KPMG’s Week in Tax: 5 - 9 November 2018 | KPMG | LU
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KPMG’s Week in Tax: 5 - 9 November 2018

KPMG’s Week in Tax: 5 - 9 November 2018

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

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BEPS

  • Saudi Arabia: Representatives of the Kingdom of Saudi Arabia signed the multilateral convention (also known as the multilateral instrument “MLI”) to implement tax treaty-related measures pursuant to the base erosion and profit shifting (BEPS) project of the Organisation for Economic Cooperation and Development (OECD).

Read TaxNewsFlash-BEPS

FATCA / IGA / CRS

  • Hong Kong: A legislative amendment would modify the automatic exchange of financial information (AEOI) regime in an effort to align Hong Kong’s rules with Organisation for Economic Cooperation and Development (OECD) requirements.
  • Taiwan: New common reporting standard (CRS) accounts opened after 1 January 2019 will be considered to be “pre-existing accounts” if certain conditions are met.
  • EU: An update about ultimate beneficial ownership (UBO) register reviews items such as defining the beneficial owner, minimum information requirements, and access rules.

Read TaxNewsFlash-FATCA / IGA / CRS

Africa

  • Nigeria: “Pioneer” industries in Nigeria qualify for an income tax “holiday” of up to five years. Other benefits include an exemption from withholding tax on dividends paid out of “pioneer profits.

”Read TaxNewsFlash-Africa

Asia Pacific

  • Hong Kong: A new research and development (R&D) tax regime classifies R&D expenditures into two categories—for determining the percentage of eligible expenditure deductions if certain conditions are satisfied.
  • India: The tax authority in India issued guidance concerning the rules for withholding (or “deducting”) the goods and services tax (GST) at source.
  • Saudi Arabia: Representatives of the Kingdom of Saudi Arabia signed the multilateral convention (also known as the multilateral instrument “MLI”) to implement tax treaty-related measures pursuant to the base erosion and profit shifting (BEPS) project of the Organisation for Economic Cooperation and Development (OECD).
  • Australia: The New South Wales government announced plans to index the stamp tax (duty) brackets to the consumer price index (CPI) for residential property transactions.
  • Malaysia: Post-election tax policy changes include repeal of the GST regime.

Read TaxNewsFlash-Asia Pacific

Europe

  • Italy: The tax authority issued guidance clarifying certain measures concerning the value added tax (VAT) grouping regime.
  • Netherlands: A memorandum from the Deputy Minister of Finance about the pending fiscal unity emergency repair legislation addresses, among other items, the effective date, the interest deduction limitation to avoid profit shifting, the subject-to-tax test for a participation exemption, the interest deduction limitation for excessive participation interests, and the loss set-off in the case of a change of control.
  • Poland: The legislature has passed legislation to impose stricter withholding tax requirements for individual and corporate income tax purposes. These new withholding tax requirements may adversely affect the cash flow of certain taxpayers.
  • EU: Negotiations concerning the digital services tax continue, and there are possible revisions concerning the scope and expiration date.
  • EU: The EU “blacklist” of non-cooperative jurisdictions for tax purposes has been revised, and Namibia has been removed from the blacklist.

Read TaxNewsFlash-Europe

Trade & Customs

  • Australia: Legislation for implementing the Trans-Pacific Partnership (TPP) has been ratified by Australia. Once the TPP enters into force, there will be reduced tariff benefits.
  • United States: U.S. Customs and Border Protection (CBP) issued guidance with respect to requests for exclusions of imported products from the “section 232” tariffs imposed on steel and aluminum. 
  • United States: In connection with the re-imposition of sanctions on Iran, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released a list of “frequently asked questions” (FAQs).
  • United States: President Trump notified Congress that he intends to terminate the eligibility of Mauritania for trade preference benefits under the African Growth and Opportunity Act (AGOA), as of 1 January 2019.
  • United States: Beginning 1 January 2019, all commercial truck shipments containing “Section 321 merchandise” (that is cross-border transfers of certain low-value goods) will be required to file an advance electronic manifest.

