1 November 2013
Americas Tax Center Weekly Roundup
Latest news — Americas
Mexican Congress approves major tax reform
The Mexican Congress has just approved a major tax reform package that now awaits signature by Mexico's President. This legislation will be of interest to all companies with Mexican operations. The original proposal was submitted to the Mexican Congress in early September 2013. The lower house of Congress approved an amended version on 18 October. After significant debate and further amendments, the reform was approved by the Mexican Senate yesterday (31 October). In general terms, the Senate approved the lower house's version with changes. A brief Alert provides details. A comprehensive Tax Alert is pending.
EY will host a webcast on the Mexican tax reform on 6 November. See Upcoming webcasts below for more information.
Costa Rica requires audited financial statements from large taxpayers
The Costa Rican Tax Authorities have issued a resolution, published in the Official Gazette on 18 October 2013 and effective as of that date, requiring "Large National Taxpayers" and "Large Territorial Companies" to submit financial statements audited by an independent Certified Public Accountant. The audited financial statements must be submitted within six months from the end of the tax year (i.e., 30 September), even if the taxpayer is not subject to income tax. The deadline to submit the audited financial statement for tax year 2012 is extended to 15 December 2013. A Tax Alert has details.
Central America – EU trade agreement takes effect for Costa Rica and El Salvador
On 1 October 2013, the trade pillar of the Association Agreement between the EU and Central America signed in June 2012 entered into force for El Salvador and Costa Rica. The Agreement’s trade pillar establishes a free trade area among the regions. While the Agreement was ratified by the Salvadoran and the Costa Rican Congresses in July 2013, the entry into force of the trade pillar for these two countries was delayed due to a dispute with Italy which has now been resolved. A Tax Alert has details.
Canada – Hong Kong tax treaty enters into force
The agreement between Canada and Hong Kong Special for the avoidance of double taxation and the prevention of fiscal evasion agreement entered into force on 29 October 2013. In accordance with Article 27 of the treaty, its provisions generally have effect in Canada: (1) in respect of tax withheld at the source on amounts paid or credited to nonresidents on or after 1 January 2014 and (2) in respect of other Canadian tax for taxation years beginning on or after 1 January 2014. A Tax Alert has details.
Uruguayan large-scale mining law takes effect
Uruguayan Law No. 19,126, which applies to large-scale mining exploitations, became effective on 25 September 2013. The primary goal of this law is to allow a large-scale mining project only if the safety of the environment is guaranteed during the mining process, closing and post-closing of the mines. Special tax regulations apply, including the exclusion of promotional activities benefits, corporate income tax modifications and the creation of an additional corporate income tax. A Tax Alert has details.
Panamanian tax amnesty program – Tax Alert now available
A Tax Alert is now available on a Panamanian tax amnesty program approved by Law 51, which was published in the Official Gazette on 6 September 2013. The amnesty period began on 7 September 2013 and ends on 7 December 2013. Therefore, taxpayers have until 6 December 2013 to participate in the program. The program is available for tax years up to 2011 and it applies to taxpayers that did not correctly report their income for income tax purposes and taxpayers with outstanding tax debts.
Uruguayan proposed bill would modify special economic zones – Tax Alert now available
A Tax Alert is now available on a Uruguayan bill proposed last summer that would modify the regulations on "Free Trade Zones." Under the proposed bill, Free Trade Zones would be renamed "Special Economic Zones." The Special Economic Zones would help promote investment, diversify production, generate employment, and promote decentralization of economic activities and regional development, among other goals. If approved, the bill would be effective 90 days after enactment.
Tax transparency: Building confidence – new EY report
At the heart of the tax transparency debate is the question of how an organization chooses to communicate its approach to tax planning and compliance and how it communicates how much tax it pays. Tax Transparency – Building confidence, a new report from EY UK, discusses the key drivers of concern – and the purpose of increased transparency in light of them. It explores the various disclosure options, assesses how they answer the needs of multinational companies and stakeholders, and sets out some of the practical issues that organizations should consider before making a disclosure.
