4 October 2024
OECD publishes annual report on tax policy reforms
The OECD has published the latest in its annual series of tax policy reports, Tax Policy Reforms 2024. The report describes tax reforms announced and enacted in 2023 across 90 OECD and Inclusive Framework jurisdictions, and identifies longer-term reform trends, highlighting how governments have used tax policy to respond to consecutive crises, high levels of inflation, and long-term structural challenges. This year’s report highlights data suggesting that a recent trend of decreasing corporate income tax rates is reversing, with more jurisdictions implementing corporate tax rate increases than decreases for the first time since the first edition of the Tax Policy Reforms report in 2015.
BEPS Multinational Instrument – Azerbaijan and Mongolia ratify
The OECD has announced that Azerbaijan and Mongolia deposited their instruments of ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS MLI) with the OECD on 24 and 30 September 2024, respectively. The BEPS MLI will first enter into force in both countries on 1 January 2025. The 1994 UK-Azerbaijan and 1996 UK-Mongolia double tax treaties are included in the UK’s list of notifications under the MLI (deposited in 2018) and in the notification lists of Azerbaijan and Mongolia respectively, and thus modifications to the operation of both of these treaties – including the introduction of a principal purpose test article – will take effect in due course in accordance with the timings in Article 35 of the BEPS MLI. It is expected that HMRC will update the relevant treaty pages on GOV.UK (here and here) in due course with ‘synthesised texts’ showing the effect of the MLI’s modifications on each of the treaties.
OECD Crypto-Asset Reporting Framework XML schema and user guide released
On 2 October 2024, the OECD released the electronic XML format and user guide to support the automatic exchange of information pursuant to the Crypto-Asset Reporting Framework (CARF). The CARF, formally approved by the OECD in 2023, sets out international standards for the reporting by crypto-asset service providers to tax authorities of tax information on cryptoassets transactions, with a view to tax authorities subsequently automatically exchanging this information. Alongside the CARF, the OECD agreed related changes to the Common Reporting Standard (CRS), and the updated CRS XML Schema and User Guide were also published on 2 October 2024. The OECD has also issued a new frequently asked questions document on the CARF. The OECD expects the first exchanges under the CARF and the amended CRS to commence in 2027. In November 2023, the UK was one of 48 jurisdictions which issued a joint statement setting out their intention to transpose the rules into national legislation in time for 2027 exchanges, and the previous UK government held an initial consultation on UK implementation in early 2024.
HMRC publish update on the holding of fractional interests in shares in ISA accounts
On 24 September 2024, HMRC published their latest Tax-free savings newsletter which included an update on allowing Individual Savings Accounts (ISAs) and Child Trust Funds (CTFs) to hold ‘fractional interests in shares’ – i.e. contractual arrangements with ISA managers intended to allow an investor to invest in a proportion of a whole share. HMRC state that, following consultation, amendments to ISA and CTF regulations to enable certain fractional interests in shares to be held are expected to take effect in the “coming months”. HMRC also state that any fractional interests acquired prior to these changes may be retained, but once the amended regulations come into force, all such fractional interests must meet the relevant requirements. HMRC will work with ISA managers and their industry representatives over the coming months to make clear what the new amended regulations will require.
EU Deforestation Regulation – proposal to delay implementation
The EU Deforestation Regulation (EUDR) aims to ensure that key goods placed on the EU market will not contribute to deforestation. The EUDR will prohibit seven key commodities (cattle, cocoa, coffee, palm oil, rubber, soya, and wood) and products derived from those key commodities (such as beef, chocolate, and furniture) from being placed on, or exported from the EU market unless certain deforestation-free requirements are met. The EUDR, which includes new compliance filing requirements, was due to come into effect for large businesses on 30 December 2024. However, the European Commission has proposed a delay of 12 months to the implementation, to allow authorities and businesses more time to prepare. If approved by the European Council and European Parliament, the requirements will instead come into effect for large businesses on 30 December 2025, and for micro- and small enterprises from 30 June 2026. The Commission also published further guidance documents and an international cooperation framework. (Contact: Eleanor Caine)
EMEA Dbriefs webcasts
The next EMEA Dbriefs tax webcast will be on Thursday 10 October 2024 at 14:30 BST/15:30 CEST. In Potential impact of US elections on tax policy for US multinationals with EMEA subsidiaries, hosted by Mark Saunderson and Arjan Fundter, our presenters will look ahead at the upcoming US elections that are now only a few weeks away. The webcast will compare the tax policy platforms of the two leading candidates for President, and of the Democrats and Republicans in general, and examine what kinds of tax legislative changes may be on the horizon for US multinationals with subsidiaries in the EMEA region.