OECD: OECD publishes public comments addressing issues related to the development of the OECD/G20 Inclusive Framework on BEPS

As part of the ongoing work of the OECD/G20 Inclusive Framework on BEPS on a two-pillar solution to address the tax challenges arising from the digitalisation of the economy, the OECD issued several publication announcements, namely:

1) The announcement dated 13 April 2022 on the publication of responses to its 14 March 2022 invitation for public comments on the development of an implementation framework to facilitate the coordinated implementation and administration of a global minimum tax.

2) An announcement dated 22 April 2022 on the publication of responses to its 4 April 2022 invitation for public comments on a consultation document on draft model rules for domestic legislation on scope under “Amount A” of Pillar One.

3) An announcement dated 2 May 2022 on the publication of responses to its 22 March 2022 invitation for public comments on a consultation document that proposes a new global tax transparency framework for the reporting and exchange of information relating to crypto-assets (the “Crypto-Asset Reporting Framework” (CARF)), as well as amendments to the Common Reporting Standard (CRS) for the automatic exchange of financial account information between jurisdictions.

4) An announcement dated 3 May 2022 on the publication of responses to its 14 April 2022 invitation for public comments on a consultation document on the extractives exclusion under “Amount A” of Pillar One, i.e., the exclusion of profits from extractive activities from the scope of Amount A.

The public comments are available and can be downloaded through the OECD website.

In addition, the OECD requested comments on regulated financial services exclusion under “Amount A” of Pillar One on 6 May 2022. According to the OECD announcement, the “defining character of [the regulated financial services] sector is that it is subject to a unique form of regulation, in the form of capital adequacy requirements, that reflect the risks taken on and borne by the firm. The scope of the exclusion derives from that requirement, meaning that Entities that are subject to specific capital measures (and only those) are excluded from Amount A.

Germany: Decree confirms tax-free treatment of capital repayments from non-EU subsidiaries

In a decree dated 21 April 2022, the German Ministry of Finance (MoF) confirmed that a non-EU subsidiary may make a tax-free repayment of capital to a German corporate shareholder and set forth related rules and documentation requirements to prove the character of such a repayment. The decree is a response to several federal tax court (BFH) decisions from 2010, 2016, and 2019, which generally align with the principles established by the BFH in the decisions.

Brazil: Brazil and OECD announce proposed changes to Brazilian transfer pricing legislation

On 12 April 2022, Brazil’s government and the OECD held a meeting to introduce proposed changes to Brazilian transfer pricing legislation.

The purposes of new transfer pricing legislation are to increase legal certainty, avoid double taxation, and avoid the loss of tax revenue (also referred to by the tax authorities as “double non-taxation”). The new legislation will incorporate the arm’s length principle, in line with the OECD transfer pricing guidelines.

The draft of the new legislation will be published for public consultation. After collecting comments and suggestions from different sectors of the economy, a bill will be submitted for congressional voting and approval.

UAE: Public consultation on corporate tax regime

Since the announcement by the United Arab Emirates (UAE) Ministry of Finance (MoF) in January 2022 of the introduction of a federal corporate tax on business profits effective for financial years starting on or after 1 June 2023, work has continued on the design and implementation of a corporate tax regime to ensure that it incorporates best practices globally and minimises the compliance burden for businesses.

Recognising the importance of input from the business community and other interested stakeholders, the MoF launched a consultation on 27 April 2022 ahead of the official release of the relevant legislation. The consultation period ended on 19 May 2022. Input received will be carefully considered and assist the MoF in further refining and implementing the proposed corporate tax regulations.