Greetings and Happy New Year! We are excited to announce that we have launched our newsletter - Tax Roast! This is a weekly newsletter that brings you the latest updates and insights from the international tax world from tax experts (and coffee enthusiastic) who are walking the tax advisory path.

I hope you will enjoy reading our newsletter, so let’s get this party started 🎉

International Tax Update

1/ North America

US / IRS expands scope of letter rulings

The IRS has expanded the scope of letter rulings, allowing it to address corporate transaction issues such as on IRC section 332 liquidations, section 351 transfers and corporate reorganizations. If you want to learn more about it, click HERE for more details.

2/ EMEA

European Union / Minimum Taxation Becomes Effective In the European Union

The implementation of Pillar Two of the OECD/G20 Inclusive Framework Global Agreement in the European Union through the Minimum Taxation Directive (2022/2523) became effective on 1 January 2024.

Some countries have, however, informed the European Commission of their intention to postpone the implementation, those countries being Estonia, Latvia, Lithuania, Malta and the Slovak Republic. The EU Directive on Pillar 2 allows Member States with less than 12 Ultimate Parent Entities to defer application for six consecutive fiscal years beginning from 31 December 2023.

An overview of the global implementation status of Pillar 2 can be found HERE.

Azerbaijan / Azerbaijan reduces withholding tax rate on dividends

Effective from 1 January 2024, the withholding tax rate in Azerbaijan on dividends has been reduced from 10% to 5%. Further information on this and other direct and indirect tax changes concerning Azerbaijan can be found HERE.

Angola / Angola announces changes to tax laws

The government of Angola has enacted various tax changes through its 2024 General State Budget. Most notable changes include inert alia the introduction of a 2.5% and 10% special contribution on current invisible foreign exchange operations (CEOCIC) for individuals and companies. Further information can be obtained HERE.

3/ APAC

Japan / Japan releases guidance on Pillar 2

The Japanese tax authorities have published new FAQs on 25 December 2023 on the Japanese income inclusion rules. This FAQ follows the guidance already released back in October 2023. The FAQ can be accessed via the Japanese tax authorities’ website, but for now its only in Japanese 🙂 

4/ LATAM

Nicaragua / Amendments to stamp duty rates

The Ministry of Finance and Public Credits of Nicaragua recently issued a list containing all stamp duties applicable as from 1 January 2024. Further information can be found HERE.

Fun Tax Fact :)

Today we searched for a fun tax fact about Canada 🍁 - here it goes 🙂 

In Canada, there is a tradition called “Polar Bear Tax”. Some residents in remote Arctic communities used to pay their taxes with seal pelts and other furs, as these were valuable commodities in the region. While this practice has largely disappeared, it’s a unique part of Canadian history.

Pillar 2 bootcamp

As from January 1, 2024 Pillar 2 has become a reality! So, we decided to launch this bootcamp to get you prepared for this new world. Our crew has already spent hundreds of hours already on Pillar 2 during our daily tax consulting life, and we know how overwhelming it can be. But this step-by-step guide can help you to stay ahead. We will explain the concept and the rules of Pillar 2 in plain English, so it’s easy to understand for everyone. Let’s start with the basics.

What is Pillar 2? And by the way, what is Pillar 1???

Under an OECD Inclusive Framework, more than 140 countries agreed to enact a two-pillar solution to address the challenges arising from the digitalization of the economy.

• Pillar 1 aims at expanding a country’s authority to tax profits from companies that make sales into their country but don’t have a physical location there; ie., through digital Permanent Establishment (PE).

• Pillar 2 introduces a global minimum Effective Tax Rate (ETR) where multinational (MNE) groups with consolidated revenue over EUR 750m are subject to a minimum ETR of 15% in each jurisdictions the Group operates.

What does GloBE stand for?

GloBE is an abbreviation for Global Anti-Base Erosion. And the GloBE rules are a set of rules aiming at ensuring that large MNEs will pay a minimum amount of tax in each jurisdiction they are present, so no profits will be shifted to tax heavens. GloBE rules are the cornerstone of Pillar 2.

