Magazine

Cover Story

Digital tax: The loose thread unravels

The BEPS process has been a little like mending an old pair of trousers. You can spend a lot of time and effort renovating the same pair to keep them in a wearable condition. However, the digital tax debate is now pulling on a thread that will be tough to patch up, writes Alexander Hartley.

Features

PPT: Business purpose as a tax professional

As the Multilateral Instrument’s (MLI) provision for the principal purpose test (PPT) is nearing effect, the business-purpose standard becomes even more important to objectively ascertain. Keith Brockman explains the importance of a business purpose diary.
How can companies prepare for real-time reporting trends?

As the trend for real-time reporting grows, how can companies prepare for the tax authorities knowing more about their tax affairs than they do themselves? Giles Parsons shares his views.
Managing BEPS and tax audits is a balancing act for heads of tax

Since its introduction in 2016, the OECD’s project to combat base erosion and profit shifting (BEPS) has changed the environment for tax audits around the world. Corporations and heads of tax have to adapt, says Sandy Markwick, head of the Tax Director Network (TDN) at Winmark.
Big tech changed everything for international tax

The OECD has been forced to question its own assumptions since the high-tech sector destabilised the international tax system. Taxpayers fear this shift will herald radical change, writes Josh White.
What is ‘mere selling’ and why should we care?

It may seem like an odd question for an international tax journal to ask, but the OECD’s report on its programme of work on digital tax indicates that we may be at the end of whatever certainty we thought we had about cross-border sales and permanent establishments, writes Giles Parsons.

Special Features

Unpicking India’s budget

Dinesh Kanabar and Rishi Kapadia of Dhruva Advisors take a close look at India’s 2019-20 budget and the Finance Bill 2019, which together promise broad-reaching reforms to the tax regime.
Malta ushers in fiscal unity regime

Malta’s May 2019 tax amendment streamlines the treatment of corporate structures and offers a boon to intra-group transactions. Donald Vella and Kirsten Cassar of Camilleri Preziosi explain the changes.
Portugal implements EU’s tax dispute resolution directive

Pedro Vidal Matos of Cuatrecasas reviews the EU Directive on Tax Dispute Resolution Mechanisms. Though far from perfect, it will enhance taxpayer protection and strengthen the EU’s double tax treaty network.

News Analysis

US companies gain benefits under tailored carbon taxes

Multinational companies, including ExxonMobil and Microsoft, are supporting a corporate-friendly US carbon tax with trade-offs where they pay more tax in exchange for tax certainty, including protection from emission disputes.
DSTs thrust into political limelight

As France’s digital services tax takes retroactive effect and the UK releases more details, tax heads spoke of a nightmarish cocktail of uncertainty and high politics.
IR35 rules could disrupt Uber and Deliveroo’s UK operations

Companies relying on the gig economy workforce, including Uber and Deliveroo, are reviewing the commercial impact in the UK after April 2020 when they will have to treat contractors as employees and pay employment taxes.
Disclosures show whistleblowing standards benefit tax departments

Data from internal corporate disclosures show that internal procedures and systems for whistleblowing are improving corporate governance and inter-departmental trust within companies, but tax heads are hesitant about the results that create a paper trail.
Tax heads: Here’s how to influence the OECD’s digital tax rules

As countries consider the OECD’s digital tax proposals, tax heads shared their experiences of trying to get their voices heard.
Investors disappointed by former Yahoo! company’s tax strategy

Altaba, a former Yahoo! entity, will begin liquidating its assets in the coming months, but corporate investors say the liquidation is not the most tax efficient option, nor what they were expecting.

Editorial

Tax Relief

International Correspondents

Australia: Australian Taxation Office publishes important guidance on cross-border tax measures

Kenny Mui of DLA Piper Australia analyses guidance published by the Australian Taxation Office on important Australian international tax measures that affect foreign investments in Australian structures and other cross-border transactions
Central America: Central America sees developments in the trade and customs areas

Carolina Palma of EY evaluates developments in the trade and customs arenas in Central America, including several Central American countries signing the Free Trade Agreement with Korea and the implementation of the WTO’s Trade Facilitation Agreement in the region.
Chile: Tax bill proposes changing rules on reduced withholding tax

Ignacio Nuñez and Astrid Schudeck of PwC Chile analyse Chile’s proposed new rules on reduced withholding tax, including the necessary criteria for an entity to qualify as a foreign financial institution.
Colombia reshapes its thin capitalisation rules

Luis Orlando Sánchez of EY assesses the new thin capitalisation rules in Colombia.
EU: Full tax harmonisation under the new Von der Leyen Commission?

