Latest updates

Protocol amending Cyprus-Russia double tax treaty ushers in new era
Elias Neocleous & Co LLC
  • Cyprus
  • 16 October 2020

Cyprus and Russia recently signed a protocol amending the double tax treaty (DTT) between the two states. Businesses in Cyprus that will be subject to the protocol are advised to review their corporate structures and assess what impact, if any, the DTT changes will have on their overall effective tax exposure.

New step-up option on taxpayer assets introduced
Studio Legale e Tributario Biscozzi Nobili Piazza
  • Italy
  • 16 October 2020

Decree-Law 104/2020 recently introduced a new opportunity for Italian companies to step up the cost of tangible and intangible assets (real estate and other immovable properties which are built or for resale are excluded) and participation in controlled and associated companies included in financial statements as of 31 December 2019. Therefore, for taxpayers for which the fiscal year matches the calendar year, the revaluation option can be exercised for the fiscal year ending 31 December 2020.

Update on economic substance
Ogier
  • Cayman Islands
  • 02 October 2020

The Cayman Islands has comprehensive economic substance legislation, under which in-scope entities that carry on particular activities must demonstrate economic substance in the Cayman Islands. The Tax Information Authority, which is responsible for monitoring and enforcing the substance requirements in the Cayman Islands, recently published guidance on economic substance for geographically mobile activities.

New Jersey reconsiders financial transaction tax
McDermott Will & Emery
  • USA
  • 25 September 2020

A troubling New Jersey financial transaction tax proposal, which appeared to be gaining popularity over the past few months, has reportedly been left out of the 2021 budget deal that Governor Phil Murphy recently struck with legislative leaders. The decision to drop the transaction tax from the deal came days after the Wall Street Journal reported that prominent stock exchanges with data centres in New Jersey were prepared to exit the state if the tax plan was adopted.

Recent tax ruling provides for priority technological enterprise status for cloud services
Fischer Behar Chen Well Orion & Co
  • Israel
  • 25 September 2020

The Tax Authority recently published a tax ruling addressing priority technological enterprise status with respect to an Israeli company that engages in the development and provision of cloud service platforms. The ruling provides that, subject to the Investment Law, income derived from the right to use a company's cloud platforms will be classified as income generated by a technological enterprise and, therefore, will be entitled to the Investment Law's reduced tax rates.

Russia revises double tax avoidance agreements with numerous countries
Gorodissky & Partners
  • Russia
  • 18 September 2020

In 2020 Russia launched an intensive process of revising its bilateral tax agreements with numerous jurisdictions. According to the Cyprus minister of finance and the Russian Ministry of Finance, significant amendments to the double tax avoidance agreement between Russia and Cyprus were agreed in August 2020. The most important amendment is the increase in the tax rate levied on the payment of dividends and borrowed money.

Tax advisers beware – avoidance is the new evasion
Kingsley Napley
  • United Kingdom
  • 11 September 2020

The government and Her Majesty's Revenue and Customs have been pledging to clamp down on enablers and promoters of aggressive tax avoidance strategies for years. In recent times, it has been hard to keep up with the plethora of measures and legislation brought in to stop these unscrupulous advisers. In August 2020 further proposals and legislation which forms part of the draft Finance Bill 2019-21 were released for consultation.

IRS issues proposed regulations intended to clarify carried interest rules
McDermott Will & Emery
  • USA
  • 04 September 2020

The Internal Revenue Service recently issued proposed regulations under Section 1061, a provision enacted as part of the Tax Cuts and Jobs Act 2017 that recharacterises certain net long-term capital gain with respect to applicable partnership interests as short-term capital gain. The proposed regulations provide clarity on some of the statutory provisions. This article discusses some of the noteworthy provisions in the proposed regulations.

Cyprus and Switzerland agree updated double tax treaty
Elias Neocleous & Co LLC
  • Cyprus
  • 14 August 2020

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.

