KPMG’s Week in Tax: 21 - 25 November 2016 | KPMG | US

KPMG’s Week in Tax: 21 - 25 November 2016

KPMG’s Week in Tax: 21 - 25 November 2016

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

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Europe

  • UK: Tax provisions in the Autumn Statement 2016 confirm changes to corporation tax on interest deductibility and set off of carried forward losses; confirm a reduction in the corporation tax rate to 17% by April 2020 for SMEs; commit to increasing the personal allowance to £12,500 and the higher rate tax threshold to £50,000 by April 2020; and restrict salary sacrifice arrangements to pension contributions, childcare vouchers, ultra-low emission vehicles, and cycle to work schemes.
  • France: The French government submitted to the National Assembly a draft rectified finance law for 2016 that includes tax technical provisions such as changes to rules for the 3% tax on dividend distributions and the exemption from this tax.
  • France: There may be implications for taxpayers in France that have paid the 3% tax on dividend distributions from a case pending before the Court of Justice of the European Union (CJEU) concerning the compatibility of the Belgian “fairness tax” with EU law and regulations and specifically with respect to the EU Parent/Subsidiary Directive. 
  • Netherlands: An EU directive regulating the entry and residence of non-EU nationals who are transferred within a company has been adopted into Dutch law and will be effective 29 November 2016.

Read TaxNewsFlash-Europe

Transfer Pricing and BEPS

  • OECD: A multilateral instrument to implement tax treaty-related base erosion and profit shifting (BEPS) recommendations pursuant to Action 15 of the BEPS project, was released along with an "explanatory statement." 
  • France: New law provides a reduced threshold for taxpayers to be eligible for filing the “abridged” transfer pricing documentation (Form 2257).
  • Netherlands: Dutch subsidiaries of multinational enterprises (MNEs) that are subject to country-by-country (CbC) reporting are granted a one-time extension for filing the 2016 CbC report. The new deadline is 1 September 2017.
  • India: An Indian court agreed with the taxpayer, that once the Transfer Pricing Officer accepted the use of the Transactional Net Margin Method (TNMM) as the most appropriate method for all but one international transaction, it was not appropriate to subject that only one transaction to an entirely different method (in this case, the Comparable Uncontrolled Price or CUP).

Read TaxNewsFlash-Transfer Pricing and TaxNewsFlash-BEPS

FATCA / IGA / CRS

  • New Zealand: The Inland Revenue Department requested financial institutions and interested parties to submit details of entities and/or accounts that they believe may meet the criteria of “other low risk” excluded entities and excluded accounts under the common reporting standard (CRS).
  • Belgium: The FATCA portal and web application tool will be temporarily closed to allow for adjustments that will accept reports pursuant to the IRS's FATCA XML schema v2.0.
  • Germany: A newsletter provides information to financial institutions and foreign service providers about an IRS notification regarding the FATCA XML schema v2.0.
  • OECD: Saint Lucia has signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, bringing the number of jurisdictions to join the agreement to 107.
  • Switzerland: Representatives of the government of Switzerland and the governments of Brazil, Mexico, Uruguay, Argentina, and India have each signed agreements for the automatic exchange of information (AEOI) with respect to financial accounts. Under these agreements, the first year of reporting will cover 2018, with the reporting itself to take place in 2019.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • Proposed regulations relate to the minimum present value requirements for certain defined benefit pension plans.
  • Proposed regulations concern the “fractions rule” for partnerships with qualified tax-exempt organization partners and their partners.
  • The U.S. Tax Court issued a “reviewed opinion” allowing a taxpayer’s dividend received deduction (DRD) as claimed. The court found that the taxpayer and the IRS did not reach an agreement in a closing agreement with respect to the treatment of the accounts receivable under section 965 and that the accounts receivable did not increase the controlled foreign corporation’s related-party indebtedness during the testing period. 
  • The U.S. Court of Appeals for the Eleventh Circuit affirmed that the taxpayer was not entitled to claim net operating loss (NOL) carrybacks because the evidence did not show that the subject real estate was abandoned or became worthless during the tax year.
  • Beginning January 1, 2017, California’s statewide sales and use tax rate will be reduced from 7.50% to 7.25%.
  • The Chicago city council approved a “bag tax” at $0.07 per bag, and beginning January 1, 2017, the tax will be imposed on the retail sale or use of paper and plastic checkout bags.
  • Ohio’s high court upheld the constitutionality of the factor-presence nexus standard that applies for purposes of the commercial activity tax (CAT).
  • The Tennessee Department of Revenue issued an annual report summarizing several tax topics addressed during informal conferences held during fiscal year 2016. Of the 346 informal conferences held during fiscal year 2016, there were 61 franchise and excise tax issues addressed, and 85 concerned sales and use tax.

Read TaxNewsFlash-United States

Exempt Organizations

  • There is new IRS guidance for issuing information document requests (IDRs) in the audit of an exempt organization in the United States.

Read TaxNewsFlash-Exempt Organizations

Americas

  • Canada: First reading of bill in Ontario to increase the land transfer tax rates, to address a tax credit for interactive digital media, and to repeal the Ontario Retirement Pension Plan Act.
  • Canada: The Canada Revenue Agency announced its 2017 contribution limits for registered pension plans (RPPs), registered retirement savings plans (RRSPs), and deferred profit sharing plans (DPSPs).
  • Canada: Quebec Bill 112, with 2016 budget and other tax measures, received first reading.
  • Canada: Measures in Vancouver would impose an annual vacancy tax on empty homes, to be effective in January 2017 with the tax not assessed and payable until 2018.

Read TaxNewsFlash-Americas

Africa

  • Nigeria: The Executive Chairman of the Federal Inland Revenue Service (FIRS) commented on a tax amnesty program, withholding tax and value added tax (VAT), and the review of tax refunds by FIRS.

Read TaxNewsFlash-Africa

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