1. un tax committee releases draft tax dispute resolution ......subcommittee on tax dispute...

May 14th to 18th, 2018

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1. UN tax committee releases draft tax dispute resolution handbook, treaty

negotiation manual

The UN Committee of Experts on International Cooperation in Tax Matters has released preliminary

draft chapters for a new UN handbook on cross-border tax dispute resolution, a paper outlining

proposed updates to a UN manual on negotiating tax treaties, and other documents associated with

a meeting now underway at UN headquarters in New York.

The 25-person UN committee of experts underwent a membership change in August 2017 and, last

October, new subcommittees were appointed to conduct the committee’s work, including a new

subcommittee on tax dispute avoidance. This new subcommittee, led by Cezary Krysiak, of the

Polish Ministry of Finance and George Obell, of the Kenyan Revenue Authority, was charged with

drafting a new handbook on tax dispute avoidance and resolution.

The subcommittee has recommended that the new handbook’s title should be the “United Nations

Handbook on Dispute Avoidance and Resolution.” The subcommittee said the drafts are

preliminary, are subject to extensive redrafting, and do not represent the consensus view of the

subcommittee.

The subcommittee was asked to update the tax treaty negotiation manual to reflect the current

version of the United Nations Model Double Taxation Convention between Developed and

Developing Countries and relevant commentaries, focusing on the needs of developing countries

and drawing upon other work, particularly a toolkit on tax treaty negotiation authored by the

Platform for Collaboration on Tax, a joint effort of the IMF, OECD, UN, and World Bank Group.

Source: https://mnetax.com/un-committee-releases-draft-chapters-of-tax-dispute-resolution-handbook-updates-to-tax-treaty-negotiation-manual-

27630


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2. EU to ask OECD for binding interest limitation rule

EU member states are expected to agree to ask the OECD to turn its interest limitation rule into a

minimum standard.

During a meeting of the High Level Working Party (Taxation), the Bulgarian presidency of the EU

Council will ask its peers if they support this approach.

“The fact that the recent U.S. tax reform includes an interest limitation rule similar to the EU’s,

could provide an occasion to ask the OECD to reopen discussions on making a minimum standard

out of BEPS action 4," the presidency says in an internal document prepared for the meeting.

Bulgaria concludes by saying it is ready to write to the OECD “to query about level playing field

issues and whether they have any plans to make a minimum standard in this area.”

Source: https://www.taxnotes.com/beps-expert/exemptions-and-deductions/eu-ask-oecd-binding-interest-limitation-rule/2018/05/15/281s5


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3. New IRS template for requesting advance pricing agreement (APA)

The IRS Advance Pricing and Mutual Agreement (APMA) program announced a new template for

taxpayers to use in requesting an advance pricing agreement (APA).

According to an item posted on the APMA webpage, the new APA template will facilitate the

submission and review of APAs. Taxpayers with pending APA requests are instructed to contact

their assigned APMA team leader(s) about whether to use this template in their cases.

The new APA template and related instructions reflect changes that were made in response to

comments received about draft versions issued by the IRS in September 2017. The new APA

template allows some editing by taxpayers “in appropriate cases.”

Source: https://home.kpmg.com/xx/en/home/insights/2018/05/tnf-new-irs-form-instructions-for-requesting-apa.html


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4. Russian finance ministry approves APA procedures

Russia’s Ministry of Finance has approved a regulation on the procedures for concluding advance

pricing agreements for foreign trade transactions involving residents of countries that have tax

treaties with Russia.

For purposes of the Russian Tax Code, an APA is an agreement concluded between a taxpayer and

the Federal Tax Service (FTS) that governs the procedures for determining market prices or applying

pricing methods in transactions considered to be controlled for transfer pricing purposes.

Tax Code article 105.20, section 2, says that if an APA is requested for a foreign trade transaction

in which at least one of the parties resides in a country with which Russia has an effective tax treaty,

a taxpayer can file a petition to conclude an APA not only with the FTS, but also with the competent

authorities of any of the countries that have a tax treaty with Russia. The procedures for concluding

those APAs will be established by the MOF.

After accepting an APA petition, the FTS must inform the taxpayer about the negotiation process

and whether the parties reached agreement on the proposed APA, and it may request additional

information from the taxpayer.

