Tax Professional usually responds in minutes
Our tax advisers are all verified
Unlimited follow-up questions
A Foreign Tax Credit (FTC) allows individuals and businesses to avoid being taxed twice on the same income in two different countries.
For example, if an Indian company earns income in another country, it pays taxes in that country.
But when it brings the income back to India, it can claim an FTC to avoid paying tax again on the same income.
In 2024, India has introduced stricter rules on how businesses and individuals can claim these credits.
This change is part of the government’s effort to close loopholes and make sure that everyone is following the rules properly.
The new rules require taxpayers to provide more documentation and proof that they’ve paid taxes abroad.
Previously, it was easier to claim an FTC, but now taxpayers will have to show detailed tax payment records from the foreign country, including receipts, assessments, and tax returns.
These changes are aimed at reducing disputes with the Indian tax authorities.
In the past, many companies would claim credits without providing enough evidence, leading to disagreements with the government.
By tightening the rules, India hopes to make the system clearer and more transparent.
The new rules will mostly affect Indian companies with foreign income and Indian nationals working abroad.
For example, multinational companies that operate in several countries will need to ensure that they have all the necessary paperwork to claim the FTC.
Without proper documentation, they risk paying higher taxes or facing penalties.
Additionally, expatriates who live and work abroad but still have tax obligations in India will also need to be more careful when claiming their credits.
India’s move to tighten FTC rules is part of a broader effort to improve tax compliance and reduce tax disputes.
While this may create more work for businesses and individuals, it’s a necessary step to ensure that the tax system remains fair and efficient.
Taxpayers should be prepared to keep better records and provide more documentation when claiming FTCs in the future.
If you have any queries about this article on India Tightens Rules on Foreign Tax Credit Claims, or any other tax matters in India, then please get in touch.
Since 2004, one of the most discussed cases in the world of international tax has been the Apple and Ireland tax deal.
Apple, one of the biggest tech companies globally, was able to benefit from Ireland’s favourable tax regime.
This allowed Apple to pay very little tax on the profits it earned in Europe.
But this deal caught the attention of the European Commission (EC), which believed that the tax arrangement between Apple and Ireland may have been a case of unlawful state aid.
The EC decided to investigate, and now, after many years of legal battles, the EU is about to make a ruling on the case.
Apple used a special arrangement with Ireland to declare much of its European profits in Ireland, a country known for having very low corporate tax rates.
By doing this, Apple avoided paying higher taxes in other European countries where it was making profits.
The European Commission believes that the tax benefits Apple received from Ireland are a form of state aid, meaning that the Irish government gave Apple an unfair advantage over other companies.
This kind of state aid is against the EU’s rules because it distorts competition between companies. The EC argues that Apple should have paid much more tax on its profits.
The EU’s final decision through the European Courts of Justice (ECJ) could force Apple to pay billions of euros in back taxes.
In fact, the European Commission already ordered Apple to pay €13 billion in back taxes in 2016, but both Apple and Ireland challenged this ruling.
Apple claims that it has paid all the taxes it owes, while Ireland argues that its tax system is fair and in line with EU rules.
This ruling is important not just for Apple and Ireland but for all multinational corporations operating in Europe.
If the EU rules against Apple, it could set a precedent that other big companies benefiting from similar deals will face tougher scrutiny.
This could mean higher taxes for other companies in the future.
The EU’s upcoming ruling on Apple and Ireland’s tax deal is a landmark moment in the ongoing battle to make sure that multinational companies pay their fair share of tax.
While some companies use clever strategies to reduce their tax bills, the EU wants to ensure that all businesses operate on a level playing field.
The outcome of this case could have long-term effects on tax policies across Europe, and companies will be watching closely to see what happens next.
If you have any queries about this article on EU Tax Ruling on Ireland’s Apple Deal, or any other international tax matters, then please get in touch.
Transfer pricing is a method used by multinational companies to set the prices for goods and services exchanged between their subsidiaries in different countries.
Recently, Coca-Cola has found itself in a major dispute with the US Tax Court over transfer pricing.
The court ruled that Coca-Cola must pay an additional $9 billion in taxes due to transfer pricing adjustments, and the company is now planning to appeal this decision.
Coca-Cola, like many multinational companies, sells products across different countries through its subsidiaries.
The US Tax Court found that Coca-Cola had set the prices for these transactions in a way that shifted profits to lower-tax countries, allowing it to pay less tax in the US.
The court ruled that these pricing arrangements violated the arm’s length principle, which requires transactions between related companies to be priced as if they were between independent companies.
