1. OECD approves the 2017 update to the OECD Model Tax Convention

Transcription

1 1. OECD approves the 2017 update to the OECD Model Tax Convention The OECD Council approved the contents of the 2017 Update to the OECD Model Tax Convention (the OECD Model). The 2017 Update, which was previously approved by the Committee on Fiscal Affairs. The 2017 Update primarily comprises changes to the OECD Model that were developed through the OECD/G20 BEPS Project. The introduction to the contents of the 2017 Update describes in detail all of these changes, which include, in particular: changes to the Title and Preamble of the OECD Model, changes to the section of the Commentary on Article 1 (Persons covered) on Improper use of the Convention, and a new Article 29, which includes in the OECD Model a limitation-on-benefits, an anti-abuse rule for permanent establishments situated in third States; changes to Article 5 (Permanent establishment) and its Commentary resulting from the Report on Action 7 (Preventing the Artificial Avoidance of Permanent Establishment Status); and changes to Article 25 (Mutual agreement procedure) and to the Commentaries on Articles 2, 7, 9 and 25 contained in the Report on Action 14 (Making Dispute Resolution Procedures More Effective). Source: 1

2 2. OECD releases mutual agreement procedure (MAP) statistics for 2016 Improving the effectiveness and timeliness of dispute resolution mechanisms is the aim of Action 14 of the BEPS Action Plan and is also part of the continuous efforts to enhance tax certainty. One of the elements of the Action 14 minimum standard requires jurisdictions to seek to resolve mutual agreement procedure ("MAP") cases within an average timeframe of 24 months. To monitor compliance with this, members of the Inclusive Framework on BEPS have committed to report their MAP statistics pursuant to an agreed reporting framework. Such reporting provides a tangible measure of the effects of the collective implementation of some elements of the Action 14 minimum standard and now includes data from over 65 jurisdictions. These MAP statistics are now available for the 2016 reporting period. Source: 2

3 3. Ireland deploys high-tech tools to combat offshore Tax Evasion The Irish Revenue will employ software that matches taxpayer data with that provided by other jurisdictions and will analyze taxpayer social media accounts as part of an inquiry to identify and pursue taxpayers engaged in offshore tax evasion and avoidance, the agency announced. Data analytics will be an integral part of developing a complete view of taxpayers and their activities, according to a Revenue press release. The agency will use proprietary software to match the data received from other tax administrations to Revenue s taxpayer records and then cross-check it against prior returns to ensure that all relevant income and assets have been declared, Revenue said. Taxpayers with defaults relating to offshore property and accounts can no longer avail themselves of the benefits of the voluntary disclosure regime, Declan Rigney, head of Revenue s planning division, said in a statement. This means anyone who did not come forward by the May deadline now faces substantially higher penalties, publication in the Quarterly List of Tax Defaulters and possible criminal prosecution, he said. Source: 3

4 4. OECD invites taxpayer input on fourth batch of Dispute Resolution peer reviews Improving the tax treaty dispute resolution process is a top priority of the BEPS Project. The Mutual Agreement Procedure (MAP) peer review and monitoring process under Action 14 of the BEPS Action Plan was launched in December 2016 with the peer reviews of the two first batches already completed and of the third batch underway. The peer review process is conducted in two stages. Under Stage 1, implementation of the Action 14 minimum standard is evaluated for Inclusive Framework members, according to the schedule of review. Stage 2 focuses on monitoring the follow-up of the recommendations resulting from jurisdictions' Stage 1 report. The OECD is now gathering input for the Stage 1 peer reviews of Australia, Ireland, Israel, Japan, Malta, Mexico, New Zealand and Portugal, and invites taxpayers to submit input on specific issues relating to access to MAP, clarity and availability of MAP guidance and the timely implementation of MAP agreements for each of these jurisdictions using the taxpayer input questionnaire. As taxpayers are the main users of the MAP this input is key for the review process and we encourage taxpayers to complete the questionnaire and return it to fta.map@oecd.org (in Word format) by 22 December 2017 at the latest. Source: 14.htm?utm_source=Adestra&utm_medium= &utm_content=OECD%20invites%20taxpayer%20input%20on%20fourth%20batch%20of%20 Dispute%20Resolution%20peer%20reviews&utm_campaign=Tax%20News%20Alert% &utm_term=demo 4

