Corporate Tax News - Issue 62
19 May 2022
Original content provided by BDO
BDO Corporate Tax News summarises recent tax developments of international interest across the world.
In this issue:
- Australia: Budget 2022-23 measures affecting businesses
- CRA position on income tax implications of cryptocurrency transactions
- Highlights of 2022 budget measures affecting businesses
- Details and impact of proposed interest deductibility rules
- Estonia: Agreement reached to postpone Estonia’s implementation of the global minimum tax
- European Union:
- Draft directive aims to reduce bias that favours debt financing
- EU Finance Ministers consider amended directive for implementation of Pillar Two, but no unanimous agreement
- Germany: Expanded reporting obligations for German entities affect ultimate beneficial owners
- International: Corporate - tax bytes
- Italy: Implementing rules for the new super deduction released
- Luxembourg: Capital contribution without share issuance does not increase acquisition price for purposes of participation exemption
- Pillar Two rules could have lasting impact on MNE groups
- Impact of the OECD Pillar Two model rules on natural resource companies
- Spain: Interaction of new minimum tax with Pillar Two and summary of White Paper on international tax
- United Arab Emirates: Ministry of Finance launches public consultation on proposed corporate tax regime
- United States:
- FY 2023 budget plan proposals affecting corporate businesses
- Important cryptocurrency related proposals included in 2023 budget proposal
- Tax treaty ratification moves forward
Issue 62 - May 2022
A proposed directive in the EU would eliminate the bias that favours debt over equity financing for companies by further limiting the deductibility of interest expense but allowing the deductibility of increases in equity in certain instances. Because most countries allow companies to deduct interest on debt from their taxable income but do not offer the same treatment to equity increases, there is an inherent incentive for businesses to borrow. This could change in 2024.
The tax treatment of cryptocurrency continues to pique the interest of the tax authorities. This issue features an article on Canada’s position on transactions using cryptocurrency. The Bahamas intends to allow its citizens to pay their tax liabilities using digital assets. The U.S. government has proposed extending certain securities-related tax rules to cryptocurrencies and other digital assets and expanding reporting requirements. The OECD has wrapped up a consultation on a new tax transparency framework for reporting and exchanging information on crypto-assets, as well as proposed amendments to the CRS.
The OECD two-pillar framework remains in the spotlight with the release of GloBE model rules under Pillar Two and a public consultation on draft model rules relating to the intended regulated financial services exclusion under Amount A of Pillar One. We include an interesting article on the impact of the Pillar Two model rules on companies in the natural resources sector. Consultations on the implementation of the global corporate minimum tax under Pillar Two are going on in New Zealand and Switzerland and Canada is expected to follow suit. Spain introduced a 15% minimum tax in January, but it appears that this tax is not entirely aligned with the minimum tax under Pillar Two. In another development, Estonia has been granted permission to postpone the implementation of the proposed EU Pillar Two directive until 2030.
The United Arab Emirates is consulting on the impending corporate income tax regime. Uganda is poised to introduce its third definition of the term “beneficial owner” to facilitate its exchange of information commitments.
Cambodia has a new investment law that contains an array of tax incentives and streamlined procedures.