This week's tax treaty news in the Americas
- Argentina and Spain: Spanish Congress approves tax treaty
- Barbados and US: Barbados expresses intention to negotiate FATCA agreement
- Brazil and France: social security agreement approved
- Canada and France: tax treaty protocol ratified
- Canada and Poland: tax treaty enters into force
- Chile and OECD: Chile signs Multilateral Convention on Mutual Administrative Assistance in Tax Matters
- Colombia and Azerbaijan: investment protection agreement negotiations ongoing
- Costa Rica and Vietnam: intentions expressed to negotiate investment protection agreement
- Costa Rica and Vietnam: intentions expressed to negotiate tax treaty
- Ecuador and Korea: tax treaty enters into force
- Mexico and Estonia: tax treaty ratified
- Uruguay and Belgium: tax treaty approved
- Uruguay and Romania: tax treaty approved
This week’s EY Global Tax Alerts
- EU Advocate General opines on UK limits on consortium relief (30 October 2013)
- India's Bombay HC rules on inclusion of subsequent tax year under a pending MAP (30 October 2013)
- Israel requires action by 11 November 2013 to release trapped profits (29 October 2013)
- Panama issues resolution on procedure to secure Double Tax Treaty benefits (25 October 2013)
- Finland's draft Bill reduces corporate income tax rate and introduces additional restrictions on corporate tax deductions (24 October 2013)
- European Commission to form Expert Group to address challenges for tax systems related to digital economy (24 October 2013)
- Ireland publishes proposed Law on "Stateless" Companies (24 October 2013)
- Mexico's lower House of Congress approves tax reform proposal affecting financial institutions (24 October 2013)
- Russia enacts Federal Law providing tax incentives for far-east region (24 October 2013)
- Bangalore Tribunal rules on deductibility of employee share reward discount cross-charged by foreign parent company (24 October 2013)
- Certain growing activities qualify as production activities for purposes of foreign base company sales income rules (23 October 2013)
- Canada's second budget implementation bill receives first reading (23 October 2013)
- Spanish Tax Authority issues ruling expanding capital gains tax to indirect transfer of Spanish real estate by Luxembourg entities (23 October 2013)
- Zambia issues 2014 Budget Proposals (23 October 2013)
Upcoming EY webcasts
- Mexico’s new tax reform package – what you need to know (6 November)
Mexico’s proposed tax reform has been approved by the two houses and is about to be finalized and signed into law. The changes included in the final reform package could have significant tax impact on all multinationals operating or investing in Mexico. A new EY Thought Center webcast will cover highlights of the final proposal as approved – increased income tax rates on earnings, a broadened tax base, and changes to the maquiladora regime. Register here.
- Managing international trade in rapid-growth markets (7 November)
Are you concerned about managing customs and international trade issues in rapid-growth markets? Do you want to avoid unnecessary costs and risks while maximizing the opportunities available to your organization? Our upcoming webcast can help your organization: (1) manage or reduce customs duties and the cost of doing business internationally when trading in and with the world’s fastest-growing economies and (2) consider the latest economic developments and their potential impact on tax policy. Register here.
- Put Mexico, Ireland and Spain tax issues on your radar screen (12 November)
In the next International tax talk webcast, the EY Global Tax Desk team will focus on the significant Mexico tax reforms and the latest tax regime developments in Ireland and Spain. These countries’ political and regulatory proposals and actions have wide ranging implications for multinationals. The webcast will discuss Mexico’s key reforms, Ireland’s recent budget proposals and the current BEPS (base erosion and profit shifting) debate in these countries. Register here.
Recently archived webcasts now available on-demand
- Managing VAT/GST in rapid-growth markets
Are you concerned about managing value added tax (VAT) and goods and services tax (GST) in rapid-growth markets? What impact could tax reforms have on your plans? Do you want to avoid unnecessary costs and risks while maximizing the opportunities available to your organization? A recent webcast explored the VAT and GST landscape and looked at how companies can manage indirect taxes more effectively. The webcast discussed the latest economic developments, their potential impact, and ways of operating more effectively. Watch it on-demand here.
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