Week in tax 26 - 30 June 2017 | KPMG | US

KPMG’s Week in Tax: 26 - 30 June 2017

Tax developments for 26 - 30 June 2017

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

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Africa

  • South Africa: There are changes to the Mining Charter 2017, with new measures concerning who must be eligible holders of new prospecting rights. Because of these changes, there can be tax implications for holders of mining rights—and tax consequences associated with ESOPs and trusts, security transfer taxes, the tax deductibility of costs incurred, and the tax deductibility of social and labor plan costs.

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Americas

  • Brazil: The due date for taxpayer applications under a tax amnesty program—one that allows taxpayers to settle their outstanding tax liabilities with a combination of cash and net operating losses (NOLs)—is 31 August 2017.
  • Bahamas: Tax proposals in the 2017/2018 budget include a reduction in the standard rate of the business license tax, and changes to customs duty owed with respect to basic food products and medical supplies and equipment.
  • Canada: Measures that required labour organizations and labour trusts to file annual reports with the Canada Revenue Agency (CRA) and to disclose financial data and information on political, lobbying, and other non-labour relations activities have been repealed.
  • Canada: Legislation that contains most of the 2017 budget's individual (personal) tax and GST/HST measures received Royal Assent. In general, the corporate tax measures in the budget remain outstanding, and are pending enactment.

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: The Australian Taxation Office (ATO) issued a draft of a ruling regarding the tax treatment of employee travel expenses.
  • Australia: The ATO has issued “open letters” in which it has identified issues regarding the securitised licence structure for public private partnership (PPP) projects.
  • Australia: The ATO has made further amendments to the 2017 Reportable Tax Position (RTP) schedule and its guide to reportable tax positions 2017.
  • Vietnam: Among guidance measures affecting corporate and individual income tax is guidance from the Ministry of Finance addressing the permitted ratio of commission payable for the insurance to construction investment activities that is capped at 5% of the actual insurance premiums. Other guidance includes an updated list of import goods subject to customs clearance at the import border, effective 1 July 2017.

Read TaxNewsFlash-Asia Pacific

Europe

  • Netherlands: The Dutch innovation box regime has been approved by the European Code of Conduct group. Biological plant-protection products will fall under the innovation box regime.  
  • Bulgaria: A “tax card” provides an overview of taxes for 2017.
  • Ireland: Annual value added tax (VAT) recovery rate adjustments for 2016 are to be included in the May/June 2017 VAT return, that is due by 23 July 2017 for those businesses involved in both VAT-exempt and VAT-able activities with a 31 December year-end and that file VAT returns on a bi-monthly basis. 
  • Italy: A law decree enacts VAT measures that affect input VAT recovery, that extend the “split-payment regime” to supplies of goods and services provided to certain Italian public bodies and corporations listed on the stock exchange, and that schedule a phased-in increase of the rate of VAT, with the “standard” VAT rate to be phased in to 25% by 2021 and the “reduced” VAT rate to be increased to 13% as of 2020. 
  • Poland: Large companies may indirectly benefit from public financial assistance being offered to their sub-suppliers in the micro, small and medium-sized enterprises (SMEs) sector.
  • Spain: The Court of Justice for the European Union (CJEU) found that tax exemptions for the Catholic Church in Spain may constitute unlawful state aid if and to the extent to which the exemptions are granted for economic activities.
  • Sweden: A high court decision affirms that certain fees paid to company directors are taxable as income from employment.
  • UK: A series of articles examines the proposals for corporate interest restriction rules.  

