The past week ended with historical events for the tax system of the whole world. On Saturday, June 5, this year, after years of negotiations and discussions, the ministers of finance of G7 and key international organizations agreed to begin global tax reform. Its necessity is dictated by the continuous globalization and digitalization of the world economy.
First of all, the reform will be pointed at companies operating in the global digital economy. Their business model, due to the high variety of the global "tax space" and the specifics of the technological business, allows paying taxes not where the activity is carried out and the cost is generated, but mainly in the country of registration (or leaving them in tax "harbors").
It is assumed that the reform will consist of two key components - "Pillar One" and "Pillar Two."
For example, within Pillar One, the largest and most profitable transnational corporations will have to pay tax not only in countries where they are registered and have a head office but in countries where they actually operate and generate value as well. The rules will apply to international companies with profitability of at least 10%. At the same time, 20% of any additional profits that will lead to an increase in profitability should be redistributed and taxable in those countries where such companies operate.
Therefore, within Pillar Two, the minimum corporate tax rate for transnational corporations is set at 15%, which should prevent the "flow" of profits to offshore jurisdictions and stop tax "races" between countries.
The next step in introducing new global tax standards should be their support during a meeting of G20 finance ministers and central bank executives in July this year. And we understand that given the agreed position of Great Britain, Germany, Italy, Canada, USA, France, Japan, EU (Eurogroup), and the OECD, this is inevitable.
The King of Pop beats the tax authorities in court
How much do you think the image (or visually similar image) of The King of Pop, which remains the richest dead celebrity according to Forbes https://bit.ly/3hSUYoA and holds the 69-line list of the most popular artists of all time on Spotify https://bit.ly/3p2Fa4p?
It all began after the death of Michael Jackson and the payment of estate tax. The heirs removed the assessor who estimated everything at a huge $2,105, which was indicated in the tax statements. Tax authorities did not agree and made their estimate, according to which the value reached 434 million US dollars. The court faced a difficult task - to play for the "zero" or "go on a promotion", but they were not confused and invited alternative experts who considered their cost. The assessor of the heirs and the tax authorities made amendments to the preliminary calculations, presenting another alternative. In total, 5 alternative assessments were conducted, but the difference between the assessment of tax authorities and the judicial expert was $430 million. And all because of the inclusion of unforeseen benefits.
In other words, at the time of Jackson's death, and in his hands, these intangible assets were worth much less than what effective managers "turned" them into after his death. And as a finale: the cost was - 4.1 million US dollars (it would be spectacular if the judge announced it making a moonwalk).
Analytics prepared by Anna Chebotareva, Head of Valuation Practice at A1 Consulting
Ukraine is the first country in the world where provided legitimate passport in a smartphone
On March 30, 2021, the Verkhovna Rada of Ukraine adopted a bill "On the Unified State Demographic Register and documents confirming citizenship of Ukraine, identity or special status".
As a result, from the moment the Law becomes effective, an e-Passport and a Travel e-Passport (the same ones that are displayed in the application "Diia") gain legal force similar to paper passports and can be presented instead of and without additional presentation of paper versions. A1 Consulting team most appreciated the possibility of using electronic copies of documents by scanning a QR code in the Diia app, instead of the notorious scanned copies.
However, it is necessary to add that e-Passport does not allow you to:
📍 cross the state border of Ukraine, except cases when it is necessary to confirm the identity of a citizen of Ukraine while entering Ukraine; 📍 enter and exit the temporarily occupied territory of Ukraine; 📍 enter, stay, reside or move within the border zone, exit to the territorial sea and inland waters of Ukraine.
Thus, if an e-Passport almost fully keeps the functionality of its paper "brother", then a Travel e-Passport is only an identity confirmation of a citizen of Ukraine, and does not perform a number of key functions of a paper one.
Dmytro Nosenko, Senior consultant at A1 Consulting
For 2020, companies should report on transfer pricing in a new form
On March 19, the order of the Ministry of Finance of Ukraine of 31.12.2020 No. 841 came into force, which enounced an updated version of the form and the Order of drawing up the Report on controlled operations.
Therefore, taxpayers who carried out controlled operations during 2020 must submit a corresponding report on a new form before 1 October 2021.