2025: WEEK 4 Reviewed
WORKSHOP
Safeguarding Tax Strategies – Setting up an Attorney-Client Privileged Tax Steering Committee
Join Dr. Daniel N Erasmus and Renier van Rensburg for an online workshop on 12 February 2025, discussing the critical role of a Tax Steering Committee in Tax Risk Management. Learn how lawyer-client confidentiality enhances tax strategies for multinational enterprises.
THIS WEEK'S ARTICLES
Navigating Hong Kong’s 15% Global Minimum Tax
Hong Kong’s adoption of the 15% global minimum tax marks a pivotal shift in its fiscal landscape, aligning with the OECD’s Base Erosion and Profit Shifting (BEPS) 2.0 framework. This development carries significant implications for multinational enterprises (MNEs), tax professionals, and regulatory bodies operating within or in relation to Hong Kong.
Tax Challenges Arising from the Digitalisation of the Economy – GloBE Information Return (January 2025)
The digitalisation of the economy has introduced unprecedented challenges in global tax compliance and administration. The GloBE Information Return, a central pillar of the OECD’s efforts, aims to provide transparency, consistency, and efficiency in implementing the GloBE Rules. This initiative aligns with the OECD’s Pillar Two framework, targeting a global minimum tax rate of 15%.
THIS WEEK'S CASE SUMMARIES
CASE #1
India vs SC Lowy P.I. (Lux): International Tax Case
The judgment in SC Lowy P.I. (Lux) S.A.R.L. vs Assistant Commissioner of Income Tax (ACIT) revolved around the denial of treaty benefits under the Double Taxation Avoidance Agreement (DTAA) between India and Luxembourg. The central issue was whether the appellant, a Luxembourg-based entity, was entitled to these benefits, given allegations by the tax authorities of treaty shopping, lack of economic substance, and non-beneficial ownership.
The applicant, a Category II Foreign Portfolio Investor (FPI) registered with the Securities and Exchange Board of India (SEBI), declared income from various Indian investments for the 2021–22 assessment year. These included capital gains, business income, and interest income. The tax officer denied the claimed exemptions under the DTAA, asserting that the appellant was a conduit entity with no significant commercial presence in Luxembourg. Key claims included that the appellant was controlled by shareholders in other jurisdictions (notably the Cayman Islands), lacked commercial rationale for being based in Luxembourg, and failed to demonstrate sufficient substance or beneficial ownership.
CASE #2
India vs Samsung Electronics: Permanent Establishment Dispute
The High Court of Delhi ruled on appeals filed by the Commissioner of Income Tax (International Taxation) against Samsung Electronics Co. Ltd., challenging the Income Tax Appellate Tribunal’s (ITAT) earlier decisions. The core dispute revolved around whether Samsung’s Indian subsidiary, Samsung India Electronics Pvt. Ltd. (SIEL), constituted a Permanent Establishment (PE) of Samsung Korea under Article 5 of the India-Korea Double Tax Avoidance Agreement (DTAA).
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CASE #3
Sweden vs “CA AB”: TRANSFER PRICING CASE
The case at hand concerns a dispute under the Nordic Tax Convention, a treaty aimed at avoiding double taxation among its signatories. The applicant, [Company Name Redacted] AB, received interest income from a related Norwegian entity in 2011 and 2012, which was taxed in Sweden. Concurrently, the Norwegian tax authority disallowed the corresponding deduction for interest expenses, citing non-compliance with the arm’s length principle. This discrepancy led to double taxation.
CASE #4
Pakistan vs Interquest Informatics: TRANSFER PRICING CASE
The case revolves around the taxation treatment of receipts received by Interquest Informatics Services, a Netherlands-incorporated company, under agreements with Schlumberger Seaco, Inc., operating in Pakistan. Interquest claimed the receipts as “business profits,” invoking Article 7 of the Netherlands-Pakistan Double Taxation Convention (DTT) to exempt them from Pakistani taxation. However, the Pakistani tax authorities treated these as “royalties” under Article 12, subjecting them to a 15% income tax.
CASE #5
Kenya vs Avic International: TRANSFER PRICING CASE
The Tax Appeals Tribunal in Kenya ruled on the case involving AVIC International Beijing (EA) Limited (Appellant) and the Commissioner of Domestic Taxes (Respondent) concerning disputed tax assessments covering Corporation Tax, PAYE, and Withholding Tax (WHT) for the years 2016 to 2023. The Respondent issued an audit notice on 30 July 2021 and finalized its assessments on 29 June 2023, leading to additional tax liabilities of Kshs. 530,528,802, later reduced to Kshs. 514,154,336 after objections.
This is a reminder that applications for our Postgraduate Programmes are now open for the March 2025 intake.
Postgraduate Programmes in Transfer Pricing:
APPLICATIONS NOW BEING ACCEPTED (Closes End of March 2025)
Postgraduate Programmes in International Taxation:
APPLICATIONS NOW BEING ACCEPTED (Closes End of March 2025)
Have some questions about the programmes?
Please don't hesitate to contact our Education Consultant, Ben Ellis, at [email protected] or call us on +44(0)2080522710.