KPMG’s Week in Tax: 9 - 13 January 2017 | KPMG | US

KPMG’s Week in Tax: 9 - 13 January 2017

KPMG’s Week in Tax: 9 - 13 January 2017

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

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Transfer Pricing and BEPS

  • United States: The IRS posted draft versions of forms (Form 8975 and Schedule A) that taxpayers would use to report information on a country-by-country (CbC) basis.
  • Brazil: The tax administration identified Austrian holding companies that do not have substantial economic activities as a “privileged tax regime.” There are transfer pricing and thin capitalization implications for such Austrian holding companies.
  • Cyprus: The Ministry of Finance issued a decree to align provisions of Cypriot tax law with the requirements of EU Council Directive (EU) 2016/881 adopting the recommendations of the OECD base erosion and profit shifting (BEPS) Action Plan 13 on CbC reporting.

Read TaxNewsFlash-Transfer Pricing and TaxNewsFlash-BEPS

Americas

  • Brazil: Application of the service tax (a municipal level tax) has been extended to streaming and advertising activities, and a uniform rate of service tax has been established at 2%.
  • Canada: The automobile deduction limits and expense benefit rates were announced for 2017. 
  • Dominican Republic: The tax authority published a set of new forms for use by taxpayers in requesting most tax-related procedures, in lieu of the prior “letter request” format used by taxpayers seeking rulings or other approvals from the tax authority.
  • Mexico: Property tax assessments on residences and condominiums in the state of Nuevo León may reflect an increase in cadastral value.

Read TaxNewsFlash-Americas

Asia Pacific

  • Singapore: The productivity and innovation credit (PIC) regime is scheduled to expire in 2018, while the research and development (R&D) tax credit will continue, but with significantly reduced benefits and scope. The expiration of the PIC also means that some businesses may fall out of the PIC regime as early as January 2017.

Read TaxNewsFlash-Asia Pacific

Europe

  • Italy: The 2017 budget law provides new tax incentives to attract capital investments to Italy, including a “flat tax” with respect to certain income of non-domiciled residents and reduced reporting requirements for wealth tax purposes.
  • France: VAT provisions are included in recently enacted finance laws for 2017.
  • Cyprus: The income tax law has been amended, with tax benefits provided for investors with respect to “innovative businesses.”
  • Serbia: Enacted legislation amends the tax procedure and administration provisions of Serbian tax law.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Ireland and Singapore: The lists of bilateral and multilateral agreements with jurisdictions for the exchange financial account information on an automatic basis under the common reporting standard (CRS) have been updated.
  • United States: The IRS announced updated FATCA report sample files using FATCA XML schema v2.0 for direct reporting non-financial entities.
  • Luxembourg: Financial institutions must use new FATCA LUX schema v2.0 (that corresponds to the new FATCA schema of the IRS) for reporting purposes.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The U.S. Court of Appeals for the Fourth Circuit held that a corporate taxpayer was not entitled to a deduction in 2008 under Code section 83 for stock issued to an executive employee because the stock was not subject to a “substantial risk of forfeiture” upon grant in 2002. The Fourth Circuit concluded there could be no deduction upon a corporate merger for stock previously issued to the executive when it was not subject to a substantial risk of forfeiture at grant.
  • A Texas state appeals court issued a “substituted decision” in a case concerning what is “tangible personal property,” and held that the taxpayer (a movie theatre company) could include costs related to exhibiting films in calculating its costs of goods sold (COGS) deduction for the franchise (margin) tax years at issue (2008 and 2009).
  • An administrative law judge in Arkansas found that a taxpayer’s purchase of machinery used to sort wholesale product and in-process inventory was exempt from the sales and use tax under the exemption for manufacturing equipment.
  • Proposed legislation (Senate Bill 8) in Tennessee would provide for adoption of single-receipts factor apportionment for franchise and excise tax purposes.
  • A Utah administrative law judge held that the Utah losses of a corporation that was merged out of existence, due to an acquisition, could not be used to offset income earned by the corporate division that maintained the same operations as the original corporation. 
  • Proposed legislation (House Bill 19) in Wyoming would require retailers that do not have a physical presence in the state to collect and remit sales and use tax if certain conditions are met.
  • The FASB has proposed changes to how companies classify debt as current or noncurrent on the balance sheet, and improvements to disclosures about inventory.

Read TaxNewsFlash-United States

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