Norway: BEPS related compliance
General rule for Country by Country (CbC) reporting: Norway has introduced Country-by-Country (CbC) reporting requirement for domestic entities with an annual consolidated group revenue of NOK 6.5 billion (equivalent to EUR 750 million) or more for the preceding fiscal year. The first CbC report shall be submitted by December 31, 2017 for fiscal years beginning on or after January 1, 2016.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Norway that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Norway.
Group definition: The country by country reporting requirement applies where the consolidated group revenue in the preceding year is at least €750 million.
Profits and tax paid: 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.
Employees: The average number of employees in each entity must be reported.
Timing: The CbC report must be submitted within twelve months after the end of the tax year.
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Mexico: Documentation requirements: As per the published decree of November 2016, the contractors and assignees defined under the Hydrocarbons Law must prepare and keep transfer pricing documentation, regardless of their income level.
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Greece: Mutual agreement procedure (MAP): The amendments of the draft law implementing Directive 2014/17/EU introduced a Mutual Agreement Procedure under the OECD Income and Capital Model Convention.
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Finland: BEPS related compliance
Master file information: Finland has introduced a requirement for a master file in line with the OECD Base Erosion and Profit Shifting (BEPS) project from 1 January 2017. Master file will contain information regarding description of the group’s capital structure, transfer pricing policy and significant intangible assets utilized.
Reporting structure: In line with the Action 13 of OECD Base Erosion and Profit Shifting (BEPS) project.
Local file information: Finland has introduced a requirement for a local file in line with the OECD Base Erosion and Profit Shifting (BEPS) project from 1 January 2016. A local file will contain specific TP information for each relevant country of operation.
General rule for Country by Country (CbC) reporting: Finland has introduced Country-by-Country (CbC) reporting requirement for 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 first CbC notification must be submitted no later than 31 May 2017, if the accounting period has ended before that date.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Finland that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Finland.
Group definition: The country by country reporting requirement applies where the consolidated group revenue in the preceding year exceeds €750 million.
Profits and tax paid: 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.
Employees: The average number of employees in each entity must be reported.
Timing: The CbC report must be submitted within twelve months after the end of the tax year.
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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Luxembourg: Comparable data: As per the Budget Bill No. 7050, companies have to base their pricing on a comparable transaction with similar economic characteristics.
Comparability analysis: As per the Budget Bill No. 7050, comparability analysis will be based on the identification of the commercial and financial relations between related companies and the determination of the important economic conditions and circumstances connected to this relationship to determine the exact transaction.
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Transfer pricing rule: Luxembourg Parliament adopted law n°7050 with a new article 56bis which will be included in the Income Tax Act (ITA) to codify the arm’s length principle. As per the article 56bis, companies have to determine an arm’s length price for all transactions. It is specified that if a transaction is generally not concluded by unrelated parties, as such, it does not automatically mean that the transaction is not at arm’s length.
BEPS related compliance
General rule for CbC reporting requirement: Luxembourg has introduced Country-by-Country (CbC) reporting requirement for the multinational enterprise (MNE) groups with total consolidated group revenue exceeding €750 million (or an equivalent amount in the local currency) during the prior fiscal year. The law is in accordance with a European Union (EU) Directive of 25 May 2016 requiring all EU Member States to implement a CbC reporting obligation in their national legislation. All Luxembourg tax resident entities that are part of a multinational group with a consolidated annual group turnover exceeding €750 million will need to comply with the CbC reporting requirements for financial years starting on or after 1 January 2016.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Luxembourg that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Luxembourg.
Group definition: The country by country reporting requirement applies where the consolidated group revenue in the preceding year is at least €750 million.
Profits and tax paid: 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.
Employees: The average number of employees in each entity must be reported.
Timing: The CbC report must be submitted within twelve months after the end of the tax year.
Penalty for non-compliance: Failure to comply with the CbC reporting rules may result in a penalty of up to €250,000.
Main corporate tax rate: As per the approved law n°7020, the corporate income tax rate is reduced to 19% in 2017, and then will further reduce to 18% in 2018.
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Cyprus: Corresponding adjustments: As per the Circular 2016/15 issued on 24 November 2016, downward adjustments apply as corresponding adjustments to cases where the taxable profits of a resident enterprise or permanent establishment of a non-resident enterprise resulting from a transaction with another resident enterprise or permanent establishment of a non-resident enterprise are increased to reflect an arm’s length price. The Circular clarifies that compensating adjustments are also accepted.
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Denmark: General rule for CbC reporting requirement: The Danish tax authorities (SKAT) announced on 9 December 2016 that country-by-country (CbC) notifications must be submitted electronically and in a standardized format on Form 05.034. For Fiscal Year 2016 onwards, Danish entities which belong to a group subject to Country-by-Country (CbC) reporting requirements must provide notification to the Danish Tax Administration as to which group entity is responsible for filing the CbC report.
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Hungary: Main corporate tax rate: As per the proposed tax amendments submitted by the government to the parliament, the corporate income tax rate will be reduced from 1 January 2017 and the current progressive rates of 10% and 19% will be replaced with a flat rate of 9%.
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US: General rule for CbC reporting requirement: The US Internal Revenue Service (IRS) has issued Schedule A of IRS Form 8975 and a draft of IRS Form 8975 (Country-by-Country Report) that will be used for country-by-country (CbC) reporting by the US persons that are the ultimate parent entity of a multinational enterprise (MNE) group.
