KPMG’s Week in Tax: 24 - 28 July 2017 | KPMG | LU

KPMG’s Week in Tax: 24 - 28 July 2017

KPMG’s Week in Tax: 24 - 28 July 2017

Tax developments or tax-related items reported this week include the following.

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BEPS

  • OECD: Recommendations made under Action 2 of the base erosion and profit shifting (BEPS) project propose domestic rule changes that would end the use of hybrid entities to generate multiple deductions for a single expense or deductions without corresponding taxation of the same payment. The changes would address branch mismatches that occur when two jurisdictions take a different view as to the existence of—or the allocation of income or expenditure between—the branch and head office of the same taxpayer.  

 

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Europe

  • Belgium: An agreement has been reached concerning various tax measures for the 2018 budget—including measures that would: (1) reform the tax treatment of savings by individuals; and (2) reduce the rate of corporate income tax for large companies and for certain small and medium-sized enterprises (SMEs).
  • Italy: A ruling by the Italian tax authority—in response to certain foreign investment funds seeking to qualify for an exemption from withholding tax—may make it easier for foreign investment funds to show they qualify for an exemption from withholding tax as available for certain real estate investment-related transactions.
  • Austria: A recent opinion of Austria’s supreme administrative court addresses what happens when requirements for the deduction of input tax with respect to the acquisition of real property are not initially satisfied.

 

Read TaxNewsFlash-Europe

Asia Pacific

  • Indonesia: Tax developments in Indonesia concern cost recovery and provisions on income tax in upstream oil and gas activities; an amendment to technical guidance for access to financial information for tax purposes; and a certificate of domicile for domestic taxpayers for the implementation of an income tax treaty.
  • Australia: The “early stage investor tax incentive” reports are due by 31 July 2017 for companies that believe they have issued shares that qualify.
  • Australia: Guidance describes how the new “similar business test” will be applied in accessing tax losses, bad-debt deductions, and net capital losses.
  • Australia: The treatment of hybrid loans concerning debt, equity, and hybrid mismatches was discussed at an international forum.
  • Saudi Arabia: Draft regulations have been issued for implementing a value added tax (VAT) system, with comments due by 19 August 2017.
  • India: The Employees’ Provident Fund Organisation issued guidance for exempted establishments to file e-returns through an online portal.
  • India: The Gujarat High Court held that a greater tax demand cannot be made on account of an incorrect permanent account number (PAN) used in the “tax deducted at source” return, and that the tax department’s action not allowing the taxpayer to correct the PAN was not acceptable. 
  • India: The Calcutta High Court held that salary received by a non-resident taxpayer in a non-resident (external) bank account in India for services rendered outside India was not includible in taxable income.
  • India: Central Board of Direct Taxes (CBDT) guidance about when an agreement or contract separately lists the goods and services tax (GST) on services provided states that the tax is to be withheld (deducted) at source on the amount paid or payable without including a “GST on services” component. 
  • India: The CBDT issued a list of “frequently asked questions” (FAQs) about the computation of book profit for the purposes of the minimum alternate tax.
  • India: The Allahabad High Court held that since no time limit has been prescribed for tax withheld (deducted) at source proceedings, certain actions can be executed at any time.

 

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Americas

  • Argentina: The rules for taxing capital gains realized on disposals of certain shares have been suspended until 2018.
  • Canada: The Saskatchewan lventure capital tax credit rate has been reduced to 17.5% (from 20%) and the maximum individual annual tax credit that can be earned will decline to CAN $875 (from $1,000).
  • Brazil: The State of São Paulo established a program that allows for the settlement of ICMS (sales tax) liabilities with reductions in penalty and interest assessments. 
  • Brazil: Legislation addresses where services are performed for purposes of the service tax.
  • Brazil: Law 13467/2017 reflects certain “labor reform” measures including amendments concerning collective bargaining standards, wage equalization, and employee medical care.

