KPMG’s Week in Tax: 6 - 10 June 2016

KPMG’s Week in Tax: 6 - 10 June 2016

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

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Americas

  • Canada: Officials from the Canada Revenue Agency (CRA)—speaking at an annual conference—said that certain limited liability partnerships (LLPs) and limited liability limited partnerships (LLLPs) governed by the laws of Florida and Delaware will be treated as corporations for Canadian tax purposes.
  • Bahamas: The 2016/2017 budget keeps the rate of value added tax (VAT) at 7.5%, but introduces certain reductions in customs duties on numerous items and eliminates and adjusts the stamp (tax) duties imposed on certain transactions.
  • Canada: The 2016 budgets in the Yukon, Northwest Territories, and Nunavut do not include any proposals for changes to the corporate or individual (personal) income tax rates. A bill to enact Alberta’s 2016 budget, that introduces a carbon levy and reduces the small business corporate income tax rate to 2%, had its first reading. 
  • Canada: The second phase-out period of the recaptured input tax credit (RITC) rules—for GST/HST purposes—in Ontario are effective 1 July 2016. Businesses affected by these changes need to consider which accounts and calculations could be affected, such as common area maintenance charges and employee expense accounts.

 

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Europe

  • EU: Claims to recover VAT paid to EU Member States must be filed by 30 June 2016. In many instances, VAT paid in 2015 may not be recoverable if the required documentation is not filed with the appropriate EU Member State authority by this date.
  • Finland: Finland’s Supreme Administrative Court issued decisions concerning the deductibility of interest costs in debt push-down arrangements, and held such interest expenses may not be deductible when the acquired shares to which the debt relates cannot be allocated to a branch’s assets or when the arrangement can be deemed to be tax avoidance transactions.
  • Italy: Implementing guidance has been issued under a new “tax ruling” system for enterprises that intend to make “substantial investments” in Italy (investments of not less than €30 million).
  • Poland: Proposed legislation would impose a retail sales tax on the sellers of goods, if a monthly threshold amount of sales revenue is satisfied. The intended effective date would be this summer (2016).
  • Sweden: The Court of Justice of the European Union (CJEU) issued a judgment concerning the different tax treatment afforded resident and non-resident pension funds.

 

Read TaxNewsFlash-Europe

Asia Pacific

  • Australia: Specifics relating to the “reportable taxation position” (RTP) schedule are still being developed.
  • India: The Delhi High Court—in deciding whether an Indian subsidiary of a U.S. company represented a permanent establishment (PE) in India—held that Indian subsidiary did not satisfy any of the tests under PE provisions of the India-United States income tax treaty. Accordingly, while the India entity was a subsidiary of a foreign company, it was not a PE of that foreign company in India.

 

Read TaxNewsFlash-Asia Pacific

Africa

  • East Africa: The 2016/2017 budgets for Kenya, Tanzania, Uganda, and Rwanda were presented, and include certain tax measures.

 

Read TaxNewsFlash-Africa

BEPS

  • EU: The European Council introduced country-by-country (CbC) reporting to EU law following the recommendations made by the OECD under Action 13 of the base erosion and profit shifting action (BEPS) plan.

 

Read TaxNewsFlash-BEPS

FATCA / IGA / CRS

  • Brazil: Guidance extends certain deadlines with respect to FATCA filing compliance. 
  • Channel Islands: Jersey released additional guidance in respect of reporting under the intergovernmental agreements (IGAs) with the United Kingdom and the United States ahead of the 30 June 2016 deadline. The newly issued guidance includes an option to request an extension related to the reporting deadline for UK IGA reports.

 

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • EU: Developments concerning EU trade-related sanctions include an order issued by the UK on export control relating to Iran; a judgment of the CJEU concerning support to the Iranian government in light of the EU anti-nuclear proliferation sanctions on Iran; and a referral from the UK to the CJEU concerning the validity and interpretation of EU sanctions against Russia.
  • United States: A proposed rule would remove the “special Iraq reconstruction license” regime from the Export Administration Regulations.

 

Read TaxNewsFlash-Trade & Customs

United States

  • Final regulations under section 108(a) provide that—for purposes of applying the bankruptcy and insolvency exceptions under section 108 to the discharge of indebtedness income of a grantor trust or a disregarded entity—the term “taxpayer” refers to the owner(s) of a grantor trust or disregarded entity. Thus, grantor trusts and disregarded entities themselves are not considered to be owners for this purpose.
  • The U.S. Tax Court issued a memorandum opinion concerning the treatment of income from intercompany licenses for intangible property required to manufacture certain medical devices and leads and the transfer pricing implications.
  • A proposed rule was issued applicable to expatriate health plans, expatriate health issuers, and qualified expatriates under the “Expatriate Health Coverage Clarification Act of 2014.”
  • Temporary regulations and, by cross-reference, proposed regulations impose corporate level tax on certain transactions when property of a C corporation becomes the property of a real estate investment trust (REIT).
  • Rev. Proc. 2016-33 provides the detailed procedures under a certification program for professional employer organizations—“certified professional employer organization” or CPEO (also referred to as employee leasing companies).

 

Read TaxNewsFlash-United States

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