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Tax & Compliance Bulletin 53Printable Version
EU: Code of Conduct Group Report Recommends Updating EU Tax Blacklist:
The EU’s Code of Conduct Group (Business Taxation) have concluded its evaluation of tax good governance standards in relation to Jordan upon the country’s joining the Global Forum on Transparency and Exchange of Information for Tax Purposes and the Inclusive Framework on BEPS on 29 October. Jordan has now fulfilled the tax good governance criteria set out by the EU and as a result Jordan should be removed from the Blacklist. The General Secretariat of the Council of the EU recommends that these changes be approved at the next ECOFIN Council in November.
Eight jurisdictions presently remain on the EU blacklist: American Samoa, Fiji, Guam, Oman, Samoa, Trinidad and Tobago, the US Virgin Islands and Vanuatu.
EU VAT: Commission Publishes Draft Explanatory Notes on VAT Quick Fixes:
The “Quick Fixes”, aimed at rectifying a number of issues in relation to the day-to-day running of the EU VAT system, were adopted by the EU Council in December, and will apply from 1 January 2020. The fixes were designed to address specific issues with EU VAT rules, pending the introduction of a definitive EU VAT Regime, concerning: call-off stock arrangements – simplification and harmonisation of rules regarding call-off stock arrangements, where a vendor transfers stock to a warehouse at the disposal of a known acquirer in another Member State; VAT identification numbers – by the introduction of an identification number for a customer as an additional condition for VAT exemption for intra-EU supplies of goods; chain transactions – simplification and harmonisation of rules regarding chain transactions; and proof of intra-EU supply – introduction of a common framework of criteria of documentary evidence required to claim a VAT exemption for intra-EU supplies.
EU AML: Council of the EU Adopts Conclusions on Anti-Money Laundering Priorities:
The Council of the EU on 5 December adopted conclusions setting out priorities for the EU’s new anti-money laundering framework, seeking to guide the EU Commission in introducing harmonised EU anti-money laundering rules as well as enhanced anti-money laundering supervision across the EU, primarily addressed to the financial sector. The Council in its recommendations urges Member States to transpose the AML legislation as soon as possible into national law. The conclusions also invite the Commission to explore further possible means of improving AML rules, such as further enhanced cooperation between authorities involved in anti-money laundering.
EU: Council of EU Adopts Report on Defensive Administrative Measures for List of Non-Cooperative Tax Jurisdictions:
The Council of the EU have adopted a report of the EU’s Code of Conduct Group (Business Taxation).
The report provides guidance for Members States on defensive measures that can be taken in the tax field concerning non-cooperative jurisdictions. The guidance sets out co-ordinated actions for Members States to take of a legislative nature, to encourage compliance with the Code of Conduct screening criteria as well as other international standards. Member States are recommended to apply at least one of the measures, which include non-deductibility of costs, CFC rules, withholding tax measures and denial of participation exemption on profit distribution.
ECOFIN: Report to the European Council on Tax Issues:
The Council of the EU has endorsed a report providing an overview of the tax policy work undertaken by Finland’s Presidency of the EU. The report highlights the work undertaken and led by the Finish Council presidency of the EU, in particular regarding digital taxation, work in the Value Added Tax (VAT) package, the exchange of VAT-relevant payment information and simplification of SME VAT rules, as well as the EU list of non-cooperative jurisdictions for tax purposes. Concerning progress on the definitive VAT system, the report notes that Member States have requested a detailed technical evaluation, which will allow them to make the final policy choices. The report further indicates the progress towards climate-friendly EU energy taxation. Croatia takes over the presidency of the European Union on 1 January 2020.
OECD: Tax Statistics Indicate Revenue Plateau:
In December, the OECD published the Revenue Statistics 2019 report. The report demonstrates that the average tax to GDP in the majority of the jurisdictions had not changed significantly from 2017 to 2018, but had decreased in 15 countries. The overhaul of the American corporate tax system led to a decrease from 26.8% in 2017 to 24.3% in 2018. Increases in tax revenues were observed in 19 countries.
BEPS: Montenegro & Honduras Join Inclusive Framework on BEPS
In December, both Montenegro and Honduras became members of the OECD/G20 Inclusive Framework on BEPS, becoming the 136th and 137th countries to join, respectively. The OECD’s Inclusive Framework of minimum standards was devised by the OECD and G20 countries as part of the 2015 Base Erosion Profit Shifting Plan (BEPS). Joining the OECD Inclusive Framework also indicates compliance with conditions set by the European Commission concerning the EU’s list of non-cooperative jurisdictions in taxation matters aimed at promoting tax good governance and minimising tax avoidance.
EU: Tax Policy Key to New European Green Deal:
The President of the European Commission Ursula von der Leyen presented her ambitious climate-change related policy proposal ‘New Green Deal’, under which every aspect of the EU economy will be revaluated to address the shortcomings of the European framework, which are compounded by the climate emergency. The European leaders endorsed the policy goal of making Europe a climate-neutral by 2050, with a dissenting opinion from Poland could not commit to this goal, as a result of which the EU leaders will revaluate the matter in June 2020.
EU: Croatian Presidency Sets Out Policy Priorities:
Croatia, who hold the Presidency of the Council of the European Union from 1 January 2020 to 30 June, have published documents setting out its Programme and Priorities for its Presidency period. It is Croatia’s first time holding the Presidency of the Council of the EU.
The programme focuses on four main concepts for Europe, namely: a Europe that develops, a Europe that connect, a Europe that protects and an influential Europe. In relation to specific taxation priorities, the Presidency Programme sets out Croatia’s aims that “current international tax rules should be adapted to globalisation and digitalisation in order to ensure fair and just taxation where value is created. Additionally, the tax system should fight activities and introduce higher taxes on products whose adverse effects significantly contribute to climate change. A modern tax system should be based on transparent, efficient and sustainable taxation procedures that ensure legal certainty for all stakeholders.”
OECD: Published Country-by-Country Reporting Guidance:
As a follow-up to BEPS Action 13, the OECD/G20 Inclusive Framework on BEPS has released additional interpretative guidance on the implementation and operation of Country-by-Country Reporting (CbCR).
The new guidance is intended to provide improved tax certainty for tax administrations and MNEs, and addresses automatic exchange concerning local filings of Country-by-Country reports.