How are Swiss-based international groups affected by EU Directive on Administrative Cooperation?
Walder Wyss
  • Switzerland
  • 31 July 2020

The EU Directive on Administrative Cooperation need not be incorporated into Swiss law, but its impact on groups based in Switzerland may be significant. Considering the directive's broad scope, it is crucial that Swiss-based groups identify qualifying intercompany transactions at an early stage and ensure that they comply with the applicable subsidiary reporting obligations in cases with no involvement of EU intermediaries.

New tax relief for IT industry
Gorodissky & Partners
  • Russia
  • 17 July 2020

President Vladimir Putin recently announced the next set of measures to amend tax legislation to help the Russian economy overcome the crisis caused by the COVID-19 pandemic. Most of the new tax changes relate to companies in the IT industry, for which a so-called 'tax manoeuvre' has been proposed in order to significantly reduce the corporate income tax rate for such companies from 20% to 3%.

Tax Department's new electronic Tax Gateway service imminent
Elias Neocleous & Co LLC
  • Cyprus
  • 17 July 2020

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.

Section 965 statutes of limitations for partnerships
McDermott Will & Emery
  • USA
  • 03 July 2020

The Internal Revenue Service (IRS) recently issued guidance on the period of limitations for Section 965 of the Internal Revenue Code transition tax-related adjustments of partnerships. Typically, pursuant to Section 6501, the IRS has three years to assess a tax liability for a tax year. However, Section 6501(e)(1)(C) states that if the taxpayer omits from gross income an amount properly includible in income under Section 951(a), the tax may be assessed at any time within six years after the return was filed.

Intercompany transactions – burden of proving arm's-length pricing
Fischer Behar Chen Well Orion & Co
  • Israel
  • 26 June 2020

The Israel Tax Authority (ITA) recently published a tax circular to clarify cases in which a transfer pricing study filed by a taxpayer will be considered to fulfil legal requirements and thus shift the burden of proof in the assessment process framework to an ITA inspector, in contrast to the general rule that the burden of proof rests with the taxpayer.

California bill would make taxpayer information available to public
McDermott Will & Emery
  • USA
  • 19 June 2020

A concerning bill is pending in the California Senate which would require the California state controller's office to make taxpayer information publicly available. The bill would require that the controller post on its website a list of all taxpayers subject to the California corporation tax with gross receipts of $5 billion or more and information about each taxpayer, including tax liability and the amount of tax credits claimed in the previous calendar year.

IRS flexes its administrative summons power in recent tax case
McDermott Will & Emery
  • USA
  • 05 June 2020

A recent US Court of Appeals for the 10th Circuit decision underlines the Internal Revenue Service's ability to obtain information that it needs to examine taxpayers' returns using its powerful summons tool. To be successful in defending against a summons, taxpayers must ensure that they have a strong case – for example, non-disclosure based upon a privilege claim.

COVID-19 Weekly Report (25-31 May 2020)
International Law Office
  • International
  • 01 June 2020

The impact of COVID-19 is being felt in almost every work area across the globe. In order to keep readers abreast of this evolving situation, ILO's COVID-19 Weekly Report provides insight into the major legal developments of the past seven days, as well as a round-up of our panel of experienced international legal commentators' legislative and regulatory guidance.

Tax treatment of debt waivers and other debt-to-equity swaps
Walder Wyss
  • Switzerland
  • 29 May 2020

In economic life, debt waivers involving associated companies take on central significance in the context of a restructuring. It can be assumed that restructuring will greatly increase in the near future due to the financial difficulties of many companies resulting from the current COVID-19 crisis. Although the tax treatment of a debt waiver granted by an independent third party is essentially well defined (ie, it is recognised in income), many questions will arise if debt is waived by a related party – namely, a shareholder.

COVID-19 Weekly Report (11-17 May 2020)
International Law Office
  • International
  • 18 May 2020

The impact of COVID-19 is being felt in almost every work area across the globe. In order to keep readers abreast of this evolving situation, ILO's COVID-19 Weekly Report provides insight into the major legal developments of the past seven days, as well as a round-up of our panel of experienced international legal commentators' legislative and regulatory guidance.

Tax exemptions introduced to protect businesses during COVID-19 pandemic
Macesic & Partners
  • Croatia
  • 15 May 2020

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.

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