UK: HMRC reveals details of employment remuneration tax avoidance schemes

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HMRC has published details of tax avoidance schemes that are being used by employers, agencies and other intermediaries to avoid payment of income tax and national insurance contributions. These and other types of tax avoidance scheme are published in HMRC’s Spotlights, notifications aiming to publicise avoidance schemes that are considered by HMRC not to work. HMRC believes these tax avoidance schemes could be successfully challenged in the Courts. HMRC summarises the schemes and sets out what users of the schemes should do to bring their tax affairs into order. The Spotlights are available online on the UK government website.

One of the main types of tax avoidance scheme for remuneration is the loan scheme. These schemes involve the employees being paid a small amount of remuneration but the main part of the remuneration is paid in the form of loans from third parties.

On 10 August 2017 the latest Spotlight on contractor avoidance, Spotlight 39, was published with the title Disguised remuneration: re-describing loans. This type of scheme involves the scheme users receiving sums from their disguised remuneration schemes under loan agreements; but they can claim that the money is only held by them in a fiduciary capacity. In the view of HMRC this is just a different name for the transaction that does not change the facts of what has happened, and they consider that re-describing the loans does not change the reality.

Netherlands-Indonesia: Agreement to clarify investment fund taxation

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The Government of the Netherlands has announced that an agreement with Indonesia has been concluded regarding the taxation of investment funds. The agreement clarifies the application of the Dutch-Indonesian double tax avoidance agreement to investors in acknowledged investment fund structures. On 11th July the Dutch Ministry of Finance announced that a new competent authority agreement was signed by the two sides on 23rd June 2017. The Netherlands has similar treaties with Canada, Denmark, Germany, Norway, Switzerland and the United Kingdom.

New protocol to DTA between Indonesia and Netherlands enters into force

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The amending protocol of Double Taxation Agreement (DTA) between Indonesia and Netherlands will enter into force on 1 August 2017 and as of 1 October 2017, this protocol will apply.

Indonesia-Netherlands: Protocol to tax treaty enters into force

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A pending protocol to tax treaty between the Netherlands and Indonesia of 29 January 2002 has been signed on 30 July 2015, will enter into force on 1 August 2017.  This Protocol was published on 10 August 2015. The protocol applies for amounts paid or credited on or after 1 October 2017.

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.

Indonesia: New regulation on exchange of information

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The Indonesian Minister of Finance issued Regulation No. 39/PMK.03/2017 of 3 March 2017 on the exchange of information as required under the international agreements entered into by the government including tax agreements, tax information exchange agreements, multilateral or bilateral competent authority agreements, the Convention on Mutual Administrative Assistance in Tax Matters, and intergovernmental agreements.

The regulation sets out, inter-alia, the information that could be released, conditions for the release of information requested and the reporting requirements of the reporting entities. The information could be exchanged through formal requests to the competent authorities, voluntarily or through automatic periodical reporting.

Indonesia, Laos DTA enters into force

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The Double Taxation Agreement (DTA) between Indonesia and Laos was entered into force for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, on 11 October 2016. The treaty was applied from 1 January 2017 for withholding taxes and from 1 January 2018 for other tax matters.