International Tax News. Edition 85 April 2020...international tax developments orldwide can be a real challenge for multinational companies International a ews is a monthly publication

International Tax NewsEdition 85April 2020

www.pwc.com/its

Keeping up with the constant flow of international tax developments worldwide can be a real challenge for multinational companies. International Tax News is a monthly publication that offers updates and analysis on developments taking place around the world, authored by specialists in PwC’s global international tax network.

We hope that you will find this publication helpful, and look forward to your comments.

Welcome

Bernard Moens Global Leader International Tax Services Network T: +1 703 362 7644E: [email protected]

Featured articles

Responding to the potential business impacts of COVID-19 COVID-19 can cause potentially significant people,

social and economic implications for organisations.This link provides information on how you

can prepare your organisation and respond.

http://www.pwc.com/gx/en/tax/newsletters/international-tax-services/index.jhtml

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https://www.pwc.com/gx/en/issues/crisis-solutions/covid-19.html



In this issue

Legislation Administrative Judicial Treaties





Legislation

Expanded concept of significant global entity now before Parliament

The Australian government introduced legislation to expand the significant global entity (SGE) definition to include a broader range of entities and also introduced a new concept of Country by Country Reporting Entity (CbCRE). Once enacted, these amendments will apply retroactively to income years commencing on or after July 1, 2019. The amendments are designed to address a perceived deficiency in the existing SGE definition.

The new rules are particularly relevant for any groups of entities that would be required to consolidate for accounting purposes as a single group if the members of the group were assumed to be a listed company and were not affected by the accounting exceptions for consolidation or materiality.

The expanded SGE definition is relevant to application of:

• the multinational anti-avoidance law• diverted profits tax• increased administrative penalties for failing

to meet tax obligations, false or misleading statements and tax avoidance and profit-shifting schemes.

The new CbCRE concept more closely aligns with the OECD BEPS action plan’s definition and is far narrower in scope than the expanded SGE definition. The CbCRE concept also will be used going forward to determine which corporate tax entities are required to lodge general purpose financial statements with the ATO where they are not already required to lodge with the Australian Securities & Investment Commission.

Peter Collins

Sydney

T: +61 0 438 624 700E: [email protected]

David Earl

Melbourne


Jayde Thompson

Melbourne


Australia

PwC observation:The consequences of an entity becoming an SGE or SbCRE are significant in terms of the additional compliance burdens and the cost of failing to determine status as an SGE correctly. Entities with ultimate investment from private equity, funds management, superannuation and pension funds, sovereign wealth funds, and state-owned enterprises may find it difficult to ascertain the profile of their investors and obtain the requisite information to assess SGE status. Potentially impacted taxpayers should understand these changes and, where necessary, seek the ATO’s guidance.





Federal government’s JobKeeper program in response to COVID-19

The Australian government, on March 30, 2020, announced the ‘JobKeeper’ program, which broadly comprises a wage subsidy of AUD 1,500 per fortnight, per eligible employee to help Australian businesses keep staff employed during the pandemic.

The incentive provides eligible Australian employers with JobKeeper payments to the extent that it retains eligible employees (i.e., not all employees are eligible for the subsidy). To be eligible for the payment, an Australian employer must experience a significant decline in turnover, based on the following thresholds:

• For a business with annual aggregated turnover of less than AUD 1 billion: estimate that goods and services tax (GST) turnover has fallen (or will fall) by more than 30% relative to a comparable period a year ago (of at least a month or three months), and

• For a business with annual aggregated turnover of AUD 1 billion or more: estimate that GST turnover has fallen (or will fall) by more than 50% relative to a comparable period a year ago (of at least a month or three months).

Peter Collins

Sydney


David Earl

Melbourne


Jayde Thompson

Melbourne


Australia

PwC observation:Taxpayers who expect to experience a significant downturn should register their interest to receive JobKeeper payments with the Australian Tax Office, and assess their eligibility to enrol in the program.





COVID-19 support measures and increase in tax audits regarding beneficial ownership

COVID-19 support measures: The Belgian government introduced relief that allows companies to request supportive financial measures to the extent they face financial difficulties directly resulting from the coronavirus spread (to be demonstrated and subject to additional conditions). These measures include, among others: (i) extension of deadlines to comply with certain tax formalities; (ii) extension of payment terms for certain debts; (iii) write-downs on doubtful trade receivables; and (iv) an increased tax benefit related to advance tax payments to be made for the third and fourth quarters of FY 2020, etc.

Also, Belgian tax authorities are initiating more tax audits in which they deny withholding tax exemptions (or reductions) claimed in Belgium based on the Danish beneficial ownership cases.

Belgium

Evi Geerts

Belgium

T: +32 492 743970E: [email protected]

Tamara Geboers

Belgium


PwC observation:Belgian companies should consider whether they meet the requirements to take advantage of these supportive measures. Companies also should assess whether, in light of the tax authorities’ increased scrutiny, their flow of funds (payments of dividends, interests and royalties, especially in case of on-payments) can continue to be considered sustainable.

COVID-19 Canadian response measures

Canada emergency wage subsidy

The federal government, on April 11, 2020, passed the COVID-19 Emergency Response Act, No. 2, a federal law which includes the new Canada Emergency Wage Subsidy. Key details of the Canada Emergency Wage Subsidy program include:

• The subsidy is 75% of remuneration paid up to a maximum benefit of $847 per week.

• The claiming periods are March 15 – April 11 (must show at least 15% drop in revenue), April 12 – May 9 (must show at least 30% drop in revenue), and May 10 – June 6 (must show at least 30% drop in revenue).

• The company may choose the reference period, which may be either the same months in 2019 or the average of January and February 2020.

• Eligible employers include employers of all sizes and across all sectors of the economy, with the exception of public sector entities.

• All employers would be expected to at least make best efforts to top up salaries to 100% of the maximum wages covered.

• A 100% refund for certain employer-paid contributions to employment insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan for eligible employees who are on leave with pay and for which the employer is eligible to claim for the wage subsidy for those employees.

• Eligible employers can apply through a Canada Revenue Agency online portal which is expected to be available within the next few weeks.

Tax payment deferral

The federal government, on March 18, 2020, announced that the payment deadline for most income tax amounts that became due after March 17, 2020 and before September 2020 would be deferred until September 1, 2020.

For more information see our PwC Tax Insight.

Canada

PwC observation:Canada’s government understands that COVID-19 presents a significant challenge to Canadian organizations. Therefore, these measures are introduced to assist organizations during this period of economic disruption. The Canadian government continues to announce additional measures, as the situation evolves.

