28 February 2014
Americas Tax Center Weekly Roundup
Latest news — Americas
Brazil issues formal opinion on remuneration of services rendered by foreign companies
The Brazilian Federal Revenue Attorney General’s Office has recently published a formal Opinion, ratifying the Superior Court of Justice decision that certain payments for services without transfer of know-how made by Brazilian residents to residents of jurisdictions with which Brazil has entered into a Double Tax Treaty should not be subject to withholding tax. As a result, taxpayers should conduct a case-by-case analysis of service payments made from Brazil to residents in treaty jurisdictions to determine whether the withholding tax on service payments can be mitigated. A Tax Alert has details.
Canadian federal budget introduces new international tax measures
The Canadian federal budget tabled on 11 February 2014 includes a number of measures targeting certain specific elements of Canada’s international tax system including insurance, offshore regulated banks, back-to-back loans and immigration trusts. The budget also announces new public consultations on a broad range of international tax issues and confirms the government’s intention to proceed with certain previously announced reforms. A Tax Alert has details.
Comprehensive US tax reform proposal released
The Chairman of the primary US Congressional tax-writing committee (House Ways and Means Committee) has released his long-anticipated tax reform proposal. The plan would reform the US corporate, individual and international tax regimes. Among other changes, the plan would move the US to a largely territorial tax system with a 95% exemption for dividends paid by a foreign corporation to a US corporate shareholder that owns 10% or more of the foreign corporation. A Tax Alert has details. Additional Tax Alerts are pending on international and other provisions in the plan. An EY Thought Center webcast, on 6 March 2014, will discuss the Chairman's proposal and its effects on businesses. Register here.
OECD releases Common Reporting Standard
On 13 February 2014, the OECD released a model Competent Authority Agreement (CAA) and Common Reporting Standard (CRS) designed to create a global standard for the automatic exchange of financial account information. The publication of the CAA and CRS is a significant structural step in governments’ efforts to improve cross-border tax compliance. It follows a raft of tax compliance legislation such as the US Foreign Account Tax Compliance Act (FATCA) and active campaigns of voluntary disclosures and legal procedures, most recently in Germany and Italy. A Tax Alert has details .
G20 reiterates support for OECD BEPS project, endorses OECD Common Reporting Standard
On 23 February 2014, the Finance Ministers and Central Bank Governors of the G20 issued a communiqué expressing continued full support for the OECD and G20 Base Erosion and Profit Shifting (BEPS) Action Plan, stating that delivery of measures to address BEPS will begin by the G20 Leaders summit in November 2014. The communiqué also endorsed the OECD’s Common Reporting Standard for automatic exchange of information regarding financial accounts. A Tax Alert has details.
Related party R&D/design costs dutiable in Canada
In one of the most important customs cases in years, the Canadian International Trade Tribunal has just confirmed an aggressive interpretation by the Canada Border Services Agency concerning additions to the transaction value for inter-company payments outside of the invoice amount or transfer price relating to design and development costs allocated to the importer. A Tax Alert has details.
Tax treaty between Peru and Mexico enters into force
The tax treaty between Peru and Mexico entered into force on 19 February 2014. The tax treaty was approved on 28 December 2013 by the Peruvian Congress and ratified on 16 January 2014 by the President. Under Article 28 of the tax treaty, its provisions will be effective beginning the first day of January in the calendar year following that in which it enters into force. Therefore, the tax treaty between Peru and Mexico will be effective on 1 January 2015. A Tax Alert is available.
US issues FATCA regulations – Tax Alert now available
As we reported in last week’s Americas Tax Center Roundup, the US released proposed and temporary regulations providing further guidance under FATCA and "conforming" the requirements in chapters 3 and 61 of the Internal Revenue Code (i.e., the Section 1441 rules applicable to withholding and reporting on payments made to nonresident aliens and the Form 1099 reporting and backup withholding requirements imposed on payments to US persons) with the requirements of FATCA. A Tax Alert with details is now available.
OECD updates schedule for stakeholder input in BEPS project
On 20 February 2014, the OECD released an updated timetable for its work on the areas of the BEPS Action Plan for which outputs are expected by September 2014. The new timetable includes specific dates for publication of discussion drafts, deadlines for comment and public consultation sessions. However, the OECD notes that the dates are subject to change. A Tax Alert has details.
