Luxembourg Tax News 2015-25

Luxembourg Tax News 2015-25

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BEPS | EU Tax Transparency – Staying informed

Update July – 12 October 2015

In order to help you stay informed and ahead of the curve on preparing for the potential tax landscape changes, we have summarized below some of the most important tax developments that have happened since the release of our last newsletter, i.e. between July and 12 October, at the OECD, EU or country level, in the area of tax transparency and the fight against tax avoidance.

 

OECD BEPS Action Plan - Release of the final deliverables

On 5 October 2015, the OECD released the final package of measures for a coordinated international approach to the reform of the international tax system under the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. For the majority of BEPS actions, these documents mark the end of the discussion and recommendation phase, and the start of the implementation and practical delivery phase.

All 13 reports, together with a plan for the follow-up work and a timetable for their implementation, were presented at the G20 Finance Ministers’ meeting on 8 October 2015 in Lima. The G20 Finance Ministers endorsed the final package of BEPS measures and renewed a commitment for rapid, widespread and consistent implementation of the measures. The package will now be submitted to the G20 Leaders for discussion and action at their meeting on 15-16 November 2015 in Antalya.

Below we have listed the 15 different actions of the BEPS Action Plan. Click on each of the actions to visit the corresponding report on the OECD website.

15 Actions of the BEPS Action Plan

  • Action 1 - Address the tax challenges of the digital economy
  • Action 2 - Neutralise the effects of hybrid mismatch arrangements
  • Action 3 - Strengthen CFC rules
  • Action 4 - Limit base erosion via interest deductions and other financial payments
  • Action 5 - Counter harmful tax practices more effectively, taking into account transparency and substance
  • Action 6 - Prevent treaty abuse
  • Action 7 - Prevent the artificial avoidance of PE status
  • Actions 8, 9 and 10 - Assure that transfer pricing outcomes are in line with value creation
  • Action 11 - Establish methodologies to collect and analyse data on BEPS and the actions to address it
  • Action 12 - Require taxpayers to disclose their aggressive tax planning arrangements
  • Action 13 - Re-examine transfer pricing documentation
  • Action 14 - Make dispute resolution mechanisms more effective
  • Action 15 - Develop a multilateral instrument

 

First reactions

To help you start assessing the potential BEPS impacts, read the KPMG action-by-action observations.

For specific initial country impressions, read here about the Netherlands, IrelandAustralia, China (PDF, 1.24 MB) and the UK.

 

G20 calls for a global forum to implement the BEPS Action Plan

For the BEPS implementation phase, following the G20 and OECD call for increased inclusiveness, a new framework for monitoring BEPS will be created, with all interested countries, including countries outside the G20, particularly developing economies, participating on an equal footing.

The OECD will present a plan for the creation of such a body for implementing BEPS at the G20 Finance Ministers’ meeting in February 2016.

 

BEPS measures - Local implementation phase: watch out!

BEPS Action 13 – Transfer Pricing Documentation and Country-by-Country Reporting

Several countries, listed below, recently indicated that they envisage implementing or have implemented Country-by-Country (CbC) reporting and other transfer pricing disclosure requirements based on Action 13 of the BEPS Action Plan.

 

 

France

France has been waiting for the release of the final BEPS reports before implementing CbC reporting and has now officially announced to issue draft legislation in this respect before year end. Read more (PDF, 141 KB).

UK

On 5 October 2015, the HM Revenue & Customs initiated a technical consultation on CbC reporting which will be opened until mid-November.

Denmark 

The Danish government issued on 18 September 2015 a legislative proposal to provide measures that would enhance the Danish transfer pricing documentation requirements and include CbC reporting, all of which is generally in line with the OECD model.Read more.

Australia

A “country-by-country” bill was introduced into Parliament on 16 September 2015 as part of a larger package of legislation, the Combating Multinational Tax Avoidance Bill 2015.The bill includes CbC, master file, and local file requirements consistent with the OECD Action 13. In addition, the bill provides for increased administrative tax penalties under the new anti-avoidance provision for multinational entities that seek to avoid the attribution of business profits to Australia by avoiding a taxable presence in Australia, and for transfer pricing adjustments. Read more.

The Netherlands

The Dutch government presented on 15 September 2015 its main plans for 2016 which include CbC reporting and more stringent documentation requirements under the form of a master file and a local file, in line with the OECD model, with stricter filing deadlines than currently is the case.    Read more.

Poland

Poland’s lower house on 11 September 2015 passed a bill containing amendments to the tax laws, including changes to the transfer pricing rules and introducing CbC reporting, local, and master file requirements. Read more (PDF, 308 KB).

Mexico

In the Mexican government’s 2016 federal budget, presented on 8 September 2015, there are proposals that would expand the transfer pricing documentation requirements under the form of a master file and a local file, and introduce CbC reporting. Read more.

South Korea

South Korea’s Ministry of Strategy and Finance released on 6 August 2015 draft legislation that would require taxpayers, subject to the Korean transfer pricing rules, to submit both a master file and a local file containing information on related-party transactions. Although CbC reporting is currently not part of the draft legislation, it can be anticipated that CbC could eventually be adopted in Korea once other countries, especially certain trading partners, would do so.           Read more.

Spain

Multinational corporations, foreign-owned Spanish subsidiaries, and permanent establishments will be subject to stricter reporting requirements in Spain following the entry into force in July of a decree outlining requirements to provide country-by country reports of a group's entire worldwide activities and other transfer pricing documentation under the form of a master file and a local file to the Spanish tax authorities.

More information can be found in our previous BEPS newsletter.

 

 

 

 

 

Switzerland / BEPS "go ahead"

The Swiss Federal Council has given the Swiss delegation to the OECD the “go ahead” to accept the final BEPS reports.

This action indicates that Switzerland could implement and apply the new standards in the near future, although the timing remains uncertain. For CbC reporting, however, it is expected to cover 2017 as its first year, i.e. one year later than initially discussed.

Read more on the KPMG blog

 

UK / Consultation on tax transparency measures

In July 2015, the UK government launched a consultation document (PDF, 506 KB) with proposals to introduce a legislative requirement for large businesses to publish their tax strategy as it relates to or affects UK taxation. 

 

EU - Tax transparency

EU agreement on mandatory exchange of information on cross-border tax rulings

EU finance ministers on 6 October 2015 agreed to introduce the automatic exchange of information on cross-border tax rulings. Read more in our newsletter on this subject.

 

Common Consolidated Corporate Tax Base

On 8 October 2015 the EU Commission launched a public consultation to help identify the key measures for inclusion in the re-launch of the proposal for a Common Consolidated Corporate Tax Base. Read more

 

For further information, please do not hesitate to contact us.

 

 

  

 

 

 

Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

 

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