Transfer Pricing

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

A collection of the brief insights throughout January 2024 of the type provided on an ad hoc basis in our Latest digital tax byte update.

In this edition, we cover the European Commission's last minute publication of some Frequently Asked Questions before the commencement of many Member State Pillar Two regimes following the minimum tax Directive (and action against those not having yet adopted), a failed challenge to the EU's Directive on this before the Court of Justice and revised estimates of the impact coming from the OECD. We also note the European Commission's announcement of the coming into force of new cross-border VAT reporting measures and the extension of the deadline in Germany for complying with various requirements of the rules implementing DAC7 on reporting by digital platforms (plus action from the European Commission on Germany and Poland for failure to communicate implementation). India has also issues the third set of guidelines on its 1% e-commerce Withholding Tax. The Australian Tax Office has published an updated draft ruling on software taxation.

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

On 15 December 2023, the General Court of the EU rendered its judgment in Fugro NV vs Council regarding the action for annulment brought by the company against the Pillar Two Directive (T-143/23). The Court decided that the company does not have legal standing to challenge the Directive. As a result, the action was rejected, being considered inadmissible, and there was also no need for the Court to adjudicate on the applications to intervene made by the Kingdom of the Netherlands and other parties.

The IRS Office of Chief Counsel on December 29, 2023 issued long-awaited guidance on the effects of group membership on financial transactions under Section 482. The guidance was issued in the form of a generic legal advice memorandum (GLAM), AM 2023-008 , titled “Effect of Group Membership on Financial Transactions under Section 482 and Treas. Reg. § 1.482-2(a).” The GLAM examines the application of the 482 regulations applicable to intercompany loans and other areas of the 482 regulations, including realistic alternatives and passive association, in the context of intercompany lending. Applying these principles, the GLAM concludes that the IRS may consider group membership in determining the arm’s length rate of interest for intercompany loans based on implicit financial support expected from another group member.

A collection of the brief insights throughout December 2023 of the type provided on an ad hoc basis in our Latest digital tax byte update.

In this edition, we cover Colombia's proposed significant economic presence measures and a provisional EU deal on employment status for digital platform workers. Countries have agreed a March/June 2024 timeframe for Pillar One Amount A materials as well as further Administrative Guidance on Pillar Two GloBE rules and we've sent a reminder about our Pillar Two tracker. New Zealand has published guidance on its forthcoming digital platform operator reporting rules and Japan is set to introduce consumption tax obligations on B2C type digital service platforms.

What happened?
France’s Finance Bill for 2024, adopted on December 16, through article 22, introduces four measures reinforcing the French tax administration’s control of transfer pricing policies applied by multinational groups operating in France:
 

• Lowering of the thresholds for Master File/Local File requirements, now capturing a wider range of French subsidiaries of middle-sized groups. 
• Higher penalties for missing or incomplete transfer pricing documentation.
• Shifting to the taxpayer the opposability and burden-of-proof rules for transfer pricing documentation and related reassessments. 
• Adoption of the OECD’s Hard-to-Value Intangibles (HTVI) ex post control approach, combined with an extension of statute of limitations to six years for transfers of HTVIs.

In this TP Talks episode, Kristina Novak (Principal in PwC’s US National Tax Services Transfer Pricing Practice), Jessica Yin (Transfer Pricing Partner, PwC Shanghai), Rong Zhen (Corporate Tax and Forex Partner, PwC Shanghai), and Nancy Chen (Transfer Pricing Senior Manager, PwC Shanghai) discuss why many MNCs operating in China have been more attentive to year-end transfer pricing adjustments (TPAs), what TPAs Chinese subsidiaries might need to undertake, the challenges cross-border TPAs present in China, and options available for MNCs to implement year-end adjustments. The speakers also address indirect tax implications for upward TPAs, and how taxpayers can respond to a potential inquiry.

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

The OECD Secretariat published the latest set of Administrative Guidance on the Global Anti-Base Erosion Model Rules (GloBE rules) of Pillar Two on 18 December 2023 intended to clarify the operation of the GloBE rules. This is the third set of administrative guidance, and along with the guidance released in February and July 2023 it will be incorporated into a revised version of the GloBE Commentary , which, according to the OECD, will be released in 2024. This latest release is the final set of guidance supplementing and clarifying the Pillar Two rules before they come into effect in many countries from 1 January 2024. Further guidance is expected in 2024 across a range of issues.

The Court of the Justice of the European Union (“CJEU”) has rendered its judgment in the case C-475/21 P regarding the appeal brought by Amazon group companies and Luxembourg against the judgment of the General Court of the European Union (“GC”) of 12 May 2021 (T-816/17 and T-318/18). In essence, the CJEU upheld the GC judgment despite errors in the GC’s reasoning. 

A collection of the brief insights throughout November 2023 of the type provided on an ad hoc basis in our Latest digital tax byte update.

In this edition, we cover the EU Parliament's ECON committee recommendations including deferral of the VAT in the Digital Age package, while the Netherlands has postponed the penalty regime for its VAT e-commerce One Stop Shop, Norway has expanded the requirements for its VAT e-commerce regime and Brazil has progressed the gradual overhaul of its indirect tax system with the introduction of a two tier VAT regime. We also note a statement by 48 countries of their intention to implement the OECD's crypto asset reporting framework (CARF) and Italy's issuance of a Circular on taxation of crypto assets, including digital currency. The UK has incorporated its guidance on digital platform operator reporting into the HMRC manual on information exchange while Canada has confirmed in its fall economic statement the intention to go ahead with introducing a digital services tax..

Welcome to our final 2023 update on recent developments in international and treasury tax of interest to multinationals operating in the UK. We will return in 2024!

On 5 December 2023, the Grand Chamber of the Court of the Justice of the European Union rendered its judgment in the joined cases C-451/21 P and C-454/21 P regarding the appeals brought by Luxembourg and the Engie group companies against the judgments of the General Court of the European Union of 12 May 2021 (T-516/18 and T-525/18) that previously confirmed the existence of State aid under article 107 TFEU. The CJEU ruled that the European Commission erred in its State aid analysis of the tax rulings granted to the Engie group.

The OECD on 11 October 2023 released a package of guidance in relation to Amount A of Pillar One: the text of a consensus-based Multilateral Convention (MLC) and accompanying explanatory statement, an Understanding on the Application of Certainty for Amount A of Pillar One (UAC), and an update to the economic impact assessment of Pillar One. Notably absent from the package is any further guidance on Amount B (i.e., transfer pricing for routine distribution and marketing transactions), which the Inclusive Framework (IF) continues to work on, post-consultation, to provide final guidance by the early part of 2024.

In this TP Talks episode, Kristina Novak (Principal in PwC’s US National Tax Services Transfer Pricing Practice), David Swenson (Consultant in PwC’s US National Tax Services Transfer Pricing Practice), and Mark Thomas (Principal in PwC’s US National Tax Services Transfer Pricing Practice) discuss the current tax and transfer pricing controversy landscape, including the current audit environment, the impact of global tax reform, the IRS’s recently announced audit initiative, and more.

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

A collection of the brief insights throughout October 2023 of the type provided on an ad hoc basis in our Latest digital tax byte update. In this edition, we cover the release by the OECD of a package of materials for Amount A of Pillar One and proposals from the UN tax committee on other aspects of the digitalisation and globalisation of the economy. We also note the update of the OECD's FAQs on digital platform reporting, the adoption of the EU rules (DAC8) on reporting of crypto asset and e-money transactions and proposed new US digital asset reporting regulations. We comment too on a Kenya notice about starting enforcement proceedings in relation to those offering registerable digital services. Japan has clarified the definition of Importer of Record under new customs laws and there is an update on the US state of New Mexico's digital advertising tax.

