Bulletin 14

Printable Version

SWITZERLAND: Second attempt to reform corporation tax model

The Swiss government has re-launched its proposals for business tax reform, the so-called Tax Proposal 17, which aims to attract multinational companies while complying with international tax good governance standards. Similar proposals were rejected in a referendum in February this year. The revised version still abolishes the special low rate of corporation tax for foreign companies, but amends the tax relief for intellectual property and the notional interest deduction on excess equity.

TAX AGREEMENTS: BRICS leaders promise improved cooperation

The five BRICS nations (Brazil, Russia, India, China and South Africa) have issued a communiqué undertaking to cooperate against tax avoidance and to promote exchange of tax information.

MADOFF AFFAIR: Latest settlement takes defrauded investors to 72 cents in the dollar

The trustee in bankruptcy of fraudster Bernard Madoff has agreed a settlement with Irish investment fund Thema International, under which USD687 million will be recovered for distribution to investors in Madoff’s failed securities business. Total recoveries for Madoff victims now amount to USD12.7 billion – more than 70 cents in the dollar.

CORPORATE TAXATION: Four leading EU members demand special tax on ‘digital economy’

The finance ministers of Germany, France, Italy and Spain have issued a joint statement urging the European Commission to draft a new ‘equalisation tax’ that will impose appropriate levels of corporation tax on companies operating in the ‘digital economy’ in a way that reflects their genuine activity in the EU. Although the matter is already being addressed at G20/OECD level, the four ministers say that they wish to move ahead quickly at EU level because it is a major challenge for the union.

EUROPEAN UNION: Non-EU resident entitled to dividend tax relief

The European Court of Justice has declared that France acted illegally by using a general anti-abuse rule to deny tax relief to dividends distributed by a French-resident subsidiary to a company controlled by a Swiss resident (Eqiom SAS v Ministre des finances et des comptes publics, C-6/16). The relief is normally granted under the EU parent-subsidiary directive, but the French government argued it could be disallowed on grounds of preventing tax evasion or abuse where the taxpayer’s parent is controlled by a non-EU resident.

IRELAND: Corporation tax code review insists 12.5 per cent rate is sustainable

A government-commissioned review of Ireland’s corporation tax code states that the country’s 12.5 per cent corporation tax rate should remain unchanged. The independent report suggests that Ireland should consider changing to a territorial tax system, and also cap claims for capital allowances on intangible assets in order to stabilise corporation tax revenues.

SWITZERLAND: US prosecutors hunt for life policy tax evaders

The US Justice Department has asked Switzerland’s biggest life insurer, Swiss Life, to disclose information on American clients who may have used the company’s products to evade tax. The inquiry concerns the insurance wrapper business, whereby individuals can place assets such as shares or private equity holdings inside a life insurance policy. Swiss Life stopped selling such products in the US in 2012, and has already reported all US client business to Washington under the US Foreign Account Tax Compliance Act (FATCA).

PORTUGAL: Legal regime on the beneficial ownership central register

Portugal’s Law 89/2017, authorising a central register of company beneficial ownership, has been enacted and will come into force on 19 November 2017. Failure to notify changes in beneficial ownership after that date will attract a fine of between EUR1000 and EUR50,000. The legislation also applies to foundations and Madeira trusts.

CRS: First exchanges take place in September

The first automatic Common Reporting Standard (CRS) exchanges have taken place in September between 49 jurisdictions. Overall, 102 jurisdictions have committed to implementing CRS, with 53 taking up exchanges in September 2018.

CORPORATE TAXATION: European Commission proposes turnover tax on digital economy

The European Commission has adopted a policy paper on taxing the digital economy in the light of the current tax framework’s unfitness for modern realities. It proposes an ‘equalisation tax’ on digital companies’ turnover, rather than on their profits.

MALTA: Strong financial services growth projected

A survey by Managing Partners Group (MPG) suggests that the Maltese financial services industry is likely to see strong growth over the next five years, with 70 per cent of financial services professionals surveyed believing that the sector will contribute 15 per cent or more to Malta’s GDP by 2022, as compared with the current 12 per cent.

SWITZERLAND: Lower house obstructs automatic exchange of information

Switzerland’s House of Representatives has voted to disallow automatic exchange of financial account information with countries it considers do not meet confidentiality and security standards. Disallowed jurisdictions include Saudi Arabia and New Zealand, though many others put forward as unsuitable during the debate ultimately received approval. The decision undermines the Swiss government’s commitment to share bank account information for tax purposes under the OECD Common Reporting Standard (CRS), under which the first exchanges took place this month.

FRANCE: End of four-year tax amnesty

France’s offshore tax amnesty, launched in 2013, will end on 31 December 2017.

SWISS BANKING: Searches of UBS’s German offices draw a blank

German prosecutors this week conducted further searches of UBS’s local offices, looking for evidence of tax evasion, though the Swiss bank says no documents were seized. The searches were based on evidence from a stolen CD bought by the German state of North Rhine-Westphalia.

IRELAND: Alarm over Brexit prompts plan to abolish stamp duty on shares

The Irish government is consulting on plans to abolish the stamp duty charge on share transactions in Irish incorporated companies, as part of its ‘Getting Ireland Brexit Ready’ strategy. It is concerned that the UK’s exit from the EU may make it harder for Irish companies to raise equity finance. Last year, the duty raised revenues of EUR392 million.

SWITZERLAND: Country-by-country reporting to start in 2018

Switzerland has adopted a decree requiring the international automatic exchange of multinational firms’ country-by-country financial reports. It will come into force on 1 December 2017, requiring multinationals in Switzerland to submit country-by-country reports from the 2018 tax year and exchange them with other jurisdictions by 2020.

Sources: STEP | IFC Review

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