The European Free Trade Association, which comprises Liechtenstein, Iceland, Switzerland, and Norway, intends to take forward free trade negotiations with India, Indonesia, Malaysia, Vietnam, and Ecuador this year.
 

The Association released a statement marking Liechtenstein taking over as the bloc’s chair.
 

EFTA said it would look also at international developments concerning provisions in free trade deals concerning trade in services and investments. It said also that special emphasis will be given to EFTA’s relationship with the United Kingdom as it prepares to leave the European Union. An expanded legal analysis on the differences between the EFTA Convention, the EEA Agreement, and the Swiss bilateral agreement with the EU will be undertaken, it said.
 

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Mexico’s Inland Revenue is extending the deadline for an amnesty for the repatriation of undeclared overseas assets and income to October 19, 2017.
 

On January 19, 2017, the country launched a six-month amnesty during which taxpayers can pay a low eight percent tax rate on previously undeclared income held overseas on December 31, 2016, provided those funds are reinvested in Mexico.
 

The preferential tax rate represents a significant reduction when compared with the 30 percent headline corporate tax rate and the top 35 percent individual income tax rate normally charged in Mexico.
 

The amnesty is only available if repatriated funds are used to acquire fixed assets, including land or buildings, used in the taxpayer’s income-generating activities, or for other approved investments. Repatriation has to be effected through Mexican banks or brokerage houses.
 

The repatriation incentive is not, however, applicable to the assets and income of taxpayers under audit or review by the Mexican tax authorities, or to income originated through illegal activities.
 

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The arrangements for collecting the alleged state aid involved in the EU Apple tax investigation should be in place before the end of the year, according to a briefing by the Irish Finance Department.
 

In a briefing prepared for the new Finance Minister Paschal Donohoe, the Department noted that, notwithstanding the Government’s appeal against the EU’s ruling, Ireland is bound to recover the sums deemed to have been state aid.
 

The briefing stated that while the European Commission has estimated that this will amount to EUR13bn (USD14.98bn), the precise sum has yet to be calculated, and will be subject to interest. “The intensive calculation work has been prioritized and progressed but is not yet concluded,” it explained.
 

The Finance Department nonetheless expects the final recovery amount to be in the region of the Commission’s original estimate, and that the interest will be less than EUR2bn.
 

The money recovered will be placed into an escrow fund.
 

The briefing said: “Given the scale and bespoke nature of such a fund, the precise terms are still being developed and negotiated with Apple and the Commission – involving commercially sensitive deliberations. It is expected that the arrangements (including signed contracts) will be in place and the initial funding paid over to the fund before the end of the year.”
 

The briefing added that significant government resources have been dedicated to this case, led by the Department’s Tax and Banking divisions, and involving officials from Revenue, the National Treasury Management Agency, and the Attorney General’s Office. The Government has engaged external advisers on the escrow contracts.
 

The briefing noted that the formal deadline for recovery has now passed, but stressed that it is “not uncommon for member states to require more time for recovery” of alleged state aid. It said that the Commission “has acknowledged the complexity involved in our case but continue to send reminders about Ireland’s obligations.”
 

After a two-year state aid investigation, in 2016 the Commission concluded that two tax rulings provided by the Irish Government to Apple had “substantially and artificially lowered the tax paid by Apple in Ireland since 1991.”
 

Separate appeals against the ruling have been lodged by the Irish Government and by Apple in the General Court of the European Union, asking the court to void the whole decision.
 

The money will only be released once there has been a final determination in the European courts. The Finance Department expects this decision “to be several years hence.”
 

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The IMF has recommended that the Canadian Government undertake a “holistic” review of the tax system, to identify areas for improving efficiency while maintaining the country’s competitiveness.
 

The recommendation was made in the IMF’s latest Article IV review of the Canadian economy. According to the report, Canada’s tax system “has become increasingly complex with a myriad of tax credits, deductions, and exemptions.”
 

The IMF said that the last comprehensive review was carried out in the mid-1980s. It argued that any new review should examine all aspects of the tax system, including taxes on earnings, savings, consumption, businesses, and housing. It should cover not only federal, but also provincial taxes.
 

The IMF said that the review should “help assess whether there is scope for reducing distortions, minimizing administrative and compliance costs, and enhancing equity, while generating sufficient revenues to cover government spending.”
 

According to the IMF, “Comprehensive reform of the tax system is needed to support the structural transformation of the economy, demographic shifts, adoption of new technologies, climate change, and provincial fiscal sustainability.”
 

The report also examined the likely risks to the Canadian economy.
 

The IMF noted that while Canada has a competitive tax regime, a sharp reduction in the US corporate tax rate may diminish Canada’s attractiveness as an investment destination, and discourage foreign direct investment. The IMF also pointed out that trade accounts for over 60 percent of Canada’s GDP, and that a shift toward protectionism would harm Canadian exports and business investment.
 

The IMF recommended that Canada “should have on stand-by stimulus measures,” such as temporary cuts to personal income taxes, and infrastructure and social housing projects. This would help ensure that fiscal policy is able to “react quickly to unanticipated shocks.”
 

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The EU has asked France to amend how it calculates personal income tax for taxpayers who receive income from foreign sources.
 

The European Commission said that under the current rules, taxpayers resident in France and earning part of their income in another member state of the European Economic Area (EEA) cannot benefit from the same personal and family tax advantages as are applied to income earned in France.
 

Taxpayers who fall into this category are also unable to benefit from any refunds or deferrals of tax credits for income from foreign sources when they are in deficit.
 

