7 February 2014
Americas Tax Center Weekly Roundup
Latest news — Americas
Chile modifies foreign tax credit system
Law N° 20.727, published in the Chilean Official Gazette on 31 January 2014, amends tax provisions related to the Chilean foreign tax credit (FTC) system and invoice issuance. The amendments shall be applied to operations performed from calendar year 2014 onwards. The new law increases the current FTC limits to be used in Chile, expands the foreign taxes that can be credited, and expands the possible carryover of FTC. The new law also establishes a mandatory electronic invoice system to be used by Chilean VAT taxpayers. A Tax Alert has details.
US signs FATCA intergovernmental agreements with Canada and Hungary
The US Treasury Department this week announced it had signed FATCA Model 1 intergovernmental agreements (IGAs) with Canada and Hungary. Under a Model 1 IGA, foreign financial institutions report the relevant information to their home governments, which they then relay to the US government. The US signing a FATCA IGA with Canada is particularly significant given the close economic ties between the two countries.
Puerto Rico issues regulation on additional tax on gross income and further extends due date to request partial waiver for 2013
Puerto Rico’s Treasury Department (PRTD) issued a regulation (Reg. 8444) on the additional tax on gross income (ATGI) imposed on entities taxed as corporations and shareholders, partners and members of pass-through entities with gross income of $1 million or more. The regulation provides guidance and rules on the terms the PRTD will follow to issue its response to waiver requests. Reg. 8444 also extends the due date for requesting a waiver from the ATGI for tax year 2013 to 28 February 2014. A Tax Alert has details.
Costa Rica approves Tax Information Exchange Agreements with Nordic countries
On 29 January 2014, through publication in the Official Gazette, bilateral Tax Information Exchange Agreements (TIEAs) entered into force for Costa Rica with Denmark, Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden. The TIEAs were signed in France in June 2011 and set out how Costa Rica will cooperate and exchange information with the other parties. They do not provide for automatic exchanges of information. A Tax Alert has details.
Canadian tax law series discusses directors’ liability
Tax Intelligence, a series prepared by the Couzin Taylor law firm allied with EY Canada, covers significant topics and developments in Canadian tax law and administration that impact businesses and taxpayers in Canada and beyond. The latest issue examines when a director of a corporation can be held liable for the corporation’s failure to remit source deductions and withholding taxes as required, as well as the possible defenses to assessments for unremitted taxes.
Rapid-Growth Markets Forecast, February 2014 edition
Rapid-growth markets (RGMs) in the Americas are struggling to gather momentum, with tighter monetary policy weighing on growth in Brazil. However, energy reforms in Mexico will encourage private investment in the sector and could trigger faster growth this year. Overall, following the modest slowdown in 2013, we expect growth in our 25 RGMs to rebound to 4.7% this year. But if markets react badly to the global monetary tightening that 2014 promises, capital flight and weakening currencies could further limit growth. Learn more in the latest Rapid-Growth Markets Forecast.
