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.
If you would like more information on any of the articles in this issue—or would like to discuss their implications for your business—please contact your local BDO professional or the author listed at the end of the article.
- THE EUROPEAN UNION:
- INTERNATIONAL: Corporate tax bytes
- OECD:
- AUSTRALIA: Budget 2022-23 measures affecting businesses
- CAMBODIA: New law aims to attract investors
- CANADA:
- CHILE: U.S. tax treaty ratification moves forward
- ESTONIA: Agreement reached to postpone Estonia’s implementation of the global minimum tax
- GERMANY: Expanded reporting obligations for German entities affect ultimate beneficial owners
- HONG KONG: 2022/23 Budget includes measures to implement BEPS 2.0
- ITALY: Implementing rules for the new super deduction released
- KUWAIT: Income tax on Kuwait-registered branches of GCC banks proposed
- LUXEMBOURG: Capital contribution without share issuance does not increase acquisition price for purposes of participation exemption
- SINGAPORE: 2022 Budget includes announcement on Pillar Two minimum effective tax rate
- SPAIN: Interaction of new minimum tax with Pillar Two and summary of White Paper on international tax
- UGANDA: Definition of beneficial ownership may be expanded
- UNITED ARAB EMIRATES: Ministry of Finance launches public consultation on proposed corporate tax regime
- UNITED STATES:
Content adapted from BDO Global.
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