Kara Ann Selby

Toronto, Canada


Michael C. Black

Toronto, Canada

T: + 416 814 5876E: [email protected]



https://www.pwc.com/ca/taxinsights



Covid-19 tax measures in Chile

The Chilean government has taken a series of actions to face COVID-19’s effects. These include the following tax measures:

• The stamp tax rate was reduced to 0% for six months, from April 1, 2020 until September 30, 2020.

• Regarding corporate tax, the Chilean IRS was instructed to forgive the provisional monthly payment (for those taxpayers required to pay) due in April, May, and June 2020.

• The Treasury is empowered to offer payment arrangements to certain taxpayers in payment default, by entering into special payment agreements. The Treasury may also forgive all or part of the penalty, interest, and fines that correspond to tax payments or tax instalments accrued in April, May, and June 2020.

• The Chilean IRS and the General Treasury are empowered to forgive, in whole or in part, the penalty, interest, and fines applied, arising from tax returns filed after the deadline, related to Income Tax, until September 30, 2020.

• Furthermore, for micro, small, and medium-sized companies, the IRS and the Chilean National Treasury, announced the following benefits:

• The income tax refund corresponding to the 2020 Annual Income Tax Filing Process will be paid in April.

• The corporate tax payment that is filed on Form 22, due in April 2020, is extended until July 31, 2020.

Chile

PwC observation:The stamp tax rate reduction may be used by companies that were planning to enter into money lending operations, including cross-border loans. There is a six-month window to perform this type of operation without being subject to stamp tax, which has a current rate of up to 0.8% in certain cases.

Francisco Selame

Santiago, Chile

T: +562 294 00 000E: [email protected]

Benjamin Barros

Santiago, Chile


Loreto Pelegri

Santiago, Chile






COVID-19 Danish response measures

The focus of legislative initiatives that the Danish Parliament has adopted in response to the COVID-19 crisis has been to support the liquidity of companies that have been extraordinarily affected economically. The initiatives include compensation for:

1. salaries, which enable companies to retain employees and put them on paid leave during work shortages, instead of terminating them.

2. fixed costs such as rent, interest expenses on debt for the purchase of fixed assets, etc. and non-contractual expenses determined as a percentage of the fixed expenses, which depends on the percentage decrease in turnover. Certain conditions apply to the entitlement of fixed cost compensation.

3. lost revenue for self-employed and small businesses. Certain conditions apply to the entitlement of turnover compensation and require an independent auditor’s statement.

4. a state guarantee scheme for a loan on the basis of a company’s realized and expected loss of revenue for the period between March 1, 2020 and September 30, 2020. The companies must have suffered or expect to suffer a revenue loss of at least 30% as a result of COVID-19.

The Danish Ministry of Taxation has extended the filing deadline for corporate tax returns for FY 2019 from June 30, 2020 to September 1, 2020. In addition, it has enacted a temporary increase in the amount of credit balance allowed in the tax account.

Please see our PwC Insight for more information.

Denmark

PwC observation:Denmark’s Covid-19 measures focus on liquidity of Danish businesses. Companies should monitor their expected revenue loss from March to June 2020 to assess any relevant aid packages, as compensation of up to DKK 60m is available per eligible company. All compensation received will be treated as taxable revenue.

Anne Cathrine Primdal Allentoft

Hellerup, Denmark


Maja Stubbe Gelineck

Hellerup, Denmark




https://www.pwc.dk/da/covid-19.html



COVID-19 Fiji response budget report

The Attorney General and Minister for Economy, Civil Service and Communications, the Honourable Aiyaz Sayed-Khaiyum, recently delivered Fiji’s COVID-19 Response Budget.

Fiji’s economy is expected to contract by 4.3% in 2020, after a 0.5% growth in 2019. Net deficit is estimated at 9% of GDP (from 2.7% initially budgeted), while the debt-to-GDP ratio is projected to be 60.9% (from 47.1%). These statistics result from a challenged economy, which recently has been exacerbated by the effects of the COVID-19 crisis. The crisis has stifled the tourism industry and negatively impacted other key areas of the economy.

The Minister announced the government’s $1 billion economic stimulus package, which includes the following:

• relaxation of bank loan repayment requirements for six months

• reduction in Fiji National Provident Fund (FNPF) employer superannuation contribution from 10% to 5%; and employee contribution from 8% to 5% from April 1 to December 31, 2020

• access to FNPF funds by employees who have been laid off or are on reduced hours

• increase in the export income deduction from 50% to 60% for 2020 to 2022

• increase in employment taxation scheme incentives by 100%

• change in advance tax requirements from 3 to 9 payments

• reduction in stamp duty rates for mortgages• subsidies by Energy Fiji Limited (EFL)

and additional concessions for small and medium enterprises

• suspension of repayment requirements until December 31, 2020 for tertiary education loans

• introduction of a new hotel incentive package applicable from April 1, 2020 to December 31, 2022

• a range of other stimulus initiatives to assist negatively impacted entities.

Fiji

PwC observation:These stimulus packages likely will be funded by additional loans, including from the Asian Development Bank, the World Bank, and the Japan International Cooperation Agency. There are also increases in the fiscal duty on fuel and expected proceeds from the sale of EFL shares.

Nitin Gandhi

Fiji

T: +679 7020894 / 9990894E: [email protected]

Deepa Kapadia

Fiji

T: +679 3313955E: [email protected]

Jermome Kado

Fiji

T: +679 7020899 / 9990899E: [email protected]





Digital services tax: Second part of the administrative guidelines released for public consultation

French tax authorities (FTA) have published the second part of their guidelines on the new digital services tax (DST). The new guidelines provide important clarifications regarding the two categories of digital services covered by the DST, namely digital intermediation services and targeted advertising services. As a reminder, companies or groups are in the DST’s scope when the income derived from these services exceed €750m worldwide and €25m at the French level.

According to the FTA, digital intermediation services include digital interfaces that allow each user to publish content that is accessible to other users, to exchange or make transactions with them. Targeted advertising services will be subject to the DST when they meet the following three criteria: they must be marketed to advertisers or their agents, be placed on a digital interface, and be targeted on the basis of data collected from users. The guidelines contain examples that the FTA provided for each service category.

These guidelines also provide that, for the DST due in 2020 only, companies are allowed to defer their DST payments of the April and October 2020 instalments until December 2020.

France

PwC observation:The new guidelines are subject to public consultation until May 23, 2020 to allow interested parties to send their comments.

