Double Taxation Relief & EU Tax Policy News Bulletin 74

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AML CFT, Company taxation, EU, VAT (Value Added Tax), European Union Commission, double taxation, roadmap, transfer pricing, business taxation-CFE, OECD Pillar 1

Malta-Poland Double Taxation Treaty Revised

The Double Taxation Relief on Taxes on Income in the double taxation treaty between Malta and the Republic of Poland Order has been revised pursuant to LN 64 of 2021. A Protocol has been agreed between the two countries for the prevention of double taxation and the prevention of fiscal evasion with respect to taxes on income. The amendments shall enter into force on such date as may be announced by notice in the Government Gazette.

EU Council Updates EU Tax Blacklist

The EU’s list of non-cooperative jurisdictions for taxation purposes was updated by the Council of the EU on 22 February 2021.

Dominica was added to the Blacklist following on from its OECD Global Forum peer review report on transparency and exchange of information, in which its compliance rating remained partially compliant. Barbados was removed to Annex II of the EU Blacklist pending the outcome of a supplementary review by the Global Forum.

Following commitments made to reform tax policies, the following 9 jurisdictions are now listed in the Annex II “grey-list” of non-compliant countries who have undertaken to reform their tax policy:

  1. Australia
  2. Barbados
  3. Botswana
  4. Eswatini
  5. Jamaica
  6. Jordan
  7. Maldives
  8. Thailand
  9. Turkey

Turkey has been asked to resolve exchange of information issues with Member States in order to avoid being moved to the blacklist.

Twelve jurisdictions remain on the EU blacklist:

  1. American Samoa
  2. Anguilla
  3. Dominica
  4. Fiji
  5. Guam
  6. Palau
  7. Panama
  8. Samoa
  9. Seychelles
  10. Trinidad and Tobago
  11. US Virgin Islands
  12. Vanuatu

Morocco, Namibia and Saint Lucia have now been removed completely from the list after fulfilling all commitments.

Detailed Implementing Regulation for EU e-Commerce Directive Published

The EU Commission has now published draft implementing rules for the e-Commerce Directive, concerning the extension of the special scheme for supplies of goods facilitated by electronic interfaces to cover all distance sales of goods and services made to non-taxable persons. Input can be submitted on the draft implementing regulation until 18 March 2021 via the Have Your Say portal.

EU Commission February Infringement Package 

The European Commission has published its infringement package for February 2021 setting out the legal action being pursued against various Member States by the Commission for noncompliance with obligations under EU law.

France has been issued with a letter of formal notice in relation to withholding tax in it double taxation tax rules on dividends paid to Unit Linked insurance companies established in other EEA countries, on the basis that differential rules imposed by France infringe on the free movement of capital. France has two months to reply before a reasoned opinion is issued.

Sweden has also been issued with a letter of formal notice concerning its taxation of dividends paid to non-resident public pension institutions, on the basis that taxation of difference in the tax treatment of Swedish public pension dividends versus those for non-resident public pension institutions infringes on the free movement of capital. Sweden has two months to reply before a reasoned opinion is issued.

Following on from its Anti-Money Laundering Action Plan published in May 2020, the Commission has also issued letters of formal notice to Germany, Portugal and Romania for failing to fully implement correctly into national law the 4th Anti-Money Laundering Directive. The countries will have two months to notify the Commission that the Directive has been implemented, or will thereafter be issued with reasoned opinions.

Agreement on Digital Tax Within Reach After US Policy ‘U-Turn’ 

This week’s key tax policy news comes from Washington DC. The new US Secretary of Treasury Dr Janet Yellen confirmed that President Biden’s administration is ready to drop the ‘safe harbour’ requirement, a key obstacle to an international agreement on Pillar One concerning taxation of the digital economy. At the G20 meeting on Friday, Secretary Yellen said the US was no longer advocating for safe harbour implementation, and will engage robustly to address both pillars of the OECD project, the tax challenges of digitisation and a robust global minimum tax, a US official was quoted for the Financial Times.

EU Ministers Endorse Public Country-by-Country Reporting 

The latest Competitiveness Council meeting of EU’s Industry and Internal Market ministers saw a clear majority of EU countries endorse the latest proposal for a directive on public country-by-country reporting (CbCR), which seeks to add further transparency to the taxation affairs of multinational companies doing business in the Single Market. The Council invited the Council Presidency to start negotiations with the European Parliament on enacting this directive. On behalf of the EU Presidency, a Portuguese Minister stated: “Tax transparency is a fundamental principle in any democratic society. It enables policy makers to take informed decisions and to ensure that all economic actors contribute in a fair and equitable manner to the economy of the various countries where they conduct their business. Today’s debate has opened the way for the proposed directive to move forward as a matter of priority.”

OECD Calls on Countries to Target Professional Enablers of Tax Crimes 

The latest OECD Report entitled “Ending the Shell GameCracking down on the Professionals who enable Tax and White Collar Crimes”  calls on governments to target professional enablers of tax crimes and other white collar crime, facilitated through complex legal and tax structures. The report notes that whilst the vast majority of intermediaries such as tax advisers, lawyers, notaries and financial institutions contribute to making complex tax and legal systems work, the small minority of professional enablers continue to play key role in defrauding governments and help clients evade their tax obligations. The means of doing so continue to be focused on non-transparent structures and schemes seeking to conceal the identity of individuals behind the activities.

Key elements of the report call on countries to develop strategies that would:

  • ensure that tax crime investigators are equipped to identify the types of professional enablers operating in their jurisdiction, and to understand the risks posed by how they devise, market, implement and conceal tax crime and financial crimes;
  • ensure the law provides investigators and prosecutors with sufficient authority to identify, prosecute and sanction professional enablers, both to deter and penalise;
  • implement multi-disciplinary prevention and disruption strategies, notably through engagement with supervisory, industry and professional bodies, to prevent abusive behaviour, incentivise early disclosure and whistle-blowing and take a strong approach to enforcement;
  • ensure relevant authorities proactively maximise the availability of information, intelligence and investigatory powers held by other domestic and international agencies to tackle sophisticated professional enablers operating across borders;
  • appoint a lead person and agency in the jurisdiction with responsibility for overseeing the implementation of the professional enablers strategy, undertake a review of its effectiveness over time and devise further changes as necessary.


Source: Malta Institute of Taxation Click here and CFE Tax Advisors Europe Click Here

Please contact David Marinelli should you wish to discuss any matter relating to your Malta registered company.