The United Arab Emirates signed a tax treaty with Bahrain and Kuwait on February 11.
The treaties were signed at the eighth Annual Arab Fiscal Forum, held in Dubai. Jurisdictions continue to make progress in addressing harmful tax practices through the implementation of the international standard under BEPS Action 5, as per new OECD results on preferential tax regimes and substantial activities in no or only nominal tax jurisdictions.
Recommendations for substantial improvement were made for one jurisdiction (Anguilla) and four jurisdictions (Anguilla, the Bahamas, Barbados, and the Turks and Caicos Islands) had areas where a need for focused monitoring was identified. No issues were identified for Bahrain, Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, the Isle of Man, and Jersey. The FHTP also concluded that since the introduction on June 1, 2023, of its corporate income tax rate of 9 percent, the UAE is now no longer a no or only nominal tax jurisdiction. The total number of regimes reviewed by FHTP has now reached 322 with over 40% of those regimes being (or in the process of being) abolished. The next annual monitoring exercise for no or only nominal tax jurisdictions will take place in the second half of 2024. Belarus has revised the country’s corporate income tax rate.
With effect from January 1, 2024, a corporate income tax rate of 25% applies to income exceeding BYN 25,000,000. The standard corporate income tax of 20% applies to income below BYN 25,000,000. Bermuda’s Ministry of Finance has issued frequently asked questions (FAQs) with respect to the Corporate Income Tax Act, 2023.
The Act will have a general commencement date of 1 January 2025, except for certain provisions for which the commencement date is 1 January 2024. The purpose of these FAQs is to assist entities in determining if and when they are within the scope of the corporate income tax, and to provide guidance as to how certain provisions are to be interpreted or otherwise intended to operate. These FAQs can be found on the Government of Bermuda website at: www.gov.bm/CIT. UK government has published stakeholders’ comments on how to reform transfer pricing, permanent establishments and Diverted Profits Tax legislation to make it clearer and easier to use.
In June last year, the government invited views on the proposals to reform UK law in relation to transfer pricing, permanent establishment, and Diverted Profits Tax. HMRC received 42 written responses from representative bodies, professional advisers and individuals, and held 4 public meetings with over 300 people as part of the consultation. The government has considered these responses and has published the summary of responses document. The responses will be used to inform the further development of these proposals. The government will hold a technical consultation on draft legislation in 2024. Jordan and Switzerland signed a tax treaty on December 13.
The treaty is in line with the OECD’s Base Erosion and Profit Shifting (BEPS) recommendations, and includes an anti-abuse provision. The treaty also contains a provision on administrative assistance in line with the international standard for exchange of information upon request. OECD has published public comments on the proposed changes to the Commentary on Article 5 of the OECD Model Tax Convention and its application to extractible natural resources.
Comments on the proposed changes were invited from stakeholders on November 16, 2023. The proposed changes result from the work by Working Party 1 on Tax Conventions and Related Questions - which is the subgroup of the OECD Committee on Fiscal Affairs in charge of the OECD Model Tax Convention – with a view to developing an alternative provision for inclusion in the Commentary on Article 5 of the OECD Model Tax Convention on activities in connection with the exploration and exploitation of extractible natural resources, together with related commentary. The Belgian Presidency of the Council of the European Union has published a priority program for its six-month term starting January 1, 2024.
In the area of taxation, priority will be given to measures aiming to curb tax evasion, tax avoidance, aggressive tax planning, and harmful tax competition. Work will involve updating the EU’s list of non-cooperative jurisdictions, propelling both legislative and non-legislative initiatives to decrease compliance costs and the burden for cross-border investors, and tackling tax abuse related to withholding taxes. Indonesia’s Finance Ministry has issued a regulation on the implementation of the arm's length principle in related-party transactions.
The regulation covers details on the application of the arm's length principle, transfer pricing documentation requirements, advance pricing agreements, and mutual agreement procedure, among other things. The regulation came into effect on December 29, 2023. France has published the Finance Law for 2024, which implements the Minimum Taxation Directive (2022/2523).
The Directive seeks to incorporate the OECD’s Pillar Two recommendations. The new law introduces an additional tax on global profits subject to an effective tax rate lower than 15%. The additional tax takes the form of either a domestic minimum top-up tax (DMTT); an income inclusion rule (IIR); or an undertaxed profits rule (UTPR). The new rules apply to large groups with an annual revenue of EUR 750 million or more. The IIR and DMTT apply to fiscal years commencing on or after December 31, 2023. The UTPR applies to fiscal years commencing on or after December 31, 2024. On January 9, 2024, the OECD conducted a webinar on the economic impact assessment of the Global Minimum Tax.
The Global Minimum Tax (GMT) introduces significant changes to the international tax architecture and thereby to the taxation of large multinational enterprises. In the webinar, the OECD discussed the latest results on the impacts of the GMT on the taxation of MNEs. The analysis uses new and unique data on MNE worldwide activity and comprehensive estimates of global low-taxed profit to estimate the impact of the GMT. It also extends previous OECD impact assessment work by incorporating a revised methodology that captures the final design of the GMT. Senegal has committed to implement the international Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI) by September 2025.
“We welcome Senegal’s decision to join the other jurisdictions engaged in the automatic exchange of information, as this will advance the country’s fight against tax evasion and other illicit financial flows and might ultimately benefit its domestic resource mobilisation,” said Gaël Perraud, Chair of the Global Forum. The Global Forum will monitor Senegal’s progress in delivering its commitment to start exchanging automatically by September 2025 and updates will be provided to the Global Forum members and the G20. The Global Forum Secretariat will assist Senegal in implementing the AEOI Standard and in addressing any challenges that may arise. The implementation of Pillar Two in the European Union through the Minimum Taxation Directive became effective on January 1, 2024.
The Directive introduces a minimum effective tax rate of 15% for in-scope groups. The Directive was published in the Official Journal of the European Union on December 22, 2022, and entered into force on December 23, 2022. On December 13, 2023, the amending protocol to the Bulgaria-Germany tax treaty entered into force.
The amending protocol was signed on July 21, 2022. The protocol generally applies from January 1, 2024, for withholding and other taxes. On December 30, 2023, the tax treaty between France and Greece entered into force.
The treaty generally applies from January 1, 2024, for withholding and other taxes. From this date, the new treaty replaced the existing tax treaty. |
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