We keep track of the latest international developments in the world of taxation for you.
Switzerland was not placed on the «black list» by the EU finance ministers, but given time until the end of 2019 to abolish its controversial tax regimes. Until that time, it will remain on the «grey list» together with 34 other countries. The «black list» now comprises 15 instead of five countries that have failed to keep their promises to the EU to abolish their controversial tax practices (including the United Arab Emirates, Oman and the Bermuda Islands). On the other hand, 25 countries have adapted their tax legislation to EU requirements and have been removed from the lists (including Hong Kong, Panama and Liechtenstein). In one year from now, the EU finance ministers will re-evaluate whether the countries on the «grey list» have delivered on their promises. If Switzerland does not manage to adapt its controversial tax regimes by then,
it will be placed on the «black list» of tax havens in 2020.
On Tuesday, 12 March 2019, the EU finance ministers will once again be discussing the controversial tax regimes, whereby a division into a «black list» and a «grey list» will be carried out. According to the EU, those states that have adjusted their controversial tax regimes/privileges by the end of 2018 will be definitively removed from the «grey list». If the states have remained inactive, they will be put on the «black list». That this clean-up operation could definitively eliminate the «grey list» was doubtful from the very beginning. Both developing countries and Switzerland could hope for longer deadlines from the EU. Minister of Finance Ueli Maurer recently explained the longer legislative period in Switzerland to the ministers in Brussels - especially regarding the possibility of a referendum. It is therefore highly likely that Switzerland
will remain on the «grey list» during the future debate - at least until the referendum on the Steuervorlage 17 / TRAF is held on 19 May 2019.
The EU finance ministers have removed Liechtenstein and Peru from their «grey list» of tax havens, as they have carried out the necessary reforms. They also moved Palau from the «black list» of non-cooperative countries and regional authorities to the «grey list». The reason for this was that Palau had made promises at a high political level to remedy the shortcomings identified by the EU. This leaves American Samoa, Guam, Namibia, Samoa, Trinidad and Tobago as well as the American Virgin Islands on the «black list». By the beginning of 2019, the EU finance ministers intend to decide who will definitely be removed from the «grey list». Should a country fail to honour its commitments, it would even be moved to the «black list». For Switzerland, which is also on the «grey list», time is therefore starting to run out, as the Steuervorlage 17 / TRAF is unlikely to be finalised by then.
French President Emmanuel Macron has announced that in 2019 he will abolish the so far ineffective and inefficient exit tax, which is designed to discourage wealthy shareholders and bondholders from relocating to low-tax countries. Additionally, Macron wants to reduce the corporate profit tax from currently 33.3 to 25% by 2022. Whether this will help to render France more tax attractive in international comparison remains questionable.
The EU Finance Ministers have adopted a directive which aims to combat aggressive cross-border tax planning through greater transparency in line with the OECD's BEPS project. The directive aims to oblige intermediaries such as tax advisers, accountants and lawyers to report cross-border tax planning strategies they design or offer that are considered potentially aggressive. Additionally, member states will be obliged to exchange the information acquired by means of this new directive automatically via a central database. Member states have until 31 December 2019 to incorporate the directive into their national legislation. The new reporting obligation will then come into force on 1 July 2020. The directive will also have an indirect impact on Switzerland. If the advisor of an EU customer is based in a third country, the reporting obligations described in the directive are transferred on to the customer.
The EU Finance Ministers have once again adjusted the black list of tax havens: Bahrain, the Marshall Islands and Saint Lucia have been removed from the list. These countries have promised corrections of their tax regimes and have therefore been moved to the «grey list» of those states that remain under observation until the commitments are implemented. At the same time, the ministers have added the Bahamas, the American Virgin Islands, St. Kitts and Nevis to the blacklist.
EU Finance Ministers have moved eight countries (Barbados, Grenada, South Korea, Macao, Mongolia, Panama, Tunisia and the United Arab Emirates) from the black list to the grey list because they made commitments to reform their tax practices.
The Council of EU Finance Ministers (Ecofin) has published a «black list» of 17 third countries which the EU considers to be «uncooperative» in tax matters. On the «black list» have been placed: American Samoa, Bahrain, Barbados, Grenada, Guam, Republic of Korea, Macau, Marshall Islands, Mongolia, Namibia, Palau, Panama, St. Lucia, Samoa, Trinidad and Tobago, Tunisia, United Arab Emirates. During the course of the procedure a further 47 states, including Switzerland, agreed to address disputed issues within certain deadlines and were included in a so-called «commitment list». The EU expects these countries to implement the necessary reforms by the end of 2018 (developing countries by 2019).
