Other news in brief
A round up of other news this week.
A round up of other news this week.
In December 2021, the European Council published a draft directive for the implementation of Pillar Two of BEPS 2.0 in EU law. The European Council has now published a compromise text for the directive and accompanying note, which were discussed at the 15 March 2022 Economic and Financial Affairs Council meeting. The Council has confirmed Member States’ commitment to the October 2021 Inclusive Framework agreed timetable for the income inclusion rule (IIR) but interprets this to mean transposition into law will be required in 2022 (itself interpreted as adopting the Directive) for domestic entry into force no later than 31 December 2023. Hence, in practice, the Directive will take effect from 1 January 2024. This will align with the expected implementation date for Pillar One and the undertaxed profits rule (UTPR). Also of note in the compromise text is the option for EU Member States with no more than ten headquartered groups within the scope of the rules (broadly those with consolidated turnover of more than €750m) to elect not to apply the IIR and the UTPR for a limited period. The compromise proposal is the Council’s response to concerns raised by several Member States, in particular that the original 31 December 2022 deadline for transposing the Directive into domestic law would raise important practical and domestic institutional difficulties. An important question now is whether the OECD and other IF members will agree that the proposed timeline is in keeping with commitments made in the October 2021 statement. Further discussions are also required in respect of the issues raised by four EU Member States who have not yet expressed their support for the compromise text, with a view to reaching agreement on the general approach during the ECOFIN meeting scheduled for 5 April 2022. For further detail please read a Euro Tax Flash produced by KPMG’s EU Tax Centre.
The National Insurance Contributions Act 2022 and the Economic Crime (Transparency and Enforcement) Act 2022 both received Royal Assent on 14 March 2022. The National Insurance Contributions (NICs) Act 2022 introduces a new secondary Class 1 NICs relief for Freeport employees and employers of armed forces veterans among other measures. Under the Economic Crime (Transparency and Enforcement) Act 2022 a new Register of the beneficial owners of overseas entities that own land in the UK will be created, the UK’s Unexplained Wealth Order regime will be reformed and changes will be made to sanctions legislation.
The Office of Tax Simplification has published an online survey and Call for Evidence to seek views about how the taxation of property income could be simplified. This follows the publication of the scoping document for the Property Income Review on 24 February 2022. The review will consider the current regimes for the taxation of residential property held by individuals, partnerships and micro companies and develop recommendations for simplification and ways of addressing distortions. The Call for Evidence asks for responses from individual landlords and businesses, alongside professional advisors and asks for views under the following headings: structural aspects, operational aspects, administrative and compliance aspects and non-UK aspects. The Call for Evidence and survey are open now and will be available until 5 June 2022.
The European Council has reached a political agreement on the Carbon Border Adjustment Mechanism (CBAM). The CBAM will affect imports of carbon-intensive products to prevent offsetting the EU’s greenhouse gas emissions reduction efforts through imports of products manufactured in non-EU countries, where climate change policies are less ambitious than in the European Union. It is also intended to help prevent the relocation of the production or the import of carbon-intensive products, and encourages trading partners to establish and maintain their own carbon pricing policies. Although a targeted measure, by changing the overall cost of cross border transactions in carbon intensive goods, the CBAM may lead to significant changes to some groups’ supply chains, which in turn may have wider commercial and tax implications.
Yael Selfin, Chief Economist, KPMG in the UK, commented on the latest GDP data stating “while UK GDP rose by 0.8 percent in January as the impact of the Omicron wave eased, growth momentum is likely to be derailed by the conflict in Ukraine, with higher and more volatile commodity prices and shortages of key raw materials affecting production and leading to higher inflation.”
A new report from KPMG’s Global Mobility Services entitled ‘Current trends in remote working: Work from Anywhere’ provides insights into the current trends and ways in which the pandemic, employees and technology may transform the mobility and talent functions of businesses globally.