As a result, the court ordered Coca-Cola to pay an additional $9 billion in taxes to the US government.
Coca-Cola argues that its transfer pricing arrangements comply with international tax rules and that the court’s ruling is unfair.
The company plans to appeal the decision, which could result in a lengthy legal battle.
If the appeal is successful, Coca-Cola could avoid paying the $9 billion in additional taxes.
However, if the court upholds the original ruling, it could set a precedent for other multinational companies, making it harder for them to shift profits to low-tax countries.
This case is being closely watched by other multinational companies, especially those that rely on complex transfer pricing arrangements.
If Coca-Cola loses the appeal, it could encourage tax authorities in other countries to take a closer look at how companies set their transfer prices.
For multinational companies, this means that they may need to review their transfer pricing policies and ensure they comply with international tax rules to avoid similar disputes.
Coca-Cola’s transfer pricing dispute highlights the challenges that multinational companies face in navigating complex international tax rules.
The outcome of the appeal will have significant implications for both Coca-Cola and other businesses, as it could reshape how transfer pricing is enforced around the world.
If you have any queries about this article on Coca-Cola to Appeal $9B Transfer Pricing Adjustment, or US tax matters in general, then please get in touch
The United Nations (UN) is stepping up its role in international tax policy, aiming to create a new framework for global tax cooperation.
Historically, organisations like the Organisation for Economic Co-operation and Development (OECD) have led the way in setting international tax standards.
However, the UN’s involvement signals a shift towards giving developing countries a stronger voice in shaping tax rules, particularly as digitalisation and globalisation have created new challenges for traditional tax systems.
The UN’s new framework is expected to focus on improving tax cooperation between countries, addressing issues like tax evasion, and ensuring fair taxation of multinational corporations.
The global tax system is under increasing strain. Large multinational companies, especially in the tech sector, often pay very little tax in the countries where they generate profits.
This is largely due to tax avoidance strategies that involve shifting profits to low-tax jurisdictions.
While developed countries have been trying to address this issue through initiatives like the OECD’s Base Erosion and Profit Shifting (BEPS) project, developing countries argue that they have been left out of the conversation.
The UN believes that a new framework could help level the playing field for developing nations, allowing them to claim their fair share of tax revenues.
This is particularly important as many developing countries rely on corporate tax revenues to fund public services.
The UN’s proposed global tax framework is expected to focus on several key areas:
While the UN’s push for a new global tax framework is ambitious, it faces several challenges.
For one, many developed countries, particularly those in the OECD, are already working on their own tax reforms, including the global minimum tax under Pillar Two.
Some may be reluctant to give the UN a bigger role in tax matters, fearing that it could complicate or slow down existing efforts.
Moreover, multinational companies may push back against any rules that significantly increase their tax burden.
Countries with low tax rates, like Ireland or certain Caribbean nations, may also resist changes that could hurt their status as attractive locations for businesses.
The UN’s involvement in creating a new global tax framework is a sign that the world is recognising the need for more inclusive tax policies.
As the global economy becomes increasingly digital and interconnected, it’s important that all countries—especially developing ones—have a say in how taxes are collected.
If successful, the UN’s efforts could lead to a fairer and more transparent international tax system, where corporations contribute their fair share and countries can cooperate more effectively to combat tax evasion.
If you have any queries about this article on the United Nations New Global Tax Framework, or other international tax matters, then please get in touch.
Singapore is a major hub for international business, with many multinational companies setting up regional headquarters there.
To ensure that these companies pay their fair share of taxes, Singapore has strict transfer pricing rules. These rules govern how companies set the prices for transactions between their subsidiaries in different countries.
In 2024, the Inland Revenue Authority of Singapore (IRAS) updated its transfer pricing guidelines to reflect the latest international standards.
The updated guidelines include several key changes:
For multinational companies operating in Singapore, the updated transfer pricing guidelines mean they need to be more diligent in how they document their transactions.
The guidelines are designed to prevent companies from using transfer pricing to shift profits out of Singapore and avoid paying taxes.
The changes also align Singapore’s rules with international standards set by the OECD. This is important because it helps Singapore maintain its reputation as a transparent and compliant tax jurisdiction.
As Singapore continues to update its tax policies, companies operating in the country will need to stay up-to-date with the latest changes.
The updated transfer pricing guidelines are part of Singapore’s broader efforts to ensure that multinational companies contribute their fair share of taxes.
