Two weeks to 8 July 2022
Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
OECD Pillar 2 - Are you ready?
The key actions for groups falling within the scope of the minimum taxation rules will be to assess the impact and prepare resources for the additional compliance requirements, to communicate the effects to the stakeholders and train teams. It starts now! Find out more on our Pillar 2 webpage.
Corporate Interest Restriction returns - electronic submission now mandatory
The process for informing HMRC of the appointment of a reporting company and submitting a return is changing. From 1 September 2022, this will need to be done electronically, using commercial software or by completing an online form and template. For further information, see this Policy Paper (published 7 July) and the Regulations which introduce the change (which were laid before the House of Commons on 7 July).
Draft Finance Bill 2022-3 clauses - release date set for 20 July 2022
On 5 July, it was announced that draft legislation for the next Finance Bill, with accompanying material, will be published on 20 July - known as L-Day. See here.
UK CFC state aid case
We have been informed that the UK Government intends to appeal to the Court of Justice of the EU against the General Court judgment by the deadline of 18 August.
Foreign Exchange Management
The FX markets have been particularly volatile in recent months, and this is likely to remain the case given ongoing uncertainties and international developments. Managing FX exposures is therefore taking on increasing importance, and unhedged positions can cause unexpected accounting and tax considerations, including impacts on distributable reserves and cash tax liabilities. We can help understand the exposures and identify ways to manage the accounting and tax positions, and potentially help reduce the cost associated with entering into external hedges. See this Suite item.
- HMRC update UK–Cyprus double tax treaty information
HMRC has updated its guidance covering tax treaties and related documents between the UK and Cyprus.
- The taxation of decentralised finance involving the lending and staking of crypto assets
The government is seeking views on possible changes to the tax treatment of crypto asset loans and ‘staking’ in the context of decentralised finance. The consultation closes on 31 August.
- UK launches consultation to upgrade Sovereign Investor tax-treatment
The UK government has launched a consultation until 12 September to modernise and improve the tax treatment it provides to foreign sovereign investors, such as heads of state and sovereign wealth funds. Read more in this press release.
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 6 July 2022. View the updated list.
Business in Focus podcast: Rethinking resilience
What does today’s external environment and its rapidly evolving risks mean for business resilience? Organisations of all types are now having to grapple with high impact, severe events at a pace that has been amplified by the move to digital. So how can business leaders move to an agile mindset that lets them respond and maintain reputation and trust with investors and the public? PwC’s Emily Khan, is joined by Paul Williams, formerly of the Bank of England PRA and now PwC special adviser on the topic of resilience, and PwC Crisis and Resilience partner Bobbie Ramsden-Knowles to explore the case for looking at resilience differently in this podcast from 22 June.
Pillar 2 - As Hungary blocks global tax deal, MEPs denounce national vetoes
MEPs have criticised countries abusing their vetoes on tax matters and have demanded a relaunch of discussions to gradually introduce majority voting, in a resolution adopted on 6 July with 450 votes in favour, 132 votes against and 55 abstentions. The resolution also states that EU and global tax rules are outdated for dealing with the modern-day economy, since they allow for significant tax evasion and tax avoidance, lead to “unacceptable competitive advantages” for multinationals over SMEs, and undermine the EU single market. Read more in this press release.
ATAD 3: The European Parliament provides initial thoughts
Just as the dust has started to settle with the EU's first two Anti-Tax Avoidance Directives, the European Commission recently announced a third. ATAD III focuses on "shell" companies and puts monitoring and compliance costs on them as well as potentially imposing increased tax charges. This article provides an update to ATAD III on some encouraging news from the European Parliament's review of the draft Directive.
Crypto assets: deal on new rules to stop illicit flows in the EU
The European Parliament has announced the adoption of a nonbinding resolution calling for member state coordination on crypto asset taxation and more effective use of blockchain to tackle tax evasion. Read more in this European Parliament press release.
EU – New Zealand Trade Agreement: Unlocking sustainable economic growth
The EU and New Zealand have concluded negotiations for a Trade Agreement, which is set to open significant economic opportunities for companies and consumers on both sides. Read more in this press release.
Annual Report on Taxation 2022
The European Commission (EC) has published its Annual Report on Taxation 2022, which highlights that EU Member States’ tax revenue has decreased for the first time since the 2009 financial crisis. The Annual Report on Taxation 2022 has been published together with an accompanying report on the most striking Taxation Trends in Member States over the last years.
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 4 July includes: 1) EU Commission Publishes Annual Report on Taxation 2022; 2) EU Commission: Call for Evidence on Administrative Cooperation Framework in VAT; 3) EU Parliament’s FISC: The Role of Tax Incentives & Exemptions in the Single Market; 4) EU Parliament & Council Reach Deal on Rules for Tracing Crypto-Assets; and 5) Public Input from VAT in the Digital Age Consultation Published.
