November 8, 2023
Global Tax Policy and Controversy Watch | November 2023 edition
In the spotlight
Updated EY Green Tax Tracker now available
The EY Green Tax Tracker (GTT) can now assist you in staying on top of the evolving sustainability tax policies in 65 jurisdictions across the world. The GTT provides an overview of the sustainability incentives, carbon pricing regimes and other environmental taxes in effect in an ever-growing number of jurisdictions. See the latest edition here.
OECD/G20 Inclusive Framework launches Multilateral Instrument to implement the Subject to Tax Rule
On 3 October 2023, the Organisation for Economic Co-operation and Development (OECD) announced that the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) had concluded negotiations on a Multilateral Instrument (MLI) to Facilitate the Implementation of the Pillar Two Subject to Tax Rule (STTR). Together with the announcement, the OECD released the STTR MLI, an explanatory statement to the STTR MLI, a summary overview including a roadmap toward signature and a frequently asked questions document. See Global Tax Alert, OECD/G20 Inclusive Framework launches Multilateral Convention to implement the Subject to Tax Rule, dated 12 October 2023.
OECD releases Multilateral Convention to implement Pillar One Amount A
On 11 October 2023, the Inclusive Framework on BEPS released a text of the Amount A Multilateral Convention (MLC). The objective of the MLC is to create a coordinated agreement to reallocate taxing rights to market jurisdictions with respect to a portion of the profits of in-scope multinational enterprises (MNEs) in excess of 10% of their global revenues. The Inclusive Framework also released an explanatory statement, an Understanding on the Application of Certainty for Amount A of Pillar One, and an additional overview document. See Global Tax Alert, OECD releases Multilateral Convention to implement Pillar One Amount A, dated 30 October 2023.
OECD Forum on Tax Administration agrees on action to support continued digital transformation, delivering Pillar Two and capacity building
The Forum on Tax Administration held its 16th plenary meeting on 11-13 October 2023 and agreed on actions and commitments in three key areas: (1) collaborate on projects to utilize new technology to enable further digital transformation of tax administration; (2) work together on the consistent, effective implementation of Pillar Two; and (3) enhance the effectiveness and reach of its global capacity building efforts. See Global Tax Alert, OECD Forum on Tax Administration agrees on action to support continued digital transformation, delivering Pillar Two and capacity building, dated 20 October 2023.
Free trade agreements provide opportunities for global businesses — but may increase controversy risk
In today's global economy, businesses continually seek to enhance efficiency, reduce costs and maintain a competitive edge. Free trade agreements are foundational to achieving these goals.
Read the latest Global Tax Controversy monthly flash news article, EY Global Tax Controversy Flash Newsletter (Issue 63) | Free trade agreements provide opportunities for global businesses — but may increase controversy risk, dated 10 October 2023.
OECD releases outcomes of sixth peer review on BEPS Action 13 on country-by-country reporting
This peer review covers 136 jurisdictions and reflects a finding that implementation of country-by-country reporting is largely consistent with the minimum standard. Not only are country-by-country reports being widely exchanged among tax authorities, going forward these reports will play a central role in the application of the new Pillar Two rules. See Global Tax Alert, OECD releases outcomes of sixth peer review on BEPS Action 13 on country-by-country reporting, dated 6 October 2023.
EU adopts Directive introducing tax transparency rules for crypto assets (DAC8)
The EU Member States have formally adopted amendments to Directive 2011/16/EU on administrative cooperation in the field of taxation. The adoption follows political agreement by the Council on 16 May 2023. Proposed amendments from the European Parliament were not included in the final text of the Directive. DAC8 introduces tax information reporting and exchange for crypto-assets and also includes other rules to expand cooperation between Member States' authorities. See Global Tax Alert, OECD releases outcomes of sixth peer review on BEPS Action 13 on country-by-country reporting, dated 6 October 2023.
ECOFIN adopts revised list of non-cooperative jurisdictions for tax purposes
On 17 October 2023, the EU Finance Ministers adopted a revised list of non-cooperative jurisdictions for tax purposes. Antigua and Barbuda, Belize and the Seychelles were added to Annex I, while the British Virgin Islands, Costa Rica and the Marshalls Islands were removed. Four jurisdictions (Jordan, Qatar, Montserrat and Thailand) were removed from Annex II. The next revision to the EU List is expected in February 2024. See Global Tax Alerts, ECOFIN adopts revised list of non-cooperative jurisdictions for tax purposes, dated 18 October 2023; Costa Rica removed from EU's 'blacklist' of non-cooperative jurisdictions for tax purposes, dated 17 October 2023; and Qatar removed from EU 'grey list', dated 20 October 2023.
Compliance obligations for EU CBAM
On 1 October 2023, the transitional period of the Carbon Border Adjustment Mechanism (CBAM) entered into force. During the transitional phase, importers, their representatives and brokers and certain other parties in the supply chain are required to adhere to several compliance and reporting requirements that vary depending on the Member State of importation. In addition to quarterly retrospective reporting obligations, importers may face additional compliance obligations when filing import declarations. Noncompliance with CBAM obligations may result in significant penalties. See Global Tax Alert, EU | Compliance obligations for EU CBAM, dated 16 October 2023.
