KPMG’s Week in Tax: 8 - 12 May 2017

KPMG’s Week in Tax: 8 - 12 May 2017

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

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Asia Pacific

  • Australia: The 2017 federal budget was delivered on 9 May 2017 and includes certain tax measures—a “major bank levy” and a one-year extension of small business accelerated write-offs. Otherwise, there is very little in the budget for corporate taxpayers.
  • India: The Central Board of Direct Taxes (CBDT) announced changes to the rules used to determine the method of valuation of unquoted equity shares.
  • India: The Supreme Court of India addressed when an Assessing Officer can make an adjustment if the issue is “debatable.” According to the Supreme Court, if the issue is settled by a high court having jurisdiction, then the issue is “not debatable.”
  • India: The Supreme Court of India addressed the term “payable” when there is a requirement to withhold (deduct) tax at source and remit the withheld tax to the government, and held the rule applies not only to situations when the amount is “payable” but also when it is “paid.”
  • India: A high court upheld the tax law provisions mandating the timely filing of income tax returns for the purpose of claiming profit-linked “tax holiday” benefit for exports and other qualifying activities.
  • India: Legislation advancing tax reforms was passed, and is viewed as providing a smooth transformation of current indirect taxes into a goods and services tax (GST) regime.
  • Myanmar: Withholding tax changes include expanded de minimis rules, and exemptions from withholding tax for individuals on payments made in relation to goods and services.

Read TaxNewsFlash-Asia Pacific

Europe

  • Norway: The tax directorate, in a “binding advance ruling” concluded that dividend distributions from a Norwegian company to an Irish holding company would be exempt from Norwegian withholding tax under the domestic participation exemption.
  • Malta: Tax benefits for aircraft leasing transactions depend, in part, on whether the lease is an operating lease or a finance lease.
  • Romania: Changes to the value added tax (VAT) regime concern electronic services, capital goods, and other areas.
  • France: President-elect Emmanuel Macron proposed tax changes for business and individual taxpayers during the campaign. He will enter office on 15 May.
  • France: A new rule requires VAT-payers that record their customers’ payments using accounting, management or cash software to use secured, certified software systems beginning 1 January 2018.
  • Sweden: Guidelines were released regarding the official position of the Swedish government concerning when the VAT exemption applies with respect to fund management services.
  • UK: There is uncertainty for UK resident non-domiciled individuals and those owning UK residential property through non-UK companies and partnerships.

Read TaxNewsFlash-Europe

BEPS

  • India: Country-by-country (CbC) reporting will be effective from financial year 2016-2017, with the first round of CbC reports to be filed by 30 November 2017.
  • Australia: Employees who travel regularly to Australia and other countries may create a permanent establishment, in light of a recommendation of BEPS Action 7 to change the definition of permanent establishment. 

Read TaxNewsFlash-BEPS

Transfer Pricing

  • South Korea: There are new forms for CbC reporting and for the advance notification as to which company of a multinational group is to be the “reporting entity.”
  • India: A tribunal “deleted” transfer pricing adjustments relating to notional interest on convertible loans and guarantee fees. The Transfer Pricing Officer had determined that the taxpayer should have charged interest on the convertible loans and also imposed 3% as the arm’s length guarantee commission.
  • Singapore: The Inland Revenue Authority of Singapore clarified its practice is to allow services companies providing “routine support services” to adopt the cost-plus mark-up method.
  • Norway: The Ministry of Finance issued a discussion paper that aims at expanding the earnings stripping rules to include interest paid to unrelated parties.
  • UK: In light of the “snap election,” new corporate interest restriction rules have been removed from Finance Bill 2017. In any event, taxpayer groups may need to assume that the rules would apply from 1 April 2017.

Read TaxNewsFlash-Transfer Pricing

Americas

  • Mexico: Taxpayers were to provide their “electronic accounting” information by 30 April 2017—unless the taxpayers initiated an amparo action and were granted suspension relief.
  • Canada: Yukon, the Northwest Territories and Nunavut tabled their 2017 budgets. Yukon announced a reduction to the general corporate tax rate to 12% (from 15%) and a reduced corporate tax rate for small corporations to 2% (from 3%), effective 1 July 2017. The Northwest Territories and the Yukon announced increases to the tobacco tax.
  • Canada: Draft legislation would allow farming and fishing corporations to be eligible for the small business deduction on selling their products to arm's length agricultural and fishery co-operatives. 
  • Canada: New tax measures in Quebec aim to align several Quebec tax measures with recently proposed federal government tax legislation—notably measures that were announced in the 2017 federal budget.

Read TaxNewsFlash-Americas

FATCA / IGA / CRS

  • Monaco: A new version of guidance for implementing the automatic exchange of financial account information in tax matters has been released.
  • UK: Amended regulations are scheduled to be effective 17 May 2017, with respect to implementation of the common reporting standard (CRS).
  • Bermuda: There are new items and guidance concerning implementation of the CRS.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • President Trump intends to nominate David Kautter to serve as an Assistant Secretary of the Treasury for Tax Policy—a key position in the development of tax reform proposals.
  • The IRS publicly released a private letter ruling—the second over the past months that addresses whether the foreign statement reserves maintained by a wholly owned insurance company, established under the laws of another country with respect to its exempt annuity contracts, are an appropriate means of measuring income within the meaning of section 954(i)(4)(B)(ii).
  • Rev. Proc. 2017-38 announced that rulings or determination letters will be issued concerning questions as to whether section 355 or section 361 applies to a distributing corporation’s distribution of stock or securities of a controlled corporation in exchange for, and in retirement of, any putative debt of the distributing corporation if such distributing corporation debt is issued in anticipation of the distribution.
  • The California Board of Equalization issued two rulings addressing whether out-of-state taxpayers were “doing business” in California. 
  • An Iowa appeals court found that a parent holding company was not includable in the Iowa consolidated group, and upheld the disallowance of deductions for certain business expenses of the subsidiaries.
  • The Texas Supreme Court concluded that natural gas temporarily stored in Texas before being sold to out-of-state customers was subject to ad valorem tax.
  • An administrative law judge in Washington State looked to interpretations of the Streamlined Sales and Use Tax Agreement (SSUTA) and declined to dismiss sales tax assessments—related to uncollected sales tax on sales of popcorn—issued to three movie theaters.

Read TaxNewsFlash-United States

 

  • The Ways and Means Committee of the House of Representatives has scheduled for Thursday, 18 May 2017, a hearing on tax reform.

Read TaxNewsFlash-Legislative Updates

Exempt Organizations

  • The IRS reminded calendar-year exempt organizations of a 15 May 2017 filing deadline for the Form 990-series information returns and cautioned exempt organizations not to include Social Security numbers or other unnecessary personal information on their Form 990.

Read TaxNewsFlash-Exempt Organizations

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