Malta Transfer Pricing Enabling Provision
The Budget Measures Implementation Act has introduced an enabling provision in the Income Tax Act which empowers the Minister of Finance to enact rules in relation to transfer pricing. The new article 51 of the Income Tax Act states that such rules may provide for the determination of the arm’s length pricing of a transaction or a series of transactions, any adjustments in relation thereto and advance pricing agreements.
Ireland raises Issues with US-backed proposed Minimum Company Tax
As a result of US proposals to introduce a minimum corporate tax rate of 21%, countries like Ireland are presumed to lose significant revenue. Under the Stability Programme Update for 2021 of the Irish Department of Finance published on 14 April, Ireland stands to lose 2 billion Euros in corporate tax revenue by 2025.
Commenting on these developments, Pascal Donohoe, Ireland’s Finance Minister said: “Small countries, such as Ireland, need to be able to use tax policy as a legitimate lever to compensate for advantages of scale, resources and location enjoyed by larger countries.”
Technical details of the OECD proposals, including the rate on minimum tax, are currently under negotiations, but are widely expected to be settled in the range around 15%, rather than 21% as suggested by the United States. The negotiations at the OECD/ G20 level are expected to be completed by mid-year.
Digital Tax Agreement by October
Speaking at a conference organised by the Government of Ireland, Pascal Saint-Amans, the OECD Tax Director confirmed the agreed timeline for reaching a global agreement on digital tax. Pascal Saint – Amans said that the G20 meeting of the finance ministers in July is still the tentative deadline for an agreement to be reached, however some details may need to be agreed until October, the date of the subsequent G20 meeting.
Benjamin Angel, European Commission Director for Direct Taxation at DG TAXUD, speaking at the same event said that the EU is keen to proceed with its own proposals on digital levy this summer, noting that the Commission does not intend to create obstacles to the digitalisation of the European economy, which is an EU policy priority. Key consideration in designing the levy is to avoid discrimination of non-resident companies or tensions with the United States. Mr Angel highlighted that the EU digital levy has nothing to do with the negotiations held at the OECD at present.
