KPMG’s Week in Tax: 4-8 April 2016

KPMG’s Week in Tax: 4-8 April 2016

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

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United States

  • Final and temporary regulations address certain “inversions”—the generic term for a domestic corporation’s adoption of a foreign-parented corporate structure—and certain post-inversion restructuring transactions. In addition, proposed regulations under Code section 385 regard the treatment of certain related-party corporate interests as debt or equity for U.S. federal income tax purposes.
  • Final regulations from the Labor Department concern the standards for investment advice provided by retirement investment advisers. The new rules impose a fiduciary duty on persons providing retirement investment advice. 
  • The IRS Large Business and International (LB&I) division publicly released a “practice unit” that explains that section 482 allows the IRS to make allocations so that taxpayers clearly reflect income attributable to “controlled transactions” and to prevent the evasion of taxes.
  • A quarterly list of countries that require (or may require) participation in, or cooperation with, an international boycott was released. No new countries were added, and no countries were removed from the prior quarterly list.


Read TaxNewsFlash-United States


  • Canada: Canada’s 2016 federal budget includes provisions to limit the scope of two excise tax relief provisions for diesel fuel used as heating oil or used for generating electricity. 
  • Mexico: Measures define and clarify certain terms in Mexico’s tax rules, such as that “Federal District” refers to Mexico City, and provide guidelines for value added tax (VAT) refunds.
  • Brazil: The Senate issued a resolution that effectively reflects the holding of the Supreme Court that had declared a provision requiring a mandatory social security contribution of 15% on the gross amount of an invoice for services provided by labor union members to be unconstitutional.
  • Mexico: Guidelines concern entities that invest in energy and infrastructure projects under the energy reform incentive regime known as “Fibra E” and list activities of companies that may qualify for Fibra E benefits—in general, activities relating to oil and petrochemical products.


Read TaxNewsFlash-Americas

Asia Pacific

  • China: Concerning retail goods purchased and imported by means of cross-border e-commerce, two circulars were issued by the authorities to address the appropriate tax policy for such business-to-customer or “B2C” imports of retail goods. The new measures are effective 8 April 2016.
  • Indonesia: A corporate governance guideline requires public companies to disclose their adherence to the guidelines (or to explain reasons for non-compliance) beginning with their 31 December 2016 annual reports.
  • Vietnam: The National Assembly approved tax law amendments that affect the VAT, special consumption tax, and tax administration laws. 
  • China: The standards to be used in completing and filling in China’s customs declaration forms have been revised. The changes include adjustments to certain descriptions of declaration form items, an increase to the number of line items that can be included in a form (increased from 20 items to 50 items), and new terms and declaration standards.


Read TaxNewsFlash-Asia Pacific


  • OECD: The Organisation for Economic Cooperation and Development (OECD) released comments received with respect to a discussion draft of proposed changes to the rules concerning the treaty residence of pension funds.
  • Canada: Country-by-country reporting will be required for tax years beginning after 2015, with the first automatic exchanges of information between governments slated to begin by June 2018. Parent companies of large multinational corporate groups need to consider developing their strategy to meet the new country-by-country reporting requirements in 2016.
  • UK: HM Treasury made a number of announcements related to the OECD’s base erosion and profit shifting (BEPS) project in the 2016 budget, and the UK government’s “business tax roadmap” setting out priorities for major business taxes to 2020 was also released. There are new measures relating to BEPS Action 2 (hybrid mismatches), Action 4 (interest deductibility), Action 6 (royalty withholding tax) and Actions 8-10 (transfer pricing).


Read TaxNewsFlash-BEPS


  • EU: The European Commission (EC) presented an “action plan” for changes to the VAT system that aims to modernize the current EU VAT rules by providing for certain action steps.
  • EU: The EC published draft guidance on the interpretation of the new customs valuation provisions addressing: (1) the “last sale for import” concept; (2) transactions in a bonded facility; and (3) customs duty on royalties.
  • Gibraltar: All companies registered in Gibraltar—that is, those registered with Companies House—must file a tax return. Under prior rules, only those companies with income assessable under Gibraltar income tax law were required to file a return.
  • Italy: Tax professionals have filed a complaint with the EC asserting that the Italian controlled foreign company (CFC) regime—in particular, provisions applicable to CFCs that are not located in “black list” countries—is contrary to standards under the EU Treaty.
  • EU: Under a new trade agreement—expected to enter into force 1 July 2016—consumer and professional electronic products currently subject to customs duties upon import into the EU and other jurisdictions will no longer be subject to import duties.


Read TaxNewsFlash-Europe


  • Luxembourg: The tax authorities published a revised version of guidelines (originally published in July 2015) concerning the file format for the purpose of FATCA reporting. The new guidelines provide rules for reporting account balances. Also, a decree was published providing the list of “excluded accounts” under the common reporting standard (CRS) regime.
  • Switzerland: The Swiss Federal Administrative Court allowed a Dutch taxpayer’s “appeal” in a matter concerning a request from the Dutch tax authorities for information about customers of a Swiss bank. The Swiss court rejected the administrative assistance request in this matter because the Dutch tax authorities did not name the customers of the Swiss bank in the request, and under treaty provisions, the persons must be named.


Read TaxNewsFlash-FATCA / IGA / CRS


  • South Africa: Voluntary disclosure often involves two processes: (1) the voluntary disclosure process related to tax defaults, and administered by the South African Revenue Service; and (2) the regularization of external control conventions, as administered by the South African Reserve Bank’s Financial Surveillance Department.


Read TaxNewsFlash-Africa

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