House of Representatives Ways and Means Committee Chairman Kevin Brady (R – Texas) has disclosed that, under his leadership, the Committee will immediately draft US international tax reform legislation, while laying the framework for more comprehensive tax reform in 2017.
On February 12, 2016, Mr. Brady delivered the keynote address at the Tax Council Policy Institute's 17th Annual Tax Policy & Practice Symposium, and confirmed that, "in the months ahead and beyond, the Ways and Means Committee will be the center of the tax reform discussion and debate. … The code we have is too costly, complex and unfair. It is abundantly clear that now is the time to overhaul our tax system from top to bottom".
Chairman Brady’s proposed changes include:
• Making the tax code simpler, fairer, and flatter
• Replacing the current world-wide tax system with a permanent, modern territorial-type system
• Closing loopholes, eliminating special rules and limiting deductions, exclusions and credits
• Providing businesses both large and small with a competitive tax system, including a fair and competitive tax rate
• Encouraging businesses to locate their operations in the United States rather than incentivizing (effectively) the shift of jobs overseas
Mr. Brady confirmed that the Committee will move forward immediately to draft international tax reform legislation – "as we plan for that finish line in 2017, developments in the global environment demand our immediate attention."
A 15 January 2016 press release from the Mauritius Revenue Authority (MRA) announced the delay of the Organization for Economic Cooperation and Development’s (OECD) Common Reporting Standard (CRS) exchanges of information for tax purposes until September 2018. Originally, the exchanges were slated to begin in September 2017.
The MRA also confirmed that the requirement for Mauritian financial institutions to apply due diligence procedures to record the tax residence of clients opening new accounts will take effect from 1 January 2017. The CRS, unlike FATCA, requires information based upon tax residency, not citizenship.
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On November 25, 2015, the European Parliament (EP) approved a resolution to make corporate taxes “fairer across Europe”. The resolution calls on EU member states to “agree on mandatory country-by-country reporting by multinationals of profits and taxes, a common consolidated corporate tax base (CCCTB), common definitions for tax terms, and more transparency and accountability with regard to their national tax rulings for companies”, a press release issued by the EP said.
If the EP resolution (as it stands) is passed into law by the European Council it would result in the following:
•Large multinational corporations would have to pay taxes in the countries where most of their financial activities and profits are made
•Smaller EU economies that offer more competitive corporate tax rates with fewer regulations would stand to lose significant tax revenues as multinationals migrate out of their jurisdictions
•Jurisdictions outside of the EU would attract multinationals with more favorable tax and regulatory schemes
A Comparison of EU VAT Tax Rates as of 1 January 2015:
Country VAT Tax Rate (%)
Czech Republic 21
Sources: the Malta Independent and the European Parliamentary Research Service
Read Article Here.
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At the 8th meeting of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes, held in Barbados on 29-30 October 2015, Panama was officially accepted into Phase 2 of the information exchange peer review process.
The Global Forum peer reviews occur in two Phases: Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework.
Panama’s Foreign Ministry noted that the country’s implementation standards for the exchange of tax information upon request will be assessed, with particular attention to those jurisdictions with which Panama has agreements that allow the exchange of information.
Panama’s Deputy Foreign Minister Luis Miguel Hincapie said "This step reflects the commitment of Panama in this area and the significant progress in updating our legal framework. In a short time we have adapted to the standards of fiscal transparency while at all times defending national interests”. He went on to say that President Juan Carlos Varela, in his recent speech at the General Assembly of the United Nations, announced that Panama, like its major trading partners, is committed to the automatic bilateral exchange of tax information, but with some conditions. The President said the exchanges will have to take into account national circumstances, the international geopolitical environment, and the right of each country to take the necessary measures to ensure that the automatic exchange of information is not misused to impair the competitiveness of some countries for the benefit of others. President Varela proposed that the issues be incorporated into the regular agenda of the United Nations to ensure that they are discussed by the countries on equal terms.
There are now 96 jurisdictions which are committed to making the first exchanges of information in 2017 or 2018. Panama has committed to commence automatic exchanges in 2018.
At the October 29-30, 2015 meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes (part of the OECD), Cyprus, Luxembourg and the Seychelles were lauded for making significant changes to their legal frameworks and practices, each earning an overall rating of “largely compliant”. To achieve a “largely compliant” rating, a jurisdiction can only be deemed by peer reviewers as having (at most) minor shortcomings in the implementation of the 10 essential elements that are rated.
The brief primer below provides an overview of the methods, standards and rating paradigm used by the Global Forum.
Peer Reviews are conducted by an assessment team composed of 2 expert assessors provided by peer jurisdictions and co-ordinated by a member of the Global Forum Secretariat. The assessment team’s report is presented to the 30 member Peer Review Group (PRG) and, once approved (by means of consensus) it becomes a report of the PRG which will then be submitted for adoption by the Global Forum.
The Global Forum’s Standards & Rating Paradigm
The Peer Reviews happen in two Phases:
• Phase 1 is a review of each jurisdiction’s legal and regulatory framework for transparency and the exchange of information for tax purposes
• Phase 2 involves a survey of the practical implementation of the standards.
The Global Forum breaks down the standards of transparency and exchange of information into 10 essential elements under three broad categories: (A) availability of information; (B) access to information; and (C) exchanging information.
