On December 4, 2020, the Australian Taxation Office (ATO) provided an update on the compliance activities undertaken by the Tax Avoidance Taskforce for the 2019–20 financial year.
Compliance activities generated AUD 2.7 billion in tax liabilities and AUD 1.6 billion in audit yield from large public groups and multinational corporations, wealthy individuals, and private groups.
The multinational anti-avoidance law has been successfully implemented with the restructures resulting in more than AUD 8 billion additional taxable sales being booked in Australia, the ATO said.
On November 27, 2020, Bahrain signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, becoming the 95th jurisdiction to join the Convention, which now covers over 1,700 bilateral tax treaties.
The Convention, which became effective with respect to some treaties, will have modified on January 1, 2021, about 650 treaties among the 57 jurisdictions that have already deposited their instrument of acceptance, approval or ratification.
Shaikh Naser Bin Khaled Al Khalifa, Chargé d’Affaires of the Embassy of Bahrain in France, signed the Convention at a signing ceremony held in Paris.
Canada has objected to a reservation to the BEPS Multilateral Convention (MLI) lodged by Denmark, the OECD updated on November 27, 2020.
Denmark lodged with the OECD a list of Reservations and Notifications upon MLI ratification, including a reservation on article 28(2) that states that "Part VI (Arbitration) of the Convention shall apply to a tax case only insofar the Parties agree that (a) the Chair of the arbitration panel shall be a judge, and (b) Denmark shall be permitted to publish abstracts of decisions made by the arbitration panel."
According to Canada, the reservation exceeds the scope of cases for which a reservation may be made under that provision. Canada has stated that the objection would become obsolete should Denmark withdraw above mentioned reservation.
Jurisdictions continue making progress in countering harmful tax practices, as contemplated in the BEPS Action 5 Minimum Standard, with the Inclusive Framework on BEPS now having approved the outcomes of the 2020 reviews by the OECD Forum on Harmful Tax Practices (FHTP).
This year's review by the FHTP has resulted in significant legislative changes to 44 of the 49 reviewed regimes, with 37 having been redesigned or abolished and a further 7 being currently in the process of being amended.
For the remaining 5 regimes, the FHTP has concluded that they do not currently pose BEPS risks. As a result, regimes in the following 18 jurisdictions are now in line with the BEPS Action 5 Minimum Standard.
On November 17, 2020, the US Department of Treasury released the 2020-2021 Priority Guidance Plan setting forth guidance priorities for the Treasury and the Internal Revenue Service.
The Plan contains guidance projects that will be the focus of efforts during the 12-month period from July 1, 2020, through June 30, 2021. The 2020-2021 Priority Guidance Plan contains 191 guidance projects.
As of September 30, 2020, 57 guidance items have been released. In addition to the projects on the 2020-2021 plan, the Appendix lists routine or ministerial guidance that is generally published each year.
See Priority Guidance Plan
On November 18, 2020, the OECD released the latest mutual agreement procedure (MAP) statistics covering 105 jurisdictions and almost all MAP cases worldwide.
The statistics were presented during the second OECD Tax Certainty Day where tax officials and stakeholders from over 60 jurisdictions took stock of the tax certainty agenda and discussed ways to further improve dispute prevention and resolution.
The 2019 MAP statistics show (a) that number of MAP cases keeps increasing; (b) number of MAP cases closed is increasing as well, but at a slower pace; (c) MAP outcomes are generally positive; and (d) MAP cases still take a long time to be resolved.
Swiss Federal Council adopts dispatches on amendment of tax treaties with Liechtenstein, Malta and Cyprus
During its meeting on November 11, 2020, the Swiss Federal Council adopted the protocols of amendment to the tax treaties with Liechtenstein, Malta and Cyprus. The protocols implement the minimum standards for the tax treaties.
The protocols of amendment contain an abuse clause which refers to the main purpose of a tax arrangement or transaction and thus ensures that the tax treaties are not abused. In addition, they strengthen the mutual agreement procedure and thus promote the effective avoidance of double taxation.
