KPMG’s Week in Tax: 29 October - 2 November 2018 | KPMG | LU
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KPMG’s Week in Tax: 29 October - 2 November 2018

KPMG’s Week in Tax: 29 October - 2 November 2018

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

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Transfer Pricing

  • Malaysia: The country-by-country (CbC) reporting rules and regulations have been implemented with an effective date of 1 January 2017. The tax authority has provided a dedicated website for CbC reporting information that includes a list of “frequently asked questions” (FAQs) on CbC reporting and sample notification letters.
  • Australia: The finalized diverted profits tax will be applied concurrently with transfer pricing rules.
  • OECD: A KPMG report: (1) summarizes the final transactional profit split method guidance from the OECD; (2) points out differences with the 2017 discussion draft on the transactional profit split method; and (3) provides commentary on the final transactional profit split method guidance.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Portugal: An ordinance effectively provides that retirement savings plans are no longer exempt from certain requirements under the common reporting standard (CRS) regime.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • EU: The European Commission announced the release of the Combined Nomenclature—the EU’s eight-digit coding system—applicable as from 1 January 2019. The Combined Nomenclature forms the basis for the declaration of goods (1) at importation or exportation or (2) when subject to intra-EU trade statistics.
  • EU and Japan: A new economic partnership agreement is expected to enter into force in the first half of 2019 after ratification. The agreement would simplify the certificates of origin process between the EU and Japan.

Read TaxNewsFlash-Trade & Customs

Africa

  • Nigeria: Guidelines concerning voluntary contributions for pensions aim to establish a uniform set of rules for voluntary contributions and retirement benefits.
  • South Africa: A bill proposes to amend the dividend stripping provisions, effective for tax years beginning on or after 1 January 2019. The bill also proposes changes to debt relief provisions, some effective retroactively as of 1 January 2018, and others effective 1 January 2019.
  • South Africa: Tax law rules with implications for debtors whose debts are reduced or eliminated for less than the face value of the debt (applicable to non-banking taxpayers) would be repealed, effective for years of assessment beginning on or after 1 January 2019. Replacement provisions would allow the South African Revenue Service (SARS) to issue a directive enabling taxpayers to claim a doubtful debt allowance of up to 85%.

Read TaxNewsFlash-Africa

Americas

  • Canada: A reminder notes that charitable contributions—cash donations or tax-effective gifts of property (“gifts in kind”)—must be made by 31 December 2018 for an individual taxpayer to claim the donation on the 2018 tax return.
  • Canada: Negotiations to update the income tax treaty with Brazil are planned for November 2018 according to the Department of Finance.
  • Canada: The federal budget bill received first reading. There is relief proposed from the accelerated filing of T1134 “Information Return Relating To Controlled and Not-Controlled Foreign Affiliates” and income tax and indirect tax measures included in the bill.
  • Brazil: A report from KPMG provides a guide to oil and gas taxation for 2018.

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: The Australian Taxation Office (ATO) released final guidance on the diverted profits tax.

Read TaxNewsFlash-Asia Pacific

Europe

  • Norway: The budget 2019 includes proposals to reduce the rate of corporate income tax and measures relating to earnings stripping that limit certain interest deductions.
  • Netherlands: A consultation was announced with regard to legislation to address hybrid mismatches.
  • France: A major tax reform measure (effective 1 January 2019) introduces a withholding tax regime on wages paid to workers, and thus not only affects employees but employers as well.
  • Italy: A tax amnesty program would allow for relief from interest and penalties. 
  • Italy: Two “statements of practice” from the Italian Revenue Agency describe the tax-exemption requirements for proceeds from an Italian real estate investment fund—specifically when the unit-holders are foreign partnerships that indirectly own the real estate investment fund units through fully owned vehicles.
  • Serbia: The Ministry of Culture and Information adopted a new “rulebook” (as legislation is known in Serbia) on deductible expenditures for investments in the field of culture—including cinematographic activities and certain types of software.
  • Netherlands: The Deputy Minister of Finance published answers to questions raised by the Lower House about legislative proposals in the 2019 Tax Plan package (including ATAD1). Topics include the corporate income tax rate, dividend withholding tax, and “emergency repair” of the fiscal unity rule.
  • UK: The Autumn Budget 2018 includes the introduction of a UK digital services tax, (effective from April 2020), reform to the corporate intangibles regime, changes to the capital allowances regime, and changes to the “IR 35” rules.

Read TaxNewsFlash-Europe

United States

  • Notice 2018-83 provides the dollar limitations for qualified retirement plans for tax year 2019. 
  • Proposed regulations offer guidance under the new U.S. tax law concerning the amount determined under section 956 with respect to certain domestic corporations that own (or are treated as owning) stock in controlled foreign corporations (CFCs).
  • A hearing has been scheduled for 28 November 2018 concerning the additional first-year depreciation deduction (“bonus depreciation”) under the new U.S. tax law. 
  • A KPMG report provides a summary of state and local ballot initiatives that, if approved by the voters, could affect state business taxpayers. Election day 2018 is 6 November 2018.
  • More states—California, Colorado, Louisiana, Utah, and Virginia—responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).
  • The Arkansas Department of Finance and Administration concluded that a taxpayer that ran a crowdfunding campaign to create a card game was in the business of selling tangible personal property for profit in Arkansas because there was an expectation that most of the backers were contributing money in exchange for a card game. Thus, the taxpayer was responsible for charging and collecting sales tax at the time of contribution, and was required to remit sales tax on the entire consideration paid by Arkansas backers, including the 5% service fee charged by the taxpayer’s platform.
  • The Idaho Tax Commission determined that a California-based company that had a single employee working from home in Idaho writing code for the company’s internal systems had corporate income tax nexus with Idaho. 
  • The Massachusetts Appellate Tax Board concluded that the state’s utility receipts tax (URT) is an income tax required to be added back in computing Massachusetts corporate excise tax despite the state statute labeling the URT as an income tax. 
  • The IRS updated lists of counties in Georgia, North Carolina, and South Carolina where taxpayers may qualify for tax relief as a result of damage caused by Hurricane Michael or Hurricane Florence. The tax relief includes more time to file returns, pay taxes, and perform certain other time-sensitive acts.

Read TaxNewsFlash-United States

Indirect Tax

  • UK: The Autumn Budget 2018 includes the introduction of a UK digital services tax. 
  • United States: The Arkansas Department of Finance and Administration concluded that a taxpayer that ran a crowdfunding campaign to create a card game was required to remit sales tax on the entire consideration paid by Arkansas backers, including the 5% service fee charged by the taxpayer’s platform.
  • United States: The Massachusetts Appellate Tax Board concluded that the state’s utility receipts tax (URT) is an income tax required to be added back in computing Massachusetts corporate excise tax despite the state statute labeling the URT as an income tax. 
  • United States: More states—California, Colorado, Louisiana, Utah, and Virginia—responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).

Read TaxNewsFlash-Indirect Tax

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