KPMG’s Week in Tax: 15 - 19 May 2017 | KPMG | US

KPMG’s Week in Tax: 15 - 19 May 2017

KPMG’s Week in Tax: 15 - 19 May 2017

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

1000

Related content

Transfer Pricing

  • France: The country-by-country (CbC) reporting requirements may—depending on the facts and circumstances—require reporting on the corporate income tax return, or a notification as to which entity will be reporting the CbC information.
  • India: The Chennai Bench of the Income-tax Appellate Tribunal rejected a transfer pricing adjustment based on the tax administration’s treatment of brand development as a separate international transaction.
  • Australia: The Australian Taxation Office released draft guidance on related-party financing arrangements. This guidance comes on the heels of a Full Federal Court decision, concerning the transfer prices applied to certain cross-border related-party loans. The case specifically concerned the transfer pricing implications of an intercompany loan agreement between an Australian entity and its U.S. subsidiary (CFC) and whether the interest paid to the CFC exceeded an arm’s length price for the borrowing. This has implications not only for taxpayers with cross-border related-party financial dealings, but also for taxpayers with any other cross-border related-party dealings.
  • Czech Republic: Transfer pricing continues to be a focus of the tax administration, given that in 2016, approximately 900 transfer pricing inspections were conducted, for a year-on-year increase of more than 10% in the number of audits.

Read TaxNewsFlash-Transfer Pricing

Europe

  • Belgium: The Court of Justice of the European Union (CJEU) issued a judgment holding that the Belgian “fairness tax” is partially contrary to EU law.
  • Czech Republic: Amendments to the value added tax (VAT) law introduce a change that will affect banks and other VAT payers that secure the future payment of loans and other receivables with movable and immovable property.
  • Czech Republic: Amendments to the income tax law, signed by the president, include among other items, provisions with respect to depreciation and withholding tax.
  • EU: A free trade agreement between Singapore and the European Commission must be concluded by both the EU and the EU Member States acting together, according to a CJEU judgment.
  • Netherlands: Changes have been proposed to revise the different treatment for profit distributions by cooperatives (in principle, not subject to dividend withholding tax) and private limited liability companies (BVs) or public limited companies (NVs) (in principle, subject to tax).
  • Romania: An income tax treaty with China has been ratified by Romania. Once the income tax treaty is ratified by China and enters into force, the treaty provisions would be effective.
  • Sweden: The new “chemical tax” on “white goods” and other electrical goods—e.g., computers, tablets, televisions, phones, games consoles, and routers—is effective 1 July 2017. A key consideration with respect to the chemical tax is whether to take advantage of the option to register as a “warehouser” because this could affect the timing of the chemical tax liability.
  • Finland: Services of a post-graduate degree offered in Finland by a UK university are exempt from VAT in Finland, a Finnish court concluded.
  • France: The CJEU found—in a case concerning the legality of requests for tax information sent by one EU Member State to another EU Member State—that review by the tax agency receiving the request is limited to verifying whether the information sought is not manifestly devoid of any “foreseeable relevance” to the tax investigation concerned.
  • UK: A taxpayer’s appeal was dismissed concerning VAT treatment of utilities in holiday accommodation charges.
  • UK: The key tax policies of the political parties, ahead of the general election, are examined.

Read TaxNewsFlash-Europe

Africa

  • Nigeria: Issues related to “pioneer status”—a fiscal incentive offered to companies operating in designated pioneer industries and/or producing pioneer products—are being investigated by a legislative committee.
  • Kenya: The Finance Bill—that “actualizes” the revenue measures in the 2017/2018 budget—was published after the budget.
  • Kenya: Regulations were issued for purposes of implementing VAT legislation that was published in the official gazette in April 2017, and are effective with the approval of the National Assembly.
  • Mauritius: An alternative tax dispute resolution panel has been established to deal with taxpayer challenges to assessments of tax.

