In brief from international taxation [November 2022]

The OECD publishes a new report regarding automatic exchange of information. Cypriot and US amendments to the tax legislation soon to come into force. You can find more detailed information on these issues and other important news on international taxation in our article.

OECD: Publication of 2022 peer review report on automatic exchange

The OECD announced on 9 November 2022 that the 2022 peer review report on the automatic exchange of financial account information was published by the Global Forum on Transparency and Exchange of Information for Tax Purposes during the plenary meeting held from 9 to 11 November 2022. The report includes the first effectiveness ratings for 99 jurisdictions that committed to beginning the automatic exchange of information (AEOI) already in 2017 or 2018. The Global Forum has also published new peer review reports on the exchange of information on request (EOIR) for 10 jurisdictions as the evidence of their compliance with international standards on tax transparency. These jurisdictions expect to commence exchanges in 2023, 2024 or 2025.

UK: Increase of corporate income tax rate to 25% as from 1 April 2023

On 14 October 2022, the UK prime minister announced her decision to keep in place the increase in the main rate of corporation tax to 25% as from 1 April 2023, reversing the announcement made in September’s 2022 “mini-budget” stating that legislation would be introduced to maintain the rate at 19%.

France: Publication of e-invoicing regulations and e-reporting requirements

Article 26 of France’s Amending Finance Law 2022, published in the official gazette on 17 August 2022 (in French only), contains the legal provisions for the new e-invoicing and e-reporting requirements that will generally apply as from 1 July 2024. The regulations concerning the new obligations are set out in Decree No. 2022-1299 and a Ministerial Order, both dated 7 October 2022 (in French only). The scope of mandatory e-invoicing in France was extended under the Finance Law 2021 to transactions carried out between taxable persons. At the same time, companies will be required to transmit the invoice data to the French tax authorities (FTA).

The FTA, assisted by the Agency for State Financial Information (AIFE), is reviewing the practical considerations of implementation, and an English version of the external specification file for electronic invoicing has been published on the FTA’s website.

Cyprus: Amendments intended to prevent tax abuse will come into force in December 2022

The new provisions amending the Special Contribution for Defence Law (SCDL) and the Income Tax Law (ITL) will be effective from 31 December 2022. These two amending laws (available in Greek only) aim to strengthen the country’s tax framework for the prevention of tax abuse.

The amendments will introduce withholding tax (WHT) on dividend, interest and royalty payments (17%, 30% and 10% respectively) to companies that are:

  • Resident in jurisdictions included in the EU blacklist; or
  • Incorporated/registered in a jurisdiction included in the blacklist and are not tax resident in any other jurisdiction that is not included in the blacklist.

Additionally, in an effort to strengthen the residency rule framework beyond the management and control criterion/concept, the term “Cyprus tax resident company” in article 2 of the ITL is expanded also to include a company incorporated/registered in Cyprus, but whose management control is exercised outside Cyprus, as long as the company is not a tax resident in any other state.

US: New tax legislation effective as of 1 January 2023

Two recent pieces of US tax legislation have significant tax-related provisions. Firstly, the CHIPS Act of 2022 (P.L. 117-167) creates a new advanced manufacturing investment credit under new Internal Revenue Code section 48D. The CHIPS Act was signed into law on 9 August 2022. Secondly, the Inflation Reduction Act (P.L. 117-169), signed into law on 16 August 2022, has a number of tax-related provisions, including (i) a 15% book minimum tax on “adjusted financial statement income” of applicable corporations; (ii) a plethora of clean energy tax incentives in the form of tax credits, some of which include a direct-pay option or transferability provisions and (iii) a 1% excise tax on certain corporate stock buybacks.

The new legislation is mainly effective for financial reporting periods and tax years beginning on or after 1 January 2023. Accordingly, the legislation is expected to have limited effects on financial reporting periods ending on or before 31 December 2022.

OECD International Taxes

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