Advance tax rulings are a common feature of mature tax systems. The tax systems of the United States, the United Kingdom, the Netherlands, Germany, Australia, and South Africa all have established ruling practices. Taxpayers can obtain an advance tax ruling in nearly all OECD member countries. Increasingly, many non-OECD countries are also offering advance tax rulings. An advance tax ruling regime seeks to promote clarity and consistency regarding the application of the tax law for both taxpayers and the tax authority. However, there are also inherent risks associated with the proliferation of granting confidential advance tax rulings which are not published or otherwise reported. This Tax Law IMF Technical Note focuses on designing an advance tax ruling regime in the nature of private tax rulings.
assumptions on which the ruling is based.
A private ruling is made when the applicant is served with written notice of the ruling and the ruling remains in force until withdrawn under Article 4.
A private ruling sets out the tax authority’s opinion on the question raised in the rulingapplication and is not a decision of the tax authority that can be formally reviewed, appealed or otherwise objected to, for the purposes of this law or any other law. For the avoidance of doubt, this Article does not limit in any way a taxpayer’s rights with respect to any tax
request additional information or clarification in relation to the application. The rulingapplication should go through an appropriate internal review process (e.g. two level review process) before making a decision to grant a ruling.
Notice of proposed ruling . Following the completion of the review process, the taxpayer will be notified of the proposed outcome of the ruling (i.e. favorable or unfavorable):
If the proposed ruling is favorable, then the taxpayer will be provided with a draft ruling which it must carefully review, particularly the description of
to other sources of income as well as account balances (from 2017), and are committed to implementing the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters (by 2017). They also exchange, upon request, firm specific tax rulings with other EU countries, and have strengthened information requirements for tax rulingapplications and related procedures.
Luxembourg has also made progress in AML/CFT in recent years . Next steps will need to center on the 2012 Recommendations of the Financial Action Task Force, where effective
This 2015 Article IV Consultation highlights that Luxembourg’s economic model, emphasizing fiscal stability, openness, firm prudential oversight, and responsiveness to investor needs, is delivering strong growth. Buoyant financial services exports contributed to real growth of close to 3 percent in 2014, with strong job creation. Budget 2015 launched a multi-year fiscal consolidation aimed at offsetting falling revenues from electronic commerce. The economy faces important challenges going forward. Evolving international tax transparency standards, in which Luxembourg is participating fully, could impact the revenue base. Growth is projected at 2.5 percent in 2015.