| Dominican Republic | Documentation-Thresholds: On 17 January 2018, Directorate General of Internal Revenue (DGII) published the Transfer pricing (TP) reporting threshold for 2019. The DGII has issued Notice 8-19, which prescribes related party transaction threshold for transfer pricing reporting purposes in 2019 at DOP 11,144,913. See the story in Regfollower |
| Australia | Safe Harbour-Rule: The Australian Taxation Office (ATO) has recently updated Practical Compliance Guideline (PCG) 2017/2 Simplified transfer pricing record-keeping (STPRK) options. The threshold for simplified transfer pricing record-keeping has been increased from AUD 25 million to AUD 50 million. See the story in Regfollower |
| Malaysia | Requirements-Control: The finance bill 2018 which was adopted on 26 December 2018 inserted a new Section 140A(5A) in the Income Tax Act 1967 to expand the meaning of “control” under Section 139 for the purpose of transfer pricing. Under this control refers to persons where one owns shares in the other person or a third person owns shares of both persons, and the percentage of share capital held in either situation is 20% or more along with satisfaction of economic control conditions. See the story in Regfollower |
| Uruguay | CbC reporting requirement-General: Under the Resolution No. 94/2019 issued on 4 January 2019, a Large MNE group that has total consolidated group revenue of €750 million or more in a fiscal year must submit CbC reports in Uruguay, unless a group member has submitted a CbC report in a jurisdiction with which Uruguay has a valid information exchange agreement and the report can be effectively exchanged with Uruguay. CbC reporting requirements apply in respect of reporting fiscal years beginning on or after 1 January 2017.
CbC reporting requirement-Timing: The CbC report must be submitted in the prescribed format (XML format) within 12 months following the end of the reporting fiscal year. Notification on the reporting entity, the ultimate parent, and constituent entities in Uruguay must be submitted annually by the end of the reporting fiscal year via the DGI website (applies regardless of the reporting entity’s residence or where the report is to be submitted). |
| Lithuania | BEPS related compliance-Master file: On 31 December 2018, the Lithuanian Official Gazette published an order for the transfer pricing (TP) rules. The Master file must be prepared by Lithuanian residents and nonresidents with a permanent establishment (PE) in Lithuania that belong to an MNE group and whose revenue (attributed to a PE) in the previous tax period exceeded EUR 15 Million.
BEPS related compliance-Local file: The Local file documentation must be prepared by Lithuanian residents and nonresidents with a permanent establishment (PE) in Lithuania if revenue (attributed to the PE) in the previous tax period exceeded EUR 3 million. Intra-group services-Low value-adding services: Exemptions for low-value transactions also have been introduced by the order. Therefore from now, transfer pricing documentation will not be required if a controlled transaction or the sum of controlled transactions during the financial year does not exceed €90,000 per related party. Documentation-Penalty for documentation failure: Sanctions for non-compliance with new requirements have been tightened. Non-compliance with the transfer pricing documentation requirements will result in a penalty ranging from €1,820 to €5,590, and the penalty for repeated violations will range from €3,770 to €6,000. |
| Estonia | Financial services-Restriction on interest deduction: On 28 December 2018, Estonia published the Income Tax Amendment Act in the Official Gazette, apply from 1 January 2019. The act introduces restriction on interest deduction in comply with the implementation of the EU Anti-Tax Avoidance Directive (ATAD) urged by the European Commission. Under this, exceeding borrowing costs may only reduce EBITDA with up to 30% with a safe harbor of EUR 3 million. See the story in Regfollower |
