KPMG’s Week in Tax: 19 - 23 February 2018 | KPMG | LU
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KPMG’s Week in Tax: 19 - 23 February 2018

KPMG’s Week in Tax: 19 - 23 February 2018

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

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Transfer Pricing and BEPS

  • Italy: Draft rules were released under a framework for implementing the base erosion and profit shifting (BEPS) Actions 8-10 that include transfer pricing guidelines. The draft transfer pricing regulations are available for public consultation and comments until 21 March 2018.

Read TaxNewsFlash-Transfer Pricing

Europe

  • Denmark: The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion concluding that the Danish rules on the deductibility of losses from a Danish permanent establishment (PE) whose head office was not a tax resident in Denmark constitute a restriction to the freedom of establishment, but that such restriction may be justified by the prevention of double deduction of losses.
  • Netherlands: The CJEU issued a judgment addressing whether provisions under the Dutch fiscal unity regime are contrary to the freedom of establishment. The dispute related to the interest deduction limitation and rules relating to deductions of foreign exchange losses on EU participations. In essence, the CJEU concluded that taxpayers are eligible for benefits from separate elements of the fiscal unity regime (also referred to as the “per element” approach).
  • Belgium: The CJEU held that the stand-by time of a worker (a firefighter) at home who is obliged to respond to calls from the employer within a short period must be regarded as “working time” as defined by EU law.
  • France: An anticipated decision of French Constitutional Court is expected to address whether certain anti-avoidance provisions of French tax law—specifically concerning the rules on the recapture of financial expenses of a French tax group in instances of corporation acquisitions—are constitutional. The decision could possibly affect the application of other tax-avoidance measures in the French tax law.
  • Germany: Following action by the Council of the EU to simplify the value added tax (VAT) system for online marketplace entities operating in the EU, legislation in Germany would be expected to address VAT fraud associated with the online trading in goods. Operators of electronic marketplaces that fail to prevent “dishonest” traders from using their electronic marketplace would be liable for the amount of VAT evaded in such transactions. 
  • Isle of Man: The 2018 budget includes tax measures such as an increase to the income tax individual (personal) allowance.
  • Czech Republic: The Ministry of Finance submitted a draft amendment to the VAT law to transpose new EU regulations into Czech legislation.
  • Czech Republic: A draft amendment to the income tax law would affect individual (personal) income tax, the deductibility of borrowing costs, the controlled foreign companies (CFC) rules, exit tax, hybrid mismatches, and other measures.

Read TaxNewsFlash-Europe

Africa

  • South Africa: The 2018 budget was delivered by the Finance Minister and includes tax and revenue raising proposals such as an increase in the ad-valorem excise tax (duty) rate on luxury goods and a below-inflation increase in the individual (personal) income tax rebates and brackets.
  • South Africa: Under the 2018 budget, the rate of VAT would increase to 15%, effective beginning from 1 April 2018. 

Read TaxNewsFlash-Africa

Americas

  • Canada: The ratification process to implement the multilateral instrument (MLI) has begun. 
  • Canada: The 2018 British Columbia budget includes housing-related tax measures and beneficial ownership rules.
  • Chile: Tax developments concern: (1) the revaluation of real estate; (2) the tax treatment applicable to motor vehicles; (3) car benefits for company workers; and (4) legislation to promote productivity and investment.
  • Uruguay: A circular was issued to address the tax implications when assets used in investment projects are sold before the end of the asset’s useful life or are sold before the expiration of a 10-year period in the event that the asset’s useful life is greater than 10 years.
  • Brazil: There is a new process for filing federal tax returns and other information reporting returns—including social security filings for workers in Brazil—that replaces a prior process with digital, web-based filings.

Read TaxNewsFlash-Americas

Asia Pacific

  • Thailand: The filing deadline for the 2017 individual income tax return is 31 March 2018, and given the standard deduction limited to 60% of income, there is a question as to whether taxpayers would itemize their deductions or claim the standard deduction.
  • Thailand: The Thai Cabinet approved a bill for a new type of real property right (“Sub-Ing-Sithi”) that is intended to encourage investments.
  • Singapore: The budget for 2018 was released, and among the tax provisions are carbon tax measures and tax benefits for research and development activities.
  • Singapore: An updated guide from the tax authority clarifies the terms “directly in connection with” and “directly benefit” with respect to those transactions that will receive favorable treatment under the goods and services tax (GST) regime.
  • Pakistan: There are updates on the Company Act.

Read TaxNewsFlash-Asia Pacific

FATCA / IGA / CRS

  • France: Updated FATCA technical guidance clarifies rules with respect to the U.S. tax identification numbers (TINs) for passive non-financial foreign entities (NFFEs).
  • Monaco: The authorities in Monaco issued a user guide for purposes of the automatic information exchange portal under the common reporting standard (CRS) regime.
  • British Virgin Islands: The deadline for reporting both U.S. FATCA and CRS 2017 filings is 31 May 2018.
  • OECD: A consultation document was released to address how individuals may be using certain citizenship or residence rights in an attempt to circumvent the CRS regime.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • Final regulations address “covered entities” for purposes of the fee imposed on health insurance providers.
  • A proposed rule would lengthen to 12 months the maximum period of short-term, limited-duration insurance. 
  • There may be opportunities for taxpayers with qualified opportunity zone investments under the new U.S. tax law.
  • The Arkansas Department of Finance and Administration issued a legal opinion concluding that a bus advertiser did not qualify as an “advertising agency” so that it would be exempt from the requirement to collect Arkansas gross receipts tax on its services. The advertising exemption requires a business to demonstrate that it is an advertising agency and is providing comprehensive professional advertising services to its clients.
  • Bills pending in the Indiana state legislature would address the taxation of remotely accessed software.
  • The New York governor announced proposals in response to new federal tax law provisions that repealed the uncapped state and local tax deduction. The state’s proposals would aim to provide relief to New York residents adversely affected by the federal tax law changes.
  • Legislation has been proposed in Rhode Island and in Connecticut that would effectively provide for “CEO pay ratio” taxation—that is, an additional tax to be imposed on publicly traded companies subject to the SEC’s pay ratio reporting requirements.

Read TaxNewsFlash-United States

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