A round up of other news this week.
On 14 January 2021, the Office of the US Trade Representative (USTR) issued its reports and findings from the Section 301 investigations of the digital services taxes (DSTs) in Austria, Spain and the UK. According to the USTR’s findings, the DSTs in all three jurisdictions discriminate against US companies, are inconsistent with prevailing principles of international taxation, and burden or restrict US commerce. The USTR notes it is not taking any specific actions in connection with the findings at this time but will continue to evaluate all available options. At the start of January 2021, the USTR also released findings from its investigations of the DSTs in India, Italy and Turkey, concluding that each of these also discriminates against US companies, is inconsistent with prevailing principles of international taxation, and burdens or restricts US commerce. The USTR plans to release an update on its investigations into the DSTs currently under consideration in Brazil, the Czech Republic, the EU and Indonesia in the near future.
The UK’s digital services tax (DST) became effective on 1 April 2020, levying a two percent tax on UK digital services revenues – arising in connection with certain types of digital activity – that are attributable to UK users. Payments of DST are due nine months and one day following the end of the accounting period, therefore a company with an accounting period that ended on 30 April 2020 (which falls within scope and is chargeable to DST in terms of the final law) will need to make its first payment of DST by 1 February 2021. Meanwhile, notification is required within 90 days of the end of the accounting period meaning businesses with 31 December 2020 year ends, which meet the registration thresholds, will need to register by 31 March 2021.
Further to the publication of a scoping document, the Office of Tax Simplification (OTS) has now published a call for evidence on the use of third party data by HMRC looking at the principles that should apply in relation to third-party data and taxpayers. The review focuses on personal tax data and considers the sources of third-party data that it could be helpful to individuals for HMRC to receive such as bank and building society interest and dividends The review follows on from the Government and HMRC’s ten year strategy for building a trusted modern tax administration system, which identified the ‘smarter use of data’ as an opportunity to modernise tax administration. The consultation will close on 9 April 2021 and the OTS intends to publish a report outlining its findings in Summer 2021.
The OECD and EU are currently reviewing the Common Reporting Standard (CRS) and DAC 2 in light of both financial innovations in e-money and crypto currencies, but also feedback from tax authorities on the information exchanged. Although e-money and crypto-currencies will be subject to consultation in 2021, reporters of information are encouraged to feed back to the relevant tax authorities on areas of concern, e.g. ambiguity in guidance.
In the latest Economic Outlook report, Yael Selfin, Chief Economist at KPMG in the UK, looks at the impact of the pandemic on the UK economy, and the outlooks for unemployment, inflation, and Government spending.
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