AGREEMENTS

Hong Kong signs AEOI agreement with Indonesia

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Hong Kong has signed an agreement with Indonesia for conducting automatic exchange of financial account information in tax matters (AEOI), a Government spokesman said on June 16, 2017.

The spokesman added that they have been seeking to expand Hong Kong’s AEOI network with their tax treaty partners. Including the agreement with Indonesia, Hong Kong now has 13 AEOI partners. The others are Belgium, Canada, Guernsey, Ireland, Italy, Japan, Korea, Mexico, the Netherlands, Portugal, South Africa and the United Kingdom.

The spokesman also added that the Government plans to extend the application of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters to Hong Kong. An amendment bill will be introduced into the Legislative Council in late 2017.

Morocco: Finance Law 2017 gazetted

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The Government of Morocco published the Finance Law 2017 on 12th of June 2017 in the official gazette. The law provides an anti-avoidance rule, a tax relief in case of dividends, interest, and rental income for real estate collective investment undertakings under some conditions, A 3 years VAT postponement for the acquisition of equipment developed for investment projects of at least MAD 100 million according to an investment agreement with the government for both new and remaining corporations, a tax relief extends for five years for profits resulting from export operations to indirect exporters conditioning that exporters do not stayed inside the free zones. Additionally, the conditions for tax exemption in case of rental income are: the only activity of the undertaking is the lease of immovable features used for professional purposes, no less than 85% of the annual rental profits are distributed and the assets added to the undertaking are measured by a certified contributions assessor and kept for at least 10 years. The Finance law 2017 applies from 1st January 2017 and it is available in French language.

Nigeria: Government approves signing of MLI to implement tax treaty related BEPS measures

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The Government on 14th of June 2017, approved the signing by Nigeria of the Multilateral Instrument (MLI) to implement into bilateral tax treaties the tax treaty-related measures arising from the OECD / G20 BEPS Project to tackle base erosion and profit shifting. First signing ceremony held on 7th of June 2017 in Paris. That time, eight countries, including Nigeria formally expressing their intent to sign.

The BEPS recommendations combat tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid. The multilateral instrument will enable countries to adjust their bilateral tax treaties to include BEPS treaty-related recommendations without having to renegotiate each bilateral treaty.

UAE: Excise tax to be implemented by the end of 2017

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The Finance Ministry of the United Arab Emirates (UAE) on 10th of May 2017 arranged a briefing session in respect of the new Excise Tax Law. Implementation of the UAE Excise Tax Law follows the Gulf Cooperation Council (GCC) Ministers of Finance approval in principle, of a unified agreement, in June 2016. In accordance with agreement, excise duty will be introduced in the UAE by the fourth quarter of 2017. The other GCC Member States also have a plan to implement the excise tax by the end of 2017. The 5 per cent excise tax is to be implemented across the GCC countries by 2018. The UAE government has proposed a 50 per cent excise tax on carbonated drinks, and a 100 per cent tax on energy drinks, tobacco and tobacco products. The importer will need to pay the accurate amount of excise tax to the tax authority before discharging the goods from the designated storage area. The final excise tax law is expected to be published before the end of June.

Mauritius will sign the MLI by the end of June 2017

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The Ministry of Finance announced in a statement on 7 June 2017, that Mauritius will sign the OECD Multilateral Agreement to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS) by the end of June 2017. The agreement will amend bilateral tax treaties to include measures recommended by the OECD project on BEPS.

About 70 countries at all levels of development have signed this Multilateral Instrument (MLI) at the OECD Centre in the presence of Secretary-General OECD. A number of jurisdictions have also expressed their intention to sign the MLI as soon as possible and other jurisdictions are also actively working towards participation in the multilateral instrument.

With regards to Double Taxation Avoidance Agreements that will not be covered by the Multilateral Convention, discussions will be held on a bilateral basis with the concerned countries to ensure the country’s compliance with the BEPS recommendations while safeguarding the legitimate interests of Mauritius.

Previously in June 2015 Mauritius also signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, jointly developed by the Council of Europe and the Organization for Economic Cooperation and Development (OECD). Mauritius is equally a member of the Early Adopters Group committed to the early implementation of the Common Reporting Standard on the automatic exchange of financial account information.

Moreover, the country was the first in Africa to have signed up to the Intergovernmental Agreement with the United States for the implementation of the Foreign Accounts Tax Compliance Act.

In view of further supporting its pledge as a cooperative IFC, Mauritius has actively participated in the Ad-Hoc Group set up by the OECD to work on the drafting of the Multilateral Instrument as recommended under Action 15 of the BEPS Report. More recently, the country equally joined the Inclusive Framework to implement the BEPS Recommendations and the new initiative on the exchange of Beneficial Ownership information.

Czech Republic signs OECD Multilateral Instrument on tax treaty related measures

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The Czech Republic has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“Multilateral Instrument” or “MLI”). On 7th of June 2017, over 70 Ministers and other high-level representatives participated in the signing ceremony at Paris.

The Convention is a key outcome of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project, which aims to offers concrete solutions for governments to close the gaps in existing international tax rules by transposing results from the OECD/G20 BEPS Project into bilateral tax treaties worldwide.

The Convention enables all signatories, inter alia, to meet treaty-related minimum standards that were agreed as part of the Final BEPS package, including the minimum standard for the prevention of treaty abuse under Action 6.

The Convention will enter into force after signatories have completed their domestic requirements and deposited their instruments of ratification with the OECD.

Chile signs OECD Multilateral Treaty on Double Taxation

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Chile has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“Multilateral Instrument” or “MLI”). More than 68 countries, including Chile, signed the Convention on 7 June 2017 at Paris.

The Convention is a key outcome of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project, aiming to put forward concrete solutions for governments to close the gaps in existing international tax rules by transposing results from the OECD/G20 BEPS Project into bilateral tax treaties worldwide.

The Convention enables all signatories, inter alia, to meet treaty-related minimum standards that were agreed as part of the Final BEPS package, including the minimum standard for the prevention of treaty abuse under Action 6.

The Convention will enter into force after signatories have completed their domestic requirements and deposited their instruments of ratification with the OECD.