Bulletin 37

Printable Version

TAX TRANSPARENCY: OECD set to blacklist fifteen countries

Fifteen jurisdictions are at risk of being identified by the OECD as failing to implement its tax transparency standards, OECD secretary-general Angel Gurriá told the G20 Leaders’ Summit in Buenos Aires last week. The OECD plans to report the results of talks with these jurisdictions to the G20 summit in June 2019, with a list of jurisdictions that have not made enough progress and may be blacklisted. Gurriá also said that a global solution to the controversy on taxing multinational companies’ digital service revenues is within reach by 2020, although no consensus has y et been reached.

VIRTUAL CURRENCIES: UK takes step closer to crypto regulation framework

The UK Cryptoassets Taskforce, set up by HM Treasury in March 2018, has published its final report paving the way for settlement of the UK policy and regulatory approach to cryptoassets and distributed ledger technology.

EUROPE: Andorra, Liechtenstein, San Marino will not be blacklisted

The EU Council of Finance Ministers has accepted that Andorra and San Marino have both complied with their commitments under the EU Code of Conduct Group on Business Taxation, by amending or abolishing their harmful preferential tax regimes. Accordingly, they will not be placed on the EU blacklist of non-cooperative jurisdictions when it is revised next year. Ecofin has already decided that Liechtenstein will not be blacklisted.

SWITZERLAND: Automatic exchange may be extended to smaller jurisdictions

Switzerland’s federal government is consulting on plans to extend the automatic exchange of financial account information to a further 18 jurisdictions, starting in 2021. They are Albania, Azerbaijan, Brunei, Dominica, Ghana, Kazakhstan, Lebanon, Macao (China), the Maldives, Nigeria, Niue, Pakistan, Peru, Samoa, Saint Maarten, Trinidad and Tobago, Turkey, and Vanuatu. The Swiss authorities will only agree to automatic exchange with jurisdictions that meet data security and confidentiality standards set out in a federal decree in 2017.

UK: FATF ranks jurisdiction as leader in fight against money laundering

The latest assessment by the international Financial Action Task Force ranks the UK as one of the world’s leading jurisdictions in the fight against money laundering. It gives special praise to the UK’s statutory framework for preventing the misuse of companies and trusts, as one of the first jurisdictions to introduce a public register of company beneficial ownership and a register of trusts.

CROSS-BORDER TAXATION: France in breach of EU law on dividend withholding tax

France’s withholding tax rules, requiring the immediate taxation of dividends paid by a loss-making parent to non-resident companies, are in breach of EU agreements; the European Court of Justice has ruled (Case C-575/17, Sofina SA, Rebelco SA and Sidro SA). Loss-making companies resident in other EU Member States may now try to recover withholding tax paid on French source dividends.

INTERNATIONAL TAXATION: Transparency on tax rulings significantly increased

The OECD’s scheme to encourage jurisdictions to exchange information on tax rulings granted to multinational companies has led to more than 16,000 tax rulings being identified and almost 21,000 exchanges of information involving 92 jurisdictions having taken place, to date.

GERMANY: Capital gains tax extended to non-resident companies holding German property

Germany’s Bundesrat assembly approved the Finance Bill 2018 on 23 November, introducing a new limited tax obligation on a non-resident person’s capital gain from disposals of shares in certain non-resident companies holding immovable property assets in Germany. It also includes a rule aimed at preventing tax-privileged investors being used for cum/cum transactions. Now the Bill has been approved, it will be received for signing into law by the Federal President and published in the Federal Law Gazette.

BRITISH VIRGIN ISLANDS: Government to pass economic substance legislation

The British Virgin Islands has enacted a Bill in December 2018 addressing the EU Code of Conduct Group on Business Taxation’s demands that companies operating in low-tax jurisdictions should have adequate ‘economic substance’ there. The EU will review legislation passed by the BVI and other jurisdictions in early 2019, and announce an updated blacklist of non-cooperative tax jurisdictions in March.

US: French bank hard hit by sanctions enforcement

The French bank Société Générale is to pay the US authorities USD1.34 billion to settle more than a thousand charges of violating US sanctions against Cuba, Iran and Sudan, even though the bank voluntarily disclosed the violations. It is the second-largest sanctions-related settlement in US history, and may signal additional enforcement actions against both financial institutions and non-financial institutions as US sanctions continue to increase in complexity and extraterritorial scope, says US law firm Ropes and Gray.

CANADA: Legislation introduced to require reporting of company beneficial ownership

The Canadian federal government has introduced a Bill requiring the disclosure of individuals with ‘significant control’ over federal private corporations, as first announced in the 2017 federal budget. It may be the first step in a mandated government registry recording the beneficial ownership of all private corporations, says law firm Moodys Gartner, which notes the recent introduction of trust reporting rules to identify beneficiaries, trustees, and settlors in tax years ending after 30 December 2021.

LATIN AMERICA: Four countries agree additional uses of exchanged tax information

The governments of Argentina, Panama, Paraguay and Uruguay have agreed to establish a Latin American initiative to tackle tax evasion, corruption and other financial crimes by making use of information exchanged under international tax transparency standards. They plan to use this information, together with beneficial ownership information, for ‘other law enforcement purposes’.

Sources: STEP | IFC Review

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