The Hungarian Ministry of Finance published on 18 October the draft legislation for public consultation to implement EU Directive 2022/2523/OECD Model Rules on the global minimum tax (GloBE). The draft legislation closely aligns with the OECD Model Rules, Commentary, and Administrative Guidance published thus far.

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

The European Finance Ministers, sitting as the Council of the EU, approved the recommendations of the EU Code of Conduct Group in relation to the updated list of non-cooperative jurisdictions. Three jurisdictions, Antigua and Barbuda, Belize, and Seychelles were all added to Annex I (the so-called EU blacklist). British Virgin Islands, Costa Rica, and Marshall Islands were removed from the previous Annex I list (published in February 2023). 

The Council of the EU recently adopted a Directive amending the EU rules on administrative cooperation in the area of taxation (DAC8). The amendments primarily pertain to the reporting and automatic exchange of information on certain revenues from crypto asset transactions and the provision of advance tax rulings for the wealthiest (high net worth) individuals. The Directive aims to strengthen the existing legislative framework by broadening the scope for registration and reporting obligations and improving overall administrative cooperation between tax administrations.

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

On 27 September 2023, the General Court of the European Union (GCEU) delivered its judgments upholding several appeals brought by the Kingdom of Spain and several companies against the European Commission’s (EC) decision declaring the Spanish tax scheme on the deduction for indirect acquisitions of shareholdings in foreign companies to be unlawful State aid. As a result, the GCEU annulled the EC’s decision.

The European Commission published a new package of proposals on 12 September to put forward: i) a single set of tax rules for doing business in the EU (Business in Europe: Framework to Income Taxation (BEFIT)); ii) harmonised transfer pricing rules within the EU ( Council Directive on Transfer Pricing); and iii) a Head-Office Tax system for micro, small, and medium-sized enterprises (SMEs) (the HOT proposal).

The enactment in the UK of the Spring Finance Bill 2023 - which received royal assent in July to become Finance (No.2) Act 2023 (the Act) - brought to a formal conclusion a more than two-year process to update the UK’s transfer pricing documentation requirements, which started in March 2021 with the release of a public consultation document. In response, various proposals have been put forward; some have been included in the new legislation, and others have been put on hold or noted for further consultation in the near future.

The Brazilian Government issued Provisional Measure (PM) 1152/22 on December 29, 2022, seeking alignment with the arm’s-length principle (ALP) in accordance with the OECD Transfer Pricing Guidelines. The PM was amended and ratified by the Congress, a process which was concluded on May 10. Afterwards, the PM was converted into Law 14,596, published on June 15.

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

On 17 July 2023, the OECD/G20 Inclusive Framework on BEPS (IF) released four important documents related to Pillar One and Pillar Two and a Progress Report to the G20 Finance Ministers and Central Bank Governors for their meeting on 17-18 July. These publications follow last week’s IF plenary meeting and resulting “Outcome
Statement,” which provided an update on the status and timeline for implementing Amount A and B of Pillar One and the Pillar Two Subject-to-Tax Rule (STTR).

On 19 June 2023, the UK government launched an eight week consultation on possible changes to three of the most fundamental aspects of the UK’s taxation of multinational enterprises (MNEs):

• Transfer pricing - the basis on which profits are divided between jurisdictions as a result of transactions between two or more legal entities within the same MNE.
• Permanent establishments - the attribution of part of the profits of a single legal entity to two or more jurisdictions.
• Diverted Profits Tax - a targeted measure introduced in 2015 to counter what HMRC considers to be “contrived arrangements designed to avoid profits being taxed in the UK”.

The specific issues under consideration in each of these categories is set out below.

On 12 July 2023, the OECD published an Outcome Statement that provides an update on the status and timeline for implementing the two Pillars of the project addressing the tax challenges arising from the digitalisation of the economy. The Outcome Statement has been signed by 138 of the 143 members of the Inclusive Framework (IF) - those who haven’t signed it are Belarus, Canada, Pakistan, the Russian Federation and Sri Lanka. While the Outcome Statement notes progress made on both pillars, it also acknowledges that differences remain between countries. Importantly, the timeline for releasing a multilateral convention (MLC) for Amount A of Pillar One has been delayed to the second half of 2023 (with a goal of it entering into force during 2025).

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

A collection of the brief insights throughout June 2023 of the type provided on an ad hoc basis in our Latest digital tax byte update. In this edition, we provide access to a new African indirect tax guide with useful information across 43 countries including tax measures directed at the digital economy and a special report by the New Zealand revenue authorities on the VAT/GST full liability model for platforms. We note that Israel has dropped VAT plans for B2C digital services and Jersey has published overseas retailers' GST guidance notes. France has published a revised doctrine/guidance on its Digital Services Tax, Hungary has proposed changes to its Payment Services Tax, Kenya's President has approved the Finance Bill containing the new Digital Asset Tax and Canada has passed its law on digital platform reporting. There are relevant state tax updates for Maryland and Georgia. The IASB has also issued an Exposure Draft on deferred tax accounting for Pillar 2 by SMEs.

In this TP Talks episode, Ugo Cannavale (Transfer Pricing Leader for PwC Italy), Andrew Hwang (Americas Operational Transfer Pricing Leader, PwC US), and Antonino De Benedictis (EMEA Operational Transfer Pricing Leader, PwC UK) discuss why Operational Transfer Pricing (OTP) is increasingly becoming a priority for in-house tax and finance professionals, the value and benefits OTP offers the broader finance function and C-Suite, scalability of OTP to accommodate small to large scale transformations, and practical considerations for implementing OTP.

In this TP Talks Special Edition podcast, David Ledure (Transfer Pricing Partner, PwC Belgium), Martin Cazaux (Transfer Pricing Principal, PwC US), and Tony Koivula (Transfer Pricing Manager, PwC Finland) discuss debt capacity and transfer pricing, focusing on the US’s and EU’s history of looking at debt capacity, the varying approaches to analyzing debt capacity, Australia’s draft legislation on proposed new interest limitation rules, debt serviceability, and reassessment of debt capacity and double taxation.

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

The Netherlands legislative proposal to transpose Pillar Two into the Dutch company tax system, titled ‘Minimum Tax Act 2024 (Pillar Two),’ was submitted to the Dutch Parliament on 31 May. The Netherlands is the first country within the European Union to release its domestic Pillar Two legislation. By doing so, the Netherlands takes the next step in implementing Pillar Two, effective 31 December 2023.

In this webcast held on Thursday 22 June, our panel provided an update on Pillar Two implementation globally, and proposed some practical steps organisations can take to overcome some of the key challenges they are facing. They also walked through the technology solutions being developed for compliance and reporting.

In this TP Talks episode, Ugo Cannavale (Transfer Pricing Leader for PwC Italy), Michela Chin (Transfer Pricing leader for PwC Brazil), and Matias Pedevilla (Transfer Pricing Principal with PwC US and global leader of PwC's Global Coordinated Documentation service) discuss the overhaul of Brazil’s transfer pricing system, focusing on the main changes that have been introduced, the implications of the pending rules for multinationals, and what companies should be doing now.

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

The Acting Director of IRS Treaty and Transfer Pricing Operations (TTPO) on April 25 released a memorandum titled “Interim Guidance on Review and Acceptance of Advance Pricing Agreement (APA) Submissions,” which includes an attachment setting forth provisions that will be incorporated into the IRS Internal Revenue Manual by 2025 (collectively, the Guidance).

The Guidance outlines procedures and criteria for TTPO personnel — including Advance Pricing and Mutual Agreement (APMA) personnel — to follow in evaluating whether a proposed APA should be accepted into the APA process or in another TTPO workstream.

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

Trusts can have filing and tax payment obligations under the Pillar Two rules, and whether groups are in scope is determined on the basis of a deemed accounting consolidation, which can be difficult to apply to investments owned by trusts.

