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A Closer Look GLOBAL TAX WEEKLY ISSUE 288 | MAY 17, 2018 a closer look SUBJECTS TRANSFER PRICING INTELLECTUAL PROPERTY VAT, GST AND SALES TAX CORPORATE TAXATION INDIVIDUAL TAXATION REAL ESTATE AND PROPERTY TAXES INTERNATIONAL FISCAL GOVERNANCE BUDGETS COMPLIANCE OFFSHORE SECTORS MANUFACTURING RETAIL/WHOLESALE INSURANCE BANKS/FINANCIAL INSTITUTIONS RESTAURANTS/FOOD SERVICE CONSTRUCTION AEROSPACE ENERGY AUTOMOTIVE MINING AND MINERALS ENTERTAINMENT AND MEDIA OIL AND GAS COUNTRIES AND REGIONS EUROPE AUSTRIA BELGIUM BULGARIA CYPRUS CZECH REPUBLIC DENMARK ESTONIA FINLAND FRANCE GERMANY GREECE HUNGARY IRELAND ITALY LATVIA LITHUANIA LUXEMBOURG MALTA NETHERLANDS POLAND PORTUGAL ROMANIA SLOVAKIA SLOVENIA SPAIN SWEDEN SWITZERLAND UNITED KINGDOM EMERGING MARKETS ARGENTINA BRAZIL CHILE CHINA INDIA ISRAEL MEXICO RUSSIA SOUTH AFRICA SOUTH KOREA TAIWAN VIETNAM CENTRAL AND EASTERN EUROPE ARMENIA AZERBAIJAN BOSNIA CROATIA FAROE ISLANDS GEORGIA KAZAKHSTAN MONTENEGRO NORWAY SERBIA TURKEY UKRAINE UZBEKISTAN ASIA-PAC AUSTRALIA BANGLADESH BRUNEI HONG KONG INDONESIA JAPAN MALAYSIA NEW ZEALAND PAKISTAN PHILIPPINES SINGAPORE THAILAND AMERICAS BOLIVIA CANADA COLOMBIA COSTA RICA ECUADOR EL SALVADOR GUATEMALA PANAMA PERU PUERTO RICO URUGUAY UNITED STATES VENEZUELA MIDDLE EAST ALGERIA BAHRAIN BOTSWANA DUBAI EGYPT ETHIOPIA EQUATORIAL GUINEA IRAQ KUWAIT MOROCCO NIGERIA OMAN QATAR SAUDI ARABIA TUNISIA LOW-TAX JURISDICTIONS ANDORRA ARUBA BAHAMAS BARBADOS BELIZE BERMUDA BRITISH VIRGIN ISLANDS CAYMAN ISLANDS COOK ISLANDS CURACAO GIBRALTAR GUERNSEY ISLE OF MAN JERSEY LABUAN LIECHTENSTEIN MAURITIUS MONACO TURKS AND CAICOS ISLANDS VANUATU GLOBAL TAX WEEKLY a closer look Global Tax Weekly – A Closer Look Combining expert industry thought leadership and team of editors outputting 100 tax news stories a the unrivalled worldwide multi-lingual research week. GTW highlights 20 of these stories each week capabilities of leading law and tax publisher Wolters under a series of useful headings, including industry Kluwer, CCH publishes Global Tax Weekly –– A Closer sectors (e.g. manufacturing), subjects (e.g. transfer Look (GTW) as an indispensable up-to-the minute pricing) and regions (e.g. asia-pacific). guide to today's shifting tax landscape for all tax Alongside the news analyses are a wealth of feature practitioners and international finance executives. articles each week covering key current topics in Unique contributions from the Big4 and other leading depth, written by a team of senior international tax firms provide unparalleled insight into the issues that and legal experts and supplemented by commentative matter, from today’s thought leaders. topical news analyses. Supporting features include a round-up of tax treaty developments, a report on Topicality, thoroughness and relevance are our important new judgments, a calendar of upcoming tax watchwords: CCH's network of expert local researchers conferences, and “The Jester's Column,” a lighthearted covers 130 countries and provides input to a US/UK but merciless commentary on the week's tax events. © 2018 CCH Incorporated and/or its affiliates. All rights reserved. GLOBAL TAX WEEKLY ISSUE 288 | MAY 17, 2018 a closer look CONTENTS FEATURED ARTICLES New US Withholding on Sales of US UK Parliament Votes For Public Registers Partnership Interests by Non-US Partners In Offshore Jurisdictions Christie Galinski, Chapman and Cutler LLP 5 Phil Munroe and Chris Groves, Withers 31 "e European Union Anti-Avoidance Directives Brazil Enters Into New Tax Treaties With Stuart Gray, Senior Editor, Global Tax Weekly 16 Switzerland And Singapore Matheus Piconez and Raphael Furtado, District Court Broadens Scope Of Willful BMA Advogados, Brazil 33 Requirement In Applying Enhanced FBAR Penalties Topical News Briefing: Ephraim Moss, Esq. and Joshua Ashman, CPA, "e Nine Lives Of "e FTT Expat Tax Professionals 26 &e Global Tax Weekly Editorial Team 38 Topical News Briefing: "e Information Exchange Age &e Global Tax Weekly Editorial Team 29 NEWS ROUND-UP Tax Transparency 40 Other Taxes 43 Swiss Council Approves New Exchange Agreements EU10 Expects Revenue Windfall From FTT SIFMA Urges Delay To FATCA Withholding Hong Kong Government Studying Vacant Property Tax Macau To Sign OECD Multilateral Information Portugal Legislates For Tonnage Tax Regime Exchange Treaty IMF Urges Ireland To Broaden Tax Base Swiss Tax Agency Exchanges Information On Advance Tax Rulings Bene(cial Ownership 46 Transfer Pricing 53 EU Council Adopts Directive To Make Company OECD Consults On Changes To Transfer Pricing Guidelines Ownership Data Public Cayman Launches CbC Reporting Portal Barbados Rejects UK Push For Public Bene$cial Saint Lucia Commits To BEPS Minimum Standards Ownership Register HMRC Announces Launch Of CbC Reporting Service Isle Of Man Studying Public Bene$cial Ownership Register Options VAT, GST, Sales Tax 56 Country Focus: Australia 49 IMF Calling For Sub-Saharan African VAT Reforms Australia Budget Cuts Personal Income Tax South Africa Invites Comment On VAT Zero-Rate Review Australia To Crack Down On Black