Argentine Government amends the Income Tax Law, incorporating 'cedular' tax for 'high-income' individuals
On 6 October 2023, the Argentine National Executive Branch enacted Law 27,725, which replaces the current income tax paid by employees with a "cedular" tax on specified high incomes received through salaries, retirements and pensions. See Global Tax Alert, Argentine Government amends the Income Tax Law, incorporating 'cedular' tax for 'high-income' individuals, dated 10 October 2023.
Argentine Tax Authority establishes new income tax prepayment
The Argentine Federal Tax Authority established a new income tax prepayment for companies that provide "financial intermediation and insurance services" as their principal activity or are registered as payment service providers. The income tax prepayment is creditable against the corporate income tax liability for fiscal year 2023 or 2024. See Global Tax Alert, Argentine Tax Authority establishes new income tax prepayment for financial entities, insurance companies, payment service providers, dated 5 October 2023.
Belgium's new proposal for mandatory electronic invoicing from 1 January 2026
During a recent Council of Ministers meeting, a preliminary draft law was approved on the introduction of mandatory electronic invoicing for business-to-business transactions. The previously proposed phased approach to adopting e-invoicing has been removed. The new proposed date for all taxpayers is 1 January 2026. See Global Tax Alert, Belgium's new proposal for mandatory electronic invoicing from 1 January 2026, dated 6 October 2023.
Brazil publishes Normative Instruction to regulate the new Brazilian transfer pricing system
The Brazilian Federal Revenue Service published Normative Instruction 2,161/23, which regulates the new transfer pricing rules in Brazil. The Normative Instruction reiterates that the transfer pricing rules apply to transactions with related parties abroad, tax havens and privileged tax regimes. See Global Tax Alert, Brazil publishes Normative Instruction to regulate the new Brazilian transfer pricing system, dated 19 October 2023.
Cyprus issues draft legislative proposal on Pillar Two global minimum tax
The draft legislative proposal is aimed at helping Cyprus implement Pillar Two global minimum tax rules. The law is proposed to be effective for accounting periods beginning on or after 31 December 2023 in relation to the Income Inclusion Rule and for accounting periods beginning on or after 31 December 2024 in relation to the Undertaxed Profits Rule. See Global Tax Alert, Cyprus issues draft legislative proposal on Pillar Two global minimum tax, dated 9 October 2023.
Egypt issues transfer pricing Explanatory Instructions
The instructions clarify the transfer pricing provisions in the Unified Tax Procedures Law No. 206 of 2020 and aim to address common transfer pricing queries. See Global Tax Alert, Egypt issues transfer pricing Explanatory Instructions, dated 3 October 2023.
France submits new e-invoicing timetable to Parliament
France has issued a revised timeline for e-invoicing and e-reporting for value added tax. Originally expected to come into effect from 1 January 2024, these obligations are now expected to commence with effect from 1 September 2026. See Global Tax Alert, France submits new e-invoicing timetable to Parliament, dated 25 October 2023.
India's Supreme Court rules 'notification' mandatory to invoke Most Favored Nations clause in India's tax treaties
The Indian Supreme Court has held that notification under the Indian Tax Laws is mandatory to give effect to any Indian tax treaty, or any Protocol that changes its terms or conditions, that has the effect of altering the existing provisions of law. The ruling may impact all pending assessments and related proceedings irrespective of the stage of the particular dispute. See Global Tax Alert, India's Supreme Court rules 'notification' mandatory to invoke Most Favored Nations clause in India's tax treaties, dated 25 October 2023.
Ireland announces Budget 2024
On 10 October 2023, the Minister for Finance presented Budget 2024, which addresses Pillar Two, an increase in the R&D tax credit from 25% to 30%, personal income taxes, a dividend participation exemption, interest deductibility and other items. See Global Tax Alert, Ireland announces Budget 2024, dated 13 October 2023.
Italian Parliament passes Windfall Tax for banks
The Italian Parliament has approved, with amendments, the announced Italian Windfall Tax for Banks, affecting both Italian banks and Italian branches of foreign banks, effective from 10 October 2023. See Global Tax Alert, Italian Parliament passes Italian Windfall Tax for banks, dated 9 October 2023.
Norway publishes fiscal budget for 2024
On 6 October 2023, the Norwegian Government published its proposal for the 2024 Fiscal Budget and a proposal to introduce resource-rent tax on onshore wind power. The proposed Budget will now be discussed by the Norwegian Parliament and, subject to any potential changes, is expected to be approved in December 2023. See Global Tax Alert, Norway publishes fiscal budget for 2024, dated 16 October 2023.
Poland issues draft explanations illuminating Beneficial Owner concept
On 28 September 2023, Poland's Ministry of Finance has published a long-awaited draft of new withholding tax explanations. Although not legally binding, the contents of the Draft Explanations will most likely contribute to the practices of tax authorities. See Global Tax Alert, Polish Ministry of Finance issues draft explanations illuminating Beneficial Owner concept, dated 19 October 2023.
Portugal enacts legislation introducing public country-by-country reporting for multinational enterprises
Portugal recently approved a law implementing the European Union public country-by-country reporting Directive into domestic legislation. The new reporting obligations will apply to financial years starting on or after 22 June 2024. Noncompliance can result in fines of between €1,500 and €30,000. See Global Tax Alert, Portugal enacts legislation introducing public country-by-country reporting for multinational enterprises, dated 3 October 2023.
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Published by NTD's Tax Technical Knowledge Services group; Carolyn Wright, legal editor