January 2019

GLOBAL TAX DEVELOPMENTS – AN UPDATE

Mayur B. Nayak / Tarunkumar G. Singhal / Anil D. Doshi
Chartered Accountants

In recent years, there has been a flurry of developments in the International Taxation field in the arena of taxation of Digital Economy, Preventing Base Erosion & Profit Shifting (BEPS), particularly after publication of BEPS Reports in October 2015 and signature of Multilateral Instruments by various Tax Jurisdictions. Investigations are being conducted by various affected Tax Jurisdictions particularly into tax evasion and tax avoidance through the use of Offshore UK Jurisdictions and other Tax Havens. In this issue, we have attempted to capture such major developments of particular interest to Indian Tax payers and their tax Advisors.

 

1.  GOOGLE, APPLE, FACEBOOK AND AMAZON (GAFA) TAX- FRANCE'S NEW DIGITAL TAX ON TECH GIANTS

The French government's GAFA tax is being introduced to combat attempts by the firms to avoid paying what is considered a "fair share" of taxes in the country, by taking advantage of European tax laws.

 

With efforts to reform a European Union (EU) tax law not bringing the desired results, France is going to introduce from 1st January 2019 a digital tax on technology giants such as Google, Facebook, Apple and Amazon. The new tax regime is expected to bring in an estimated 500 million euro ($570 million) to the country’s coffers for 2019. Major technology companies have come under the scrutiny of lawmakers in countries like France and Britain for allegedly routing profits through operations in countries with extremely low tax rates or other arrangements. Earlier this year, the European Commission published proposals for a three per cent tax on the revenues of major tech companies with global revenues above 750 million euro a year and taxable EU revenue above 50 million euro.


But to become law, EU tax reforms need the support of all member states. And some countries, including Ireland, the Czech Republic, Sweden and Finland are yet to come on board to bring the reforms.

 

2.  EU’S EXPANDED TAX HAVEN BLACKLIST COULD APPLY TO US.

2.1  Black List

The European Union plans to update its

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