2 May 2014
Americas Tax Center Weekly Roundup
Latest news — Americas
Canadian Federal Court of Appeal interprets 95(6)(b) as a status manipulation rule
On 23 April 2014, the Canadian Federal Court of Appeal released its much-anticipated decision and reasons in The Queen v Lehigh Cement Limited et al. The decision upheld the result of the Tax Court of Canada, which had allowed the taxpayers’ appeals, but for very different reasons. The dispute involved the establishment of a nonresident finance company for the purpose of making a loan to a nonresident sister corporation of the Canadian corporate taxpayers, which had borrowed money to fund the investment in the finance company. The Minister had applied the specific anti-avoidance rule in paragraph 95(6)(b) of the Income Tax Act to deny the deductions in computing taxable income that would normally be available in respect of dividends from a "foreign affiliate" paid out of the affiliate’s "exempt surplus." A Tax Alert has details.
Bahamas introduces Value-Added Tax
The Bahamian Government has published the draft Value-Added Tax (VAT) Bill and Regulations. If approved, the VAT will take effect on 1 July 2014. From the draft VAT Bill, it would appear that nonresident businesses will need to register for VAT in the Bahamas if they supply telecommunication services and electronic commerce to persons resident or located in the Bahamas. A Tax Alert has details.
Specific tax on incoming international telephone calls ending in El Salvador ruled unconstitutional
The Salvadoran Supreme Court of Justice (SCJ) has ruled that the Incoming International Telephone Calls Ending in El Salvador Specific Tax Law is unconstitutional. The Law created a specific tax of US$0.04 per minute, which is levied on incoming international calls ending in El Salvador that go through a duly authorized operator or concessionaire of a public telephone service. The tax also applies to outgoing collect calls made from El Salvador. The SCJ’s ruling that the tax is unconstitutional is final and cannot be appealed. A Tax Alert has details.
New US Tax Controversy and Risk Management Review
A new EY quarterly newsletter reports on recent US tax developments and news pertinent to both US and multinational companies. This first issue covers the new US IRS Large Business & International (LB&I) Information Document Request (IDR) process, LB&I’s new "Roadmap" for transfer pricing audits, the use of statistical sampling for mitigating tax risk, and more.
This week's tax treaty news in the Americas
- Bahamas and US: FATCA agreement agreed in principle
- Barbados and Singapore: tax treaty enters into force
- Brazil and France: social security agreement ratified by France
- Colombia and India: tax treaty ratified by Colombia
- Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua: second round of negotiations held on Central American Customs Union
- Mexico and Belgium: Mexican Senate approves protocol to tax treaty
- Mexico and Malta: Mexican Senate approves tax treaty
- Mexico and United Arab Emirates: Mexican Senate approves tax treaty
- Paraguay and Spain: tax treaty negotiations held
- Uruguay and United Arab Emirates: Uruguay express intention to negotiate tax treaty
This week's EY Global Tax Alerts
- Germany’s highest Tax Court suggests that interest limitation rule may be unconstitutional and grants suspension of proceedings (29 April 2014)
- Norway issues regulations on exemptions to the new interest deduction limitation rules (29 April 2014)
- Luxembourg and Mauritius sign new Protocol (29 April 2014)
- The Bahamas introduces Value-Added Tax (28 April 2014)
- Slovakia introduces "white list" affecting withholding tax on cross-border payments (28 April 2014)
- The latest on BEPS as of 28 April 2014 (28 April 2014)
- Italian Government reduces IRAP rate and enacts other tax measures (28 April 2014)
- Guernsey and Mauritius sign tax treaty (25 April 2014)
- Costa Rica Taxpayers required to correctly register their tax domicile (24 April 2014)
- Spain-UK tax treaty will enter into force on 12 June 2014 (24 April 2014)
- Specific tax on incoming international telephone calls ending in El Salvador ruled unconstitutional (24 April 2014)
Dissecting disputes over the OECD arm’s-length principle (13 May)
Differences in the treatment of the OECD arm’s-length principle can lead to financially significant, complex and time consuming multi-jurisdictional disputes between national tax administrators and businesses. The next quarterly "International tax talk" webcast will focus exclusively on the myriad issues that confront businesses facing such a scenario. Register here.
Mexico tax reform: Decision time! Upcoming deadlines for elections and compliance (15 May)
As a result of the 2014 Mexico tax reform, many taxpayers now face important decisions and deadlines to maintain certain benefits available in the past. Companies will need to make elections and comply with new rules, primarily regarding maquiladora operations in Mexico. An upcoming webcast will discuss what actions may be needed. Register here.
Recently archived webcasts now available on-demand
International tax reform developments and outlook
A recent BorderCrossings webcast shared information and insights on international tax reform proposals in the US and how the OECD’s Base Erosion and Profit Shifting (BEPS) project is changing the global international tax policy landscape. To learn how these proposals may affect your global tax position in the years ahead, access the webcast on-demand here.
2014 EY global transfer pricing survey
A recent webcast shared predictions and insights from a survey of 2,000 EY transfer pricing professionals around the world. It discussed how transfer pricing trends, issues and events worldwide could affect companies’ global compliance, controversy and planning in 2014. Watch it on-demand here.
EY industry, service and issue publications
Mining and Metals