The Commission said that as a result of these provisions, France is in breach of its obligations under the freedom of movement of workers, the right of establishment, and the free movement of capital articles of the Treaty on the Functioning of the European Union and the Agreement on the EEA.
 

The Commission said that France must comply with its request within two months. Failure to do so could result in France’s referral to the European Court of Justice.
 

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An administrative court in Paris has ruled that Google is not liable for EUR1.1bn (USD1.25bn) in unpaid taxes, dealing a blow to the tax authority’s anti-tax avoidance campaign against multinational companies.
 

The court said that Google’s Irish subsidiary did not have a permanent establishment in France and was therefore not required to pay the disputed sum.
 

“Google Ireland Ltd is not taxable in France over the period 2005-2010,” the court said in a statement.
 

The basis of the French Government’s challenge to Google’s tax position was that it paid minimal corporate tax in France despite deriving substantial revenues in the country during the period in question. It says that Google’s French income was routed to Ireland, where corporate tax is 12.5 percent, to avoid French corporate tax, which is currently 33 percent.
 

In reaching the verdict, judges agreed with the opinion of an administrative court adviser, who decided last month that Google was not liable for the EUR1.1bn back tax bill because the company did not have a sufficiently large physical presence in France.
 

Google’s offices in Paris were raided by more than 100 investigators on behalf of France’s tax authority in May 2016. France’s prosecutor’s office said at the time that the “searches are the result of a preliminary investigation opened on June 16, 2015, relative to aggravated tax fraud and organized money laundering.”
 

“The investigation is aimed at finding out whether Google Ireland Ltd. is permanently established in France and if, by not declaring some of its activity on French soil, it has failed to meet its fiscal obligations,” prosecutors added.

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China and New Zealand have held the second round of negotiations on an upgrade to their free trade agreement (FTA).
 

Representatives from the two countries met in Beijing on July 4 to discuss matters such as technical trade barriers, rules of origin, customs procedures, and trade facilitation. The China-New Zealand FTA was signed in 2008 and was the first FTA reached between China and a developed country.
 

China announced the commencement of upgrade talks in late March, following Chinese Premier Li Keqiang’s meeting with New Zealand’s Prime Minister, Bill English.
 

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The Canada Revenue Agency (CRA) is to investigate reports that real estate speculators are manipulating loopholes in the property residence rules to evade taxes.
 

In a statement, Revenue Minister Diane Lebouthilier said: “Like all Canadians, I am very concerned over allegations that some wealthy Canadians are not paying their fair share of taxes. That is unacceptable and I’ve since asked Canada Revenue Agency officials to look into the specifics of the case.”
 

Lebouthilier’s announcement follows a report by the Globe and Mail, in which it was claimed that “a network of speculators flips homes for a profit and evades taxes by classifying them as principal residences even though they never lived there.”
 

Michael de Jong, Finance Minister in the province of British Columbia – which recently introduced a 15 percent property transfer tax on offshore buyers – subsequently called on the CRA to “diligently enforce the law.”

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OECD Secretary General Angel Gurría has stressed the need for policy makers to provide a certain tax environment for businesses, to maintain trade and investment.
 

Discussing the tax challenges facing EU countries at the informal meeting of EU finance ministers, held in Bratislava, Slovakia, on September 10, 2016, Gurría said: “Of course there will always be some degree of policy uncertainty due to economic change – such as new business models arising from developments in the digital economy – but governments can design tax policies to minimize tax uncertainty. Improving dispute-resolution mechanisms is one obvious way to do this, and efforts to improve the EU Arbitration Convention are a step in that direction.”
 

Gurría said the OECD has launched work on ensuring tax certainty, in response to recent discussions at G20 level on the impact of international tax policy changes on trade and investment.
 

Gurría pointed out that globally consistent international tax rules are key. He stressed that options at EU level for reducing tax uncertainty include further harmonizing cross-border tax rules; offering binding tax rulings and advance pricing agreements; training tax administration officials to deal with new global challenges; and implementing cooperative compliance programs.
 

Gurría concluded that the base erosion and profit shifting (BEPS) recommendations will make certain types of tax planning arrangements – like those challenged in the the European Commission’s state aid investigations – impossible in the future.
 

Referring to the EU’s probe, he said: “The state aid cases deal with the past. It is thus extremely important that we all stick to the agreed rules on transfer pricing. Sending this message loud and clear will avoid jeopardizing the BEPS package we worked so hard to deliver.”
 

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Slovenia will increase corporate tax by two percent and reduce personal income tax for middle-income taxpayers in 2017, the Government has announced.
 

Under a package of tax reforms recently approved by the Government, corporate tax will increase from 17 percent to 19 percent next year. The measure is expected to raise an extra EUR60m (USD67.4m) annually in additional revenues.
 

The tax reform package also restructures personal income tax rates and thresholds, with measures designed to make Slovenia more attractive to skilled workers.
 

Under tax rates in force this year, income up to EUR8,021.34 is taxed at 16 percent; income between EUR8,021.34 and EUR20,400 is taxed at 27 percent; income between EUR20,400 and EUR70,907.20 is taxed at 41 percent; and income above EUR70,907.20 is taxed at 50 percent.
 

The tax package retains the first two tax brackets at the same rates but introduces a new 34 percent bracket on income between EUR20,400 and EUR48,000, with income between EUR48,000 and EUR70,907.20 taxed at 39 percent. Income above the highest threshold will continue to be taxed at 50 percent.
 

The personal income tax changes are expected to reduce tax revenue by EUR106m. However, the Government expects to recoup revenue lost from the tax cuts from a strengthening of the economy.

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