This week's tax treaty news in the Americas
- Brazil and Switzerland: negotiations underway on social security agreement
- Canada and Ethiopia: intentions expressed to negotiate tax treaty
- Canada and Ethiopia: intentions expressed to negotiate investment protection agreement
- Colombia and Japan: continuing negotiations to be held on Economic Partnership Agreement
- Panama and US: negotiations to be held on FATCA agreement
- Paraguay, Venezuela and MERCOSUR: Paraguay approves protocol of accession of Venezuela to MERCOSUR
This week’s EY Global Tax Alerts
- New Spanish cash accounting scheme impacts VAT reporting (5 February 2014)
- Chile modifies foreign tax credit system (5 February 2014)
- Australia releases Investment Manager Regime Final Element 3 Exposure Draft with submissions due 14 February 2014 (4 February 2014)
- Puerto Rico issues regulation on the additional tax on gross income and further extends due date to request partial waiver for 2013 (4 February 2014)
- Austria publishes revised draft bill 2014 amending Tax Acts (4 February 2014)
- Belgian Constitutional Court rules on foreign tax credit in case of insufficient taxable basis (3 February 2014)
- Costa Rica approves Tax Information Exchange Agreements with Nordic countries (3 February 2014)
- Kenya enacts new VAT act (31 January 2014)
- Hong Kong IRD clarifies deductibility of amounts recharged for equity-based compensation expenses in a group context (31 January 2014)
- Italy signs FATCA intergovernmental agreement with the US (31 January 2014)
- Australian Tax Authorities release draft tax determination on market and capital support payments (31 January 2014)
- New tax treaty between Belgium and China enters into force (30 January 2014)
- Korea passes tax reform proposals including several changes to R&D incentives regime (30 January 2014)
- New CJEU decision does not fully provide clarity on exit taxation (30 January 2014)
- OECD releases draft country-by-country reporting template for comment (30 January 2014)
- Puerto Rico enacts changes to sales and use tax rate effective 1 February 2014 (29 January 2014)
- India’s Delhi Tribunal rules on application of Profit Split Method (29 January 2014)
- Italy issues significant tax measures including new step-up opportunities and provisions for Digital Economy companies (29 January 2014)
- Honduras adopts tax reform (28 January 2014)
- South Africa requires VAT registration for nonresidents who supply electronic services (24 January 2014)
- OECD provides an update on BEPS Action Plan (23 January 2014)
- US IRS and Treasury issue Temporary Regulations regarding treatment of certain stock of a foreign corporation under Section 7874 (23 January 2014)
- Puerto Rico’s Governor signs act affecting audited financial statements’ requirement (23 January 2014)
- International tax talk quarterly series with the EY Global Tax Desk Network (11 February)
The first Global Tax Desk webcast of 2014 will focus on recent UK and Switzerland tax proposals, as well as developments from Israel and Italy – all of importance to multinationals operating in those jurisdictions. Our discussion on the UK will center on the country’s recent CFC and Patent Box reforms. Our Swiss discussion will cover the strategic direction of the next corporate tax reform. In addition, we will bring you up to date on tax developments in Israel and Italy. Register here.
- Global Payroll: one year on and closer to reality? (12 February)
Is one global payroll system an achievable goal for global organizations? Or are country-specific or regionally focused models more practical? One year ago, we asked global payroll leaders in multinational organizations to share their views. Their sentiments suggested that while one universal system is a good idea in theory, it is probably not practical. One year later, we asked this question again to see if their opinions changed. An upcoming webcast will discuss the latest global payroll study results, including core challenges, best practices and more. Register here.
- OECD BEPS Action Plan: update and outlook (18 February)
Over the coming weeks, the OECD is planning significant activity with respect to its base erosion and profit shifting (BEPS) action plan. An upcoming webcast will examine the OECD’s progress in relation to the BEPS project and the implications for multinational businesses and will also look at BEPS-related developments around the globe. Areas of focus will include the latest activity with respect to the country-by-country reporting template, hybrid mismatch arrangements, treaty abuse and the digital economy. Register here.
Recently archived webcasts now available on-demand
- Mexico tax reform: VAT certification for multinational corporations with manufacturing operations
Beginning 1 January 2015, Mexican imports covered under a temporary regime will be taxed at the 16% general VAT rate and at the applicable rate under Excise Tax Law provisions. However, under both VAT Law and Excise Tax Law provisions, companies that obtain a "VAT/Excise Tax Certification" may get a credit equivalent to 100% of the applicable VAT or excise tax. A recent webcast covered the progressive benefits, requirements and obligations that Mexican taxpayers should observe and comply with to obtain this certification. Watch it on-demand here.
- Mexico's tax reform package and its impact to the maquiladora industry
The changes included in the Mexican tax reform will likely have a significant tax impact on all multinational companies operating in Mexico’s maquiladora industry. A recent webcast discussed highlights of the final reform as they relate to the maquiladora industry. The webcast also addressed the Rules and Presidential Decree provisions impacting the maquiladora industry that were announced by the National Maquiladora Council (INDEX). Watch it on-demand here.
EY industry, service and issue publications
Mining and Metals
Oil and Gas
- EY - Audit Committee Bulletin: Issue 6
- EY -IASB issues IFRS 14 - interim standard on regulatory deferral accounts