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Quantera Global Newsletter – June 2020

In this Newsletter we would like to keep you up to date on relevant Transfer Pricing developments in an
accessible manner.

We are pleased to keep you informed about the most important national and global developments in tax
law that are (closely) related to the transfer pricing world.

Please feel free to contact us if you have any questions.
You may send an e-mail to TPnews@quanteraglobal.com  or call us at +31 88 221 5800 and we will introduce you to the relevant professional.


Developments and blogs:

• Cooperative Compliance 2.0
– Tax jurisdictions aim to work together with multinational enterprises to promote tax compliance and to prevent issues that might arise. Next steps are taken towards cooperative compliance. For more information, please read our blog here.

• Extension of DAC6 reporting deadline
– The European Commission proposed to extend the DAC6 reporting deadline of July with three months. The proposed extension only affects the deadlines for reporting and exchange of information, it does not extend the entry into force date of 1 July 2020.

• OECD-officials note disagreement on Pillar One proposal
– The 137 countries that make up the “Inclusive Framework” on BEPS intended to reach consensus on Pillar One by the end of 2020. However, disagreement between the countries increased regarding the scope of Pillar One.

• OECD consults on review of Country-by-Country Reporting scheme

– On May 13th the OECD organized a two-day public consultation reviewing the Country-by-Country Reporting (“CbCR”) scheme for MNEs. By video conference topics such as public CbCR and other potential revisions were discussed.

• Portuguese tax Law has recently been changed
– On 24 April, Order 153/2020.XXII was published with impact on transfer pricing obligations. For more information, please read our
blog here.


News around the world:

Argentina: the Argentinean tax authorities released an official bulletin regarding a general resolution that sets forth rules for
compliance with transfer pricing reporting rules.
Brazil: on May 4th, a Brazilian law to create a digital tax was submitted to Brazil’s House of Representatives.
It will apply to entities that surpass the 600 million USD revenue threshold on group level as well as 20 million USD gross revenue in Brazil.
Germany: the German Finance Ministry has responded to questions from German Members of Parliament regarding the proposed
modifications to the transfer pricing rules as proposed in December 2019. Although the new price-setting approach will not be obliged
by these proposed modifications, questions on financial transactions and the implementation of DEMPE remained unanswered.
Hong Kong: the Hong Kong Tax Authority has published revised guidance in order to implement the minimum standards of the
spontaneous exchange of rulings, resulting from the BEPS-project. Hong Kong will now exchange rulings relating to preferential
regimes, unilateral APAs, other cross-border unilateral rulings with respect to transfer pricing, permanent establishment rulings, as
well as related party conduit rulings.
India:
– India’s government issued a tax circular in which it stated that individuals that cannot leave the country due to the lock-down
resulting from the COVID-19 virus, will not be considered as residents of India for tax purposes.
– On May 6th, India’s government amended its rules for dispute resolution under mutual agreement procedures. The amended rules
include guidance on the process and timeline.
Italy: the European Court of Justice ruled that Italy’s tax on financial transactions is compliant with European law. The tax consisted
of a 0.2% taxation of the transactional value of shares, participating financial instruments, or derivatives whose value is for more than
50% linked to such shares and instruments.
Ireland: the Irish tax authority has published enhanced tax guidance describing the procedure for an Irish taxpayer to claim
a corresponding adjustment in cases where the taxpayer faces double taxation after a reassessment by a foreign tax authority. It expands the list of information that is required.
Kenya: on May 5th, the Kenyan government submitted a proposal for a 1.5% digital service tax on revenue from services provided
through a digital marketplace in Kenya.
The Netherlands:
– The Dutch Supreme Court decided in a ruling published on May 15th that fixed-to-floating rate perpetual securities qualify as debt
for Dutch corporate tax purposes (and not equity).
– The European Commission announced that it has widened the scope of the State aid investigation into the tax treatment of an
IKEA subsidiary. The annual tax assessments of the IKEA subsidiary will also be within the scope of the investigation to assess
whether the Netherlands granted state aid by approving tax deductions.
– On May 29th, the Dutch Ministry of Finance announced that it intends to implement a new withholding tax on dividend payments to
non-cooperative and low-tax jurisdictions. It is expected that this new law will enter into force on January 1st, 2024.
Russia: the Russian Ministry of Finance has announced that it will implement new legislation in order to optimise the APA
procedure and other aspects of controlled transactions.
South Africa: South Africa postponed the deadline for comments on a discussion paper that covers the implementation of general
measures that limit interest deduction that applies to South-African and foreign MNE groups.
Spain: on May 12th, Spain’s Council of Ministers approved draft law to incorporate EU Directive DAC6 into the national law.
Sweden: the Swedish Tax Authority has issued guidance in which it retroactively accepts the additional guidance from the new
OECD Guidelines Chapter X on financial transactions as clarification on how to apply the arm’s length principle for these types of
transactions.

United States:
– On May 5th the US tax court ruled in favour of the IRS in the Whirlpool case regarding the Maquiladora structure. It is expected that
this will set a precedent on future transfer pricing examinations.
– The IRS announced that it is willing to assist taxpayers that have agreed upon or are in the process of agreeing upon an APA, that
face problems as a result of the current economic distress. It also has relaxed requirements for APA and MAP procedures, as well as other filing requirements.


Launch of the Coperitas software solution!

  • Managing transfer pricing within corporates has become key. International focus by an increasing number of countries provides for a dynamic and challenging transfer pricing environment.
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  • Learn how Coperitas may support you. Visit the website for more information and feel free to book a demo: www.coperitas.com

 


This information is intended only as a general update for interested persons and should not be used as a basis for decision-making. For further details please contact Quantera Global, Eindhovenseweg 128, 5582 HW Waalre, the Netherlands,
phone: +31 88 221 58 00, e-mail: TPnews@quanteraglobal.com

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