Poland has temporarily suspended the reporting of cross-border tax arrangements under the country’s DAC6 law.
The Government said that the deadlines for submitting the forms are suspended until June 30, 2020. The decision was taken in view of the COVID-19 pandemic.
The suspension is applicable to both domestic and cross-border arrangements.
On April 6, 2020, the Dutch Government issued guidance on the application of the OECD’s Multilateral Instrument to implement tax treaty-related base erosion and profit shifting measures.
Netherlands ratified the BEPS MLI on March 29, 2019, and the Instrument entered into force for Netherlands on July 1, 2019.
The guidance covers the following information: what is the MLI, how does the MLI work, and when does the MLI apply. It includes a table setting out the tax treaties that are affected by the MLI.
On April 3, 2020, the OECD issued recommendations on implications of the COVID-19 crisis on cross-border matters based on an analysis of the international tax treaty rules.
The guidance deals with issues affecting the residence of companies for tax purposes, where their management is carried out in another country due to the travel and quarantine restrictions.
The guidance notes that it is unlikely that the COVID-19 situation will create any changes to an entity’s residence status under a tax treaty.
The guidance states: “A temporary change in location of the chief executive officers and other senior executives is an extraordinary and temporary situation due to the COVID-19 crisis and such change of location should not trigger a change in residency, especially once the tie breaker rule contained in tax treaties is applied.”
The guidance also addresses concerns relating to the creation of permanent establishments and change to the residence status of individuals.
On April 1, 2020, the OECD’s Multilateral Instrument to tackle base erosion and profit shifting (BEPS) entered into force for Liechtenstein and Qatar.
Both countries ratified the BEPS MLI in December last year.
Liechtenstein and Qatar have committed to include 14 and 76 of their tax treaties, respectively, under the BEPS MLI.
Sri Lanka has extended the deadline for submission of the Transfer Pricing Disclosure Form, according to an announcement by the Commissioner General of Inland Revenue.
The announcement, made on March 20, 2020, notes that taxpayer may submit the Form until April 30, 2020.
The Form is usually submitted along with the annual tax return. However, the tax authority noted that persons who submit the Form on or before April 30 would be deemed to have submitted it on the date of filing of the tax return.
The deadline was extended “taking into the account the prevailing situation in the country.”
On March 24, 2020, the OECD released the second peer review report, which assesses countries’ efforts to implement the Action 6 minimum standard agreed under the base erosion and profit shifting (BEPS) project.
The second peer review report on the implementation of the Action 6 minimum standard on treaty shopping reveals that a large majority of members of the OECD’s Inclusive Framework on BEPS are translating their commitment on treaty shopping into actions and are modifying their treaty network.
The report includes the aggregate results of the peer review and data on tax treaties concluded by each of the 129 jurisdictions that were members of the Inclusive Framework on BEPS on June 30, 2019. The report recognizes the substantial progress that jurisdictions have made towards the implementation of the minimum standard.
The results of the peer review show that the Multilateral Instrument (MLI) has been the tool used by the vast majority of jurisdictions that have begun to implement the minimum standard.
On March 19, 2020, the French Government gazetted Decree No. 2020-270 dated 17 March 2020 further to the French domestic law implementing the EU Directive on reportable cross-border tax arrangements (commonly referred to as DAC6).
The Decree sets out the information that intermediaries and relevant taxpayers must report to the tax authority.
The list of information is broadly the same as that stipulated in the EU Directive.
In October last year, the Government gazetted Ministerial Order No. 2019-1068 to transpose the provisions of the Directive into French domestic tax law.
See Decree No. 2020-270
On March 19, 2020, the UK tax authority issued for public comments a consultation document on the impact of the double deduction rules and the acting together rules within the hybrid and other mismatches regime at Part 6A of the Taxation (International and Other Provisions) Act, 2010.
Stakeholders have raised concerns that the rules in relation to double deductions are disproportionate, the acting together rules are too widely drawn, and that in some cases taxpayers are unable to obtain the necessary third party information required to fully comply with the legislative requirements.
The tax authority is inviting comments on both the technical application of the rules and impact of the policy as enacted. The move is aimed at ensuring that the rules operate proportionately, as intended.
