Corporate Tax updates

Argentina

Tax amnesty: are bonds an attractive option?
  • Argentina
  • July 08 2016

The government is proposing an ambitious tax amnesty law which would allow taxpayers to disclose undeclared assets and extinguish any tax obligation relating to such assets by paying a penalty. The government proposal gives taxpayers the option to use the disclosed assets to subscribe to a three-year zero coupon bond and a seven-year 1% per year coupon bond.


Canada

Contributed by Thorsteinssons LLP
Tax loss transactions denied
  • Canada
  • January 19 2018

The Tax Court recently decided a new case under the general anti-avoidance rule in Section 245 of the Income Tax Act, holding that the rule applies to restrict losses in an attempted non-acquisition of control transaction. However, the court offered up no analysis to support the allegation that Clause 256(7)(b)(iii)(B) had been abused in this case. Instead, it relied on late-stage financing through the use of shares.

Federal Court of Appeal releases decision on application of GAAR rule
  • Canada
  • November 17 2017

The Federal Court of Appeal recently overturned a Tax Court decision which had found that a number of transactions undertaken by the Univar corporate group constituted abusive tax avoidance under the General Anti-avoidance Rule (GAAR). The judgment contains several important points concerning the analysis and application of the GAAR and will undoubtedly be relied on by taxpayers in future.

Federal Court denies minister's application to compel CRA oral interviews in course of audit
  • Canada
  • September 22 2017

The minister of national revenue recently sought to compel 25 people to attend oral examinations as part of a transfer pricing audit. The minister applied to the Federal Court for a compliance order, arguing that the Income Tax Act provides the authority to compel such examinations. However, the court disagreed. Its analysis highlights the problematic nature of the minister's position.

Taxpayer beware: courts may choose to ignore a CRA administrative concession
  • Canada
  • September 08 2017

The Tax Court recently rejected the Canada Revenue Agency (CRA) administrative concession that orthodontists can claim input tax credits (ITCs) on a periodic basis, concluding that orthodontic treatment consists of only a single supply, which is exempt and results in no tax charged to the patient and no entitlement to claim ITCs. The decision serves as a cautionary example to taxpayers that CRA administrative concessions which are not supported by the law may be ignored.

Tax Court disapproves of taking questions under advisement in examinations for discovery
  • Canada
  • September 01 2017

Taking questions under advisement is common practice in examinations for discovery in tax disputes; it indicates that counsel has not decided whether the question will be answered or refused and will advise at a later date. In a recent judgment, the Tax Court denounced the practice of taking questions under advisement during examinations for discovery and warned that there may be cost consequences to doing so.


Cayman Islands

Introduction to automatic exchange of information for investment funds
  • Cayman Islands
  • September 01 2017

As Cayman Islands entities are not directly subject to the so-called 'automatic exchange of information' agreements, the government has introduced legislation to implement these under the Tax Information Authority Law. Guidance notes have also been issued, providing details of the notification, reporting and ongoing obligations that apply, as well as a useful reminder of the differences between the Foreign Account Tax Compliance Act and the Common Reporting Standard.


Chile

Contributed by Montt y Cia SA
Supreme Court overturns decisions denying taxpayers' authority to issue tax invoices
  • Chile
  • November 03 2017

The Supreme Court recently revoked two appeal court decisions in which the underlying issue was the Tax Department's authority to deny taxpayers the ability to issue invoices in certain circumstances. It is unclear whether the Tax Department will review its criteria in this regard, as court decisions in Chile affect only the parties in the specific case.

Withholding tax on interest paid on certain portfolio investments – an overview
  • Chile
  • September 15 2017

A taxpayer resident in Chile with a portfolio investment in the United States recently requested a ruling on whether he was entitled to a refund of certain withholding taxes paid by the portfolio because it included bonds issued in Chile. The taxpayer argued that withholding tax should be refunded to the beneficiary of the interest if the beneficiary is a Chilean resident. However, the Tax Department took a different view.

Tax consequences of mergers for accumulated profits
  • Chile
  • June 23 2017

A taxpayer recently requested a ruling on whether a certain type of tax treatment was available following the merger and consolidation of a group. The tax department ruled that the individuals who owned shares in the resultant entity were entitled to use a variable tax rate rather than the 32% fixed tax rate on corporate income tax already paid on profits, as there is no transfer of property in a merger process, but rather an assignment of property to a person who already has a legal interest therein.

Ruling under Chile-UK double tax treaty on permanent establishment and entitlement to treaty benefits
  • Chile
  • April 07 2017

A taxpayer recently requested a ruling from the Chilean tax authorities on whether a branch of an entity resident in a third state should be considered a UK resident for the purpose of claiming the benefits provided under the Chile-UK double tax treaty. The tax department concluded that the person claiming benefits under the treaty was a resident of a third state and that its UK branch or permanent establishment did not meet the requirements to qualify as a UK resident under the treaty.

New rules for selection of tax regime introduced
  • Chile
  • January 06 2017

The recent tax reform introduced by Law 20,780 has provided for two alternative tax regimes: the attributed regime and the partially integrated regime. The attributed regime applies to individual entrepreneurs, limited liability companies, communities and joint stock companies, while the partially integrated regime is obligatory for corporations and companies whose members and shareholders are other companies (resident or non-resident).


Cyprus

Contributed by Elias Neocleous & Co LLC
New double tax agreement between Cyprus and Saudi Arabia
  • Cyprus
  • January 19 2018

Cyprus and Saudi Arabia recently signed an agreement for the avoidance of double taxation with respect to taxes on income and the prevention of tax evasion. The agreement provides for the exchange of financial and other information in accordance with the relevant article of the Organisation for Economic Cooperation and Development Model Convention for the Avoidance of Double Taxation on Income and on Capital. It will take effect once formal ratification procedures have been completed.

Taxation of deemed benefits on loans and advances to directors and shareholders
  • Cyprus
  • January 12 2018

The Tax Department recently issued Interpretative Circular 14, which has clarified the application of the Income Tax Law regarding a deemed benefit which is to be assessed on any drawings, loan or other financial facilities granted by a company to a non-resident director or shareholder or their spouse or close relatives. The circular clarifies that the deemed benefit is taxable in full, regardless of the period of residence of the individual in question.

Treatment of additional taxes for deemed distribution purposes
  • Cyprus
  • January 05 2018

The Cyprus Tax Department recently clarified the treatment of additional taxes imposed under the Assessment and Collection of Taxes Law. The department has specified that any additional tax is to be treated as such, meaning that penalties and interest will be imposed if they are not paid on time. The taxes are included under the term 'corporation tax' and are deductible from accounting profits for the purpose of calculating the deemed distribution for special defence contribution tax.

Extension of country-by-country reporting deadlines
  • Cyprus
  • December 22 2017

The Tax Department recently extended the deadline for the submission of country-by-country reports to be filed by the end of 2017. The deadline for reporting entities to submit country-by-country reports for multinational groups for the fiscal year ending December 31 2016 has been extended by two months, while the deadline for Cyprus-resident constituent entities to file their notifications for the fiscal year ending December 31 2017 has been extended to January 15 2018.

Further reminder of instalment scheme for tax arrears
  • Cyprus
  • December 15 2017

With the extended deadline for the submission of applications for inclusion in the deferred settlement scheme for tax arrears established by Law 4(I)/2017 now less than one month away, the Tax Department has issued a further reminder of the scheme's main features. For example, all tax returns due must have been submitted and all tax liabilities for periods after December 31 2015 must have been settled or be in the process of being settled in accordance with an agreed payment schedule.