Yves Cattel’s Post

My article "Principles Justifying the Reallocation of Taxing Rights to Market Jurisdictions: Do We Need Them?" is now available open access on SSRN: https://lnkd.in/d79m_Shy Although the fate of Pillar One seems to be pledged, the question of whether we need principles to govern the international allocation of taxing rights between nations is still one of the fundamental and hotly debated questions of international tax theory. It is an especially acute question at the time when the UN is discussing the UN Framework Convention on International Tax Cooperation and seeks to define principles, among those fairness in the allocation of taxing rights, that should govern international tax cooperation in the future. In the article, I tried to pin down what fairness could mean in this context whilst clarifying concepts such as legitimacy and internation equity. I submit that principles are necessary to frame the allocation of taxing rights and the principles underlying the prevailing system must be adhered to when reforming the system. However, this does not mean that principles of the international tax regime are eternal. To the contrary, it would be high time to define new principles that could form the basis of a new international tax regime. The article was nominated for the 10th IBFD Frans Vanistendael award. Happy reading! But most of all, happy summer!!!

To start the week, I am happy to share our most recent edition of E-News (5 April 2024) from KPMG's EU Tax Centre. Highlights include: 💡CJEU: AG finds Dutch interest deduction rule compatible with EU law and AG opinion on Swedish withholding tax treatment of foreign public sector pension institutions 💡CJEU Referrals: Luxembourg referred to CJEU for failing to correctly transpose the interest limitation rules under ATAD 💡Belgium: Draft amendments to minimum taxation rules (under Pillar Two) and draft reform of investment deduction regime  💡Germany: Tax reform bill enacted 💡Luxembourg: Q&A on deferred tax expenses in the transitional period (under Pillar Two) 💡Liechtenstein: Ordinance on the application of the minimum taxation rules (under Pillar Two) published 💡Poland: Draft public CbyC reporting bill approved by lower chamber of the Parliament and updated national list of non-cooperative jurisdiction 💡Sweden: Draft amendments to minimum taxation rules (under Pillar Two) 💡UAE: Consultation launched on minimum taxation rules (under Pillar Two) 💡Netherlands (court decision): Dutch Supreme Court decision on the Dutch interest deductibility limitation and abuse of law  💡Portugal (court decision): Portuguese tax arbitration court judgment on discriminatory effect of withholding tax on interest income Happy reading everyone! Raluca Enache  Ana Puscas Erwan Cherfaoui Elena Moro Fajardo Maximilian Frolik Nina Matvienko #futureoftax #kpmgtax

Great news. The Research School of International Taxation at the University of Tübingen has made the International Tax Institutions (ITI) database public! The database contains a collection of tax indicators for several African jurisdictions including transfer pricing rules, CFC rules, personal income tax rates, corporate income tax rates, earnings-stripping rules, thin-cap rules and more. How to access it? Visit http://lnkd.in/dwUC6hY8

Canada’s Global Minimum Tax Act substantively enacted as part of Bill C-69 On 19 June 2024, Bill C-69, Budget Implementation Act, 2024, No. 1, received third reading in the House of Commons and became substantively enacted for Canadian financial reporting purposes. Among other measures, Bill C-69 includes a revised version of Canada’s Global Minimum Tax Act (GMTA), which was previously released for public comment last August. In this Tax Alert, we review certain key differences contained in the revised version of the GMTA. Learn more in our latest Tax Alert, Canada’s Global Minimum Tax Act substantively enacted as part of Bill C-69. Click here to view other recent Tax Alerts and follow us on LinkedIn: @EYCanada.

More on the protection of #taxpayerrights and the role of the #taxprocedures and #competentauthorities. Taxation is a very powerful tool in the hands of any government. Necessary balances, in the form of #taxpayerprotection are provided (should be provided) as embedded procedural guarantees, as dictated by the rule of law. Is it an obvious statement? Sure it is! Do countries have adequate guarantees for the taxpayers to balance the force with which they may hit? Sure they have! Still, gaps remain. And it is a matter of #taxjustice to identify the gaps and take action. In our study, “Tax Justice in the Post-BEPS Era: Enhanced Cooperation Among Tax Authorities and the Protection of Taxpayer Rights in the EU”, https://lnkd.in/dDkry7sM, included in the brilliant volume entitled “Tax Justice and Tax Law”, Christiana HJI Panayi and I approach the issue of #crossborder #taxcooperation and point out the asymmetry in the combined powers of cooperating tax authorities, on the one side, and the taxpayers on the other side. The developments in the international tax cooperation have not taken into account the position of the taxpayer. Christiana HJI Panayi and I argue that there is urgent need that international developments and cooperation efforts put taxpayer rights in the agenda. To that end, it has been incredibly encouraging to see that the #UN engaged in this discussion and in the recently published document setting out “Zero Draft Terms of Reference for a United Nations Framework Convention on International Tax Cooperation” it includes as a founding principle, the need to ensure respect to the #righttoprivacy and other #fundamentalhumanrights.