The consultation closes on May 29, 2020.
See Consultation Document
On March 18, 2020, the South African Revenue Service issued for public comments two draft interpretation notes relating to withholding tax on interest and royalties.
The draft interpretation note on Withholding Tax on Interest provides guidance on the interpretation and application of sections 50A to 50H of the Income Tax Act, 1962 relating to withholding tax on interest.
The draft interpretation note on Withholding Tax on Royalties provides guidance on the interpretation and application of sections 49A to 49H relating to withholding tax on royalties. A draft note was previously issued on Withholding Tax on Royalties, however, due to significant changes and alignment it is reissued for a second round of comment, the tax authority said.
The consultation closes on May 29, 2020.
See Consultation Documents
Chile has signed a tax treaty with India, Chile's Finance Ministry has announced.
The treaty is aimed at increasing direct investment from India to Chile, boost services exports and facilitate technology transfer. Additionally, it will promote the exchange of tax information and reinforce the integrity of the Chilean tax system, providing a better legal framework through which the tax administrations of Chile and India can prevent international tax evasion and resolve tax disputes, the Ministry said in a March 11 release.
Chile's Finance Minister Ignacio Briones said: "This is a relevant and concrete step that deepens and narrows our relations with India, aimed not only at deepening the tax relationship, but also at facilitating the paths to increase investments between each country."
On March 11, 2020, Chancellor Rishi Sunak presented UK’s 2020 Budget to Parliament.
It is announced that the Government would retain the current 19% corporate tax rate in April 2020 (and not reduce the rate to 17%, as was earlier proposed).
The Budget confirms that the Government would introduce a 2% digital services tax (DST) from April 1, 2020. The DST would be levied on revenues earned by digital businesses and would ensure the amount of tax paid in the UK reflects the value these businesses derive from their interactions with, and the contributions of, an active user base.
Next, the Government would publish a consultation on the corporation tax rules that apply to hybrid mismatch arrangements that seek to exploit the differences in tax treatment between two jurisdictions.
Last, from April 1, 2020, the Government would restrict the proportion of annual capital gains that can be relieved by brought-forward capital losses to 50%.
See Budget Policy Paper
On February 28, 2020, Portugal ratified the OECD’s Multilateral Instrument to tackle base erosion and profit shifting (BEPS).
Portugal intends to cover 79 of its tax treaties under the BEPS MLI.
For Portugal, the BEPS MLI will enter into force on June 1, 2020.
On February 29, 2020, a new tax treaty between the Netherlands and Ireland entered into force.
The treaty was signed on June 13, 2019.
The treaty provides for a dividend withholding tax rate of 15% in general cases. Dividends would, however, be exempt if the beneficial owner holds directly at least 10% of the capital of the company paying the dividends throughout a 365-day period.
Interest and royalty payments would be exempt.
Gains derived by a resident of a Contracting State from the alienation of unlisted shares deriving more than 75% of their value from immovable property situated in the other Contracting State (at any time during the 365 days preceding the alienation) may be taxed in the other Contracting State. However, such gains would be taxable only in the first-mentioned State where:
The new treaty would apply from January 1, 2021.
See Ireland-Netherlands Tax Treaty
On February 25, 2020, Nova Scotia’s Finance Minister, Karen Casey, tabled the 2020-21 provincial Budget.
Under the proposal, the general corporate income tax rate would be reduced by 2 percentage points, from 16% to 14%. The move is aimed at helping Nova Scotia businesses “become more competitive, innovate, reinvest in their businesses, and grow.”
In addition, the small business rate is proposed to be reduced by one-half percentage point, from 3.0% to 2.5%.
The changes would be effective April 1, 2020.
See Budget 2020-21
On February 28, 2020, Norway’s Finance Ministry launched for stakeholders’ comments a consultation on a proposal to introduce withholding tax on interest and royalty payments to overseas related parties.
The proposal seeks to impose a 15% withholding tax on interest payments made to related parties located in low-tax jurisdictions.
It is also proposed that a 15% withholding tax be imposed on payments made to non-resident related parties for the use of intangible assets.
The consultation closes on May 27, 2020.