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CFE's Global Tax Top 5 N°.1





CFE Tax Top 5 - 2018




EU removes eight countries from the tax ‘blacklist’


The Council of the European Union removed eight jurisdictions from the EU list of non-cooperative jurisdictions for tax purposes at the ECOFIN meeting of 23 January. Following commitments made at high political level to remedy the EU concerns, the EU finance ministers agreed to move these countries to a separate list, where they will be subjected to close monitoring: Barbados, Grenada, Republic of Korea, Macao SAR, Mongolia, Panama, Tunisia and the United Arab Emirates. The decision leaves 9 countries on the list of 5 December 2017, initially comprising 17 jurisdictions.

EU Commissioner Moscovici urged the Member states to publish the content of the commitment letters sent to the EU by the jurisdictions that are now on the grey list. Moscovici stated that these letters must be made public, so that everyone can judge these commitments. It was further submitted by the Commissioner that the credibility of this process depends on such transparency, with the Member states bearing the onus of this responsibility.



Thailand releases second draft of proposed e-commerce law along with public consultation


The redraft of the proposed e-commerce tax, notably, removes the proposal for a withholding tax or corporate income tax but rather focuses on bringing service providers of e-commerce transactions within the scope of VAT. The new proposals include requiring foreign companies providing services via electronic media to a non-VAT registered person in Thailand to register for VAT if their income exceeds a certain threshold. The foreign VAT registered service provider will be subject to certain specific conditions. In addition, a non-VAT registered person who is subject to the service fee of the foreign company will not be required to self-assess for the VAT.



South Korea to tax cryptocurrency

The Ministry of Finance in South Korea has indicated its intention to introduce a tax on cryptocurrency exchanges such as the Bitcoin exchange. It is reported that the tax will be in the region of 22% corporate income tax and 2.2% local income taxes on the previous year’s earnings. The tax will be imposed if the annual income of the exchange exceeds the threshold of $18.8 during 2016.

In addition, it was indicated by the Finance Ministry that the exchange would be required to share transaction data with banks, in an effort to increase tax compliance.



Hong Kong introduces two-tiered profits tax regime


Hong Kong is set to introduce a new corporate tax regime targeted at encouraging growth of SMEs in 2018. Under the proposed new rules a lower rate of corporation tax of 8.25% will be introduced on the first $2 million of profits with the balance taxable at the standard rate of 16.5%.

New measures will also be introduced aimed at encouraging investment in research and development. The first $2 million of expenditure will be eligible for a 300% tax deduction with the remained expenditure subject to a 200% tax deduction. 



Panama signs OECD Common Reporting Standard Multilateral Competent Authority Agreement

Panama has become the 98th jurisdiction to become a signatory. Signatories affirm their commitment to the automatic exchange of financial account information under the OECD/G20 Common Reporting Standard. The first set of exchanges are due to commence in September 2018. By becoming a signatory Panama will be in a position to activate bilateral exchange relationships with the other signatories.



CFE’s Global Tax Top 5 is edited by Piergiorgio Valente

The selection of the remitted material is prepared by

Aleksandar Ivanovski/ Filipa Correia / Piergiorgio Valente/

Stella Raventós-Calvo / Wim Gohres




According to media reports, the European Commission is about to issue a decision that the rulings of the Irish tax administration on the tax treatment of two subsidiaries of Apple, Apple Sales International und Apple Operations Europe, were illegal state aid. The decisive element in distinguishing state aid from tax is the question whether the advantageous treatment of an undertaking or group of undertakings has been selective. State aid affecting trade between member states is in principle incompatible with the EU single market, subject to a limited number of exceptions and to notification to the European Commission which, in the case of Apple, has not taken place. If the aid is found to be illegal, Ireland will have to claim back billions of unpaid tax from Apple. There are two similar cases pending, concerning Starbucks in the Netherlands and Fiat Finance and Trade in Luxembourg.


- European Commission press release of 11 July 2014 (opening of investigations)



2. Germany referred to Court over VAT refund rules for non-EU operators


On 25 September 2014, the European Commission decided to refer Germany to the EU Court of Justice regarding its rules on VAT refund which discriminate against non-EU operators. Under German legislation, operators established in another EU member state can authorise a third person to sign or submit their refund form to recover VAT, but taxable persons established outside the EU must personally sign the application form. The Commission considers that this requirement for third country operators goes against the EU law principles of effectiveness, proportionality and equivalence. There is no provision in EU law which requires VAT refund forms to be personally signed.


- Press release of 25 September 2014



3. Commission asks Italy to amend inheritance tax law


On 25 September 2014, the European Commission has requested Italy to amend its inheritance tax legislation which discriminates against bequests to non-profit organisations in another EU or EEA country. Under Italian law, legacies to non-profit organisations pursuing public and social goals are exempt from tax. However, if these are established elsewhere in the EU/EEA, an exemption is only granted if there is reciprocity from that member state, otherwise, the legacy is taxed at 8% of its value. In addition, Italian legislation excludes Italian bonds and public securities from the inheritance estate, while bonds and public securities issued by other EU and EEA states are not allowed this exclusion. The requests take the form of two reasoned opinions, giving Italy two months to react.


- September infringement package



4. CJEU rules on VAT on services supplied by a non-EU main company to its EU branch


On 17 September 2014, the Court of Justice of the EU (CJEU) has rendered its judgment on the case Skandia (C-7/13) concerning the question whether services supplied by a main company with its seat in a third country to its branch belonging to a VAT group within an EU member state are taxable. The Court confirmed this where the branch belongs to a group of persons whom it is possible to regard as a single taxable person for VAT purposes.


- Judgment



5. Commission refers the Netherlands to CJEU over VAT treatment of water sport activities


On 25 September 2014, the European Commission has decided to refer the Netherlands to the EU Court of Justice for failing to fully comply with EU rules on VAT exemptions for water sports activities. According to the Commission, Dutch legislation is too strict to the extent that it exempts sport or physical education services by non-profit organisations from VAT only if these services are provided by volunteers, and too wide to the extent that they exempt the letting of berths and moorings for vessels provided by these water sport organisations even when it is not linked to sport activities.


- Press release