BDO Corporate Tax News

• Argentina: A decree published on 11 July 2024 removes five countries (Benin, Burkina Faso, Papua New Guinea, Rwanda and Vietnam) from Argentina’s list of noncooperative jurisdictions as these countries are in a position to engage in the exchange of information.
• Australia: The tax authorities released a tax determination on 3 July 2024 that explains the application of particular aspects of the "liable entity" and "hybrid payer" definitions in the hybrid mismatch rules. The hybrid mismatch rules are designed to prevent multinational enterprises from exploiting differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions.
• Austria: The bill implementing the EU public country-by-country reporting directive (CbCR) was published in the official gazette on 17 July 2024 and became effective on the following day.
• Bahrain: The Central Bank of Kuwait issued a letter dated 12 June 2024 to banks in Kuwait, attaching a notification from the Ministry of Finance (MOF) regarding the foreign account tax compliance act (FATCA) and common reporting standard (CRS) reporting deadlines. The MOF notification postpones the deadline for filing the CRS reports for 2022 and 2023 until further notice and requires the FATCA and CRS reports for 2022 and 2023 to be ready for filing with the MOF once revised reporting deadlines are issued. No specific date has been determined for the filing of the CRS reports. The original CRS and FATCA reporting deadlines for 2023 were 31 May 2024 and 30 August 2024, respectively. The postponement of the reporting deadlines is due to the ongoing maintenance of the MOF’s reporting systems. The MOF is expected to issue further notifications to confirm revised deadlines.
• Bermuda: A bill (Income Tax Agency Bill 2024) tabled on 12 July 2024 would create a Corporate Income Tax Agency (CITA) to administer the Bermuda corporate income tax regime. The Corporate Income Tax Act enacted in December 2023 created a framework for Bermuda to impose a 15% corporate income tax that applies to Bermuda businesses that are part of multinational groups with annual revenue of EUR 750 million or more. According to a press release issued by the government, the structure of the agency will help to ensure effective governance and oversight.
• Colombia: In a ruling issued on 8 July 1014, the tax authorities confirm that foreign branches in Colombia engaging in transactions using a functional currency other than the Colombian peso must be recognised in pesos for Colombian tax purposes.
• Denmark: Effective 1 July 2024, Danish payers of royalty payments to nonresidents (both companies and individuals) must notify the Danish tax authorities that the payment has been made unless the recipient is exempt from tax under the EU Interest and Royalties Directive. The notification must be made by the last banking day in the month the royalty payment was made or accrued by a large company, and no later than the 10th day of the month following the payment or accrual of the royalty for small companies.
• Estonia: The new government has proposed to introduce a 2% corporate income tax on profits of companies as from 1 January 2026.
• European Union: The European Commission has launched a consultation on a draft implementing regulation that includes a common machine readable template and electronic reporting format for country-by-country (CbC) reporting. The CbC reporting directive requires large multinationals operating in more than one EU member state to disclose information on the corporate taxes they pay, in the form of annual CbC reports. The consultation runs from 1-29 August 2024.

The European Commission has initiated an infringement procedure against Germany, Hungary, Poland and Romania for failing to exchange timely information on income earned by individuals and companies through online platforms based on DAC7.

• Fiji: Fiji has joined the Inclusive Framework on BEPS, making it the 144th jurisdiction to commit to participating in the two-pillar solution on addressing the tax challenges arising from the digitalisation of the economy.
• Gibraltar: The draft budget for 2024/25, presented on 1 July 2024, includes a proposal to increase the corporate income tax rate from 12.5% to 15%.
• Hungary: The European Commission has closed an infringement procedure against Hungary for failure to transpose certain aspects of the EU Anti-Tax Avoidance Directive (e.g., regarding associated enterprises and controlled foreign companies) into its domestic law. The infringement procedure was first announced on 14 July 2023.
• International: The G20 Finance Ministers and Central Bank Governors released a communiqué on 26 July 2024 in which it acknowledges the considerable progress made on implementation of the Pillar Two GloBE and encourages members of the Inclusive Framework to finalise the negotiations on a final package on Pillar One by resolving the outstanding issues on a framework for Amount B, which will allow the Multilateral Convention to be finalised and opened for signing. The group also reiterated its commitment to tax transparency.
• Ireland: In an ebrief released on 6 August 2024, the tax authorities announced that the Tax and Duty Manual - Guide to Exchange of Information under DTAs - TIEAs & UE Directive 77-799 has been updated to clarify the automatic exchange of information on digital platform operators under DAC7.

