[World Tax News] Germany Amends Tax Haven Defense Ordinance | Includes Russia as Non-Cooperative Jurisdiction and More

Editorial Team – [2023] 157 Taxmann.com 513 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Germany amends Tax Haven Defense Ordinance; includes Russia as Non-Cooperative Jurisdiction

On December 20, 2023, Germany officially released the Second Ordinance, amending the Tax Haven Defense Ordinance through publication in the Official Gazette. The Tax Haven Defense Ordinance outlines a roster of jurisdictions identified as non-cooperative under the Law to Prevent Tax Avoidance and Unfair Tax Competition (the Tax Haven Defense Law).

These modifications stem from the European Union Economic and Financial Affairs Council’s October 17, 2023, decision to include Antigua and Barbuda, Belize, and Seychelles in the EU’s non-cooperative jurisdictions.

Simultaneously, the British Virgin Islands, Costa Rica, and the Marshall Islands were removed. Furthermore, Russia, previously designated as non-cooperative by the Council earlier in the year, is newly added. In terms of enforcing the measures outlined in the Tax Haven Defense Law, these additional non-cooperative jurisdictions are considered officially listed as of the publication date of the ordinance, namely, December 20, 2023.

The Tax Haven Defense Ordinance presently comprises a total of 16 jurisdictions. These include American Samoa, Anguilla, Antigua and Barbuda, Bahamas, Belize, Fiji, Guam, Palau, Panama, Russia, Samoa, Seychelles, Trinidad and Tobago, Turks and Caicos Islands, U.S. Virgin Islands, and Vanuatu.

Source: Federal Law Gazette

2. Belgian Chamber of Representatives Approve Pillar 2 Global Minimum Tax

On December 14, 2023, the Belgian Chamber of Representatives sanctioned the legislation facilitating the implementation of the Pillar 2 global minimum tax, aligning with Council Directive (EU) 2022/2523, dated December 14, 2022.

This legislation incorporates the Pillar 2 income inclusion rule (IIR) and the undertaxed payment/profit rule (UTPR). It ensures a minimum tax threshold of 15% for multinational enterprise (MNE) groups with annual consolidated revenue exceeding EUR 750 million.

The proposed law introduces a qualified domestic minimum top-up tax (QDMTT). The IIR and QDMTT apply to tax years beginning on or after December 31, 2023, while the UTPR takes effect for tax years commencing on or after December 31, 2024.

Source: Bill introducing a minimum tax for multinational business groups and large national groups

3. Singapore releases guide on “Tax Treatment of Gains or Losses from the Sale of Foreign Assets”

The Inland Revenue Authority of Singapore (IRAS) has released a new e-tax Guide providing insights into the revised income tax regulations governing the treatment of gains or losses arising from the sale or disposal of movable or immovable property located outside Singapore, collectively referred to as “foreign assets,” effective from January 1, 2024.

Currently, gains from the sale of foreign assets that are capital in nature are not taxable. To address international tax avoidance risks relating to non-taxation of disposal gains in the absence of real economic activities, Singapore has amended its foreign-sourced income regime to subject foreign-sourced disposal gains to tax under specific circumstances. The amendment aligns with Singapore’s focus on anchoring substantive economic activities in Singapore and our longstanding policy to align key areas of our tax regime with international norms.

Foreign-sourced disposal gains will be chargeable to tax under section 10(1)(g) of the Income Tax Act, 1947, under specific circumstances:

(a) the gains are received in Singapore from outside Singapore by a covered entity;

(b) the gains are derived by an entity without adequate economic substance in Singapore; or

(c) the gains are from the disposal of foreign Intellectual Property Rights (“IPRs”)

Source: E-Tax guide on Tax Treatment of Gains or Losses from the Sale of Foreign Assets