The attached article from National Law Review provides meaningful insight into a tax risk framework encompassing the UK Corporate Criminal Offenses (CCO) Act and EU Directive on Administration Cooperation (DAC6) requirements.
The approach to performing compliance with the CCO and DAC6 Acts should be an integrated risk framework approach.
TEI has submitted comments to the OECD addressing potential changes to the current Country-by-Country (CbC) reporting regime.
Extract of some comments:
Multinationals filing U.S. GAAP financials also face some of these same issues as FASB is considering similar data as part of the tax footnote, for example. They are currently weighing the cost/benefit of such information, most importantly the level of insight gained by the reader of the financial statements.
Additionally, countries are still proposing the public disclosure of CbC reports, including a recent proposal by the U.S.
Tax practitioners should follow this trend, as one country is all that is required to prompt insight, and questions, into the underlying data.
As COVID 19 ravages the world, the world of transfer pricing will also feel extraordinary consequences. The attached articles from Rödl & Partner highlight transfer pricing considerations in China, which can apply in most other countries, and a COVID 19 tax summary of each EU Member State’s relevant developments, updated daily.
Highlights of China’s TP considerations:
It should be noted that current year comparables will include many loss making companies due to COVID 19, thus advance thinking may be necessary prior to year-end.
https://www.roedl.com/insights/covid-19/transfer-pricing-beps-corona-virus-transactions-cashflow
Deloitte’s March update of DAC6 legislation for the various countries is attached, providing a valuable reference as legislation is continually enacted.
You may also refer to the DAC6 blog page for hallmark transaction updates.
https://www2.deloitte.com/lu/en/pages/tax/articles/dac6-mdr-radar.html
Luxembourg, in a draft law, appears ready to adopt one of the EU recommended measures for non-deductibility of costs payable to an EU black list country. However, there is also an economic exception in the draft, although the documentation to avail the exception is not yet known.
The new law should apply as of 1/1/2021, although not yet certain.
An alert from Goodwin provides additional details.
https://www.goodwinlaw.com/publications/2020/03/03_27-luxembourg-adopts-draft-bill
As DAC6 is rapidly approaching, Mexico has enacted new obligations for reportable transactions with similar excessive penalties as a deterrent.
Taxpayers with Mexican operations should be aware of, and prepare for, this new world of real-time reporting and a governance process for sustainability.
Click to access 2020G_001313-20Gbl_Mexico%20-%20New%20reportable%20transaction%20obligation.pdf
This is a valuable reminder of the US GAAP tax accounting guidance in this strange time, when guidance of many companies is being withdrawn and significant uncertainties remain.
Click to access hot-topic-coronavirus-income-taxes.pdf
Attached is very transparent and informative tax report, including tax strategy, that is valuable to preview as part of the continuing trend for transparency.
https://www.vodafone.com/our-purpose/reporting-centre/tax-and-our-contribution-to-economics
Following up global support, the DAC6 Best Practices page has launched.
I invite your comments and valuable insights.
Thank you
McDermott Will & Emery’s (MWE) informative article presents basic reporting attributes for DAC6 reporting that may be a good reference tool in understanding this reporting quagmire, which seems to get deeper as more countries publish their rules and ordinary transactions are surfaced for inclusion to avoid penalties.
https://www.mwe.com/insights/top-10-things-you-need-to-know-about-dac6/
As advisors develop tools to capture data, etc., it seems there are not many sites/articles that a tax professional can gain knowledge quickly and easily about Best Practice reporting and a listing of the transactions that are definitive, or subjective, for consideration.
DAC6 is more draconian by the day, it seems, as countries publish rules and tax professionals unearth normal business transactions that seemingly get caught in its web.
Due to the significant penalty provisions that have been legislated, this reporting is a requirement for which assumptions may prove costly. Many esteemed followers (practitioners, advisors, tax administrations, academicians, etc.) are proficient in international tax, many of whom interact with EU Member States.
To develop Best Practices that are a primary focus for this blog, I am thinking of developing a separate page for DAC6 reporting, listing basic hallmarks, and description of transactions based on my experience and input from the strategizingtaxrisk.com community. I look forward to your input and ideas.
You may comment on this site, or via email at: strbestpractices@gmail.com.
Thank you in advance for your time and comments.
The Swedish Government issued, on 4 February 2020, a final bill to Parliament implementing the European Union (EU) Directive on the mandatory disclosure and exchange of cross-border tax arrangements (referred to as DAC6 or the Directive).
An earlier draft was issued in December 2019, the final legislation is expected to be enacted in March 2020, and penalties apply after it goes into force July 1, 2020.
EU Member States were to adopt and publish national laws required to comply with the Directive by 31 December 2019. Sweden did not meet this deadline. This major miss of the OECD deadlines for a complex, subjective and arguably far-reaching disclosure legislation brings forth the question: Why is there not a similar delay for implementation by taxpayers and reporting parties? Unfortunately, the OECD has not provided any comments on this mismatch of Member State responsibilities and taxpayer obligations.
The scope of the taxes covered under the Swedish new draft legislation is fully aligned with the Directive and applies to all taxes except VAT, customs duties, excise duties and compulsory social security contributions.
In accordance with DAC6, the main benefit test (MBT) will be satisfied if it can be established that the main benefit or one of the main benefits which, having regard to all relevant facts and circumstances, a person may reasonably expect to derive from an arrangement, is the obtaining of a tax advantage.
The Government’s explanatory notes indicate that a “tax advantage” includes a tax advantage outside of Sweden (and there is no suggestion that such tax advantage must arise in respect of EU taxes).
The Government further concludes that there is no requirement that the tax advantage occurs during the current fiscal year, it can occur also in the future, for example, in the form of deferred taxation. It states, however, that it must be a tax advantage based on current rules.
DAC6 is complex, subjective and frustrating as each Member State applies their own interpretation of the final rules, as well as reporting formats.
Taxpayers with operations or transactions affecting Sweden, or other Member States, will likely over-report transactions for the initial period, and hope for further clarifications in the near future. However, penalty consequences are so significant with respect to each (subjective) reportable arrangement that some companies may find it difficult to prove the negative – that each arrangement was reported timely.
Click to access 2020G_000817-20Gbl_Sweden%20issues%20final%20MDR%20proposal%20to%20Parliament.pdf
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/
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.
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!
Strategizing Multinational Tax Risks 
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