Strategizing International Tax Best Practices – by Keith Brockman

Archive for August, 2019

MESA Tax Guide

KPMG’s Middle East and South Asia (MESA) e-guide was recently published, providing a tax overview of GCC countries, wider Middle East countries and South Asian countries.

The reported countries include:

  • Bahrain
  • Kuwait
  • Oman
  • Qatar
  • Saudi Arabia
  • UAE
  • Egypt
  • Iraq
  • Jordan
  • Lebanon
  • Yemen
  • Bangladesh
  • Pakistan
  • Sri Lanka

The report provides a summary of Direct Taxes, including branches/permanent establishments, Tax Treaties, Indirect/Withholding taxes, Accounting rules including loss carryovers, and details about each country’s tax rules and requirements.

The guide is a handy reference, especially as the included countries are experiencing significant changes in their tax rules and guidance.

https://assets.kpmg/content/dam/kpmg/xx/pdf/2019/08/mesa-tax-guide.pdf

US int’l developments

Proposed Regulations were issued for cloud computing and digital transactions; this is an especially important area re: sourcing of income, definitions, etc. especially in light of France and others looking to implement a digital services tax.

Publication 5188 was revised re: FATCA data reporting.

OECD released Peer 2 review reports re: re: BEPS Action 14 (dispute resolution).  Interestingly, some US treaties include a MAP provision, although not all are consistent with the minimum standard.

https://www.ey.com/Publication/vwLUAssets/Report_on_recent_US_international_tax_developments_-_16_August_2019/$FILE/2019G_003793-19Gbl_Report%20on%20recent%20US%20international%20tax%20developments%20-%2016%20Aug%202019.pdf

EU Mandatory disclosure update

EU Directive 2018/822, adopted May 25, 2018, is in process of being adopted by Member States through the end of this year.  A summary of the status is as follows:

  • Adopted: Hungary, Poland, Lithuania, Slovenia
  • Published legislation: Austria, Cyprus, Czech Republic, Denmark, Estonia, Finland, Germany, Italy, Luxembourg, Netherlands, Portugal, Slovakia, Spain and UK
  • Formal consultation: Latvia and Sweden
  • Informal consultations: Belgium, France, Ireland, Malta, and Romania
  • No action yet; Bulgaria, Croatia and Greece
  • Under the Directive, cross-border reportable arrangements, where the first step of implementation is taken during the transitional period between 25 June 2018 and 30 June 2020, are required to be reported by 31 August 2020. As of 1 July 2020, reporting will be required within 30 days of a triggering event, e.g., the cross-border arrangement being ready for implementation.  However, Poland has earlier rules.

International tax professionals should be aware of the above rules, coordinating relevant reporting externally and internally.

EY’s Global Tax Alert has additional details, for reference.

https://www.ey.com/Publication/vwLUAssets/EU_Mandatory_Disclosure_Rules_-_An_update_on_local_country_implementation_status_and_trends/$FILE/2019G_003690-19Gbl_EU%20Mandatory%20Disclosure%20Rules%20-%20Update%20on%20local%20countries.pdf

Canada: Draft legislation

Canada’s Dept of Finance released draft legislative proposals, with comments due by 7 October 2019.

Canada has complex rules re: foreign affiliate dumping, etc. making it more complex to place subsidiaries under a Canadian holding company without proper planning for Paid Up Capital and other items, and these proposals appear to tighten those rules.

Cross border securities lending arrangements are included re: additional rules.

Tax professionals with Canadian operations should monitor this legislation accordingly.

EY’s Global Tax Alert provides additional details therein.

https://www.ey.com/Publication/vwLUAssets/Finance_Canada_releases_draft_legislation_for_2019_budget_measures/$FILE/2019G_003652-19Gbl_Canada%20-%20Draft%20legislation%20for%202019%20budget%20measures.pdf

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