KPMG’s Week in Tax: 12 - 16 November 2018 | KPMG | LU
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KPMG’s Week in Tax: 12 - 16 November 2018

KPMG’s Week in Tax: 12 - 16 November 2018

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

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Transfer Pricing

  • Israel: The tax authority issued guidance on business restructurings involving multinational entity (MNE) groups.
  • Argentina: Guidance from the tax administration concerns country-by-country (CbC) reporting and transfer pricing applications.
  • Belgium: The tax administration published a draft circular regarding multiple items stemming from ongoing base erosion and profit shifting (BEPS) developments, and that aims at adopting and addressing some of the recently introduced OECD concepts for purposes of the Belgian transfer pricing rules.
  • Asia Pacific: A report summarizes the status of CbC reporting rules within the region.
  • Peru: The deadline to submit a CbC report for 2017 has been extended for Peruvian subsidiaries of MNE groups if the headquarters office is required to file a CbC report in its country of origin.

Read TaxNewsFlash-Transfer Pricing

BEPS

  • OECD: Reports under the base erosion and profit shifting (BEPS) project include: (1) “synthesised texts” and an overview of the modifications to existing tax treaties resulting from application of the multilateral instrument (MLI); (2) a request for input relating to peer review of dispute resolution (MAP) under BEPS Action 14; and (3) an update on preferential regimes and zero-tax jurisdictions.

Read TaxNewsFlash-BEPS

Africa

  • South Africa: The South African Revenue Service (SARS) announced its intention to introduce administrative non-compliance penalties on outstanding corporate tax returns.  
  • South Africa: Proposed rules would require non-residents supplying services by electronic means to persons in South Africa to register and account for value added tax (VAT). 
  • Mauritius: Tax regulations have been revised, with changes including the repeal of the deemed foreign tax credit and an extension of a partial exemption for both domestic and foreign-sourced income, among other measures.
  • Nigeria: Commissioners for the Tax Appeal Tribunal have been appointed, thus advancing the tax controversy and dispute resolution process in Nigeria.
  • Nigeria: The tax authority has revised its practice regarding VAT certificates issued to businesses.

Read TaxNewsFlash-Africa

Americas

  • Colombia: A bill would broaden the list of items subject to value added tax (VAT), would gradually reduce the current VAT rate of 19% to 17% by 2021, would reduce the corporate income tax rate from 33% to 30%, and would provide certain tax incentives to promote investment, economic growth, and employment. 
  • Canada: Employer refund claims for CPP and EI overpayments are due by 31 December 2018.
  • Canada: The Manitoba budget bill includes measures to increase the small business deduction limit in 2019.
  • Canada: Tax changes may be possible later this year to address certain measures under the U.S. tax reform.
  • Canada: The second stage of Quebec's phase-out of the input tax refund restrictions is to continue in 2019. As a result, certain large businesses will be able to claim 50% of the Quebec sales tax (QST) that becomes payable on goods and services subject to the restrictions as of 1 January 2019 (up from 25%).
  • Costa Rica: Legal representatives of taxpayer entities need to take steps to obtain their digital signature cards and to verify their registration during the first quarter of 2019.  
  • Dominican Republic: Taxpayers may want to acquire transferrable tax credits to apply against tax liabilities, but they need to act by 31 December 2018 to be able to use these credits on their 2018 tax returns.

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: Proposed reforms to the petroleum resources rent tax (PRRT) regime may require oil and gas companies to consider what could be implications on their current and future project expenditures.
  • Australia: The tax authority issued final guidance regarding hybrid mismatch arrangements.
  • Thailand: Labor protections and employee benefits are parts of legislation that has been approved by the national assembly. 

