This week in tax: PwC tax scandal continues to unravel
PwC Global flies executives out to help manage the Australian tax leaks scandal, while the UAE issues new corporate tax rules to clarify the scope of investment earnings.
PwC Global is taking over long-term oversight of its Australian firm as the company’s tax leaks scandal continues, reported the Financial Times on Wednesday, May 17.
Former PwC Australia CEO Tom Seymour is set to retire after an independent review has been launched following the firm’s tax leaks scandal.
Seymour, who stepped down last week, is set to retire as a partner on September 30, PwC said in a statement on Monday, 15 May.
The ‘big four’ firm has also revealed that former Telstra CEO Ziggy Switkowski will lead an independent inquiry into its governance and culture that could reach beyond Australia to countries as far away as Ireland and the US.
This comes after an Australian senator, Labor’s Deborah O’Neill, said that PwC’s internal review into the tax leak only “continues the cover-up”.
UAE releases new rules on regulations for corporate tax
New rules, announced on Wednesday, May 17, mean that business owners in the UAE are only required to pay corporate tax if their annual turnover surpasses Dh1 million ($272,000).
The Ministry of Finance issued UAE Cabinet Decision No. (49) of 2023 to provide clarity on the application of corporate tax for individuals engaged in business activities.
Income from personal investments and real estate will be tax exempt. This ensures that income generated from a business is taxed and personal income, employment and investments remain untouched by corporate taxation.
Business owners will need to register and pay corporate tax if their combined annual turnover is on or over the threshold of Dh1 million in a calendar year. This decision is to provide support and boost start-ups and smaller businesses.
EU brings crypto tax rules in line with OECD’s CARF
The EU’s Economic and Financial Affairs Council voted in favour of implementing the Markets in Crypto-Assets regulation on Tuesday, May 16.
This vote introduced the eighth version of the Directive on Administrative Cooperation (DAC8), which has extended tax reporting requirements to include the transfer of crypto-assets. As a result, EU crypto legislation will be aligned with the OECD’s Crypto-Asset Reporting Framework (CARF).
DAC8 aims to ensure that all crypto transactions are traceable and that any suspicious ones are easily identifiable. This may help strengthen the EU’s Anti-Money Laundering and Counter Terrorism Financing rules.
MEPs pay into luxury pensions with assets in offshore tax havens: report
Some members of the European Parliament pay into a luxury pension scheme with corporate assets based in Bermuda and the Cayman Islands, among other low-tax jurisdictions, it has been claimed.
MEPs who have voted for a resolution calling for a crackdown on tax havens are among those paying into the scheme, according to a report by EU Observer on Tuesday, May 16.
The Luxembourg-based pension scheme is running a €379 million ($409 million) actuarial deficit and may require a taxpayer bailout as early as 2024, the report claimed.
MEPs only had to contribute to the fund for two years to receive a pension for life. The Greens have tabled an amendment demanding MEPs withdraw from the voluntary pension fund if they already receive another pension.
French authorities seek €2.5bn in back taxes from banks
The French government has sent a €2.5 billion ($2.6 billion) bill of back taxes to several banks, including BNP Paribas and Société Générale.
Public Accounts Minister Gabriel Attal confirmed the figure in a Senate hearing earlier this month, reported Le Monde on Tuesday, May 16. The tax bill relates to an investigation into the ‘cum-ex’ dividend tax fraud scheme that spanned multiple European countries.
Financial institutions including BNP Paribas, Crédit Agricole, HSBC, Société Générale, Natixis and Exane are under investigation in France over allegations of money laundering and tax fraud from 2017 to 2019.
The National Financial Prosecutor (PNF) sent 150 agents to raid the Paris offices of these companies on March 28. At the time, the PNF confirmed that the compensation request could be more than €1 billion, including interest and penalties.
Brazil adopts new TP regime
Brazil’s Federal Senate approved the country’s new transfer pricing regime, which includes the arm’s-length principle, on May 10.
The regulation will go to President Luiz Inácio Lula da Silva for sign-off by May 31. These new rules will be effective from January 1 2024, but taxpayers can choose to apply them from 2023.
A proposed amendment to delay the regime until 2025 was rejected.
It means Brazil will “comply with international commitments more effectively, with special attention to double taxation agreements”, according to Allan Fallet, partner at Mauger Muniz in Sao Paulo.
“This alignment will be important for the prevention of potential disputes with other tax administrations,” Fallet added.
A former director at the OECD in Paris said that the new legislation is a “major achievement” for Brazil.
“This will ultimately reduce double taxation, increase foreign investment, facilitate Brazil’s integration into global value chains, increase Brazil’s revenues and provide greater tax certainty”, Grace Perez-Navarro added.
Next week in ITR
ITR will be watching the G7 summit closely this weekend for news on the two-pillar solution and other tax reforms for next week.
We will also be holding ITR’s 2023 Indirect Tax Forum in Brussels on May 23 and May 24. Editor-in-Chief Ed Conlon and Reporter Euan Healy will be there to speak to tax experts from around the world and report on the key sessions.
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.