KPMG’s Week in Tax: 6 - 10 February 2017

KPMG’s Week in Tax: 6 - 10 February 2017

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

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Asia Pacific

  • Japan: The National Tax Agency (NTA) released a statement announcing its policy concerning the tax treatment of income derived through a U.S. limited partnership by Japanese resident partners.
  • Australia: The government introduced legislation seeking to impose a 40% “diverted profits tax” on significant global entities carrying on business in Australia.
  • Australia: A draft taxation ruling concerns the depreciation of composite assets (i.e., assets made up of a number of components that are capable of separate existence).
  • Thailand: Legislation with tax incentives and benefits concerning investments and research and development (R&D) activities has been introduced, with an aim of encouraging continued investment in Thailand.
  • Thailand: An additional “bonus” deduction has been extended through 31 December 2017, but at a lower rate of 50% (instead of the previous bonus deprecation of 100%).
  • Thailand: There are changes with respect to individual (personal) income taxation with increases to some individual tax deductible expenses and allowances, and reductions for others; changes to the tax filing thresholds; and an increase to the income threshold in the highest tax bracket. 
  • Indonesia: Measures concerning an exemption or reduction of import (customs) duty and value added tax (VAT) on goods imported within the context of a contract of work for the coal mining sector are effective in February 2017.
  • China: Guidance from the tax authorities concerns implementation of the R&D expense “super deduction.”
  • India: A tribunal held that when tax has been withheld (“deducted”) on the basis of beneficial provisions of tax treaties, the provisions of Section 206AA of the Income-tax Act, 1961 do not apply.
  • India: A circular answers specific questions on the implementation of the provisions of the General Anti-Avoidance Rules.
  • India: A tribunal concluded that a provision of the Income-tax Act, 1961 does not refer to a surcharge or education cess, and that such a surcharge and education cess cannot be levied on the amount of tax withheld at source.

 

Read TaxNewsFlash-Asia Pacific

Transfer Pricing

  • Hong Kong: Comments to a consultation on transfer pricing rules are being considered. At present, it is not certain what could be the effect of these comments or whether the suggestions will be reflected in draft transfer pricing legislation.
  • India: Since the launch of India’s advance pricing agreement (APA) regime in 2012, over 700 applications—both for unilateral and bilateral APAs—have been filed, and over 120 APAs  have been entered into.

 

Read TaxNewsFlash-Transfer Pricing

Europe

  • United Kingdom: Critical timelines and processes in 2017 concerning Brexit are provided. 
  • Hungary: Recent developments concerning the VAT in Hungary include findings that certain loans are subject to VAT, and window installation services were seen as a supply of construction-installation services that too were subject to VAT.
  • Lithuania: The rules for issuance of business certificates and the list of activities under business certificates have been amended; and corporate income tax relief is available for entities operating in a free economic zone.

 

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Luxembourg: Guidance defines the format to be used by Luxembourg financial institutions for purposes of reporting the information under the common reporting standard (CRS) regime.
  • South Africa: A second guide item for implementing the FATCA regime was released.

 

Read TaxNewsFlash-FATCA / IGA / CRS

Africa

  • Zambia: Submissions of “provisional” income tax returns for 2016 are due in early March 2017 (manual) or at the end of March 2017 (electronic). The due date for the final income tax return submission and payment of balance of tax has advanced from 30 June to 21 June.
  • Botswana: The budget for 2017-2018 include a proposal for a transfer pricing regime and application of thin capitalization rules.

 

Read TaxNewsFlash-Africa

Americas

  • Canada: New Brunswick’s 2017 budget includes a reduction in the small business income tax rate, but no changes to individual (personal) income tax.

 

Read TaxNewsFlash-Americas

United States

  • Rev. Rul. 2017-05 provides the “covered compensation” tables for determining the permitted disparity in employer-provided pension plan contributions or benefits for the 2017 plan year.
  • Tax refund or tax credit opportunities may be available to businesses across a variety of industry sectors with respect to fuel used for off-highway business purposes.
  • Newly enacted law in Delaware reflects legislative reforms to the state’s unclaimed property statutes.
  • The New York Department of Taxation and Finance concluded that an individual who sewed quilts for customers was performing a taxable service.
  • An administrative law judge in Texas found that a Spanish-language television and radio broadcaster was not entitled to deduct, as cost of goods sold (COGS), costs associated with depreciation and amortization of transmitters, antennas, and towers (i.e., distribution equipment), but could depreciate its FCC license and costs associated with equipment used to produce television and radio programs.
  • An administrative law judge in Washington State found that reels used to store and ship wire cable, manufactured by the taxpayer, were not exempt from sales and use tax under the manufacturing exemption.
  • Proposed “market-based sourcing” legislation being considered in New Mexico and Oregon would adopt a location of delivery rule for service receipts.

 

Read TaxNewsFlash-United States

 

  • The U.S. Government Accountability Office (GAO) released a report concerning its evaluation of U.S. Customs and Border Protection's (CBP) Customs-Trade Partnership Against Terrorism (C-TPAT) program. In the report, the GAO recommended that CBP develop: (1) standardized guidance for field offices regarding the tracking of information on security validations; and (2) a plan with milestones and completion dates to fix the “dashboard” data reporting tool, so the C-TPAT program can produce accurate data on C-TPAT member benefits.

 

Read TaxNewsFlash-Trade & Customs

 

  • New guidance was released for use by IRS agents in examining organizations that received tax-exempt status after October 2013.

 

Read TaxNewsFlash-Exempt Organizations

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