Over the past year, Parliament has adopted several laws amending the Tax Code regarding the taxation of legal entities. This article examines the most significant tax innovations expected in the corporate sector in 2020 which concern corporate income tax, transport and land taxes and changes in tax administration rules.
The Organisation for Economic Cooperation and Development (OECD) set a goal to deliver by 2020 a final report that includes a consensus approach with respect to the challenges of the digital economy, both the allocation of taxation rights (pillar one) and Base Erosion and Profit Shifting issues (pillar two). What are the latest proposals of the OECD and where does Israel stand?
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The Illinois Department of Revenue has begun a new amnesty programme, which is running from 1 October 2019 to 15 November 2019. All taxes paid to the Illinois Department of Revenue for taxable periods ending after 30 June 2011 and before 1 July 2018 are eligible for amnesty with relief from penalties and interest. In light of the phase-out of the corporate franchise tax by 1 January 2024 (enacted by Public Act 101-9), participants in the amnesty programme should proceed with extreme caution.
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.
The Compliance Assurance Process (CAP) programme was developed to improve large corporate taxpayer compliance with US federal tax obligations. The IRS recently announced that it was accepting applications – for the first time since 2015 – from new corporate taxpayers that meet the CAP programme eligibility requirements. As such, eligible taxpayers interested in the programme for 2020 should prepare and submit an application as soon as possible.
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.
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 Arbitral Court recently issued a landmark decision regarding value added tax (VAT) deductions for holding companies. The court's approach is notable for its analysis of European Court of Justice guidance on VAT deductions for holding companies set out in several relevant decisions and its innovative approach of combining the relevant reasoning behind these decisions to provide a comprehensive legal overview.
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.
Legislators in Sacramento are mulling over one of the most (if not the most) troubling state and local tax bills of the past decade. AB 1270, which was recently introduced and passed by the California Assembly in May 2019, would amend the California False Claims Act to remove the 'tax bar' – a prohibition that exists in the federal False Claims Act and the vast majority of states with similar laws.
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.
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.
The Serious Fraud Office's guidance on self-reporting suggests that Her Majesty's Revenue and Customs is now turning to companies themselves to tackle tax avoidance and evasion. The guidance states that prosecutors will assess whether a self-reporting corporate has been genuinely proactive. Critical to such an assessment is whether the corporate has provided sufficient information about its operations, including making witnesses available and disclosing the details of any internal investigations.
The Federal Council recently announced its intentions to resume the temporarily suspended Swiss withholding tax reform and set out the general framework to introduce a paying agent tax system with regard to interest payments. However, as the Federal Council's communication did not contain any details, it remains to be seen how the reform will be set out in the draft bill expected in Autumn 2019 and how it will affect paying agents and investors.
The Internal Revenue Service recently released new informal guidelines regarding Section 965 of the Internal Revenue Code. Among other things, the guidelines contain information on making successive instalment payments, filing transfer agreements as a result of certain acceleration or triggering events and other matters relating to S corporation shareholders making the Section 965(i) election.
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 enactment of the Taxpayer First Act brings with it several changes to the procedures and operations of the Internal Revenue Service (IRS). The act touches on (among other things) establishing the IRS Independent Office of Appeals, improving customer service and introducing changes to enforcement. However, it appears that many of the changes to the IRS appeals process are mere guidelines and do not apply to large taxpayers.
Federal Law 79-FZ on the Ratification of the Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting recently entered into force. Once the ratification procedure has been completed, the convention will enter into force in Russia, introducing changes to the taxation procedure for transactions with counterparties from a large number of countries that have concluded double tax avoidance agreements with Russia.
A Wisconsin governor recently signed into law an act that either bars a reduction for, or requires amounts deducted to be added back to, Wisconsin taxable income for moving expenses deducted on federal income tax returns if the expenses are associated with a business moving out of the state or country. However, the act blatantly discriminates against interstate and international commerce and is unconstitutional.