Daily Tax Update - December 9, 2014: EU Extends Scope for Automatic Exchange of Information

EU Extends Scope for Automatic Exchange of Information:  The Council of the European Union announced the adoption of a directive intended to prevent tax evasion and fraud by extending the scope for the automatic exchange of information.  The directive broadens the exchange of information to include interest, dividends, and gross proceeds from the sale of financial assets and other income, as well as account balances.  Member states will start exchanging the information by the end of September 2017.

EU Adds Anti-Abuse Clause to Parent Subsidiary Directive:  The Council of the European Union announced the approval of an amendment to the parent-subsidiary directive that disallows the benefits of tax exemption for profit distributions for arrangements or series of arrangements that are not “genuine” and have been put in place to obtain a tax advantage.

US and Singapore Sign FATCA Agreement:  Singapore and the United States signed a Foreign Account Tax Compliance Act Model 1 Intergovernmental Agreement.  Under the agreement, Singapore-based financial institutions must perform due diligence checks to identify financial accounts held by US persons.  According to the statement from the Ministry of Finance, the US and Singapore have been discussing a reciprocal FATCA arrangement, where the US would provide similar cooperation to Singapore.

Miscellaneous Guidance and Reports:
Notice 2014-78 provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates, and the 24-month average segment rates.  In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities.

TIGTA report finds that IRS should do more to reduce risk of improper payments of the Earned Income Tax Credit and the Additional Child Tax Credit.