The Global Forum’s 10 Essential Elements of Transparency and Exchange of Information for Tax Purposes:
A. AVAILABILITY OF INFORMATION
• A.1. Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities.
• A.2. Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements.
• A.3. Banking information should be available for all account-holders.
B. ACCESS TO INFORMATION
• B.1. Competent authorities should have the power to obtain and provide information that is the subject of a request under an EOI agreement from any person within their territorial jurisdiction who is in possession or control of such information.
• B.2. The rights and safeguards that apply to persons in the requested jurisdiction should be compatible with effective exchange of information.
C. EXCHANGING INFORMATION
• C.1. EOI mechanisms should provide for effective exchange of information.
• C.2. The jurisdictions’ network of information exchange mechanisms should cover all relevant partners.
• C.3. The jurisdictions’ mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received.
• C.4. The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties.
• C.5. The jurisdiction should provide information under its network of agreements in a timely manner.
The French Minister of Foreign Affairs, Lauren Fabius, Senator Jacques Gautier, Vice-president of the Senate Foreign Relations Committee, and Secretary General of the French Presidency, Jean Pierre Jouyet, all agreed that Panama “is no tax haven” and they recognized the “solid financial platform” of the Central American country, as stated by the Panamanian Ministry of Foreign Affairs. This information was provided following meetings held between the Panamanian Vice-president and Minister of Foreign Affairs, Isabel de Saint Malo, and the above-mentioned authorities during an official visit to Paris.
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The Panamanian Foreign Minister applauded France, a member of the OECD Peer Review Group, for offering support to remove Panama from the European Union’s discriminatory lists. Read Article here.
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On October 29, 2015, the Swiss State Secretariat for International Financial Matters announced that the double taxation agreement (DTA) with respect to taxes on income and capital between Switzerland and Argentina will enter into force on November 27, 2015. It replaces the agreement of 1997 and is in line with the current international standard on the exchange of information.
The purpose of the new agreement is the avoidance of double taxation with respect to taxes on income and on capital, particularly those on dividends, interest and royalty payments. It adopts the majority of the provisions of the former agreement and complies with the current international standard on the exchange of information upon request. The new agreement will be applicable from January 1, 2016, with the exception of taxes withheld at source, for which relief will already be applied in 2015 according to the agreement.
The new agreement sets the maximum withholding tax rate for dividends at 15 percent, and provides for a ten percent rate where the beneficial owner is a company that holds directly at least 25 percent of the capital of the company paying the dividends. The withholding tax rate for interest payments is capped at 12 percent. The maximum withholding tax rate for royalties is 15 percent, with reduced rates of ten, five, and three percent applicable in certain circumstances.
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Mossack Fonseca en Panamá evaluará la implementación de los estándares para el intercambio de información fiscal a requerimiento
La OCDE oficializó que el país canalero pasó a la segunda fase de la revisión de pares.
(Ciudad de Panamá-ANPanamá). El Foro Global sobre Transparencia e Intercambio de Información Tributaria de la Organización para la Cooperación y el Desarrollo Económicos (OCDE) formalizó el avance del país hacia la Fase II del Proceso de Revisión Paritaria
Este logro se oficializó durante la VIII Reunión del Foro Global, realizada entre el 29 y 30 de octubre pasado en Bridgetown, Barbados, donde se adoptó por consenso lo aprobado en Paris el pasado mes de septiembre. Ver nota: Panamá pasa a la segunda Fase del Foro Global
Ahora los retos de la segunda fase son diferentes como el intercambio de información automática.
La cancillería señaló que se evaluará la implementación de Panamá de los estándares para el intercambio de información fiscal a requerimiento en la práctica. En especial, frente a aquellas jurisdicciones con las que Panamá tiene vigentes acuerdos que permiten el intercambio de información.
“Este paso refleja el compromiso de Panamá en esta materia y los significativos avances en la actualización de nuestro marco legal. En poco tiempo nos hemos adaptado a los estándares de transparencia fiscal, defendiendo en todo momento los intereses nacionales", apuntó el Vicecanciller Luis Miguel Hincapié.
Debemos recordar que el mandatario de la nación Juan Carlos Varela, dijo en su reciente discurso en la Asamblea General de la Organización de las Naciones Unidas (ONU) el país se compromete al intercambio de información automático, pero con algunas condiciones y que el mismo se de en forma bilateral, esto se dio durante su discurso en Naciones Unidas.
Entre estas condiciones están que sea de forma bilateral, tal como lo han hecho los principales socios comerciales, debe estar condicionado conforme a la capacidad y circunstancias nacionales y que en el entorno geopolítico internacional se respete el derecho de cada país de tomar las medidas que considere necesarias para garantizar que el intercambio automático de información, que persigue el bien común, no sea mal utilizado.
Igualmente propuso que el debate de estos temas se incorpore a la agenda regular de Naciones Unidas, asegurando que las iniciativas que se presenten, sean discutidas por los países en igualdad de condiciones.
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The Republic of Panama is not included on the District of Columbia’s (DC) list of tax havens for fiscal year 2016. The DC Fiscal Year 2016 Budget Support Act of 2015 defines “tax haven” as a jurisdiction that:
The Mossack Fonseca Group is a leading international corporation which provides comprehensive legal, trust, technological and accounting services. With over 500 staff members in all continents, Mossack Fonseca provides personalized advice based on more than 36 years of experience in the market. They also offer world-class service through their exclusive online services which are available 24 hours a day.