| Malaysia | Restriction on interest deduction: On 5 July 2019, the Inland Revenue Board of Malaysia has published new guidance on restrictions to the deductibility of interest expenses. Under the rules the maximum amount of deductible interest is 20% of the amount of Tax-EBITDA. Excess interest can be carried forward and deducted against the adjusted income of the company for subsequent year. See the story in Regfollower |
| US | CbC reporting requirement: On 1 July 2019, IRS published the updated instructions for filing Form 8975 including mailstop for U.S. MNEs filing Form 8975 on paper and guidance on “Stateless” Country Code and Tax Jurisdiction Table for Schedule A (Form 8975). See the story in Regfollower |
| Malta | MAP: Earlier the month of June 2019, the Maltese Commissioner for Revenue issued guidance under the provisions of article 96(2) of the Income Tax Act, Chapter 123 of the Laws of Malta (the ‘ITA’) on the use of Mutual Agreement Procedure (‘MAP’). The updated guidelines provide some additional clarifications to the previous version of the said guidelines. See the story in Regfollower |
| India | Master file-Reporting structure: On 5 July 2019, the Minister of Finance presented the Finance Act for the financial year 2019-20. Under the new amendments, with effect from the 1 April 2020, the constituent entity of an International group shall now be required to keep and maintain master file under Section 92D and file required form even when there is no international transaction. With this amendment, the constituent entities will be required to file Part ‘A’ of Form No. 3CEAA even if there are no international transactions. Adjustments-Secondary adjustment: The 2019 budget presented on 5 July 2019 proposed to simplify the provisions of secondary adjustment (in case of transfer pricing) by providing that instead of interest payment every year, the assessee shall have an option to make one-time payment of tax of specified amount. See the story in Regfollower |
| Ukraine | Requirements-Control: On 20 June 2019, the Ukraine State Fiscal Service published a guidance letter No. 2826/6/99-99-15-02-02-15/IPC defining the treatment of transactions with residents of tax Bulgaria, which was removed from the Cabinet tax haven list in April 2018. See the story in Regfollower |
| Costa Rica | APAs: On 2 July 2019, the Ministry of Finance released a draft resolution providing rules on advance pricing agreements (APA) under the OECD transfer pricing guidelines. The resolution outlined the application procedures for approval, refusal, renewal and termination of an APA. See the story in Regfollower Requirements-Control: The Resolution N° 41818-H published on 26 June 2019 defines related parties those who are resident in jurisdictions with an income tax rate of 18% or less and /or in jurisdictions that do not have tax information exchange agreements with Costa Rica. Specific TP compliance: Companies required to file transfer pricing return those are operating in a free trade area or classified as “large taxpayers” under the Large Territorial Company (GETES) program and engaging in transactions with related parties (either domestic or cross-border) that exceed the 1,000 (one thousand) base salaries threshold from the corresponding year (approximately USD 745,000 for FY2019). See the story in Regfollower |
| Portugal | APAs-Validity: On 19 July 2019, the Portuguese Parliament approved Law No. 180/2019, which includes amendments to the country’s transfer pricing rules. The new law increase in the maximum validity period of advance pricing agreements (APAs) from 3 years to 4 years. CbC reporting requirement-Penalty for non-compliance: The current penalty that applies to failures to timely submit transfer pricing documentation and the country-by-country also apply for CbC notifications, which include penalties of EUR 1,000 to EUR 20,000 plus 5% per day of delay. Applicable Methods: The new law abolished the hierarchy in the selection of the transfer pricing method, and taxpayers may adopt other methods in cases where the standard methods would not provide reliable results. See the story in Regfollower |
| Hong Kong | Documentation-Requirement: On 19 July 2019, the Hong Kong Inland Revenue Department (IRD) published the three “Departmental Interpretation and Practice Notes” (DIPNs) Nos. 58, 59 and 60. The notes have been issued to set out the Department’s interpretation and practice on the relevant rules and requirements, and the latest international standards relating to transfer pricing. See the story in Regfollower |
| Denmark | Documentation-Deadline: On 12 July 2019, the Danish Tax Authority has published a notice (SKM2019.374.SKTST) which establishes a new practice for the importance of whether a transfer pricing documentation in its entirety is available at the time of tax return. The practice change is a consequence of the Supreme Court’s judgment in the Microsoft case, but is only of significance for income years commenced before 1 January 2019. See the story in Regfollower |
| Latvia | Intra-group services-Low value-adding services: On 9 July 2019, Latvia published Cabinet Regulations No. 324 of 9 July 2019 in the Official Gazette addressing simplified transfer pricing provisions for intra-group low value-added services including a generally allowed mark-up of 5% on costs for the determination of the market value. See the story in Regfollower |
| Qatar | CbC reporting requirement-General rule: On 16 June 2019, Qatar’s General Tax Authority (GTA) has issued a notice prescribing further updates and clarifications for the Country-by-Country (CbC) reporting obligations in Qatar. The notice includes mandatory submission of CbCR for ultimate parent entities of MNE groups which consolidated revenue is equal or more than QAR 3 Billion in previous year. CbC reporting requirement-Timing: CbC report must be filed no later than 12 months after the last day of the reporting fiscal year. Penalty for non-compliance: Any person who violates the provisions of the decisions issued with regard to the exchange of information for tax purposes or for the purpose of combating international tax evasion shall be liable to a financial penalty up to QAR 500,000. See the story in Regfollower |
| Australia | Special rules for hybrid instruments or entities: The Australian Taxation Office has issued Practical Compliance Guideline (PCG) 2019/6 and Law Companion Ruling (LCR) 2019/3, related to the concept of structure arrangements in relation to Australia’s new hybrid mismatch rules. See the story in Regfollower |
| Netherlands | Special rules for hybrid instruments or entities: On 2 July 2019, the Dutch government published a legislative proposal engaging rules to counter hybrid mismatches into the Dutch corporate income tax act pursuant to the EU Anti-Tax Avoidance Directive as agreed upon in May 2017 (ATAD2). The main objective of ATAD 2 is to eliminate hybrid mismatches by neutralizing their tax effects. The hybrid mismatch rules are proposed to apply to financial years commencing on or after 1 January 2020. See the story in Regfollower |
| Bangladesh | Requirements-Rule: The provision of transfer pricing issues has been incorporated under the budget 2019-20 which is adopted by the Parliament on 30 June 2019. Accordingly, entities are required to declare in the income tax returns whether they have any international transactions with related parties. See the story in Regfollower |
Transfer Pricing Brief: August 2019
August 05, 2019
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