HST filing requirement for non-residents that provide services to Canadians
Effective from 1 July 2021, non-residents that provide services to persons that reside in Canada may be required to: 1) register for Canada’s Goods and Services Tax and Harmonized Sales Tax (GST/HST); and 2) charge and collect GST/HST on services that they provide to Canadian residents that are not registered for GST/HST. The rules apply to most services including investment advisory and portfolio management services. Read more in this PwC Tax Insights.
Department of Finance launches consultation on the proposed underused housing tax
To help address the housing crisis in Canada, the Department of Finance has released a backgrounder that describes the proposed framework for a new annual 1% federal underused housing tax (UHT) that would apply on the value of non-resident, non-Canadian owned Canadian residential property considered to be vacant or underused. However, if the UHT is implemented as proposed, many residential property owners in Canada, including nominee companies, trustees and certain partners, could be subject to mandatory annual reporting obligations, even if they are exempt from the UHT. Read more in this PwC Tax Insights.
China (excluding Hong Kong)
China STA publishes Public Notice on the application of simplified procedures for unilateral APAs
China’s State Taxation Administration (STA) recently issued Public Notice 24 which consolidates feedback and opinion of all relevant stakeholders. It further relaxes the conditions for the application of simplified procedures for unilateral APAs, effective 1 September 2021, meaning more companies can apply for unilateral APAs under the simplified procedures. See this PwC Tax Insights.
Germany
Distributions from Luxembourg investment company (SICAV) exempt from German income tax
Corporations with at least a 25% share in a société d’investissement à capital variable (SICAV), a Luxembourg investment company, do not have to pay income tax in Germany on the dividends received from the SICAV in 2010. This also applies if the Luxembourg tax authorities – for whatever reason – did not exercise their right of taxation at source and the distributions hence remained untaxed. Read more in this PwC Germany tax blog.
Hong Kong
Court rules company directors not personally liable to penalty tax for incorrect profits tax returns filed
The Court of Appeal (CoA) handed down its judgment in a case concerning whether additional (penalty) tax assessments can be issued by the Inland Revenue Department (IRD) to the directors of a company who sign the profits tax return of the company filed with the IRD, when such returns are regarded by the IRD as incorrect. The CoA held in this case that the directors are not required under the Inland Revenue Ordinance to make or furnish a profits tax return on behalf of the company, and therefore cannot be made liable to additional (penalty) tax imposed for filing an incorrect return of the company. Read more in this PwC News Flash.
India
1 September 2021 specified as notified date for constitution of BAR to replace AAR and to give effect to transitional amendments
The Finance Act 2021 (effective from 1 April 2021) introduced amendments to the Income-tax Act 1961 to replace the existing Authority for Advance Rulings (AAR) with the Board for Advance Rulings (BAR). To move a step forward in achieving this objective, the Central Government has constituted a Board for pronouncing advance rulings and notified 1 September 2021 as a date for the Board to be operational. Furthermore, no effective date was specified for the abolition of the AAR and to give effect to the transitional amendments from AAR to BAR. The Central Government has now specified 1 September 2021 as the date for enforcing such amendments. Read more in this PwC Tax Insights.
Ireland
PwC response to public consultation on Anti-Reverse Hybrid mismatches
The Irish Department of Finance recently ran a public consultation where interested stakeholders were invited to submit their views on possible approaches to some of the technical aspects of the anti-reverse hybrid rule. The consultation closed on 3 August 2021 and you can view PwC Ireland’s response here.
Common Reporting Standard (DAC2-CRS) - Passive NFEs with Controlling Persons in Multiple Jurisdictions
The Irish Revenue has updated “Filing Guidelines for DAC2: Common Reporting Standard (CRS)” with guidance for Financial Institutions who are reporting Controlling Persons of Passive NFEs, when the Controlling Persons are resident in different jurisdictions.
Luxembourg
Potential protective action needed before 30 September 2021 for Luxembourg property companies owning real estate assets in Germany
As a result of a recent EU decision, Luxembourg-based entities owning real estate assets in Germany may need to consider submitting VAT refund claims under Directive 2008/9/EC (previously known as the 8th Directive) to protect their entitlement to recover input VAT incurred in Germany in relation to the real estate properties they exploit there. Read more in this PwC news item.
Cross-border employment Belgium-Luxembourg: “24-days” rule becomes “34-days” rule
As reported above, the Prime Ministers of Belgium and Luxembourg announced a further relaxation of the 24 days rule for a post-COVID-19 “home working” era on 31 August 2021. The number will increase from 24 to 34 in 2022. Read more in this PwC Belgium news item.
Middle East
Extension of deadline for Qatari and GCC owned businesses operating in Qatar
The General Tax Authority recently issued Circular No 6 granting a second extension of the tax filing deadline for entities owned by resident Qatari and Gulf Cooperation Council (GCC) nationals by 4 months, from 31 August 2021 to 31 December 2021. Read more in this PwC alert.
New Zealand
New Zealand issues guidance on calculating foreign tax credits
The New Zealand Inland Revenue has released an interpretation statement for comment until 28 September that explains how to calculate a foreign tax credit under subpart LJ of the Income Tax Act 2007. The purpose of subpart LJ is to prevent the double taxation of foreign-sourced income.
