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10 December 2024 Global Tax Policy and Controversy Watch | December 2024 edition On 15 November 2024, the Organisation for Economic Co-operation and Development (OECD) held its sixth annual OECD Tax Certainty Day. During the event, the OECD released the 2023 statistics on the mutual agreement procedure (MAP) and advance pricing arrangements (APA), followed by a presentation of the 2023 MAP and APA awards. In 2023, MAP case inventory for new cases (post-2016) decreased by approximately 16% for new transfer pricing cases, while the inventory for new "other" cases increased 2.8% compared with 2022. Following compromises and modifications to the original proposal, the Economic and Financial Affairs Council has adopted the ViDA initiative. The ViDA initiative proposes fundamental changes to the common value-added tax (VAT) rules across the European Union (EU) with three pillars and gradual implementation dates. It aims to ensure VAT compliance, prevent tax fraud and elevate the VAT regulations to the next level, fitting the needs of the digital age. Now that the EU Member States' Finance Ministers have reached a political agreement, further legislative steps can be taken to implement the package. President-elect Donald Trump posted on social media his intention to impose a 25% tariff on all products from Mexico and Canada. Trump also discussed his plan to impose an additional 10% tariff on all Chinese goods, on top of any existing tariffs currently in place. Findings from the 2024 EY Tax and Finance Operations survey illustrate the growing pressure on companies' tax and finance functions. As tax authorities embrace digital transformation at a rapid pace, these functions must keep up with the data and technology needed to comply with ever-increasing government demands. The Rio de Janeiro Leaders' Declaration, released at the conclusion of the 18-19 November 2024 G20 Leaders' Summit, cites progressive taxation as a key tool to reduce domestic inequalities and expresses the intention to work cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed. The declaration reiterates the G20 Leaders' commitment to the swift implementation of Pillars One and Two by all interested jurisdictions. The Australian Parliament has passed legislation to implement in domestic law Pillar Two of the OECD/G20 two-pillar solution, including a 15% global minimum tax and domestic minimum tax (DMT). This reflects a significant milestone in Australia's implementation of the OECD's Pillar Two global minimum tax solution. In-scope groups need to prepare for the financial reporting and compliance obligations that will be required as a result of this new law. The recent European Union Regulation on deforestation-free products includes a possible postponement and a new "no risk" category for countries. For these changes to enter into force, the agreed text will have to be endorsed by both European Union Council and European Parliament. The Draft Decree, part of an ongoing broader tax reform, is aimed at significantly amending the Italian corporate income tax framework by specifically focusing on the elimination of existing mismatches between accounting and tax values as well as mitigating cases of tax arbitrage. The Draft Decree intends to simplify and rationalize the tax treatment of corporate reorganizations with regard to (i) tax step-up regimes, (ii) tax loss carryforwards, and (iii) tax-free regimes for corporate reorganizations. The Draft Decree, which may become final and effective by the end of the year, provides for certain provisions to apply retroactively as of 1 January 2024. The Italian government has proposed to remove the revenue thresholds that currently apply to the Digital Services Tax so that any business generating revenues from digital services in Italy will automatically be subject to the tax. The new reporting obligations are expected to be effective from 1 January 2025. The proposal is currently under parliamentary discussion and may be subject to changes. The Kenya Tax Appeals Tribunal has ruled that the Kenya Revenue Authority properly changed a taxpayer's transfer pricing (TP) method on intercompany transactions from the Comparable Uncontrolled Price method to the Resale Price Method. As of 1 January 2025, local Latvian companies must issue structured e-invoices to Latvian budgetary institutions. The e-invoice mandate will extend to all business-to-business transactions as of 1 January 2026. A reporting deadline is approaching for New Zealand platform operators, who will need to submit certain information to Inland Revenue by 7 February 2025. Specifically, legislation enacted in New Zealand in March 2023 to implement the information reporting and exchange framework developed by the OECD requires platform operators based in New Zealand to collect information from 1 January 2024 on sellers that receive consideration from relevant services through digital platforms and report annually to Inland Revenue. The Swiss Federal Supreme Court has held that a Danish-resident special credit institution qualified as the beneficial owner of interest income from Swiss government bonds linked to cross-currency swaps, which should in principle mean the entity was entitled to relief from withholding tax in Switzerland. The case has been remanded to the lower court to decide whether the taxpayer's withholding tax refund request must be denied as contrary to the Switzerland-Denmark double tax treaty.
Document ID: 2024-2246 | ||||