This TP Talks episode is part 3 of a three-part series on Pillar Two, where Ugo Cannavale (Transfer Pricing Leader for PwC Italy), Kartikeya Singh (Transfer Pricing Principal in PwC’s US National Tax Services practice), and Giorgia Maffini (Transfer Pricing and Tax Policy Director with PwC UK) discuss the latest Pillar Two developments, country level developments, and what companies need to prioritize from a transfer pricing perspective.

On this webcast from Tuesday 25 April, our tax policy specialists reviewed unresolved technical issues, as well as the administrative guidance to date. They also discussed how countries are implementing the rules, and how businesses can deal with what we know and don’t know. In the latter category, one big question is what is being built into the regime for increasing tax certainty during the transition and beyond?

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

On 23 March 2023 as set out in the Spring Finance Bill, updated draft UK legislation was released for an income inclusion rule (“IIR”) and new draft legislation for a domestic minimum top-up tax, as part of the latest installment of the UK’s implementation of the OECD’s Pillar Two project.  

The Australian government has released draft legislation to require certain large multinationals (known as Country by Country (CbC) reporting parent entities) to publicly disclose the information in their CbC reports broken down by jurisdiction, as well as publicly disclose other new tax and financial information.

I am pleased to welcome you to the European Business Tax Forum’s (EBTF) fourth annual study of the Total Tax Contribution (TTC) of the largest multinational companies (MNCs) headquartered in the EU, EFTA and the UK.

The IRS Advance Pricing and Mutual Agreement Program (APMA) on March 27 issued its 24th Annual Statutory Report (the report) concerning Advance Pricing Agreements (APAs). The Report observes that during calendar year 2022, APMA completed substantially fewer APAs than in 2021, with a slight increase in processing times. A total of 77 APAs were executed in 2022 as compared to 124 APAs executed in 2021. For APAs completed in 2022, the average processing time was 42.0 months, a slight increase from the prior-year average of 39.2 months.  

The United Kingdom released draft legislation on March 23, containing an income inclusion rule (IIR) and new draft legislation for a Domestic Minimum Top-up Tax, as part of the latest installment of the UK’s implementation of the OECD’s Pillar Two project. Both the UK IIR (‘Multinational Top-up Tax’) and the UK domestic minimum tax apply for accounting periods beginning on or after December 31, 2023.

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

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

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.

At the end of December 2022, the Italian government introduced in the Italian Income Tax Act (IITA) law an investment management exemption (IME), that provides a safe harbour aimed at certainty that foreign investment funds (and controlled entities) will not trigger a permanent establishment (PE) due to activities in Italy of a fund’s (senior) asset manager.

The UK’s Chancellor of the Exchequer, Jeremy Hunt, delivered his Spring Budget 2023 on 15 March 2023. Most significantly from an international perspective, Pillar Two Policy Paper was amongst the package of documents that were published on Budget Day. Whilst light on new details, the paper is a reminder that UK implementation of Pillar Two is rapidly approaching. We now eagerly await the publication of the Finance Bill on 23 March, which we expect to include draft legislation for an Income Inclusion Rule (IIR) and Qualified Domestic Minimum Top-up Tax (QDMTT), both of which are scheduled to be introduced in the UK for accounting periods beginning on or after 31 December 2023.

A collection of the brief insights throughout February 2023 of the type provided on an ad hoc basis in our Latest digital tax byte update.

This edition includes draft update ESS regulations for Kenya, guidance on VAT reporting for e-commerce in the UAE and pre-registration procedures for those without a presence in Egypt. There are reminders of the deadline for feedback on DAC7 implementing regulations and registering for our webcast on DAC7 more widely while New Zealand's political parties argue about making platform responsible for GST of sellers. UAE plans ahead for pre-registering digital businesses for the incoming corporate tax while Singapore and Hong Kong plan to implement the Pillar 2 GloBE rules and a domestic top-up tax for businesses’ financial years starting from 1 January 2025. South Africa noted the imminent publication of draft legislation for consultation and Bermuda flagged the second half of 2023 for decisions on Pillar 2. There are also updates in the form of new Washington State sourcing rules and a Massachusetts State nexus decision. We also consider the sales and use tax implications of metaverse transactions.

Pillar Two brings unprecedented changes to the global tax system, impacting large multinational companies that operate under the reformed international tax
framework. We recently published our Pillar Two Data Input Catalog, which highlights the urgency for taxpayers to start preparing for Pillar Two, outlining anticipated divergences in Pillar Two rules, calculation complexities, and considerations in developing an extensive data strategy.

In this TP Talks episode, new podcast host Ugo Cannavale (Transfer Pricing Leader, PwC Italy) is joined by Monica Cohen-Dumani (International Tax Services Partner, PwC Switzerland), and Brad Slattery (Global VCT Transfer Pricing Leader, PwC US) to discuss the role ESG and transparency play in driving value in operating model transformation and how transfer pricing plays a key part. The speakers focus on the EU Corporate Sustainability Directive and how tax and transfer pricing is tied into the Directive and ESG overall, the value chain implications as a result of increased transparency, and considerations around the procurement function. The speakers finish with key takeaways.

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

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

On 14 February 2023, the EU’s ECOFIN Council approved the latest list of non-cooperative jurisdictions for tax purposes. Four jurisdictions, Russia, British Virgin Islands, Costa Rica and Marshall Islands were all added to Annex I (the so-called blacklist).

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

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

HMRC’s statistics report across a variety of  areas, including TP enquiries, Advance Pricing Agreements (APAs), Mutual Agreement Procedures (MAPs), Advance Thin Capitalisation Agreements (ATCAs), DPT investigations and Profit Diversion Compliance Facility cases (PDCFs) highlighting the additional yield, number of cases and length of time to resolve cases, across each area. 

The OECD released Administrative Guidance (‘guidance’) on the Pillar Two Global Anti-Base Erosion Rules (GloBE Rules) on 2 February. The guidance was approved by the OECD/G20 Inclusive Framework on BEPS (IF) and is therefore not subject to public consultation. The guidance primarily focuses on (some but not all) previously unaddressed areas under the GloBE Rules.

A collection of the brief insights throughout January 2023 of the type provided on an ad hoc basis in our Latest digital tax byte update.

This edition includes measures taken just prior to the end of December 2022 by France, Germany, Spain (with later Parliamentary discussion), Belgium, Finland, Croatia (with subsequent consultation on some details) and Slovenia on DAC7 in relation to reporting by digital platform operators; the OECD has meanwhile published a set of FAQs on its Model Rules for such operators. The European Commission has published for consultation a draft Implementing Regulation for determining the DAC7 equivalence of similar regimes in non-EU countries and also sent a notice to non-notifying Member States. Tanzania has also published a notice on registration by non-resident electronic service providers. There has been some further progress in the challenges to Maryland's digital advertising tax.

The European Directive that will oblige those multinational groups and entities whose revenues exceed 750 million euros to make public relevant tax and financial information aggregated on a country-by-country basis on their website has been transposed into Spanish law.

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

The Brazilian Government on December 29 issued Provisional Measure (MP) 1.152/22 seeking alignment with the arm’s length principle (ALP) in accordance with the OECD Transfer Pricing Guidelines. The MP is effective immediately with the force of federal law. In order to remain effective, Congress must ratify the MP within 60 days from the date of publication (discounting Congressional recess, the initial deadline is April 2023), and convert it into ordinary law. This term may be extended for an additional period of 60 days (i.e., by June 2023). Congressional amendments to the provisions of the MP may be proposed by February 3, 2023.

A draft Law prepared by the Portuguese Government, aiming at implementing the EU Directive on the mandatory disclosure and exchange of cross-border tax arrangements, also known as DAC6, is currently under public consultation.

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

In the last few years, factors including the COVID pandemic, the Ukraine conflict, general economic volatility and significant changes in the local and international tax environment, have meant that there is increased focus on risk management, with increasingly complex financing and hedging strategies being adopted.

