Australia’s Diverted Profits tax proposed to be applicable from 1 July 2017. Penalty tax will be charged at a rate of 40% on profits artificially diverted. Will apply to global entities with an annual global income of A$1 billion or more (USD 750 million) and an Australian turnover of more than A$25 million However, may not be imposed of one of the following tests apply to the taxpayer Sufficient economic substance test Sufficient foreign tax test Australia’s Diverted Profits Tax
30 Patent Box Regime
31 Patent Box Regime Introduced in 2000 by the Irish & 2001 by France as a reduced rate of tax on revenue from licensing or transfer of qualified IP. Belgium, Hungary, Luxembourg, Netherlands, Spain and UK have since introduced similar regimes Finance Act, 2016 introduced the Patent Box regime in India Gross amount of royalty from patents developed and registered in India will be taxed at 10% u/s 115BBF. Such rate is optionally available to Patentee resident in India. Bill provided for 100% expense on patent to be incurred in India – Act allowed 75%. No prohibition on set-off of losses
32 Country-by-Country Reporting
Country-by-Country Reporting is a tool intended to allow tax administrations to perform high-level transfer pricing risk assessments The country-by-country reporting template will require multinational enterprises (MNE) to provide annually and for each jurisdiction in which they do business, aggregate information relating to the global allocation of the MNE’s income and taxes paid certain indicators of the location of economic activity within the MNE group, information about which entities do business in a particular jurisdiction and the business activities each entity engages in. More than 50 countries have signed the Multilateral Competent Authority Agreement on the exchange of Country-by-Country reports (CBC MCAA) In the Finance Act, 2016, India has inserted section 286 to introduce the requirement of CbC reporting in India Country - by - Country Reporting (CBCR)
CBCR - Three tiered approach Three-tier documentation structure applicable to Multinational Enterprises having a consolidated group revenue greater than EUR 750 million. Master File – Provides a blueprint of MNE group’s business – Provides a high-level overview of the MNE group’s TP policies (on goods, services, intellectual property, treasury, etc.) Local File – Provides detailed information of inter-company transactions of the taxpayer – Demonstrates that the taxpayer has complied with the arm’s length principle in its material intragroup transactions CBCR – Aggregated tax jurisdiction-wise information on global allocation of income, taxes and indicators of economic activity supports high-level TP risk assessment.