Economy Australia Defers Release Of New International Tax Guidance TAX TREATY ROUND-UP 58 CONFERENCE CALENDAR 60 IN THE COURTS 72 THE JESTER'S COLUMN 81 (e unacceptable face of tax journalism For article guidelines and submissions, contact [email protected] © 2018 CCH Incorporated and its affiliates. All rights reserved. FEATURED ARTICLES ISSUE 288 | MAY 17, 2018 Brazil Enters Into New Tax Treaties With Switzerland And Singapore by Matheus Piconez and Raphael Furtado, BMA Advogados, Brazil On May 3 and May 7, 2018, Brazil en- tered into two bilateral conventions for the avoidance of double taxation ("DTT") with Switzerland and Singapore respectively. Curiously, both countries were, in the past, blacklisted by Brazilian authorities as tax havens (Switzerland until June 18, 2014 1 and Singapore until December 21, 2017). While not completely following OECD's model convention, both DTTs incorporate a number of provisions that follow the BEPS framework to combat tax avoidance, including Principal Pur- pose Test ("PPT") and substantive business activities Limitation on Bene1ts ("LOB") clauses. Unlike other, older DTTs Brazil has entered into, these new DDTs do not contain a tax sparing clause – a tax treaty provision whereby a contracting state agrees to grant relief from taxation with respect to source taxes that have not actually been paid (taxes that have been "spared"). 3is is in line with OECD's latest recommendation to abandon the use of such clauses since they have been used for tax avoidance purposes and could indicate, in the future, that other countries that have DTTs with Brazil could be willing to renegotiate DTTs with tax sparing clauses. Note that both DTTs will only enter into force in Brazil after rati1cation by the Brazilian Con- gress, which will enact a Legislative Decree. Subsequently, a Decree issued by the Executive Branch will make the DTT e4ective. 3ere is history of DTTs that took many years to enter into force in Brazil. But we hope that this time the process will be quicker, especially in the current inter- national tax climate, which requires greater cooperation between jurisdictions in order to combat tax avoidance and provide tax transparency. 33 We present below a summary of the main aspects of both treaties. Brazil–Switzerland DTT Article Comments 1 (Persons covered) Art. 1.2 expressly includes in the DTT's scope of fiscally transparent entities or arrangements as long as they are taxed in the country of residence. The protocol exemplifies the contractual fund or investment entity as defined in Articles 25 and 36 of the Swiss Federal Act on Collective Investment Schemes and the Brazilian investment funds regulated by the Securities and Exchange Commission of Brazil ( Comissão de valores Mobiliários ). 2 (Taxes covered) Art. 2.1.a(i) expressly includes in the DTT's scope the Brazilian Social Contribution on Net Revenue (Contribuição Social sobre o Lucro Líquido) . Usually this provision is included only in the Protocol. 3 (General definitions) Art. 3.j expressly defines the concept of "pension fund," which faces special tax rules under Arts 10 and 11 of the tax treaty. 4 (Residence) In line with the majority of DTTs signed by Brazil, the tiebreaker clause for legal entities favors the Place of Effective Management. 5–9 These provisions are similar to most DTTs signed by Brazil. 10 (Dividends) Taxation at source is restricted (i) to 10% if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends throughout a 365-day period, and (ii) to 15% in all other cases. 11 (Interest) Taxation at source is restricted (i) to 10% if the beneficial owner is a bank and the loan has been granted for at least five years for the financing of the purchase of equipment or of investment projects, and (ii) to 15% in all other cases. Moreover, if the beneficiary is a governmental entity of the other contracting state, taxation at source is not allowed. Protocol prescribes that the payment of Brazilian interest on net equity (juros sobre capital próprio – which allows notional interest deduction) qualifies as interest for the DTT's purpose. 12 (Royalties) Taxation at source is restricted (i) 15% in relation to the use or the right to use trademarks, and (ii) 10% in other cases. Usually the DTT Protocol extends the scope of Article 12 to include technical services and technical assistance. In this DTT, an autonomous article was included to deal with technical services (see Art. 13 below), aligned with the suggestion of the Committee of Experts on International Cooperation in Tax Matters (14th session, New York, April 3–6) as a revised commentary to Art. 12-A of the United Nations Double Taxation Model. 13 (Fees for technical Taxation at source is restricted to 10% for technical services (as defined services) in the DTT). 14 (Capital gains) Art. 14.5 uses an "arising" rule, permitting source country tax for gains on the sale of property that "arise in the other Contracting State". Since the term "arising" is not defined in the DTT, the meaning can be supplied by domestic law, under Art.
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