Click cover to download

(Subscriber-only password access)

Not a subscriber?

Click here to join the FREE mailing list and receive password access

Corporation tax is a complex, controversial and emotive subject, which remains in a constant state of review and reform around the globe. In Europe, for example, the EU-ATAD took effect on 1 January 2019 in response to the relevant Action Plans of the Organization for Economic Co-operation and Development (OECD)’s base erosion and profit shifting (BEPS) project. The introduction of the EU-ATAD helped create some degree of uniformity across EU Member States, introducing three BEPS-related rules, plus two rules which did not derive from BEPS, for a total of five substantive anti-tax avoidance rules. In December 2019, Germany’s Ministry of Finance released a draft bill for the transposition of the EU Anti-Tax Avoidance Directive (EU-ATAD) into German law.

MEXICO

Josemaría Cabanillas

Deloitte Mexico

“Amendments were incorporated into the income tax and value added tax (VAT) laws as of 1 January 2020, while others are set to be implemented in June 2020 or on 1 January 2021. Of these amendments, there are a number which will be of interest to taxpayers. First, the restriction on expense deductibility for income tax. This amendment corresponds to payments to related parties resident in low tax jurisdictions. A jurisdiction is low tax if income there is subject to income tax that is lower than 75 percent of the income tax that would have been paid in Mexico, which, in principle, translates to a 22.5 percent effective income tax rate threshold.”

SPAIN

Eduardo Gracia

Ashurst

“Recently, some Spanish tax laws and regulations have been amended to implement, or to be adapted to, the corresponding directives. VAT legislation and regulations on tax dispute resolution mechanisms in the European Union (EU) have been modified. It should also be noted that new bills regulating Spanish taxes on digital services and on financial transactions have just been submitted to parliament and significant changes are expected in the Corporate Income Tax Act, the Individual Income Tax Act and in the environmental tax system, although they depend on obtaining a parliamentary majority. In particular, the Spanish government intends to establish a minimum taxation for large companies and amend the Spanish participation exemption regime and regulation of Spanish real estate investment trusts (REITs).”

NETHERLANDS

Jian-Cheng Ku

DLA Piper

“The key developments relating to tax regulations that we have seen in the Netherlands, and in Europe, over the last 12-18 months have been, first, the implementation of the Anti-Tax Avoidance Directive II (ATAD II) by EU Member States, which provides for rules targeting hybrid mismatch arrangements. ATAD II is based on the Organisation for Economic Co-operation and Development’s (OECD’s) base erosion and profit shifting (BEPS) Action 2 report. Second, the implementation of the Dispute Resolution Directive (DRD) by Member States, which provides for an arbitration procedure in the event of cross-border tax disputes between Member States.”

GERMANY

Karsten Ley

RSM

“International tax regulations in Germany are undergoing significant changes and amendments at present. In December 2019, the German Ministry of Finance released a draft bill for the transposition of the EU Anti-Tax Avoidance Directive (EU-ATAD) into German law. This draft bill includes significant changes, including the German CFC and hybrid mismatches rule, as well as various statutory regulations regarding transfer pricing (TP). Also, the EU Directive on the mandatory exchange of information of cross-border tax structuring (DAC 6) is a key topic. Furthermore, new research and development (R&D) incentives make Germany more attractive for R&D activities.”

ITALY

Luca Bosco

Studio Tributario e Societario - Deloitte

“The major changes that have been made to Italian tax rules over the last 12-18 months are related mainly to the full enactment of the EU’s Anti-Tax Avoidance Directives – ATAD 1 and ATAD 2 – provisions which cover interest limitation rules, exit taxation, entry taxation, controlled foreign company (CFC) rules, a new set of criteria to identify ‘tax havens’ and EU and extra-EU anti-hybrid rules.”

UKRAINE

Slava Vlasov

PwC

“The point is that the key developments are still ‘under construction’, and have not been finalised yet. What unites them is the goal of introducing the best international practices in Ukraine, which can be divided into four main categories. First, the struggle against aggressive cross-border tax planning. Here we talk about base erosion and profit shifting (BEPS) and its specifics, such as taxation of controlled foreign companies, revision of permanent establishment rules and mandatory principal purpose tests. Second, transparency.”

CHINA

Gerald Neumann

Ebner Stolz China

“In the past 12 to 18 months, the most important tax regulations development was the implementation of the revised PRC Individual Income Tax (IIT) Law, under which tax burdens can be reduced as more deductions can be claimed. For foreign expats, the new IIT Law, as well as a series of additional tax regulations, implies that significant allowances, such as housing and education, for expats will be abolished from 2022. In terms of VAT, standard VAT rates have been gradually reduced from 17 percent to 13 percent, especially for sales and the import of goods, with further incentives for VAT refunds also introduced.”

ETHIOPIA

Getu Jemaneh

HST Consulting Plc

“The Ethiopian government has introduced a series of reforms that include revising some existing tax laws. To effectively realise these reforms, new tax laws have been enacted, including excise tax on import and production on selected items such as beverages, automobiles and other basic goods. New directives have also been issued to clarify implementation of existing tax laws. These directives significantly reduce the confusion that had faced taxpayers. The government is also undergoing new investment laws to streamline tax and investment incentives. The tax authority is also working on building up its internal staff to strengthen tax collections.”

CONTRIBUTORS

Ashurst

Deloitte Mexico

DLA Piper

Ebner Stolz China

HST Consulting Plc

PwC

RSM

Studio Tributario e Societario - Deloitte