Analysis of Tax Developments Worldwide
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www.pwc.com/its International Tax News Edition 78 August 2019 Welcome Keeping up with the constant flow of Featured articles international tax developments worldwide can be a real challenge for multinational companies. International Tax News is a monthly publication that offers updates and analysis on developments taking place around the world, authored by specialists in PwC’s global international tax network. We hope that you will find this publication helpful, and look forward to your comments. Bernard Moens Global Leader International Tax Services Network T: +1 703 362 7644 E: [email protected] In this issue Legislation Administrative Judicial EU/OECD Treaties Legislation Argentina Argentina approves tax regime for Among others, the following tax benefits knowledge-based activities apply to the extent that taxpayers comply with certain requirements: Law No. 27,506, published on June • 15% reduced corporate income tax rate 10, enacted a new regime promoting applicable to fiscal years beginning on or knowledge-based activities. The regime’s after January 1, 2020 main tax benefits include a reduced • executing tax stability agreements with federal corporate income tax rate of 15% and a tax authorities providing that the federal tax tax stability agreement. The new regime burden on income from Promoted Activities cannot increase until December 31, 2029 replaces the existing regime, which was • ability to claim withholding taxes, VAT limited to the software industry, and withholding exemptions, and reduction in will be effective from January 1, 2020 social security contributions through December 31, 2029. Multinational entities engaged in Promoted Activities should revisit their Argentinian operations in order to The new regime aims to encourage the creation, benefit from the new regime. The regime promotes design, production, and implementation/adaptation Argentina as a jurisdiction for establishing regional of products and services related to, among others, shared service centers. the following ‘Promoted Activities’: For more information, see our PwC Insight. • software, computing, and digital services • audiovisual production and post- production activities PwC observation: • certain scientific and engineering activities • geological and prospecting services Expected regulations may provide additional • export of professional services guidance on the: • activities related to the industrial sector using ‘4.0 technologies.’ • types of activities that qualify as Promoted Activities • registration process mechanism for making contributions to finance the regime (3% and 1.5% on tax savings obtained, as described above) Luis Maximo Vargas Jose Leiman Maria Bel New York New York New York T: + 1 646 471 0582 T: + 1 305 381 7616 T: + 1 646 471 1268 E: [email protected] E: [email protected] E: [email protected] France France enacts DST and partially Services within the tax’s scope delays corporate tax rate reduction The digital tax applies to the following services: The French Parliament on July 11 passed 1. the provision of a digital interface by means a tax on digital services by large internet of electronic communications, allowing users and technology providers and partially to contact and interact with other users, postponed the corporate income tax rate particularly for the purpose of selling goods or reduction initially intended to apply as of providing services directly among such users January 1, 2019. (such as online marketplaces, dating services, and app stores). The law was published in the Official French legal 2. services to advertisers or their agents, aimed Gazette on July 25, 2019. The new 3% digital tax at placing targeted advertising messages on a applies to companies providing certain digital digital interface based on the interface user’s services in France with global annual revenue data collected or generated through the use exceeding EUR 750M and revenue in France of such interface. In particular, these services exceeding EUR 25M. The tax is based on the include the purchase, storage, and distribution amount the taxpayer collects as consideration of advertising messages, advertising control, for taxable services provided in France as of and performance measurement, as well January 1, 2019, excluding VAT. The law also as services for managing and transmitting includes a provision postponing the decrease user data. of the corporate income tax rate from 33 1/3% to 31% for companies or tax groups with global For more information, see our PwC Insight. revenue in excess of EUR 250M. The US and France, on August 27, agreed that once an OECD resolution is reached on taxing the digital Technology and internet services providers economy, France would issue a tax credit to US operating in France and with French corporations that are subject to the French DST. customers should immediately consider the impact of the digital tax, its reporting and filing requirements, and potential domestic and EU challenges. Guillaume Barbier Guillaume Glon Emmanuel Picq United States France France T: +1 347 276 7441 T: +33 156 574 072 T: +33 156 574 969 E: [email protected] E: [email protected] E: [email protected] Hungary Significant changes in the Hungarian Notably, the implemented provisions closely The implemented provisions set forth the corporate income tax legislation follow ATAD II’s rules with respect to the scope of mandatory automatic exchange of information PwC observation: hybrid mismatch anti-avoidance provisions and with respect to certain cross-border arrangements tax residency mismatches. The new rules do not involving either more than one EU member state The latest legislative changes are of great A number of significant changes include provisions on reverse hybrid mismatches, or a member state and a third country and aim to significance, as they intend to meet EU were enacted on July 23, 2019 to as they are only expected to be incorporated into strengthen tax transparency in this respect and law harmonization measures and provide the Hungarian corporate income tax Hungarian legislation when the corresponding to fight against aggressive tax planning. In this more favorable conditions for existing (CIT) legislation. deadline of December 31, 2021 approaches. respect, the new rules introduce an obligation entities operating under a group tax regime. for ‘intermediaries’ to disclose cross-border Taxpayers should carefully review existing arrangements that feature the hallmarks set arrangements and new structures, as the new Introduction of exit taxation rules Amendment of group taxation rules out by the Directive. The term ‘intermediaries’ rules are not completely straightforward and generally includes persons that design, implement allow for differing interpretations. The Hungarian corporate income tax (CIT) regime Hungary introduced a group taxation regime for or manage the implementation of such cross- introduced exit taxation provisions that take effect corporate income tax purposes as a new concept border arrangements or persons that provide aid, beginning on January 1, 2020. The implementation effective January 1, 2019. The current amendments assistance or advice in this regard. of such rules complies with the EU’s Anti-Tax aim to simplify the administration process and Avoidance Directive (ATAD I) harmonization assure increased transparency in the application of Upon failure to comply with provisions related requirements. Accordingly, a Hungarian taxpayer is respective provisions, with effect from July 24, 2019. to reportable cross-border arrangements, the subject to a 9% CIT in certain cases at the time of Hungarian tax authority may impose a default exit of its assets at an amount equal to the positive Currently, Hungarian taxpayers may opt to apply penalty of up to HUF 500,000, or up to HUF difference between the fair market value of such group taxation if (i) the level of direct or indirect 5,000,000 for repeated failure to report. The first assets (to be determined in line with the general voting rights is at least 75% (in which sense a reportable arrangements are those where the transfer pricing guidelines) and the tax book value common controlling company also has to be first implementation step occurs between June of those assets. considered); (ii) they apply the same GAAP for statutory purposes; (iii) with the application of the 25, 2018 (the date when the Directive entered into force) and July 1, 2020, the date the disclosure The exit tax per the above rule is only triggered if same balance sheet date (or same tax year if the requirements become applicable). Taxpayers will the underlying transaction would not otherwise be balance sheet date is not applicable); and (iv) they be required to file information in this respect by subject to the same tax burden in Hungary. have the same functional currency. August 31, 2020. Implementation of hybrid mismatch rules and Implementation of DAC6 related anti-avoidance provisions Hungary implemented EU harmonization Also, effective January 1, 2020, ATAD II’s (EU requirements as set out in EU Council Directive Directive 2017/952) hybrid mismatch provisions will 2018/822 EU (DAC6). be incorporated into the Hungarian CIT legislation. Gergely Juhasz Robert Haak Jordy van den Bogaert Budapest Netherlands Netherlands T: + 363 0 689 5487 T: + 646 398 4515 T: + 646 906 3927 E: [email protected] E: [email protected] E: [email protected] Ireland Ireland publishes Feedback Statement to understand how the new rules will on