Bulletin 51

Printable Version

EU: new VAT rules for SMEs agreed

The Council of the EU has reached an agreement on the amendments to the VAT Directive in relation to SMEs. The objective of the amendments is to reduce the administrative burden and compliance costs for SMES, and in particular addresses SMEs operating in a cross-border context. The revised rules will allow businesses which qualify as Small Undertakings to apply the VAT exemption across the EU (currently the exemption for small undertakings only applies in a domestic context).

Malta: amendment to the eco contribution regulations

The Eco Contribution Regulations have been revised. The new provisions concern the power of the Minister, on the advice of the Resource Recovery and Recycling Agency, to exempt a producer from the payment of eco-contribution due on products, subject to certain conditions being satisfied, including, if the producer proves to the satisfaction of the Minister that he is participating in a circular economy initiative, as defined, and has either invested or is going to invest in the said scheme.

OECD Publishes Stakeholder Comments on Pillar One Consultation

The OECD has now published the comments submitted by stakeholders to the Secretariat proposals for taxation of the digitalising economy on the basis of the ‘unified approach’ under Pillar One. Under the proposed approach, new taxation rights for market jurisdictions are recognised. The new rules are intended to apply to companies that derive value from consumer-interaction with users in market jurisdictions. Under the new profit allocation rules, a share of the deemed residual profits of the ‘consumer-facing’ multinational companies will be reallocated to market jurisdictions, through formulary apportionment and use of proxies such as sales.

Council of the EU Adopts Company Law Directive

On 18 November, the Council of the EU adopted the second of two Commission proposals initially published in April 2018 on reforming and digitalising EU company law, which aim to make it easier for companies to merge, divide or move within the EU Single Market, whilst preventing fraud and abusive behaviour in cross-border operations. The proposals were adopted by the EU Parliament in April 2019. The rules allow companies to register, set up new branches or file documents online. As concerns cross-border conversions, mergers and divisions, the EU rules for cross-border conversions and divisions aim to update existing ones to facilitate reorganisation, provided that the operations are genuine.

Malta: Payment of Provisional Tax rules- change to additional tax calculation

The Payment of Provisional Tax Rules are being amended. A new proviso to Rule 14(1) provides that in respect of periods commencing on or after 1 January 2020, additional tax due in relation to late payment of provisional tax shall be charged at 0.33% of the unpaid provisional tax (instead of 1%) for each calendar month or part thereof.

OECD Seeks Comments on Pillar Two Minimum Taxation Global Anti-Base Erosion Proposal

The OECD on 8 November published a further public consultation document concerning Pillar Two of its two-pillar approach to addressing the taxation challenges of the digitalising economy, the so-called “Global Anti-Base Erosion Proposal”, or “GloBE” proposal, which seeks to address outstanding BEPS issues by introducing a global minimum tax and providing “jurisdictions with a right to “tax back” where other jurisdictions have not exercised their primary taxing rights or the payment is otherwise subject to low levels of effective taxation”. The approach would seek to apply an income inclusion rule and deduction denial in tandem to achieve the intended aim of global anti-base erosion.

ECOFIN Reaches Agreement on VAT-Related Directives

On Friday 8 November, EU finance ministers sitting at Council level (ECOFIN) reached agreement on a number of significant indirect tax files, concerning: transmission and exchange of VAT-relevant payment data; amendment of the VAT system as regards the special scheme for small enterprises (SMEs); and the administrative burden for trade in goods subject to excise duty. The proposals as regards the exchange of VAT-relevant payment data, aimed at reducing VAT fraud, will introduce requirements for records to be kept by payment service providers concerning cross-border payments related to e-commerce. A central electronic system will be established for storage of the information, which will also be accessed and processed by Member States’ anti-fraud officials.

Council of the EU Updates List of Non-Cooperative Tax Jurisdictions

The ECOFIN Council on 8 November approved the changes recommended to the list of non-cooperative jurisdictions for tax purposes. The Council accordingly endorsed the removal of Belize from the blacklist to the grey list, after establishing that it had implemented reforms to comply with EU tax good governance standards. It will be removed from the Annex II grey list in the future, subject to implementation of further changes concerning its foreign source income exemption regime. On the basis that North Macedonia has fulfilled the tax good governance criteria set out by the EU, the ECOFIN Council also approved the recommendation that it be removed entirely from the Annex II jurisdictions list. Eight jurisdictions now remain on the EU blacklist: American Samoa, Fiji, Guam, Oman, Samoa, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

EU: North Macedonia Compliant with EU’s Tax Good Governance Standards

The EU’s Code of Conduct Group (Business Taxation) concluded on 24 October 2019 that North Macedonia has fulfilled the tax good governance criteria set out by the EU and as a result would be removed entirely from the Annex II jurisdictions. The General Secretariat of the Council of the EU recommends Annex II delisting. Macedonia has ratified the OECD Multilateral Convention on Mutual Administrative Assistance (“MAC”) as amended, and the parliamentary instrument of ratification was deposited on 30 September. As a result, the Multilateral Convention will enter into force on 1 January 2020. North Macedonia is an EU membership candidate country and is expected to commence EU accession talks with Brussels at the EU summit in Zagreb in May 2020.

Source: STEP | Malta Institute of Taxation

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