I. Introduction

On April 4, the Brazilian Government published Provisional Measure 563/2012 (“MP 563”) with some significant changes to the Brazilian transfer pricing regulations. While the Brazilian Congress is yet required to convert MP 563 within the upcoming 120 days, it is currently valid and enforceable.

Among other provisions, MP 563 modifies several articles of Law 9,430/96, the primary regulatory frame for transfer pricing in Brazil. The main MP 563 changes are:

• new minimum profit margins for the Resale Price less Profit Method – PRL, which vary (40, 30 and 20 percent) according to the taxpayer economic sector;

• new requirements for the application of the Comparable Uncontrolled Price Method – PIC;

• new transfer pricing methods for imports and exports of commodities (PCI and PECEX), which are based on quotations from internationally recognised commodities exchanges; and

• new rules for deductibility of interest derived from loan agreements between related parties.

This article provides an overview on these changes….

Disclaimer

I. Introduction

On April 5, 2012, the State Administration of Taxation (“SAT”) issued a circular (Bulletin of SAT [2012] No. 13, “Bulletin 13”) to provide detailed implementation guidance for the VAT treatment of zero-rated services — this is a significant development in the VAT reform pilot program and provides welcome clarification on the VAT refund administration for VAT zero-rated services.

II. Highlights of Bulletin 13

Effective from January 1, 2012, the “Exempt, Credit and Refund” method is applicable to VAT zero-rated services under Circular 131 (Caishui [2011] No. 131, issued by the Ministry of Finance and SAT on December 29, 2011). Bulletin 13 has clarified the scope of VAT zero-rated services and provided a detailed calculation method and administration requirements.

A. Clarification on the scope of VAT zero-rated services

Bulletin 13 clarified that the following services are not within the scope of zero-rated “International transportation services”, “R&D services” and “Design services”.

•  Transportation services relating to the transport of cargo or passengers from domestic areas to special Customs supervision regions (or zones), or, from special Customs supervision regions (or zones) to other domestic areas or other special Customs supervision regions (or zones); and

•  R&D or Design services provided to entities located in special Customs supervision regions (zones).

The services listed above are not eligible for zero rating and will, consequently, be subject to VAT.

B. Calculation of tax refund

The definition of “Exempt, Credit and Refund” method in Bulletin 13 follows the same principle….

Disclaimer

GENEVA — Switzerland and Italy have agreed to establish a formal dialogue and create a steering group to help ease tensions between the two countries over tax matters, the Swiss Federal Department of Finance (FDF) announced May 9.

In a statement, the FDF said the dialogue would include a working visit between Swiss President Eveline Widmer-Schlumpf, who is also the country’s finance minister, and Italian Prime Minister Mario Monti. The FDF gave no date for the meeting, only indicating that it would take place “soon.”

The new steering group will hold its first meeting May 24, the FDF said, and will work toward solving outstanding financial and tax issues.

The FDF said Michael Ambuhl, head of the Swiss State Secretariat for International Financial Matters (SIF) and the country’s chief negotiator on international tax matters, met May 9 in Bern with Carlo Baldocci, diplomatic adviser to the Italian Ministry of Economy and Finance, and discussed various financial and tax issues.

Those discussions also addressed new agreements Switzerland has signed with Germany and the United Kingdom imposing a withholding tax on investment income from Swiss bank accounts held by German and U.K. nationals, the FDF said….

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I. Introduction

In the eagerly awaited decision of Calgary (City) v. the Queen, 2012 SCC 20, the Supreme Court of Canada (SCC) has provided welcome clarification with respect to the application of goods and services tax/harmonized sales tax (GST/HST) to certain grant and subsidy funding, as well as confirmation of key principles to be applied in undertaking a single/multiple supply analysis.

The funding in this case was a transfer payment made by the Province of Alberta to the City of Calgary, which applied for monies to help pay for the construction and upgrading of its municipal transit system. The City had originally accounted for the funding as a grant, in effect using the monies received as an additional source of revenue to help to cover the cost of developing the system and claiming the municipal rebate to recover a portion of the tax incurred.

The City later took another look at its funding arrangements and decided that it would be appropriate to recharacterize the funding as consideration for a separate taxable supply to the Province of constructing the transit system. It attempted to claim additional input tax credits on that basis….

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I. Introduction

This article discusses the main tax and certain legal considerations relevant for foreign investors investing in Poland. In particular, this article covers the tax treatment of Polish companies, partnerships and branches, the tax consequences of debt and equity financing, the different forms of repatriating profits, debt pushdown possibilities and the location of foreign holding and financing companies in relation to Polish subsidiaries. Furthermore, certain other tax planning options are discussed, such as the possible tax free step-up of assets owned by Polish subsidiaries and using a Polish or foreign EU/EEA investment fund as investment vehicle.