A collection of the brief insights throughout December 2022 of the type provided on an ad hoc basis in our Latest digital tax byte update.

This edition includes information on the OECD's release of a consultation document on a multilateral tax convention provision on removing DSTs and other unilateral measures and an OECD webinar on Amount B of Pillar 1. It also comments on the latest developments in the cases challenging Maryland's digital advertising tax and the USTR concerns about Canada's proposed DST. On Pillar 2, it also covers EU Member States finally agreeing on an implementation Directive, as well as OECD consultations on the GloBE information return and on tax certainty plus implementation guidance on safe harbours and relief from penalties in the early years. ATAF has published its suggested approach to countries introducing their own minimum taxes. We comment too on the publication by the European Commission of proposals for its VAT in the Digital Age initiative and on the Bulgarian and Czech Republic's implementation of DAC7 rules on digital platform operators.

The draft MLC provisions focus on Digital Services Taxes (DSTs) and other Relevant Similar Measures and they reflect the commitments with respect to the removal of all existing DSTs and other relevant similar measures and the standstill of such future measures. The consultation document includes two articles: one detailing that DSTs will be withdrawn under Pillar One and the other describing the three characteristics of a DST-like tax which should be withdrawn.

Unlike the other Pillar Two releases on Tax Certainty and the GloBE Information Return, the rules on safe harbours and penalty relief are not subject to a public consultation process. This release takes the form of an Inclusive Framework approved publication.

The GloBE Model Rules require MNE groups to file a standardised GloBE information return (GIR) in each relevant jurisdiction that has introduced the GloBE rules. The public consultation document on the GIR indicates that the ultimate objective of the GIR is to develop a consistent and transparent set of standards for information collection that preserves consistency and certainty of outcomes for MNE groups, while avoiding a significant increase in taxpayer and tax administrations’ compliance burdens.

Given the complexity of the Pillar Two rules and the differences that could arise in the interpretation or application of the rules among jurisdictions, the OECD started working on exploring mechanisms to provide further tax certainty with respect to the GloBE rules. This public consultation on Pillar Two – Tax Certainty for the GloBE Rules seeks input from stakeholders with respect to the scenarios where differences in interpretation or application of the GloBE rules between two or more jurisdictions may arise.

On 15 December, the EU Council formally adopted the EU minimum tax Directive by written procedure. The written procedure ended with this unanimous agreement, notwithstanding the fact that Hungary abstained from the final vote, and Sweden made a written observation on a specific provision of the Directive. The Directive will enter into force on the day following its publication in the Official Journal of the European Union. Member States shall transpose the Directive into their domestic law by 31 December 2023. All Member States voted in favour of the accompanying Council Statement. This outcome follows a week of speculation on the deal after Poland reserved its support until yesterday’s EU Council meeting. 

The European Parliament’s recommendations to the EU Commission on a fair and simple taxation strategy included further categories of income and assets, such as crypto assets, to include in the scope of automatic exchange of information. The seventh potential update published by the European Commision to the EU’s Directive on Administrative Cooperation on Tax (DAC), which would make this DAC8, is to address certain deficiencies that have been identified in the scope of the automatic exchange of information, including to set minimum levels of financial penalties with respect to serious non-compliance.

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

The EU’s public country-by-country reporting (CbCR) Directive, published in December 2021, is currently being transposed into individual Member States’ legislation. The latest date for this to apply is for accounting periods beginning on or after 22 June 2024
(for a December year, publication would be needed by 31 December 2026 for the 31 December 2025 year-end). However, local countries can apply earlier and determine their own penalty regime. The Romanian Official Gazette has formally published the regulations to implement the Directive, effective for accounting periods beginning on or after 1 January 2023 (i.e. publish by 31 December 2024).  This may accelerate the requirement to disclose country-by-country data for your EU-wide operations and countries in the EU black/grey list. 

The Romanian Government recently formally introduced the EU public country-by-country (CbC) requirements, transposing into the national legislation the provisions of EU Directive 2021/2101.
 

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

In this TP Talks episode, David Ernick (Transfer Pricing Principal in PwC’s US National Tax Services practice) is joined by Stephan Rasch (PwC Transfer Pricing Partner based in Munich) and Michael Shaw (PwC Transfer Pricing and Tax Disputes Director based in London) to discuss transfer pricing controversy in the EU and UK, touching on the audit environment, APAs, litigation trends, and more.

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

A collection of the brief insights throughout October 2022 of the type provided on an ad hoc basis in our Latest digital tax byte update.

This edition includes the publication of draft Pillar 2 legislation in the Netherlands, an update on various VAT issues to consider in the Gulf Cooperation Council states and the release by the OECD of a Crypto Asset Reporting Framework (and update to CRS for financial institutions). It also covers a ruling outlawing Maryland's state digital advertising tax, the likely implementation of the Danish media cultural contribution and Turkish investigations into cloud and software licensing services. The UK has published a technical consultation on its proposals for digital platform reporting.

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

What is Country by Country Reporting (CbCR)?

The Organisation for Economic Co-operation and Development (OECD) adopted a form of CbCR as a high level risk assessment tool for tax administrations, as part of its project to strengthen international standards on Base Erosion and Profit Shifting (BEPS). It is applied in the UK to accounting periods commencing on or after 1 January 2016.

A collection of the brief insights throughout July 2022 of the type provided on an ad hoc basis in our Latest digital tax byte update.

This edition includes an OECD consultation on consolidated Pillar 1 Amount A materials, UK draft legislation for implementing Pillar 2 and an update on Maryland's US Sales Tax rules. It also covers Indian guidelines on crypto assets and an insight into the global indirect treatment of non-fungible tokens (NFTs). There are updates too on Kenyan amended VAT treatment of various digital services, but its failure to sanction a rise the in DST rate. We also include draft legislation on transposing the EU's DAC 7 on platform reporting for Italy, Poland and Germany with an update on the UK's plans following consultation on implementing the OECD Model Rules in this area.

As part of 2022 tax reform, the Korean Ministry of Strategy and Finance (MOSF) recently announced the introduction of draft domestic legislation for a global minimum tax. Korea’s summary draft rules, released in Korean, correspond closely to the OECD’s Pillar Two Model Rules, which was led by the OECD / G20 and has been agreed upon by 141 countries in the Inclusive Framework. Detailed legislation is expected in December.

HMRC has released the first tranche of draft legislation to change the UK’s transfer pricing documentation rules.

For inclusion in Finance Bill 2022/23, the UK has released draft legislation to introduce the OECD’s Pillar Two Model Rules into UK law. The draft legislation includes an Income Inclusion Rule (IIR), to be known in the UK as the Multinational Top-up Tax, which will apply to accounting periods beginning on or after 31 December 2023.

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

The Cyprus Parliament on June 30 approved the long-awaited amendments to the Cyprus Income Tax Law and new Regulations to introduce Transfer Pricing (TP) 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. Specific penalties for non-compliance with the new obligations are now in place by an amendment to the Assessment and Collection of Taxes Law. The law amendments and Regulations are effective from the tax year 2022 onwards.

The Dutch Ministry of Finance published a transfer pricing decree on 1 July 2022,  replacing the prior version from 2018, but also retracting the prior guidance on the use of a spread for financial services companies, so-called financial intermediaries (‘Dienstverleningslichamen’ or DVLs), in a questions and answers decree from 2014.

The Dutch Ministry of Finance published a transfer pricing decree on 1 July 2022,  replacing the prior version from 2018, but also retracting the prior guidance on the use of a spread for financial services companies, so-called financial intermediaries (‘Dienstverleningslichamen’ or DVLs), in a questions and answers decree from 2014.

The European Commission has launched a public consultation on measures to address the role of “enablers that facilitate tax evasion and aggressive tax planning” in the European Union (Securing the Activity Framework of Enablers - SAFE).

