This site uses cookies. and this alert will appear once and then not again.

Two weeks to 7 April 2023

Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK. 


Pillar Two - UK implementation
As noted in our last edition, legislation relating to the UK implementation of Pillar Two was set out in the Spring Finance Bill that was published on 23 March.  As expected, it confirms that the UK income inclusion rule (IIR) and the domestic top-up tax (DTT) will apply for accounting periods beginning on or after 31 December 2023.  With less than nine months until these new rules come into play, groups that will be within their scope should take action now to understand how they’ll be impacted and to ensure their systems, technology and processes are able to deal with the requirements of the new regime. Read more about the proposed legislation in this article. For further information regarding the UK implementation of Pillar Two, see our UK Pillar Two webpage.

‘Temporary’ Digital Services Tax risks becoming permanent, says CIOT
Commenting on the Public Accounts Committee’s report on the Digital Services Tax, published on 5 April, the Chartered Institute of Taxation (CIOT) has said that there is a ‘real risk’ that the supposedly temporary tax could effectively become a permanent part of the UK’s tax landscape. Read more in this CIOT press release

Treaty updates

  • San Marino and United Kingdom negotiating tax treaty
    Negotiations for an income tax treaty between San Marino and the United Kingdom are ongoing, according to recent information published on the UK Parliament website.
  • Double Taxation Treaty Passport Scheme register
    HMRC has updated the register of overseas corporate lenders who are passport holders for Double Taxation Relief on UK loan interest. The register has been updated as at 31 March with 198 additions, 38 amendments and 55 removals.

Approved offshore reporting funds
HMRC has updated the list of approved offshore reporting funds to include the latest funds that have entered the Reporting Fund Regime. The list has been updated to include the funds that have entered as at 5 April 2023. View the updated list.

HMRC Manual updates

  • International Manual update
    HMRC has updated section INTM483110 - Transfer pricing: operational guidance: working a transfer pricing case: penalties for a typo and review date. 
  • Corporate Finance Manual
    HMRC has updated the following sections following review:
    • CFM95480: Interest restriction: groups, periods and financial statements: financial statements: no financial statements
    • CFM96460: Interest restriction: group-EBITDA: capital (disposals) adjustment 
    • CFM98020: Interest restriction: anti-avoidance: commencement and exceptions
    • CFM98250: Interest restriction: carry forward rules: excess debt cap
    • CFM98540: Interest restriction: administration: reporting requirements: inclusion of estimates in return
  • Corporate Intangibles Research and Development Manual
    HMRC has added a new page to section CIRD81000 - R&D tax relief: conditions to be satisfied. 

UK strikes biggest trade deal since Brexit to join major free trade bloc in Indo-Pacific
The UK will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a vast free trade area of 11 countries spanning the Indo-Pacific, the Prime Minister announced on 31 March 2023. Read more in this Government press release

PwC webcast: How technology is opening up a world of new possibilities for Tax
Tax teams are seeing the benefit of the latest wave of technological advances, which have the potential to catapult tax to the front of the finance function investment agenda. In our latest Delivering Tax webcast held on 29 March, we touched on cloud, ERP and some of the latest tech we’re introducing along with our alliance partners to deliver outstanding results for tax departments. You can register here to watch the replay.


EU Parliament Subcommittee on Tax Matters discusses Pillar One & Two with OECD
On 28 March Members of the European Parliament’s Permanent Subcommittee on Tax Matters (“FISC”) held an exchange of views with Mr Achim Pross from the OECD on Pillar 1 and 2 of the OECD/G20 Inclusive Framework’s Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. A recording of the meeting can be viewed here.

CJEU to hear Apple State aid case in May
The Court of Justice of the European Union will hear the appeal of the European Commission against the decision of the General Court in the €14 billion Apple State Aid case on 23 May 2023. The EU Commission appealed the 2020 decision of the General Court, in which it annulled the Commission’s decision that Ireland’s tax authorities granted Apple a “selective advantage” by failing to employ appropriate profit allocation methods to apportion income of the Irish Apple branches, in contravention of EU State aid law.

