Norway: Base Erosion and Profit Shifting (BEPS) Related Compliance:
General Rule for Country by Country (CbC) Reporting: The Ministry of Finance published a public consultation paper regarding country-by country reporting for tax purposes. As per the proposal, multinational groups where the ultimate parent company is a resident in Norway would be required to submit country-by country reports if the consolidated turnover is at least NOK 6.5 billion (approximately U.S. $720 million). If it is enacted, the country-by country report would have to be submitted for the first time before 31 December 2017.
Main Corporate Tax Rate: The corporate income tax rate is reduced from 27% to 25% as per the 2016 Fiscal Budget which was enacted and came into effect from 1 January 2016.
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Netherlands: Base Erosion and Profit Shifting (BEPS) Related Compliance:
Master File & Local File Information: Netherlands has introduced a requirement for a “master file” and “local file” in line with the OECD Base Erosion and Profit Shifting (BEPS) project starting on or after 1 January 2016. It will be mandatory to provide information for taxpayers with group turnover equal to or exceeding €50 million in the fiscal year preceding the year for which the tax return applies. Master file will contain information regarding description of the group’s capital structure, transfer pricing policy and significant intangible assets utilized. A local file will contain specific transfer pricing information for each relevant country of operation.
General Rule for Country by Country (CbC) Reporting: Netherlands has introduced CbC reporting for domestic entities with consolidated turnover above 12 billion pesos that require to provide information concerning the amount of revenue earned and tax paid by location, activities and places of business for dependent entities and permanent establishments within the group. CbC reporting is applicable to the fiscal year beginning from 1 January 2016. The CbC report must be submitted by a company resident in Netherlands that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company whether resident or non-resident in Netherlands. The country by country reporting requirement applies where the consolidated group revenue in the preceding year exceeded 12 billion pesos. The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax. The average number of employees in each entity must be reported. The CbC report must be submitted within twelve months after the end of the tax year.
Penalty for Non-Compliance: Non-compliance will lead to a monetary fine of €8,100 or custody of six months at the most for the party involved. In case of non-compliance occurs intentionally, then a fine of the fourth category, as provided in article 23, paragraph 4 of the criminal code applies in addition to an imprisonment of four years at the most. It will be applicable for fiscal years starting on or after 1 January 2016.
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Venezuela: Main Corporate Income Tax Rate: The highest bracket of the corporate income tax rate has been increased from 34% to 40% as per the Presidential Decree No. 2.163 issued on 30 December 2015.
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Singapore: Applicable Method if the Supplier of the Goods and Services is the Tested Party and is a Taxpayer in Singapore: As per the transfer pricing guidelines amended by IRAS on 4 January 2016, if the supplier of the goods and services is the tested party and is a taxpayer in Singapore, the cost base should be determined according to the Singapore Financial Reporting Standards and necessary adjustments will be made to ensure the cost base is at arm’s length.
Mutual Agreement Procedure (MAP): The diagram of the MAP process has been updated to provide more clarity which is included in paragraph 9.2 of the third edition of the e-Tax Guide issued on 4 January 2016.
Rules for Advance Pricing Agreement (APA): The general rule regarding when a financial year is considered a roll-back year has been replaced with examples on the APA period and roll-back years in the third edition of the e-Tax Guide issued on 4 January 2016. Taxpayers should submit a formal application to IRAS within 3 months from the receipt of IRAS’ indication that the application can be submitted.
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Malaysia: Financial Services: The Ministry of Finance (MoF) issued a notice on 30 December 2015 informing that the effective date of the Thin Capitalization Rules has been deferred.
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Italy: Controlled Foreign Companies (CFC): The existing black list relevant for the application of the Controlled Foreign Companies (CFC) regime has been repealed by Law no. 208 of 28 December 2015.
Statute of limitations: As per the Law no. 208 of 28 December 2015, the statute of limitation has been extended to seven years in the case of failure to file any tax return. Law no. 208 also repeals the doubling of statute of limitations in case of criminal tax investigations.
Penalty for Non-Compliance of CbC Reporting: In the case of omission or incomplete submission of the Country-by-Country Reporting (CbCR), penalties apply from €10,000 to €50,000.
Main Corporate Income Tax Rate: The Law no. 208 of 28 December 2015 provides a reduction of the applicable corporate income tax (IRES) rate from 27.5% to 24% for financial year 2017 and onwards.
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Finland: Base Erosion and Profit Shifting (BEPS) Related Compliance:
Master File & Local File Information: The Ministry of Finance released a proposal on 21 December 2015 for public comments to introduce “master file” and “local file” requirement as per the recommendations of the OECD’s base erosion and profit shifting (BEPS) Action 13. Master file will contain information regarding description of the group’s capital structure, transfer pricing policy and significant intangible assets utilized. If this provision is enacted, it will be applicable to the fiscal year beginning from 1 January 2017. A local file will contain specific transfer pricing information for each relevant country of operation.