Guilhem Calzas

Paris

T: +33 0 1 56 57 15 40E: [email protected]

Samuel Vincent

Paris

T: +33 01 56 57 59 71E: [email protected]

Renaud Jouffroy

Paris

T: +33 0 1 56 57 42 29E: [email protected]





COVID-19 Hondorus response measures

The Honduras government passed Decree 33-2020, which contains legal aid to the productive sector and workers due the effects of the COVID-19 pandemic. This legislation establishes a tax obligation due date extension for taxpayers categorized as small and medium enterprises. The extension is until June 30, 2020 (without fines and interests) for the following fiscal year 2019 taxes: corporate income tax (CIT); solidarity contribution and net assets; contribution of the social sector of the economy; rentals; surpluses of the educational sector; and cooperative social sector contribution.

Honduras

PwC observation:The Decree grants that taxpayers categorized as small and medium enterprises by the tax authorities, who file and pay their income tax return no later than April 30, 2020; may apply a discount of 8.5% on the tax paid. Major taxpayers must comply with the filing and payment of the corporate income tax return no later than April 30, 2020. The government has also postponed the deadline for the filing the annual transfer pricing informative sworn tax return until July 31, 2020.

Ramón Morales

San Pedro Sula


Milton Rivera

San Pedro Sula


Francis Roque

Tegucigalpa






COVID-19 Japanese response measures

Japan’s Cabinet on April 7 approved an emergency stimulus package to mitigate the economic impact of COVID-19 (‘Emergency Measures’). It contains several key tax measures, and the Japan Diet enacted it in late April.

Under the Emergency Measures, taxpayers that experience a significant decline in revenue may apply to defer national tax, local tax, and social insurance premium payments for one year without providing any collateral and without paying interest on the unpaid amount. These extensions will apply to taxes due from February 1, 2020 through January 31, 2021.

In addition, companies with paid in capital of up to 1 billion yen will generally be eligible to claim tax refunds by carrying back losses incurred in fiscal periods ending between February 1, 2020 and January 31, 2022. Large corporations may also be eligible to carry back certain losses.

Japan’s National Tax Agency (NTA) also announced in March 2020 that it would grant extensions on tax filings and payments for taxpayers that have been negatively impacted by COVID-19. Due dates for the filing and payment of 2019 individual income tax, individual consumption tax, and gift taxes were automatically extended to April 2020.

Please see our PwC Japan Tax Update for more information.

Japan

PwC observation:Multinationals in Japan affected by COVID-19 should consider whether they are eligible to apply for any of the measures such as the one-year grace period for tax payments and the loss carryback rules.

Haruhisa Shirato

Tokyo, Japan


Akemi Kito

Tokyo, Japan


Shintaro Yamaguchi

Tokyo, Japan




https://www.pwc.com/jp/en/taxnews/pdf/jtu-20200413-en-160.pdf



COVID-19 Korean response measures

In response to the COVID-19 crisis, the Korean government amended and enforced the Special Tax Treatment Control Law (STTCL) on March 23, 2020, to provide tax relief to businesses or economic activities in specific regions affected by COVID 19. Also, the amended Presidential Decree of the STTCL came into force on April 9 following cabinet approval on April 7, 2020.

Significant tax measures in response to the COVID 19 crisis include:.

Corporate income tax reduction for SMEs in a designated disaster area

Individual or corporate income taxes (in the June 30, 2020 tax year) on income earned by small and medium-size enterprises (SMEs) will be reduced by up to 60% (i.e., 60% for small-sized company and 30% for medium-sized company) for SMEs with business operations in a designated disaster area (e.g., Daegu, Cheongdo in Gyeongbuk) as of the designation date. The income tax reduction will be capped at KRW 200 million unless the number of full-time employees decreases from the preceding year. If that occurs, then the income tax reduction will be decreased by the amount equal to KRW 5 million multiplied by the reduced number of employees.

Increased tax limit on deductible entertainment expenses

Tax deductible entertainment expenses are limited to the amount equal to a certain percentage of sales revenue, plus KRW 36 million per year for SMEs (KRW 12 million for non-SMEs). For entertainment expenses spent between January and December 2020, higher percentage rates will apply: i) 0.35% (from 0.3%) for sales revenue of up to KRW 10 billion; ii) 0.25% (from 0.2%) for sales revenue of more than KRW 10 billion but not exceeding KRW 50 billion; and iii) 0.06% (from 0.03%) for sales revenue of more than KRW 50 billion.

New tax credit for store rent reduction

Real estate rental companies that reduce store or commercial building rents to micro businesses renting the building from January 1 to June 30, 2020 will be allowed to credit an amount equal to 50% of the rent reduction against its individual or corporate income tax. However, the tax credit will not apply if rents or rental deposits increase between February 1 and December 31, 2020, as compared with those under lease or rental agreements signed prior to the rent reduction date.

Korea

PwC observation:The tax measures in response to the COVID 19 crisis may not significantly impact most companies from a corporate income tax perspective. There have been no tax filing extensions except for taxpayers in designated disaster areas. Therefore, most taxpayers should prepare and proceed with all tax compliance matters as planned before the crisis.

Changho Jo

Seoul, Korea


Robert Browell

Seoul, Korea


Andy Kang

New York, USA






COVID-19 Norwegian financial measures

Norway introduced or proposed several financial measures to mitigate the COVID-19 pandemic’s economic consequences. These measures include:

1. Corporate tax

The Norwegian government has taken several measures regarding corporate income tax. The payment of advance tax for companies for the second term was initially due April 15, but the deadline is extended to September 1, 2020. The deferral does not apply to companies that are subject to the hydropower and petroleum tax regime.

The tax authorities have announced that they will revert with updated information on the practical implementation of extended deadlines, and that interest will not accrue as a result of the deferrals. In addition, the Tax Administration is postponing compulsory fines for a delayed delivery of:

• A-melding (monthly report from the employer)• VAT returns, and• Corporate income tax returns.

• This applies to notice submissions due between March and June 10. However, companies may wish to comply with the filing deadlines to the extent possible. Some may be able to reallocate a deficit in 2020 against taxed profits from the previous two years. A limit of NOK 30 million has been set for deficit reallocation for 2020.

The Norwegian Parliament has proposed a temporary increase of the initial depreciation for balance group D (e.g. industry) from 20% to 30%, and the establishment of a temporary tax balance group for ships (not included in the tonnage tax scheme) in short sea shipping. The proposed depreciation rate for this group is 20%.

The Norwegian Parliament has asked the government to propose a new model for management incentives (such as taxation of stock options for startups). The model is meant to, at the latest, be presented in connection with the revised national budget for 2020.