By the end of the year, the EU intends to draw up an initial version of a «black list» of tax havens («non-cooperative tax territories»). Tax experts from the member states are currently preparing it on behalf of the EU finance ministers. Although the final say is still reserved for the finance ministers, Switzerland was given an all-clear for the time being: the expert group will not propose Switzerland for this list.
France abolishes wealth tax. President Macron got the abolition through parliament with 77 to 19 votes. Macron and his government are confident that the rich will return to the country with their wealth, thus causing an increase in investments and jobs. The government is pursuing a similar goal with a new flat-rate tax of 30 per cent on capital gains (so-called «flat tax»), which was approved by the National Assembly on Thursday.
We follow the OECD Tax Talks and summarise them for you continuously.
On 27 February 2019, the Federal Council opened the consultation processes on the amendment of the Federal Act as well as the Ordinance concerning the International Automatic Exchange of Information in Tax
Matters (AEOI) by which the Federal Council wants to implement the recommendations which the Global Forum on Transparency and Exchange of Information on Tax Purposes (Global Forum) has issued for Switzerland.
The Federal Council has adopted the message on the implementation of the recommendations of the Global Forum regarding Phase 2 of Switzerland. The Global Forum had published these recommendations in a report on 26 July 2016. The draft law, which is now to implement these recommendations, proposes, among
other things, the conversion of bearer shares into registered shares or their design as book effects and the introduction of a sanction system for breaches of duty. The proposal has been critically received in the consultation process. But the Federal Council wants to adhere to the main points mentioned above, because otherwise Switzerland could receive an insufficient overall rating in the next country review of the Global Forum (end of 2018) and this would not only result in considerable reputational damage, but would also put Switzerland at risk of being placed on a list of non-cooperating states by other states. The bill is to be submitted for parliamentary consultation in spring 2019.
US President Donald Trump signs the US tax reform and it will therefore enter into force on 1 January 2018. The Senate adopted the draft bill called «Tax Cuts and Jobs Act» with 51 to 48 votes and the House of Representatives with 224 to 201 votes.
The US Senate has approved its draft bill on the controversial tax reform with 51 to 49 votes. Now the procedure to reconcile differences with the House of Representatives begins. Therefore, there is a good chance that President Trump will have an adjusted bill on the table for Christmas.
The vote in the Senate's second chamber of Congress is imminent. If there is a majority in the Senate, the House of Representatives and the Senate still have to agree on a common version of the law. The core concern of both versions is to reduce corporate income tax from 35% to 20% in order align it with the rest of the world, as the OECD average is currently 23%.
On 16 November 2017, the House of Representatives and the Senate's Finance Committee each adopted a draft law on the planned tax reform. The Senate's version will now be submitted to the second chamber of Congress for a vote. According to a study by the Tax Policy Center, however, the planned tax reform could mean that half of the US population will have to pay more taxes in 2027 than in the current year.
After four days of debate, the Tax Policy Committee of the US House of Representatives adopted its version of a tax reform with 24 to 16 votes. At the same time, the Republicans launched their own bill in the Senate. It also intends a reduction of the corporate income tax from 35% to 20%, but unlike the House of Representatives, it would not be implemented until 2019. There are also considerable differences between the two proposals in other respects, so it seems likely that the two chambers will each adopt a separate version of the tax reform and the procedure for eliminating differences will then follow.
The Tax Policy Committee of the U. S. House of Representatives has launched its first bill for the new tax reform. The centrepiece of the Republican draft is a reduction in corporate income tax from 35% to 20%. Taxes for small businesses will also be reduced. How the tax reform is to be financed has not yet been clarified, however, as the US budget is still highly deficient.
The Senate voted 51 to 49 to allow an additional burden on the federal budget of up to 1.5 trillion dollars within ten years. In this way, it should be possible to co-finance the tax cuts promised by the government for companies and private individuals as part of the new tax reform. The draft also provides for a simple majority vote on tax legislation. President Donald Trump's tax plans have thus cleared an important hurdle in the Senate.