16 May 2014
Americas Tax Center Weekly Roundup
Latest news — Americas
Brazil enacts major tax reform
Brazil has enacted major corporate tax reform (Law 12.973 of 13 May 2014) that is the most significant change to the corporate tax system since the enactment of Decree-Law 1.598 of 26 December 1977. The law differs from the Provisional Measure (PM 627) introduced in November 2013 by eliminating the restrictions on goodwill and making substantial changes to the proposed controlled foreign corporation (CFC) regime included in PM 627. The law is generally effective on 1 January 2015; however, taxpayers may irrevocably elect to implement certain Articles for calendar year 2014, as well as the CFC regime. A Global Tax Alert provides details.
Additional countries issue statement of public support for adoption of OECD’s Common Reporting Standard
On 6 May 2014, a declaration on automatic exchange of information in tax matters was adopted at the meeting of the OECD Council at the Ministerial Level. The declaration broadly affirms the endorsers’ intention to adopt the OECD Standard for Automatic Exchange of Financial Account Information "swiftly, on a reciprocal basis" and calls upon "all financial centers to implement the new single global standard without delay." The declaration was endorsed all 34 OECD countries and 13 additional countries. A Tax Alert has details.
Panama is treated as having an IGA under FATCA
On 2 May 2014, Panama was added to the list of jurisdictions that have reached an "agreement in substance" for the pending Intergovernmental Agreement (IGA) with the US under the Foreign Account Tax Compliance Act (FATCA). Panama’s IGA with the US, although not yet signed, will be treated as being in effect until 31 December 2014, the date by which the IGA must be signed for its in-effect status to continue without interruption. A Tax Alert has details.
US-Chile and other pending treaties stall in US Senate
Last week, US Senator Rand Paul again quashed quick Senate approval of five pending tax treaties, including pending agreements with Chile, Hungary, Luxembourg, Switzerland and a protocol amending the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. The Chilean treaty is of particular interest because it would be the first-ever US tax treaty with Chile. The proposed tax agreements were reported out of the Senate Foreign Relations Committee favorably on 1 April 2014. However, Senator Rand’s opposition will postpone ratification.
EY’s The latest on BEPS as of 12 May 2014
On 7 May 2014, the OECD posted on its website close to 500 pages of comments that had been received on the discussion drafts on hybrid mismatch arrangements, and a week later, it held a public consultation on the hybrid mismanagement discussion drafts. On 19 May, the OECD will hold a public consultation on the discussion draft on transfer pricing documentation and country-by-country reporting. These and other recent developments are highlighted in EY’s biweekly Global Tax Alert on the OECD’s base erosion and profit shifting (BEPS) project.
EY releases first report on 2014 tax risk and controversy survey
Throughout 2014, EY will launch a series of reports on its annual tax risk and controversy survey, supported by a new online benchmarking tool, as well as information graphics, animations and podcasts that focus on the key issues identified. The first report in the series, Bridging the divide, highlights the most significant survey findings and sets the stage for deeper exploration of key topics in subsequent editions. The survey report, based upon responses from 830 tax and finance executives in 25 countries, identified four key areas of risk that are discussed in more detail. For a related upcoming webcast, see below.
Private equity-backed IPOs outperform all other exit routes in Latin America
Private equity-backed initial public offerings (IPOs) in Latin America outperformed the broader public markets and other IPOs in the region by a significant margin over the course of 2013, according to Great expectations: what’s next for Latin American private equity?, EY’s annual Latin American private equity exit study. The report, published on 13 May, underscores that exits via IPOs yielded better returns than the other key route in Latin America – sale to corporates. The report, now in its third year, examines the results and methods of over 107 private equity exits between 2007 and 2013.
Latest Brazil Capital Confidence Barometer now available
Our latest Brazil Capital Confidence Barometerreport shows Brazilian companies are poised for growth: more than half of respondents are confident in both the local and global economies. This confidence is reflected in Brazilian executives’ strategic approach to optimizing capital through operational efficiency, increased margins and cost control. The report discusses the economic outlook, access to capital, and growth strategies.
This week's tax treaty news in the Americas
- Canada and Nigeria: foreign investment protection and promotion agreement signed
- Panama and Israel: free trade agreement negotiations begin
- US and Spain: tax treaty protocol sent to US Senate for ratification
This week's EY Global Tax Alerts
- Brazil enacts tax reform (15 May 2014)
- Austrian Parliament narrows interest definition in response to recent ruling of the Austrian Administrative High Court (14 May 2014)
- Panama is treated as having an IGA under FATCA (13 May 2014)
- Additional countries issue statement of public support for adoption of the OECD’s Common Reporting Standard (13 May 2014)
- The latest on BEPS as of 12 May 2014 (12 May 2014)
- China’s State Administration of Taxation issues views on service fees and management fees (12 May 2014)
- Oman Tax Authority issues new regulations on requirements for tax certificates (12 May 2014)
- Treasury and IRS issue proposed regs redefining ‘acquiring corporation’ for purposes of attributes in corporate asset reorganizations (9 May 2014)
- South Africa issues new VAT rules relating to the exportation of goods
(9 May 2014)
- Australian Treasury releases thin capitalization reforms exposure draft legislation with submissions due 6 June 2014 (8 May 2014)
- New US-Hungary treaty delayed in Senate due to renewed opposition (8 May 2014)
- China issues circular to clarify corporate income tax incentive for Hengqin, Qianhai and Pingtan regions (8 May 2014)
- Internal customs and international trade training: US defense export controls and economic sanctions (21 May)
The next in a series of customs and international trade training webcasts targeted at Canada, Mexico and US personnel will cover Export Controls for Defense Articles and Services / US Economic Sanctions.
- Exploring the Possible: effective global tax data management (21 May)
In an upcoming webcast, leading EY professionals from Tax Performance Advisory will take a closer look at data and the impact that finance transformation will, could and should have on the quality and value of enterprise data coming from SAP, Oracle and other ERP solutions. Tax sensitizing these systems and the data they produce is a key driver of tax function effectiveness. Register here.
- Inter-company effectiveness: forecasting, executing and monitoring intercompany pricing (28 May)
Our upcoming BorderCrossings webcast will address how to achieve operational excellence in the execution of inter-company pricing across the inter-company life cycle (e.g., forecasting, processing, monitoring/adjusting and documenting). The webcast will cover a broad range of common issues facing today’s multinational organizations. Register here.
- 2014 tax risk and controversy survey highlights (5 June)
Our 2014 tax risk and controversy survey found that reputation risk, the OECD BEPS project, complex new national legislation, and more robust tax enforcement worldwide are all putting more pressure on tax function resources, processes and technology. Register for the upcoming webcast to hear highlights from the survey of 830 tax and finance executives in 25 jurisdictions. Register here.
EY industry, service and issue publications
- EY Financial Services Capital Confidence Barometer
- IASB confirms the use of insurance contracts revenue
- EY - FASB lays out topics it will consider for insurance industry accounting
- The DNA of the CIO
- EY CIO - How to become a successful big data CIO
- Big data: changing the way businesses operate
Strategic Growth Markets
- IFRS Developments, Issue 78: IASB prohibits revenue-based depreciation
- EY - IASB confirms the use of insurance contracts revenue