Group companies or individuals are:
- registered as Auditors in Malta
- registered as Accountants in Malta
AML CFT, EU Regulatory and Tax Policy Bulletin 79Printable Version
EU Commission Publishes AML CFT Legislative Package
The European Commission has now published its Anti-Money Laundering legislative package, which will upgrade the existing EU anti-money laundering legislative AML CFT framework.
The package consists of four proposals, namely:
- A Regulation establishing a new EU AML/CFT Authority;
- A Regulation on AML CFT, containing directly-applicable rules, including in the areas of Customer Due Diligence and Beneficial Ownership;
- A Sixth Directive on AML CFT (“AMLD6”), replacing the existing Directive 2015/849/EU (the fourth AML directive as amended by the fifth AML directive), containing provisions that will be transposed into national law, such as rules on national supervisors and Financial Intelligence Units in Member States;
- A revision of the 2015 Regulation on Transfers of Funds to trace transfers of crypto-assets(Regulation 2015/847/EU).
130 Countries Sign Historic Agreement on International Tax Reform
130 countries signed the global agreement on international tax reform, based on a two-pillar solution which allows multinational companies to pay more tax in the countries where they operate as well as a global minimum tax rate.
As estimated by the OECD, a total amount of USD 100 billion of profits per year will be reallocated to the market jurisdictions, under the rules agreed in Pillar One. Companies within scope include the largest MNEs with global turnover above 20 billion euros and profitability above 10% (profit before tax/revenue) with the turnover threshold to be reduced to 10 billion euros over time, subject to conditions. Financial services and extractive industries will be excluded from the agreement.
The agreement creates new nexus rules, for a market jurisdiction where the MNE derives minimum 1 million euros in revenue from that jurisdiction. For smaller jurisdictions with GDP lower than 40 billion euros, a minimum of 250 000 euros is required to trigger the new nexus and bring the MNE within scope. In terms of revenue allocation, according to the agreement 20-30% of the residual profit (profit in excess of 10%) will be allocated to market jurisdictions using a revenue-based allocation key. Profitability of the in-scope companies will be determined with reference to financial accounting income, and loss carry-forward will be allowed.
New EU VAT Rules Enter Into Force
The new rules concerning the EU VAT regime entered into force on the 1 July, creating a simplified VAT regime for cross-border supplies of goods (B2C) and distance sales. The new rules provide for a system to declare and pay VAT in the EU using the Import One-Stop Shop and also level the playing field between EU businesses and non-EU sellers.
Online sellers, including online marketplaces and platforms can now register in one EU Member State and this will be valid for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers within the EU. According to the European Commission, online marketplaces will now benefit from a reduction in red tape of up to 95% by registering with the new One Stop Shop (OSS).
EU: Landmark Climate Policy Package
On 14 July, the European Commission proposed an ambitious climate policy package, encompassing multiple policy instruments to deliver on the European Green Deal Commitment to make Europe a carbon neutral continent by 2050, and to cut carbon emissions 55% by 2030. The package includes a number of instruments, which will require consent of Member states to achieve full implementation across the continent. Proposed instruments include: extension and enforcement of the ETS to new sectors; increased use of renewables and energy efficiency; a faster roll-out of low emission transport modes and the infrastructure and fuels to support them; an alignment of taxation policies with the European Green Deal objectives, and measures to prevent carbon leakage.
EU Tax Policy Report – Semester 1
CFE Tax Advisers Europe has now published its EU Tax Policy Report covering the first semester of 2021. The EU Tax Policy Report is a bi-annual publication which provides a detailed analysis of significant primary law and tax policy developments at both EU and international level that have occurred in the previous six months which would be of interest to European tax advisers. It also includes an overview of selected CJEU case-law and relevant European Commission decisions.
OECD: Nominal Corporate Income Tax Rates Continue to Fall
The OECD has announced that on average, global nominal corporate income tax rates have continued the downwards trend, down 8 points on average from the year 2000 (28.3%) to year 2021 (20%). Across 111 jurisdictions, 94 had lower corporate income tax rates in 2021 compared with 2000, while 13 jurisdictions had the same tax rate, and only 4 had higher tax rates. In addition, data confirms that corporate income tax continues to be an important source of government revenue for developing countries and emerging economies: the corporate income tax share of government revenue in Africa stands as 19.2%, in Latin America and the Caribbean at 15.6%, compared to the OECD countries average of 10%.
Detailed overview is available in OECD’s Corporate Tax Statistics database and the latest report on the matter, which also highlights the persistent practice of profit shifting relative to the importance of the recently reached G20 agreement on global taxation.
Minimum Tax Substance Carve-Out Will Increase Tax Competition & Decrease Taxable Revenue
The EU Tax Observatory, recently established research body funded by the European Commission, published a note suggesting that a substance carve-out will increase tax competition and would allow companies to escape taxation if they have sufficient operations (assets and employees) in tax havens. According to the note of the Tax Observatory, the carveout agreed by the G20 leaders would reduce taxable revenue in the European Union by €168 billion to €132 billion, if a 5% carve-out is agreed, whereas a 7.5% carve-out would reduce revenues by 23% for a 15% minimum tax.
The analysis is based on the Tax Observatory study published at its inaugural event, entitled “Collecting the Tax deficit of Multinational Companies: Simulations for the European Union” (Baraké et al., 2021). Data is based on OECD’s aggregate tabulations of country-by-country reports (CbCR) released in July 2020.
EU Commission AML CFT Legislative Package Details
Significantly, the package will establish an EU Anti-Money Laundering supervisory body, the Anti-Money Laundering Authority, or AMLA, which would commence operating in 2024 and is envisaged to employ around 350 people. The AMLA will establish a single integrated system of supervision across the EU, be given direct supervisory powers at EU level to monitor and coordinate national supervisory bodies, as well as be given the ability to give fines and directly supervise cross-border financial companies. The AMLA will also coordinate with national Financial Intelligence Units (FIUs) and facilitate joint analyses to detect illicit financial flows.
The package will also create a single EU Rulebook for AML across the EU, including rules on Customer Due Diligence, Beneficial Ownership and the powers and task of supervisors and Financial Intelligence Units (FIUs). Existing national registers of bank accounts will be linked to the system, providing access to FIUs on bank accounts and deposit boxes. It is also proposed that law enforcement will be provided access to the system.
Other notable elements of the package include plans to extend the full application of the AML framework to to the crypto sector, impose an EU-wide cash payment limit of EUR 10,000 and create a “black-list” and “grey-list” based on the recommendations made by the global money laundering and terrorist financing watchdog, Financial Action Task Force (FATF). Any country listed in recommendations by FATF will be listed by the EU in either the “black-list” and a “grey-list”, and measures will be applied by the EU on the basis of the risk level. The EU will also be able to list additional countries not subject to a FATF recommendation, based on its own assessment of risk level to the EU.
The package will now be considered by Parliament and Council. The proposals set out that the EU AML Authority would commence its duties from 2024 onwards, with the direct supervision role to commence later, after the Directive is transposed and the regulatory framework starts to apply.