KPMG’s Week in Tax: 23 - 27 May 2016

KPMG’s Week in Tax: 23 - 27 May 2016

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

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Transfer Pricing

  • Australia: The Australian Taxation Office (ATO) announced the pending release the final Local file “high level design” as part of Australia’s implementation of the country-by-country (CbC) reporting requirement. 
  • Latvia: Laws and regulations in Latvia do not address compensating adjustments; however, there have been situations that, during an audit, the tax authorities imposed a tax “surcharge” after finding that a compensating adjustment was needed. 
  • Sweden: The tax agency submitted draft legislation to the Ministry of Finance for purposes of implementing new documentation standards for transfer pricing and for the automatic exchange of CbC reports.
  • United States: Members of the U.S. Senate Finance Committee wrote to Treasury Secretary Jack Lew concerning EC state-aid investigations of U.S. companies.
  • Denmark: The Danish tax authorities (SKAT) published an annual report of  transfer pricing statistics for 2015, revealing a steady high number of tax audits and taxable income adjustments—but one that is significantly lower than in previous years’ results.


Read TaxNewsFlash-Transfer Pricing


  • Switzerland: The Swiss Federal Council published a draft version of an ordinance concerning the automatic exchange of information in tax matters (AEOI) for consultation.
  • Channel Islands: Guidance on the format and procedure for FATCA reporting pursuant to the intergovernmental agreements (IGAs) concerning the United States and the United Kingdom was published by Jersey.
  • Ireland: Irish Revenue Commissioners confirmed that an electronic registration site (ROS) is open for the filing of 2015 FATCA returns in advance of the 30 June 2016 deadline.
  • United Kingdom: HM Revenue & Customs released an updated version of its XML schema guidance in support of the UK submission schema for FATCA and Crown Dependencies and Overseas Territories (CDOT) reporting.


Read TaxNewsFlash-FATCA / IGA / CRS


  • Netherlands: The Dutch government launched a consultation on proposed changes to the Dutch innovation box regime, that include a nexus approach and rules to narrow the definition of qualifying intellectual property (IP). The effective tax rate for income attributable to the innovation box would remain unchanged at 5%.
  • EU: The Economic and Financial Affairs Council (ECOFIN) met to discuss and agree on its position on the draft anti-tax avoidance directive (ATAD). No agreement was concluded, and the matter has been postponed until the next ECOFIN meeting.
  • Finland: A draft bill proposes to shorten the limitations period for all tax matters to three years, from the current five-year limitations period, starting in tax year 2017. This proposal would have implications for when claims for refunds of withholding tax could be allowed. 
  • Latvia: With Latvia’s accession to the euro-zone, a law was enacted to require companies to restate their share capital and the nominal value of shares in euros (€). The deadline for registering these restated values with Latvia’s enterprise registry is 30 June 2016.
  • Norway: A political agreement on future tax amendments has been reached, and there are proposals for a reduction to the rate of corporate income tax to 23% by 2018; changes to the earnings stripping rules; and proposed measures for CbC reporting. 
  • EU: The European Commission (EC) published a notice of an intention to clarify certain key concepts relating to “state aid.”


Read TaxNewsFlash-Europe

Asia Pacific

  • Australia: The government announced that it was committed to a new voluntary Tax Transparency Code for large businesses. 
  • Japan: Tokyo's metropolitan government released its proposal for local tax rates—including business tax rates and inhabitant tax rates—for fiscal years beginning after 1 April 2017.
  • Australia: There is a continued focus on currency in which taxpayers undertake transactions. 


Read TaxNewsFlash-Asia Pacific


  • Canada: Many businesses only have a short amount of time to gather all the details needed to meet their indirect tax—GST/HST and QST—filing obligations by 30 June 2016.


Read TaxNewsFlash-Americas


  • Nigeria: A tribunal held for the taxpayer (petroleum company) and determined that all expenses wholly, exclusively, and necessarily incurred by the taxpayer for purposes of its petroleum operations were deductible, and were not limited to the extent of the taxpayer's 40% equity participation in a joint venture with the Nigerian National Petroleum Corporation. 
  • Africa: Tax guides with information about the tax systems within each African country are available.


Read TaxNewsFlash-Africa

Trade & Customs

  • Australia: The Department of Immigration and Border Protection (Customs) released draft notices that outline its opinion on Incoterms 2010 Delivered Duty Paid (DDP) transactions and the liability for customs duty, revenue recovery and duty demands.
  • New Zealand: A number of “business friendly” customs-related changes are to proceed to the legislative stage. The changes were consulted on last year. There will be further opportunities for businesses to provide feedback once draft legislation is introduced later this year.
  • United States: The U.S. State Department’s Directorate of Defense Trade Controls (DDTC) announced a “change in policy” concerning the sale or transfer of lethal weapons to Vietnam. 


Read TaxNewsFlash-Trade & Customs

United States

  • The U.S. Court of Appeals for the Eleventh Circuit concluded that deferred compensation payments under corporate plans made after an independent contractor’s retirement from a direct-to- customer cosmetic company were derived from the taxpayer’s former association with the company, thus making the payments subject to self-employment tax.
  • The governor of Puerto Rico vetoed a bill to repeal the value added tax (VAT) regime, as scheduled to be implemented on June 1, 2016. This week, both the House and the Senate of Puerto Rico voted to override the governor’s veto, thereby effectively continuing the island’s existing sales and use tax system.


Read TaxNewsFlash-United States


  • Congress passed a joint resolution to nullify recently promulgated U.S. Labor Department regulations concerning the fiduciary responsibilities of financial advisors. 
  • The Senate Finance Committee held a second hearing concerning corporate integration, with the focus on debt versus equity.


Read TaxNewsFlash-Legislative Updates

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