Summary: 1. BEPS • OECD's public consultation on transfer pricing on 12 and 13 November 2013 • Last consultation on intangibles • Key issue: how do you ensure that the significant functions performed by related parties (other than the legal owner) are properly rewarded, reflecting the "added value" which those functions bring? • "Special measures": different taxing principle? • For information: John Henshall (London): jhenshall@deloitte.co.uk 2. Japan • Report on consumption tax treatment of inbound supplies of services and intangibles (such as digital products) • Under current law, such supplies are not subject to consumption tax • Report recommends change of law to cause the foreign supplier to be subject to consumption tax • Alternatives to enforce compliance • For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp 3. OECD • Discussion draft on international traffic - Proposed change to Article 8 of model treaty: from place of effective management to residence - Proposed change to Commentary: "may be taxed" has no impact on residence country (other than via Article 23A) • Discussion draft on "technical" amendments to Commentary - Article 10 and Article 13: share redemptions - Article 11: definition of "interest", in regard to third party sales of securities with accrued interest, premium, or discount 4. China • Bulletin 63 • Business tax on sales on financial products will be calculated based on one category, instead of four • Thus, gains and losses will be able to be offset • For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 5. In brief • Korea / Ecuador treaty: entered into force • India: Metro & Metro - Indian company paid service fees to non-resident at time when no withholding tax obligation - Retrospective change to deemed source rule, thereby causing withholding tax obligation - Such change does not cause payer of service fees to have "failed" to withhold tax - For information: K.R. Sekar (Bangalore): krsekar@deloitte.com