- Global Tax Top 10 – June 2022
This edition includes: 1) Pillar 2 Directive: EU Fails to Reach Agreement on Minimum Tax Directive; 2) EU Consultation on Introducing a Common EU-wide System for Withholding Taxes; 3) Professional Regulation of Tax Advisers in the EU: Commission Consultation to be Launched in July; 4) OECD Transfer Pricing Profiles Updated; 5) CFE Opinion Statement on Possible Solutions to Inheritance and Gift Taxation Issues Within the EU; 6) EU Parliament’s FISC: Study on Regulation of Intermediaries; 7) OECD Publishes Public Comments on Tax Certainty Under Pillar One; 8) DGTAXUD Conference on Mega-Trends & Their Impact on Taxation; 9) Forum on Tax Administration Publishes 2022 Report; 10) Tax Transparency in Africa 2022: Africa Initiative Progress Report .
Visit their latest news page here.
Pillar One Model Rules
- OECD invites public input on the Progress Report on Amount A of Pillar One
To seek further feedback from stakeholders, and consistent with the revised schedule for completing the work on Amount A agreed by the Inclusive Framework, the OECD secretariat has prepared a Progress Report on Amount A of Pillar One which includes a consolidated version of the operative provisions on Amount A (presented in the form of domestic model rules), reflecting the technical work completed thus far. The OECD is seeking public comments on the Progress Report until 19 August.
Madagascar joins multilateral Convention to tackle tax evasion and avoidance
Madagascar has signed the multilateral Convention on Mutual Administrative Assistance in Tax Matters, bringing to 145 the total number of jurisdictions that participate in the Convention.
Model Manual on Exchange of Information for Tax Purposes
The Global Forum’s Model Manual on Exchange of Information for Tax Purposes, which provides checklists and various template letters to deal with the main forms of communications carried out by exchange of information units, is now available in four languages: English, French, Portuguese, and Spanish.
Global Forum members’ Competent Authorities exchange on their practices and experiences
The 9th Competent Authorities meeting was held virtually on 30 June and 1 July 2022. The event brought together 355 participants from 106 jurisdictions. Discussions covered the implementation of both the exchange of information on request (EOIR) and the automatic exchange of financial account information (AEOI) standards. Read more in this OECD item.
International Tax News - June 2022
Among the topics featured in this month's edition are: 1) Cyprus Parliament votes to reduce tax on 'passive' interest income from listed corporate bonds; 2) UK sets implementation for Pillar Two; 3) New Mexican rules for international tax restructurings; and 4) China and Rwanda enter into tax treaty and accompanying protocol.
Digital tax byte
The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of digitalisation of business.
- The latest edition from 1 July includes an update on Maryland's US Sales Tax rules.
- The Digital tax megabyte for June 2022 from 1 July. Topics include: 1) 30 June 2022 - Thailand provides more relevant VAT exemptions; 2) Tanzania's Finance Bill provides DST details.
Environmental, Social and Governance (ESG)
- Tax Transparency in an ESG era
The tax transparency landscape is experiencing seismic changes internationally, with historical legislative and voluntary reporting developments on the near horizon. The direction of travel is clear, tax is no longer just a private compliance issue between tax teams and tax authorities, it has become a core element of the wider ESG movement under the very public purview of stakeholders, investors and the board. Read more.
- Streamlining reporting regulations to support a more sustainable future
Investors and other stakeholders are increasingly focused on the actions companies are taking on environmental, social and governance (ESG) commitments - particularly how they are tackling climate change. This blog discusses the implementation challenges companies are facing and a number of changes that could be made to help.
Monthly Tax Update - July 2022
Welcome to the July 2022 edition of Australia's Monthly Tax Update, keeping you up to date on the latest Australian and international tax developments.
US GILTI not a CFC rule for hybrid mismatches
The Australian Taxation Office has issued its finalised guidance in relation to the hybrid mismatch rules and the United States “GILTI” rules which, in essence, include certain income of controlled foreign companies (CFCs) in the US tax base. Read more in this PwC tax alert.
See here for latest updates.
Early indications of the direction of travel for broad tax reform
Professor Delanote of the University of Ghent recently published his vision note regarding the broad tax reform. The note includes recommendations for potential amendments in the scope of a broader tax reform. The note was drafted at the request of several ministers, however, there is no consensus among the Federal and/or Regional levels regarding any amendments. Read more in this PwC news item.