2. Creation of a government loan guarantee and reintroduction of the government bond fund

The Norwegian government has adopted two rescue packages totalling NOK 100 billion to help companies in crisis:

• A government loan guarantee with a NOK 50 billion limit, aimed at new bank loans to SMEs in need of external financing. The loan scheme is approved by ESA (EFTA’s supervisory body), and banks can apply immediately. Work is underway on delimiting the companies eligible for loans under the scheme.

• Reintroduction of the Government Bond Fund with a limit of up to NOK 50 billion, with the intention of providing increased liquidity and capital access in the bond market

3. Compensation for businesses (the cash benefit scheme)

The government, on March 27, proposed establishing a cash support scheme for vulnerable companies. Businesses will be able to apply for compensation for decline in turnover due to the corona crisis. The compensation is determined on the basis of a legal entity’s fixed costs. The scheme is valid for March, April and May 2020.

The compensation scheme is intended to apply to taxable companies in Norway that have experienced a decline in sales as a result of the COVID-19 pandemic. The starting point for the right to compensation is that the company has experienced a sales decline of more than 30% (20% for March) compared with the same month last year. If the company did not operate in March 2019, or for other reasons had unnaturally low turnover at this time last year, the average turnover for January and February 2020 can be used to calculate the turnover failure. The scheme is not intended to apply to businesses with their own support scheme (such as the finance industry, oil and gas extraction, private kindergartens and airlines).

Norway

PwC observation:Companies are awaiting payment of the tax deduction for the second term. The measure will immediately affect liquidity as a result of the deferred payment of advance tax. Companies that made a profit in 2018 and or 2019, will in their 2020 tax return be able to reallocate company losses against prior year profits. Therefore, the liquidity effect will not arise until 2021. There are currently no measures regarding deferred wealth tax for the 2019 income year, payment for which is due in 2020. The owners must therefore pay wealth tax for the 2019 income year.

Ståle Wangen

Oslo, Norway


Erik Stenvik Granly

Oslo, Norway






2020 state budget published

The 2020 State Budget Law was published in the Official Gazette on March 31, and is effective April 1,2020. Some of the tax measures include:

Tax benefits to companies:

– Patent box regime: this provides a 50% relief from taxation on qualifying income (patents and industrial drawings or models) under certain conditions. It was expanded to include income from copyrights on computer programs. The Portuguese patent box regime is BEPS compliant, reflecting the modified nexus approach.

– R&D tax incentive scheme (‘SIFIDE II’): the regime was extended until 2025 (formerly 2020). The budget amended the rules on eligible contributions to public or private investment funds that invest predominantly in R&D companies, as follows:

• There is an obligation to maintain participation units in these funds for a five-year period. Taxpayers not meeting the obligation will be required to pay the tax that would have been due had the benefit not applied (payment is due in the year of the sale), plus late assessment interest.

• In order to assess the investment, investment fund management companies must send annually to the National Innovation Agency the last audited annual report and a document (portfolio or other) that evidences the fund’s investments made in the previous tax year.

– Deduction for reinvestment of retained earnings (‘DLRR’): from January 1, 2020 onward, the period for retained earnings reinvestment in relevant applications was extended to four years (formerly, three years) and the maximum amount of retained earnings to reinvest was increased to EUR 12 million (formerly EUR 10 million); intangible assets corresponding to technology transfer (namely, the acquisition of patent rights, licenses, know-how or technical knowledge not protected by patents), are now considered eligible investments if they are amortized for tax purposes and are not acquired from related parties.

– Stamp tax exemptions: exemptions have been extended:• Exemption for cash pooling agreements:

the stamp tax exemption applicable to financial transactions between companies in a control or group relationship now applies to loans not exceeding a one-year period, under a cash pooling agreement, for companies in a control or group relationship (when a controlling company holds, for more than one year, directly or indirectly, at least 75% of the share capital of controlled companies, provided that such participation grants to the first more than 50% of the voting rights).

• Exemption on ‘going concern’ transfers: a stamp tax exemption applies to the transfer of a going concern (commercial, industrial or agricultural establishments) within the context of a business restructuring.

– Inland Valuation Program: a tax credit of 20% of the costs incurred with the creation of jobs in inland regions (EU authorisation is required under the regional aid regime).

– Incentives to internationalization: the introduction of tax benefits (yet to be defined) to activities aiming at promoting SMEs, with the purpose of internationalising their products and activities, providing access to markets, and enhancing the national products.

Portugal

PwC observation:The introduced measures, as well as amendments to existing tax legislation following the publication of the 2020 state budget law have focused on fostering investment by extending tax benefits, with particular focus on intangibles. MNEs should consider Portugal as an investment hub under the current beneficial tax regime framework. The 2020 State Budget was announced in a positive economic environment, and an amendment to the State Budget is expected shortly due to recent impacts from the COVID-19 pandemic.

Jorge Figueiredo

Portugal


Catarina Nunes

Portugal






South Africa’s National Treasury proposes interest deduction and loss carryforward changes

South Africa’s Finance Minister, on February 26, conveyed National Treasury’s proposed amendments to the South African Income Tax Act, No. 58 of 1962 (ITA) during the annual budget speech. Two key proposals that could affect MNEs with South African operations are amendments to assessed-loss carryforwards by South African companies and interest deduction limitations.

Assessed loss offset

The proposed change limits assessed loss carryforwards to 80% of taxable income for assessment years commencing on or after January 1, 2021. Going forward, the proposed change will result in the taxpayer paying tax on at least 20% of its taxable income.

Limitation on the interest deduction

Treasury proposes reducing the 40% ATI threshold to 30% for assessment years beginning on or after January 1, 2021.

This proposed change opened for comments and discussion on Treasury’s website on April 17, 2020. The 10% reduction potentially could result in a larger limitation on a South African debtor’s interest deduction.

Please see our PwC Insight for more information.

South Africa

PwC observation:The proposed changes to the assessed-loss carryforward rules would result in a tax on at least 20% of taxable income. MNEs that have current or future assessed losses should evaluate the impact of the changes.

MNEs that have outbound debt to their South African subsidiaries and stand-alone domestic entities should consider the impact of the proposed interest deduction limitation amendments on a potential resulting funding structure.

Gilles de Vignemont

United States


Omoike W Obawaeki

United States


Frank Mosupa

United States




https://www.pwc.com/us/en/tax-services/publications/insights/assets/pwc-south-africas-national-treasury-proposes-changes.pdf



COVID-19 Spanish response measures

As a consequence of the Covid-19 pandemic, Spain declared a state of emergency on March 14 for fifteen days; it has been extended each fortnight since then. The government is approving different measures, as follows.

As a consequence of the Covid-19 pandemic, Spain declared a state of emergency on March 14 for fifteen days; it has been extended each fortnight since then. The government is approving different measures, as follows.