II. Choice of a local Polish investment vehicle

A. Companies

The most commonly used investment vehicle for foreign and domestic investors establishing a business presence in Poland is a limited liability company, although joint-stock companies may also be used. A company is a Polish tax resident if it has its registered office or place of management in Poland. A resident company is subject to 19 percent Polish corporate income tax (CIT) on its worldwide income….

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Tomasz Krasowski is a Senior Associate at Salans, Warsaw. Niels Muller is a Senior Associate and Bartjan Zoetmulder is a Partner at Loyens & Loeff, Amsterdam.

According to amendments approved April 25 by the European Parliament Committee for Economic and Monetary Affairs and to be voted May 22 in the institution’s General Assembly, the EU financial transaction tax should exempt pension funds, but payment of the tax should be linked to the owner of the securities in order to help combat tax evasion.

The expanded scope, the exemption for pensions funds and the payment links to ownership of the securities all differ from the European Commission proposal put forward in September 2011. That proposal is currently being negotiated in the Council of the Economic and Finance Ministers, where it is opposed by a host of EU member states.

While the European Parliament does not have a veto over the European Commission proposal, it is hoping a large majority in favour in the General Assembly in May will put pressure on EU member states opposed to the financial transaction tax….

Disclaimer

China has recently revised its tax policies to encourage energy conservation and the efficient exploration of natural resources. This article briefly describes and analyses the four major tax policy changes that will affect companies and investors engaged in the exploration, production and sale of oil and gas in China.

I. China implements new resource tax regulations

In September 2011, China’s State Council announced new amendments to the Resource Tax Interim Regulations that would take effect from November 1, 2011. Shortly following this announcement, the Ministry of Finance (MOF) issued the revised Implementing Rules for the Resource Tax Interim Regulations on October 28, 2011 (together with the State Council’s decision, the “New Resource Tax Regulations”).

The State Council also promulgated at the end of September 2011 the new Regulations on Sino-Foreign Cooperative Exploitation of Offshore Petroleum Resources and the new Regulations on Sino-Foreign Cooperative Exploitation of Onshore Petroleum Resources (together, the “New Sino-Foreign Cooperative Exploration Regulations”), which change the tax payment obligations on foreign-invested onshore and offshore oil and gas fields by replacing the former royalty-based system with a resource tax system. The New Sino-Foreign Cooperative Exploration Regulations supersede and replace the prior versions of these regulations with effect from November 1, 2011….

Disclaimer

According to amendments approved April 25 by the European Parliament Committee for Economic and Monetary Affairs and to be voted May 22 in the institution’s General Assembly, the EU financial transaction tax should exempt pension funds, but payment of the tax should be linked to the owner of the securities in order to help combat tax evasion.

The expanded scope, the exemption for pensions funds and the payment links to ownership of the securities all differ from the European Commission proposal put forward in September 2011. That proposal is currently being negotiated in the Council of the Economic and Finance Ministers, where it is opposed by a host of EU member states.

While the European Parliament does not have a veto over the European Commission proposal, it is hoping a large majority in favor in the General Assembly in May will put pressure on EU member states opposed to the financial transaction tax….

Disclaimer

During the past 10 years, many of the states in Brazil’s less-developed northeast and north regions have offered discounts on Brazil’s main state tax, the ICMS tax on the circulation of goods and services, to attract large companies from the wealthier south and southeast. Some states have also lowered or eliminated the ICMS tax on imports in order to draw foreign exporters to their ports.

This has led to retaliation from the states that have lost imports and has contributed to Brazil’s already confusing tax structure by creating a wide range of tax rates on imports. The country’s industry also has complained that by lowering the ICMS tax on imports, these states are hurting Brazilian firms competing with the imports….

Disclaimer

GENEVA — Switzerland will raise the rates for past tax liabilities fixed under a new withholding tax agreement with the United Kingdom in order to match the higher rates recently negotiated in its deal with Germany.

In an April 20 statement, the Swiss government said the rates were raised at the request of the United Kingdom in line with a most-favored nation clause included in a March 20 protocol revising the Swiss-U.K. agreement.

The protocol states that, should Switzerland conclude an agreement with Germany before the end of April regarding the regularization of past tax due that provides for a higher level of taxation than under the U.K.-Swiss agreement, the higher level of taxation will also apply to the latter.

As a result, the range of rates on past tax liabilities will be raised to 21 percent to 41 percent from 19 percent to 34 percent, the Swiss government said…

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