CbC Reporting Update on Sweden and Hungary, Amendments to withholding taxes in South Africa and Oman

BEPS news

Sweden
On 3 March 2017, the proposed law (Prop. 2016/17:47) implementing OECD country-by-country (CbC) reporting and transposing EU Directive 2016/881/EU on the exchange of ruling reports between EU Member States into national legislation, as presented to the parliament was adopted by the parliament. The amendments will enter into force on 1 April 2017. The most important elements of the new legislation are summarised below:

New transfer pricing documentation
The new format of Master and Local file will apply to companies which financial year starts on or after 1 April 2017. The Master file will have to be prepared with the parent company's tax return and the Local file by the time the local entity is required to submit its tax return. 

Entities with less than 250 employees and with either revenue below SEK 450 million or total value assets not exceeding SEK 400 million will be exempt from the obligation of preparing such documentation. 
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Companies covered by the legislation include foreign entitities with PEs in Sweden, Swedish companies with PEs abroad and Swedish unlimited partnerships (Handelsbolag). For the unlimited partnerships to fall under the scope of documentation, they need to have transactions with non-resident entities and the partnership's profits are to be taxes in Sweden.

The safe harbour of unsignificant value transaction will also provide an exemption from filing the documentation e.g. transactions not exceeding SEK 5 million in a financial year, however tax authorities have a right to access the meaning of 'insignificant transaction' on a case-by-case scenario.  

Country by Country Report
The Report will have to be submitted by 31 December 2017 for financial years starting on or after 1 January 2016. The threshold for submitted CbC Report in SEK 7 billion. Following the OECD Guidelines, if there is no obligation to submit CbC report in the country where the parent company is resident, Swedish tax authorities may require Swedish subsidiary to submit it on behalf of the parent company. 

Note: Swedish companies should notify tax authorities by 30 April 2017 as to which entity will submit CbC report for financial years that ended before 1 April 2017.

Hungary
Hungarian government released the draft version on implementation on CbC reporting. The proposal aims at implementing EU Directive 2016/881, which also follows OECD recommendations on Country-by-Country reporting. Hungarian companies that are part of a MNE group with a consolidated income exceeding € 750 million will have to comply with the reporting standard. Additionally, companies will also have to notify tax authorities within 12 months from 31 December 2016 as to which entity will submit the report. Both lack of notification and false information may be subject to penalties. Once enacted, the legislation will apply retroactively for fiscal years starting 1 January 2016. 

Treaty news

Croatia – Kosovo
Signed a new tax treaty on 6th March 2017. Further details will be reported in due course.

Cyprus – Iran
Tax treaty signed on 4th August 2015 will enter into force 1 January 2018.

Cyprus – Jersey
Tax treaty signed on 11th July 2016 will enter into force 1 January 2018.
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Panama – Vietnam
Tax treaty signed on 20th August 2016 will enter into force 1 January 2018. 

Local tax news

South Africa
The Budget Speech delivered in the end of February amended effectively the withholding tax rates on dividends from South Africa. Dividends paid out of profits on or after 22  February 2017 will be subject to a higher rate of 20%. Dividends paid before that day can apply the older rate of 15%.
 
Oman
The recent corporate tax reform in Oman introduced several new measures, including

• a higher corporate tax rate of 15% (increased from 12%),
• dividends, interest payments and service fees will be subject to 10% withholding tax (subject to potentially lower rates under applicable tax treaties),
• tax exemption for manufacturing industry will be applicable for 5 years only without a possibility of extension.
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Additionally, Omani Capital Market Authority released a clarification of the treatment of dividends, which included, inter alia, that dividends paid to nationals of Gulf Cooperation Council Members should be exempt from the withholding tax obligation. However, it is not clear yet whether that treatment will be also applicable to corporate taxpayers.