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Bulletin 48Printable Version
INTERNATIONAL TAXATION: OECD expects global agreement by 2020 on taxing multinationals
The Organisation for Economic Co-operation and Development (OECD) has released a detailed work plan to develop a consensus solution to the tax challenges arising from the digitalisation of the global economy. The 129 countries participating in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) project have approved the plan, which includes proposals for revised nexus and profit allocation rules, and a global anti-base-erosion proposal. A long-term consensus is expected by the end of 2020.
BANKING: Waning correspondent banking services may encourage virtual currency exchanges
Correspondent banking arrangements are in sharp decline across the world, with active relationships having decreased by 20 per cent in the last seven years.
NETHERLANDS: Busy legislative schedule aims at corporate anti-avoidance
In the next three months, the Netherlands government will table a Bill transposing the EU directive on mandatory disclosure of tax avoidance arrangements into domestic law, along with legislation implementing the second EU Anti-Tax Avoidance Directive (ATAD 2) regarding hybrid mismatch arrangements. A further Bill will limit tax deductions for intra-group borrowing, and introduce a conditional withholding tax on royalties and interest paid to low-tax jurisdictions, from 2021.
NEW ZEALAND: Turnover tax considered for digital services companies
New Zealand’s government is pushing ahead with plans to apply a 2-3 per cent turnover tax to highly digitalised multinationals, such as Airbnb, eBay, Facebook, Google, Instagram, Uber and YouTube doing substantial business in the country.
ECONOMIC SUBSTANCE: Transition period June 2019 deadlines
The deadlines for existing registered entities to comply with new economic substance legislation in Bermuda, the British Virgin Islands and the Cayman Islands all fell at the end of June 2019.
JERSEY: Companies not UK-resident after all, says UK’s Upper Tax Tribunal
The owners of a group of special purpose vehicles (SPVs) incorporated in Jersey for tax planning reasons have overturned a 2017 decision of the First-tier Tax Tribunal, which held they were tax-resident in the UK despite holding their board meetings in Jersey.
TAX: Benefits established for the Argentine knowledge economy
The Argentine government has committed to the promotion of the country’s knowledge economy – knowledge-based and digital activities resulting in manufacturing of goods, provision of services or improvement of processes – through the introduction of new tax incentives.
UK CROWN DEPENDENCIES: Timetable set out for public accessibility of beneficial ownership registers
Guernsey, Jersey and the Isle of Man have jointly announced a schedule for setting up publicly accessible registers of company beneficial ownership. The three jurisdictions have made a collective commitment to bring forward legislative proposals in line with developing EU standards for public registers of beneficial ownership of companies.
FATF: Will not allow cryptocurrency to replace secret numbered accounts’
The June 2019 plenary session of the global Financial Action Task Force (FATF) ended with the issuance of a binding interpretive note for international regulation of virtual assets and virtual-asset service providers. Countries are now required to license or register virtual-asset service providers, to subject them to customer identification and due-diligence rules, and to appoint official bodies to supervise or monitor them.
SWITZERLAND: Government adopts FATF’s demands for anti-money laundering reforms
Switzerland’s federal government has formally adopted the anti-money laundering reforms demanded in the Financial Action Task Force’s (FATF’s) 2016 mutual evaluation report, requiring financial intermediaries to comply with customer due-diligence obligations.
US: Confirm that offshore virtual currency need not be disclosed on FBAR yet
US persons who hold virtual currency on a foreign third-party exchange do not have to disclose it on the Foreign Bank Accounts Reporting (FBAR) form, according to a US government response to a direct question from the American Institute of Certified Public Accountants (AICPA) Virtual Currency Task Force.
INTERNATIONAL TAXATION: G7 meeting compromises between US and European positions
Finance ministers of the G7 have voted to support the OECD’s proposed new rules for taxing multinational businesses, through revisions of existing profit allocation and nexus rules, combined with new global minimum tax rules.
OECD: International Exchange Framework for Mandatory Disclosure Rules published
On 27 June, the OECD released the International Exchange Framework for Mandatory Disclosure Rules on CRS Avoidance Arrangements and Opaque Offshore Structures. The publication sets out an international framework to govern MDR exchanges, from a legal and an operational perspective. The publication also contains a draft of the Multilateral Competent Authority Agreement (MCAA), which will enable jurisdictions that receive information about a CRS Avoidance Arrangement or Opaque Offshore Structure under the MDRs to exchange such information with the relevant jurisdictions where the concerned taxpayers are residents.
NETHERLANDS: State Secretary for Finance to create Multinational Taxation Commission
The Netherlands’ State Secretary for Finance announced in a letter dated 25 June 2019, sent to the lower house of national parliament, that a Commission will be established in order to create an inventory of mechanisms in place concerning the Dutch corporate tax base. The Commission will be made up of experts, including EU law, economic and tax specialists, as well as experts from within the Ministry of Finance. The Commission will also work to ensure the competitiveness of the Netherlands as a location for multinational headquarters. The Commission will be required to report to the parliament every 6 months on its activities.
BELGIUM & India: OECD Multilateral BEPS Convention Ratification
On 25 June, Belgium and India deposited their instruments of ratification for the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. The BEPS convention aims to combat tax avoidance by multinational enterprises (MNEs) through prevention of Base Erosion and Profit Shifting (BEPS). On the same day, Morocco became the 89th jurisdiction to sign the BEPS MLI Convention. The BEPS multilateral instrument was negotiated within the framework of the OECD G20 BEPS project and enables countries and jurisdictions to swiftly modify their bilateral tax treaties to implement some of the measures agreed.