The Australian independent Parliamentary Budget Office (PBO) has released its estimates of the budget impacts of the incoming Australian Labor Party (ALP) Government’s proposed tax policy measures. This 2022 Election Commitments Report is prepared based on the election commitments of the new government. The report is not formal government policy, much less legislation. However, the report is intended to ‘hold parties to account’ regarding their election commitments.

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

The OECD released a Progress Report on Amount A of Pillar One on 11 July 2022. The OECD is seeking public comments by 19 August 2022. This alert provides a short overview of the report and some initial observations.

The German Ministry of Finance recently issued a circular to extend the ‘simplified withholding tax procedure’ regarding German IP nexus rules to payments received before 1 July 2023.

A review of the tax disclosures in the FTSE100 reveals an increase in tax transparency over the last 8 years, with some leaders dedicating time and energy to developing voluntary disclosures to inform the debate on tax transparency and improve understanding.

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

A collection of the brief insights throughout June 2022 of the type provided on an ad hoc basis in our Latest digital tax byte update. This edition includes an insight into Kenya's new ESS rules and a publication on AsiaPac's ESS and other indirect tax digital development path as well as some new VAT incentives in Thailand. An overarching Pillar 1 consultation may be announced in early July while the UK has confirmed that its Pillar 2 rules will apply to accounting periods beginning on or after 31 December 2023. Nepal and Tanzania are the latest countries to announce the potential introduction of digital services taxes. We also cover India Guidelines on application of WHT on transfer of crypto assets.

On 16 June 2022, the Court of Justice of the European Union (CJEU) rendered its judgment in the case C-572/20 (ACC Silicones) finding that German requirements for withholding tax refund claimed by non-resident corporate taxpayers with a portfolio shareholding are in breach of EU law.

Today (17 June) the EU Finance Ministers met to agree a new compromise text covering the introduction of a minimum taxation proposal by the EU Member States. No political  agreement to the text has been reached, on the basis that unanimous approval for the  proposal was not forthcoming. According to the French Finance Minister Bruno le Maire, and agreed by Poland, who until today remained the only country to oppose the proposal, all conditions were met to reach unanimous support. However, as was widely  anticipated in the days before the meeting took place, Hungary declined to approve the  compromise text, thereby revoking its previous support for the proposal.

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

A collection of the brief insights throughout May 2022 of the type provided on an ad hoc basis in our Latest digital tax byte update.

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. This edition includes an OECD announcement on a delay to Pillar One, our latest Africa tax report that includes digital economy insights and a proposed 6% streaming levy in Denmark..There is also insight into the UK's proposal to introduce platform reporting rules with effect from 1 January 2024.

The General Court of the EU has dismissed both the UK and ITV plc’s applications made in respect of the European Commission’s UK Controlled Foreign Company State aid decision.

The OECD released the public consultation documents on the Amount A - Tax Certainty Framework for Amount A and Tax Certainty for Issues Related to Amount A on 27 May 2022.

Watch the replay from 31 May where our specialists discuss the importance of ESG positioning in corporate strategy, buy-side due diligence, sell-side divestiture planning, and credits & incentives. 

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

Portugal introduced changes to its Advance Pricing Agreement (APA) regime and transfer pricing (TP) documentation requirements on November 26, 2021. Following these amendments, TP documentation must be prepared by July 15 of the year following the tax calendar year (or the 15th day of the 7th month of the year following the taxpayer’s fiscal year-end). Most large taxpayers also are obliged to deliver the TP documentation file to the Portuguese Tax Authorities.

Brazil’s Ministry of the Economy reaffirmed on April 12 its commitment to ‘fully converge’ its transfer pricing (TP) rules to the arm’s-length standard (ALS), bringing the rules in line with the OECD TP Guidelines. Specific draft legislation has not yet been released. This announcement is of increased significance to taxpayers in light of the recently adopted final regulations (TD 9959) (the ‘Final Regulations’) by the US Department of Treasury (Treasury) and Internal Revenue Service (IRS) addressing various aspects of the US foreign tax credit (FTC) regime, as well as BEPS 2.0 developments.

The statistics report across a variety of transfer pricing areas, including enquiries, Advance Pricing Agreements (APAs), Mutual Agreement Procedures (MAPs), Advance Thin Capitalisation Agreements (ATCAs), DPT investigations and Profit Diversion Compliance Facility cases (PDCFs) highlighting the additional yield, number of cases and length of time to resolve cases, across each area. A summary of the statistics and our view of these are set out below.

Watch the replay from 31 May where our specialists discuss the importance of ESG positioning in corporate strategy, buy-side due diligence, sell-side divestiture planning, and credits & incentives. 

Watch the replay from 4 May where our specialists discuss the controversy challenges companies are facing and ways they can minimize risk to their business operations. 

View the recording of our webcast where our global tax policy team and subject specialists discussed the latest guidance on global minimum tax (Pillar 2).

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

The OECD released the public consultation document on the Pillar One - Amount A: Extractive Exclusion on 14 April 2022. Comments on the consultation document are due by 29 April 2022. This alert provides a short overview of the proposed approach to the Extractives Exclusion and some initial observations.

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

A collection of the brief insights throughout March 2022 of the type provided on an ad hoc basis in our Latest digital tax byte update.

This edition includes publication of the Commentary on Pillar 2 GloBE Rules together with the status of attempts to implementation those rules across the EU and also in Switzerland. We focus too on the consultation on the Implementation Framework for the GloBE Rules and on a possible extension of the EU's blacklist criteria for non-cooperative jurisdictions regarding Pillar 2.

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

The IRS Advance Pricing and Mutual Agreement Program (APMA) on March 22 issued its 23rd Annual Statutory Report (the Report) concerning Advance Pricing Agreements (APAs). The Report observes that during calendar year 2021, APMA completed almost the same number of APAs as those completed in 2020, without significant increase in processing times. A total of 124 APAs were executed in 2021 as compared to 127 APAs executed in 2020. For APAs completed in 2021, the average processing time was 39.2 months, a slight increase from the prior year’s average of 38.5 months. 

On 4 April 2022, the OECD released draft Model Rules for domestic legislation on the scope of Amount A of Pillar One. Comments to the draft Model Rules are due by 20 April 2022. This alert provides a short overview of the draft Model Rules and some initial observations.

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

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

The OECD released Commentary and illustrative Examples to the Pillar Two Model Rules (Model Rules) on 14 March 2022. This alert includes several highlights of what is, and is not, in the Commentary, plus some initial observations.

EU Finance Ministers met on 15 March to debate and ultimately vote on a compromise text covering the introduction of a minimum taxation by the EU Member States. While there was broad support for the compromise text, it was not supported unanimously.

In this TP Talks episode, Horacio Peña (PwC’s Global Transfer Pricing Leader), Kartikeya Singh (Transfer Pricing Principal in PwC’s US National Tax practice), and Giorgia Maffini (Transfer Pricing and Tax Policy Director with PwC UK) discuss the OECD Pillar Two Model Rules, including an overview of the rules, some of the nuances and elements of complexity, and highlights the role of transfer pricing in the new system of Pillar Two taxation.

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

Finland has introduced a new amendment to the Tax Assessment Procedure Act which entered into force on 1 January  2022.

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

The Pescara Tax Court of First Instance recently ruled that a Luxembourg SICAV is comparable to an Italian investment fund and, therefore, is entitled to the refund of the full withholding tax suffered on the dividends received from Italian companies. 

n this Financial Transactions Transfer Pricing quarterly podcast, Bob Ritter (PwC’s US Financial Transactions Transfer Pricing leader) is joined by Laura Valestin (Partner in PwC’s National Tax practice in Washington DC, specializing in financial products), and Chad Clark (Director in PwC’s Financial Markets and Real Estate practice, based in Austin, TX) to discuss LIBOR and the final regulations released by the IRS and US Treasury that provide tax guidance with respect to alterations to debt instruments, derivative contracts, and other contracts that replace interbank offered rates with qualified replacement rates, or fallback replacement rate provisions. They also highlight changes from the proposed regulations and provide key considerations for companies.