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 from 27 March includes: 1) EU Calls on UN to Support OECD Efforts on International Taxation; 2) EU and UK Adopt the Brexit Windsor Framework; 3) EU Tax Observatory: ATAD GAAR Applied Infrequently Out of Litigation Fears; 4)  EU Parliament Subcommittee on Tax Matters to Discuss Pillar 1 & 2 with OECD; and 5) Register Now: CFE Forum – 20 April 2023 – “Towards a More Cohesive European Fiscal Union? Minimum Tax & VAT in the Digital Age”. Visit their latest news page here.
  • Global Tax Top 10 – March edition
    This edition includes: 1) EU Calls on UN to Support OECD Efforts on International Taxation; 2) EU and UK Adopt the Brexit Windsor Framework; 3) CFE Opinion Statement on VAT Groups; 4) OECD Public Consultation on Global Minimum Tax; 5) Register Now: CFE Forum – 20 April 2023 – “Towards a More Cohesive European Fiscal Union? Minimum Tax & VAT in the Digital Age; 6) EU Tax Observatory: ATAD GAAT Applied Infrequently Out of Litigation Fear; 7) EU Parliament Subcommittee on Tax Matters Discusses Pillar 1 & 2 With OECD; 8) CJEU to Hear Apple State Aid Case in May; 9) EU Relaxes State Aid Rules in Transatlantic Subsidy Race; and 10) CFE Opinion Statement on VAT Compensation Payments.


Pillar Two
See our international section below for updates regarding the steps particular territories are taking in relation to Pillar Two.

Pillar One

  • ‘Temporary’ Digital Services Tax risks becoming permanent, says CIOT
    Commenting on the Public Accounts Committee’s report on the Digital Services Tax, published on 5 April, the Chartered Institute of Taxation (CIOT) has said that there is a ‘real risk’ that the supposedly temporary tax could effectively become a permanent part of the UK’s tax landscape. Read more in this CIOT press release.

Global Forum publishes seven new peer review reports on transparency and exchange of information on request
The OECD Global Forum has released seven new peer review reports on transparency and exchange of information on request, for six of its members (Albania, the Czech Republic, Mexico, Nigeria, Saint Lucia and Togo) and one non-member, which had previously been deemed of relevance to its work on EOIR (Nicaragua). Read more in this OECD item.

OECD to publish data on how long tax treaty cases have been open
Starting next year, OECD statistics will show how long cases are pending under a system that helps resolve tax disputes under bilateral treaties, an official has said.

Other territories


International Tax News - Edition 117, March 2023
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) Hong Kong - 2023-24 Budget and GloBE Rules implementation plan; 2) South Africa - Budget announcement provides more details on Pillar Two implementation; 3) Mexico - MLI enters into effect on 1 January 2024 for Mexico; and 4) UK - Spring Budget 2023.

Digital tax byte
The latest edition in our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of digitalisation of business. This edition, from 5 April, includes: 1) Canadian Budget 2023 sets out DST, Pillar 1 and Pillar 2 plans; 2) Ireland seeks feedback on implementation of GloBE rules including a domestic top-up tax; 3) Kenya proposes to drop its DST and join the two-Pillar agreement; 4) UN Tax Committee approves Subject to Tax Rule (STTR) Model Treaty Provision; 5) UN Tax Committee discusses a Fast Track Instrument for digital treaty updates; 6) New Zealand has now passed its law changes to introduce reporting and GST changes for various online platforms.

Digital tax megabyte for March 2023
This edition, to the end of March, includes: 1) comment on the US President’s FY24 Budget Proposal and Treasury’s Green Book and note the US request for feedback on NFT guidance; 2) Germany and Liechtenstein have published draft legislation for the implementation of Pillar 2; 3) following earlier consultation, the UK has included provisions on the 'multinational top-up tax' and a 'domestic top-up tax' in the Finance Bill 2023; 4) Malaysia's postponement of the imposition of sales tax on low value goods; 5) New Zealand has passed its law on platform GST liability.

