The US Ways and Means Republicans have called on the Biden Administration to take swift and strong steps against Canada’s decision to impose a discriminatory digital services tax (DST) on US businesses.
In their July 11 letter to United States Trade Representative (USTR), Ambassador Katherine Tai, Republicans on the US Ways and Means Committee urged the Biden Administration to utilize authorities under Section 301 of the Trade Act to send a strong response to Canada, given the threat the DST poses to US businesses. The letter was signed by every Republican on the Committee. Statutory corporate tax rates are stabilizing worldwide after a lengthy period of falling rates, according to new OECD data.
The 2024 edition of OECD Corporate Tax Statistics shows that average statutory corporate income tax rates have remained steady at 21.1 percent over the past three years. This follows a two-decade period that saw average statutory corporate income tax rates decline from 28 percent in 2000 to 21.1 percent in 2021. Anticipation of the new global minimum tax, agreed by more than 140 members of the Inclusive Framework on BEPS, may have contributed to the recent stabilization, according to the report. The latest edition of Corporate Tax Statistics also points to a stabilization of certain tax incentives designed to attract mobile intangible assets and their related income. UK Government has published guidance on preparing for the two new taxes introduced in the UK as part of the international response to the challenges of digitalization.
The government had announced two new taxes as part of the UK adoption of the OECD Pillar Two rules: the Multinational Top-up Tax (MTT); and the Domestic Top-up Tax (DTT). These will apply to accounting periods that begin on or after December 31, 2023. MTT will require all groups with both UK and non-UK entities and sufficient consolidated revenue to register with the tax authority. A charge may arise on UK parent members within such a group, where a UK parent member has an interest in an entity in a non-UK jurisdiction, and the group’s profits arising in that jurisdiction are taxed below the minimum rate of 15 percent. DTT will require all groups with UK entities and sufficient consolidated revenue to register with the tax authority. A charge may arise on UK members within a domestic or multinational enterprise group where UK profits are taxed below the minimum rate of 15 percent. Groups will have UK obligations even if they do not have MTT or DTT liabilities. These obligations will apply to both UK-headed and non-UK headed groups irrespective of whether the jurisdiction of the Ultimate Parent Entity implements Pillar Two. The OECD has published for stakeholders’ comments a draft version of the XML Schema and User Guide developed as part of the OECD’s work on formulating the Global Anti-Base Erosion (GloBE) model tax rules.
The draft version of the GIR XML Schema and User Guide is designed to both facilitate domestic GIR filings, wherever appropriate, and to be the technical format for exchanging GIR information between tax administrations. Comments must be received by August 19. The Nigerian Government has approved a new withholding tax regime as part of the ongoing fiscal policy and tax reforms.
The new withholding tax regime incorporates tax measures to curb tax evasion and minimize tax avoidance. It contains changes to reflect emerging issues and adopt global best practices. The new withholding tax regime provides clarity on the timing of deduction and sets out definitions of key terms. The Bahamas’ Finance Ministry has published guidance on the mutual agreement procedure (MAP) framework set out in the Tax Information Exchange Agreement between The Bahamas and Japan.
The guidance discusses several aspects of the MAP framework including who can request a MAP, how to initiate a MAP request, the processing of MAP requests, and implementation of the agreement. The guidance states that the Competent Authority will strive to resolve cases in a timely manner and keep the taxpayer informed of the status of their request on an ongoing basis. The dividends, interest, and capital gains articles of the tax treaty between Austria and Belarus have been suspended until December 31, 2026.
With respect to Belarus, the suspension is effective from June 1, 2024, to December 31, 2026. With respect to Austria, the suspension is effective from June 28, 2024, to December 31, 2026. In general, the allocation of taxation rights between Austria and Belarus under the tax treaty remains unaffected, with the exception of Articles 10, 11, and 13 of the tax treaty. The Inland Revenue Authority of Singapore has published an updated version of the country’s transfer pricing guidelines.
The seventh edition of the transfer pricing guidelines, which was published on June 14, 2024, incorporates frequently asked questions (FAQs) regarding the making of working capital adjustment. The guidelines include new exemption rules for related party domestic loans entered into on or after January 1, 2025. Additionally, there is an increase in the threshold for exemption from transfer pricing documentation for certain transactions from SGD 1 million to SGD 2 million. Updated guidelines include new FAQs regarding transfer pricing documentation for long term loans and provision of information to supplement an existing transfer pricing documentation. On May 30, 2024, Ireland and Oman signed a tax treaty.