On 4 February 2022, the OECD released draft Model Rules with respect to nexus and revenue sourcing under Amount A of Pillar One. Comments to the draft Model rules are due by 18 February 2022. This alert provides a short overview of the draft Model Rules and some initial observations. It should be noted that this is the first in a series of several sets of rules that the OECD is expected to release over the coming months, with very short comment periods, as part of a 'rolling consultation'.

Following the publication of Austria’s draft Transfer Pricing Guidelines (draft ATPG) in 2020, the Austrian Federal Ministry of Finance issued the final Austrian Transfer Pricing Guidelines (ATPG 2021 or Guidelines) in October 2021. The ATPG 2021 extensively revise the 2010 Transfer Pricing Guidelines (ATPG 2010) and aim to reflect the OECD BEPS project-related developments, latest jurisprudence, and administration practice in Austria.

This insight provides a comprehensive overview of the key changes in the final ATPG 2021 compared to the draft ATPG, as well as the ATPG 2010.

On 30 September 2021, the International Taxation Department of China’s State Taxation Administration (STA) released its “Questions and Answers on Anti-Tax Avoidance During Pandemic Prevention and Control” (the "Q&A") on its portal. This is the first time that the STA has provided, in written form, prescriptive instructions for tax authorities and MNEs when analyzing the impact of the COVID pandemic from a transfer pricing perspective.

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

The Cyprus Parliament recently passed two bills amending the Cyprus tax legislation, with the goal of strengthening the Cyprus tax framework in order to prevent abuse, evasion, and avoidance of tax. In addition, the Cyprus Tax Authority (CTA has announced an additional extension of the submission deadline for DAC6 reports (without penalties) to 31 January 2022. Cyprus also has several treaty updates.

In this episode, we feature an excerpt from PwC’s Global Transfer Pricing Conference, focusing on ESG factors as drivers of value creation and levers to manage risks, concentrating on supply chain/value chain analysis, tax transparency, intercompany financial transactions, and deals. The panelists include Ronan Finn (Ireland TP country leader and PwC’s global TP ESG leader), Jayde Thompson (Transfer Pricing partner – PwC Australia), Noor Sanders (Transfer Pricing partner – PwC Netherlands), and Shane McEvoy (Transfer Pricing partner – PwC US).

The Organisation for Economic Co-operation and Development (OECD) recently published the fourth annual peer review report of Base Erosion and Profit Shifting (BEPS) Action 13 – Country-by-Country (CbC) Reporting and the seventh batch of the Stage 2 peer review reports of Action 14 – Mutual Agreement Procedure (MAP) for Mainland China and Hong Kong SAR.

The peer review reports evaluate the progress made by jurisdictions of the OECD/G20 Inclusive Framework on BEPS (IF), including Mainland China and Hong Kong SAR, in implementing the BEPS Action 13 and Action 14. The reviews show positive results for Mainland China and Hong Kong SAR, which indicate both competent authorities’ continuous efforts and commitment to participate in global efforts to address BEPS issues.

A collection of the brief insights throughout January 2022 of the type provided on an ad hoc basis in our Latest digital tax byte update. This edition includes the publication of Nigeria's Finance Act 2021 with tis effective 6% Digital Service Tax (DST).and the announcement by the UAE of a Federal corporate tax with rates potentially tailored to the Pillar Two minimum tax regime. We've seen the launch of an EU consultation on digital VAT, as well as of a Ukrainian Information Notice for VAT on e-services. We also comment on debates around an e-levy in Ghana and the optimism being shown in relation to changes to US GILTI.

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

Watch the replay from this webcast held on 10 January 2022, as our panel of PwC specialists discuss Model Rules, including definitions, scope, timeline, tax accounting issues, administration of the rules, and touch briefly on the December 22 EU draft Directive on minimum taxes, as well as the interactions with current US legislative proposals.

The IRS and Treasury recently published final regulations under Sections 860A, 860G, 1001, 1271, 1275, and 7701(1). These regulations provide tax guidance with respect to alterations to debt instruments, derivative contracts, and other contracts that replace interbank offered rates (IBORs) - e.g., London Interbank Offered Rate (LIBOR) - with qualified replacement rates or provide fallback replacement rate provisions.

Welcome to our first edition for 2022 on recent developments in international and treasury tax of interest to multinationals operating in the UK. 

A collection of the brief insights throughout December 2021 of the type provided on an ad hoc basis in our Latest digital tax byte update. This edition includes the publication by the Model Rules for the 15% minimum ETR under Pillar Two of the G20/OECD Inclusive Framework digitalisation project and by the European Commission on proposals to implementation them across the EU. There is also a warning from the Australian tax authorities for businesses to be prepared for Pillar Oen and Pillar Two changes. It also provides an update on the US Senate Finance Committee progress on the Build Back Better reconciliation bill, Canada consulting on its deferred DST, a Nigerian statement on the reasons they wouldn't sign the global deal and plans for Cyprus to increase its tax rate as a result of Pillar Two.  The UK concluded its G7 presidency with an acknowledgement of the digital tax achievement.

The Australian Taxation Office recently finalised Practical Compliance Guideline PCG 2021/5 (PCG) which sets out the expectations regarding the Commissioner's assessment of risk in connection with the imported hybrid mismatch rules, including the Commissioner's approach to reviewing whether a taxpayer has undertaken reasonable enquiries in relation to the rules for non-structured arrangements.

The OECD released the long-awaited Pillar Two 15% minimum effective tax rate Model Rules on 20 December, just days before the expected release of a draft EU Directive on minimum taxes.

Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK. The next edition will be in January 2022.

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

Following a final debate between MEPs in the European Parliament plenary session, a majority of MEPs voted on 11 November to pass changes to amend Directive 2013/34/EU, which deals with financial reporting of certain types of undertakings (the EU Accounting Directive). This vote follows the political agreement reached with the Council in June and a further updated text that was agreed in September 2021. The amendments have become known as public country-by-country reporting (pCbCR) requirements. 

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

The Australian Taxation Office (ATO) recently released its decision impact statement in relation to the transfer pricing decision in Commissioner of Taxation v Glencore Investments Pty Ltd, affirming that the decision outcome was ‘mostly unfavourable to the Commissioner’. The decision impact statement follows the High Court’s refusal in May 2021 for the Commissioner to apply for special leave to appeal the decision of the Full Federal Court of Australia.

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

A collection of the brief insights throughout October 2021 of the type provided on an ad hoc basis in our Latest digital tax byte update.

This edition includes announcements around a new OECD/G20 Inclusive Framework Statement on 8 October, while the Irish Budget on 12 October gave a little more detail on Ireland's plans and G20 Finance Ministers gave a brief endorsement. A subsequent agreement then covered transitional relief for DSTs in UK, France, Italy, Spain and Austria while India seems to have indicated it will await 'implementation' of the deal. We also cover updates on the US domestic proposals which are linked to the deal, a Latvian proposal that would have introduced a DST and the news than Canada will progress its DST legislation but hold it in abeyance for now..

In this episode, we take an excerpt from our recent Global Transfer Pricing Conference, with Ian Dykes (Transfer Pricing Partner, PwC UK), Giorgia Maffini (Tax Policy and Transfer Pricing Senior Manager, PwC UK), Will Morris (Deputy Global Tax Policy Leader, PwC US) discussing the OECD global tax agreement focusing on where we are now and the sticking points in moving forward. They also discuss where further developments might be heading after the introduction of Pillars 1 and 2.

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

A collection of the brief insights throughout September 2021 of the type provided on an ad hoc basis in our Latest digital tax byte update.

