Weekly Tax News - 22 August 2022

August 22, 2022

Publication of the EP study on the regulation of intermediaries

The study on the “Regulation of Intermediaries, including tax advisers, in the EU/Member States and best practices from inside and outside the EU”, requested by the FISC subcommittee of the European Parliament has been published beginning of August. It provides an overview of the regulatory framework for tax intermediaries in four EU countries (Ireland, the Netherlands, Germany, and Italy) and one non-EU country (the United Kingdom). “There is insufficient data available to enable the identification of best practices on the various forms of regulation currently in place”, the authors concluded. They therefore suggested carrying out a more comprehensive study of the regulation in all EU countries. They also pointed out that, given that the majority of promoters of tax avoidance schemes are specialist tax advisers often outside the ambit of professional bodies, it might seem counter-intuitive to continue to increase the legislative burden of law-abiding intermediaries without tightening entry to the tax advisory market.

Switzerland publishes draft legislation on Pillar II

On Wednesday 17 August, Switzerland opened a consultation procedure on its draft legislation implementing Pillar II (minimum taxation of large companies). Switzerland has chosen to proceed in several stages. First, an ordinance will temporarily regulate the minimum taxation in the country by means of a supplementary tax until the corresponding law is drafted. The purpose of this tax is to ensure the minimum taxation of corporate groups with worldwide sales of more than 750 million €. The ordinance also specifies how Switzerland's cantons will be distributed the revenues from the temporary supplementary tax. Switzerland said that it will examine the state of implementation in other countries before making a decision on when the regulation will come into force. At present, it expects the regulation to come into force on 1 January 2024.

Joe Biden signs the US tax and climate bill into law

On Tuesday 16 August, US President Joe Biden signed the landmark climate, health care and tax bill, called the “Inflation Reduction Act”. The package invests roughly $300 billion in climate and energy initiatives, limiting prescription drug prices and implementing the new minimum tax on large corporations. Negotiations over a larger spending package (the “Build Back Better Act”) fell apart last year. However, the US minimum tax proposal included in the Inflation Reduction Act reportedly falls short of the OECD Pillar II framework and might even be "at odds" with how the agreement would work in other jurisdictions. This would have raised concerns that multinationals will face a web of complexity and several observers would even be “doubtful” that the US proposal will be deemed compliant with the global minimum tax.

Commission launches call for applications for informal expert group on CBAM

On Thursday 28 July, the European Commission published a call for application for members of an informal expert group to provide advice and expertise on certain elements of the implementation of the Carbon Border Adjustment Mechanism (CBAM). The informal expert group will assist DG TAXUD to complete methods for the monitoring, reporting, quantification and verification of embedded emissions of products in the sectors in the scope of the CBAM, and in the early preparation of implementing acts, before submission to the relevant comitology committee, the Commission said. While Member States’ authorities will form part of the expert group, applications from other organisations such as business associations and NGOs are also welcomed. The deadline to submit applications is 15 September 2022.

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