HMRC update UK–Cyprus double tax treaty information
HMRC have updated their guidance covering tax treaties and related documents between the UK and Cyprus.
Transfer pricing developments in Cyprus - new documentation obligations
The Cyprus Parliament recently approved long awaited amendments to the Cyprus Income Tax Law and new Regulations to introduce Transfer Pricing documentation compliance obligations (Master File, Cyprus Local File, Summary Table) for Cyprus tax resident persons and permanent establishments of non Cyprus tax resident persons situated in Cyprus that engage in transactions with related parties (“Controlled Transactions”). A formal Advance Pricing Agreement (“APA”) procedure has also been introduced. Read more in this PwC tax alert.
Germany extends ability to claim exemption from IP withholding tax by one year
The Ministry of Finance has issued a circular to extend the ‘simplified withholding tax procedure’ regarding German IP nexus rules to payments received before 1 July 2023. Read more in this PwC Tax Insights and related PwC tax blog.
Limited tax liability and tax withholding in case of indefinite transfer of know-how
The transfer of know-how by a foreign creditor for an unlimited period may lead to limited income tax liability in Germany by way of tax withholding. The fact that the know-how must be used domestically in order to trigger German withholding tax does not, according to the Supreme Tax Court, require that the know-how also had the specified scope, substance and quality to fulfil the purposes pursued in the domestic market. Read more.
Finance Committee approves amendments on two double tax agreements
The Finance Committee of the German Bundestag (whose working scope basically coincides with the responsibilities of the Federal Ministry of Finance) recently approved specific revisions to the double tax treaties with Mauritius and Mexico. Read more in this PwC tax blog.
Update: Bundestag lowers interest rate for tax arrears and refunds
On 8 July 2022 the German Bundesrat approved the Draft Bill providing, inter alia, for reduction of the interest on tax arrears and tax refunds which was resolved by the Bundestag on 23 June 2022. The bill will be announced in the Federal Gazette once it has been signed by the President of the Federal Republic. It is expected to come into force sometime during July 2022. Read more.
Income adjustment pursuant to Section 1 (1) FTA vis-à-vis a write-down of an unsecured loan receivable issued within a group
Following a referral from the Federal Constitutional Court, the Supreme Tax Court has again had to rule on the income adjustment pursuant to Section 1 (1) Foreign Taxes Act vis-à-vis the write-down of an unsecured loan receivable issued within a group. Read more in this PwC tax blog.
Proposed refinements to foreign source income exemption regime for passive income
The Hong Kong SAR government recently launched a consultation on a proposal to refine Hong Kong's foreign source income exemption regime for passive income in response to the concern of the European Union (EU) over double non-taxation arising from the tax exemption for offshore passive income in Hong Kong. The consultation will end on 15 July 2022. Read more in this PwC news alert.
Withholding tax on consideration for transfer of virtual digital assets - guidelines issued
Virtual digital assets (VDAs) have gained tremendous popularity in recent times and the volumes of trading in such digital assets has increased substantially. A new scheme to provide for taxation and withholding of tax pertaining to VDAs, introduced by the Finance Act 2022 (the Act), took effect from 1 July 2022. On 22 June 2022, the Central Board of Direct Taxes issued guidelines relating to the obligation on a person to ensure that tax is withheld at the rate of 1% at the time of payment or credit of any sum to any resident as consideration for transfer of a VDA. Read more in this PwC Tax Insights.
Guidance on the anti-hybrid rules
The Irish Revenue has updated its guidance on the country's anti-hybrid rules for Finance Act 2021.
Payment and receipt of interest and royalties without deduction of income tax
The Irish Revenue has updated its guidance on the payment and receipt of interest and royalties without deduction of income tax.
Ireland releases new tax treaty policy
The Minister for Finance has published Ireland’s Tax Treaty Policy Statement. The policy statement has been approved by Government and was developed following a public consultation with interested stakeholders and in coordination with other relevant Government Departments.
Planned reform of the tax process
The Council of Ministers has approved a draft law containing provisions on the justice system and tax process. The proposed reform envisages, among the main goals to be achieved by 31 December 2022, the speeding up of the tax process in order to achieve one of the objectives of the National Recovery and Resilience Plan (NRRP). Read this summary of the main features of the planned reform.
Luxembourg government releases draft DAC7 bill
The Luxembourg government recently released the draft bill to transpose DAC 7 (Automatic Exchange of Information for Digital Platform Operators) into domestic law by 31 December 2022. The text still has to go through the legislative process to be formally voted and to enter into force, but the reporting obligations are proposed to take effect as of 1 January 2023 and the information to be reported to the Luxembourg Tax Authorities by 31 January 2024. Given the substantial amount of information that may have to be reported and the increased compliance requirements in terms of tax transparency, taxpayers should act now to assess whether they have activities that fall within the scope of DAC 7 and, if so, to begin to prepare for their new obligations. Read more in this PwC news item.