5 5. UK proposes tax on royalties paid to low tax countries, hitting multinational digital businesses UK Chancellor Philip Hammond in his Autumn Budget speech proposed a new temporary tax on multinational firms designed to primarily reach firms in the digital sector. Following consultation, the UK government will introduce legislation taxing multinational firm profits from selling products and services to UK customers where those profits have been transferred via royalties to a related entity in a low-tax country that owns the group s intangible assets. The new tax would be implemented by extending the withholding tax on royalties. Hammond said the new tax would only partially address the problem of inadequate taxation of digital firms and is a short term solution pending international agreement on a rewrite of the international tax rules. Source: 5

6 6. Transfer pricing safe harbors offer potential for developing countries, Paper says Unlike most other OECD recommendations on international tax policy, transfer pricing safe harbors for routine functions may provide a significant and near-term revenue boost for developing countries, according to a paper by the International Centre for Tax and Development. The working paper on technical assistance regarding implementation of the base erosion and profitshifting project argues that safe harbors may be the best enforcement option that developing countries have within the current international transfer pricing framework. Although they can vary significantly in design, transfer pricing safe harbors generally allow taxpayers the option to price routine service or distribution transactions using a fixed ratio of operating profit to costs or revenue. Source: 6

7 7. Vestager gives OECD until spring to resolve digital economy issues The OECD has until spring to produce an international plan for taxing the digital economy or the EU will move forward with its own proposal, according to EU Competition Commissioner Margrethe Vestager. Speaking at a French economy ministry event in Paris, Vestager said the EU will consider the results of the work the OECD is doing on the digital economy, but will use its own consultation launched in October to ensure that it can move forward on its own if necessary. Vestager said the solution will require international cooperation, and she commended the recommendations that French President Emmanuel Macron made recently. Macron has supported a single EU-wide tax as well as a reform of the way digital companies are taxed and regulated. Vestager said she does not want the EU to slow down innovation, but that it needs to ensure that digital companies are taxed fairly and that the public s data is protected. Source: issues/2017/11/22/1xc0j 7

8 8. HMRC given new powers against tax scheme promoters The Chartered Institute of Taxation (CIOT) has highlighted that two significant new penalties for tax non-compliance are now effective, following Royal Assent to Finance. The first of these is a substantial penalty for "enablers of tax avoidance". The second is a penalty for "failing to correct relevant offshore tax non-compliance," which applies to failures to correct inaccuracies and omissions existing at the end of the tax year 2016/17 within the period from April 6, 2017, to September 30, Chris Davidson, Chair of the CIOT's Management of Taxes Sub-committee, said: "The enabling penalty is a significant provision to support HMRC's continued offensive against tax avoidance. Setting the penalty at the level of the enabler's fee should act as a very strong deterrent to anyone considering enabling abusive tax avoidance schemes in the future. By focussing on abusive tax arrangements, the measure will help tackle those who enable tax avoidance while ensuring that the ability of the overwhelming majority of tax practitioners to provide genuine professional advice to their clients." Source: html 8

9 9. United States: IRS update to jurisdiction status table, country-by-country reporting The IRS announced recently signed competent authority arrangements (CAAs) have been added as new content concerning country-by-country (CbC) reporting. The IRS s jurisdiction status table includes recently signed CAAs for the exchange of CbC reports. The IRS table also includes: Operative dates of the CAAs Jurisdictions that are in negotiations for a CAA, have satisfied the U.S. bilateral data safeguards and infrastructure review. According to the IRS, CbC reporting data will be exchanged pursuant to bilateral CAAs that rely on income tax treaties, Tax Information Exchange Agreements, or the Convention on Mutual Administrative Assistance in Tax Matters that permit automatic exchanges of information. Source: 9

10 10. Italian senator proposes 'Equalization Tax' for online sales by Multinationals Massimo Mucchetti, president of the Senate s Industry, Commerce, and Tourism Committee, proposed the 6 percent tax in a blog posting on his website. He singled out Google, Facebook, Apple, Expedia, Airbnb, and Booking.com as companies that would be affected by the proposed tax. The Financial Times reported that the tax would require Italian purchasers of services such as internet ads to withhold 6 percent of the price paid to the internet company and remit the tax to the Italian Revenue Agency. Transactions under 30 would be exempt from the tax, as would purchases made by individuals. Under Mucchetti s proposal, banks and credit card companies would be required to report transactions involving internet companies to the Italian Revenue Agency. He also proposed that the agency be required to determine whether a nonresident internet company has a permanent establishment in Italy if it has more than 1,500 transactions for an aggregate total of at least 1.5 million in any half-year period. In September, the French government proposed an equalization tax based on the turnover of large technology companies such as Google, Apple, Facebook, and Amazon. The so-called GAFA group has been accused of avoiding European national taxes by artificially shifting a large part of their European revenues from higher-tax countries to jurisdictions with lower rates. Source: 10