Strategizing International Tax Best Practices – by Keith Brockman

Archive for the ‘Tax Risk Management’ Category

EU blacklist: Additions

The EU blacklist of noncooperative tax jurisdictions, which is used in one of the DAC6 hallmarks for reportable transactions, is revised as of February 18th to include the Cayman Islands, Panama, Seychelles and Palau, in addition to the official list, as included in the referenced link.  It is noted that Turkey was not added to the list.

https://www.consilium.europa.eu/en/policies/eu-list-of-non-cooperative-jurisdictions/

Books/records: German MOF change

The German Ministry of Finance recently changed their rules re: maintenance of books and records for tax (including customs) purposes.  The GoBD compliance provisions are especially important in acquiring businesses with German locations, digital technology, changing systems, moving/dissolving German entities and reviewing current documentation rules for multinationals operating in Germany.  Upon audit, German tax authorities will ensure this compliance is verified.

These rules are similar to other EU rules for maintaining records in the country, and should always be a diligence item for M&A, ERP system conversions, etc.  

HAPPY NEW YEAR

May the Year 2020 bring a fresh start, new aspirations and inspiring successes!

Thank you for your continued interest, suggestions and comments, which are very much appreciated.  Have a fantastic 2020!

VAT refund: EC steps in

This is a very interesting case and would seem to form precedence for EU Member States and taxpayers in a similar situation, resulting from a request for a preliminary ruling to the EC from the Supreme Administrative Court, Czech Republic and the Kingdom of Spain also submitted written observations.

 Are tax authorities able to defer the refund of the total amount of excess VAT even though only a small part is still the subject of an ongoing tax inspection? The tax authorities and the Commission believe so, arguing that the deduction under Article 179 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘the VAT Directive’) is to be made only from the total amount.

 This question is particularly sensitive because the part of the claimed deduction still to be investigated might be connected with a third party’s fraudulent transactions, about which the taxable person possibly should have known. According to the Court’s case-law, this would permit (or require) the tax authorities to refuse the deduction in this regard.  But does this also mean that the deduction in respect of other indisputably ‘legitimate’ transactions can be deferred for several years?  Theoretically, the inspection of a single transaction to the value of one euro could therefore defer the tax assessment for all other transactions for several years. 

It can be stated, as an interim conclusion, that Articles 179, 183 and 273 of the VAT Directive do not include a right for the Member States to limit in time the total amount of excess VAT if only part of it is disputed, while the other part is undisputed.

http://curia.europa.eu/juris/document/document.jsf?text=&docid=221824&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=953875

Tax transparency: Shell’s 2018 report

Royal Dutch Shell PLC has published their 2018 tax contribution report, including country-by-country (CbC) statistics.

Public transparency of CbC reports has been in the vision of the EU (Dec. 6, 2019 blog), although it has not yet passed.

Shell’s report reflects a proactive effort to promote global transparency, and is an exemplary model to follow.

https://reports.shell.com/tax-contribution-report/2018/servicepages/downloads/files/shell_tax_contribution_report_2018.pdf

 

EU Code of Conduct

The Council of the EU published its latest report, summarized and referenced herein:

  • The US complies with all the EU Member States re: Automatic Exchange of Information (AEOI) due to its double tax treaty network, FATCA, etc.
  • Guidance on notional interest deductions who wish to adopt a similar method, as not harmful by the Group (no safe harbor; general criteria)
  • Delisting certain non-cooperative jurisdictions
  • Monitoring implementation of commitments by jurisdictions
  • Identification of new preferential regimes
  • Further defensive measures for non-cooperative jurisdictions
  • Treatment of partnerships re: substance
  • The way forward; future monitoring, etc.

This is important guidance, as it provides transparency into the tax measures adopted, or not adopted, by various jurisdictions.  It also provides potential measures to incentivize non-cooperative jurisdictions.

https://www.ey.com/Publication/vwLUAssets/EU_Code_of_Conduct_Group_issues_update_report,_including_new_guidance/$FILE/2019G_005707-19Gbl_EU%20Code%20of%20Conduct%20Group%20issues%20update%20report%20-%20new%20guidance.pdf

https://data.consilium.europa.eu/doc/document/ST-14114-2019-INIT/en/pdf

http://data.consilium.europa.eu/doc/document/ST-12284-2019-REV-1/en/pdf

2019 BDO Board Survey

BDO’s 2019 Board of Directors survey is attached.

The 2019 BDO Board Survey, conducted by Market Measurement, Inc., an independent market research consulting firm on behalf of the Corporate Governance Practice of BDO USA, examined the opinions of 180 corporate directors of public company boards.

Respondents represent a distribution of organizations across industries and market value, from less than $200M to more than $10B.

Re: impact of the Tax Cuts and Jobs Act (TCJA), approx. 47% of the respondents were affected by the reduced Federal tax rate, although less than 20% were impacted by tax losses, foreign earnings impact or interest expense limitations.  This is very surprising with the TCJA GILTI provisions.

Almost two-thirds of directors (65%) report a high or moderate understanding of their company’s total tax liability.

Page 7 of the report is interesting, as it illustrates actions pursued as a result of tax reform.  These actions include MA&A, stock buy-backs, increased dividends and repatriation of cash to the US.

https://www.bdo.com/getattachment/9a99015e-cd22-4d93-94b2-68cc0d243e1f/attachment.aspx?2019_BDO-Board-Survey_web.pdf

%d bloggers like this: