Month: January 2017

Denmark: Publishes new guidelines on TP documentation

Posted on Updated on

The Minister of Taxation issued order BEK no. 401 and 402 regarding transfer pricing documentation. The new documentation guidelines BEK no. 402 will replace the previous guidelines of BEK no. 42. The new guidelines include more specific documentation requirements than under the previous documentation guidelines. The new documentation guidelines are applicable from 1 January 2017.

The documentation requirements:

  • According to to the new rules, taxpayers must use the prices and terms of business with related persons comparable to those used in independent transactions and depending on their size when calculating taxes or income.
  • Taxpayers also need to prepare themselves and keep written records of the prices and conditions for the controlled transactions.
  • The documentation contains following two parts: (i) Master file documentation on the entire group and (ii) country-specific documentation for each taxpayer in the group.
  • Language: The documentation can be prepared in Danish, Norwegian, Swedish or English.
  • Timing: The requested documents must be sent to the Danish tax authority (SKAT) within 60 days.

7 more countries sign tax co-operation agreement to enable BEPS Action 13

Posted on Updated on

According to a press release of 27 January 2017, published by the OECD, as part of continuing efforts to boost transparency by multinational enterprises (MNEs), Gabon, Hungary, Indonesia, Lithuania, Malta, Mauritius and the Russian Federation have signed the Multilateral Competent Authority Agreement for Country-by-Country Reporting (CbC MCAA), bringing the total number of signatories to 57. Lithuania and Hungary joined the Agreement in October and December 2016 respectively.

The CbC MCAA is an efficient mechanism that allows signatories to bilaterally and automatically exchange Country-by-Country Reports with each other, as contemplated by Action 13 of the BEPS Action Plan. It will help ensure that tax administrations obtain a better understanding of how MNEs structure their operations, while also ensuring that the confidentiality and appropriate use of such information is safeguarded. Information on the activation of exchange relationships under the MCAA will be released in due course.

Gabon, Indonesia, Malta, Mauritius and the Russian Federation signed the Agreement at a signing ceremony held during the second meeting of the Inclusive Framework on BEPS on 26-27 January 2017. The inclusive framework brings together over 100 countries and jurisdictions to collaborate on the implementation of the OECD/G20 Base Erosion and Profit Shifting (BEPS) package.

India: Government announces GAAR will be effective from April 1, 2017

Posted on

On 27 January 2017, the Union Finance Ministry has announced that the General Anti-Avoidance Rule (GAAR) will be effective from the 1 April 2017. The General Anti-Avoidance Rule (GAAR) provisions shall be effective from the Assessment Year 2018-19 onwards (i.e. Financial Year 2017-18 onwards). The rules are framed mainly to minimise and check avoidance of tax. Accordingly, India will be the 17th nation in the world to have laws that aim to close tax loopholes.

Canada: Trump Import Tariffs impact

Posted on

The US President gave warning of raised import tariffs on Mexican exports to the United States. He also made an indication that Canadian exports could be subject to the same tax treatment. He said that he would impose 35% import tariff from multinational companies situated in US, especially motor industries in Mexico. He also pointed out on US trading arrangements in Mexico under the North American Free Trade Agreement (NAFTA). In other words, Canada would be directly engaged in any such future reconciliation, the close links between its motor company and the US could also be unprotected. Any warning on Canadian exports tariff could trigger US multinationals (such as general motors and ford) to reconsider their current manufacturing facilities in Canada.

Lithuania, Russia signed the Multilateral Competent Authority Agreement for CbC reporting

Posted on

According to a press release of 27 January 2017, published by the OECD, Lithuania, Mauritius, Gabon, Hungary, Indonesia, Malta, and the Russian Federation have now signed a tax co-operation agreement, the Multilateral Competent Authority Agreement for Country-by-Country Reporting (CbC MCA), to enable automatic sharing of country-by-country information. According to OECD, Total signatories to the agreement CbC MCAA are now 57.

Finland: E-services rule to reduce VAT refund fraud

Posted on Updated on

The Finnish government is going to add e-service rule in value added tax system from February 1 to mitigate the VAT refund fraud. Taxpayers who are registered for value-added tax must use the MyTax e-service when providing their bank account details.

Paper filing will not be permitted for corporate taxpayers and all VAT-registered taxpayers unless there is a special reason for it. Examples of such a special reason include a situation where online filing of a notice is not possible due to technical difficulties.

South Africa: SARS issues tax exemption guide for public benefit organization

Posted on

The South African Revenue Service (SARS) has issued a tax exemption guide on the income tax exemption for a public benefit organization (PBO) carrying on a public benefit activity (PBA).

The guide provides general guidance on approval and taxation of public benefit organisations and approval under section 18A to issue tax-deductible receipts. The guide deals with the some taxes area like income tax, donation tax, estate duty, transfer duty, dividends tax, capital gains tax, value-added tax, employees’ tax and customs and excise etc. that may affect organisations approved as public benefit organisations. Information relating to taxes, duties, levies and contributions reflect the rates applicable as at the date of issue of this guide.

The guide is not an “official publication” as defined in section 1 of the Tax Administration Act 28 of 2011 and accordingly does not create a practice generally prevailing under section 5 of that Act. It is also not a general binding ruling under section 89 of the Tax Administration Act. Should an advance tax ruling be required, visit the SARS website for details of the relevant application procedure.