 

Read TaxNewsFlash-Americas

Africa

  • Nigeria: The electricity industry current faces certain operational, financial, and tax issues.

 

Read TaxNewsFlash-Africa

FATCA / IGA / CRS

  • Channel Islands: The Government of Jersey issued regulations with respect to the common reporting standard (CRS).
  • Singapore: An updated version of FAQs was issued as guidance on implementation of the CRS measures.
  • United States: The list of “approved certificate authorities” has been updated, with an effective date of 31 July 2017. Entities with a valid certificate from an approved certificate authority, based on the prior version of the certificate authority list, may continue to use it until that certificate expires.
  • United States: Draft and final versions of forms to be used to report FATCA and withholding tax obligations for the 2017 tax year have been posted, including Form 8966, Form W-8EXP, Form W-8BEN, and instructions for Form W-8BEN-E and Form W-8BEN.
  • Russia: A bill was submitted to the State Duma that would codify into Russian tax law, the rules for the automatic international exchange of information (AEOI) of financial accounts and documentation by international groups of companies, under the CRS regime. The anticipated effective date is 1 January 2018.

 

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The U.S. administration and congressional Republican leaders released a joint statement on tax reform highlighting lower tax rates for families and businesses, and reflecting that a decision has been made to set aside border adjustability in order to advance tax reform.
 
 
  • The U.S. Tax Court issued a memorandum opinion that concluded, in part, that the IRS cancellation of advance pricing agreements (APAs) was an abuse of discretion.
  • A KPMG report of state and local tax developments of technology-related tax issues is provided for the second quarter of 2017, with updates covering topics such as the taxability of software, guidance on digital equivalents, and other items.
  • Final regulations were issued, concerning the annual fee imposed on covered entities engaged in the business of manufacturing or importing branded prescription drugs. 
  • Final regulations were issued, concerning the health insurance premium tax credit available under section 36B. 
  • The IRS Appeals Office announced a pilot program will begin on 1 August 2017. The pilot program will allow for new web-based virtual conferences by taxpayers and Appeals.
  • A public hearing was scheduled in October 2017 about proposed regulations under section 468A relating to decommissioning nuclear power plants.
  • Legislation in California law amends the state’s partial sales and use tax exemption for manufacturing and research and development (R&D) equipment. The legislation also extends California’s cap and trade auction program (requiring certain businesses to acquire permits for each ton of greenhouse gases they emit into the environment).
  • Legislation in Illinois (in addition to making changes to the rates of state’s corporate income tax and individual income tax) amends the state’s unclaimed property law, effective 1 January 2018.
  • The Ohio Board of Tax Appeals concluded that goods picked up in Georgia and later transported to Ohio were Ohio-sitused for purposes of the commercial activity tax (CAT) economic nexus rules.
  • A Washington State hearing officer found U.S. population data (instead of internet-user population data) to be a better proxy for sourcing receipts from internet advertising for purposes of the B&O tax.

 

Read TaxNewsFlash-United States

 

  • The U.S. Senate agreed, 51-50, to begin debate on the House-passed bill, H.R. 1628, “The American Health Care Act of 2017.”

 

Read TaxNewsFlash-Legislative Updates

 

  • A wholly owned subsidiary of an international technology group, both located in Singapore, agreed to pay approximately $12 million to settle its potential U.S. civil liability for over 100 violations of sanctions prohibiting trade with Iran.
  • An updated list of FAQs on trade with Cuba was issued. The FAQs follow up an announcement by the U.S. president on 16 June 2017.
  • The U.S. Court of International Trade considered the proper tariff classification of gum base used in manufacturing chewing gum.
  • The first meeting of the U.S.-UK Trade and Investment Working Group will focus on providing commercial continuity for businesses as the UK prepares to leave the EU. The meetings will explore ways to strengthen trade and investment ties ahead of “Brexit.”

 

Read TaxNewsFlash-Trade & Customs

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