Operational Transfer Pricing: Addressing the challenges of managing intercompany pricing adjustments
Year-end transfer pricing adjustments have been, and continue to be, a mechanism companies widely use to adhere to their transfer pricing (TP) policies and ensure compliance with local TP pricing regulations. In this Tax Insight, we explore some of the common challenges encountered by businesses in implementing and defending such adjustments, as well as practical considerations for determining an optimal framework to effectively implement TP policies.

TP Podcast: Special Edition – Financial Transactions Transfer Pricing
In this TP Talks Special Edition podcast, David Ledure (Transfer Pricing Partner, PwC Belgium), Dan Pybus (PwC’s EMEA Financial Transactions TP Leader), Bob Ritter (PwC’s US Financial Transactions TP Leader), and Hiral Mistry (Transfer Pricing Partner, PwC Australia) discuss changing financial market conditions, tax policy changes, what to expect from tax authorities in 2023, as well as a look back at 2022.

Environmental, Social and Governance (ESG) 

  • Are you ready for the EPR era?
    A decade ago, the idea of a circular economy was very much an outlier in mainstream business thinking. Not any longer. Circular economy and waste legislation are introducing measures to improve waste management – notably Extended Producer Responsibility (EPR) obligations for different products and waste flows.  In this article, we discuss what EPR is, how it will impact businesses and what they can be doing now to prepare.

For more ESG insights, visit our dedicated ESG webpage.

Australia’s proposed intangible integrity measure
The Australian Treasury has released draft law and explanatory materials to implement the Federal Government’s proposal to deny deductions for payments relating to intangible assets connected with low corporate tax jurisdictions. The proposed new law is far reaching and may also cover a multitude of arrangements where a multinational group entity owns and exploits intangible assets. These proposed new rules are subject to a consultation period with submissions due by 28 April 2023. Read more in this PwC Alert.

Australia consults on public CbC reporting plans
As part of the October 2022‑23 Budget, the government announced a transparency measure for multinational entities to prepare for public release certain tax information on a country‑by‑country basis and a statement on their approach to taxation. The measure will enhance the tax information entities disclose to the public (for income years commencing from 1 July 2023). The Australian Treasury recently launched a consultation seeking stakeholders’ views until 28 April on the exposure draft legislation and accompanying explanatory material implementing this measure.

Monthly Tax Update - April 2023
Welcome to the April 2023 edition of Australia's Monthly Tax Update, keeping you up to date on the latest Australian and international tax developments. 


See here for latest updates.

Belgium agrees on core principles for implementation of Pillar Two
The Belgian government has reached an agreement on the Federal budget. One of the key elements in the budget decision was the decision on the core principles of the introduction of Pillar 2 in Belgium. These measures will now be translated into a proposal of law and go through the legislative process, and be adopted by the Chamber before coming into effect. Read more in this PwC news item.

Are you ready for the next compliance deadlines?
The focus on compliance from different stakeholders has become even more important lately. Meeting deadlines and avoiding penalties is the general expectation but a true challenge for many companies. This PwC news item shares a compliance timeline again to help you keep track of the most important deadlines upcoming in 2023.

Budget 2023
On 28 March 2023, the Deputy Prime Minister and Minister of Finance, Chrystia Freeland, presented the government’s budget.

  • 2023 Federal Budget analysis
    This Tax Insights discusses the tax initiatives proposed in the 2023 Canadian federal budget and the impacts they may have on Canadian businesses.
  • Canadian Budget 2023 sets out DST, Pillar One and Pillar Two plans
    On 28 March, Canada’s Finance Minister Chrystia Freeland tabled the 2023 Budget. The Budget provides an update on Canada’s Pillar 1 and 2 implementation plans. See the latest edition of the Digital Tax Byte.

Ministry of Finance to comment on the application of the Platform Tax Transparency Act
The German Federal Ministry of Finance (MoF) recently published a circular on certain application issues regarding the Platform Tax Transparency Act. Read more in this PwC blog.