Read TaxNewsFlash-Africa

Americas

  • Canada: Financial institutions and business that are deemed to be financial institutions under the goods and services tax / harmonized sales tax (GST/HST) and Quebec sales tax (QST) rules and that have a 31 December year-end must file annual information returns by 30 June 2017.
  • Canada: The budget bill in New Brunswick, which reduces the small business tax rate and the dividend tax credit rate for non-eligible dividends, received Royal Assent.
  • Canada: New sales tax regulations in Quebec concern changes to the tax treatment of supplies of financial services and rules for “selected listed financial institutions” (SLFIs).
  • Canada: Businesses that conduct research and development (R&D) activities in Saskatchewan may be able to benefit from measures announced in the province’s 2017 budget—including a new refundable 10% R&D tax credit and a “patent box” regime for taxable income earned on intellectual property.

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: Concerning qualifying for the small business rate, a draft ruling on an unrelated topic included a footnote discussing when a company will be regarded as carrying on a business for the purpose of certain tax residency tests.
  • Singapore: The tax authority has changed the tax treatment of employer contributions to foreign pension or provident fund plans under the “not ordinarily resident” (NOR) regime.
  • India: A tribunal upheld a penalty levy for the taxpayer’s failure to file an audit report with respect to its international transaction of receiving foreign remittance from its non-resident Indian director (also a beneficial shareholder) on account of share capital and share premium.
  • India: The Supreme Court of India agreed to the disallowance of an expenditure under Section 14A of the Income-tax Act, 1961 with respect to dividend income that is subject to the dividend distribution tax.
  • India: The goods and services tax (GST) in India differs from other indirect tax systems in two important aspects: (1) the levy of an integrated GST on an interstate supply of goods or services, or both; and (2) the requirement for matching the claim of input tax credit. This affects the input tax credit matching under the GST regime.
  • India: Guidance was issued concerning individuals not required to obtain an Aadhaar number or enrollment identification.
  • India: The Ministry of Finance issued draft income computation and disclosure standards concerning real estate transactions and based on a guidance note for real estate transactions issued by the Institute of Chartered Accountants of India in 2012.

Read TaxNewsFlash-Asia Pacific

FATCA / IGA / CRS

  • United States: The IRS issued a reminder of the approaching 31 May 2017 deadline for renewing all qualified intermediary (QI), withholding foreign partnerships (WP) and withholding foreign trust (WT) agreements.
  • Bermuda: Guidelines were issued for Bermuda’s financial institutions on certain aspects of common reporting standard (CRS) options and other topics concerning the collection of taxpayer identification numbers (TINs), place of birth, investment funds, and trusts.
  • Germany: A newsletter from the tax administration provides information to financial institutions and foreign service providers about the FATCA test procedure and test manual.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • United States: The Trump Administration sent letters to Congress as notification of its intent to initiate negotiations with Canada and Mexico regarding modernization of the North American Free Trade Agreement (NAFTA).

Read TaxNewsFlash-Trade & Customs

United States

  • The U.S. House Ways and Means Committee will hold a hearing next week on President Trump’s fiscal year (FY) 2018 budget proposals. The Trump Administration is expected to submit its FY 2018 budget proposals to Congress "[i]n the coming days." The proposed budget will detail the administration’s tax and spending proposals for the coming fiscal year as well as provide an overview of the budget for the Treasury Department and other activities of the federal government.
  • U.S. Senator John Thune (R-SD), a member of the Senate Finance Committee, introduced a bill—Investment in New Ventures and Economic Success Today (INVEST) Act of 2017 (S. 1144)—that is intended to simplify accounting rules and reform key parts of the tax law. The bill is positioned to be part of future tax reform efforts.
  • The Joint Committee on Taxation (JCT) released a report—Economic Growth and Tax Policy (JCX-19-17)—that provides an overview of economic growth and the effect that taxes may have on economic growth ahead of a hearing on tax reform of the House Ways and Means Committee.

Read TaxNewsFlash-Tax Reform

 

  • Montana legislation adopts market-based sourcing rules and incorporates into Montana law recent changes to the Multistate Tax Compact.
  • The Tennessee Department of Revenue last year approved Rule 129 that adopted an economic nexus standard for sales and use tax purposes. Recently, the legislature passed a bill prohibiting the enforcement of an economic nexus rule.
  • The Texas Comptroller issued guidance about how a taxpayer must apportion receipts from providing payment risk and fraud prevention services.
  • The Utah Tax Commission ruled that an online marketplace provider was not required to collect and remit sales tax on sales of products to Utah customers that were facilitated using the company’s website.

Read TaxNewsFlash-United States

© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit