Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘Slovakia’

BEPS related developments

EY’s Global Alert highlights several OECD / unilateral actions resulting from the BEPS Action Items announced earlier this month.

Click to access 2015G_CM5827_The%20Latest%20on%20BEPS%20-%2026%20October%202015.pdf

Highlights:

  • Czech Republic’s 2016’s income tax proposal, including the EU Parent-Subsidiary Directive change limiting exemption of tax deductible distributions, although retaining its own general anti-abuse rule (vs. that in the Directive).
  • EU’s State Aid decisions re: Luxembourg and Netherlands, for which legal appeals are expected.
  • Honduras transfer pricing information return requirement.
  • Indonesian thin capitalization limit of 4:1, remainder of interest non-deductible (thereby incurring one-sided taxation re: interest income of recipient).
  • Ireland’s Knowledge Development Box, following the OECD’s recommendations, and country-by-country (CbC) reporting by Irish headquartered groups with a secondary filing mechanism.
  • Norway’s 2016 budget proposal, with an interest limitation of 25% of taxable EBITDA.
  • Slovakia’s 2016 income tax changes, including implementation of the EU Parent-Subsidiary Directive.

This new post-BEPS period is starting off with a multitude of activities by countries and the EU that is not expected to slow down in the near future.  These developments will shape the transfer pricing regime, and resulting complexity and disparity, around the world.  Accordingly, these trends should be monitored and addressed in a corporation’s tax risk framework accordingly.

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OECD

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Slovakia’s amendments: TP, licenses, anti-abuse

Some interesting proposals to Slovakia’s tax code are highlighted for review, as detailed in the PwC summary in the attached link:

Click to access tax-and-legal-alert_4-2013_en.pdf

Interesting provisions include:

  • Transactions will not be recognized if they have no business substance and their purpose is to avoid tax or attain a tax advantage that would not be otherwise attributable to the taxpayer
  • Binding rulings will be available at the end of 2014
  • The corporate income tax rate will decrease by 1% to 22% in 2014
  • Net loss carryover period is shortened from seven to four years
  • A tax license, from EUR 480 to EUR 2,880 will be introduced
  • A service permanent establishment (PE) concept is created, provided it is recognized in the double tax treaty
  • A new 35% withholding tax rate is introduced for payments to taxpayers from non-contracting states
  • Transfer pricing documentation is to be provided within 15 days upon request

Slovakia’s proposals are further evidence of increased general anti-avoidance rules (GAAR) and emphasis on transfer pricing.

 

Category:

Transfer Pricing

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