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Rajendra Nayak

James Newnham After an intense month of tax-related Australian Senate Economics Committee hearings, namely an inquiry taking evidence on corporate tax avoidance, Apple, Google and Microsoft as well as leading Australian mining companies were in the spotlight to answer allegations around international profit shifting. In this context, the Australian tax regime is under increasing public pressure to keep up with the effects of ubiquitous digital disruption. In this regard, Australian Treasurer Joe Hockey has flagged plans for the so-called 'Netflix tax' to extend the reach of the GST to the online purchase of movies, songs, books and streaming services, consistent with the G20/OECD destination principle. The plan would update the GST to include intangible services such as online downloads and could set a precedent which extends to other digital and editorial content. On March 30 2015, the Australian government released its 'Re:think' tax discussion paper, following on from the 2015 Intergenerational Report, contemplating a renewed tax system that supports higher economic growth and living standards, improves international competitiveness and adjusts to a changing economy. In releasing the paper, the Treasurer also said the government "does not support high tax rates to deliver these outcomes. As we have said on numerous occasions, our nation will never be able to tax its way to prosperity.". Hockey said the "challenge then is to reform our tax system so that we can raise necessary revenue without detracting from continued economic growth across the Australian economy". The key points of the paper discuss and consider reforms to the rate and base of the GST, the (high) corporate tax rate and inefficient taxes such as stamp duty.

Tiago Cassiano Neves A new case entered the European Court of Justice (Brisal – C-18/15) dealing with the issue of compatibility of a withholding tax on gross interest paid to non-resident financial institutions, while in a domestic situation taxation is levied on a net basis without a withholding tax being levied. In general terms, Portuguese financial institutions or non-resident financial institutions with a permanent establishment in Portugal are not subject to withholding tax on interest derived from loans to Portuguese resident entities or individuals. As for outbound interest payments, Portugal continues to generally levy a 25% final withholding tax which may be reduced under a tax treaty between 10% and 15% (depending on the tax treaty). Only in very few instances may domestic exemptions apply, that is, interest payments for certain public and private debt securities and interest income paid between financial institutions.

The introduction of the UK's diverted profits tax (DPT) on April 1 2015 has dismayed tax practitioners and their multinational clients. Rushed through parliament (ahead of its dissolution before the general election) it seemed intended to appease public anger at multinationals failing to pay their 'fair share' of tax. It has been roundly criticised for its breadth and complexity, for the speed with which it has been introduced, for the lack of public consultation and parliamentary scrutiny, and for pre-empting the multilateral response to tax avoidance of the G20/OECD BEPS Project. DLA Piper's Stephen Jones asks whether the DPT has created a cloud of uncertainty to cover the previous decade’s climate of reform favourable to global business.

Danish taxpayers will have to move carefully to avoid being caught out The Danish government has introduced a Bill (L167) to implement a general anti-avoidance rule (GAAR) in the country for the first time, which would enable authorities to deny treaty benefits if obtaining those benefits was the sole or main purpose of an arrangement A final decision on the passage of the Bill, which was introduced March 20, will take place at the end of April.

As one of the founding members of the OECD and also a member of the G20 group – holding the group presidency position for 2015 – Turkey generally supports the OECD’s Action Plan to fight against base erosion and profit shifting (BEPS), explains Deloitte’s Güler Hülya Yilmaz.

Modifications to the French-German agreement set in motion changes elsewhere Changes to the double tax treaty (DTT) between France and Germany are unexpectedly affecting real estate investment trusts (REITs). The amendments can be seen as a precursor to upcoming changes to the France-Belgium and France-Netherlands DTTs, and also as evidence of a German- and BEPS-driven trend of closing the door on some REIT tax exemptions.

Read this month's special features on Turkey and GCC

Arif Çelen of WTS & Çelen in Turkey looks at the significant tax and legal considerations relevant for taxpayers operating, or planning to operate, in the real estate sector in Turkey.

Mark Lindley, head of tax at the Qatar Financial Centre (QFC), looks at investment opportunities across the Gulf Cooperation Council (GCC) as the region moves away from a reliance on oil and prepares to host global events like the FIFA World Cup. He also tackles the resultant controversy concerns that could lead to tax disputes.