A round up of other news this week.
As widely reported this week, leaked documents suggest that European Finance Ministers will be considering two new taxing measures at an informal meeting next week. The first, proposed by the Estonian presidency, would introduce a ‘virtual permanent establishment’ concept, where the income of multinationals would be taxed in the country where the value is created, rather than on the basis of tax residency. The second, proposed by France and supported by Germany, Spain and Italy, would tax tech companies on their revenues, at a rate of 2 to 5 percent. A full story in Tax Matters Digest will follow when the proposals are launched.
In July 2015, the Court of Appeal in BT Pension Scheme v HM Revenue and Customs, the test case for the Foreign Income Dividend (FID) and Tax Credit Group Litigation referred the case to the Court of Justice of the European Union (CJEU). The substantive point of law on whether or not pension funds should have been able to recover dividend tax credits on FIDs was referred. The CJEU issued a judgment on 14 September 2017 which ruled that shareholders not subject to income tax in respect of dividends that have received foreign income dividends, should have a remedy which allows payment of a tax credit. This is a positive development which confirms there is a breach of EU law. A further update in respect to potential next steps will be provided next week once the decision has been considered in detail.
HMRC’s Executive Chair, Edward Troup, has announced his plans to retire.
HMRC have published a technical consultation on draft legislation to preserve the effect of four Extra-statutory concessions on directors’ fees, professional remuneration, financial loss allowance and payments from medical committees to members.
HMRC have published proposed secondary and tertiary legislation on Income Tax and VAT affecting Making Tax Digital for businesses. The consultation will be open until 10 November 2017.
The OECD has published its report, Tax Policy Reforms 2017, which sets out its findings on how countries are implementing tax policy reforms as part of wider strategies to boost growth, reduce inequalities and drive behavioural change.
The Landfill Disposals Tax (Wales) Act 2017 has received Royal Assent. The Act provides for a devolved Landfill Disposals Tax, which will replace Landfill Tax in Wales from April 2018.
The Tonnage Tax training requirement has been amended with effect from 1 October 2017 by The Tonnage Tax (Training Requirement) (Amendment etc.) Regulations 2017. The change made is to increase payments in lieu of training (PILOTs) in line with UK inflation. A company which is unable to provide the required training may propose to make PILOTs. The new Regulations increase the PILOT from £1,236 to £1,259 per calendar month per trainee with effect from 1 October 2017. There are penalties for non-compliance in the form of a 50 percent or - for repeated non-compliance – 100 percent increase in the basic rate of PILOTs payable in following periods. The Regulations also increase the basic rate from £1,151 to £1,172 per calendar month per trainee with effect from 1 October 2017.
KPMG in the UK’s Vice Chair Melanie Richards responds to the OECD’s Education at a Glance 2017 Report. The comments highlight the value of apprenticeships in supporting skills development and employment.