Who needs to be concerned about Pillar 2?

The GloBE Rules apply to MNE Groups that has annual revenue of at least EUR 750 million in the Consolidated Financial Statements of the Ultimate Parent Entity (UPE) in at least two of the four Fiscal Years immediately preceding the tested Fiscal Year.

For the sake of completeness, not necessarily all the members of an MNE Group will be subject to GloBE rules. Each entity in a Group needs to be classified, and there might be for instance so-called Excluded Entities that do not fall under the same rules. But as good rule of thumb, if your MNE Group has a consolidated revenue of at least EUR 750m, you already need to start studying Pillar 2 🙂 

Leadership principles for top managers at Big Multi Inc. 🏢

Rule #1 - Create a Mission Statement

Congratulation, you just got promoted to a top manager🎉 

If I had to guess, probably you got promoted, because either your predecessor got everything wrong, or he became too old and locked himself out of his laptop for the third time in a week 🙂 Regardless, as a first rule, you need to come up with a new Mission Statement. But what is a Mission Statement?

A mission statement is a long and childish attempt to summarize what and how your company is supposed to produce and operate. But you need to be careful to include all the trendy buzzwords so your management will like it, but no one else can understand it.

If you are in trouble, we are here to help you! You can freely use the following template for whatever organization you manage:

“We strive to synergize impactful best methods through holistic approaches, leveraging cutting-edge paradigms and disruptive innovation to seamlessly engineer scalable solutions that empower stakeholders in a dynamic ecosystem, fostering a culture of excellence and thought leadership”

Don’t forget, without a good mission statement your employees probably won’t know how to handle their normal day-to-day tasks and you will risk that everyone will run around you like headless chickens (not that most of your employees would be actually capable for more…).

Tax meme of the week

Coffee corner

Full disclosure: we are not coffee experts (yet), BUT we have an undying love for good coffee, and we cannot imagine starting our day without a delicious cup of coffee 🙂 

That’s why we decided to explore the history of coffee, and how to make the perfect cup of espresso, cappuccino or latte macchiato - you pick your poison ☕ We will also test different coffee beans and share our review with you in plain English.

This week we will share the legend of the origin of coffee.

Origin of coffee

Once upon a time, in a land far, far away, there lived a goat herder named Kaldi. Now, Kaldi wasn't your ordinary goat herder. He had a knack for stumbling upon the most peculiar things. One fine day, as he was tending to his flock in the highlands of Ethiopia, he noticed something strange. His goats were bouncing around like they had just won the lottery!

Curiosity piqued, Kaldi investigated the cause of this goatly madness. And behold, he discovered that his mischievous goats had been munching on some red berries from a nearby tree. "Well, well, well," Kaldi thought to himself, "what have we here?"

Unable to resist the temptation, Kaldi decided to give these magical berries a taste. And boy, oh boy, was he in for a surprise! As soon as the first sip touched his lips, he felt a jolt of energy like never before. It was as if he had just chugged a gallon of rocket fuel!

News of Kaldi's newfound discovery spread like wildfire through the neighboring villages. People couldn't resist the allure of this invigorating elixir. They flocked to Kaldi's humble abode, begging for a taste of this mystical brew.

But it wasn't until the 15th century that coffee truly made its mark. In the land of Yemen, a wise soul took the roasted coffee seeds and brewed them into a heavenly concoction. It was like a party in a cup, with every sip awakening the senses and banishing sleepiness to the land of nod.

And so, the legend of coffee was born. From the humble beginnings of a goat herder's discovery to the bustling coffeehouses of today, this magical elixir has captured the hearts (and taste buds) of people all around the world. So, next time you take a sip of that glorious cup of joe, remember the tale of Kaldi and his energetic goats. Cheers to coffee ☕, the fuel that keeps us all buzzing!

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DISCLAIMER: None of this is financial or tax advice. This newsletter is strictly educational and is not investment or tax advice or a solicitation to buy or sell any assets or to make any financial or tax decisions. Please be careful and do your own research.
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