Welcome to the July edition of our tax newsletter, bringing you updates on global and regional tax developments.
International updates
OECD: Statement of Inclusive Framework on the two-pillar solution, addressing the tax challenges of the digital economy
The OECD/G20 Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS) has recently released a statement concerning a two-pillar solution to address the tax challenges arising from the digitalization of the economy.
According to the OECD’s statement (PDF 178 KB), 130 member jurisdictions have agreed to a detailed implementation plan, with remaining issues expected to be finalized by October 2021.
The agreement indicates that the Inclusive Framework members aim for “a robust global minimum tax” with limited impact on multinational entities (MNEs) carrying out real economic activities with substance.
For more details, see the full KPMG tax flash here.
KPMG report: OECD/G20 Inclusive Framework agreement on BEPS 2.0
On 1 July 2021, in a historic agreement, 130 countries approved a statement providing a framework for reform of international tax rules. These countries are members of the OECD/G20 Inclusive Framework on BEPS. The statement sets forth the key terms for an agreement to a two-pillar approach to reforms. It also calls for a comprehensive agreement to be drawn up by the G20 Finance Ministers and Central Bank Governors meeting, taking place in October 2021, with changes coming into effect in 2023.
Read initial impressions and observations about the IF statement in a July 2021 report (PDF 392 KB) prepared by KPMG.
For more details, see the full KPMG tax flash here.
G20 Finance Ministers conclude meeting with agreement for global minimum tax
The G20 Finance Ministers and Central Bank Governors issued a communique (PDF 723 KB) following their third official meeting on 9th and 10th July 2021 in Venice.
This third meeting concluded with an agreement:
- For a more stable and fairer international tax architecture, with an endorsement of key components of the two pillars on the reallocation of profits of multinational enterprises and an effective global minimum tax.
- For the OECD/G20 Inclusive Framework on base erosion and profit sharing (BEPS) to finalize the design elements within the agreed framework, and to produce a detailed plan for the implementation of the two pillars by their next meeting in October 2021.
- For a “menu” of policy options on digital transformation and productivity recovery with policies and good practices to make better use of the opportunities of digitalization.
- To address climate change with closer international coordination on climate action.
For more details, see the full KPMG tax flash here.
GCC updates
The United Arab Emirates (UAE)
Dubai Customs Notice no. 10/2021-Anti-dumping duties payment procedures
Dubai Customs released Notice no. 10/2021 on the payment of definitive anti-dumping duties against GCC imports of ceramic flags and paving, hearth, floor, or wall tiles originating in or exported from India and China on 6th July 2021. It came into force on 1st July 2021.
Companies importing ceramic flags and paving, hearth, floor, or wall tiles originating in or exported from India and China are required to fill in the declaration and undertaking form, which will specify the amount of anti-dumping duties payable.
The duties are based on the percentages on the CIF value indicated for originating or exporting companies by the Ministry of Economy’s circular 1/2020 (between 23.5% and 106%). The undertaking form must be submitted at the time of customs clearance, and anti-dumping duties are payable through customs systems.
For more details, see the full KPMG tax flash here.
Kingdom of Saudi Arabia (KSA)
Saudi Arabia introduces new national rules of origin
The Saudi Minister of Finance and Chairman of the Zakat, Tax and Customs Authority (ZATCA) approved Ministerial Decision No.3852, which introduces the new national rules of origin (the rules) that determine the conditions to be met for goods imported into Saudi to qualify for GCC preferential treatment based on the GCC Unified Economic Agreement. The rules came into effect on 2nd July 2021, the date of their publication in the official gazette.
For more details, see the full KPMG tax flash here.
Oman
Tax treaty between Oman and Qatar to be signed
The Shura Council of Oman (Majlis Al-shura) authorized the signing of an income and capital tax treaty with Qatar on 14th July 2021. The Qatari Cabinet reportedly approved the signing of an income tax treaty with Oman on 28th April 2021. The treaty will be the first of its kind between the two countries and must be signed and ratified before it comes into force.
For more details, click here.
Oman suspends the Country-by-Country (CbC) report filing requirement until further notice
On 7th July 2021, the Oman Tax Authority (OTA) announced the suspension of the requirement to file a CbC report with the OTA until further notice.
Subsequently, the OTA issued an alert on 14th July 2021 clarifying that the above suspension is applicable only to those qualifying Multinational Enterprise (MNE) Groups with an Ultimate Parent Entity (UPE) resident outside Oman. Qualifying MNE Groups’ with an Oman-based UPE are still required to file the CbC report in Oman for the reporting fiscal year 2020 on or before 31st December 2021.
Further, the alert explicitly clarified that the CbC notification requirement for reporting fiscal year 2021 continues to remain applicable for all covered tax resident entities in Oman, and is due for submission on or before 31st December 2021.
For more details, see the full KPMG tax flashes here and here.
