9 August 2013
Americas Tax Center Weekly Roundup
Latest news — Americas
Urgent action may be required by Canadian taxpayers with foreign affiliates on upstream loan rules
Due to the effective dates of the upstream loan rules contained in the recently enacted Bill C-48, Technical Tax Amendments Act, 2012, urgent action may be required by some Canadian taxpayers to avoid significant adverse tax implications. The upstream loan rules target certain loans and other indebtedness owing to a foreign affiliate by certain non-arm's length debtors. Canadian taxpayers that have foreign affiliates should immediately review the accounts of those foreign affiliates to determine if there are any outstanding upstream loans in place. A Tax Alert has details.
Brazil issues further guidance on pricing of interest bearing transactions; taxpayer-favorable decision in Resale Minus 60 case
The Brazilian Finance Ministry on 2 August issued details on the interest rate spread for interest-bearing transactions that was mentioned, but not specified, in Law 12.766/2012; that law significantly changed the transfer pricing rules for such transactions. In addition, the Brazilian Administrative Council of Tax Appeals has issued a ruling on the controversial application of the Brazilian transfer pricing method for imported materials that are subject to further industrialization in Brazil, Resale Minus 60. A Tax Alert provides details.
OECD invites public comments on White Paper on Transfer Pricing Documentation
As part of its project on transfer pricing simplification, the OECD has released a White Paper on Transfer Pricing Documentation. This document is intended to initiate an international discussion of ways in which compliance with transfer pricing documentation requirements can be made simpler and more straight-forward, while at the same time providing tax authorities with more focused and useful information for consideration in connection with transfer pricing risk assessment and transfer pricing audits. A Global Transfer Pricing Alert provides details.
Colombia’s Central Bank modifies exchange regime regulations
Colombia’s Central Bank Foreign Exchange Department modified External Regulatory Circular DCIN-83 on 19 July 2013, and the Board of Directors of the Central Bank on 26 July 2013 issued Resolution No. 7 of 2013, which makes changes to Resolution No. 8 of 2000. The changes affect the filing of exchange declarations, foreign indebtedness, payment of guarantees in foreign currency, direct foreign investment in Colombia, Colombian direct investment abroad, compensation accounts and more. A Tax Alert has details.
Brazil’s CARF concludes companies must pay social security contributions on stock option plans
Brazil’s Administrative Counsel of Internal Revenue (CARF) has recently decided that two Brazilian companies should pay social security contributions on the income from their employee stock option plans. In both cases, CARF concluded that the stock options granted under the companies’ plans should be treated as compensation income rather than investment income based on the specific characteristics of each plan. However, these decisions are not final, since the companies may appeal in at least two other courts. A Tax Alert has details.
Quebec announces changes to large business simplified method for calculating input tax refund
The simplified method currently applicable to large businesses (the LB simplified method) is a well-known method for calculating an input tax refund in respect of an expense reimbursement. However, following analyses by the Agence du revenu du Québec (ARQ), it appears that the LB simplified method no longer meets the basic principles that originally justified its implementation. Burgeoning application difficulties, as well as a series of interpretation issues, have caused the ARQ to make changes to the current LB simplified method. A Tax Alert has details.
Latest annual report on business risks facing mining and metals industry now available
As the mining and metals industry shifts its focus to margin quality rather than price-driven volume growth, CFOs need to manage increasing risks and balance divergent stakeholder demands, while maximizing returns. That is the key takeaway from EY’s sixth annual report discussing the 10 global business risks facing the mining and metals sector. The report looks at important risks for the commodities, including touching on 10 below-the-radar risks or “horizon-watchers.” The report is part of EY’s CFO Perspective series that summarizes key findings from EY reports from the perspective of the CFO and future finance leader. Access it here.
This week's tax treaty news in the Americas
- Argentina and Austria: tax treaty negotiations at advanced stage
- Argentina and Germany: negotiations for revision to tax treaty at advanced stage
- Argentina and Switzerland: tax treaty negotiations at advanced stage
- Bermuda and US: FATCA agreement initialed
- Colombia and Switzerland: tax treaty details available
- Costa Rica and OECD: multilateral Convention on Mutual Administrative Assistance in Tax Matters enters into force for Costa Rica
- Honduras, Nicaragua, Panama and EU: free trade association agreement between EU and Central America enters into force for Honduras, Nicaragua and Panama
- Panama and Portugal: Portugal takes action to remove Panama from list of privileged tax regimes
- Panama and UK: tax treaty details available
- US and Poland: tax treaty approved for ratification
This week’s Global Tax Alerts
- Colombia's Central Bank modifies Exchange Regime regulations as well as some forms and exchange declarations (7 August 2013)
- India's CBDT prescribes information required to claim tax treaty benefit (7 August 2013)
- Italy issues operative guidelines on tax audits for 2013 (6 August 2013)
- Israel approves 2013-2014 Budget (6 August 2013)
- Spanish Constitutional Court ratifies transfer pricing penalty regime (6 August 2013)
- Italy issues guidance on bad debt loss deduction (5 August 2013)
- Hungary amends transfer pricing documentation rules (5 August 2013)
- Ukraine's President signs Transfer Pricing Law, effective from 1 September 2013 (2 August 2013)
- Romania issues amendments to Fiscal Code (2 August 2013)
- French government publishes decree on obligation to provide electronic accounting records upon a tax audit (1 August 2013)
Recently archived webcasts now available on-demand
- The shift toward risk management: 2013 global transfer pricing survey
EY's 2013 Global Transfer Pricing Survey reveals companies are placing a higher priority on managing risk associated with transfer pricing compared to the past, reflecting a need to adjust to more and new sources of controversy around the world. By identifying trends and anticipating changes in policy, legislation and enforcement, business can plan for adverse impacts, take proactive steps to adapt to changes and even engage with policymakers. A recent EY webcast discussed several sources of risk that may be contributing to the new environment to help companies prepare for these ongoing changes. Watch it on-demand here.