Puerto Rico's State Department will revoke incorporation certificates of non-filers
Puerto Rico’s State Department has announced that it will be notifying corporations that have not filed their Annual Corporation Reports for two consecutive years of its intention to revoke their incorporation certificates or authorization to do business in Puerto Rico. The Department indicated that it will not impose fines on corporations that decide to comply with the annual filing requirement for prior years. Corporations must file their Annual Corporation Report for prior years on or before 15 April 2014 to avoid paying the fines applicable to those years. A Tax Alert has details .
Québec budget 2014–15 tabled
Quebec’s Finance Minister tabled the province’s fiscal 2014-2015 budget on 20 February 2014. The budget contains no new taxes and no tax increases with the exception of rate hikes for childcare services. It includes some new initiatives to fight tax evasion and unreported work but few new tax measures. A Tax Alert discusses the budget and certain new tax measures announced in October 2013.
This week's tax treaty news in the Americas
- Chile and Vietnam: free trade agreement enters into force
- Venezuela and Palestinian Autonomous Areas: tax treaty negotiations held
This week’s EY Global Tax Alerts
- Puerto Rico’s State Department will revoke incorporation certificates for failure to file Annual Corporation Reports (26 February 2014)
- G20 reiterates support for OECD BEPS project, endorses OECD Common Reporting Standard (26 February 2014)
- Cambodia releases circular on treatment of interest expenses for enterprises (25 February 2014)
- US IRS and Treasury issue proposed and temporary regulations under FATCA, as well as "conforming regulations" (25 February 2014)
- Brazil’s Federal Revenue Attorney General’s Office issues formal opinion on remuneration of services rendered by foreign companies (25 February 2014)
- Tax treaty between Peru and Mexico enters into force (25 February 2014)
- Canada’s federal budget introduces new international tax measures (25 February 2014)
- Swedish Supreme Administrative Court rules on the distinction between debt and equity for a convertible bond (21 February 2014)
- Swiss Federal Tax Administration issues clarifications on taxation of Swiss principal companies (21 February 2014)
- OECD updates schedule for stakeholder input in BEPS project (21 February 2014)
- Vietnam issues regulations on foreign contractor taxation (20 February 2014)
- UAE-Kazakhstan Income Tax Treaty enters into force (20 February 2014)
- OECD releases Common Reporting Standard (20 February 2014)
- Chairman Camp’s comprehensive US tax reform proposal: what businesses need to know (6 March)
US House Ways and Means Committee Chairman Dave Camp (R-MI) has released his long-anticipated tax reform proposal. The plan would reform the US corporate, individual and international tax regimes. Among other changes, the plan would move the US to a largely territorial tax system with a 95% exemption for dividends paid by a foreign corporation to a US corporate shareholder that owns 10% or more of the foreign corporation. An upcoming webcast will discuss the Camp proposal and its effects on businesses. Register here.
Recently archived webcast now available on-demand
- Internal customs and international trade training: Preferential trade agreements
A previous customs and international trade training webcast targeted at Canada, Mexico and US personnel covered the basic rules for applying trade agreement processes to obtain duty preference, including identifying benefits and compliance issues by assessing rules of origin, certification process, customs procedures and audit.
EY industry, service and issue publications
- Enhanced Prudential Standards for FBOs (Feb. 2014)
- EY - IASB sets 2018 effective date for IFRS 9
- EY- Matching adjustment for equity release assets
- EY EMEIA Financial Services Sustainability Report 2013
- ESG and impact investing: an emerging business driver
Oil and Gas
Power and Utilities
- EY Rethinking service costs
- Plug in - February 2014
- Power transactions and trends: 2013 review and 2014 outlook
- Creating an agile control environment
- EY CIO - Born to be digital 2014
- EY CIO - How to use cybersecurity to generate business value
Governance and Reporting
- EY - IASB completes redeliberations on expected credit loss model; sets 2018 effective date
- IFRS Developments, Issue 74: IASB completes redeliberations on expected credit loss model; sets 2018 effective date