KPMG’s Week in Tax: 25 - 29 September 2017 | KPMG | LU

KPMG’s Week in Tax: 25 - 29 September 2017

KPMG’s Week in Tax: 25 - 29 September 2017

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

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BEPS and Transfer Pricing

  • OECD: “Peer reviews”—analysis of efforts by Belgium, Canada, the Netherlands, Switzerland, the United Kingdom, and the United States on implementation of the base erosion and profit shifting (BEPS) minimum standards for improving tax dispute resolution mechanisms—were released.
  • OECD: Heads of tax administrations met to discuss the status of implementation of the BEPS project and the movement towards the automatic exchange of financial account information. The discussions also focused on taxation of the digital and sharing economy.
  • Argentina: Country-by-country reporting rules were published in the official gazette, and are effective for fiscal years beginning on or after 1 January 2017.

Read TaxNewsFlash-BEPS

Europe

  • France: The draft budget for 2018 will be submitted to the French parliament in the next few days. The draft budget includes certain tax measures aimed at increasing the competitiveness of companies established in France and also at encouraging, through targeted measures, a reduction in the tax burden and incentives for individuals and companies to invest their savings in the economy. 
  • Switzerland: Reduced value added tax (VAT) rates will be effective 1 January 2018—providing a short deadline for taxpayers to prepare.
  • Poland: A draft amendment would introduce the “split payment” mechanism to VAT legislation in Poland. To encourage VAT taxpayers to participate in the VAT split payment system, the legislation would offer certain incentives.
  • Slovakia: A draft amendment to the income tax law would introduce a number of new provisions including: (1) a patent box regime to support research and development (R&D); (2) an “exit tax” when a taxpayer transfers assets or business activities abroad; (3) controlled foreign companies (CFC) rules; and (4) amended rules for business combinations by domestic companies. 

Read TaxNewsFlash-Europe

Americas

  • Canada: Nova Scotia’s 2017 budget was reintroduced, and does not propose changes to the individual (personal) or corporate income tax rates. A previously announced increase to the small business income threshold and increases to certain individual tax credits are included.
  • Brazil: New tax law measures are intended to foster growth of the domestic oil and gas industry.
  • Brazil: A new version of a program intended to unify and digitize tax, labor, and social security reporting obligations was released.

Read TaxNewsFlash-Americas

Asia Pacific

  • Japan: A new income tax treaty was signed with Russia and would replace the existing income tax treaty (1986). The new tax treaty includes provisions for reduced rates of withholding tax on dividends, interest, and royalties.
  • Korea: Courts and tax tribunals in South Korea addressed foreign tax credits under the Korea-China income tax treaty; the starting date for a refund request; and local file tax filing deadlines.
  • China: Businesses need to be aware of the effect of tax-related clauses within sales and purchase agreements when engaging in mergers and acquisitions.

Read TaxNewsFlash-Asia Pacific

United States

  • The Trump Administration, Republican leaders of Congress, and chairs of the tax-writing committees released a “unified framework” for tax reform that is intended to serve as a template for tax reform legislation. Implications as to what measures in this framework could mean for taxpayers are being considered.

Read TaxNewsFlash-Tax Reform

 

  • Notice 2017-53 announces that farmers and ranchers who previously were forced to sell livestock due to drought in an “applicable region” have an additional year to replace the livestock pursuant to section 1033 and to defer tax on any gains from “forced sales.”
  • Notice 2017-55 provides relief from the application of rules for “United States property” when controlled foreign corporations (CFCs) need to move the property—that is, “section 1221(a)(1) property”—because of the damage caused by recent hurricanes in Puerto Rico and the U.S. Virgin Islands.
  • Proposed regulations concern the “public approval requirement” under section 147(f) for tax-exempt private activity bonds issued by state and local governments. Earlier proposed regulations were withdrawn.
  • The IRS released a reminder of tax relief for taxpayers affected by Hurricanes Harvey, Irma, and Maria that includes postponed deadlines, diesel fuel penalty waivers, and other measures.
  • Notice 2017-54 sets forth the special per diem rates for taxpayers to use for 2017-2018 in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home.
  • Final regulations concern withholding from—and information reporting on—certain payments of gambling winnings from horse races, dog races, and jai alai and on certain other payments of gambling winnings.
  • An Alaska administrative law judge found that certain dividends received from a domestic subsidiary (excluded from the Alaska combined group under the “water’s edge” standard because its business activities were primarily outside of the United States) were subject to an 80% dividends received deduction.
  • A Texas administrative law judge found that a taxpayer qualified as a manufacturer and was entitled to the manufacturing exemption under the sales and use tax for wrapping and packaging supplies. 
  • Wyoming’s high court held that the generation of electricity does not qualify as “manufacturing,” and thus, certain chemicals used in generating electricity were not exempt from sales and use tax under the manufacturing exemption.

Read TaxNewsFlash-United States

 

  • The U.S. Tax Court released a “reviewed opinion” in which the court majority held that rent for agricultural operations was not includible in self-employment income of the individual taxpayer-farmers.

Read TaxNewsFlash-Cooperatives

FATCA / IGA / CRS

  • The IRS announced that its sending of file status notifications will take longer than usual due to a high volume of files coming into the IRS.
  • Notice 2017-46 sets forth procedures for certain foreign financial institutions required to report U.S. taxpayer identification numbers (“U.S. TINs”) for certain accounts under a FATCA Model 1 intergovernmental agreement (IGA).

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • A final rule adopts, with changes, proposed amendments (from 2012) to Customs and Border Protection (CBP) regulations regarding amendments to the in-bond process. CBP’s rule on the in-bond process allows imported merchandise to be entered at one U.S. port of entry without appraisement or payment of duties and transported by a bonded carrier to another U.S. port of entry or other authorized destination, as long as all statutory and regulatory conditions are met.
  • A luxury goods company headquartered in New York agreed to pay almost $335,000 to settle its potential civil liability for four apparent violations of the “narcotics kingpin sanctions” for shipments of jewelry to an entity on the SDN list.
  • CBP guidance provides that when Hurricane Maria caused ocean vessels to divert from their intended port of unlading to other port locations for discharge purposes, the ports are not to penalize carriers for such diversions of cargo.

Read TaxNewsFlash-Trade & Customs

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