Singapore’s updated transfer pricing guidelines represent a significant step forward in ensuring that companies pay their fair share of taxes.
For businesses, this means more work to ensure compliance, but it also creates a fairer tax system that benefits everyone.
If you have any queries about this article on Singapore Updates Transfer Pricing Guidelines, or any other tax matters in Singapore, then please get in touch.
Corporate tax is the money companies pay on their profits, and it varies from country to country.
Vietnam has recently decided to raise its corporate tax rate for large multinational companies, especially those in the technology and manufacturing sectors like Samsung and Intel.
Vietnam raised its corporate tax because it wants to collect more revenue from the large multinational corporations (MNCs) that operate there.
These companies have been benefiting from Vietnam’s relatively low tax rate for years while earning significant profits from their operations in the country.
By raising the corporate tax, Vietnam hopes to increase the amount of money it collects from these companies. This revenue can be used to improve public services like healthcare, education, and infrastructure.
The tax hike is aimed at the largest multinational companies, especially those in tech manufacturing.
Companies like Samsung and Intel, which have significant operations in Vietnam, are expected to see an increase in their tax bills.
However, smaller companies and local businesses are not affected by the tax increase, as the government wants to continue supporting them.
For large companies, this tax increase could mean they have to rethink their tax planning strategies.
While Vietnam is still an attractive place for manufacturing because of its low labour costs and skilled workforce, companies may now have to factor in the higher tax rate when deciding where to invest.
On the other hand, Vietnam remains competitive compared to other countries in the region, and the government is still committed to attracting foreign investment.
Vietnam’s corporate tax hike for multinationals is part of its broader efforts to collect more revenue from big businesses while still supporting local companies.
For multinational corporations, this means adjusting to a higher tax environment, but Vietnam’s strong manufacturing sector and favourable business conditions will likely keep it as a top choice for investment.
If you have any queries about this article, Vietnam Raises Corporate Tax for Multinationals, or tax matters in Vietnam more generally, then please get in touch.
Corporate tax is the tax paid by businesses on their profits. Some countries, like Gibraltar, have relatively low corporate tax rates to attract companies to set up operations there.
However, due to international tax changes, Gibraltar is considering increasing its corporate tax rate to remain compliant with global standards.
Gibraltar’s current corporate tax rate is 12.5%, one of the lowest in the world. Many businesses choose Gibraltar because of this attractive tax environment.
However, the introduction of the OECD’s Pillar 2 global minimum tax—set at 15%—means Gibraltar might have to raise its tax rate to align with this international rule.
The global minimum tax is designed to prevent companies from shifting profits to low-tax countries to avoid paying taxes.
Countries with tax rates lower than 15% may have to increase them, or other countries where companies operate can “top up” the tax to meet the 15% threshold.
If Gibraltar increases its tax rate, it could still remain competitive compared to other countries, but businesses might have to adjust their tax planning strategies.
Some companies that rely on Gibraltar’s low tax rate might look for other tax-friendly jurisdictions.
On the other hand, by complying with the global minimum tax, Gibraltar will improve its reputation as a transparent and cooperative tax jurisdiction, which could attract more responsible businesses.
Companies currently benefiting from Gibraltar’s low corporate tax rate will need to evaluate how the increase will affect their profits.
They may have to pay higher taxes if the rate rises to 15%.
However, many businesses may find that Gibraltar remains an attractive place to operate, especially because of its other benefits, like a favourable regulatory environment and access to European markets.
Gibraltar’s potential corporate tax rate increase is part of a global shift towards greater tax transparency and cooperation.
While businesses may need to adjust to the new rate, Gibraltar’s continued compliance with international standards will likely strengthen its position in the global economy.
If you have any queries about this article on Gibraltar Considers Corporate Tax Rate Increase, or tax matters in Gibraltar more generally, then please get in touch.
Transfer pricing refers to the rules that govern how multinational companies set the prices for transactions between their subsidiaries in different countries.
These rules exist to prevent companies from artificially lowering their taxable income by shifting profits to low-tax countries.
Brazil is undergoing a major reform in its transfer pricing laws to align itself with international standards, specifically those set by the Organisation for Economic Co-operation and Development (OECD).
The reform aims to reduce tax avoidance by ensuring that companies operating in Brazil pay their fair share of taxes.
In 2024, Brazil passed Law No. 14596, which introduced new transfer pricing rules. These rules are designed to bring Brazil in line with OECD standards and the Base Erosion and Profit Shifting (BEPS) project.