General Rule for Country by Country (CbC) Reporting: The Ministry of Finance released a proposal on 21 December 2015 for public comments to introduce country-by-country (CbC) reporting as per the recommendations of the OECD’s base erosion and profit shifting (BEPS) Action 13. Multinational groups where the ultimate parent company is a resident in Finland would be required to submit country-by country reports if the consolidated turnover exceeds €750 million. The government intends for the provisions to be enacted and effective beginning 2017.
Penalty for Non-Compliance: A failure to comply with the CbC reporting rules would be subject to a penalty and the maximum amount of which is €25,000.
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Israel: Main Corporate Tax Rate: Israel has amended Tax Ordinance and officially published the tax law on 5 January 2016 that reduces the standard corporate income tax rate from 26.5% to 25%. This amendment entered into force on 1 January 2016.
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Oman: Main Corporate Tax Rate: The State Council of Oman has approved the proposed changes to the Income Tax Law on 12 January 2016 by increasing the corporate tax rate from 12% to 15%. The proposed changes are expected to come into force, effective for tax year 2016, starting 1 January 2016, after pronouncement by Royal Decree and publication in the Official Gazette as law.
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Romania: Availability of Advance Pricing Agreement (APA): The President of the National Agency for Fiscal Administration issued Order no. 3735/2015 regarding the procedure for the issuance and amendment of the APA. As per the order, an APA is to be issued for each transaction undertaken with a related party. The provisions of this order are applicable for APA issuance requests submitted to the tax authorities after 1 January 2016.
Unilateral Advance Pricing Agreement (APA): As per the Order no. 3735/2015 issued by the President of the National Agency for Fiscal Administration, the tax authorities can request conversion of unilateral APA into a bi- or multilateral APA in case of a unilateral APA request made by a taxpayer if there is any indication that the cross-border transaction in scope of the APA might have an artificial nature.
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France: Penalty for Non-Compliance of Country by Country (CbC) Reporting: As per the Finance Act for 2016, a failure to produce the report would be subject to a penalty in an amount up to €100,000. Omissions or inaccuracies in the report would be subject to a penalty in an amount of €15 per omission or inaccuracy, with the total amount of such penalties not being less than €60 or more than €10,000.
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South Africa: Base Erosion and Profit Shifting (BEPS) Related Compliance:
General Rule for Country by Country (CbC) Reporting: South Africa has not yet implemented Country-by-Country (CbC) reporting requirements. It has included language in the Tax Administration Act (Act no. 23 of 2015) released as government gazette on 8 January 2016 concerning standards for the exchange of CbC reports. The Tax Administration Act defines ‘international tax standard’ as the CbC Reporting Standard for Multinational Enterprises specified by the Finance Minister. South African MNEs with annual group consolidated turnover exceeding ZAR 11.5 billion in the 2015 financial year will be required to prepare the CbC report for financial years starting on or after 1 January 2016. The reporting deadline is 12 months from the end of the financial reporting year; therefore, the first reporting period for a South African MNE with a 31 December year-end will be 1 January-31 December 2016, with the report due to the SARS by 31 December 2017.
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Japan: Base Erosion and Profit Shifting (BEPS) Related Compliance:
Master File & Local File Information: Japanese Cabinet has approved the 2016 tax reform proposal and introduced a requirement for a master file in line with the OECD Base Erosion and Profit Shifting (BEPS) project starting on or after April 1, 2016. It will be mandatory to provide information for taxpayers with group turnover exceeding JPY100 billion in the fiscal year preceding the year for which the tax return applies. Master file will contain information regarding description of the group’s capital structure, transfer pricing policy and significant intangible assets utilized. A local file will contain specific transfer pricing information for each relevant country of operation.
General Rule for Country by Country (CbC) Reporting: Japan has introduced CbC reporting for domestic entities with consolidated turnover above JPY100 billion that require to provide information concerning the amount of revenue earned and tax paid by location, activities and places of business for dependent entities and permanent establishments within the group. CbC reporting is applicable on or after April 1, 2016. The CbC report must be submitted by a company resident in Japan that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company whether resident or non-resident in Japan. The country by country reporting requirement applies where the consolidated group revenue in the preceding year exceeded JPY100 billion. The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax. The average number of employees in each entity must be reported. The CbC report must be submitted within twelve months after the end of the tax year.
Penalty for Non-Compliance: The tax reform implements penalties for a failure to file the Master File or CbC Report by the due dates. The exact nature of the penalty provision and to whom they apply is expected to be clarified later.
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