Bob van der Made of PwC assesses the current level of tax harmonisation across EU member states, and evaluates whether there would be further harmonisation under a new EU Commission.
Germany: Approaching VCA and DEMPE analysis

Yves Hervé and Philip de Homont from NERA Economic Consulting propose a practical approach to structuring DEMPE analysis.
Greece: Greece progresses in tax policy-making realm

Riana Zanni of EY Greece evaluates recent changes to Greek tax law, which enhance transparency and aid in the elimination of corruption.
Indonesia issues two tax regulations

Hartiadi Budi Santoso and Irma Sari Batubara of GNV Consulting Services analyse two new tax regulations: one concerns moving goods to and from free trade zones and free port zones and exemption from excise, while the other relates to income tax collected from buyers on the sale of luxury goods.
Indonesia introduces new regulations

Ahdianto Ah and Jeklira Tampubolon of GNV analyse new tax regulations introduced in Indonesia, including one related to documents equivalent to tax invoices.
Italy: Italian Supreme Court rules on place of effective management

Gian Luca Nieddu and Barbara Scampuddu of Hager Partners analyse a Supreme Court ruling which declared a company was resident in the Netherlands because its effective management took place in this jurisdiction.
Luxembourg: CJEU clarifies rules on automatic forfeiture of VAT refund claims

Michel Lambion and Christian Deglas of Deloitte Luxembourg analyse a CJEU decision which rules that the one month deadline for responding to a request for information when seeking a VAT refund is not mandatory.
Malta: Commissioner publishes first ever guideline on remittance basis of taxation

Rosanne Bonnici of Fenech & Fenech analyses the first Maltese guideline on the remittance basis of taxation, assessing both its advantages and disadvantages.
Netherlands: Analysing important tax developments in the Netherlands

Roderik Bouwman & Gabriël van Gelder of DLA Piper assess recent developments in Dutch tax law, including the legislative proposal concerning ATAD 2, a letter from the state secretary of finance on recent ECJ judgments and a new policy on a tax ruling relating to cross-border structures.
New Zealand proposes changes to GST on cross-border telecommunication services

Brendan Brown and Young-chan Jung of Russell McVeagh analyse the government’s proposed changes to the goods and services tax treatment of cross-border telecommunications services, including charging GST based on the consumer’s residence.
Poland: Poland introduces substance test for payments to recipients abroad

Monika Marta Dziedzic, legal and tax advisor at MDDP, evaluates Poland’s new measures concerning payments to recipients abroad subject to a certain amount of withholding tax and what criteria must be fulfilled in order for an exemption or reduction to be applied.
Spain: UNE 19602 provides standards for tax compliance in corporate sphere

José Vicente Iglesias and Julia Rubio of Garrigues evaluate the new quality standard UNE 19602 which seeks to provide a model of best practice for tax compliance in the corporate governance arena.
Switzerland: The Swiss Federal Council begins Swiss withholding tax reform

André Kuhn and Robin King of Deloitte evaluate the Swiss Federal Council’s proposed reforms to the Swiss withholding tax system.
US inbound: Ninth Circuit issues decision on § 482 in Altera v Commissioner case

James Fuller and David Forst of Fenwick & West analyse the Ninth Circuit’s opinion in Altera v Commissioner, in which the majority held that the “commensurate with income” method can be employed to meet the arm’s length standard.
US outbound: IRS CAP programme reopens with attention to transfer pricing

Mark Horowitz, Thomas Bettge, Mark Martin, and Theresa Kolish of KPMG assess the IRS’s reopening of the CAP programme, noting that the updated programme seeks to address transfer pricing issues.