Bulletin 11

Printable Version

CORPORATE TAXATION: EU Council to consider watered-down country-by-country reporting

The EU’s Maltese presidency has offered a compromise on plans for public country-by-country (CbC) tax reporting by multinational companies. The compromise text proposes a EUR750 million threshold for required CbC reporting – much higher than the EUR40 million preferred by the EU Parliament. It also introduces an exemption where it would be ‘commercially prejudicial’ to publish such information, and postpones the transposition deadline by a year.

EUROPEAN UNION: Estonian presidency backs tax blacklist plan

Estonia has taken over the presidency of the EU Council. Its declared goals include agreeing a common EU list of non-cooperative tax jurisdictions, and leading discussions on the Commission’s recent proposals requiring financial intermediaries and advisors to disclose tax avoidance schemes.

HONG KONG: Government abandons bilateral approach to automatic exchange agreements

The Hong Kong government has abandoned its bilateral approach to automatic exchange of tax information (AEOI) negotiations, and agreed to join the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters. It will introduce an amendment bill into the Legislative Council in October 2017. Meanwhile, the Legislative Council has agreed to expand, on 1 July 2017, the list of Hong Kong’s reportable jurisdictions for AEOI purposes from two to 75.

LUXEMBOURG: ‘Golden visa’ to attract big investors

Law firm Arendt & Medernach has published a briefing on the new category of residence permit introduced, on 8 February 2017, by the Luxembourg parliament to attract foreign investors. Foreign nationals can obtain the permits by depositing at least EUR20 million with a Luxembourg financial institution for at least five years, or by investing at least EUR500,000 in an existing company or EUR3 million in an investment management structure.

CORPORATE TAXATION: Further discussion of controversial BEPS permanent establishment rules

The OECD has released discussion drafts concerning the attribution of profits to permanent establishments and transactional profit splits. Both discussion drafts replace drafts published in July 2016 on actions 7 to 10 of the OECD’s Base Erosion and Profit Shifting (BEPS) action plan. Progress has also been made on sharing country-by-country reports.

AUTOMATIC EXCHANGE OF INFORMATION: OECD publishes results of jurisdictional compliance review

The OECD’s global tax transparency forum has released the results of its Fast-Track review process for identifying non-compliant jurisdictions. It stresses that the process is entirely separate from the soon-to-be-published European Commission blacklisting process, being based on fully objective criteria. Only Trinidad and Tobago is rated non-compliant by the OECD, which says massive progress has been made by many jurisdictions towards exchange of information on request in the last 15 months.

CYBERSECURITY: Tax accounting package suspected of causing worldwide ransomware outbreak

The most recent high-profile outbreak of computer malware, the ‘Petya’ ransomware, appears to have been distributed through a tax accounting software package developed by the Ukrainian company ME Doc. The malware’s creators are thought to have hijacked ME Doc’s software updating website so that it infects the customer’s computer with the malware, which then spreads through the company via vulnerabilities in Microsoft Windows networking protocols.

EUROPEAN UNION: Parliamentary committee demands tough action on trust and offshore centres

The European Parliament’s committee of inquiry into the Mossack Fonseca affair has demanded a fully public beneficial ownership register for trusts and fiduciaries at EU level, as well as a common international definition of what constitutes an Offshore Financial Centre (OFC) in terms of tax non-cooperation and money laundering risks. It also insists that a zero corporate tax rate should be considered as one of the criteria for inclusion in a common EU list of non-cooperative tax jurisdictions, while noting that several EU member states, notably the UK, Luxembourg and Cyprus, provided the largest number of offshore entities revealed in the data leak.

EUROPEAN UNION: Parliament approves fully open CbC reporting

The European Parliament has overwhelmingly approved an amendment to Directive 2013/34/EU requiring multinational groups with worldwide turnover above EUR750 million to publish country-by-country reports breaking down the tax they pay in each country of the world. The information is to be made available for free on each firm’s website, with certain exemptions for commercially sensitive items. Parliamentary committees will now start negotiations to progress the proposals with the EU Council, some of whose members are known to oppose it.

AUSTRALIA: Diverted profits tax now in force

Australia’s Diverted Profits Tax came into force at the beginning of July 2017, imposing a 40 per cent tax on profits artificially shifted offshore by multinationals with worldwide revenues above AUD1 billion and Australian revenues above AUD25 million. However, there are newspaper reports that large multinationals are finding ways of avoiding publishing general purpose financial statements in Australia as required by the Combating Multinational Tax Avoidance Act 2015.

PORTUGAL: EU money laundering directive is about to be transposed

Portugal’s parliament is about to approve two money laundering laws, which will transpose the Fourth EU Money Laundering Directive into national law and authorise the creation of a central registry of effective beneficial owners of legal entities and trusts. All EU members were instructed to transpose the directive by 26 June 2017.

Sources: STEP | IFC Review

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