Summary: 1. Treaties i. India / Malta + Signed: 8 April 2013 + Interest: 10% + Royalties: 10% + "Short form" LOB rule ii. Hong Kong / Mexico + In force: 7 March 2013 + Effective: 1 January 2014 (Mexico) / 1 April 2014 (Hong Kong) + Very interesting provisions in protocol - OECD and UN Commentaries required to be used for interpretation - Art. 5(3) PE: aggregation of similar activities of associated companies - Double non-taxation due to differing classification of income: no treaty benefits 2. BEPS i. OECD working groups 1. Source countries' jurisdiction to tax (incorporating CFC rules) + chaired by France 2. Transfer pricing + chaired by Italy 3. Countering base erosion (incorporating intragroup financial transactions, hybrids and anti-avoidance measures) + chaired by Denmark ii. CFC rules vs. transfer pricing + Looming tussle between residence country taxation (CFC rules) vs. source country taxation (transfer pricing) + U.S. government officials argue in favor of stronger CFC rules 3. China: VAT pilot scheme + VAT pilot scheme will be expanded nationwide on 1 August 2013 and will be extended to more services + Government intends that the VAT reform will be completed by 2015 + For information: contact Vicky Wang (Shanghai) vicwang@deloitte.com.cn 4. MAP / APA statistics i. OECD 2011 MAP report + Open MAP cases at the end of 2011 - Germany: 702 - US: 686 - France: 539 + On average, 25 months to complete an MAP case ii. U.S. 2012 APA report + 103 bilateral APAs completed by U.S. in 2012 + Over 50% with Japan 5. Japan i. Customs duty + Effective 1 April 2013, transaction value method cannot be used to set the customs value for goods imported by a non-resident importer ii. Takeda Pharmaceutical Company + Takeda issues press release announcing its victory in a transfer pricing dispute with the Japanese tax authorities + Expects a refund of USD163 million of taxes and interest 6. Australia i. Draft legislation: investment manager regime + Draft legislation released on 4 April for public comments + Third and final element of investment manager regime + For Deloitte Tax Alert, http://www.deloitte.com/view/en_GX/global/services/tax/cross-border-tax/international-tax/a845e257452fd310VgnVCM1000003256f70aRCRD.htm + For information: contact Peter Madden (Sydney) pmadden@deloitte.com.au or David Watkins (New York) davwatkins@deloitte.com ii. Dividend withholding tax: ruling + Australia / UK treaty, Art. 10(2)(a): "holds directly" at least 10% of the voting power + Not satisfied by 100% parent, where the shares are registered in the name of a nominee