Read TaxNewsFlash-Europe

Transfer Pricing

  • Thailand: Measures that would implement a transfer pricing regime in Thai tax law and that would add transfer pricing documentation rules, as well as other provisions, are pending public consultation and final consideration.
  • India: The Central Board of Direct Taxes entered into a unilateral advance pricing agreement (APA) with a taxpayer, with the APA addressing certain issues about severance compensation paid to employees following the reduction and shutdown of captive activities in India.
  • OECD: Following last week’s release of a discussion draft regarding base erosion and profit shifting (BEPS) Action 10, a KPMG report considers several key issues related to the application of the transactional profit split method, addresses certain comments provided on the prior (2016) discussion draft, and poses some questions for public discussion.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Belgium: The online portal is now open for submission of common reporting standard (CRS) returns.
  • Cayman Islands: The online AEOI portal is open and an updated version of the AEOI portal user guide for financial institutions has been released concerning obligations in respect of the U.S. FATCA regime and the OECD’s common reporting standard (CRS).
  • India: Guidance concerns the reporting of information about certain “corporate actions”—that is dividends and interest—under the FATCA and common reporting standard (CRS) regimes.
  • Luxembourg: An updated version of guidance defines the format to be used by Luxembourg financial institutions in reporting information under the common reporting standard (CRS) regime.
  • United States: The IRS has posted final versions of Form W-8IMY and the related instructions, and a final version of Publication 5118 on the FATCA online registration process.
  • United States: According to an IRS release, any foreign financial institutions (FFI) that entered into an FFI agreement before 2017 must renew its agreement by 31 July 2017 to continue to be treated as a “Participating FFI” (including a Reporting Model 2 FFI).

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • EU: Nine countries, including the Arab nations of Saudi Arabia, the United Arab Emirates (UAE), Egypt, Bahrain and Yemen, have imposed sanctions on Qatar. As a consequence of the current sanctions, it is no longer possible to use certain shipping routes to Qatar.
  • United States: The Treasury Department Office of Foreign Assets Control (OFAC) announced that a New York-headquartered international insurance and financial services organization agreed to pay approximately $149,000 to settle its potential civil liability for 555 “apparent violations” of OFAC sanctions programs concerning Iran, Sudan, and Cuba.

Read TaxNewsFlash-Trade & Customs

United States

  • The U.S. Treasury Department and IRS released corrections and clarifications of regulations on tax withholding, information reporting, and backup withholding.
  • The U.S. Court of Appeals for the Eighth Circuit affirmed a decision of the U.S. Tax Court, that a private golf club was not entitled to a charitable deduction for a conservation easement because, under the regulations, no deduction is allowed for an interest in property that is subject to a mortgage unless the mortgage is subordinated before the easement is conveyed.
  • The U.S. Tax Court issued an opinion concluding that pregame meals at away-city hotels, provided by a professional hockey team to its players and personnel, qualified as a de minimis fringe and that the costs of the pregame meals were not subject to the 50% limitation.
  • In Delaware, legislation is to increase the maximum franchise tax to $200,000 effective for tax years beginning 1 January 2017.
  • The Maine legislature voted to override the governor’s veto, thereby enacting economic nexus sales and use tax provisions. Effective 1 October 2017, remote sellers with no physical presence in Maine must collect and remit sales tax if they meet certain requirements for the current or preceding calendar year.
  • The North Carolina legislature voted to override the governor’s veto of an appropriations bill that includes reductions in the rates of the state’s corporate income tax and individual income tax.
  • In Oregon, legislation to impose market-based sourcing rules has been passed by both houses of the legislature.  
  • An ordinance in the Puerto Rican city of Caguas requires an additional “contribution” from certain individuals or entities having gross receipts exceeding a threshold amount. The “municipal entrepreneur contribution” will apply in Caguas beginning 1 July 2017.

Read TaxNewsFlash-United States

 

  • President Trump announced his intent to nominate Christopher Campbell as Assistant Secretary of the Treasury, Financial Institutions. Campbell currently serves as majority staff director for the U.S. Senate Finance Committee, and if confirmed, may be expected to participate in tax reform discussions.
  • U.S. Senate Finance Committee Chairman Orrin Hatch (R-UT) spoke about the need for comprehensive tax reform and the “ongoing effort” to reform the Code.
  • The Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) released reports of the effects of a healthcare legislative as had been proposed in the Senate. An expected vote on the legislation has been postponed.

Read TaxNewsFlash-Legislative Updates

 

  • Final regulations allow the IRS Commissioner to adopt a streamlined application process for eligible organizations to apply for recognition of section 501(c)(3) tax-exempt status.

Read TaxNewsFlash-Exempt Organizations

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