Under Royal Decree Law 8/2020, dated March 18, tax procedures whose deadlines would have started to run before March 18, 2020, are extended to April 30, 2020. Also, the period between March 18 and April 30 should not be considered for purposes of the statute of limitation, or the maximum length of tax procedures although, during this period, the tax authorities may execute essential procedures.

Royal Decree Law 11/2020, dated March 31, states that from the entry into force of the state of emergency to April 30, the new deadline to file federal or local tax appealing (recursos de reposición o reclamaciones económico administrativas) will start as of April 30 as long as the deadline to start them had not expired by March 13 or provided that the tax assessment to appeal had not been notified yet. Also, the time between the entry into force of the state of emergency to April 30 will not be taken into account for purposes of the deadlines to execute resolutions made by the tax office. Similarly, certificates of tax residence issued by foreign tax authorities, whose validity expired during that period, will be valid until April 30.

In connection with deferral of tax payments, the measures can only apply to SMEs provided that certain requirements are met. Royal decree law 7/2020, dated March 12, introduced a six-month extension, upon request and without interest during the first three months, of the deadline to pay taxes due from March 13, 2020 to May 30, 2020. The law requires that the debtor is a person or entity with a total amount of transactions (i.e., ‘volumen de operaciones’ as defined by the Spanish VAT law) not exceeding Euro 6,010,121.04 in 2019 and the amount to be deferred is less than Euro 30,000.

On April 14, royal decree law 14/2020 extended the deadline to file the tax returns and pay taxes due between April 14 and May 20, 2020 to this last date, provided that the taxpayer’s total amount of transactions (i.e., ‘volumen de operaciones’ as defined by the Spanish VAT law) does not exceed EUR 600.000. Such extension is not allowed for companies within a tax consolidation group or a VAT group, regardless of its previous-year turnover (‘INCN’).

Separately, the Spanish tax authorities’ premises have been closed since the start of the state of emergency. Some of the tax processes that require physical presence, such as the request of a tax ID, may be completed electronically.

With regard to Covid-19’s impact on tax residence or permanent establishment rules in tax treaties, Spanish tax authorities have not published or commented in this regard after the OECD guidelines were published on April 3.

Lastly, a few corporate measures are relevant for the management of multinationals. The drafting of the annual accounts, whose deadline is three months from the end of the fiscal year, would be extended for another three months from the end of the state of emergency. Also, during the state of emergency, boards of directors meetings could be held via videoconference or in writing and without a session provided that the president or at least two members of the board decide it. In both cases, the meeting would be deemed as held in the company’s legal domicile.

Spain

PwC observation:Considering the immediacy of both the measures and their adoption, and the ongoing developments, Spanish companies should consider whether they meet the requirements of the extended deadlines or could benefit from relaxation of board meeting requirements.

Roberta Poza Cid

Madrid


Isabel Asin Perez

United States






Restriction on the use of carried forward capital losses

Finance Bill 2020 contained updated draft legislation restricting the use of carried forward capital losses from April 1, 2020. The 50% restriction that already applies to other corporate tax losses is now extended to capital losses. The draft legislation is largely unchanged from the previous version published in July 2019, although the transitional rules have been amended to deal with some anomalies, and the restriction on the use of carried forward capital losses will not apply to companies in insolvent liquidation. This Bill has not yet been passed into law, but is expected to be enacted by summer 2020 without significant changes to this particular measure.

Key points

• Effective April 1 carried forward capital losses will be subject to the same restrictions as carried forward income losses.

• Companies already are only able to use carried forward income losses (trading losses, NTDs, etc.) against 50% of their current year total income including chargeable gains. The other 50% is taxable. Effective April 1 this restriction will also apply to carried forward capital losses.

• Each group gets a £5m ‘deductions allowance.’ This allows up to £5m of profits to be offset by carried forward losses before the 50% restriction applies. Groups only get one £5m allowance. Effective April 1 this must cover all types of losses, including capital losses.

• Current year capital losses will continue to be available for 100% offset against current year chargeable gains.

• The restriction on the use of carried forward capital losses will not apply to companies in insolvent liquidation.

• Specific provisions apply in the case of non-resident companies which carry on a UK property business or are within the charge to UK corporation tax on gains in relation to direct and certain indirect disposals of UK immovable property.

• Other issues

• Anti-avoidance and anti-forestalling provisions are included.

• Transitional rules deal with periods that straddle April 1, 2020.

• For insurance, the restriction will not apply to BLAGAB losses set against BLAGAB gains.

• For real estate, a REIT’s property rental business will also be exempt from the restriction.

United Kingdom

PwC observation:When the 50% restriction was previously introduced for income losses, carried forward income losses simultaneously were made more flexible. There will be no extra flexibility this time around. In particular, it will still not be possible to set capital losses (even current year capital losses) against any other types of profit. Many groups already are planning asset disposals that will be affected by these changes. These groups need to be aware that they could pay much more tax than expected.

Rachael Palmer

London


Sara-Jane Tovey

London






COVID-19 UK response measures

The UK government has introduced a number of measures to mitigate the economic impact of COVID-19. Of particular interest to multinational enterprises, the following measures are available:

• Coronavirus Job Retention Scheme The government on March 20, announced the Coronavirus Job Retention Scheme (CJRS). This temporary scheme is designed to support employers whose operations have been severely affected by COVID-19. Under the CJRS, any eligible UK employer can obtain a grant to cover 80% of the wage costs of eligible employees who would otherwise be laid off (or have already been laid off/left but then re-hired), up to a total of £2,500 per month (plus the associated Employer NIC and minimum automatic enrolment employer pension contributions on the wage) for each ‘furloughed’ employee. Employers can top up the remaining 20%, but there is no obligation to do so. The CJRS will cover the costs of wages backdated to March 1, 2020, and will be open for at least three months, but may be extended by the government.

• COVID-19 and taxable presence HMRC believes that the existing legislation and guidance related to company residence and permanent establishments already provides flexibility to deal with changes in business activities necessitated by the response to the COVID-19 pandemic. The approach to these matters will therefore not change and no safe harbour will be offered for this period. Instead, HMRC emphasizes that temporary arrangements resulting from the COVID-19 crisis are unlikely (on their own) to change the residency status of a company or give rise to PEs.

United Kingdom

PwC observation:COVID-19 presents significant challenges to people and organizations around the globe, and the disruption continues to evolve. Businesses face several potentially significant challenges to which they need to rapidly respond. MNEs should consider taking advantage of the UK government’s efforts to assist employers via the temporary Coronavirus Job Retention Scheme.

