KPMG’s Week in Tax: 17 - 21 April 2017 | KPMG | US

KPMG’s Week in Tax: 17 - 21 April 2017

KPMG’s Week in Tax: 17 - 21 April 2017

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

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Transfer Pricing

  • UN: The United Nations (UN) updated a transfer pricing publication for use by developing countries.
  • Australia: A Local file / Master file detailed design was published on the Australian Taxation Office (ATO) website as guidance for taxpayers concerning the practicalities in completing country-by-country (CbC) reporting by “significant global entities.”

Read TaxNewsFlash-Transfer Pricing

BEPS

  • How the global M&A landscape is altered by base erosion and profit shifting (BEPS) recommendations.

Read TaxNewsFlash-BEPS

FATCA / IGA / CRS

  • India: A revised timeline was provided for completing the due diligence for accounts opened between 1 July 2014 and 31 August 2015, for which the self-certifications could not be obtained by 31 August 2016 under an alternative procedure with respect to the FATCA regime.
  • Singapore: An updated version of the frequently asked questions (FAQs) to provide guidance on the implementation of the common reporting standard (CRS) was issued.
  • Malaysia: The FATCA reporting deadline for the reporting years 2014, 2015 and 2016 has been tentatively extended to 30 June 2018.
  • Hong Kong: The AEOI guidance for financial institutions has been updated.
  • Germany: A newsletter provides information about revising the communication manual, releasing XSD/XML schema files, transmitting FATCA returns in 2017, and receiving FATCA data by the IRS.

Read TaxNewsFlash-FATCA / IGA / CRS

Americas

  • Canada: The 2017 federal budget, containing some personal tax and goods and services / harmonized sales tax (GST/HST) measures, received first reading.
  • Canada: The Saskatchewan capital tax bill that increases the corporation capital tax rate on large financial institutions received royal assent.
  • Canada: British Columbia announced new relief from the foreign buyer property transfer tax.

Read TaxNewsFlash-Americas

Asia Pacific

  • India: The Supreme Court held that waiver of interest due by amalgamating company to financial institutions is taxable in the hands of the amalgamated company under Section 41(1) of the Income-tax Act, 1961.
  • India: A tribunal held that under Article 9 of the India-Denmark income tax treaty, income earned by a foreign company from operating ships in international traffic is not taxable in India because the place of effective management of such foreign company is outside India.
  • India: The Central GST Bill, the Integrated GST Bill, Union-Territory GST Bill, and the GST (Compensation to States) Bill, have received assent from the president of India to become “acts of Parliament,” thereby making implementation of GST in India by 1 July 2017 possible. However, the government still needs to notify further items, products, or taxpayers covered at more than 80 places in the acts.
  • India: Guidance provides rules for mergers and amalgamations between a company registered under the Companies Act and a foreign company (and vice versa). Guidance was also issued in conjunction with the Reserve Bank of India (RBI) to amend the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
  • India: A tribunal held that expense disallowance rules under section 14A of the Income-tax Act, 1961 apply to shares held as stock-in-trade, but that such expense disallowance is limited to those shares that have yielded dividend income in the year at issue.
  • India: A tribunal held that income tax withheld (“deducted”) outside India is not allowed as a deduction under section 37(1) of the Income-tax Act, 1961 because the amount is covered under the “disabling provisions” of section 40(a)(ii).
  • Australia: A 2016 taxpayer alert raises concerns for both the United States and the UK on leasing arrangements.
  • Australia: The government’s proposed superannuation reforms impact transition retirement income streams.
  • Australia: Legislation has been proposed that would relax the loss recoupment rules by introducing a more flexible “similar business test.”
  • Singapore: The Monetary Authority of Singapore issued a consultation paper on a legislative framework for a new corporate structure—Singapore variable capital company (S-VACC)—that would be tailored as a collective investment scheme.
  • Taiwan: Amendments to the value added tax (VAT) law—that have an effective date of 1 May 2017—include measures requiring foreign enterprises selling e-commerce services to individual purchasers in Taiwan to register for VAT and pay VAT directly or indirectly through an appointed tax agent.

Read TaxNewsFlash-Asia Pacific

Europe

  • Romania: An amended procedure for approving VAT return refunds was published in the official journal of Romania. “High-risk” taxpayers will only be eligible for VAT refunds after a tax audit.
  • Serbia: The VAT law allows a refund to non-resident taxpayers of Serbian VAT charged on supplies of goods and services purchased within Serbia.
  • UK: A new tax reform for non-UK domiciled individuals took effect on 6 April 2017.
  • Luxembourg: A new law incorporates EU directives into Luxembourg’s domestic law to position Luxembourg as a gateway for entrepreneurs and investors in Europe.

Read TaxNewsFlash-Europe

United States

  • Rev. Proc. 2017-33 provides guidance under the Protecting Americans for Tax Hikes Act of 2015 (PATH Act) regarding amendments to expensing section 179 property, the additional first year depreciation deduction under section 168(k), and the qualified Indian reservation property depreciation provision under section 168(j).
  • Rev. Proc. 2017-30 provides an updated list of “automatic changes” to which the automatic change procedures in Rev. Proc. 2015-13 (as clarified and modified by subsequent revenue procedures including Rev. Proc. 2016-29) apply.
  • The U.S. Tax Court ruled on the tax treatment of variable prepaid forward contracts (VPFCs), concluding modifications made in 2008 to the VPFCs did not result in taxable exchanges under section 1001.
  • The California Franchise Tax Board issued a technical advice memorandum addressing whether the limitations of Internal Revenue Code sections 382-384, which generally limit the use of losses and other tax attributes after a substantial change in ownership, apply in California on a pre- or post-apportionment basis.
  • The Pennsylvania Department of Revenue revised and re-issued a letter ruling addressing the imposition of sales and use taxes to support services provided with canned software and other digital products. 
  • The Tennessee Department of Revenue recently ruled that a taxpayer did not owe sales or use tax on the transfer of software that had been developed internally prior to the time that transferor became affiliated with the taxpayer. 
  • An administrative law judge in Texas determined that a corporate taxpayer was not allowed to amend its franchise tax reports to change its method of deducting or capitalizing certain costs of goods sold. The judge rejected the taxpayer's claim that the regulatory prohibition against amending the return to change the accounting method was not supported by the statute and exceeded the tax commissioner’s authority.

Read TaxNewsFlash-United States

 

  • Treasury Secretary Mnuchin was widely reported to have said that the administration's tax plan would be released "very soon" and that the cost of the tax plan would largely be offset by economic growth and the benefits of dynamic scoring rather than specific tax increases.

Read TaxNewsFlash-Tax Reform

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