On September 29, 2020, Jordan 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 Jordan, the MLI will enter into force on January 1, 2021.
At the time of ratification, Jordan listed 37 of its tax treaties that it wishes to cover under the MLI.
On September 29, 2020, a further four countries signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, bringing the total number of jurisdictions that participate in the Convention to 141.
These four countries are: Botswana, Eswatini, Jordan and Namibia.
The Convention enables jurisdictions to engage in a wide range of mutual assistance in tax matters: exchange of information on request, spontaneous exchange, automatic exchange, tax examinations abroad, simultaneous tax examinations, and assistance in tax collection. It guarantees extensive safeguards for the protection of taxpayers' rights.
The European Commission is challenging the judgement of the General Court of the European Union in the Apple State aid case in Ireland.
EU Competition Commission Margrethe Vestager announced on September 25, 2020: “The General Court judgment raises important legal issues that are of relevance to the Commission in its application of State aid rules to tax planning cases. The Commission also respectfully considers that in its judgment the General Court has made a number of errors of law. For this reason, the Commission is bringing this matter before the European Court of Justice.”
Ireland’s Finance Minister Paschal Donohoe responded thus: “The facts of the case, as established by the GCEU, demonstrate, as Ireland has always contended, that no State aid was given and that the Irish branches of the relevant Apple companies paid the full amount of tax due in accordance with the law. Ireland has always been clear that the correct amount of Irish tax was paid, and that Ireland provided no State aid to Apple.”
On September 22, 2020, the OECD announced that Albania, Bosnia and Herzegovina, and Costa Rica have deposited their instruments of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.
These latest ratifications bring to 52 the number of jurisdictions that have already deposited their acceptance or ratification instrument. The Convention will become effective on January 1, 2021, for over 500 treaties concluded among the 52 jurisdictions, with an additional 1200 treaties to become effectively modified once the MLI will have been ratified by all Signatories.
More countries are expected to deposit their instruments of ratification before September 30 in order for the MLI to start to take effect as of January 1, 2021.
On September 16, 2020, the UK Government issued a Policy Paper setting out the interest rates for over and under payments of Digital Services Tax (DST) liabilities.
The interest rate applicable to the payment of a DST liability paid before its required due date will be the reference rate less 0.25%, or 0.5% if greater.
The interest rate applicable to the repayment of a DST liability that is overpaid on or after its required due date will be the reference rate less 1%, or 0.5% if greater.
The interest rate applicable when there is an underpayment of the DST liability will be the reference rate plus 2.5%.
The changes would come into force from October 14, 2020.
See Policy Paper
On September 15, 2020, the Dutch Government issued the 2021 Tax Plan, which includes key corporate tax measures.
The previously announced reduction of the high corporation tax rate will be scrapped; the rate will remain 25%.
The reduction of the low corporation tax rate from 16.5% to 15% will go ahead as planned. In addition, more SMEs will pay this lower rate in the years ahead. From 2021, the low rate will apply to profits of up to €245,000 instead of €200,000. In 2022 this limit will be raised further to €395,000.
The scope for companies to offset losses will be reduced as of 2021, generating €555 million on a structural basis. This means that businesses will pay a more constant amount of corporation tax, and that fewer businesses will pay no tax at all in a particular year.
See 2021 Tax Plan
The Platform for Collaboration on Tax (PCT) – a joint initiative of the IMF, OECD, UN and World Bank – has extended the deadline for the public consultation on its draft Toolkit on Tax Treaty Negotiations.
In June 2020, the PCT invited feedback from the public on a draft toolkit designed to help developing countries build capacity in tax treaty negotiations. Comments were specifically invited on:
The public consultation on the Toolkit on Tax Treaty Negotiations is now accepting submissions until September 24, 2020.
On September 8, 2020, Cyprus and Russia signed a protocol to amend the Cyprus-Russia tax treaty.
The protocol increases the withholding tax on dividends and interest income to 15%, while excluding from the said withholding tax income on interest and dividends certain regulated entities, such as pension funds and insurance companies, as well as listed entities with specific characteristics.
Additionally, exemption from the said withholding tax applies for interest payments from corporate bonds, government bonds, and Eurobonds.
On September 8, 2020, the Inland Revenue Authority of Singapore published guidance on transfer pricing in view of the COVID-19 pandemic.
The guidance is published in the form of frequently asked questions. Following questions are answered:
Governments have taken unprecedented fiscal action in response to the COVID-19 crisis, but countries will need to support economic recovery in the face of significantly increasing fiscal challenges, according a new OECD report.
The Tax Policy Reforms 2020 Report - issued on September 3 - describes the latest tax reforms across OECD countries, as well as in Argentina, China, Indonesia and South Africa. The report identifies major tax policy trends adopted before the COVID-19 crisis and takes stock of the tax and broader fiscal measures introduced by countries in response to the pandemic, from its outbreak to June 2020.
The report shows that while the size of fiscal packages in response to the COVID-19 crisis has varied across countries, most have been significant, and many countries have taken unprecedented action. It also provides an overview of the reforms introduced before the COVID-19 crisis.
See Tax Policy Reforms 2020 Report
On September 1, 2020, the US Internal Revenue Service issued final regulations providing additional guidance on the base erosion and anti-abuse tax (BEAT).
To limit profit-shifting, the Tax Cuts and Jobs Act added a new tax, the BEAT. The BEAT focuses on large US corporations that make deductible payments to related foreign parties.
The final regulations provide detailed guidance regarding how to compute certain BEAT calculations for groups of related taxpayers. The final regulations also contain rules permitting taxpayers to waive deductions for purposes of the BEAT, and additional guidance regarding partnerships and anti-abuse rules.
See Final Regulations