On 3^rd April, the Organisation for Economic Cooperation and Development released a report addressing the tax implications of COVID-19 pandemic on cross-border workers and other related cross-border matters. 

Apart from launching stimulus packages across the world, Governments have also imposed certain restrictions with the aim of easing the pandemic. As a result, many cross-border workers are unable to physically perform their duties in their country of employment. They may be required to stay at home and telework or may be laid off because of the exceptional economic circumstances.

The OECD observed that this unusual situation is raising many cross-border tax issues particularly when workers are working in a country that is not that of their residence – so the question of taxing rights between countries arise. Currently, such rights are governed by international tax treaties. 

The OECD found that certain exceptional circumstances of the COVID-19 crisis call for an exceptional level of coordination and co-operation between countries, notably on tax issues, to mitigate the potentially significant compliance and administrative costs for employees and employers. The OECD encourages countries to work together to alleviate the unplanned tax implications and potential new burdens arising due to effects of the COVID-19 crisis. 

In this context, the OECD Secretariat released guidance on these issues following an analysis of the international tax treaty rules.

Should you have any queries or wish to discuss further, please send an email to covid@kpmg.com.mt.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.