KPMG’s Week in Tax: 10 - 14 April 2017 | KPMG | US

KPMG’s Week in Tax: 10 - 14 April 2017

KPMG’s Week in Tax: 10 - 14 April 2017

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

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Europe

  • Bulgaria: The regulation for applying the Value Added Tax (VAT) Act, effective 21 March 2017, received significant changes in the state gazette.
  • Luxembourg: The Court of Justice of the European Union (CJEU) Advocate General concluded that existing national rules were not satisfactorily implementing a provision of the VAT Directive and that Luxembourg therefore had not satisfied its obligations under EU law.
  • Sweden: A proposal to amend Swedish tax law for real estate transactions was presented. If legislation is introduced and enacted, the proposal would provide a major tax increase for the real property market.
  • Switzerland: The KPMG member firm in Switzerland reports an update on the tax rates and tax environment.
  • UK: HMRC published amendments to the hybrid mismatch rules draft guidance.
  • UK: Certain benefits received by the self-employed may now be subject to an income tax charge.
  • UK: Draft guidance and regulations have been published on the new corporate interest restriction regime.
  • UK: The High Court has ruled that a claimant can recover overpaid stamp duty reserve tax on share issues made between 2000 and 2003.
  • UK: The KPMG member firm in the UK prepared a report concerning the possible future of the VAT cost-sharing exemption.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Cayman Islands: The automatic exchange of information (AEOI) portal will remain offline until the beginning of May 2017 and the common reporting standard (CRS) return submission functionality is anticipated to be available to financial institution users at the beginning of June 2017.
  • Spain: Updated guidance concerns presentation of model 289 through web service based on XML messages for the CRS regime.
  • Liechtenstein: An updated version of the AEOI guidance provides guidelines for financial institutions on aspects of registration, entry classification, due diligence, and reporting obligations for effective implementation of the CRS.
  • OECD: The Organisation for Economic Cooperation and Development (OECD) released two updates related to the CRS.
  • United States: A new International Data Exchange Services (IDES) frequently asked question has been posted that discusses FATCA reporting by a Model 1 financial institution that does not have a U.S. tax identification number (TIN) for an account holder.

Read TaxNewsFlash-FATCA / IGA / CRS

BEPS

  • Asia: Multinational companies need to prepare for the eventual adaptation of base erosion and profit shifting (BEPS) Action 1.
  • UK: Multiple announcements from the OECD, the EC, and HMRC are changing the landscape for transfer pricing dispute resolution. The BEPS project is expected to substantially increase the number of cross-border tax disputes as tax authorities are likely to interpret the BEPS changes differently.

Read TaxNewsFlash-BEPS

Americas

  • Bolivia: A law was published that increases to 25%, the tax rate that certain financial intermediary entities must pay if their return on equity index exceeds 6%. The law is effective beginning fiscal year 2017.
  • Panama: When a lack of merchandise is detected or when there is an error in the weight, quantity, measure or declared value causing a higher tax payment, the taxpayer may file a refund request with the customs authority.
  • Panama: The deadline has been extended to 30 April 2017, for applications for approval of tax credits related to administrative costs incurred in implementing and applying the retention mechanism of ITBMS.
  • Canada: Saskatchewan Bill 58 hikes large financial institutions' corporation capital tax rate.
  • Canada: Finance tabled a notice that sets out selected measures announced in the 2017 budget as draft legislation.
  • Canada: Charities now have until 31 July 2017 to transition to the Canada Not-for-profit Corporations Act.
  • Canada: Manitoba’s 2017 budget did not include changes to the province’s individual (personal) or corporate tax rates.
  • Canada: The 2017 budget for the province of Prince Edward Island includes no changes to the province’s individual (personal) or corporate tax rates.

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: The Australian Taxation Office introduced the “justified trust” initiative to focus on tax performance and tax governance.
  • India: A tribunal held that the taxpayer can claim and apply a foreign tax credit (FTC) for taxes withheld in the United States against dividend income on satisfying the conditions specified in the FTC Article of the India-United States income tax treaty.
  • India: The Central Board of Direct Taxes (CBDT) has clarified that mandatory quoting of the Aadhaar number/enrollment ID only applies to a person who is eligible to obtain an Aadhaar number.
  • India: A tribunal held that an exemption claim for the house rent allowance concerning the non-contractual payment of rent to a parent is not allowable. 
  • India: A tribunal held that under Article 13 of the India-Italy tax treaty, taxability of a royalty paid by an Indian company to an Italian company depends on the actual payment by the former and receipt by the latter. Therefore, unless the actual payment takes place, the taxability under Article 13 of the tax treaty does not arise. 
  • India: The CBDT has proposed that for purposes of the exemption, the condition of chargeability to securities transaction tax will only apply to certain specified transactions of acquisitions of equity shares entered into on or after 1 October 2004.
  • India: Draft rules were released for the procedures pertaining to registration, valuation, tax invoice, credit and debit notes, input tax credit, returns, payment of tax, refunds, transitional provisions, and composition levy. The set of 9 rules, prescribing procedures to be followed by taxpayers under the GST regime, is a significant step to implementing the GST by 1 July 2017.
  • Singapore: The Reserve Bank of India issued a notification in March 2017 to address concerns and to bring about changes to the foreign direct investment regulations in limited liability partnerships (LLPs). The regulatory framework is clearer for Singapore investors and other foreign investors to use LLPs to invest in India.
  • Singapore: A tax deduction was disallowed for interest expense from shareholder bonds issued by the taxpayer. The bonds were a restructured form of capital from equity interests previously held by the shareholders.
  • New Zealand: Draft legislation of a new tax bill would create new employee income and investment income reporting systems to support business transformation and will affect all business.

Read TaxNewsFlash-Asia Pacific

United States

  • An IRS “practice unit” (guidance for IRS personnel) was publicly issued concerning foreign tax credit general principles.
  • A notice provides the 2017 inflation adjustment factors and reference prices used in determining the availability of the credit for renewable electricity production and refined coal production under section 45.
  • The California Franchise Tax Board issued Notice 2017-02, which addresses the steps for requesting penalty relief due to compliance with the recently amended regulation for sourcing sales of other than tangible personal property. 
  • The Massachusetts Department of Revenue issued Directive 17-1 outlining when out-of-state internet vendors are required to collect and remit Massachusetts sales or use tax. In the directive, the Department adopts a bright-line rule based on the dollar amount of Massachusetts sales or number of Massachusetts transactions.
  • The Oregon Tax Court, Magistrate Division, held that the warranty work performed by a third-party corporation acting on behalf of the taxpayer, a Georgia-based wholesale tire distributor, resulted in the loss of P.L. 86-272 protection.
  • The Appeals Division of the Washington State Department of Revenue concluded that the service income of an out-of-state mutual fund investment manager was subject to B&O tax based on the locations of the individual investors in the mutual funds managed by the taxpayer. 
  • The Appeals Division of the Washington State Department of Revenue addressed whether an exempt “bakery item” included a pie or roll with a savory, rather than sweet, filling. The Division concluded that the term “bakery items” must be construed to mean items prepared and sold by a typical bakery and that savory baked goods that could serve as meals were not bakery items.

Read TaxNewsFlash-United States

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