Quantera Global Newsletter – October 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.

Quantera Global news, developments and blogs:

–         Quantera Global team update

We are happy to announce that as of the first of September, Eline Couperus has joined the Dutch Quantera Global team. We wish her a lot of luck and fun with her new function at Quantera Global.

–         OECD pillar one and two blueprints

In October and November 2019, the OECD released discussion drafts as part of BEPS Action 1 on taxation in the digital economy. The proposals of the OECD consisted of two main “pillars”. Although the release of these blueprints is not expected until October 2020, draft versions of both blueprint reports distributed to the delegates are already circulating on the internet. Please take a look at our blog, which highlights some of the elements of the leaked rapports, here.

–         Transfer Pricing & Mandatory Disclosure

The EU Mandatory Disclosure Directive (MDD/DAC6) obliges intermediaries and taxpayers to report certain tax and TP arrangements to tax authorities. If you’re interested in knowing more about the MDD in relation to transfer pricing, please take a look at our blog.

–         Webinars

We held webinars last month on Transfer Pricing developments in India and Transfer Pricing & Mandatory Disclosure. We were proud to see that such a large audience participated. You can find the recordings here.

Please find below the schedule for our upcoming free webinars:

–       October 8:          Financial Transactions

–       October 22:         Transfer pricing developments and year-end topics

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

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

–       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.

In addition, we would like to mention that our office in the Baltics will hold a webinar on the 21st of October. The subject of this webinar will be Transfer Pricing Management for Start-ups. To register for this webinar, please send an e-mail to baltic@quanteraglobal.com.

News around the world:

–       Australia

o    Australia has published guidance addressing the treatment of capital gains in computing the foreign income offset limit.

o    The Australian Tax Office has noted increased non-compliance with the international dealings schedule disclosure regarding hybrid mismatches. It warns taxpayers that are engaged in certain dealings to correctly disclose the required information.

–       Australia / Indonesia

The Australian and Indonesian tax offices have made a deal to automatically exchange information in order to fight tax avoidance.

–       Belgium

The deadline for filing of the Local File (the 275LF Form) in Belgium is approaching (October 29th, 2020).

–       Bulgaria / Netherlands

A new tax treaty has been signed between Bulgaria and the Netherlands to include changes in international taxation (OECD).

–       Chile

Chile’s Internal Revenue Services has issued Resolution No. 101, which requires Chilean resident entities to prepare a local file and master file when certain conditions have been met.

–       Cyprus

Cyprus has implemented the EU Anti-Tax Avoidance Directive. Starting FY 2020 new anti-tax avoidance measures regarding exit taxation and hybrid mismatches become effective. Certain reverse hybrid mismatch provisions will become effective as of FY 2022.

–       Cyprus / Russia

The tax treaty between Cyprus and Russia has been amended. The withholding tax on dividends and interest income is increased to 15%, while some entities with specific characteristics are excluded from the withholding tax.

–       Ecuador

o    Ecuador has published a list of approximately 200 digital services that are subject to a new 12% VAT.

–       European Union

o    The EU will form a digital tax proposal by June 2021 if the OECD fails to form one.

o    The European Commission has announced that it has appealed the EU General Court’s July 15 ruling in the Apple state aid case.

–       Greece

The APA rollback rules in Greece have been expanded. Bilateral or multilateral APAs may include a rollback of the APA to prior tax years if certain circumstances are met.

–       Guernsey

New legislation passed in September that brings Collective Investment Vehicles within the scope of Guernsey’s substance rules.

–       India

The due date for undertaking Indian transfer pricing compliance is 31 October 2020 for fiscal years ended 31 March 2020.

–      Netherlands

On budget day, the proposed changes to tax law in the Netherlands for 2021 were presented. Proposed changes include, amongst others, extending the lower bracket of the corporate income tax (from € 200,000 to €245,000 and to €395,000 in 2022), reducing the tax rate of this lower bracket (16.5% in 2020 and 15% from 2021 onwards), a withholding tax on interest and royalty payments to low tax jurisdictions and an increase of the effective tax rate for the innovation box (7% to 9%).

–      New Zealand

New Zealand has published transfer pricing guidance for businesses which were affected by Covid-19. It is emphasised that contemporaneous documentation should be prepared to report all specific facts and circumstances relating to Covid-19 and arm’s length pricing.

–      OECD

Albania, Bosnia and Herzegovina, and Costa Rica have deposited their instruments of ratification for the MLI. The MLI will enter into force on January 1, 2021. France has added additional bilateral tax treaties to which the MLI can apply.

–      Poland

In Poland a bill has been drafted which would adjust transfer pricing rules. For instance, documentation obligations are expended for intercompany transaction with entities located in ‘tax havens’.

–      Turkey

Turkey has published guidance relating to transfer pricing documentation requirements. Since the Multilateral Competent Authority Agreement on CbCR has not been signed yet (deadline: 31 December, 2020), Turkish subsidiaries of MNEs will be required to locally file a CbC report in Turkey. Furthermore, the deadline for submission of the Country-by-Country Reporting Notification Form is coming up, i.e. 31 October, 2020. This form indicates in which jurisdictions the CbCR will be filed and by whom

–      United Arab Emirates (UAE)

The UAE issued economic substance regulations during 2019. During August 2020, changes were made to the substance regulations and the Ministry of Finance has published guidance on the regulations (Ministers Resolution No. 57 of 2020 & Ministerial Decision No. 100 of 2020)

–      United Kingdom

The UK has published additional guidance on overdue or overpaid digital services taxes

–      United States

o    The United States has issued final BEAT (Base Erosion and Anti-abuse Tax) and CFC (Controlled Foreign Company) regulations.

o    The United States has also issued final regulations with regard to a deduction limitation on business interest expenses, as well as a deduction for dividends received from certain CFCs.

 

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