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This week in tax: PwC partner banned in Australia over tax leaks

Australia’s DPT has been dismissed by many groups as simply a threat used to ensure proper TP analysis

Former PwC partner Peter-John Collins has been banned from serving as a tax agent in Australia, while Brazil reports its best-ever year of tax collection on record.

Peter-John Collins, former head of international tax at PwC Australia, has received a two-year ban from serving as a tax agent after leaking confidential information.

On Monday, January 23, the Tax Practitioners Board (TPB) confirmed a report from the Australian Financial Review that it had deregistered Collins for failing to act with integrity.

Collins was a member of an advisory group involved in confidential policy discussions with the Australian Treasury. He was found to have broken confidentiality agreements on Treasury discussions in 2013, 2016 and 2018.

The TPB found that Collins shared information with other PwC staff in Australia and overseas. Some of this was later shared with clients and potential clients, according to the board. Collins left the ‘big four’ firm in October 2022.

Australian Treasurer Jim Chalmers pledged to “throw the book” at those responsible for this breach of trust on Wednesday, January 25. He said he is “absolutely furious” about the case.

Meanwhile, PwC has acknowledged it “failed the high standards we set for ourselves as a firm”. The TPB has ordered PwC to improve its standards and training on potential conflicts of interest.

Dutch finance minister clarifies scope of TP anti-mismatch rules

The Netherlands’ Minister of Finance Sigrid Kaag published a decree on Tuesday, January 24, clarifying the scope and application of a double non-taxation rule that came into effect last year.

According to EY, the provision in question prevented double non-taxation due to a valuation difference between jurisdictions in situations involving certain capital transactions such as contributions or distributions.

That rule, laid out in Article 8bd of the Corporate Income Tax Act (CITA) 1969, came into effect in January 1 2022 and was one of several updates to end unilateral downward transfer pricing adjustments.

“In certain situations such as those whereby a tax-exempt entity, or an entity that resides in a jurisdiction in which it is not subject to a profit tax, contributes or distributes an asset to a Dutch corporate taxpayer, Article 8bd, paragraph 1, CITA could apply even if there is no difference in the valuation of that asset,” said EY in an update on the same day.

You can read the firm’s more detailed discussion here.

Brazil’s tax revenues reached new heights in 2022

The Federal Revenue of Brazil collected a record R$2.2 trillion ($401 billion) in tax receipts in 2022, it reported on Tuesday, January 24.

Tax revenue increased last year despite the loss of R$120 billion to tax breaks.

Tax collection set a monthly record in December 2022 with an increase of 2.4% year on year. This increase in tax collection in December was the biggest rise in revenue since records began in 2007.

Higher prices for fuel, minerals and food partly boosted tax revenue, but inflation was not the only factor. The Brazilian economy rebounded from COVID-19 in 2022 and the rate of GDP growth reached 3%.

The growth in tax receipts come just as Brazil’s tax system is changing. Former president, Jair Bolsonaro, pursued a total overhaul of corporate tax for most of his tenure, but only succeeded in securing transfer pricing (TP) reform as he left office in December 2022.

New President Luiz Inácio Lula da Silva remains committed to alignment with the OECD on international tax, including the return of the arm’s-length principle.

Taxpayers can choose whether to apply Brazil’s old TP laws or the OECD-style standards for this tax year. There will be no choice from January 2024 when the new rules will be made mandatory.

UK plans carbon border tax to raise cost of steel imports

The UK government is planning to impose a carbon border tax to raise the cost of steel imports and provide greater subsidies to the British steel industry, reported the Financial Times on Sunday, January 23.

Two companies, British Steel and Tata Steel UK, are set to receive a £600 million ($742 million) support package funded by the carbon border tax. The UK government hopes it will help the steelmakers invest in greener technology and avoid job cuts.

Prime Minister Rishi Sunak aims to bail out the UK steel industry and gradually decarbonise the sector by 2035 to meet the country’s commitment to zero-carbon by 2050.

However, £600 million may fall short of industry expectations. British Steel and Tata Steel UK requested £2 billion in government support. It could cost as much as £2 billion just to decarbonise Tata Steel’s Port Talbot operation.

The UK could introduce a carbon border adjustment mechanism (CBAM) like the EU plans to. A British CBAM would raise the price of steel imports by factoring in the cost of carbon emissions. But the UK government may prefer to take a different route after Brexit.

Next week in ITR

ITR will be taking a look at South Korea’s implementation of the OECD’s global minimum corporate tax rate. The Asian country is one of the first to adopt pillar two and it may set an example for other countries to follow.

Meanwhile, we will be examining the most important global tax trends to keep an eye on in 2023.

Readers can expect these stories and plenty more next week. Don’t miss out on the key developments. Sign up for a free trial to ITR.

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