OECD Pillar One and Pillar Two Blueprints released
On 12 October 2020, the G20/OECD Inclusive Framework published its ‘blueprints’ in relation to its work on the international corporate tax challenges arising from digitalisation. The Pillar One Blueprint report sets out the building blocks of proposed rules on where tax should be paid (‘nexus’) and on sharing taxing rights between countries (‘profit allocation’). Our alert on this report is available here.
The Pillar Two Blueprint report sets out proposals for an interlocking set of tax rules designed to ensure that large multinational businesses pay a minimum level of tax regardless of where they operate. Our alert on this report is available here.
It remains for governments to reach political consensus on the way forward.
The OECD has also published a consultation which runs until 14 December 2020, followed by a public consultation meeting in January 2021, together with other supporting documents including a press release, cover note, economic impact assessment, and FAQs.
There will be two Dbriefs webcasts on these documents:
• G20/OECD The Digitalised Economy – Blueprint On Nexus And Profit Allocation (Pillar One) - Thursday 29 October 2020 (14:00 GMT / 15:00 CET). You can register here.
• G20/OECD The Digitalised Economy – Blueprint On A Global Minimum Tax (Pillar Two) - Tuesday 3 November 2020 (14:00 GMT / 15:00 CET). You can register here.
Expansion of Coronavirus Job Support Scheme
As reported last week, the Chancellor announced on 9 October that the government’s Job Support Scheme (JSS) will be expanded. A fact sheet has been issued with further details, along with a Written Ministerial Statement, which also covers updates to the Local Restrictions Support Grant scheme. Under the expanded JSS, the government will pay two thirds of eligible employees’ salaries to protect jobs over the coming months up to a maximum of £2,100 a month. Cash grants for businesses required to close in local lockdowns will be increased to up to £3,000 per month. Businesses will only be eligible to claim the grant while they are subject to restrictions, and employees must be off work for a minimum of seven consecutive days. The scheme will begin on 1 November 2020 and will be available for six months, with a review in January 2021. Employers will be able to make a claim in arrears on a monthly basis online from early December 2020. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme (CJRS) to be eligible. All employers with a UK bank account and a UK PAYE scheme registered on or before 23 September 2020 can claim under the scheme. Only employees on their employer's payroll by 23 September are eligible. Further details will be set out in future guidance.
Institute for Fiscal Studies: Green Budget 2020
The Institute for Fiscal Studies (IFS) launched its Green Budget 2020 report on 13 October 2020. The IFS report analyses the economic developments since the March Budget, the uncertainty over the path of the economy in coming years, and the decisions faced by the Chancellor as he decides how policy should respond to support households, business and public services. A briefing summary is also available, together with a recording of the launch and the slides from the presentations.
OECD publication: Taxing Virtual Currencies
The OECD has released a publication Taxing Virtual Currencies: An Overview of Tax Treatments and Emerging Tax Policy Issues for presentation to the October 2020 meeting of G20 Finance Ministers and Central Bank Governors. The report was prepared with the participation of over 50 jurisdictions and analyses their approaches and policy gaps in relation to virtual currencies across income, consumption and property taxes.
Forthcoming Dbriefs webcasts
The next Dbriefs webcast is on Monday 19 October 2020, 11.00 BST/12.00 CEST. The title is UK Coronavirus Job Support Scheme - An Introduction To Eligibility, Required Employer Funding And Submitting Claims from our Global Mobility and Employment Tax series, hosted by James Warwick. Our panel of experts will discuss the key features of the new Coronavirus Job Support Scheme. There is a webcast on Tuesday 20 October 2020, 12.00 BST/13.00 CEST Year End Transformation - Plan Now To Optimise Resilience? from our Operations Transformation for Tax series, hosted by Stephanie Hurst. Our panel will discuss the key year-end tax accounting considerations, as well as the latest developments in tax reporting technology. There is another webcast on Wednesday 21 October 2020, 12.00 BST/13.00 CEST SAP S/4HANA®: The Tax Digital Boardroom from our SAP S/4HANA series, hosted by Jan de Clercq. Our panel will discuss S/4HANA and the ‘Tax Digital boardroom’, including how to manage your tax position, potential risks and any pending audits.
Combinova: ‘use’ of goods when applying inward processing relief: CJEU
Combinova imported goods into Sweden on 23 November 2017, processed them, and re-exported them on 11 December. It relied on inward processing relief (IPR) for relief from import VAT and duty, but was two weeks late in submitting the required bill of discharge. A customs debt arose because of this non-compliance, but that debt would be extinguished by Article 124 of the Union Customs Code if Combinova could demonstrate that the goods had not been ‘used or consumed’ and had in fact been re-exported. The CJEU has now ruled that ‘use’ referred to use which went beyond the processing which was authorised under IPR. If ‘use’ meant any sort of processing (as the Commission argued), then Article 124 would never have any effect on goods which were imported under IPR. Provided that Combinova had simply processed the goods as expected, had in fact re-exported them, and there was no suggestion of deception by the taxpayer, the import VAT and duty debt should be extinguished. (Contact: Bob Jones).
VAT: hiring skates separately: First-tier Tribunal
Visitors to Planet Ice in Milton Keynes can hire skates or bring their own; they can even hire skates to go and use elsewhere. In April 2019, the Upper Tribunal (UT) remitted an appeal to the First-tier Tribunal (FTT) to reconsider whether ‘skating with skates’ packages involved two separate supplies (if they did, then the hire of children's skates could be zero-rated). The UT instructed the FTT to consider not whether people using the rink might have their own skates, but whether typical customers who selected the ‘skating with skates’ package had realistic alternative options. The FTT, confirming its original decision from 2017, thought they did. Such customers had a genuine contractual freedom to use their own skates, and could plan to buy skates from a retailer (or even from the rink itself) when they decided to go skating. This might not make sense economically, given expensive purchases for children can languish at the back of a cupboard after one or two uses. However, purchasing skates was a realistic alternative for customers considering the ‘skating with skates’ package, and hiring them was therefore a separate supply. The appeal was allowed. (Contact: David Walters).
COVID-19: help and information
To help inform our clients and to enable them to understand how businesses can respond, recover and thrive in these times we are running a series of webinars focused on the economy, on particular sectors and on key roles within an organisation. You can register for future webcasts and view archived webcasts here. You can access more information here and also at our Deloitte global COVID-19 webpage. You can also sign up to our Deloitte Tax Atlas COVID-19 Tax and Fiscal Measures microsite, which provides a high-level summary of tax and fiscal coronavirus measures that have been announced by governments, and our COVID-19 Signal Topic email alerts, here.