Worldwide Tax News
Argentina has published General Resolution 4816/2020 of 15 September 2020, which provides further rules for the implementation of the tax regularization scheme recently expanded by Law No. 27562 to alleviate the effects of the COVID-19 pandemic (previous coverage). Key points include:
- Qualifying taxpayers are allowed to settle their tax obligations in up to a maximum of 48 to 120 monthly installments depending on the type of taxpayer and the type of tax obligation;
- The deadline for the first installment is 16 December 2020, with subsequent installments due by the 16th of each month;
- Interest will apply at a rate of 2% per month for installments due until May 2021, after which the BADLAR rate used by private banks will apply from the installment due in June 2021;
- Taxpayers taking advantage of the regularization scheme must repatriate a cash equivalent to at least 30% of the value of financial assets held abroad as on the effective date of Law No. 27,562 (26 August 2020), which must be repatriated into ARS or kept in a USD bank account for at least 24 months as from 26 August 2020;
- Taxpayers taking advantage of the regularization scheme must submit a sworn statement on the partners, shareholders, and/or similar with holdings of at least 30% in the capital stock and/or similar as of the effective date of Law No. 27,562 (26 August 2020); and
- It is provided that the tax authority will not initiate criminal proceedings in respect of tax liabilities that fall under the criminal tax law if paid under the regularization scheme.
General Resolution 4816/2020 entered into force on 17 September 2020.09-23-2020
According to recent reports, Cyprus published the Assessment and Collection of Taxes (Amendments) (No. 3) Law in the Official Gazette on 20 August 2020. The main measures include the following:
- All individuals with gross income are required to submit an annual income tax return (TD1) from the 2020 tax year, with the removal of the general exemption where gross income does not exceed EUR 19,500, although exemptions may still be provided by decree;
- The deadline for individual income tax returns is set at 31 July of the year following the tax year, although for individuals required to prepare audited accounts (i.e., self-employed individuals), the deadline for tax returns is set at 31 March of the second year following the tax year;
- The deadline for company income tax returns (TD4) is set at 31 March of the second year following the tax year;
- It is provided that taxpayers required to submit returns by 31 July following the tax year must pay the tax due with the return (i.e., individuals), and taxpayers required to submit returns by 31 March of the second year following the tax year are required to pay the tax due by 1 August of the year following the tax year (i.e., companies and self-employed individuals);
- It is provided that registered taxpayers must notify the tax authority of any changes in their registration details within 60 days of a change;
- It is provided that companies that are established in Cyprus but are not resident in Cyprus must notify the tax authority regarding their situation within 60 days of establishment
- The time limit for submitting revised tax returns for the 2020 and subsequent tax years is set at 3 years from the expiration of the standard deadline for the relevant return with any resulting tax liability to be paid within 30 days of submissions, and it is provided that the submission of revised returns is limited to cases where the revision:
- arises as a result of a requested discount, credit, deduction, or reduction provided by law;
- is necessary to correct and error or mistakes; or
- is necessary for the purpose of consistency with the provisions of any tax law;
- It is provided that in any case, a revised tax return cannot be submitted during a tax examination or a tax audit of the relevant tax return;
- It is provided that revised returns in respect of tax years for which the time limit above has expired may be submitted within 6 months of the entry into force of the amendment law (i.e., by 20 February 2021);
- A new rule is introduced to limit refunds in case of non-compliance with VAT obligations, including that if at the end of a tax year a tax credit balance is due to a taxpayer and the taxpayer has failed to submit any VAT return due for the year, the payment of the refund will be suspended until the VAT obligation is complied with.
Note, certain amendments clarify rather than change existing requirements, including the company annual tax return and payment deadlines.
The amendment law generally entered into force on the date of its publication, i.e., 20 August 2020.09-23-2020
Ethiopia published the Investment Regulation No. 474/2020 in the Official Gazette on 2 September. The regulation is effective from the date of publication and provides rules for the implementation of the Investment Proclamation No. 1180/2020, which was issued to improve the investment environment in Ethiopia including the further opening of areas for foreign investment (previous coverage). In this respect, Regulation No. 474/2020 provides investment sectors that remain restricted, including:
- Investment areas reserved for joint investment with the government (5 investment areas);
- Investment areas reserved for domestic investors (32 investment areas); and
- Investment areas reserved for joint investment with domestic and foreign investors (7 investment areas, including 49% maximum holding by foreign investors).
