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.
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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.
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See Note

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.
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See Announcement

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.
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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.
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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.
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See Roadmap

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.
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See Reports

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.
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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. 
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See Comments

The Cypriot tax authority has issued two notices setting out guidance on the requirement for entities to report certain cross-border arrangements.

Cyprus is yet to transpose the EU DAC6 Directive into its domestic law. However, the notice states that entities may voluntarily file information until legislation is given effect to, which is likely to happen later this month. Filing must be done electronically via the government’s Ariadni portal using an XML form.

The guidance briefly covers topics such as hallmarks, concept of intermediaries and relevant taxpayers and the reporting deadlines.

See Notice
See Notice

On December 21, 2020, Barbados 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 Barbados, the MLI will enter into force on April 1, 2021.
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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 4, 2020, the Maltese tax authority issued guidance on the DAC6 reporting requirement.

The guidance includes information on reporting entities, reportable arrangements, the different categories of hallmarks, information to be submitted and how, and penalties.

The guidance provides clarifications on the concepts of the main benefit test and tax advantage.

DAC6 was implemented by Legal Notice L.N. 342 of 2019 with effect from July 2020.

See Guidance

The tax treaty between Hong Kong and Serbia came into force on December 30, 2020, after the completion of the relevant ratification procedures.

The tax treaty was signed in August 2020. The treaty provides for reduced withholding tax rates on certain kinds of payments.

The tax treaty applies for Serbia from January 1, 2021, and for Hong Kong from April 1, 2021.
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See Announcement