In Budget 2019 the federal government has continued to bolster its tools and resources to detect and prosecute tax evasion. As such, several measures have been proposed, including a C$150.8 million investment over the next five years to fund new initiatives. More so than ever, tax professionals should be well acquainted with various definitions to ensure that their client services and advice cannot be construed as the commission or facilitation of a criminal offence.
The minister of finance recently tabled the 2019 Budget. As a pre-election budget, the government appears to have shied away from tax measures that could receive negative backlash from the business community. Among other things, the government is proposing to expand the foreign affiliate dumping rules to apply to Canada-resident corporations that are controlled by non-resident individuals or trusts.
The Canadian Broadcasting Corporation recently reported that the Canada Revenue Agency has transferred more than 1.6 million Canadian banking records to the US Internal Revenue Service since the intergovernmental agreement for the enhanced exchange of tax information under the Canada-US Tax Convention was entered into in 2014. The agreement provides lengthy and detailed rules with respect to the information that the Canadian government must transfer to the United States.
Earnings within tax-free savings accounts (TFSAs) and other tax-deferred plans are, in principle, supposed to grow tax free. However, some taxes still apply, including the advantage tax which applies at the rate of 100% of any 'advantage' (as defined in the Income Tax Act). This tax has become one of the Canada Revenue Agency's favourite tools to effectively expropriate what it views as improperly boosted returns within a TFSA.
The second package of government measures for mitigating the effects of the COVID-19 pandemic on the Croatian economy, which recently entered into force, includes a number of tax exemptions for companies. For example, companies whose revenue in April 2020, May 2020 and June 2020 has fallen by 50% or more compared with the respective month in 2019 will be completely exempt from their tax liabilities – namely, from paying profit tax, income tax and contributions.
Cyprus recently agreed an updated double tax treaty (DTT) with Switzerland. The amendments made to the DTT focus on business profits, associated enterprises, mutual agreement procedures and benefit entitlement, and the amending protocol introduces the mandatory minimum standards of the Organisation for Economic Cooperation and Development's Base Erosion and Profit Shifting actions regarding arrangements on bilateral conventions and verbal amendments agreed bilaterally.
The Tax Department recently informed the Cyprus International Businesses Association that it expects its new electronic taxation service to be operational imminently. The Tax Gateway aims to provide a central point via which all citizens, businesses and their representatives can gain information about debts owed and payments made to the department.
The government has introduced a variety of tax measures intended to help taxpayers preserve their cash flows and ease the administrative burden on them during the COVID-19 health emergency. In this regard, the deadlines for payment of indirect taxes and those pertaining to tax returns have been extended.
The Cyprus-Kazakhstan double tax treaty recently entered into force. The agreement – which is the first of its kind between the two countries and closely based on the latest Organisation for Economic Cooperation and Development Model Tax Convention framework – is to be welcomed in view of the possibilities for business, transactional work and business synergies that it may help to create between the two countries.
Innovation and entrepreneurship are heavily sought after by countries looking to ameliorate and modernise their economies. Cyprus is no different in this respect and has prioritised creating a vibrant landscape which addresses the needs of start-ups and their investors. The defining features of the Cypriot system are its IP box regime, notional interest deduction, alternative investment funds and various tax incentives which can be coupled with research and development and innovation.
Tackling e-commerce fraud is high on the European Union's political agenda, with significant effort being put into creating new rules to combat value added tax fraud in particular. An important step in this regard has been the introduction of a significant number of changes to the existing rules on e-commerce taxation.
For many years, tax authorities have rejected holding companies' right to deduct input value added tax; however, the European Court of Justice has issued several decisions that have enabled a slow but unequivocal paradigm shift towards so-called 'active' or 'mixed' holdings (ie, holding companies which are directly or indirectly involved in the management of subsidiaries and provide them with taxable services). This article examines the most important decisions in this regard.
The European Union has added further impetus to its objective of providing greater transparency with regard to harmful tax practices through an amendment to EU Directive 2011/16/EU. The directive has introduced the mandatory reporting of cross-border arrangements that are indicative of potentially aggressive tax planning. The relevant disclosure requirements must be followed by intermediaries and, in some instances, taxpayers.
Over the years, India has witnessed a number of notable tax reforms. Now – in yet another attempt to enhance the country's attractiveness as a business destination, boost investment and encourage manufacturing – the government has introduced the Taxation Laws (Amendment) Ordinance 2019, which has amended the Income Tax Act 1961 and the Finance (No 2) Act 2019. In so doing, India has tried to bring its tax rate in line with other countries and has given domestic companies a level playing field.
In an attempt to curb tax evasion and avoid tax leakage, the government introduced the General Anti-avoidance Rule (GAAR), which took effect from April 2017. Following the introduction of the GAAR, businesses have had to revisit and revalidate their transactions. Further, as there are a number of potential issues that may be faced by taxpayers, they must observe the types of transaction that are likely to be affected.
The Central Board of Direct Tax (CBDT) recently issued a circular clarifying the applicability of Section 56(2)(viib) of the Income Tax Act and the procedure that must be followed by tax officers in assessment proceedings. Although an attempt has been made to end the confusion created in the start-up community, uncertainty surrounding the legal basis for the Department for Promotion of Industry and Internal Trade and CBDT notifications regarding the applicability of Section 56(2)(viib) remains.
On the back of its new electoral mandate, the Modi Sarkar 2.0 government recently presented its first budget. The budget focuses primarily on infrastructure spending and boosting investment from private and foreign investors, with the government forecasting that the Indian economy will grow to $5 trillion by 2025. Following the budget announcement, a slew of reforms and policies are expected in the coming months, including a draft of the much-awaited Direct Tax Code.
The Bombay High Court recently considered whether a taxpayer, which was resident in India and the sole owner of a business that provided personnel on an as-needed basis to foreign companies, had been required to deduct tax under Section 195 of the Income Tax Act when paying an employee who it had loaned to a Kuwait-based company. Section 195 of the act requires taxpayers to deduct tax on any payment (other than salary payments) made to non-residents.