On February 18, 2021, Croatia and Malaysia deposited their instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
For Croatia and Malaysia, the MLI will enter into force on June 1, 2021.
With 95 jurisdictions currently covered by the MLI, the ratifications today by Croatia and Malaysia now bring to 63 the number of jurisdictions which have ratified, accepted or approved it. The MLI became effective on January 1, 2021, for approximately 650 treaties concluded among the 63 jurisdictions, with an additional 1,200 treaties to become effectively modified once the MLI will have been ratified by all Signatories.
On February 18, 2021, the OECD Forum on Tax Administration released a new handbook for the International Compliance Assurance Programme (ICAP), which for the first time is being run as a full program open to all FTA member tax administrations.
The handbook builds on feedback from tax administrations and MNE groups, including those with direct experience from the two pilots. Additional information on ICAP, including more frequently asked questions and a list of participating tax administrations, will be made available on the dedicated ICAP webpage during March 2021.
The Forum on Tax Administration is a global forum on tax administration for Commissioners. It has 53 members, including all G20 and OECD member countries as well as a number of advanced and emerging non-OECD economies.
On February 5, 2021, Irish Revenue published an eBrief No. 020/2021 on corporate residence.
Section 23A of the Taxes Consolidation Act, 1997 sets out rules for determining company residence in the State. Section 23A was amended by Finance Act, 2014, but the application of the amended section 23A was subject to a transition period for companies incorporated before January 1, 2015.
According to the eBrief, the transition period ceased on December 31, 2020, and the Tax and Duty Manual Part 02-02-03 has been updated to reflect this.
See eBrief No. 020/2021
On January 28, 2020, Hungary’s Finance Ministry published key DAC6 guidance.
The guidance includes details on who should provide the reporting information, and how and in what manner the information must be provided to the tax authority. The guidance also clarifies the meaning of concepts such as an arrangement and a cross-border arrangement and provides interpretation of the different applicable hallmarks.
Information is also provided on penalties that may apply in cases of non-compliance.
On February 3, 2021, the Cypriot tax authority announced an extension of DAC6 deadlines.
The deadline for the submission of DAC6 information is extended until 31 March 2021, in the following cases:
The tax authority said that the DAC6 Directive is expected to be incorporated into the Cypriot legislation this month.
On January 27, 2021, Irish Revenue published e-Brief No. 014/21, on EU Mandatory Disclosure of Reportable Cross-Border Arrangements (DAC6).
Tax and Duty Manual Part 33-03-33 has been updated to set out filing instructions where certain specified information in a disclosure is subject to Legal Professional Privilege (LPP).
In such cases, a Form DAC6 (LPP) should be filed using MyEnquiries, setting out the identity of the relevant taxpayer and other intermediaries involved in the reportable cross-border arrangement.
See e-Brief No. 014/21
US Treasury Secretary Janet Yellen has spoken to senior government officials in France, Germany, and the UK on digital economy taxation.
Yellen spoke to Rishi Sunak, the UK Chancellor of the Exchequer, on January 27, 2021. She spoke to the German and French finance ministers on January 27 and January 28, respectively.
In her call, Yellen committed to active US participation in the ongoing OECD discussions on international taxation to forge a timely international accord. She noted the importance of collaborating closely on bilateral and global issues.
See Announcements here, here, and here
From January 1, 2021, some EU countries may start to deduct tax from interest, royalty, and dividend payments made into the UK.
In a short note published on its website on January 5, 2021, the UK government stated that the amount of tax deducted will depend on the double taxation agreement between the UK and relevant EU country.
The Government added that taxpayers may usually apply for full or partial exemption or claim back some or all of the tax already paid under the relevant double taxation agreement.
On January 14, 2021, Ireland’s Minister for Finance, Paschal Donohoe, published an Update to Ireland’s 2018 Corporation Tax Roadmap.
The Update takes stock of the changing international tax environment, outlines the significant actions Ireland has taken to date and the further actions that will be taken over the coming years.
The Update is being published in the context of discussions at International level on the reform of the International Tax Framework which are expected to come to a conclusion in mid-2021.
On January 19, 2021, the Platform for Collaboration on Tax (PCT) – a joint initiative of IMF, OECD, UN and the World Bank – released the final version of the Practical Toolkit to Support the Successful Implementation by Developing Countries of Effective Transfer Pricing Documentation Requirements.
The toolkit serves as a sourcebook of guidance on implementing transfer pricing documentation requirements for developing countries. The toolkit compiles essential information on transfer pricing documentation and analyses policy choices and legislative options. Readers can find sample legislation as well as examples and practices from over 30 countries and additional approaches to transfer pricing documentation in the toolkit.
This is the fourth toolkit published by the PCT—a collective effort of the PCT Partners to help countries address challenges in international taxation. The toolkit takes into account extensive comments received from countries and stakeholders during the public consultation process in 2019.
See Practical Toolkit
On January 15, 2021, Estonia deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting with the OECD.
For Estonia, the MLI will enter into force on May 1, 2021.
The BEPS MLI now covers over 1,700 bilateral tax treaties. The Multilateral Convention became effective on January 1, 2021, for over 600 treaties concluded among the 60 jurisdictions.
On January 14, 2021, the European Commission published a roadmap to address the issue of fair taxation of the digital economy.
According to the roadmap, the initiative will be designed in a way that is consistent with the Digital Services Act package and the Commission’s digital strategy to ensuring a fair and competitive digital economy. The initiative will be compatible with the international agreement to be reached in the OECD, as well as broader international obligations.
The roadmap notes that the EU Commission will identify additional policy options, such as: a corporate income tax top-up to be applied to all companies conducting certain digital activities in the EU; a tax on revenues created by certain digital activities conducted in the EU; and a tax on digital transactions conducted business-to-business in the EU.
Comments must be received by February 11, 2021.
On January 14, 2021, the US Trade Representative (USTR) issued findings in Section 301 investigations of Digital Service Taxes adopted by Austria, Spain, and the UK.
The USTR concluded that each of the DSTs discriminates against US companies, is inconsistent with prevailing principles of international taxation, and burden or restricts US commerce.
The findings on each of the DSTs are supported by comprehensive reports, which have been published on USTR’s website.
On January 13, 2021, the Australian tax authority published Law Companion Ruling 2021/1, providing the Commissioner's view of particular aspects of the law in relation to the hybrid mismatch targeted integrity rule.
The hybrid mismatch targeted integrity rule – contained in Subdivision 832-J of the Income Tax Assessment Act, 1997 – was legislated as part of the package of measures making up Australia's hybrid mismatch rules.
This Ruling also covers the amendments to the targeted integrity rule (and other provisions impacted by the rule's hypothetical operation), contained in Parts 1 and 3 of Schedule 1 to the Treasury Laws Amendment (2020 Measures No.2) Act, 2020.
The Ruling is effective from January 1, 2019.
See Law Companion Ruling 2021/1
On January 13, 2021, the OECD published a list of comments received from various stakeholders on the 2020 review of Action 14 of the base erosion and profit shifting Action Plan.
In particular, the consultation sought stakeholders’ input on experiences with, and views on, the status of dispute resolution and suggestions for improvements, including experiences with mutual agreement procedures in those jurisdictions that obtained a deferral.
Additional comments may still be submitted by January 25. The public consultation meeting will be held virtually on February 1, 2021.