Source: https://www.taxnotes.com/worldwide-tax-daily/competent-authority-matters/russian-finance-ministry-approves-apa-

procedures/2018/05/10/281g6


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5. Switzerland shares private tax rulings with other nations for the first time

Switzerland’s Federal Tax Administration (FTA) announced that for the first time it transmitted

information on private tax rulings to partner states thus meeting its obligation of spontaneous

exchange of information.

In this way, Switzerland continues to demonstrate its commitment to implementing international

standards in the area of taxation requiring tax transparency.

Under spontaneous exchange of information, tax authorities must share information if they

encounter something that may interest to another state. Advance tax rulings themselves are not

directly exchanged; only an agreed template containing information from the tax ruling is

spontaneously exchanged.

The exchange is based on tax administrative assistance rules introduced by Switzerland after

Switzerland ratified the OECD/Council of Europe Convention on Mutual Administrative Assistance

in Tax Matters. The exchanges were made within the framework of the OECD/G20 base erosion

profit shifting (BEPS) project.

Source: https://mnetax.com/switzerland-shares-private-tax-rulings-with-other-nations-for-the-first-time-27555


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6. Polish government drafting new APA procedure

Poland’s Ministry of Finance held its first transfer-pricing forum, announcing that it is drafting a

simplified procedure for advance pricing agreements.

The simplified APA would cover low-value-adding services and simple licensing agreements. It

would remain valid for three years, as opposed to five years under the existing standard APA regime.

The three-year period could be extended.

Further, the APA fee would be reduced for the simplified APA, making it less costly than the

standard version. Application fees would not be based on the value of the transaction covered by the

application.

Applicants for the simplified APAs would not be required to submit financial forecast data, but

would still be required to submit a selection of financial data and ratio, as well as a functional

analysis.

Source: https://www.taxnotes.com/worldwide-tax-daily/corporate-taxation/polish-government-drafting-new-apa-procedure/2018/05/01/280fv


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7. Netherlands: New transfer pricing decree incorporates OECD standards

The Dutch Ministry of Finance published a new transfer pricing decree that incorporates provisions

from the OECD’s base erosion and profit shifting (BEPS) action plans (2015) and from the OECD’s

Transfer Pricing Guidelines (2017).

The new Dutch transfer pricing decree provides insight into the interpretation of the arm’s length

principle, and in particular, focuses on aspects for which the 2017 OECD Transfer Pricing

Guidelines leave scope for domestic interpretation.

The main differences between the 2013 and 2018 Dutch transfer pricing decrees are:

1. Clarification of the process under which intercompany transactions are to be characterized,

with the aim to fully reconcile to the actual value creation within a multinational enterprise

(MNE)

2. Further explanation with respect to application of transfer pricing methods in specific

situations, with greater focus on risk and intellectual property (IP) management functions

and providing guidance on valuation methods

3. Clarification about hard-to-value intangible assets (a new provision), with guidance on

acceptable deviations in projections and a five-year monitoring period.

Source: https://home.kpmg.com/xx/en/home/insights/2018/05/tnf-netherlands-new-transfer-pricing-decree-incorporates-oecd-standards.html


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8. Italy issues final transfer pricing regulations addressing arm’s length

standard

Italy’s Ministry of Economy and Finance issued final transfer pricing regulations on the application

of the arm’s length principle. The publication follows the release of a draft for public consultation

in February and a consultation in May.ut

The guidance aligns Italy’s transfer pricing rules with the outcome of Actions 8–10 of the

OECD/G20 base erosion and profit shifting (BEPS) plan. In particular, new regulations provide

definitions of associate enterprises, control, independent enterprises, controlled and non-controlled

transactions, and financial indicators.

The regulations also explain the concept of comparability analysis and describe five methods that

can be used to determine arm’s-length prices for intra-group transactions, namely, the comparable

uncontrolled Price method, resale price method, cost plus method, transactional net margin method,

and the transactional profit split method.

Source: https://mnetax.com/italy-issues-final-transfer-pricing-regulations-addressing-arms-length-standard-27618


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9. Germany suspends interest charge on late tax payments providing relief for

MNEs

The Ninth Senate of Germany’s Federal Fiscal Court has questioned the constitutionality of a

German law that imposes large interest charges on unpaid taxes and has suspended enforcement of

the law from 2015.