All other areas not reserved in one of the above three categories are open to foreign investors without restriction. Further to the investment areas, Regulation No. 474/2020 also provides other related rules, including rules on applications for investment permits, rules on the acquisition of existing enterprises by foreign investors, rules on the transfer of investment projects, rules on the registration of technology transfer agreements and collaboration agreements, and rules on training and the transfer of knowledge and skills to Ethiopian employees.09-23-2020
Oman's Ministry of Justice and Legal Affairs has published Royal Decree 82/2020 of 17 August 2020, which provides for the introduction of a new Employment Security System that is essentially an unemployment insurance system for Omani nationals whose jobs have been terminated. As part of the funding for the system, both employers and employees are required to make contributions equal to 1% of the monthly salary, with the employee contribution withheld by the employer. Payments for the contribution are due by the end of the month by public sector employers and by the 15th of the following month by private sector employers.
The Royal Decree will enter into force on 1 November 2020, although the requirement to pay monthly contributions will be effective from 1 January 2021.09-23-2020
U.S. IRS Issues Final and Proposed Regulations on Ownership Attribution Including for Purposes of Determining Status as CFC or U.S. Shareholder
The U.S. IRS and Treasury have issued final regulations on Ownership Attribution Under Section 958 Including for Purposes of Determining Status as Controlled Foreign Corporation or United States Shareholder (TD 9908), published in the Federal Register on 22 September 2020. The regulations provide relief to taxpayers affected by the repeal of section 958(b)(4) by the Tax Cuts and Jobs Act, which provided an exception for subpart F purposes to downward attribution of CFC stock held by a foreign person to a U.S. shareholder. This includes modifications to existing regulations that are intended to ensure, in certain appropriate circumstances, that the operation of certain rules is consistent with their application before the repeal of section 958(b)(4).
In addition to the final regulations, proposed regulations were also published on Ownership Attribution Under Section 958 for Purposes of Sections 367(a) and 954(c)(6) (REG-110059-20). The proposed regulations modify the ownership attribution rules applicable to outbound transfers of stock or securities of a domestic corporation under section 367(a) and also narrow the scope of foreign corporations that are treated as controlled foreign corporations for purposes of the look-through rule under section 954(c)(6).09-23-2020
The Brazilian Senate is considering Bill No. 4468/2020, which was submitted on 3 September 2020. The bill provides for the introduction of a special tax arbitration procedure that is meant to help deal with the significant number of tax-related lawsuits the are initiated in Brazil. The special tax arbitration procedure would be available to deal with tax disputes arising during a tax audit and could be requested by either a taxpayer or the tax authority prior to the issuance of a tax assessment notice. The special procedure would be limited to issues concerning factual matters and would not be available in respect of constitutional issues, cases challenging Supreme Court decisions of general repercussion, or case involving discussions of law in theory.
For the purpose of the special tax arbitration procedure, an arbiter tribunal would be established that includes an arbiter appointed by the tax authority, an arbiter appointed by the taxpayer, and an arbiter elected, through mutual agreement, by the arbiters appointed by the tax authority and the taxpayer. If mutual agreement is not reached, additional rules are provided for electing the third arbiter. When an arbiter tribunal is established, decisions must be issued within 12 months, which may be extended through agreement by the parties up to two times, provided the total time does not exceed 24 months. Decisions of the arbiter tribunal would be binding for the parties and would prevent the initiation of further administrative proceedings or inspection measures in relation to the matters that were subject to arbitration.09-23-2020
German Finance Minister Olaf Scholz reportedly stated on 21 September that the German Presidency of the Council of the European Union will include public Country-by-Country (CbC) reporting as part of its agenda. According to Minister Scholz, it appears that a majority of EU Member States support public CbC reporting and that, although the German government does not have an official position on public CbC reporting, the German Council Presidency would support a decision on the matter.09-23-2020
Ireland's Department of Finance has issued a release announcing the draft Investment Limited Partnerships (Amendment) Bill 2020.