The cantons and the business circles concerned have welcomed the conclusion of the protocols of amendment. The protocols have to be approved by the legislative bodies of the countries in question before they can come into force.
On November 11, 2020, the South Africa Revenue Service published for public comments a discussion paper on advance pricing arrangements.
The discussion paper covers the following issues: dispute resolution and tax certainty, considerations in implementing an APA system, recommendations by the Davis Tax Committee, international benchmarking, the way forward and legislative framework.
Comments must be received by December 18.
See Discussion Paper
On November 5, 2020, Panama 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 Panama, the MLI will enter into force on March 1, 2021.
At the time of ratification, Panama listed 17 of its tax treaties that it wishes to cover under the MLI.
On November 3, 2020, Irish Revenue published Revenue e-Brief No. 200/20 pertaining to the domestic law implementing the EU Directive on reportable cross-border tax arrangements (commonly referred to as DAC6).
Revenue e-Brief No. 200/20 notes that Appendix II in the Revenue Tax and Duty Manual Part 33-01-01 has been updated.
Appendix II sets out a list of exemptions and reliefs that are excluded from the scope of hallmark A.3 where certain criteria are met.
On November 4, 2020, the OECD will hold a public consultation workshop in relation to the Draft Toolkit on Tax Treaty Negotiations.
The toolkit authors and expert speakers will discuss how the toolkit can help developing countries, followed by a demo of the interactive, web-based version of the toolkit and a feedback roundtable with experienced negotiators.
Registration is currently open.
See Registration details
On October 29, 2020, the OECD released the new methodology for the peer review of BEPS Action 13, on country-by-country reporting.
The documents form the basis on which the continuing BEPS Action 13 peer review processes will be undertaken. The compilations include the Terms of Reference which are unchanged from the original mandate in 2017 and set out the criteria for assessing the implementation of the minimum standard, and the Methodology which sets out the procedural mechanism by which jurisdictions will complete the peer review from 2020 onwards.
This includes the process for collecting the relevant data, the preparation and approval of reports, the outputs of the review and the follow-up process.
On October 28, the US Internal Revenue Service (IRS) announced that it is updating parameters that the Advance Pricing and Mutual Agreement program (APMA) will follow in implementing resolutions it has reached on behalf of U.S. taxpayers in mutual agreement procedure and advance pricing agreement cases negotiated under US income tax treaties.
The updates significantly curtail so-called “telescoping” of the results of these cases into current tax years; US taxpayers will generally be required to amend the applicable year’s federal income tax return to reflect the changes in taxable income per competent authority resolutions instead of reflecting the changes to taxable income in current tax years.
The update reflects the IRS’s efforts to promote compliance with changes brought to US tax law by the Tax Cuts and Jobs Act and its many interlocking provisions that require careful determination of a US taxpayer’s taxable income and tax attributes.
On October 22, 2020, the OECD released the stage 2 peer review monitoring reports for Czech Republic, Denmark, Finland, Korea, Norway, Poland, Singapore, and Spain.
The reports were released as part of the OECD’s work on Action 14 of the base erosion and profit shifting work.
These reports evaluate the progress made by these eight jurisdictions in batch 3, in implementing any recommendations resulting from jurisdictions' stage 1 peer review reports. The stage 2 monitoring takes into account any developments in the period August 1, 2017 – February 28, 2019 and the MAP statistics are based on years 2016, 2017, and 2018.
The results from the peer review and peer monitoring process demonstrate positive changes across all eight jurisdictions, although not all show the same level of progress.
On October 21, 2020, Hong Kong’s Chief Executive in Council made two orders to implement the tax treaties with Serbia and Georgia.
Both orders will be tabled at the Legislative Council on October 28 for negative vetting. The treaties will enter into force after both Hong Kong and the respective treaty partners have completed their ratification procedures.
Hong Kong signed the tax treaties with Serbia and Georgia in August and October 2020, respectively.