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Dajana Topic Pursuant to Article IV.4.d of the Constitution of Bosnia and Herzegovina (B&H), the Parliamentary Assembly of B&H on the 62nd session of the House of Representatives held on January 23 2014, and the 36th session of the House of Peoples held on March 12 2014, adopted the decision on approval for ratification of the agreement between B&H and the Republic of Macedonia for the avoidance of double taxation with respect to taxes on income and on capital. The agreement will apply to persons who are residents of one or both of the contracting states.

The new OECD VAT guidelines were signed by 86 countries, in Tokyo, Japan, in April. Chris Needham, global VAT/GST director for General Electric offers his views on what the guidance means for taxpayers.

Tom Seymour The Australian Taxation Office (ATO) has released draft guidance on the new Australian transfer pricing rules. The draft guidance addresses the topics of documentation, penalties, and the 'reconstruction' rules. The new transfer pricing rules include specific provisions that, in certain circumstances, require the taxpayer to disregard in whole, or in part, the actual transactions entered into and replace them with hypothetical transactions. The intention was for the rules to be consistent with the 'exceptional circumstances' under which the OECD Transfer Pricing Guidelines permit the non-recognition of transactions.

Donka Pechilkova The Bulgarian Ministry of Finance added an important new Appendix (Reference No.1 to Appendix 4) to the annual tax return that legal entities are obliged to submit for the calendar year of 2013. The appendix concerns transactions between related parties (both local and foreign ones) and transactions that were carried out with companies registered in offshore zones. In the application, all companies are obliged to disclose the amounts of such transactions that were settled during the year, as well as the type of the transactions (sales or purchases of goods, services and so on; loans; intercompany remunerations and other types of incomes or expenses). Due to the fact that the above-mentioned changes also concern transactions with physical persons, on March 10 2014 the National Revenue Agency published instructions for the filling out of Reference No.1 to Appendix 4 of the annual tax return declaration according to the text and meaning of Article 92 of the Corporate Income Tax Act and Reference No.7 to Appendix 4 of the annual tax return, related to Article 50 of the Income Taxes on Natural Persons Act. The aforementioned guidelines also attempt to clarify the ambiguity of the phrase "persons that have carried out transactions" included in Reference No. 1, which in some cases is replaced with "settled transactions", creating an obvious inconsistency in the method of reporting of loans and other transactions.

On April 29 2014 China's Ministry of Finance and State Administration of Taxation jointly issued Circular Caishui [2014] 43 (Circular 43) which provides for the entry into force of the Value Added Tax (VAT) reforms of the telecommunications sector, effective from June 1 2014.

Katerina A Charalambous

Bob van der Made During the May 6 2014 ECOFIN Council meeting, the EU-28 Finance Ministers could not reach political agreement on Part 1 (PPLs/hybrid loans) of the revised EU Parent-Subsidiary Directive (PSD) due to concerns by Sweden and Malta about a Greek presidency compromise text. Swedish concerns relate to a possible risk of double taxation of Swedish investment funds, for example when a foreign parent in an EU member state holds a stake in a Swedish investment company which holds shares in a big Swedish company (for example, Volvo Trucks, as mentioned by the Swedish Finance Minister in the May 6 ECOFIN meeting). In that case a dividend might be taxable for the investment company (and deductible upon redistribution to the foreign owner). Under the proposed revised PSD the redistribution dividend would be taxable at the level of the foreign owner of the investment company. If the foreign owner would hold the Volvo Trucks shares directly, then the dividend would be exempted instead under the PSD (since Volvo Trucks is not allowed to deduct dividends).

Greg Neill The Finance and Expenditure Committee recently reported back to New Zealand's Parliament on the Taxation (Annual Rates, Employee Allowances and Remedial Matters) Bill. Among other matters, the Bill proposes amendments to strengthen New Zealand's thin capitalisation rules and to facilitate the implementation of foreign account information-sharing agreements entered into between New Zealand and other jurisdictions.

Wensing Li

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