Minister for Finance publishes Draft Investment Limited Partnerships (Amendment) Bill 2020
Published at 21 September 2020
Last updated 21 September 2020
Aim of Bill is to promote investment, secure Ireland's competitiveness and enhance our regulatory environment in international financial services
The Government has approved the draft text and publication of the Investment Limited Partnerships (Amendment) Bill 2020. The modernization of the Investment Limited Partnership Act is a longstanding priority of the Ireland for Finance Strategy and will enhance the development of Ireland's international financial services sector. The Bill, when enacted, will serve as a means to promote investment, secure Ireland's competitiveness and enrich our regulatory environment in international financial services.
Speaking today (Monday), the Minister for Finance, Paschal Donohoe said:
'The publication of this Bill is an important step to maintain Ireland's place as a leader for investment funds in Europe. It fulfils a commitment made in the Programme for Government to progress the revision of the Investment Limited Partnership structure and it ensures the same standards of transparency and beneficial ownership apply across all of Ireland's investment fund vehicles. The importance attached to the Bill as a means to promote investment and Ireland's competitiveness and sound regulatory environment in international financial services is more acute in the wake of the economic impact caused by COVID-19'.
Minister of State Sean Fleming said:
'This is a timely opportunity to modernise Ireland's private equity offering by amending the Investment Limited Partnership Act, which was recognised in the Programme for Government – Our Shared Future. It also delivers on a strategic priority set out in Ireland for Finance - Strategy for the development of Ireland's international financial services sector to 2025'.
Notes to Editors:
- The Bill incorporates significant amendments to enhance the transparency applied to Ireland's fund vehicles by extending Anti Money Laundering Beneficial Ownership requirements to both Investment Limited Partnerships and to Common Contractual Funds.
- The Bill also makes a number of technical amendments to the Irish Collective Asset Management Vehicles Act of 2015 to enhance the efficiency of the structure and align it with the Companies Acts.
- Finally, the Bill also provides that the Central Bank can verify PPSN information pertaining to beneficial ownership registers it operates by proposing an amendment to the Social Welfare Consolidation Act 2005.
The Russian parliament is considering draft Law No. 1022669-7, which was submitted on 17 September 2020 and provides for the introduction of an increased income tax rate on higher-income individuals as announced earlier in the year by President Putin. This includes that the current 13% rate would continue to apply on individual income up to RUB 5 million, with income exceeding that amount subject to a new increased rate of 15%. The increased rate would apply for both resident and non-resident individuals.09-23-2020
Botswana reportedly ratified the pending income tax treaty with the Czech Republic on 26 August 2020. The treaty, signed 29 October 2019, is the first of its kind between the two countries. It will enter into force once the ratification instruments are exchanged and will apply in Botswana from 1 July next following the date of its entry into force and in the Czech Republic from 1 January of the year following its entry into force.09-23-2020
The French General Directorate of Public Finance has published the synthesized text of the 1971 tax treaty with Portugal as impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The text is intended to facilitate the reading of the treaty as impacted by the MLI based on the reservation and notifications deposited by France and Portugal. The text is not a substitute for the respective authentic texts of the treaty and the MLI, which remain the only applicable legal instruments.
As provided in the synthesized text, the MLI applies for the 1971 France-Portugal tax treaty:
- with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2021;
- with respect to all other taxes levied by a Contracting State, for taxes levied with respect to taxable periods beginning on or after 1 December 2020; and
- with respect to arbitration, for cases submitted from 1 June 2020 and for cases submitted prior to that date to the extent agreed to by both Contracting States.
Click the following link for the tax treaty page of the General Directorate of Public Finance, which includes the MLI synthesized texts.09-23-2020
On 18 September 2020, the German Federal Council (upper house of parliament - Bundesrat) approved the law for the ratification of the pending protocol to the 2016 tax treaty with Finland. The protocol, signed 18 November 2019, updates the treaty's title and preamble, and replaces Article 25 (Application of the Convention in Special Cases) with a new Article 25 (Prevention of Treaty Abuse) in line with OECD BEPS Standards. The protocol will enter into force 30 days after the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.09-23-2020
On 16 September 2020, officials from Greece and North Macedonia met to discuss bilateral relations, including the signing of an income tax treaty. The treaty would be the first of its kind between the two countries and must be finalized, signed, and ratified before entering into force.09-23-2020