New EU rules tackle the distortive effects of financial subsidies granted by non-EU member states to companies engaging in economic activities in the EU—particularly in the context of mergers—and allow the European Commission to take action against potentially offending subsidies. Details are provided on important company notification obligations that will apply as from October 2023.
On the subject of reporting obligations, new mandatory disclosure rules in Canada expand the reportable transaction rules and introduce new reporting requirements. The changes require taxpayers and their advisors to disclose certain tax planning transactions at the time they take place rather than through the normal compliance process.
The EU minimum taxation directive must be implemented into the domestic laws of the 27 member states by 31 December 2023. To this end, legislative activity is ramping up, with draft laws released in Germany, Luxembourg and the Netherlands, and Slovak Republic holding a public consultation on the measures.
The OECD has released a progress report on its two-pillar initiative, announcing that the Inclusive Framework (IF) has delivered the text of a multilateral convention (MLC) that would allow signatories to exercise a domestic taxing right known as Amount A of Pillar One and that agreement has been reached to extend the moratorium on imposing or collecting digital services taxes (DST) or similar measures until the earlier of 31 December 2024 or the entry into force of the MLC. Interestingly, Uganda is introducing a 5% DST on revenue derived by non-residents from the provision of digital services to persons in the country and Canada is holding a consultation on revised draft legislation on a 3% DST.
Equally interesting are the steps Bermuda is taking to shed its status as an established no corporate tax jurisdiction—the country is considering the introduction of a corporate tax regime in line with the global minimum tax rules under the OECD’s two-pillar project. A public consultation is being held on the proposal, which would apply to Bermuda businesses that are part of MNE enterprise groups with annual revenue of EUR 750 million or more. If enacted, corporate tax—at a rate of between 9% and 15%—would become effective in 2025. Finally, in three other Pillar Two developments, Korea has deferred the implementation of the under-taxed profits rule until 2025, Switzerland’s electorate and cantons overwhelmingly approved a decree that will allow the introduction of the GloBE rules Thailand’s BOI has issued incentives to mitigate the impact of Pillar Two.
Learn about these developments and much more in Corporate Tax News.