As countries worldwide grapple with the confluence of inflation, surges in the prices of oil and gas and commodities, etc. and an enduring COVID-19 pandemic, some governments have resorted to temporary “windfall profits taxes,” often to generate revenue to fund public measures to ease pressure on the population. Our lead article covers the recently introduced energy profits levy on oil and gas producers in the UK. We also feature articles that discuss Italy’s one-time contribution on extra profits earned by companies in the energy sector, more expansive measures in Hungary’s “special taxes on extra profits,” which apply to companies in the financial, petroleum, energy and airline sectors, a proposal in Argentina that would apply to any company that generates extraordinary income from the increase in international prices and a proposal in Spain to introduce contributions on additional profits generated by energy companies and banks. Conversely, France’s parliament rejected a proposed “exceptional” tax on windfall profits on companies operating in the energy and freight transport sectors.
In other news, both Hong Kong and Uruguay have announced major changes to their offshore income regimes to bring them in line with EU requirements, as both jurisdictions are included on the EU’s grey list of noncooperative jurisdictions for tax purposes. In the EU, a recent report contains recommendations on how to remove taxation-based obstacles and distortions in the Single Market. Tax reform proposals in Chile would make fundamental structural changes to the corporate income tax regime, including abolition of the partially integrated tax system and replacing it with the separate taxation of companies and shareholders, as well as the introduction of a new mining tax targeting the copper production sector. Kenya has new rules on transactions with entities located in countries with preferential tax regimes and the Netherlands has revised its international rulings regime to introduce more requirements to obtain a ruling.
The UK is holding a public consultation on draft legislation that would implement parts of the OECD model Pillar Two rules, specifically a “multinational top-up tax” that would be charged when a subsidiary is located in another jurisdiction and the group’s profits in that jurisdiction are taxed at a rate below the minimum rate of 15%.
Learn about these developments and more in the August 2022 issue of Corporate Tax News. Be sure to check out the Corporate Tax Bytes and global tax alerts columns.
- EUROPEAN UNION:
- INTERNATIONAL: Corporate tax bytes
- OECD:
- AUSTRALIA:
- CHILE: Fundamental and major tax reform proposed, including new rules for mining companies
- GIBRALTAR: Highlights of measures in 2022 budget
- HONG KONG:
- HUNGARY: Extra profits tax levied on various sectors
- ITALY: Energy companies subject to one-time contribution on extra profits
- KENYA: Finance Act, 2022 now in effect
- NETHERLANDS: Decree on international tax rulings revised
- PAKISTAN: Finance Act, 2022 includes measures affecting businesses and disclosure of beneficial owners
- SAUDI ARABIA: New six-month tax amnesty announced
- SPAIN: Temporary windfall profits tax proposed for energy companies and banks
- UNITED KINGDOM:
- UNITED STATES: Treasury makes rare move to terminate tax treaty with Hungary amid minimum tax debate
- URUGUAY:
Content adapted from BDO Global.
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