Read TaxNewsFlash-Trade & Customs

United States

  • Two sets of proposed regulations as guidance for implementing certain provisions of the new U.S. tax law—specifically concerning the new foreign tax credit provision and the “base erosion and anti-abuse tax” (BEAT)—have been received by OMB’s Office of Information and Regulatory Affairs (OIRA) and are pending review. Once OIRA review is completed, it would be expected that the Treasury Department and IRS would release these proposed regulations.
  • Taxpayers in certain counties in Alabama and Georgia affected by Hurricane Michael may be eligible for tax relief.
  • Reports prepared by KPMG consider how the midterm congressional elections could affect federal tax legislation in the next Congress. One report offers observations regarding what might be addressed during the short “lame duck” session before the current Congress adjourns. Another report looks at the outcome of the elections for state and local tax measures either approved or rejected by voters in Arizona, San Francisco, Portland, Florida, North Carolina, Colorado, Oregon, and Washington State.
  • Following the release of proposed regulations coordinating sections 956 and 245A, a KPMG report explains the implications and offers observations.
  • Two sets of final rules were issued that address religious and moral exemptions regarding coverage of certain preventive services of health plans.
  • The IRS updated a list of FAQs about return filing and tax payment obligations relating to the “transition tax” under new Code section 965.
  • Proposed regulations provide guidance concerning the new U.S. tax law rules for discounting insurance companies’ unpaid losses and estimated salvage recoverable for federal income tax purposes.
  • Notice 2018-85 announced a new dollar amount for determining the fee (excise tax) imposed with respect to certain health plans for the period 1 October 2018 to 1 October 2019.
  • The IRS Large Business and International (LB&I) division released a “practice unit” as guidance for IRS examiners concerning taxpayers electing a partial disposition of a building.
  • More states—New Jersey, North Carolina, South Carolina, South Dakota, and Wyoming—responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).
  • A newly enacted law in Ohio excludes rewards cards and additional types of gift cards from the state’s definition of “unclaimed funds.” The effective date is 22 January 2019.
  • An South Carolina administrative law court—in a case of first impression—held that a bank could not deduct net operating loss (NOL) carryforwards for purposes of computing the state’s bank tax (concluded to be a franchise tax).
  • A Washington State appeals court held that in determining the sales price of tangible personal property that is subject to the retail sales tax, the sales price is not reduced by credits offered by the taxpayer with regard to customer trade-ins of video game hardware and software.

Read TaxNewsFlash-United States

Exempt Organizations

  • The IRS posted a draft version of new Schedule M, Unrelated Business Taxable Income for Unrelated Trade or Business, to be filed with Form 990-T for 2018.
  • Proposed regulations specify which return is to be used to pay certain excise taxes imposed by sections 4960, 4966, 4967, and 4968 and the time for filing the return. Additionally, the proposed regulations implement the statutory addition of sections 4966 and 4967 to the first-tier taxes subject to abatement. 

Read TaxNewsFlash-Exempt Organizations

Indirect Tax

  • Italy: The tax authority issued guidance clarifying certain measures concerning the value added tax (VAT) grouping regime.
  • India: The tax authority in India issued guidance concerning the rules for withholding (or “deducting”) the goods and services tax (GST) at source.
  • Australia: The New South Wales government announced plans to index the stamp tax (duty) brackets to the consumer price index (CPI) for residential property transactions.
  • EU: An update on negotiations concerning the digital services tax includes information about the scope and expiration date.
  • United States: Proposed regulations specify for exempt organizations, which return to use to pay certain excise taxes and the time for filing the return.
  • Malaysia: Post-election tax policy changes include the repeal of the GST regime.
  • United States: A South Carolina administrative law court held that a bank could not deduct net operating loss (NOL) carryforwards for purposes of computing the state’s bank tax (a franchise tax).
  • United States: A Washington State appeals court held that in determining the sales price of tangible personal property that is subject to the retail sales tax, the sales price is not reduced by credits offered by the taxpayer with regard to customer trade-ins of video game hardware and software.
  • United States: More states—New Jersey, North Carolina, South Carolina, South Dakota, and Wyoming—responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).
  • United States: The IRS issued a notice providing dollar amount to be used for purposes of determining the fee (excise tax) imposed by sections 4375 and 4376 with regards to certain health plans. 

Read TaxNewsFlash-Indirect Tax

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