KPMG’s Week in Tax: 2 - 6 July 2018 | KPMG | LU
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KPMG’s Week in Tax: 2 - 6 July 2018

KPMG’s Week in Tax: 2 - 6 July 2018

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

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Transfer Pricing and BEPS

  • Hong Kong: Transfer pricing legislation (the “BEPS bill”) has passed, with most provisions effective from assessment year 2018/2019.
  • India: The Central Board of Direct Taxes issued guidance on the appropriate use of country-by-country (CbC) reports. The instruction includes guidance about maintaining the confidentiality of CbC reports as well as a framework to monitor, control, and review the appropriate use of information received from CbC reports.
  • Nigeria: Transfer pricing-related developments in Nigeria include: (1) revision of the transfer pricing regulations; (2) implementation of CbC reporting rules and the automatic exchange of information; and (3) review of Nigerian model tax convention.
  • OECD: The Organisation for Economic Cooperation and Development (OECD) released a discussion draft on the transfer pricing aspects of financial transactions. 

Read TaxNewsFlash-Transfer Pricing and TaxNewsFlash-BEPS

Africa

  • Kenya: The 2018 finance bill introduces tax provisions, some of which would be effective on different dates between 1 July 2018 and 1 January 2019.
  • South Africa: A recent tax court judgment reached a conclusion that is contrary to prior case law holdings that the source of employment income is located at the place where the services are rendered.

Read TaxNewsFlash-Africa

Americas

  • Canada: Businesses that purchase qualifying taxable carbon emission allowances must now self-assess the goods and services tax / harmonized sales tax (GST/HST) on such purchases and remit the taxes to the Canada Revenue Agency. 
  • Mexico: In the hydrocarbons sector, the tax treatment of expenses incurred before the first payment is made to the Mexican petroleum fund (or incurred in the “pre-operative period”) corresponds to the treatment of such expenses in “regular” commercial production situations. There also are implications for value added tax (VAT) purposes.

Read TaxNewsFlash-Americas

Asia Pacific

  • Hong Kong: The government announced plans to introduce a new tax on “vacant properties” (that is properties that remain unoccupied for six months in any year).
  • India: The Central Board of Direct Taxes (CBDT) finalized guidance concerning the “place of effective management” standard that has implications for foreign companies.
  • Thailand: A new income tax treaty between Thailand and the Philippines entered into force, with the treaty provisions to be effective 1 January 2019. The income tax treaty replaces one from 1983.
  • Australia: Tax bills before Parliament include measures to reduce the company tax rate and to address the rules on hybrid mismatches. 

Read TaxNewsFlash-Asia Pacific

Europe

  • Denmark: The Court of Justice of the European Union (CJEU) concluded in a case concerning the Danish rules on the deductibility of losses from a Danish permanent establishment (PE) whose head office is not a tax resident in Denmark that the Danish law constitutes a restriction to the freedom of establishment, but that such restriction may be justified by the prevention of double deduction of losses.
  • Italy: The tax authority published guidance to clarify certain issues related to the mandatory requirements for “e-invoices” (as introduced by the 2018 budget law).

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • OECD: The OECD announced there are over 100 jurisdictions having bilateral exchange relationships established under the common reporting standard (CRS) Multilateral Competent Authority Agreement—the CRS MCAA.
  • Taiwan: The tax authority issued a list of “frequently asked questions” (FAQs) related to CRS implementation and due diligence procedures. CRS self-certification forms were also issued.
  • United States: The IRS announced: (1) there is an updated list of approved certificate authorities under the FATCA regime; and (2) the International Data Exchange Services (IDES) User Guide (Pub. 5190 Rev. 06 2018) has been updated.
  • Malta: An updated version of guidelines was issued concerning implementation of the EU Council Directive 2014/107/EU (DAC2) and the CRS regime.
  • Russia: The government issued guidance that describes technical aspects of CRS information exchanges between Russia’s federal tax service and financial institutions.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • United States: Customs and Border Protection (CBP) issued a release with updated filing requirements and information on customs drawback eligibility relating to the additional import duties being imposed, beginning 6 July 2018, on products imported from China.
  • United States: The International Trade Commission (ITC) issued a report concerning proposed modifications to the United States-Korea free trade agreement regarding the customs duty rates for certain motor vehicles imported from South Korea.
  • Canada: In response to U.S. tariffs on Canadian steel and aluminum, Canada imposed reciprocal surtaxes on $16.6 billion of imports of steel, aluminum, and other goods and products from the United States, effective 1 July 2018.

Read TaxNewsFlash-Trade & Customs

United States

  • The IRS Large Business and International (LB&I) division announced five new “compliance campaigns” being added to the list of previously identified compliance campaigns under LB&I's issue-based compliance work. One of the topics is the section 965 transition tax under the new tax law.• The IRS released the draft version of Form 1040, “U.S. Individual Income Tax Return,” and also a series of “schedules” that will be filed by some individuals for tax year 2018.
  • Newly enacted legislation in Louisiana extends until 30 June 2025 an additional state sales and use tax levy, but reduces the rate from 1.0% to 0.45% effective 1 July 2018.   
  • The Massachusetts Appellate Tax Board ruled that an out-of-state taxpayer was a “manufacturing corporation” required to use single-sales factor apportionment for the tax years at issue.
  • In Pennsylvania, newly enacted legislation allows a depreciation deduction relating to the 100% bonus depreciation under IRC section 168(k) for assets placed in service after 27 September 2017 (that is, under the new federal tax law).
  • States (including Hawaii, Idaho, Iowa, Massachusetts, North Dakota, Rhode Island, Texas, and Vermont) continued to issue statements or guidance or otherwise respond to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc.

Read TaxNewsFlash-United States

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