Further details will be reported when available. OECD Secretary-General Mathias Cormann has welcomed the commitment of the 147 Members of the Inclusive Framework on Base Erosion and Profit-Shifting to keep working to resolve any remaining issues in time to start the signing process of the Multilateral Convention (MLC) implementing Amount A of Pillar One by the end of June this year.
This week’s Inclusive Framework plenary meeting has clarified the outstanding issues in its ongoing effort to reach agreement on a fairer allocation of taxing rights across the globe. It has also been an opportunity to reflect on the significant progress already realized over more than a decade of multilateral discussions on addressing the tax challenges arising from digitalization and globalization of the economy. The Republic of Moldova joins international efforts against tax avoidance by joining the OECD/G20 Inclusive Framework on BEPS, an international collaboration with over 145 member countries and jurisdictions.
Through its membership, Moldova has also committed to addressing the tax challenges arising from the digitalization of the economy by participating in the Two-Pillar Solution to reform the international taxation rules and ensure that multinational enterprises (MNEs) pay a fair share of tax wherever they operate. Collaborating on an equal footing with all other members of the Inclusive Framework, Moldova will participate in the implementation of the BEPS package to tackle tax avoidance, improve the coherence of international tax rules and ensure a more transparent tax environment. The 16th meeting of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) took place in Paris from May 28-30. More than 400 delegates representing 140 delegations (including 127 countries and jurisdictions and 13 observers) participated in the meetings.
During the three days of productive meetings, the Inclusive Framework discussed a range of topics including the implementation and impact of the BEPS minimum standards, the opportunities to further broaden the reach of this impact through technical assistance and capacity building, the status of and experience with implementation of the global minimum tax, plans for participation in a signing ceremony for the Subject to Tax Rule that will be held in Paris on 19 September 2024, and our ongoing tax policy work and delegate interest in role of tax in addressing inequality. We also engaged in a reflection on challenges and opportunities associated with the Inclusive Framework journey to date and opportunities for further enhancing effectiveness and inclusivity. Finally, following productive discussions on remaining open issues related to Pillar One of the Two-Pillar Solution to address the tax challenges arising from the digitalization of the economy, we can report that the Inclusive Framework on BEPS is nearing completion of the negotiations on a final package on Pillar One (which includes a text of the Multilateral Convention (MLC) for Amount A and a framework for Amount B) with the goal of reaching a final agreement in time to open the MLC for signature by the end of June. In this regard, we welcome the expressions of interest by France and Brazil in hosting a signing ceremony as soon as practical after the MLC is opened for signature. Fiji joins international efforts against tax avoidance by joining the OECD/G20 Inclusive Framework on BEPS, an international collaboration with over 145 member countries and jurisdictions.
Through its membership, Fiji has also committed to addressing the tax challenges arising from the digitalization of the economy by participating in the Two-Pillar Solution to reform the international taxation rules and ensure that multinational enterprises (MNEs) pay a fair share of tax wherever they operate. Collaborating on an equal footing with all other members of the Inclusive Framework, Fiji will participate in the implementation of the BEPS package to tackle tax avoidance, improve the coherence of international tax rules and ensure a more transparent tax environment. US Treasury Secretary Janet Yellen said last week she is trying to save a part of the global corporate tax deal focused on highly profitable multinational firms, but India is refusing to engage on issues important to US interests.
Yellen told Reuters in an interview on the sidelines of a G7 finance leaders meeting in Italy that China also has been “all but absent” in the negotiations to finalize “Pillar 1” of the OECD corporate tax deal reached in principle in 2021 that involves 140 countries. “We are actively engaged in this negotiation,” to meet an end-June deadline for the deal, Yellen said. “We’re committed to doing everything we possibly can to make it work.” While most countries support the US position on these issues, “we have a problem with India. India will not engage with us,” she said. On 8 May 2024, the Directorate-General for Taxation and Customs Union (DG TAXUD) of the European Commission published the Taxation and Customs Union Management Plan 2024.
To develop a stronger, fairer and more efficient Single Market, DG TAXUD will continue to push for the swift implementation of the landmark 2-pillar international corporate tax reform. The reform proposal, agreed in 2021, entails the reallocation of taxing rights for the 100 biggest and most profitable multinationals (Pillar One) and the establishment of a minimum effective tax rate worldwide (Pillar Two). |
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