EUROPEAN COMMISSION RELEASES ANTI-TAX-AVOIDANCE
PACKAGE – PRACTICAL TAKEAWAYS
By Pie Geelen, David Thompson and Tom Zondag
The European Commission has released its highly anticipated anti-tax-avoidance package.
The package, released January 28, 2016, contains proposed rules and recommendations to avoid aggressive tax planning within the European Union. It contains many elements also addressed by the OECD BEPS project.
Find out more about the ATA and its implications for your business.
FIRPTA REFORM UNDER THE PATH ACT:
KEY POINTS FOR NON-US INVESTORS
By Naftali Weg,
Gerald Rokoff and
Among the reforms and provisions in the Protecting Americans From Tax Hikes Act of 2015 are several important changes to the Foreign Investment in Real Property Tax Act of 1980 (commonly referred to as FIRPTA) that are applicable to the disposition of US real estate (or interests in companies that, directly or indirect, hold US real estate) by non-US investors.
Structuring investments to address the effects of FIRPTA taxation is an integral consideration for any non-US investor that is considering investing directly or indirectly in US real estate.
The Act includes a number of new provisions that may be available to certain non-US investors to exempt them from, or to clarify and expand existing exemptions from, the effects of FIRPTA on their US real estate investments.
Find out more.
RUSSIA: SIGNIFICANT CHANGES COMING TO VAT ON SOFTWARE LICENSE TRANSACTIONS AND E-COMMERCE SERVICES
By Ruslan Vasutin
Russia’s Duma is pondering a draft law that would introduce important changes to the VAT taxation of software supply transactions and IT services.
One of the aims of the draft law is to ensure the equal treatment of Russian and foreign companies selling content to final consumers in Russia. The draft law suggests implementing in Russia the widely used “destination principle” for VAT taxation of e-commerce services, which implies charging VAT in the country of the service recipient’s location.
Find out more.
BEPS ACTION 7: HOW THE OECD’S PROPOSALS TO REDEFINE
A PE COULD AFFECT MULTINATIONALS
By Carmelo Lam, London
The OECD’s final reports on the Base Erosion and Profit Shifting (BEPS) Project aim to target aggressive tax planning strategies which have the effect of shifting profits from high tax jurisdictions to low tax jurisdictions. The BEPS Project has been divided into 15 Actions, of which one of the most far-reaching actions is Action 7 (Preventing the Artificial Avoidance of Permanent Establishment Status).
The purpose of Action 7 is to tackle common tax avoidance strategies used to circumvent the existing definition of permanent establishment (PE) via the use of agency or similar arrangements (eg commissionaire arrangements). Further, Action 7 aims to prevent the exploitation of the existing specific exceptions to the PE definition, in particular those relating to activities of a “preparatory and auxiliary” nature, an issue which is particularly relevant in the digital economy.
Find out more.
BRAZIL’S REPATRIATION LAW INTRODUCES TAX AND CURRENCY
VOLUNTARY DISCLOSURE AND AMNESTY PROGRAM
By Alex Jorge,
Humberto Marini and Renato Lopes*
Brazil has passed Law No. 13,254, the Repatriation Law, introducing a tax and currency exchange voluntary disclosure and amnesty program (locally known by the acronym RERCT) to stimulate the voluntary disclosure of assets, tangible and intangible, held by Brazilian tax residents (i) remitted abroad; (ii) maintained abroad; or (iii) repatriated, which, in either case, were not previously reported or, if reported, presented material errors or insufficient information to the Brazilian authorities.
This new rule covers all assets, tangible or intangibles, remitted and maintained abroad not in accordance with prevailing tax and currency exchange laws, even if the funds have already been repatriated.
See our summary of the key aspects of the Repatriation Law.
MORE INTERNATIONAL TAX NEWS FROM DLA PIPER
In Canada, January has brought many significant changes to the taxation of trusts and estates, such as higher tax rates which will affect all lifetime trusts – but the Department of Finance may be reconsidering the new rules.
In the UK, Her Majesty’s Treasury is proposing to simplify the present patchwork of energy efficiency taxation and reporting.
In the latest issue of our China Tax Newsletter, we report on an array of developments – among them, the PRC’s new rules to assess non-resident taxpayers’ entitlement to treaty benefits; zero-rated VAT policies for export of film and television services; and Hong Kong’s response on the implementation of the Automatic Exchange of Information regime.
The Australian Tax Office, in a move important for those conducting mining operations, is clarifying its views about when exploration and prospecting costs are immediately deductible.
Belgium’s excess profit tax rulings are illegal state aid, says the European Commission – a move that will hit at least 35 multinationals.
In the US, the PATH Act, a $1.15 trillion spending bill, enacts a number of important tax measures – among them a package of tax breaks benefiting the alternative energy industry, and clarifications to the new rules governing partnership audits and litigation. And also in the US, observers are noting the recent, surprisingly stress-free passage of key pieces of legislation, suggesting Congressional leaders’ goals of international tax reform in 2016 may not be unrealistic. House Ways and Means Committee Chairman Kevin Brady (R-TX) believes a consensus on international tax reform is possible this year.
The European Council, in the wake of the final OECD BEPS reports, is providing for the automatic exchange of information on advance cross-border rulings and advance pricing arrangements between member states. But we caution that the amendments, which come into force from 1 January 2017, cannot be read in isolation.
*Alex Jorge, Humberto Marini and Renato Lopes are partners in the Tax practice of Campos Mello Advogados, an independent Brazilian law firm.