Countries continue to legislate in response to the OECD’s BEPS

EY’s “Latest on BEPS” covers the most recent legislative responses to the OECD’s BEPS project across the globe:

Austria

On 1 August 2016, the European Union (EU) Tax Amendment Act 2016, including among other provisions, the new Austrian Transfer Pricing Documentation Law (TPDL) was authenticated by the Federal President and published in the Federal Law Gazette. The wording of the TPDL corresponds to the wording approved by Austrian Parliament. The TPDL is applicable for fiscal years starting on or after 1 January 2016.

Belgium

On 3 August 2016, as part of the measures to align Belgian tax law with BEPS Action 5, the Belgian Parliament approved new legislation to withdraw the patent income deduction (PID) as of 1 July 2016 with a five-year grandfathering period until 30 June 2021. The PID is expected to be replaced shortly with a new, broader innovation deduction (ID). While complying with the modified nexus approach provided for by BEPS Action 5, there will be significant improvements. The new regime would not be limited to patents, but would also apply to copyrighted software and plant breeders’ rights. The deduction rate is expected to increase to at least 90% of the net qualifying income resulting in an effective tax rate of maximum 3.4%. Unused innovation deductions could be carried forward. The income qualifying for the new innovation deduction would also include capital gains. The new regime would also be applicable to patent requests.

Read about developments in other jurisdictions, including Australia and Canada, here.