19th December 2022
With countries around the world feeling the effects of geo-political turmoil and the knock-on effects of inflation, many are looking for ways to claw back lost revenue, with taxes being one key source. This means that it’s never been more important for agencies placing talent around the world to keep abreast of tax and compliance changes. The market is shifting at an alarming pace, which is why we have provided a roundup of the latest cases for agencies to be aware of.
OECD global forum expands its tax ambitions
Earlier this year, authorities in India appealed to the Organisation for Economic Cooperation and Development (OECD) to apply its automatic exchange of information framework (AEIO) on crypto assets. While India doesn’t recognise cryptocurrency in a formal way, it does still tax it heavily, however the application of the framework would make it significantly easy to do so and to apply the legislation more easily across borders. And, in October, this request – made on behalf of India and eventually the other G-20 nations – was granted, with the rollout of the law set to be discussed at the upcoming OECD Global Forum.
The framework is currently applied to more traditional finances and was rolled out in 2014 with countries asked to start exchanging information by 2018. Four years later, nearly 100 countries had begun to do so and, as of 2022, around two-thirds of the group’s 165 members are signed up. Authorities are now hoping for such a positive and rapid take up of any new crypto-based legislation, however the change should keep agencies operating in this space on high alert, as it could have significant implications for future tax reporting.
UK and Brazil sign new tax agreement
The UK and Brazil recently announced the signing of a Double Taxation Agreement in a move labelled as the most significant trade agreement development between the two countries in many years. Double taxation makes cross-border trade and investment more expensive and creates obstacles for those working across different jurisdictions, like international contractors. The agreement is also designed to provide tax certainty and predictability to business, facilitate long-term investments and intensify trade and investment between the UK and Brazil. Notably, it has also been introduced to tackle tax evasion and improve the efficiency of the exchange of information between the two countries. If your agency places contractors in Brazil then you will need to monitor this situation closely as the legal situation is likely to change in the coming weeks following this announcement.
Portugal was ready to scrap its ‘Golden Visa’ system; why didn’t it?
And finally, despite the Portuguese Prime Minister’s insistence that the country may be forced into scrapping its so-called ‘Golden Visa’ system, a proposal put to parliament was rejected when his own Socialist Party voted against it. Following the announcement, other party members condemned their party’s vote, with some warning over the continued use of the system. Over the past decade, Portugal has given 1,470 Golden Visas to people originating from countries where the EU has cast aspersions over tax-transparency practices.
Unlike other European Union countries with similar programmes, Portugal has allegedly not carried out thorough due diligence and risk assessment of foreign citizens applying for golden visas. Ireland, for example, with a similar scheme, has implemented a series of processes which weigh the risk of applicants, areas like money-laundering, political exposure or being the subject of international sanctions. And, according to data released in Portugal, the country has issued numerous visas to individuals on the EU’s red list of non-cooperative countries, including Panama and Trinidad & Tobago, and thousands to residents of orange list countries, like Turkey, Russia, Vietnam and Jordan. Again, with this situation changing at a rapid pace, agencies that place contractors in Portugal – one of the more popular destinations for those working abroad – should keep up to speed with the latest legislative updates. As we all know, since the introduction of new legislation in 2018, agency directors can be punished for the noncompliance of the specialists they work with. If you’re in any doubt regarding your agency’s status then get in touch for leading specialist advice.
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