Quantera Global Newsletter – November 2020

We are pleased to share 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.

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.

 

Quantera Global news, developments, and blogs:

–         Quantera Global strategic partner update

We are proud to announce our strategic partnership with AGM Group, a high-level boutique advisory firm in Belgrade, Serbia. AGM Group specialises in financial and accounting advisory, international taxation, Transfer Pricing, and legal advice. This alliance will strengthen the position of Quantera Global in Serbia, Montenegro, and Bosnia and Herzegovina.

–         OECD Pillar 1 and 2 Blueprints

In October, the OECD published the blueprints of Pillars 1 and 2. The OECD initially planned to reach a political agreement by October 2020, but now hopes that this agreement will be reached by mid-2021.

–         Blogs

In October we released a number of blogs on developments in the Transfer Pricing landscape. In our blogs we provide some insight in the developments in intercompany financial transactions, the Transfer Pricing implications of the IBOR transitions, Transfer Pricing & Year-end developments, and our view on the bank as Transfer Pricing specialist.

–         Webinars

Last month we organized webinars on developments in intercompany financial transactions and on Transfer Pricing & Year-end developments. We are proud that such a large audience participated. You can find the recordings here.

 

Please find below the schedule for our upcoming free webinars:

o    November 11:     Transfer Pricing in the Middle East and North & Central Africa

o    November 18:     The good hope (our thoughts about current TP developments)

o    December 3:       What to expect for 2021

 

To register for one or more webinars, please send a short e-mail to QGAcademy@QuanteraGlobal.com indicating for which webinar you would like to register.

Due to the success of our webinars, we will continue to provide free-of-charge webinars in 2021. Amongst others the following topics will be discussed:

o    Digital economy

o    Intellectual property

o    TP Risk Management: Compliance and Organization

o    TP Risk Management: APAs and MAPs

o    Also, additional country specific webinars will be held

 

News around the world:

–      Australia

Australia has changed the tax treaties with Russia, South Korea, and Czech Republic to facilitate the understanding of the application of the MLI to the treaty.

–      Belgium

The deadline for filing of the Local File (the 275LF Form) in Belgium has been further extended to 16 November 2020.

–      Colombia

The Colombian tax authority has issued guidance on the procedure to request the resolution of cross-border tax disputes under Colombia’s tax treaties.

–      Denmark

In the recent ECCO shoe case the Danish court ruled against a long-debated stance of the Danish tax authorities. In short, the Danish tax authorities claimed that when a taxpayer’s transfer pricing documentation was insufficient, a discretionary tax assessment was necessary. In a number of court rulings since 2019, Danish courts have rejected this point of view. As a result, new transfer pricing rules have been drafted to increase the legal option of the tax authorities to conduct such discretionary tax assessments.

–      European Union

The European Commission has released an updated list of non-cooperative jurisdictions in taxation. Oman and the Cayman Islands are out, while Anguilla and Barbados are in.

–      France

After postponement earlier this year, the French Minister of Finance has announced that the payment of the French digital service tax will be required in December 2020.

–      Hong Kong/Georgia

Hong Kong and Georgia have signed a tax agreement to allocate taxing rights, as well as relief for double taxation. Withholding taxes on interest and royalties for Hong Kong residents will be capped at 5 percent. Profits from international shipping exports by Hong Kong residents will not be taxed in Georgia.

–      Ireland

After the announcement of the Budget 2021 measures, the Irish government has published the Finance Bill 2020, which contains legislation to enact EU-compliant interest deduction limitations from 2022 onwards.

–      Jordan

Jordan has deposited the instrument of ratification to implement the MLI, bringing the total of jurisdictions that have ratified the MLI to 53.

–      OECD

Botswana, Eswatini, Jordan, and Namibia have signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which brings the total of participating jurisdictions to 141. This enables the jurisdictions to engage in for example (spontaneous) exchange of information and international tax examinations. It also guarantees safeguards for the protection of taxpayers’ rights.

–      Oman

Oman has introduced Country-by-Country Reporting requirements, which will become effective for fiscal years starting from 1 January 2020.

–      Poland

The Polish tax authorities have published data that provide insight into transfer pricing audits performed in 2019. This showed a 76% increase in the number of performed audits compared to 2018. Of the approximately 500 audits, nearly 200 audits resulted in an increase in taxable profit. This was achieved by focussing on certain intercompany transactions (e.g. financial transactions, service agreements, and transactions regarding IP), as well as dealings with entities based in tax havens.

–      Romania

The CJEU has issued a decision in a case concerning a Transfer Pricing adjustment imposed by the Romanian tax authority on a Romanian branch of an Italian company. As a lender, the Romanian branch issued two interest-free loans to the Italian parent company. During the audit, the tax authority corrected the interest rate to a market interest rate. The Romanian branch challenged the assessment by claiming that this violated the freedom of establishment, because dealings with a Romanian branch and a Romanian parent company would not be subject to an adjustment. The CJEU ruled in in favour of the Romanian tax authority, as the assessment did not violate the freedom of establishment.

–      Russia

Russia has proposed draft law to change the APA procedures. In the draft law, a number of subjects are proposed, such as: the opportunity for the taxpayer to apply the Transfer Pricing method, the introduction of a moratorium on Transfer Pricing audits regarding transactions that are subject to an APA, as well as the introduction of time limits for negotiating an APA.

–      Singapore

The tax authorities of Singapore have published a list of FAQs to address transfer pricing considerations of taxpayers that have been affected by COVID-19. The list deals with the subjects of transfer pricing documentation and APAs.

–      Spain

The Spain Upper House has passed two tax bills that introduce a financial transactions tax (a 0.2% tax on the purchase of financial instruments of large Spanish companies) and a digital service tax (a 3% tax on the revenue of certain digital activities).

–      Sri Lanka

Sri Lanka has published a new transfer pricing disclosure form and guide to this form. This form will be obligatory for all taxpayers engaging in intercompany transactions.

–      Thailand

As a COVID-19 relief measure, the Thai Revenue Department has announced that it will allow a reduction of the penalty for late submissions of the transfer pricing disclosure form.

–      Turkey

Turkey will soon implement a CbCR-exchange agreement. If this is implemented before the end of December 2020, Turkish resident entities that are part of a foreign headquartered MNE do not have to file CbC reports with the Turkish tax administration.

–      United Nations

In October, the UN Committee of Experts on International Cooperation in Tax Matters held its 21st session. During this session, the following topics were discussed: UN Model Double Taxation Convention between Developed and Developing Countries, the United Nations Practical Manual on Transfer Pricing for Developing Countries, the Handbook on Selected Issues for Taxation of the Extractive Industries by Developing Countries, as well as other UN documents.

–      United States

The IRS has announced that it will focus on participants of micro-captive insurance constructions. Entities that still participate in such constructions are advised by the IRS to contact a tax advisor to become compliant for US tax law

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