According to para 233a AO (German fiscal code), interest is charged or credited on unpaid taxes if

the tax assessment notice is not issued within 15 months after the end of the respective calendar

year.

For the disputed periods as of 2015, the court no longer sees the low level of market interest rates

as a temporary phenomenon with typical cyclical fluctuations in interest rates but as structurally and

sustainably consolidated.

Until further notice, taxpayers must take action themselves and possibly raise an objection against

an interest assessment notice citing this decision.

The final decision regarding interest rates from 2015 remains with the Federal Constitutional Court.

This is now one of several cases to be decided by the court pertaining to the high rate; the others

deal with taxable periods from 2010 and 2012 and the interest calculation for pension provisions.

Source: https://mnetax.com/germany-suspends-interest-charge-on-late-tax-payments-providing-relief-for-mnes-27622


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10. Cayman launches CbC reporting portal

The Cayman Islands' country-by-country (CbC) reporting portal is now open, with the first CbC

reports due from some taxpayers by the end of the month.

CbC reporting requires multinational enterprises (MNEs) that meet certain criteria to file a country-

by-country report with tax authorities. CbC reporting applies only to MNE groups with annual

consolidated group revenue of not less than USD850m.

CbC reports are due within 12 months of the end of the fiscal year. As a result of an earlier extension,

even if such would have been required earlier than May 31, 2018, the first deadline will be May 31,

2018.

The Finance Ministry has said a Reporting Entity resident in the Islands must make a CbC Report

via the CbCR Portal even if that results in duplication because a CbC Report for the same MNE

Group has already been made to another Competent Authority, for instance where the MNE Group

appoints a Surrogate Parent Entity in another participating jurisdiction or where a Reporting Entity

resident in the islands is also resident for tax purposes in another participating jurisdiction.

Source: https://www.tax-news.com/news/Cayman_Launches_CbC_Reporting_Portal____76776.html

https://www.tax-news.com/news/Cayman_Launches_CbC_Reporting_Portal____76776.html


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11. Swedish Government acts to approve BEPS MLI

The Swedish Government has submitted a bill to the Swedish Parliament for approval of the

Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and

Profit Shifting (the MLI), along with the Government’s positions regarding Sweden’s choices and

reservations.

The MLI will enter into force on 1 July 2018 as five jurisdictions have now deposited their

instruments of ratification with the Organization for Economic Co-operation and Development’s

depository. From a Swedish perspective, however, it is necessary to also amend the laws which have

implemented tax treaties into Swedish domestic law, in order for the provisions to become applicable

in Sweden. The bill that was submitted to Parliament on 15 March 2018 does not contain any

proposed changes to these laws as not all of the relevant jurisdictions have ratified the Convention

yet. Instead, the Swedish Government intends to come back to the Parliament regarding the

necessary changes concurrently as the relevant jurisdictions ratify the Convention. It is therefore not

possible to provide a date for the entry into force of the MLI’s provisions in Sweden.

Source: http://taxinsights.ey.com/archive/archive-news/swedish-government-acts-to-approve-beps-mli.aspx

http://taxinsights.ey.com/archive/archive-news/swedish-government-acts-to-approve-beps-mli.aspx


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12. Saint Lucia becomes 114th country to join “inclusive framework” countering

multinational tax avoidance

The OECD has announced that Saint Lucia has joined the “Inclusive Framework on BEPS,” bringing

the number of participating countries to 114.

The OECD-led framework is made up of countries that have agreed to incorporate into their laws

minimum standards devised by OECD and G20 countries in the 2015 base erosion profit shifting

(BEPS) plan. These BEPS standards aim to curtail tax avoidance by multinational corporations and

improve cross-border tax dispute resolution.

Included is Saint Lucia’s pledge to participate in a country-by-country reporting scheme, whereby

Sant Lucia will collect information on large multinationals and share that information with other tax

administrations.

Source: https://mnetax.com/saint-lucia-becomes-114th-country-to-join-inclusive-framework-countering-multinational-tax-avoidance-27546

1. un tax committee releases draft tax dispute resolution ......subcommittee on tax dispute...

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