What will the next 24hours bring....  As those in the world of tax know on Tuesday night, the Taxation (Multinational – Global and Domestic Minimum Tax) Imposition Bill 2024 (Imposition Bill) passed the Senate and has now passed both Houses of Parliament. However, the main Pillar Two Bill, Taxation (Multinational – Global and Domestic Minimum Tax) Bill 2024 (Main Bill) and Taxation Laws Amendment (Multinational – Global and Domestic Minimum Tax) (Consequential) Bill 2024 (Consequential Bill), have not yet passed through both Houses of Parliament. In addition, while the Imposition Bill has passed both Houses, its commencement is dependent on the Main Bill commencing.   Additionally, the Taxation (Multinational – Global and Domestic Minimum Tax) Rules 2024 (Subordinate Legislation) containing the bulk of the Pillar Two Rules is yet to be introduced into Parliament.   We are now waiting to see whether the Main Bill and consequential Bill will be passed, and whether the Subordinate Legislation will be introduced prior to the Christmas break. The last sitting date for both houses is Thursday 28th of November 2024. We will provide a further update on the progress of these additional Bills as they come to hand.   The timing is particularly important for taxpayers who need to consider the disclosures/impact of the new Pillar Two regime as part of their financial reporting obligations for the 31 December 2024 year end. The ultimate position is dependent on whether the Pillar Two legislation and rules meet the substantively enacted threshold in accordance with the Australian Accounting Standards Board’s guidelines. If the substantively enacted threshold is met prior to 31 December 2024, groups preparing accounts for the year ending 31 December 2024 will be required to consider their Pillar Two related disclosure obligations, with very tight reporting deadlines. The BDO Corporate Tax and IFRS & Corporate Reporting teams are working closely to provide you with further updates and what it means for taxpayers and 31 December 2024 corporate reporting entities.   Given the length of time before the first sitting of Parliament in February 2025, we would not be surprised if the remaining Pillar Two measures are passed by the end of the final sitting day today – it is a ‘watch this space’.   If you would like further information in relation to the application of Pillar Two, please reach out to your local BDO Corporate & International Tax Adviser. Alternatively, further information in relation to the measures as released for consultation can be found in BDO’s earlier article linked below. #PillarTwo #BDOTax

The first step before the first step in terms of the UN work on UN Tax Framework Convention. Namely, a “zero draft” from the 20 members Ad-hoc Committee that have been working on the draft for the Terms of Reference for a UN Tax Framework Convention. In simple words the Terms of Reference are the parameters on which the envisioned convention would be negotiated. So, this is the first draft of such parameters. Some comments on the release: - Input can be shared by the 21st of June 2024 - There seems that the release does not have the backing of all 20 members - The current version highlights some of the key areas aimed to be discussed under the framework convention (among others - allocation of taxation rights including for MNEs or the taxation of high-net individuals). Some of them overlap the work from the OECD at least in terms of perceived themes - One proposal that may generate debates is the suggestion that some specific areas should be developed simultaneously with the negotiation of the framework convention. There are mentioned: taxation of the digital economy, taxation of cross-border services, tax-related illicit financial flows, prevention and resolution of tax disputes & taxation of high-net individuals.

📄 Submission: International taxation – global and domestic minimum tax – primary legislation Our Tax Policy and Advocacy Team recently made a submission to the Treasury in respect of its consultation on the draft legislation package that proposes to implement key aspects of Pillar Two of the Organisation for Economic Co-operation and Development’s (OECD’s) two-pillar solution as set out in the Global Anti-Base Erosion Rules (GloBE). In particular, the draft legislation package proposes to implement the Domestic Minimum Tax, Income Inclusion Rule, Undertaxed Payments Rule, and domestic top-up tax. These changes, when legislated, will result in significant changes to the compliance obligations for impacted entities. Given the significance of this impact, we consider it important to ensure that the implementation of Pillar Two considers the cost of the additional compliance obligations on taxpayers, and seeks to minimise these costs where opportunities arise to reduce them. We also consider that a Constituent Entity’s obligations in relation to the Australian Globe Tax Return should be satisfied if it has been lodged with another foreign government agency. You can read the full submission below, and we've outlined some further considerations here: ⚫ Further consideration and potentially consultation is required regarding the interaction between Pillar Two and Australia’s tax consolidation regime ⚫ Further consideration should be given to whether entities that are subject to the top-up taxes should also be subject to the various integrity measures that form part of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) actions already in place in Australia ⚫ Unintended timing issues with respect to the interactions between Pillar Two and the foreign income tax offset rules should be rectified ⚫ The start date for Pillar Two should be delayed by at least 12 months to allow taxpayers reasonable time to understand and meet their tax liabilities ⚫ A prompt post-implementation review of Pillar Two in Australia will be required to ensure that unforeseen issues are rectified in a timely manner ⚫ The approach to non-lodgment penalties should be reviewed, removing the unfair approach of potentially subjecting an AMG to multiple and significant penalties ⚫ The definitions and terminology used in Australian legislation and the contents of information to be requested by the relevant compliance documents/returns should be consistent with the OECD’s approach Let us know what you think below 👇 #TheTaxInstitute #TTI #tax #thehomeoftax #jointhetaxconversation #TaxPolicyandAdvocacy #submission #PillarTwo #OECD #BEPS

In a recent paper submitted to the Legislative Council Panel on Financial Affairs (the Paper), the Government has summarized its responses to the views received on its earlier consultation paper on the implementation of the global minimum tax and the Hong Kong minimum top-up tax (HKMTT) in Hong Kong. Having regard to the feedback received, the Government indicates that it will refine certain features of the legislation for the implementation of the global minimum tax (referred to below as “top-up tax”) and the HKMTT. Please check out our latest tax alert on this topic. https://lnkd.in/g3aajSUd

https://lnkd.in/dgK2UPP9 Since 2020, the Council of the European Union (EU) updates the list of non-cooperative jurisdictions for tax purposes twice a year. The next revision of the list is scheduled for February 2025.