Other news in brief

Following the announcement on 22 May of a UK General Election, the Spring Finance Bill completed its final stages through Parliament as part of the ‘wash-up’ process before dissolution. No amendments were made during these final stages. Royal Assent was granted on 24 May 2024 and Finance (No. 2) Act 2024 has now been published. Our earlier article discussed the main provisions of the Spring Finance Bill, all of which remain unchanged in the final legislation.

On 24 May 2024, the OECD updated its Guidance on the Implementation of Country-by-Country Reporting (CbCR). Only one change has been made, and this is to the guidance on the treatment of dividends. The guidance clarifies that it is necessary to look at the treatment of dividends from an accounting perspective (rather than, say, the tax treatment) and in particular the treatment in the source data used for the preparation of Table One of the CbCR. It also clarifies that payments between constituent entities should be treated consistently in the tax jurisdiction of the payer and recipient, based on the accounting treatment in the payer jurisdiction. For example, if the payer jurisdiction treats the payment as a dividend, but the recipient treats it as interest, for the purpose of Table One, it is treated as a dividend in both the payer and recipient jurisdiction.

On 30 May 2024, the OECD “welcomed the commitment of the 147 Members of the Inclusive Framework on Base Erosion and Profit-Shifting to keep working to resolve any remaining issues in time to start the signing process of the Multilateral Convention (MLC) implementing Amount A of Pillar One by the end of June this year”. This followed a meeting of the Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS) in Paris where it was confirmed that the IF “is nearing completion of the negotiations on a final package on Pillar One”. The text of the MLC was released in October 2023 and was discussed in our earlier article. In essence it provides for a coordinated system of taxation for the largest and most profitable multinational enterprises (MNEs) which should lead to the removal of many existing unilateral digital services taxes.

On 23 May 2024, HMRC updated their page containing tax treaties and related documents between the UK and Belarus with confirmation that Belarus has suspended provisions of many of its Double Tax Agreements, including the 2017 UK-Belarus Double Taxation Convention. 27 countries have been impacted and treaty provisions relating to dividends, interest and capital gains were suspended with effect from 1 June 2024. The announcement states that “The UK considers the treaty to remain in force and is continuing to comply with its terms”, and further information will be provided “in due course”. Pending receipt of that further information it is unclear what position the UK proposes to take with regard to the double taxation that may arise and which under the treaty would fall to Belarus to take steps to relieve (for example, by restricting taxation at source), creating some uncertainty for UK residents with income arising in Belarus.

Early tax advice is essential for local authorities to navigate complex tax issues and optimise their financial position. In a recent blog post KPMG experts discuss the common tax pitfalls and opportunities for maximising revenue or tax relief.