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France: General rule for CbC reporting requirement: The Constitutional Court declared on December 8 2016 that article 137 of the Law on filing an annual CbC report freely accessible to the public was unconstitutional and repealed this article from the Law. The Court ruled that such public CbC reporting disregards the business freedom in so far as it compels companies to disclose their business strategy.
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Peru: Main corporate tax rate: As per the official Gazette introducing amendments to the Income Tax Law, the general corporate income tax rate is increased from 28% to 29.5% from 1 January, 2017.
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Italy: Main corporate tax rate: As per the approved draft Budget Law for 2017, the corporate income tax rate will be decreased to 24% from 2017.
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Bulgaria: Filing of corporate income tax returns: As per the state Gazette of 6 December 2016, a mandatory obligation for electronic filing of corporate income tax returns is introduced from 1 January 2018.
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Sweden: General rule for CbC reporting requirements: The law proposal (Prop. 2016/17:47) implementing the OECD country-by-country (CbC) reporting was presented to the parliament on 6 December 2016. The amendments, if adopted, will enter into force on 1 April 2017.
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UK: Special rules for hybrid instruments or entities: The government will introduce the new hybrid mismatch regime legislation in Finance Bill 2017 as per BEPS action 2 and will take effect from January 1, 2017.
Restriction on interest deductions: The government will introduce rules in Finance Bill 2017 to implement the OECD’s Action 4 Final Report that will limit the tax deductions that companies can claim for their interest expenses and will take effect from April 1, 2017.
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Ireland: General rule for CbC reporting requirement: The Irish regulations require an annual notification to be made to the Revenue Commissioners by the last day of the fiscal year to which the CbC report relates. A detailed step by step guidance on how to make the electronic notification is included in the CbC reporting FAQ published by the Revenue Commissioners on 9 December 2016. The updated guidance confirms that jurisdictions have flexibility as to the due date for the submission of CbC reporting notifications.
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Brazil: BEPS related compliance
General rule for CbC reporting requirement: The Brazilian Federal Revenue Agency on 4 November 2016, issued a proposed Normative Instruction to introduce country-by-country reporting (CbCR) rules in Brazil for Multinational groups where the ultimate parent company is a resident in Brazil would be required to submit country-by country reports if the consolidated turnover exceeds €750 million.
Definition of group: Instead of using the definition of OECD, the proposed Normative Instruction would refer to entities that are related to one another through direct or indirect “control.” The proposed Normative Instruction would then define the concept of control along the lines of Brazilian corporate law.
Timing: As per the proposed Normative Instruction, the CbC report will be embedded in the Brazilian electronic corporate tax return, which uses the calendar year. The relevant period for CbCR would not, however, necessarily be the calendar year as the reporting period used by the group may be a different 12-month period.
Penalty for non-compliance: The proposed Normative Instruction would impose heavy penalties for non-compliance with the CbCR rules. Under the proposed Normative Instruction, transactions and financial operations that are not fully reported in the CbC report would give rise to a penalty of up to 3% of the underlying value of the transactions.
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Belgium: BEPS related compliance
Master file information: As per the Belgian Royal Decrees, the master file form (Form 275.MF) should be filed annually with the Belgian tax authorities within 12 months after the end of the financial year of the group.
Local file information: As per the Belgian Royal Decrees, the local file form (Form 275.LF) should be filed annually as an attachment to the income tax return.
General rule for CbC reporting requirement: As per the Belgian Royal Decrees, Belgian entities which are the ultimate parent company or surrogate parent company of such a multinational group should annually file the CbC reporting form (Form 275.CBC) with the Belgian tax authorities within 12 months after the end of the group’s financial year.
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Poland: Regulations on CbC reporting: The Polish legislature has decided to move the regulations on CbC reporting from Art. 27 par. 6 of the Corporate Income Tax (CIT) Act to the act on the exchange of tax information with other countries with additional obligations to report certain information. The new rules are planned to come into force as of January 1, 2017.
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Ukraine: Definition of controlled transaction: As per the adopted draft law amending the Tax Code, a transaction is considered controlled if (i) the annual income of the taxpayer within the reporting period exceeds UAH 150 million, and (ii) the sum of the transactions with each counterparty exceeds UAH 10 million. If signed by the President, the draft amendments will enter into force on 1 January 2017.
Penalty for documentation failure: As per the adopted draft law amending the Tax Code, late surcharges will be introduced for failure to submit a report on controlled transactions or failure to include all controlled transaction in the report. If signed by the President, the draft amendments will enter into force on 1 January 2017.
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Portugal: Timing for CbC reporting requirement: As per the published Decree no.254/2016-XXI dated 12 December 2016, the deadline to submit the mandatory Country-by-Country (CbCR) notification, with reference to the fiscal year 2016, has been extended to the last day of May 2017.
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Uruguay: Transfer pricing rule: As per the tax Ruling No. 5,947 (the ruling) issued on 6 December 2016, a corporation that has income derived from a tax-exempt activity will be subject to the transfer pricing rules.
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Slovak Republic: Main corporate income tax rate: The corporate income tax rate has been reduced from 22% to 21% and will be effective from 1 January, 2017.
Fees for advance pricing agreement (APA): As per the amendments to the tax law, the fee for applying for a unilateral APA is EUR 10,000. The fee for bilateral and multilateral APAs will be set at EUR 30,000.
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Spain: General rule for CbC reporting requirement: The tax authorities recently published a communication announcing the submission of a model country-by-country (CbC) reporting form (231). The form has not yet been approved.
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Hong Kong: General rule for CbC reporting requirement: The Inland Revenue Department published an announcement on 22 December 2016 regarding detail procedure for country-by-country (CbC) reporting.
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