Madagascar joins multilateral Convention to tackle tax evasion and avoidance
As reported above, Madagascar has signed the multilateral Convention on Mutual Administrative Assistance in Tax Matters, bringing to 145 the total number of jurisdictions that participate in the Convention.
Saudi Arabia: Proposed amendments to the RETT Implementing Regulations
The Zakat, Tax and Customs Authority (ZATCA) has proposed amendments (available only in Arabic) to certain Articles of the Real Estate Transaction Tax (“RETT”) Implementing Regulations. Read more in this PwC tax alert.
New Dutch Transfer Pricing Decree
On 1 July 2022, the Dutch Ministry of Finance published a new transfer pricing decree replacing both the prior version from 2018 and also the 2014 decree covering questions and answers on financial services companies, so called financial intermediaries (‘Dienstverleningslichamen’ or DVLs). Read more in this PwC tax news alert.
EU – New Zealand Trade Agreement: Unlocking sustainable economic growth
As reported above, the EU and New Zealand have concluded negotiations for a Trade Agreement, which is set to open significant economic opportunities for companies and consumers on both sides. Read more in this press release.
Tax Synopsis - June 2022
This edition includes: 1) VAT: Zero-rating the supply of “arranging of international transport”; 2) Is a “verification” by SARS an “audit”? and 3) SARS watch.
New rules regarding withholding tax on dividends to foreign investors
The Swedish Ministry of Finance recently issued a draft referral to the Council of Legislation (Lagrådet) for consultation on the proposed new rules regarding withholding tax on dividends, replacing the current rules in the Coupon Tax Act (Kupongskattelagen). This PwC tax blog highlights the major changes and when they are coming into force.
For the latest updates on current topics, see this PwC Switzerland Insights page.
Taiwan Tax Update - June 2022
In this issue: 1) Legislative Yuan announced extension of “Special Act for Prevention of COVID-19 and Introduction of Economic Stimulus Package” and associated special budget implementation deadline to 30 June 2023; 2) Legislative Yuan passed third reading of amendment to Business Mergers and Acquisitions Act on 24 May 2022.
Revenue code update
In this issue: 1) Flat rate of personal income tax for qualified expatriates working in target activities; 2) VAT exemptions; 3) VAT-exempt businesses eligible to be registered for VAT; 4) Purchase of bio-degradable plastic products; and 5) Tax support for investment in target companies using technology as the main basis of the business.
Withholding tax - extension of deadline for reduced rates and new rates for certain securities
A recent Presidential Decision has once again extended the temporarily reduced withholding tax rates applied in accordance with Temporary Article 6 to 31 December 2022. In addition, for some securities new withholding tax rates have been determined. Read more in this PwC alert.
Policy on Demand series
- Week in Review
In this episode from 30 June, Pat Brown shares his insights on why government officials are bullish on the prospects for Pillars 1 & 2 and what to expect in the coming week. He also answers the question that he received most this week: Where are we with respect to reconciliation and the OECD project?
Tax Readiness: Unlock value through global indirect and US state tax reporting
Join our specialists on 27 July at 7pm as they discuss how companies are dealing with more sources of data in real-time at a granular level and the operational and compliance challenges for both direct and indirect tax departments. We will focus on state and local income tax, sales and use tax, and global VAT compliance strategies and benefits. Register here.
Tax Readiness: Emerging trends in the Metaverse
The Metaverse is profoundly changing how businesses and consumers interact with products, services and each other. Register here to join us on Thursday 21 July at 7pm as we discuss how companies can begin to operate in this new three-dimensional digital world they need to understand and manage the tax consequences.
Tax Readiness: Q2 financial reporting considerations
On Wednesday 22 June, our Tax Accounting Services (TAS) specialists took a deep dive into relevant tax accounting matters and recent tax developments. Register here to view a recording.
Second quarter 2022 state and local tax developments
This publication presents a brief summary of significant SALT Insights published this quarter along with links to PwC Insights that provide analysis and observations.
Tax Readiness: Breaking through reporting disruption with a more sustainable strategy
The rapidly changing tax and business landscape requires companies to build a more sustainable data and reporting strategy that addresses both global transparency and digitization trends. Watch the recording from 29 June where our panel of specialists discussed practical steps for adapting to change and preparing for the future.
You can sign up for Tax Alerts issued by the US to be emailed to you. Subscribe using the link on this page and a back catalogue of previous webcasts and other resources are available on our US tax reform hub here.