Hong Kong
Consultation launched on providing upfront certainty of non-taxation of onshore equity disposal gains
The implementation of the refined foreign-sourced income exemption (FSIE) regime early this year may cause some taxpayers to consider structuring their transactions involving disposal of equity interests onshore.To provide greater upfront certainty of non-taxation to taxpayers, the Financial Services and the Treasury Bureau (FSTB) released the Enhancing Tax Certainty of Onshore Gains on Disposal of Equity Interests Consultation Paper (the Consultation Paper) on 23 March 2023 for a two-month trade consultation. This PwC news flash summarises the eligibility criteria of the Enhancement Scheme and our observations.

Key amendments to the Finance Bill, 2023 – enactment awaited
The Finance Bill 2023 was originally tabled on 1 February 2023 by the Finance Minister and was passed by the Lok Sabha on 24 March 2023 with certain amendments. This PwC Tax Insights summarises the amendments to the Bill as passed.

Bombay High Court overrules AAR findings and holds that taxpayer is entitled to treaty benefits as a valid TRC holder
The Bombay High Court sets aside the findings of the Authority for Advance Rulings (AAR) involving the transfer of shares of an Indian entity by a Mauritius-based special purpose vehicle in FY 2011–12. The Court held that, as the taxpayer was holding a valid tax residency certificate (TRC) and the Revenue could not bring on record any material to demonstrate that the taxpayer was incorporated as a device to avoid tax or that there was any fraud or illegal activity, the transaction of sale and investment (being prior to 1 April 2017) was grandfathered, and the Limitation of Benefits (LOB) clause of the India-Mauritius double taxation treaty (treaty) (DTAA) could not be triggered in the present facts. The High Court quashed and set aside the AAR ruling, denying the benefit under the treaty and remanded the matter back to the AAR to reconsider the  application of the taxpayer in light of the aforesaid observations. Read more in this PwC Tax Insights.

Irish Department of Finance releases Pillar Two feedback statement with draft legislation 
On 31 March 2023, the Irish Department of Finance released a feedback statement seeking comments until 8 May on the Irish implementation of Pillar Two GloBE rules. The statement sets forth proposed Irish legislation to implement Pillar Two, including confirmation of the intention to introduce a Qualified Domestic Top-up Tax (QDTT).  This feedback statement builds on a previous consultation process held in 2022 around implementing the EU Minimum Tax Directive in Ireland. Read more in this PwC Tax Insights.  See also the latest edition of the Digital Tax Byte

UAE-Israel Comprehensive Economic Partnership Agreement (CEPA) enters into force
The UAE Ministry of Economy has recently published the full text of the UAE-Israel CEPA signed between the Government of the United Arab Emirates and the Government of the State of Israel. The landmark Agreement was signed on 31 May 2022, and officially entered into force on 1 April 2023. Read more in this PwC news item.

Tax amnesty, criminal shield and the new timing
Law Decree no. 34 of 30 March 2023, which came into force on 31 March 2023, extends and innovates some measures of the regime relating to the tax amnesty which was introduced by the Law of 29 December 2022, no. 197 (i.e. the Budget Law for 2023), also in relation to the tax crimes. Read more in this PwC blog.

Company collective agreements and proximity agreements: the Constitutional Court defines the scope of effectiveness
The Constitutional Court, with Judgement No. 52 released on 28 March 2023, confirmed that proximity company collective agreements – in the presence of all the requirements set forth by Article 8 of Decree-Law No. 138/2011 – are effective vis-à-vis all those affected by the agreement. Conversely, “ordinary” company collective agreements do not take effect vis-à-vis trade unions and workers who are not signatories to the aforementioned agreements and who disagree with them. Read more in this PwC blog.

