BEPS newsMalta - Legislation implementing ATAD came into effect
On 11 December 2018, Legal Notice 411 of 2018 was published in Government Gazette No. 20,102, implementing the Anti-tax avoidance directive. The Regulations came into force on 1 January 2019. The Regulations introduced the following anti-tax avoidance measures: (i) Interest deductibility limitation rule limits the deductibility of a taxpayer's exceeding borrowing costs to 30% of the taxpayer’s EBITDA. Safe harbour: full deductibility is allowed of exceeding borrowing costs up to EUR 3 million or if a taxpayer can demonstrate that the ratio of its equity over its total assets is equal to or higher than the equivalent ratio of the group. (ii) The Regulations implemented general anti-avoidance rules. (iii) The CFC rule applies if the taxpayer itself, or together with its associated enterprises, holds a direct or indirect participation of more than 50% of the voting rights, or owns directly or indirectly more than 50% of the capital or is entitled to receive more than 50% of the profits of that entity; and the actual corporate tax paid by the entity/PE is less than 50% of the tax that would have been charged to the entity or PE under the provisions of the ITA. Should an entity or PE be treated as a CFC, the non-distributed income of the said entity or permanent establishment arising from non-genuine arrangements which have been put into place for the essential purpose of obtaining a tax advantage are included in the tax base of the taxpayer. The income to be included in the tax base of the taxpayer is limited to the amounts generated through assets and risks which are linked to significant people functions carried out by the controlling company. The CFC rule does not apply in relation to an entity or PE if accounting profits of no more than EUR 750,000 and non-trading income of no more than EUR 75,000; or of which the accounting profits amount to no more than 10% of its operating costs in the tax period concerned. If these subjects are something which you find interesting and would like to discuss further we are happy to be at your service. Contact us at sales@comtaxit.com. Treaty newsIreland - Multilateral Instrument (MLI) approved by Irish government
On 23 October 2018 an order approving the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI) was signed by the Government. The order will be debated in the parliament and is expected to be signed into law before the end of the year. Once the order is in force in primary law it can be deposited with the OECD completing Ireland's ratification of the MLI. Ireland submitted its MLI position at the time of signature, listing its reservations and notifications and including 71 tax treaties that it wishes to be covered by the MLI. If these subjects are something which you find interesting and would like to discuss further we are happy to be at your service. Contact us at sales@comtaxit.com. BEPS newsEstonia - Income Tax Law Amendments Proposed
The proposal to implement the requirements of the EU Anti-Tax Avoidance Directive was approved by government on 26 September 2018. If adopted by the parliament, the amendments will enter into force on 1 January 2019. The following rules will be implemented: Interest limitation rule Deduction of interest expenses will be limited if the borrowing costs in a financial year exceed EUR 3 million and the borrowing costs exceed 30% of EBITDA. Exit tax If a resident company transfers assets from Estonia to its permanent establishment in another state, income tax will be charged on the amount which equals to the fair market value of the transferred asset. If a resident company transfers its tax residency away from Estonia, income tax will not be levied on capital repayments that are equal to capital contributions. If tax residency or assets are transferred within EEA Member States, the payment of exit tax may be deferred by way of payment in instalments over a period of 5 years. General anti-abuse rule Under the proposal, the existing general anti-avoidance rule will be replaced by new provisions. The original provision, which specifically prohibited the abuse of the exemption on dividend distributions, will be annulled. The new rule will broaden the scope of the GAAR and will be applicable to all types of income and transactions. Controlled foreign company rules CFC rules existed in Estonia before, but were applicable only to transactions conducted by individuals. According to the proposal, a CFC is defined as an enterprise in which the resident company alone or together with related parties holds more than 50% of the shares, profits or voting rights; or a permanent establishment. If these subjects are something which you find interesting and would like to discuss further we are happy to be at your service. Contact us at sales@comtaxit.com. |
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