This edition includes the latest from both sides of the US Congress on international tax reform and from the Philippines Parliament on VAT for digital services, proposals from the Czech Ministry of Finance on reporting by platforms in accordance with DAC7, Vietnam's incoming regime that goes beyond reporting to require withholding at source and Pakistan's application of withholding tax to online marketplaces. Some recent developments in relation to VAT on e-services in South Africa warrant attention. Singapore has clarified aspects of its e-commerce GST regime.

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

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

China’s State Taxation Administration (STA) on July 26 issued the Public Notice on Matters Regarding the Application of Simplified Procedures of Unilateral Advance Pricing Arrangements (STA Public Notice [2021] No.24, hereinafter referred to as “Public Notice 24”). The STA previously sought public consultation on the draft simplified procedures for unilateral APAs (Consultation Draft) on March 19, 2021 (see PwC’s prior Tax Insight ). Public Notice 24 consolidates feedback and opinion of all relevant stakeholders. Compared with the Consultation Draft, Public Notice 24 further relaxes the conditions for the application of simplified procedures for unilateral APAs, effective September 1, 2021.

The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of the digitalisation of business.

In this edition, we look at Kenya's renewed attempts to swap its digital services tax (DST) for a Significant Economic Presence Tax (SEPT) and the EU Member States approval of the VAT in the Digital Age package. The UK has proposed changes to its digital platform reporting rules while Turkey has sought to clarify withholding tax requirements for platforms and other e-commerce intermediary service providers. We also consider a Hong Kong case involving the determination of the source of royalty payments.

The IRS has released two competent authority agreements entered into by the US and the UK to express their agreement on the application of certain aspects of the limitation on benefits article of the US-UK income tax treaty (Article 23). The expressed agreement is in light of Brexit and the USMCA, which replaced the NAFTA. Under the new agreements, the two countries have agreed that neither Brexit nor NAFTA’s replacement by the USMCA should adversely impact the ability of US or UK tax residents to qualify as ‘equivalent beneficiaries’ under the US-UK income tax treaty.

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

International Tax News is designed to help multinational organisations keep up with the constant flow of tax developments.

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

A collection of the brief insights throughout July 2021 of the type provided on an ad hoc basis in our Latest digital tax byte update.

This edition includes the G20 agreement/ Inclusive Framework Statement, postponement of details of an EU digital levy, Canada's GST/HST draft legislation, Gibraltar's rate increase reaction to Pillar 2 and confirmation of assent to Kenya's Finance Act 2021. The IMF has also published a Technical Note on recommended VAT measures on imported digital services and low-value imported goods. A primer on deferred tax will help shed light on the related issues being discussed on the Pillar 2 discussions.

Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK. This edition includes: 1) Details of draft legislation published on HMRC "Legislation Day"; 2) 130 countries and jurisdictions have joined a new two-pillar plan to reform international taxation rules; and 3) An overview of the UK patent box regime.

In line with international tax trends, the Taiwan Ministry of Finance (MOF) on June 24 issued a Decree (Tai Tsai Ji No. 11024508100) which grants flexibility for income adjustments for cross-border bilateral or multilateral advance pricing arrangements (BAPAs). The new Decree stipulates that when the Taiwan tax authorities negotiate cross-border BAPAs with the competent authorities of the treaty partners, both authorities may determine the method of examining whether the controlled transactions fall within the arm's-length range. They can adopt the results of the controlled transactions either on a year-by-year basis or using the average results of the controlled transactions of the covered years as a whole.

The fifth of a regular series of short videos highlighting key issues and developments in the transfer pricing field. This episode discusses the imminent introduction of Public Country-by-Country Reporting within the European Union and what it means for multinational groups.

At the 9th - 10th July G20 meeting, the G20 endorsed the position reached by 132 of the 139 Inclusive Framework members to move forward with the two-Pillar approach and to begin work on the technical discussions in advance of the next OECD/IF and G20 meetings in October.

On 10 July, all the G20 countries endorsed an historical agreement on Pillar 1 and 2 (G20 Communiqué), following the Inclusive Framework (IF) agreement of last week.

The IRS on July 16 released AM 2021-004, a legal advice memorandum issued by Associate Chief Counsel (International) (the "CCM"). The CCM provides non-taxpayer-specific legal advice regarding the potential timing and amount of adjustments arising from transfer pricing examinations of stock-based compensation (SBC) costs involving taxpayers' cost-sharing agreements (CSAs) that included so-called "reverse claw-back" provisions which are assumed to have been triggered by a final decision in the Altera litigation. (See our July 7, 2020 Tax Insight for details of the case.)

The CCM provides an indication of the adjustments that the IRS intends to pursue on examination of taxpayers that did not include SBC costs under their CSAs, and in particular how the IRS intends to coordinate such adjustments with the income inclusions triggered under taxpayers’ contractual reverse claw-back clauses. The CCM represents the IRS’s effort to provide definitive answers on this coordination issue.

This Financial Transactions Transfer Pricing quarterly podcast features a discussion of the end of LIBOR, focusing on why and when the majority of LIBOR term rates will expire and the replacement rates; certain exceptions with regard to US dollar LIBOR tenors; general tax and transfer pricing considerations; potential challenges converting from the old overnight LIBOR to the new overnight reference rates, and available options for reference rates with a longer maturity; developments across the Asia-Pacific region; and key takeaways.

On July 1, 130 countries of the 139 members of the OECD Inclusive Framework on Base Erosion and Profit Shifting committed to fundamental changes to the international corporate tax system. The 130 countries include the G7 members (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States), emerging economies like Brazil, China and India, and jurisdictions like Switzerland, Singapore, Bermuda, and the Cayman Islands. However, Ireland, Hungary, Estonia, Barbados, Kenya, Nigeria, Peru, Sri Lanka, Saint Vincent and the Grenadines did not sign on to the consensus.

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

Committees of the European Parliament and the Council of the EU have agreed to compromise text on a Directive on public country-by-country reporting (‘Public CbCR’). The text will amend Directive 2013/34/EU, which deals with financial reporting of certain types of undertakings (the Accounting Directive).

The agreed changes will require multinational groups or standalone undertakings with a total consolidated revenue of at least €750m, in that and the previous financial year, whether headquartered within the European Union or not, to publicly disclose the corporate income tax they pay in each EU Member State plus in each of the countries that are either on the EU list of non-cooperative jurisdictions for tax purposes (‘the EU’s blacklist’) or listed for two consecutive years on the list of jurisdictions that do not yet comply with all international tax standards but have committed to reform (the ‘EU’s grey list’).

This Directive aims to make corporate tax in the European Union more transparent by introducing the same reporting obligations for European businesses and non-European multinational companies doing business in the European Union through their branches and subsidiaries. While some commentators believe the proposal does not go far enough (particularly regarding aggregated vs. disaggregated information), the proposal nevertheless is a significant step towards multinationals’ tax information becoming available for public scrutiny.

The fourth of a regular series of short videos highlighting key issues and developments in the transfer pricing field. This episode discusses the challenges ahead from the disappearance of LIBOR as a published financing reference rate at the end of 2021.

This episode features a discussion of how companies may address the impact of the pandemic on their business for transfer pricing purposes. The panelists address how companies can use publicly available information on third-party behavior to support their business decisions stemming from economic disruptions, focusing on actions to take in the immediate, near term, and a long term.

Argentina published General Resolution 4717 (GR 4717) on May 15 in the Official Gazette. Through GR 4717, which supersedes GR 1122, the Federal Administration of Public Revenue (AFIP) sets forth formalities, requirements, and other conditions for taxpayers that carry out transactions that are governed by transfer pricing regulations and/or that import and export goods from/to independent parties. GR 4717 regulates the modifications introduced to the Income Tax Law and its Regulatory Decree regarding transfer pricing — as a result of the latest tax reform (see PwC Tax Insights issued in January 2018 and January 2019) — and applies to fiscal years ended from December 31, 2018 onward.

