Direct Tax
The OECD and Global Forum on Transparency and Exchange of Information has recently published its report on Beneficial Ownership and Tax Transparency- Implementation and Remaining Challenges. The report delves into the implementation of beneficial ownership requirements within the exchange of information (EOI) standards, with a specific focus on the Transparency and Exchange of Information on Request (EOIR) standard. The report examines the current state of implementation across jurisdictions as evidenced in EOIR and AEOI peer reviews, analyses the results of EOIR peer reviews on effective implementation of beneficial ownership requirements and the remaining challenges, and explores best practices in beneficial ownership transparency. The report proposes potential directions to further strengthen beneficial ownership transparency within the global tax landscape.
This report was prepared by the OECD and Global Forum on Transparency and Exchange of Information for tax purposes to provide the discussions held at the July 2024 G20 meeting of Finance Ministers and Central Bank Governors at the request of the G20 Brazilian Presidency.
Transfer Pricing
UAE: Clarification on the definition of related party transaction2
The Federal Tax Authority (FTA) issued a Corporate Tax Public Clarification on 22 July 2024, clarifying the definition of related parties in case of common ownership and/or control by virtue of the UAE Federal Government or a Local Government.
The clarification explains that Taxable Persons with common ownership of at least 50% or control (either directly or indirectly) through the Federal Government are not related parties.
Nevertheless, the clarification explicitly provides that transactions between entities in the same group structure the government holds will be considered as related parties, and UAE TP provisions shall apply accordingly.
Our Comments
This move will significantly save time and effort for the management in the identification of related party transactions, thereby reducing substantial transfer pricing compliance.
Amendment in Australia's public CBC reporting3
Schedule 4 to the Omnibus Bill implements Australia's public countryby- country reporting (CBCR) regime by amending the Taxation Administration Act 1953 (TAA) to require certain large multinational enterprises to publish selected tax information on a countryby- country (CBC) basis for specified jurisdictions and on either a CBC basis or an aggregated basis for the rest of the world.
The objective of public CBCR is to improve information flows to help the public, including investors, to compare entity tax disclosures to better assess whether an entity's economic presence in a jurisdiction aligns with the amount of tax they pay in that jurisdiction.
Indirect Tax
Vietnam extends VAT reduction till end of 2024
Excerpts from various sources
The Vietnamese government extended the VAT reduction from 10% to 8% until 31 December 2024. However, there is no expansion in the scope of goods and services eligible for the reduced tax rate. Sectors excluded from such reduction are telecommunications, IT, finance, banking, insurance, real estate, metals and prefabricated metal products, refined petroleum, chemical products, and products and services subject to special consumption tax.
The Decree takes effect from 1 July 2024 until 31 December 2024.
Saudi Arabia extends VAT amnesty until 31 December 2024, announces e-invoicing for 13th group of taxpayers
Excerpts from various sources
The Zakat, Tax and Customs Authority (ZATCA) of Saudi Arabia has announced an extension of its amnesty initiative, which waives fines and penalties relating to corporate income tax, withholding tax, VAT, Excise, and real estate transaction tax until 31 December 2024.
However, this amnesty does not cover fines paid before the effective date of the initial amnesty initiative, viz., 1 June 2022, penalties for tax evasion, or fines related to returns due after 1 July 2024. To benefit from the amnesty, taxpayers must register with ZATCA, submit any outstanding tax returns, and either settle their tax liabilities or apply for an installment plan.
Additionally, ZATCA has outlined the requirements for the 13th group of taxpayers who need to comply with the second phase of the e-invoicing system implementation. This phase would apply to taxpayers with VAT-liable revenues exceeding SAR 7 million in 2022 or 2023. The mandate of this group will commence on 1 January 2025.
Canada introduces 3% Digital Services Tax (DST) retrospectively from January 2022
Excerpts from various sources
Canada's Digital Services Tax (DST) was implemented on 28 June 2024. The 3% tax applies to online revenues earned from 1 January 2022.
The following thresholds have been prescribed:
- Total revenue threshold: If a taxpayer or, if applicable, its consolidated group, earns total revenue from all sources of EUR 750,000,000 or more in a fiscal year of the taxpayer or group that ends in a particular calendar year, the taxpayer or group would meet this threshold for the subsequent calendar year.
- Canadian in-scope revenue threshold: If the taxpayer (or the taxpayer's consolidated group, if applicable) earns greater than CAD 20,000,000 of Canadian in-scope revenue in the calendar year. However, if a taxpayer earns more than CAD 10,000,000 of Canadian inscope revenue in the calendar year, it will still be required to register for the DST even if no DST is payable.
Businesses meeting the aforesaid criteria must register with the Canada Revenue Agency (CRA) by 31 January 2025. They are required to file their first DST return and pay any owed taxes by 30 June 2025 to avoid penalties and interest.