| Colombia | Master and Local file: On 27 December 2018, the Colombian Tax Administration (DIAN) has published Decree No.2442 specifying the deadlines for transfer pricing documentation, including local/master file and CbC reports for 2019. The deadline for informative transfer pricing returns and Local and Master files (if applicable) is 9 July to 22 July 2019. The deadline for CbC reports (if applicable) is 10 December to 23 December 2019. See the story in Regfollower Main corporate income tax rate: Colombia enacted tax reform (Law 1943-Tax Reform) on 28 December 2018. The Tax Reform reduces the corporate income tax (CIT) rate from 33% in 2018 to 32% for 2020, 31% for 2021 and 30% for 2022 and onwards. The Tax Reform also repeals the 4% surcharge imposed on corporate income, making the total tax rate 33% for 2019, as opposed to 37% (33%, plus the 4% surcharge. |
| Denmark | Financial services-Restriction on interest deduction: On 28 December 2018, the Danish Ministry of Taxation has published a new legislation (Law No 1726) for the implementation of the measure of the EU Anti-Tax Avoidance Directive (ATAD1) and the Directive as amended (ATAD2). Under this, exceeding borrowing costs may only reduce EBITDA with up to 30% with a safe harbor of DKK22.3 million (equal to €3 million). See the story in Regfollower |
| Panama | Business restructurings-Location specific advantages: On 26 December 2018, Panama released the Law No.69 in the Official Gazette No.28684-B which sets out provisions on applying transfer pricing regulations to companies under preferential tax rules. Starting from fiscal year 2019, transfer pricing rules will apply to all transactions carried out by an individual or legal person with related parties which are located in the ColĎŚn Free Zone. See the story in Regfollower Information exchange-Multilateral: On 24 January 2019, Panama signed the Multilateral Competent Agreement (MCAA) on the exchange of Country-by-Country (CbC) reports. |
| Kazakhstan | Master file & Local File: On 24 December 2018, the Finance Minister approved forms and procedures for filling the Master files and Local files, effective from January 01, 2019. Master file and Local file are in line with the OECD Transfer Pricing (TP) Guidelines for Multinational Enterprises and Tax Administrations. See the story in Regfollower |
| Romania | Financial services-Restriction on interest deduction: Romania has published Law no. 30 of 10 January 2019, which amendments restriction on interest deduction rules. The amendments increase safe harbor threshold from the RON equivalent of EUR 200,000 to the RON equivalent of EUR 1 million. It also increases in the percent deduction in excess of the safe harbor from 10% of the calculation basis (EBITDA) to 30% and the addition of provisions in relation to the right to carry forward excess borrowing costs. See the story in Regfollower |
| Finland | Financial services-Restriction on interest deduction: Under the new law 1237/2018 published in the Official Gazette on 27 December 2018, the deductibility of net interest expense would remain same as current limited to 25% of EBITDA. In addition, the general deductibility threshold of EUR 500,000 would continue to apply and an additional threshold would be added under which the net interest expense of a third party would be fully deductible up to EUR 3 million. See the story in Regfollower |
| France | Financial services-Restriction on interest deduction: On 20 December 2018, the French Parliament approved the Finance Bill for 2019.The finance bill approves interest deductibility limitation rules in effort to comply with the European Union (EU) Anti-Tax Avoidance Directive (ATAD). Deductible interest would now be limited to 30% of earnings before interest, taxes, depreciation and amortization (EBITDA), or EUR 3 million, whichever amount is higher.
Main corporate income tax rate: Starting in 2019, all businesses will be taxed at 28% on their first €500,000 of earnings and 31% above this level. The standard CIT rate will be further reduced to 28% in 2020 (applicable on the entire amount of taxable profits), 26.5% in 2021 and finally 25% in 2022. |
| US | Financial services-Special rules for hybrid instruments or entities: On 20 December 2018, IRS issued proposed regulations implementing sections 245A(e) and 267A that were added with the enactment of the Tax Cuts and Jobs Act (TCJA). The proposed provisions under Section 267A clarify the application of the provision, and the guidance under Section 245A (e) defines hybrid dividends and clarifies the interaction between the provision and foreign tax laws. See the story in Regfollower |
Transfer Pricing Brief: February 2019
05 February, 2019
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