KPMG’s Week in Tax: 23 - 27 October 2017 | KPMG | LU

KPMG’s Week in Tax: 23 - 27 October 2017

KPMG’s Week in Tax: 23 - 27 October 2017

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

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United States

  • The first tax reform bill (a House Republican bill) will be unveiled 1 November 2017, and with a mark-up by the House Ways and Means Committee to follow beginning 6 November 2017. This action will follow passage on 26 October by the U.S. House of the FY 2018 budget resolution.

Read TaxNewsFlash-Tax Reform

 

  • The president intends to appoint David J. Kautter to serve as Acting Commissioner of the IRS. Kautter will continue to carry out his duties as Assistant Secretary, Treasury, and his work on tax reform, while serving as IRS Acting Commissioner.
  • The 2017-2018 priority guidance plan was released late last week. It includes certain projects that have been identified as “burden reducing” and that the IRS believes can be completed in the 8½ months remaining in the plan year. Concerning the insurance industry, this year’s IRS business plan includes fewer insurance initiatives when compared to the 2016-2017 priority guidance plan.
  • Illinois’ independent tax tribunal held that metallurgical coke used in manufacturing zinc powder is not eligible for the manufacturing exemption (available under the state’s use tax regime).
  • Maryland’s tax court, finding that the activities of the taxpayer’s employees served a business purpose other than requesting orders, held that a seller of pet products and food was not protected from taxation under Public Law 86-272, and therefore was not entitled to a refund of corporate income tax.
  • A New York administrative law judge concluded that a taxpayer (providing securities rating services) did not establish that it had paid sales tax on behalf of customers and was thus denied sales tax refunds.

Read TaxNewsFlash-United States

BEPS and Transfer Pricing

  • India: The Central Board of Direct Taxes extended to 31 March 2018 (from November 2017) the due date for filing the first country-by-country report.
  • OECD: The Organisation for Economic Cooperation and Development (OECD) released comments received concerning a request for information about the tax challenges of digitalization, and the OECD announced a public consultation (hearing) on this topic scheduled for 1 November 2017.
  • OECD: A new implementation guidance was released, having the goal of promoting the effective collection of consumption taxes—including value added tax (VAT)—on cross-border sales.

Read TaxNewsFlash-BEPS 

Europe

  • Netherlands: The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion concerning a corporate income tax issue—whether taxpayers, despite being unable to enter into a fiscal unity with subsidiaries established elsewhere in the EU, are nevertheless eligible for benefits from certain separate elements of the fiscal unity regime as if there were the ability to enter into a fiscal unity with foreign subsidiaries (the “per element” approach). The Advocate General concluded that the interest deduction limitation is contrary to the freedom of establishment. In response, the Dutch Cabinet announced emergency remedial measures that would provide if the CJEU were to issue a judgment that follows the opinion of the Advocate General, certain corporate income tax and dividend withholding tax rules—also in domestic corporate relationships—would be applied as if there were no fiscal unity.
  • UK: The CJEU issued a judgment concluding that duplicate bridge is not a “sport” for value added tax (VAT) purposes, and is not exempt from VAT.
  • Poland: The CJEU issued a judgment concluding that EU Member States cannot impose mandatory liquidation on companies that seek to transfer their registered office to another EU Member State.Norway: New rules (effective beginning in 2018) concern the documentation requirements and approval processes for obtaining relief or an exemption from withholding tax “at source” on dividends. If the Norwegian distributing company does not know the identity or tax status of the beneficial dividend recipient, the company must withhold tax at a rate of 25% on dividend distributions. 
  • Norway: Legislative measures proposed in the 2018 budget would allow taxpayers that are residents of the European Economic Area (EEA) to carry forward losses incurred in Norway indefinitely, even if the taxable activity in Norway has ceased. Such losses could then be used by other Norwegian group companies through group contributions. Cross-border relief for Norwegian companies was addressed in a judgment of the European Free Trade Association (EFTA) Court.
  • Germany: According to a revised position of the Ministry of Finance, there is no requirement to register for VAT by a foreign supplier when there goods are moved from an EU country into German consignment stock, within the trader’s own business.

Read TaxNewsFlash-Europe

Africa

  • Kenya: An ongoing debate is whether the tax law needs rewriting or simply revising. 
  • Mauritius: The deadline has been extended to 1 October 2018 (from October 2017) for individual taxpayers to submit a statement of assets and liabilities for the fiscal year ended 30 June 2017. 

Read TaxNewsFlash-Africa

Americas

  • Canada: The Department of Finance announced plans for passive investment tax changes to protect venture “angel investing,” as the proposed private company tax changes proceed.• Canada: Finance announced a proposal to reduce Canada’s small business tax rate, and to make adjustments to the dividend tax credit rate and the Canada child benefit.
  • Canada: Proposed anti-surplus stripping measures—intended to prevent the conversion of dividends into capital gains—have been dropped by the government.
  • Chile: There are new requirements for taxpayers that have “partially integrated” tax systems (including taxpayers that have limited liability company or limited liability partnership interests) to submit an affidavit by 15 March 2018.
  • Argentina: Guidance concerning a “simplified export” regime includes measures for VAT recovery related to exports.
  • Brazil: ICMS (a state-level tax on merchandise) in São Paulo will be due with respect to downloads and streaming of software programs and applications and other electronic files.

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: A new bill in New South Wales (NSW) may expand the scope of the NSW stamp duty refund and allow for an up-front exemption for “reputable developers” of real estate.
  • India: The Central Board of Direct Taxes issued guidance to clarify the “place of effective management” and in particular with respect to the operations of a regional headquarter in India. 
  • India: The Supreme Court of India held that if a statute is unambiguous, a taxpayer cannot contend that a method that is favourable to the taxpayer must be adopted. The case concerned the valuation of land and a building.
  • India: The Supreme Court issued a decision concerning the tax treatment of a “deemed dividend” when the recipient of a loan payment was not a shareholder of the lender company. 
  • Indonesia: Certain “basic necessities” (in general, food) are exempt from VAT. 

Read TaxNewsFlash-Asia Pacific

FATCA / IGA / CRS

  • Liechtenstein: A proposal would expand the list of common reporting standard (CRS) partner countries to include 27 additional jurisdictions. The first exchange of information would take place in 2019 for the reporting year starting 1 January 2018.
  • Singapore: An updated version of “frequently asked questions” (FAQs) was released as guidance on implementation of the CRS measures. 
  • Channel Islands: The government of Jersey issued regulations that amend previously issued CRS regulations. The new regulations are effective 17 October 2017.
  • Switzerland: An agreement on the automatic exchange of financial account information (AEOI) with Singapore, and an updated version of the CRS technical guidance were released.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • United States: The Office of the U.S. Trade Representative (USTR) announced a new focus on determining whether countries that benefit from the Generalized System of Preferences (GSP) trade preference program satisfy the GSP eligibility criteria.

Read TaxNewsFlash-Trade & Customs

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