Rachael Palmer

London


Sara-Jane Tovey

London






Corporate restructures – Decree 76/020

The Executive Power issued a Decree, on February 28, which establishes provisions applicable to corporate restructures when they are carried out without pursuit of an economic benefit.

With regards to the corporate income tax, companies that resolve to merge or demerge according to the regulations established in the Commercial Companies Act may choose to do so without computing the corresponding goodwill, provided the following conditions are met:

a. beneficial owners of the companies involved in the mergers or demergers remain the same, maintaining their equity proportions (which cannot be modified for at least two years from the date of the final agreement)

b. tax returns submitted to the Central Bank of Uruguay must contain information about the entire chain of ownership and identify all beneficial owners, and

c. companies must maintain the predecessor’s business for a two-year period from the date of final agreement.

If companies choose to not compute goodwill and they breach any of the established conditions, the restructure will be subject to the general tax regime. Any outstanding tax payment would be then updated by the evolution of the indexed unit between the date of payment and the date of the breach.

COVID-19 Uruguayan response measures

In line with the health measures announced in Decree 93/020 (issued by the Executive Power to respond to the pandemic caused by COVID-19), the following actions were enacted:

• Special unemployment subsidy created and extended to all sectors of activity. It is applicable until May 31, 2020.

• Ministry of Labour exceptionally authorized employers to have employees taking their annual paid leave or parts thereof (complying with all requirements of the Labour Code).

• Those who are in mandatory isolation due to the risk of contracting or spreading the virus, are entitled to receive the monetary benefit of sickness subsidy.

• The Uruguayan Tax Authority and the Social Security Office have decided to expand on-line services and reduce the opening hours. Furthermore, payment facilities have been given to small business, and financial institutions are authorized to extend their due dates for those debtors whose income has been affected.

• Free Zones Area authorized employees, temporarily and exceptionally, to carry out remote working, if the nature of the activity allows it.

• National Customs Agency authorized the temporary or permanent import or export of certain goods, free of taxes and subject to ‘Simplified Customs Procedure’, under the special customs regime of humanitarian aid.

• Central Bank communicated extensions for certain reporting information corresponding to fiscal year 2019.

Uruguay Uruguay

PwC observation:These corporate provisions would allow the execution of corporate reorganizations with relevant tax and administrative savings.

PwC observation:Measures have the objective to assist companies and workers to deal with the transitory crisis caused by COVID-19.

Patricia Marques

Uruguay


Patricia Marques

Uruguay


Eliana Sartori

Uruguay


Eliana Sartori

Uruguay






Administrative

ATO reviewing arrangements with Australian taxable property

The ATO raised concerns regarding taxable Australian property (TAP) disposal by foreign residents.

The ATO identified situations where foreign residents incorrectly claimed that assets were not TAP. They are now reviewing arrangements where foreign residents have:

• structured investments in indirect Australian real property interests in a manner that each entity holds a less than 10% interest (i.e., the non-portfolio interest test)

• attributed significant value to non-taxable Australian real property assets (relevant to the principal asset test), and

• dissipated funds by transferring them offshore prior to meeting Australian tax obligations.

Australia

PwC observation:Foreign residents disposing of Australian assets should consider whether gains on disposal will be taxable.

Peter Collins

Sydney


David Earl

Melbourne


Jayde Thompson

Melbourne






Non-arm’s length arrangements involving intangible assets

The ATO issued Taxpayer Alert TA 2020/1 which addresses their concerns that certain international arrangements mischaracterised Australian activities connected with the development, enhancement, maintenance, protection and exploitation (DEMPE) of intangible assets.

The ATO is specifically concerned with whether the arrangements appropriately recognize and remunerate Australian entities for functions performed, assets used and risks assumed in connection with the DEMPE of intangible assets. These arrangements may also involve the migration of Australian intangible assets and associated rights to international related parties on non-arm’s length terms or in a manner intended to avoid tax in Australia. The ATO is also concerned that parties to these arrangements may fail to properly comply with capital gains tax, capital allowances, transfer pricing, general anti-avoidance and diverted profits tax provisions.

Australia

PwC observation:Taxpayers should consider their existing arrangements and ensure they have supporting documentation to support their Australian tax filing position.

Peter Collins

Sydney


David Earl

Melbourne


Jayde Thompson

Melbourne






ATO finalizes compliance approach for offshore drilling rig projects

The Australian Taxation Office (ATO) released, in final form, Practical Compliance Guideline PCG 2020/1 which sets out its compliance approach to transfer pricing issues for projects involving the use in Australian waters of non-resident owned mobile offshore drilling units (MODUs), such as drill-ships, drilling rigs (including but not limited to submersibles, semi-submersible and jack-up rigs), pipe-laying vessels and heavy-lift vessels.

The ATO has indicated its willingness to work with taxpayers to resolve the ‘back years’ in a cooperative, and practical manner. For the 12 month period from the date of publication of the Guideline (i.e., until February 19, 2021), ATO will consider remitting shortfall penalties to zero and the shortfall interest charge to the base rate if certain pre-conditions are met, including making a voluntary disclosure in relation to all income years where arrangements are in place and adjusting historic and prospective pricing to reflect an appropriate transfer pricing outcome based on the law.

Australia

PwC observation:Practical compliance guidelines provide broad law administration guidance, addressing the practical implications of tax laws and outlining the ATO’s administrative approach. Accordingly, taxpayers should consider PCG 2020/1’s impact on their offshore drilling rig projects.

Peter Collins

Sydney


David Earl

Melbourne


Jayde Thompson

Melbourne






ATO COVID-19 administrative response measures

The ATO announced a series of administrative measures to assist taxpayers experiencing financial difficulty as a result of the COVID-19 outbreak. Impacted businesses may utilize the following relief measures:

• deferring by up to six months the payment date of amounts due through the business activity statement (BAS) including pay as you go (PAYG) installments and income tax assessments, fringe benefit tax assessments and excise

• allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to gain quicker access to net GST refunds to which they may be entitled

• allowing businesses to vary PAYG instalment amounts (including to zero) for the March 2020 quarter. Businesses that vary their PAYG instalment can also claim a refund for any instalments made for the September 2019 and December 2019 quarters

• remitting any interest and penalties, incurred on or after January 23, 2020, that have been applied to tax liabilities

• working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans, and

• For tax years encompassing the February/March 2020 period, the ATO will not dedicate compliance resources to review the application of the arm’s length debt test under certain circumstances, due to the balance sheet effects of COVID-19.