Pillar Two - a Japanese perspective
Doug McHoney (PwC's US International Tax Services Global Leader) was joined by Shin Yamaguchi at PwC’s 2023 International Tax Conference on 5 April. Shin is a Tokyo-based International Tax Partner, where he leads PwC Japan’s Inbound Tax Practice. In this episode, Doug and Shin discuss Japan’s latest tax developments, focusing on the Pillar Two rules (of course!), specifically, UTPR, IIR, Safe Harbours, QDMTT, the GloBE Information Return and effective dates. They also discuss the Japanese legislative process. Since the recording of this podcast Japan has enacted their 2023 Tax Reform Bill which includes the Pillar Two Income Inclusion Rule which applies on or after 1 April 2024.

Kenya proposes to drop its DST and join the two-Pillar agreement
In a speech on 30 March 2023 at an American Chamber of Commerce Regional Business Summit, Kenyan President William Ruto made a commitment to review its tax regime and align it with the two-Pillar model. See the latest edition of the Digital Tax Byte.

Luxembourg submits Public Country-by-Country Reporting Bill
A bill (Bill n° 8158) was recently submitted to the parliament implementing the European Union (“EU”) directive regarding the Disclosure of Income Tax Information by Certain Undertakings and Branches (2021/2101) (the Public Country-by-Country Reporting (“CbCR”) Directive). Read more in this PwC news item.

Middle East
Kuwait: Circular No. 8 of 2023
The Kuwait Ministry of Finance recently issued Circular No. 8 of 2023, which concerns the 5% tax retention withheld on companies enjoying tax incentives as per the Kuwait Direct Investment Promotion Authority (KDIPA)’s regulations (“K-Entities”). Read more in this PwC alert.

Corporate Tax in the UAE - tax accounting considerations
As companies begin to focus on financial reporting in 2023, there are important corporate income tax considerations to evaluate and assess. The UAE Federal Corporate Tax Law is now considered as enacted for the purposes of International Financial Reporting Standards (“IFRS”). Despite no current income tax accounting being required yet, companies need to consider whether to account for deferred income taxes for reporting periods ended on or after 16 January 2023. To assist companies in navigating the accounting for deferred income tax impacts during the interim reporting period, this PwC alert highlights some key areas to consider.

UAE-Israel Comprehensive Economic Partnership Agreement (CEPA) enters into force
The UAE Ministry of Economy has recently published the full text of the UAE-Israel CEPA signed between the Government of the United Arab Emirates and the Government of the State of Israel. The landmark Agreement was signed on 31 May 2022, and officially entered into force on 1 April 2023. Read more in this PwC news item.

Internet consultation on limitation of real estate transfer tax exemption
The Dutch Ministry of Finance has launched an internet consultation on a draft proposal of law limiting the application of the real estate transfer tax (RETT) exemption applicable to the acquisition of newly developed property through the acquisition of shares. It has been proposed to abolish this exemption as of 1 January 2024. Read more in this PwC news alert.

Funding by treasury department not ‘artificially diverted’
The Dutch Supreme Court has decided that internal financing is deemed business-like when it is raised from a group entity with a pivotal financial function. Read more in this PwC news alert.

Singapore’s implementation of Pillar Two
In the 2023 Budget presented in parliament on 14 February 2023, Deputy Prime Minister and Finance Minister Mr Lawrence Wong noted that Singapore plans to implement the Global AntiBase Erosion (GloBE) rules as well as a domestic top-up tax (DTT) for in-scope multinational enterprises (MNEs) from their financial year beginning on or after 1 January 2025. The recently announced transitional safe harbour provisions may provide a brief reprieve for MNEs which qualify for them although the additional time should be utilised effectively to implement a robust system and process to fulfil the compliance requirements. Read more in this PwC alert.

For the latest updates on current topics, see this PwC Switzerland Insights page.

Taiwan Tax Update - March 2023
This edition covers: Ministry of Economic Affairs and Ministry of Digital Affairs announces draft amendments to definition of foreign special professionals with special expertise in economic and digital fields respectively.