In an ebrief published 12 July, the tax authorities confirmed the increase in the R&D tax credit from 25% to 30% of qualifying R&D expenditure, an increase in the credit payable in the first year from EUR 25,000 to EUR 30,000 and the introduction of a prefiling notification requirement, as introduced in the Finance Act 2023 (for prior coverage, see the article in the October 2023 issue of Corporate Tax News).

• Kazakhstan: A draft of a new tax code, published on 24 July 2024, includes new tax rates for designated entities: a 10% rate for companies engaged in manufacturing activities, a 25% rate for banks and a 3%-6% rate for agricultural producers. The rate would remain at 20% for all other entities. A new 5% withholding tax rate on dividends is proposed for nonresidents holding at least 25% of a Kazak company. The existing 10% withholding tax on dividends paid by an entity whose shares have been held for at least three years would be abolished but the withholding tax exemption for dividends and interest paid on listed securities and that on capital gains derived from the disposition of shares of Kazakh companies where the shares are held for at least three years would be eliminated.

On 1 January 2025, the tax rate on the mining of uranium will increase from 6% to 9%, with the higher rate applying until 1 January 2026.

• Lithuania: The corporate income tax rate will increase from 15% to 16% on 1 January 2025.

On 18 June, the parliament announced it had approved a one-year extension of a temporary windfall levy on the net interest income of banks so that the tax will now have to be paid for 2025. Revenue from the windfall tax will be used in part to fund investment in the military.

• Luxembourg: The Minister of Finance presented a bill to parliament on 17 July 2024 that includes several provisions affecting companies, including a proposed reduction in the corporate income tax rate from 17% to 16% for income exceeding EUR 200,000 (the rate for smaller businesses with income up to EUR 175,000 would drop from 15% to 14%), the introduction of a “group ratio” under the interest deduction limitation rules and a decrease in the threshold from 50% to 25% for a company to be considered a related company. If approved, the measures would apply as from 1 January 2025.
• Moldova: Moldova has joined the Inclusive Framework on BEPS, making it the 145th jurisdiction to commit to participating in the two-pillar solution on addressing the tax challenges arising from the digitalisation of the economy.
• OECD: Accession discussions have been opened with Indonesia and Thailand, the first two Southeast Asian countries to be considered for OECD membership. The Secretary-General of the OECD Council will prepare a “draft accession roadmap” for the technical review process, which will be used to base recommendations for areas of needed reform, etc. to align the countries’ legislation, policies and practices with those of the OECD. Following the review, OECD members will make a unanimous decision on whether to extend an invitation to Indonesia and Thailand to join the organisation. There currently are 38 OECD member countries.
• United Kingdom: The tax authorities published guidance on the reporting rules for digital platforms on 1 August 2024. As from 1 January 2024, digital platforms in the UK must comply with the OECD Model Reporting Rules for Digital Platforms and technical guidance published by HMRC provides additional details on the reporting obligation. The new guidance sets out the information that must be collected, as well as diligence obligations and deadlines. Penalties are imposed for noncompliance
• United States: The Financial Crimes Enforcement Network (FinCEN) has issued updated frequently asked questions on the beneficial ownership information reporting rule and beneficial ownership information access and safeguards rule. Newly added FAQs provide information on entities that are disregarded for U.S. tax purposes.