KPMG’s Week in Tax: 9-13 May 2016

KPMG’s Week in Tax: 9-13 May 2016

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

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Transfer Pricing

  • OECD: Representatives of the governments of Canada, Iceland, India, Israel, New Zealand, and China signed an agreement for the automatic exchange of country-by-country (CbC) reports.
  • United States: The IRS released a practice unit explaining 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. In general, section 482 can only be used by the IRS, but taxpayers are allowed to invoke section 482 under certain situations.
  • Peru: The tax authority (SUNAT) in Peru published two new transfer pricing-related forms that are to be used by taxpayers in making their transfer pricing declarations beginning after 1 May 2016.
  • Hungary: Tax proposals, if enacted, would make changes to Hungarian tax law—including changes to the transfer pricing rules.
  • India: A tribunal held that the tax officer must prove that the taxpayer’s real intention in incurring an advertising, marketing, and promotion expenditure was to benefit related parties, and not the taxpayer’s own business.


Read TaxNewsFlash-Transfer Pricing


  • Italy: The tax authority issued guidelines for taxpayers seeking to claim eligibility for the tax benefits under the patent box regime.
  • Netherlands: A Dutch court of appeals held that under certain income tax treaties, a request to form a “fiscal unity” between sister companies must be allowed—even if the joint parent company is established in a third country (that is, a country outside the European Union (EU) or European Economic Area (EEA)).
  • Hungary: Tax proposals, if enacted, would make changes to Hungarian tax law affecting both corporate and individual taxpayers.
  • Lithuania: The KPMG member firm in Lithuania prepared a report that provides information on individual (personal) income tax concerning peer-to-peer lending activities, rules for completing the annual individual income tax return, and caps on maternity allowances.
  • Luxembourg: The government published a draft tax bill that includes provisions to provide incentives for land and housing supplies. The new law would provide tax incentives for gains realized during the period between 1 July 2016 and 31 December 2017.
  • Russia: Amendments concerning voluntary disclosure by individuals of foreign-held assets and bank accounts were signed by the president in April 2016. The law was amended to extend the deadline for the submission of certain declarations to 30 June 2016 (from 31 December 2015).


Read TaxNewsFlash-Europe


  • Canada: Tax relief is being offered to Canadians who have been affected by the wildfires in north-east Alberta and Fort McMurray.
  • Canada: Budget bills in Nova Scotia (Bill 174) and Prince Edward Island (Bill 32) received first readings. Both include tax measures; however, Bill 32 contained no income tax provisions.
  • Canada: Legislation introduced in British Columbia would reduce the provincial film tax credit rates.
  • Canada: Upcoming harmonized sales tax (HST) changes will affect businesses located or with activities in the provinces of New Brunswick, Newfoundland and Labrador, Ontario, and Prince Edward Island.
  • Mexico: A “technical amendment” to article 12 of the regulations implementing the income tax law is intended to correct a drafting error to a provision concerning the rules relating to the tax treatment of certain profits of foreign currency exchange centers.


Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: The government announced an intention to introduce a diverted profits tax (DPT) that would target multinational entities with effect for income years beginning from 1 July 2017.
  • China: A report that describes customs-related developments has been prepared by the KPMG member firm in China.
  • Asia Pacific: Among the tax developments in many jurisdictions in the Asia Pacific region are measures to implement the automatic exchange of information (AEOI) provisions.
  • India: Representatives of the governments of India and Mauritius signed a Protocol to amend the income tax treaty between the two countries. The Protocol is pending the ratification procedures of each country before it can enter into force.


Read TaxNewsFlash-Asia Pacific


  • OECD: Bahrain, Lebanon, Nauru, Panama, Vanuatu, Israel, and the Russian Federation signed agreements to implement the common reporting standard (CRS). 


Read TaxNewsFlash-FATCA / IGA / CRS


  • Namibia: The KPMG member firm in Namibia prepared a tax reference guide for 2016-2017 that provides tax rates and other items for individual and corporation taxpayers, and provides information about VAT and other indirect taxes.


Read TaxNewsFlash-Africa

Trade & Customs

  • United States: The Senate passed legislation that would affect the tariffs on certain imported products by reviving the miscellaneous tariff bill (MTB) process. The next step is for the bill to be sent to the White House for action by the president.


Read TaxNewsFlash-Trade & Customs

United States

  • The U.S. Court of Appeals for the Third Circuit reversed a decision of the U.S. Tax Court, and concluded that a taxpayer operating a chain of retail supermarkets, pharmacies, gas stations, and convenience stores was entitled to deductions for anticipated customer redemptions of gasoline discounts under a shoppers’ reward program because the “all events” test had been satisfied.


Read TaxNewsFlash-United States


  • The Joint Committee on Taxation (JCT) released its description of the U.S. federal tax system as in effect for 2016 that includes a broad overview of each of the four main elements of the U.S. federal tax system.


Read TaxNewsFlash-Legislative Updates

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