Disequilibrium: The new geopolitical and macroeconomic landscape
In this episode from 29 March, Doug McHoney (PwC's US International Tax Services Global Leader) is joined by Craig Stonberg, PwC’s Macro Intelligence Leader at PwC’s 2023 International Tax Conference. Doug and Craig discuss the geopolitical landscape, particularly in Asia and Europe; how a recession would affect multinational companies, the labour shortage that is particularly affecting women, the geopolitical part of the energy equation, and how multinational companies should be preparing for 2023 and beyond.

Tax Court rules IRS lacked authority to assess Section 6038b penalties
The US Tax Court recently ruled that the IRS lacked statutory authority to assess Section 6038(b) penalties against an individual taxpayer for failure to file Forms 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, with respect to his Belize foreign corporations. The Court also held that the IRS could not proceed with the collection of the penalties via its proposed levy against the taxpayer. The IRS has not yet indicated whether it will appeal the decision. Read more in this PwC Tax Insights.

 Policy on Demand series 

  • Recent banking developments: Companies can act to address risks
    In this episode from 3 April, Karl Russo shares his insights on the potential economic and legislative impact of recent developments in the banking sector and actions companies can take to address increased risks.
  • Week in Review
    • In this episode from 7 April, Todd Metcalf discusses how with Congress in recess, companies are focusing on guidance the Treasury and IRS, especially new guidance out this week related to tax incentives enacted in 2022 as part of the Inflation Reduction Act and the CHIPS Act.
    • In this episode from 31 March, Janice Mays discusses how divisions over a debt limit increase remain, but we are seeing some movement on issues that could ultimately be part of a bipartisan debt limit agreement. She also notes that although tax increase proposals in President Biden’s budget are unlikely to be enacted in this Congress, they are key messaging points for the administration’s goals and priorities. Janice encourages companies to keep an eye on UN and OECD international tax developments.

Tax Readiness webcast series

  • Tax Readiness: Demystifying the data dilemma - How tax can stay ahead of constant change
    Consistent, reliable data is the pinnacle of success and a critical component in building operational readiness in tax. It can help manage reporting obligations, alleviate internal and external demands, and serve as the cornerstone of compliance and implementation for required changes (eg Pillar Two). Join our panel of specialists on Tuesday 18 April at 7pm for a “how to” discussion on realising a future-ready, data-driven tax function powered by a new baseline of capabilities. Register here.
  • Tax Readiness: Q1 Financial reporting considerations
    Register here to join our panel of PwC specialists on Tuesday 28 March at 8pm as they take a deep dive into key tax accounting and reporting reminders and discuss recent tax developments.
  • Tax Readiness: Deals Outlook - The tax perspective
    In this webcast from 2 March, our panel reviews the recently launched US Deals 2023 outlook and discusses key tax issues and opportunities including the new stock buyback excise tax, divestitures, expiring provisions, and state and local taxes. Watch the replay here.

State and local tax

  • Tax Readiness: 5 years later - The impact of Wayfair and tax reform on state taxation
    It has been almost five years since the US Supreme Court decided South Dakota v. Wayfair and struck down the long standing “physical presence” nexus test, and a little more than five years since the Tax Cuts and Jobs Act rewrote the federal income tax laws for the first time since 1986. Register here to join our panellists on Tuesday 25 April at 7pm as they discuss the evolving compliance challenges produced by these two events and how companies are implementing leading practices to reduce costs, minimise risk, and produce cash tax savings.
  • Washington Supreme Court upholds capital gains tax
    A capital gains tax enacted in 2021 and effective beginning with the 2022 tax year is a valid excise tax under the state constitution, the Washington Supreme Court has held. Read more in this PwC Tax Insights.
  • California Office of Tax Appeals decision highlights complexity of sourcing flow-through receipts
    A recent California Office of Tax Appeals addresses whether a nonresident taxpayer is liable for California tax upon a gain from the sale of a partnership interest. Read more in this PwC Tax Insights.
  • California provides initial guidance on unclaimed property VCP
    The California State Controller’s Office has provided initial guidance regarding the unclaimed property voluntary compliance program. Read more in this PwC Tax Insights.

Further information
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 pageA back catalogue of previous webcasts and other resources are available on our US tax reform hub here