Additionally, the ATO issued guidance on March 17 (by way of frequently asked questions) in relation to tax residency and permanent establishment issues due to COVID-19. Importantly, if the only reason for holding board meetings in Australia, or directors attending board meetings from Australia, is because of COVID-19 impacts, then they will not apply compliance resources to determine if central management and control is in Australia. Moreover, the ATO indicated that compliance resources may not be dedicated to the arm’s length debt test where taxpayers are no longer able to use the safe harbour or worldwide gearing tests for thin capitalization purposes due to the balance sheet impacts of COVID-19.

The ATO is working with businesses that are struggling to meet their tax obligations to tailor solutions to their circumstances, including withholding enforcement actions including director penalty notices and wind-ups.

Australia

PwC observation:Access to these relief measures are being assessed on a case-by-case basis, and taxpayers are encouraged to reach out to their tax agent to liaise with the ATO.

Peter Collins

Sydney


David Earl

Melbourne


Jayde Thompson

Melbourne






Enhanced tax concessions for capital investments in response to COVID-19

Concessions are available relating to business capital investment for depreciating assets and apply from March 14, 2020 to all businesses with an annual aggregated turnover of up to AUD500 million.

The existing instant asset write-off rule will be expanded so that it provides an immediate tax deduction for the cost of a depreciating asset, whether new or second-hand, which has a cost of less than AUD 150,000 (up from the existing AUD 30,000 limit). This will only apply to eligible depreciating assets that are first used or installed ready for use from March 12, 2020 through June 30, 2020. After this time, in the absence of any further relief, the asset threshold will revert to AUD 1,000 and the instant write-off will only apply to small businesses with an aggregated turnover of less than AUD 10 million.

The backing business investment concession will provide a tax deduction of 50 percent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. This measure will apply for approximately 15 months and will apply to eligible new depreciating assets (not second hand) acquired from March 12, 2020 and first used or installed by June 30, 2021. There is no

limit to the cost of a depreciating asset that can qualify for this concession, and it will be relevant for assets acquired between March 12, 2020 and June 30, 2020 with a cost of AUD150,000 or more which are not eligible for the instant asset write-off.

Australia

PwC observation:Faster tax write-offs on depreciable assets, such as plants, motor vehicles and equipment, have the effect of reducing taxable income and tax payable. However, considering potential global supply chain disruptions, a practical challenge for businesses seeking to rely on the concessions, particularly the expanded instant asset write-off, may be the ability to source relevant depreciating assets, and have them first used or installed ready for use before the deadline expires.

Peter Collins

Sydney


David Earl

Melbourne


Jayde Thompson

Melbourne






Direct corporate income tax measures

The Dominican Republic’s government recently initiated several corporate income tax measures, including:

1. Extension for the filing and payment of the Corporate Income Tax Return of Legal entities (Form IR-2) with a fiscal year closing dated December 31 to May 29, 2020. This extension also applies to the following obligations:

• Corporate Income Tax Return for Individuals with Sole Owner Business

• First Quota Assets Tax of Individuals with Sole Owner Business

• First Quota Assets Tax of Legal Persons with a fiscal year closing dated December 31

• Informative Tax Return of Non-Profit Institutions with a fiscal year closing dated December 31.

2. Extension for filing and payment of Other Withholdings and Complementary Remuneration Form (Form IR17) until April 24, 2020

3. Annual income tax payment may be divided into four payments for all companies that close their fiscal year on December 31, and must make the presentation and payment in May.

4. All corporate income taxpayers, legal entities and sole proprietorship businesses (with the exception of large taxpayers), who currently have a monthly advance payment obligation, are exempt from the payment of this obligation for the fiscal period March 2020, with an expiration date of April 15, 2020. Large taxpayers may request the exemption of advances corresponding to the month of April.

Dominican Republic

PwC observation:Taxpayers should immediately consider how they can benefit from these extended deadlines.

Odalys Burgos

Dominican Republic






Irish corporate tax residence

The Irish tax authorities have issued several guidance updates to assist businesses affected by the COVID-19 pandemic, one of which addresses a company’s tax residency position. This guidance provides that where an individual is present either in Ireland, or, where relevant, in another jurisdiction, as a result of travel restrictions related to COVID–19, the Irish tax authorities are prepared to disregard such presence for a company in relation to which the individual is an employee, director, service provider or agent. The Irish tax authorities have advised that the individual and company should maintain a record of the facts and circumstances of the bona fide relevant presence in Ireland or the other country for production if evidence that such presence resulted from COVID-related travel restrictions is requested.

The OECD Secretariat referenced the Irish tax authority guidance in a guidance note it issued addressing concerns about COVID-19’s impact on tax treaties with respect to the creation of PEs, the residence status of a company (place of effective management), cross-border workers, and changes in residence status of individuals.

Ireland

PwC observation:Multinational groups with companies that have employees dislocated in countries other than the country in which they regularly work, or executives and directors unable to travel for board meetings should ensure that they maintain robust documentation as support that the travel restrictions affecting those relevant individuals were COVID-19 related. In addition, domestic law in the other jurisdictions should be considered to ensure that their presence does not trigger any residency or PE issues in those jurisdictions.

Denis Harrington

Ireland


Liam Diamond

Ireland


Harry Harrison

Ireland






Philippines: Filing of certificate of residency for tax treaty relief on dividends, interest, and royalties extended

Republic Act No. 11469 or ‘Bayanihan to Heal as One Act’ enacted March 25, 2020, declares a state of national emergency in the country and grants the President special powers to combat the COVID-19 outbreak. These special powers include the power to move the statutory deadlines of filing or payment of taxes and submission of necessary documents.

For multinational corporations deriving dividends, interests, or royalties from Philippine sources, withholding agents shall apply tax treaty rates, subject to submission of the Certificate of Residence for Tax Treaty Relief (CORTT) Form within thirty days after the payment of withholding taxes due. Pursuant to the above-mentioned law, however, the Bureau of Internal Revenue (BIR) extended the deadline for filing the CORTT Form to thirty days from the date the enhanced community quarantine is lifted.

Notwithstanding the Supreme Court decision that filing a Tax Treaty Relief Application (TTRA) is not mandatory to avail tax treaty relief, the BIR continuously requires TTRA filing for other types of income (such as business profits and capital gains from sale of unlisted and non-traded domestic shares).

Philippines

PwC observation:The COVID-19 pandemic drastically changed the way business, including tax compliance, is done. Cognizant of these changes, the Philippine government provided taxpayers with temporary relief from the burden of meeting statutory filing deadlines. However, taxpayers should continue to observe and monitor compliance with the extended deadlines. Taxpayers are also encouraged to coordinate closely with the BIR to discuss the possibility of electronic submission.

