Corporate Tax News Issue 62 - May 2022

A proposed directive in the EU would eliminate the bias that favours debt over equity financing for companies by further limiting the deductibility of interest expense but allowing the deductibility of increases in equity in certain instances. Because most countries allow companies to deduct interest on debt from their taxable income but do not offer the same treatment to equity increases, there is an inherent incentive for businesses to borrow. This could change in 2024.  

The tax treatment of cryptocurrency continues to pique the interest of the tax authorities. This issue features an article on Canada’s position on transactions using cryptocurrency. The Bahamas intends to allow its citizens to pay their tax liabilities using digital assets. The U.S. government has proposed extending certain securities-related tax rules to cryptocurrencies and other digital assets and expanding reporting requirements. The OECD has wrapped up a consultation on a new tax transparency framework for reporting and exchanging information on crypto-assets, as well as proposed amendments to the CRS.   

The OECD two-pillar framework remains in the spotlight with the release of GloBE model rules under Pillar Two and a public consultation on draft model rules relating to the intended regulated financial services exclusion under Amount A of Pillar One. We include an interesting article on the impact of the Pillar Two model rules on companies in the natural resources sector. Consultations on the implementation of the global corporate minimum tax under Pillar Two are going on in New Zealand and Switzerland and Canada is expected to follow suit. Spain introduced a 15% minimum tax in January, but it appears that this tax is not entirely aligned with the minimum tax under Pillar Two. In another development, Estonia has been granted permission to postpone the implementation of the proposed EU Pillar Two directive until 2030.   

The United Arab Emirates is consulting on the impending corporate income tax regime. Uganda is poised to introduce its third definition of the term “beneficial owner” to facilitate its exchange of information commitments.   

Cambodia has a new investment law that contains an array of tax incentives and streamlined procedures.   

Read these articles and more in the May 2022 issue of Corporate Tax News. Be sure to check out the Corporate Tax Bytes and global tax alerts. 

If you would like more information on any of the articles in this issue — or would like to discuss their implications for your business — please contact your local BDO professional. 

Source BDO Global