Welcome to our April 2023 edition of the Funds Tax Bites, where we provide a “bite size” overview of the key recent and anticipated tax developments globally that we expect to be of interest to those operating in the investment funds industry.

Now may be a good time for multinational enterprises with subsidiaries in low or no tax jurisdictions to consider the amount of economic substance they have in these jurisdictions: to ensure compliance with economic substance rules, generally enacted from 2019 onwards, largely in response to the requirements of the OECD Forum on Harmful Tax Practices and the EU Code of Conduct Group; and to alleviate the impact of the Pillar 2 rules, which will begin to apply from 1 January 2024, multinational groups should consider substance for the “Substance-based Income Exclusion”.

On 7 September 2022, Brazil and the UK issued a joint declaration announcing the intention to start negotiating a double tax convention. This announcement came off the back of a number of years of discussion to progress both policy and technical issues – hence the treaty was able to be signed on 29 November 2022, within three months of that announcement. The treaty has not yet entered into force – this will happen upon completion of the legal procedures required by both countries, but it is not yet clear how long this will take.

Stay tuned to Baker McKenzie’s Supply Chains Disrupted video series for discussions and practical insights about current and emerging supply chain issues, with a focus on the tax, legal, trade and regulatory implications supply chain management teams should consider.