New Zealand sets out rules on currency conversions
New Zealand's Inland Revenue has published guidance for consultation (open until 11 October) which sets out approved sources for foreign exchange rates that may be used by any person who is required to convert a foreign currency amount into its New Zealand Dollar (NZD) equivalent for the purposes of determining their tax liability. It also explains how the relevant exchange rate should be used to convert foreign currency amounts to their NZD equivalent.
Norway
The Government proposes fundamental alteration of the Norwegian Petroleum Tax system effective from 2022
In a recent press release (in Norwegian only), the Government introduced its proposal for alteration of the Norwegian Petroleum Tax system effective from 2022. The proposal involves fundamental changes to the current tax system which may be replaced by a so-called cash flow-based system. The proposal will be submitted for public consultation during the first weeks of September. See this PwC Norway tax blog.
Poland
The Polish Deal - Key changes for international investors
A draft law was recently published which introduces significant changes into Polish Corporate Income Tax Law and the Polish Tax Ordinance and includes a number of amendments that may affect international entrepreneurs, including foreign companies investing in Poland or Polish entrepreneurs with subsidiaries located abroad. Read more in this PwC Alert.
Portugal
Unexpected DAC6 reporting obligations may arise in Portugal
The Portuguese Tax Authority (PTA) transposed the EU DAC6 rules into law on 21 July. Following this, the PTA published guidelines on the practical implementation of DAC6 in Portugal which may create unexpected reporting obligations in Portugal for a ‘relevant taxpayer’ regarding cross-border arrangements when a Portuguese nexus exists. Read more in this PwC Tax Insights.
Singapore
Singapore issues the Sixth Edition Transfer Pricing Guidelines
As reported previously, the Inland Revenue Authority of Singapore recently revised its Transfer Pricing Guidelines (“6th Edn TPG”) for the first time since 2018. The 6th Edn TPG comes on the back of recent circulars with additional details on centralised activities in multinational enterprise groups and the commodity marketing and trading activities, and reflects IRAS’ increased focus on transfer pricing matters. Read more in this PwC bulletin..
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.
Togo
Togo joins the Inclusive Framework on BEPS and participates in the agreement to address the tax challenges arising from the digitalisation of the economy
As reported above, Togo has joined international efforts against tax evasion and avoidance by joining the OECD/G20 Inclusive Framework on BEPS as its 140th member. Togo has committed to address the challenges arising from the digitisation of the economy by joining the two-pillar plan thereby becoming the 134th jurisdiction to participate in the agreement. Read more in this OECD item.
Ukraine
Ukraine commits to start automatic exchange of financial account information by 2023
As reported above, Ukraine has committed to implement the international Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI) by 2023. The commitment made by Prime Minister of Ukraine, Mr Denys Shmyhal, makes Ukraine the 118th Global Forum member to commit to start AEOI by a specific date. See this OECD item.
US
Senate Finance Chairman Wyden releases international tax reform discussion draft
Senate Finance Committee Chairman Ron Wyden, Finance Members Sherrod Brown and Senator Mark Warner have released discussion draft legislation and a six-page, section-by-section staff description on international tax reform proposals. Read more in this PwC Tax Insight.
House approves budget resolution, action to come on reconciliation tax bill
The House recently voted 220 to 212 to approve the Senate-passed fiscal year 2022 budget resolution that provides reconciliation instructions for spending and tax relief provisions that would be offset in part by corporate and individual tax increases. The House action also calls for a House vote, without amendments, on 27 September on the bipartisan infrastructure bill recently approved by the Senate. See this PwC Tax Insights
Streamlined filing may lengthen transition tax lookback period
The IRS updated its webpage to clarify that a taxpayer that uses the agency’s streamlined filing compliance procedures must include in its submission the tax year in which the Section 965 transition tax is levied (generally, 2017 and/or 2018) if the taxpayer is not compliant with Section 965. Accordingly, the lookback period for any streamlined filing submission involving specified foreign corporations (SFCs) with a Section 965(a) inclusion in 2017 must include 2017 and all subsequent years affected. In addition, taxpayers must account for and report Subpart F income and Section 956 amounts in their submission. Read more in this PwC Tax Insights.
IRS issues Section 451 accounting method change procedures
The IRS has released procedures for taxpayers to change their methods of accounting to comply with final regulations under Section 451. Read more in this PwC Tax Insights.
Subscribe for US tax alerts
You 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: Q3 financial reporting considerations
In this webcast taking place on Wednesday 22 September at 7pm, our panel of Tax Accounting Services (TAS) specialists will take a deep dive into relevant tax accounting matters and recent tax developments. Register here. - Cross-border tax talks: Tax Reform 2.0 - Hot topics in inbound taxation
In this episode from 1 September, Doug McHoney (PwC's US International Tax Services (ITS) Leader) is live at the Westminster Studios with Tom Patten (ITS Partner based in London) to discuss current and future tax considerations for US inbound companies.
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
The latest episodes in this PwC podcast were released on 24 and 30 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: ESG - Bringing your reporting & investment strategy to life
This webcast held on Wednesday 25 August explored 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. Watch the replay. - 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.
Other updates
For regular updates on this topic, check out our US tax reform hub on The Suite here.
Vietnam
Circular 71 on unrecaptured corporate income tax for businesses engaged in socialized activities
The Ministry of Finance has just issued Circular 71 on unrecaptured corporate income tax for businesses established before 22 July 2016 which are engaged in socialised activities. Circular 71 takes effect from 01 November 2021. Read more in this PwC NewsBrief.