KPMG’s Week in Tax: 31 October - 4 November 2016 | KPMG | US

KPMG’s Week in Tax: 31 October - 4 November 2016

KPMG’s Week in Tax: 31 October - 4 November 2016

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

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Americas

  • Canada: Bill C-29, which would implement tax measures in the 2016 federal budget, received a first reading.
  • Canada: A trade agreement signed with the European Union (EU) will remove almost all of tariffs on goods moving between Canada and the EU Member States.
  • Peru: A resolution extends exceptions to the rules for submissions of monthly income tax and value added tax (VAT) statements.
  • Bermuda: Tax risk management challenges are increasing across all industries, including insurance, in light of the recent reports published by the Organization for Economic Cooperation and Development’s (OECD) on base erosion and profit shifting (BEPS).

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: The Australian Taxation Office (ATO) provided guidance in relation to when the Commissioner will exercise discretion to treat a trust as fixed for the purposes of the trust loss provisions.
  • Papua New Guinea: The budget for 2017 includes tax proposals affecting resource companies and foreign contractors.
  • UAE: A new tax authority in the United Arab Emirates will be responsible for the administration of taxes (including VAT) in the UAE. This reflects the intention to implement a VAT system in the UAE by January 2018 and to align UAE laws with international tax developments such as tax treaties, tax information exchange agreements (TIEAs), and global tax information exchange programs (such as FATCA and CRS).
  • Malaysia: There was no change to the goods and services tax (GST) rate proposed in the budget for 2017. The government, instead, will be relying on the collection of GST to cope with expenses and to reduce the dependence on revenue from the oil and gas industry. Thus, there will be no reduction in GST in the short-term.
  • India: A tribunal held that a taxpayer is eligible to claim depreciation with respect to a “brand value.” The tribunal found that a subsequent amalgamation was not a basis for finding the taxpayer had not acquired a brand name.
  • India: The Supreme Court of India held that concerning the transfer of a taxpayer’s case from one Assessing Officer to another, an agreement between the two officers and their superiors was required prior to the transfer.
  • India: A tribunal held that no technology, know-how, or skills were made available by the taxpayer while rendering management support and other services to enable the Indian group company to function on its own without the taxpayer. Therefore, the services were not taxable as “fees for technical services” under a provision of the India-Finland income tax treaty.
  • Vietnam: Various official letters and other corporate income tax guidance were issued by the tax authorities.

Read TaxNewsFlash-Asia Pacific

BEPS

  • OECD: Panama joined the inclusive framework under the BEPS project.
  • OECD: A questionnaire for taxpayers provides input into the mutual agreement process (MAP) proposal under Action 14 of the BEPS project for the first scheduled peer review that will concern Belgium, Canada, Netherlands, Switzerland, the United Kingdom, and the United States.
  • OECD: A business survey requests comments from businesses regarding tax certainty. The survey—intended to support the G20’s future tax policy work—will run to 16 December 2016.

Read TaxNewsFlash-BEPS

Europe

  • Italy: Elections to participate under certain VAT reporting regimes are due 31 December 2016.
  • Poland: Proposed legislation would revise the tax treatment of investment funds.
  • Spain: Applications to be included in (or excluded from) Spain’s special VAT monthly refund regime for 2017 are due in November 2016.
  • Spain: Royal Decree-Law 2/2016 focuses on reducing the public deficit by introducing corporate income tax measures that aim at raising revenue, and includes new income tax “prepayment” measures.
  • Germany: A report summarizes recent tax developments and court cases concerning, among other items, withholding tax challenges, repayment of contributions, and current expenses. VAT developments are also summarized.
  • Sweden: A report proposes that companies establish a public tax policy—one that is established by the management board.
  • Belgium: A new collective labor agreement enables Belgian e-commerce employers to hire personnel under a more flexible manner, and would allow for night work.
  • Belgium: VAT guidance provides rules concerning where to collect VAT on “distance sales” (when a company sells and transports goods to private customers in other EU Member States). 
  • EU: A new financial transaction tax may be finalized by the end of 2016, with the tax taking effect at the beginning of 2018.
  • Netherlands: A bill to implement the “ultimate beneficial owner” (UBO) registry in the Netherlands is expected to be presented soon, but given a recent decision of the French Constitutional Court against such public registries, there are questions for the Dutch government to consider with regards to a publicly available UBO registry.
  • Serbia: The implementation date for VAT changes has been postponed to 1 January 2018.

Read TaxNewsFlash-Europe

Transfer Pricing

  • South Africa: A final notice regarding additional transfer pricing documentation requirements was published.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Cayman Islands: Financial institutions need to identify certain high-value accounts before 2017.
  • Panama: Law No. 47 enacts into Panamanian domestic law the intergovernmental agreement (IGA) between Panama and the United States for purposes of implementing the FATCA regime.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • Final regulations and proposed regulations address the treatment as “United States property” of certain property held by controlled foreign corporations (CFCs) in connection with transactions involving partnerships. 
  • The Mississippi Supreme Court affirmed a chancery court decision holding that a state statute allowing an exclusion only for dividends subject to Mississippi income tax was unconstitutional. The high court adopted the taxpayer’s proposed remedy—to provide a dividends-received exclusion for all dividends subject to tax in Mississippi or in another state.
  • Notice 2016-66 identifies a type of transaction involving a “micro-captive insurance” structure as a “transaction of interest”—i.e., a tax avoidance transaction—for purposes of Reg. section 1.6011-4(b)(6) and sections 6111 and 6112.
  • Alabama’s Attorney General issued guidance addressing when local sales tax is due if the parties to a retail sales transaction agree to allow title to transfer at the place of the sale and not at the time of delivery.
  • The California tax authorities are weighing proposed regulatory guidance to implement court decisions concerning the exemption from sales and use tax of transfers of software licenses with telecommunications switching equipment.
  • A South Carolina appeals court held that the Department of Revenue did not prove that a taxpayer was required use an alternative apportionment formula. Under South Carolina law, an alternative apportionment method can be applied if the standard apportionment method does not fairly reflect a taxpayer’s income.
  • Voters will decide if Washington State will become the first state to tax carbon emissions. Reductions to other taxes—including a proposal to reduce the sales tax from 6.5% to 5.5% over a two-year period, tax rebates for low-income families, and a reduction in the B&O tax rate applicable to manufacturers—are also on the ballot in an effort for revenue neutrality.

Read TaxNewsFlash-United States

 

  • The U.S. Congressional Research Service (CRS) released a report that outlines several approaches to corporate integration.

Read TaxNewsFlash-Legislative Updates

 

  • The U.S. Justice Department’s National Security Division issued guidance for businesses regarding voluntary self-disclosures, cooperation, and remediation in export controls and sanction investigations.

Read TaxNewsFlash-Trade & Customs

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