Read TaxNewsFlash-Asia Pacific

Europe

  • Czech Republic: The Supreme Administrative Court—in a case concerning credit transactions between a Czech (domestic) and foreign company belonging to the same group of companies—held that if an income taxation treaty can be applied to a taxpayer’s situation, the tax administrator cannot automatically use domestic law or regulations to interpret a treaty’s concepts, but must apply international law principles and the commentaries to the OECD’s Model Convention.
  • Czech Republic: Because the Czech Republic does not recognize Taiwan as an independent state and thus cannot enter into an income tax treaty with Taiwan, legislation that would provide measures effectively corresponding to an income tax treaty is under consideration. 
  • Germany: The tax authorities announced a further extension of a regulation concerning the value added tax (VAT) treatment of the supplies of goods via consignment stocks. The new extension applies through (until the end of) 2019. 
  • Ireland: A consultation relates to Ireland’s adoption of measures to counteract cross-border hybrid mismatches as well as matters to consider when Ireland moves to adopt a general interest limitation rule.
  • Switzerland: In Geneva, tax proposals include a reduction of the canton’s corporate income tax rate to 13.79%.
  • Italy: A tax ruling clarifies that interest on a loan paid by an individual taxpayer in Italy to a Swiss bank is subject to the beneficial withholding tax rate of 12.5% under the Italy-Switzerland income tax treaty.
  • Denmark: The Court of Justice of the European Union (CJEU) issued a judgment concerning whether a business was entitled to a refund of VAT on professional advisor fees that were paid for a proposed, but failed, sale of shares. The CJEU held that the purpose for which the shares were to be sold was decisive as to whether the VAT refund would be allowed.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Brazil: The tax authority issued an updated version of a manual with respect to the FATCA and common reporting standard (CRS) regimes.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • Rev. Proc. 2018-57 provides the inflation adjustments for tax rates and for more than 60 tax provisions to be used by individual taxpayers on their 2019 returns (generally filed in 2020).
  • Tax relief was made available for certain taxpayers affected by the California wildfires.  
  • OMB’s Office of Information and Regulatory Affairs (OIRA) received proposed regulations concerning the hybrid dividends and payments provision under the new U.S. tax law. Once the review is completed, Treasury and the IRS would issue proposed regulations.
  • An Arkansas administrative law judge concluded that a taxpayer that provided water utility services was not entitled to a refund of sales taxes paid on sediment removal services. 
  • A Massachusetts appellate tax board found that a taxpayer’s software products were taxable sales of prewritten computer software transferred electronically. 
  • A South Carolina appeals court affirmed that receipts of a Colorado-headquartered satellite television service provider from providing television programming to South Carolina subscribers were to be sourced to South Carolina and thus were to be included in the South Carolina sales factor numerator. 

Read TaxNewsFlash-United States

Trade & Customs

  • The Office of the United States Trade Representative (USTR) released the results of the annual generalized system of preferences (GSP) review.
  • The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released a final rule amending the Congo sanctions regulations.
  • U.S. Customs and Border Protection (CBP) issued guidance for the entry filing of imports of steel mill articles and aluminum products that have been granted relief, under “section 232.”

Read TaxNewsFlash-Trade & Customs

Indirect Tax

  • Denmark: The Court of Justice of the European Union (CJEU) issued a judgment concerning whether a business was entitled to a refund of VAT on professional advisor fees that were paid for a proposed, but failed, sale of shares. The CJEU held that the purpose for which the shares were to be sold was decisive as to whether the VAT refund would be allowed.
  • Germany: The tax authorities announced a further extension of a regulation concerning the VAT treatment of supplies of goods via consignment stocks. The new extension applies through (until the end of) 2019. 
  • Nigeria: The tax authority has revised its practice regarding value added tax (VAT) certificates issued to businesses.
  • United States: State court actions include: (1) an Arkansas case finding that a taxpayer that provided water utility services was not entitled to a refund of sales taxes paid on sediment removal services; (2) a Massachusetts holding that a taxpayer’s software products were taxable sales of prewritten computer software transferred electronically; and (3) a South Carolina appeals court affirming that receipts of a Colorado-headquartered satellite television service provider from providing television programming to South Carolina subscribers were sourced to South Carolina and included in the South Carolina sales factor numerator. 

Read TaxNewsFlash-Indirect Tax

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