In this podcast, Chris Desmond (PwC US Transfer Pricing Partner), Lionel Van Reet (PwC Belgium Customs and International Trade Partner), and Maytee Pereira (PwC US Customs and International Trade Managing Director) discuss transfer pricing and the interrelationship with customs and trade in the current economic environment, focusing on the impact on consumer markets, duty drawback, managed margin and trade impact considerations, as well as key takeaways.

The General Court of the European Union (GC) recently rendered its judgment regarding the action brought by Starbucks Corp. and Starbucks Manufacturing EMEA BV and the Netherlands for the annulment of the final State aid decision of the European Commission (EC) of 21 October 2015 on Starbucks. The GC annulled the EC’s decision because the EC did not demonstrate the existence of an economic advantage within the meaning of EU State aid rules.

Despite the long history of the Permanent Establishment (“PE”) concept, the practical application to the offshore oil and gas industry continues to raise a number of issues and disputes between taxpayers and tax authorities. In this article, Szymon Wlazlowski considers the key PE risks created by common activities performed under each of the four phases of the asset life cycle.

On 13 February 2019, the OECD released a public consultation document on "Addressing the tax challenges of the digitalisation of the economy". The consultation will run until 1 March 2019, and a public meeting will then be held in Paris on 13 and 14 March 2019. If agreed at the Inclusive Framework, any of the proposals could have a significant impact on all international businesses.

The Brazilian Federal Revenue Department (RFB) published on 29 January 29 2019, Normative instruction (NI) 1870/2019 amending NI 1312/12 on some aspects of transfer pricing rules, mainly related to import transactions and commodities.

HMRC’s introduction of a settlement Facility aimed at businesses with a risk of “profit diversion” confirms observations that we have made in our recent blogs. This blog provides further detail as to how business should respond. 

On 10 January 2019, the European Commission (EC) announced in a press release that it has opened a formal State investigation into the tax treatment in the Netherlands of two Dutch affiliates of Nike.

The OECD recommended country-by-country reporting (CbCR) requirements to address base erosion and profit shifting and it is now fully entrenched around the world. There are over 70 countries having implemented and/or committed to implement CbCR rules and around 1800 exchange arrangements in place for tax authorities to share the submitted CbC reports such that we are reaching the point where CbCR is the new norm.

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

The Annual Report describes the regulations, procedures, latest statistics, and implementation status of the APA program in China, and provides references for enterprises and competent tax authorities in other countries and regions. These statistics show that China had concluded a total of 147 APAs by the end of 2017, and a number of other APAs (yet to be concluded) were in the application process at that time.

The General Authority of Zakat and Tax (GAZT) in the Kingdom of Saudi Arabia (KSA) published its draft Transfer Pricing By-Laws. This is the first time that transfer pricing regulations of any kind have been published by the GAZT and demonstrates the KSA’s commitment to introducing transfer pricing rules and implementing the OECD's BEPS recommendations on transfer pricing.

On 27 December 2018, the Argentine Government adopted new transfer pricing rules, effective for fiscal years starting from 1 January 2018.  The legislation includes new transfer pricing documentation requirements, which are broadly consistent with the BEPS Action 13 initiative.

The EU Joint TP Forum (JTPF) has recently issued the draft paper on the “Application of the Profit Split Method within the EU”. The main purpose of this document is to address two issues: (1) when it is appropriate to apply the Profit Split Method (PSM), and (2) the use of profit splitting factors.  This paper is an attempt to address these issues with the aim to explore how the application of the PSM could be simplified.

In this podcast, PwC Transfer Pricing professionals Paige Hill, Jozef Kavuliak, and Chris Desmond discuss how US tax reform and other global issues such as trade have affected how companies approach their transfer pricing policies, and what possible uncertainties there are for clients next year given some of the underlying policy issues.

HMRC has today announced the introduction of a Facility aimed at Multinational Enterprises (‘MNEs’) with a risk of HMRC challenge in relation to what is described as "profit diversion". The new Facility is designed to encourage companies potentially impacted to review both the design and implementation of their tax policies, change them as appropriate and use the Facility to put forward a report with proposals to pay any additional tax, interest or penalties due.

In this article, we summarise the main updates to the Diverted Profits Tax guidance that was published on 31 December 2018. These updates may affect companies that are already discussing their arrangements with HMRC or who could potentially be within the scope of DPT. This remains an area of HMRC focus as demonstrated by the launch of the Profit Diversion Compliance Facility on 10 January. 

The OECD Inclusive Framework (IF), in follow-up work related to BEPS Action 5, has released new global standards that apply to ‘no or only nominal tax’ jurisdictions and that require ‘substantial activities’ in order for the tax regime not to be considered a ‘harmful tax practice.’

In this article, we summarise the amendments to the Diverted Profits Tax legislation that were published in the Finance (No. 3) Bill published on 7 November 2018. The amendments will have effect from 29 October 2018 and affect companies that are already discussing their arrangements with HMRC or who could potentially be within the scope of DPT.

Welcome to our latest round-up on recent international transfer pricing developments.

Since the BEPS project, HMRC is now much more prepared to set quite challenging expectations of potential additional tax yield from TP or DPT enquiries, often well ahead of fully evaluated and developed technical positions.

HMRC has made tackling the diversion of profits from the UK their number one corporate tax priority and continue to increase the resources allocated to this area of risk.

On 13 February 2019, the OECD released a public consultation document on "Addressing the tax challenges of the digitalisation of the economy". The consultation will run until 1 March 2019, and a public meeting will then be held in Paris on 13 and 14 March 2019. If agreed at the Inclusive Framework, any of the proposals could have a significant impact on all international businesses.

With the resolution of some major transfer pricing enquiries by HMRC since the introduction of Diverted Profits Tax, together with the introduction of further far-reaching legislation in the recent Budget, it’s a good time to look the changing landscape for transfer pricing disputes in the UK and what might come next. In this series of articles we will share experience gained on how best to prepare for, and successfully navigate a way through, the new type of TP enquiry in the UK.

At PwC’s global TP conference in Tokyo in October an informal survey was conducted of what individual tax authorities are doing with the CbC data that has started to arrive. An interesting picture emerges of several dozen varieties of ‘not much…yet’; and four where visible action or specific plans provide insight into what many, if not most countries, are likely to do.

The UK finance bill, which was published on 7 November 2018, includes the legislation required to update UK domestic law to align with the UK’s position on the changes to the Permanent Establishment (“PE”) definition arising from the OECD’s Base Erosion and Profit Shifting (“BEPS”) project and included within the Multi-Lateral Instrument (“MLI”). This effectively expands the definition of PE in the UK which, together with forthcoming changes to many Double Tax Treaties, is likely to result in more PEs arising.

In recent years there has been substantial increase in the number and size of transfer pricing (TP) disputes with tax authorities worldwide. Alongside an increasing importance for taxpayers to be able to sufficiently demonstrate that they have taken reasonable care in managing their TP, tax authorities are expanding their lines of enquiry to include assessing how they implement, execute and monitor the application of their TP policies.

This article provides an insight into how tax authorities are interrogating TP implementation along with the nature of evidence that authorities typically expect a taxpayer to retain in order to demonstrate they are taking reasonable care in ensuring their TP policies are properly implemented and operationally effective.

In this article, we suggest a constructive approach to HMRC engagement as a key deadline for the issue of preliminary and final charging notices for 2016 approaches. For a business with a December year end which had notified HMRC of potential chargeability to DPT, HMRC has until 31 December 2018 to issue a preliminary notice for the year ended 31 December 2016. This will be particularly relevant for companies that received a notice into 2015 and there remain unresolved issues, or where HMRC have started challenging or querying their 2016 arrangements.