This reform is essential because, historically, Brazil had unique transfer pricing rules that were inconsistent with global norms, which created confusion and made it easier for companies to shift profits.
One of the key changes in the new law is the arm’s length principle. This principle ensures that transactions between related parties (such as a parent company and its subsidiary) are priced as if they were between independent parties.
By applying the arm’s length principle, Brazil hopes to ensure that companies aren’t manipulating prices to reduce their tax liabilities.
The reform has significant implications for companies operating in Brazil.
Under the new rules, companies must provide more detailed documentation to prove that their transfer pricing arrangements comply with the arm’s length principle. Failure to do so could result in hefty fines and back taxes.
For multinational companies, this means they need to review their transfer pricing policies and ensure they comply with Brazil’s new rules.
The reform also creates more work for tax professionals, as they will need to help companies navigate the new requirements.
Brazil’s transfer pricing reform is part of a broader trend towards greater tax transparency and cooperation among countries.
By aligning its rules with OECD standards, Brazil is sending a message that it is serious about cracking down on tax avoidance.
This reform is expected to improve Brazil’s relationships with other countries and make it easier for foreign companies to invest in Brazil.
Brazil’s transfer pricing reform is a significant step forward in the fight against tax avoidance.
By adopting the arm’s length principle and aligning its rules with international standards, Brazil is making it harder for companies to shift profits and avoid taxes.
For businesses, this means more compliance work, but it also creates a fairer tax system.
Final thoughts
If you have any queries about this article on Brazil’s Transfer Pricing Reform, or tax matters in Brazil more generally, then please get in touch.
Non-cooperative tax jurisdictions, sometimes called “tax havens,” are countries or territories that don’t follow international tax rules.
These places can be used by people and companies looking to hide their money and avoid or evade paying taxes.
Argentina has a list of these places, and they keep an eye on which countries are cooperating and which ones are not.
If a country is on Argentina’s list, it means that companies and individuals doing business there might face higher taxes.
In September 2024, Argentina updated its list of non-cooperative tax jurisdictions.
This is something Argentina does regularly to make sure its list is up-to-date. In this latest update, Argentina removed five countries from the list.
By removing these countries, Argentina is saying that these places have started cooperating with international tax rules.
This is a good thing because it means fewer people and companies will be able to hide their money from tax authorities.
When countries cooperate on tax rules, it becomes harder for people and companies to avoid paying taxes. This means that governments can collect more money and use it to fund things like schools, hospitals, and roads.
By updating its list, Argentina is helping to create a fairer tax system, where everyone pays their fair share.
Argentina will continue to monitor other countries and update its list as needed.
For now, companies and individuals doing business with the countries that were removed from the list will have an easier time.
But for those still on the list, the higher taxes will remain in place.
If you have any queries about this article on Argentina Updates List of Non-Cooperative Tax Jurisdictions, or tax matters in Argentina more generally, then please get in touch.
Firstly, what is the Global Minimum Tax?
A global minimum tax is a tax rule that tries to stop big companies from paying very little tax by moving their profits to countries with super low taxes (called “tax havens”).
The idea is that every big company should pay at least a certain percentage of tax, no matter where they are based.
Japan is one of the countries working to put this rule into action. But it’s not easy, and Japan still has a long way to go before it can fully introduce the global minimum tax.
In 2021, Japan agreed with other countries in the Organisation for Economic Co-operation and Development (OECD) to introduce a global minimum tax of 15%.
This means that even if a company is based in a low-tax country, Japan can still charge it extra tax to make sure it’s paying at least 15%.
But agreeing to the tax is just the first step. Japan still needs to pass laws and create systems that can track companies and make sure they are following the rules. This is where things get tricky.
One of the big challenges Japan is facing is making sure it has all the right tools to check how much profit companies are making and where they are making it.
This requires a lot of coordination with other countries, especially because big companies can have hundreds of subsidiaries in different parts of the world.
Another challenge is making sure that Japan’s laws match up with the global rules set by the OECD.
If Japan’s rules are different from those in other countries, it could cause confusion and make it harder to enforce the tax.
Japan is working hard to put all the pieces together, but it will take some time. Experts say that Japan’s full global minimum tax system might not be ready for another few years.
The global minimum tax is a big deal because it helps ensure that big companies pay their fair share of taxes.
For Japan, making sure this tax works is important for protecting its economy and making sure that tax revenue is being used to improve services for everyone.
If you have any queries about this article on Global Minimum Tax in Japan, or any other Japanese tax matters, then please get in touch.