LCN Legal has just released a new, free legal product built on no-code automation platform Documate, which helps ease the tax compliance burden for multinational groups and their advisers under the new ‘DAC6’ legislation, which is due to take effect from July 1, 2020.
The International Tax Enforcement (Disclosable Arrangements) Regulations 2020 No 25 – DAC6 as the rules are commonly known – are designed to enable European Union tax authorities to share information about cross-border tax arrangements. The rules as to which arrangements are reportable are complex and require consideration of multiple inter-relating conditions, for which the Documate platform was essential, given the complex logic and conditionality it allows lawyers to configure without using any code. Ongoing reporting must take place within 30 days of the relevant arrangements being made, or of ‘aid, assistance or advice’ being provided. Substantial fines and penalties apply for non-compliance.
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“Although tax authorities worldwide are showing lenience during the coronavirus outbreak, they are quite rightly still insisting on full compliance. And clearly they will be seeking to maximize tax revenues on an ongoing basis, in order to recoup the huge investment made in supporting the local economies,” explained Paul Sutton, LCN Legal co-founder. “The new DAC6 reporting regime is designed to give tax administrations advance warning of cross-border ‘arrangements’ made by multinational groups. Although the aims of achieving tax transparency are laudable, the reality is that these regulations present a significant compliance burden for businesses and their advisers at a time when many are trying to recover from the impact of the virus containment measures.”
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The LCN Legal self-assessment tool built on Documate is an online questionnaire that collects the relevant information regarding the ‘main benefit’ test and the applicable ‘hallmarks’ and applies the logic regarding the inter-relationship of the hallmarks and the main benefit test as prescribed by DAC6. The output is a Word document that contains a log of the responses made as well as an executive summary of preliminary conclusions on reportability in the form of a ‘traffic light’ report. The new tool is available on the LCN Legal website.
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