Lawrence C. Biscocho

Makati City


Noelie Tagle

Makati City

T: +63 2 845 2728 ext. 2067E: [email protected]





Treasury releases final and proposed anti-hybrid regulations

Treasury and the IRS on April 7 released regulations that finalize the 2018 proposed regulations addressing anti-hybrid rules under Sections 245A(e), 267A, and 1503(d). On the same date, Treasury and the IRS issued additional proposed regulations under Sections 245A(e) and 951A. The final regulations retain the architecture of the 2018 proposed regulations, but make several changes based on comments provided to Treasury and the IRS. While many of these changes provide additional clarity or narrow the scope of the anti-hybrid rules in specific ways, other changes may widen their reach.

On the same date, Treasury and the IRS issued additional proposed regulations under Section 881 (with respect to the ‘anti-conduit regulations’). Finally the Treasury and the IRS issued proposed Section 951A regulations, which for purposes of computing tested income or loss, may impact the deductibility of items relating to prepayments made to related foreign corporations that have a fiscal year-end during the so-called ‘gap’ period between January 1, 2018 and the first tax year of such foreign corporation to which Section 951A applied.

See our PwC Insight on 245A(e) and PwC Insight on 267A for more information.

United States

PwC observation:The final regulations retain the overall architecture of the proposed regulations but make a number of changes that either clarify, expand, or narrow the reach of the proposed regulations and thus may impact how taxpayers are affected by these rules. In addition, the new proposed regulations will expand the reach of the anti-conduit regulations to impact financing arrangements that currently may not be in the regulations’ scope. Taxpayers should evaluate the impact of the final and proposed regulations on their businesses.

Rebecca Lee

United States


Steve Nauheim

United States


Marty Hunter

United States






Judicial

Discount capital gains and FITO claims

The High Court of Australia dismissed the taxpayer’s application for special leave to appeal against the Full Federal Court’s decision in Burton v Commissioner of Taxation [2019] FCAFC 141

The Full Federal Court decision that the taxpayer was not entitled to a full foreign income tax offset (FITO) with respect to the portion of capital gain not included in its Australian assessable income due to the capital gains tax discount has been upheld. The taxpayer was only entitled to claim a FITO to the extent of the assessable amount of the capital gain in Australia, even though foreign tax may have been paid on the full gain amount in the foreign jurisdiction.

The Australian Taxation Office (ATO) released a decision impact statement welcoming the High Court decision and encouraging taxpayers to review prior year FITO claims and make necessary voluntary amendments to limit FITOs claimed where the full amount of the gain has not been included in Australian assessable income. The ATO indicated that it will commence compliance activity on this issue in the near future.

Australia

PwC observation:Taxpayers should review prior year FITO claims and consider whether a voluntary amendment is required with respect to the open years.

Peter Collins

Sydney


David Earl

Melbourne


Jayde Thompson

Melbourne






Tax treaty between Australia and Israel enters into force

The Australian government ratified its first tax treaty with Israel.

The Australia/Israel tax treaty provides a framework for Australian and Israeli revenue authorities to cooperate and address tax avoidance practices by giving effect to OECD BEPS recommendations. The benefits of the treaty will apply in Australia from the following dates:

• withholding taxes – on income derived on or after January 1, 2020

• fringe benefits tax – on benefits provided on or after April 1, 2020

• all other taxes – for income years starting on or after July 1, 2020

Australia

Treaties

PwC observation:Australian and Israeli investors should consider the impact of the new tax treaty on existing structures and income flows.

Peter Collins

Sydney


David Earl

Melbourne


Jayde Thompson

Melbourne






Russia – Cyprus tax treaty

The Russian Minister of Finance, on April 1, sent a letter to the Cyprus Minister of Finance proposing they sign a Protocol that would amend some provisions of the Russia – Cyprus tax treaty. The Russian Minister has requested its Cyprus counterpart to respond by June 15 and has warned that it could withdraw from the treaty unilaterally (as provided for by treaty Article 31). The amendments stipulate that interest or dividends may be taxed in the source country, and the tax shall not exceed 15%, provided that the recipient of income is the beneficiary.

Starting from 2021 the look-through approach (provided for by Article 312 of the RTC) may be used to avoid paying 15%. If there is a treaty with a country where the beneficial owner of the income is located, entities throughout the chain must certify that they are not entitled to income, while the beneficial owner is entitled to it. In this case, it could apply the withholding tax rate specified in the treaty with a country where the beneficiary is located (such as 5% or 10% for dividends). Holding an indirect interest in a Russian entity would be classified as equal to holding a direct one. However, if a treaty includes criteria for a minimum investment amount (not only an ownership interest), it might be difficult to apply

the reduced rate, as the beneficial owner has not made the investment by itself.

Russia

Mikhail Filinov

Moscow


PwC observation:Taxpayers planning to pay interest and dividends to Cyprus in 2020 should not delay in making such payments. Payment dates and amounts should be pursuant to agreements, economic rationale, etc. The tax authorities can easily challenge unexpected and inadequate cash repatriation.





Glossary

Acronym Definition

ATAD Anti-Tax Avoidance Directive

ATO Australian Tax Office

BAS business activity statement

BEPS Base Erosion and Profit Shifting

CbCRE Country by Country Reporting Entity

CFC controlled foreign corporation

CIT corporate income tax

CJRS Coronavirus Job Retention Scheme

DAC6 EU Council Directive 2018/822/EU on cross-border tax arrangements

DDT Dividend Distribution Tax

DLRR Deduction for reinvestment of retained earnings

DST digital services tax

DTT double tax treaty

EBITDA Earnings before interest, tax, depreciation and amortization

EFL Energy Fiji Limited

FITO foreign income tax offset

FNPF Fiji National Provident Fund

FTA French Tax Authority

Acronym Definition

GST goods and services tax

EU European Union

LOB Limitation on benefits

MFN most favoured nation

MNC Multinational corporation

MODU mobile offshore drilling units

NAFTA North American Free Trade Agreement

NCST non-cooperative states and territories

NOL net operating loss

PAYG pay as you go

PE permeant establishment

OECD Organisation for Economic Co-operation and Development

R&D Research & Development

SGS significant global entity

SSTCL Special Tax Treatment Control Law

VAT value added tax

WHT withholding tax





For your global contact and more information on PwC’s international tax services, please contact:

Bernard Moens Global Leader International Tax Services Network

T: +1 703 362 7644 E: [email protected]

Geoff JacobiInternational Tax Services


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International Tax News. Edition 85 April 2020...international tax developments orldwide can be a real challenge for multinational companies International a ews is a monthly publication