KPMG’s Week in Tax: 17 - 21 July 2017

KPMG’s Week in Tax: 17 - 21 July 2017

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

1000

Related content

Asia Pacific

  • Japan: Under the 2017 tax reform, the Japanese controlled foreign company (CFC) regime has been extensively amended, in light of the final report of the OECD’s base erosion and profit shifting (BEPS) Action 3 (Designing effective controlled foreign company rules).
  • Malaysia: There is a new set of corporate governance requirements for companies to apply in providing a framework of control mechanisms that support the company in achieving its goals, while preventing unwanted conflicts.
  • Saudi Arabia: Excise tax rules require the registration of producers, importers, and processors of certain items (including carbonated drinks and tobacco products), and the filing of six excise tax returns per year (that is, a return every two months).
  • India: A tribunal held that disallowance under section 14A of the Income-tax Act, 1961 does not apply for the minimum alternate tax computation. 
  • India: Guidance was issued prescribing the method of valuation of unquoted shares for tax purposes. 
  • India: The Chamber of Tax Consultants filed a writ petition before the Delhi High Court challenging the constitutional validity of a provision of the Income-tax Act, 1961 that requires compliance with “income computation and disclosure standards.”
  • India: The High Court of Gujarat affirmed a tribunal decision for the taxpayer, holding that the mere fact of participation by one enterprise in the management or control or capital of the other enterprise, or the participation of one or more persons in the management or control or capital of both the enterprises, does not always make them “related parties.”
  • India: The Andhra Pradesh and Telangana High Court held that capital gains arising from the sale of shares by the taxpayer of its Indian subsidiary, deriving its value from the immovable property, are not taxable in India under the India-Netherlands income tax treaty.

Read TaxNewsFlash-Asia Pacific

Transfer Pricing and BEPS

  • Czech Republic: The chamber of deputies passed legislation to make country-by-country (CbC) reporting and CbC exchange measures part of Czech law. The legislation includes new responsibilities for companies that are a part of multinational groups having a total consolidated turnover exceeding €750 million.
  • Australia: During the past year, transfer pricing activity has included new legislation, enhanced transfer pricing and CbC compliance activity by the tax authorities, and a significant court win for the government in relation to transfer pricing. 
  • OECD: The Organisation for Economic Cooperation and Development (OECD) released additional guidance under the BEPS inclusive framework on implementation of the CbC reporting measures under BEPS Action 13.

Read TaxNewsFlash-Transfer Pricing and TaxNewsFlash-BEPS

Americas

  • Canada: The Department of Finance proposes to address tax planning involving “income sprinkling” using private corporations and converting a private corporation’s income into lower-taxed capital gains. 
  • Canada: Innovation funding is now available for companies involved in research and development (R&D) through the “strategic innovation fund” that provides contributions to eligible Canadian companies, and is open to all industries.
  • Canada: The Alberta capital investment tax credit program offers a 10% non-refundable tax credit of up to CAN $5 million to eligible Alberta companies involved in manufacturing, processing, and tourism infrastructure. Companies must file an application for the credit with the Alberta government between 17 July 2017 and 8 September 2017.
  • Mexico: A new system aims to simplify the registration of construction projects, as part of a campaign by the social security institute in Mexico (IMSS). Use of the new system will be mandatory beginning 1 September 2017.
  • Chile: The tax administration (SII), as part of tax reform efforts, has been granted authority with respect to appropriate technological systems.
  • Panama: There are changes to regulations regarding the responsibilities of withholding agents, with respect to the tax imposed on the transfer of goods and services.
  • Panama: Companies making investments in Panama can benefit from certain measures under a “legal stability” regime if the company is registered in the Panama Pacifico area.

Read TaxNewsFlash-Americas

Europe

  • France: An administrative court in Paris determined that an Irish entity did not have a permanent establishment in France for purposes of either corporate income tax or VAT. A “tax raid” on the French corporate offices of the multinational entity in 2011 triggered the reassessments.
  • Czech Republic: Guidance was issued concerning how to complete value added tax (VAT) ledger statements, in light of changes to the VAT law that were effective 1 July 2017.
  • Switzerland: The Swiss federal tax authority announced that VAT reform concerning “low value” imports will be postponed to 1 January 2019. The VAT reform was originally scheduled to be effective 1 January 2018.
  • Italy: A decree establishes a new percentage of capital gains and losses realized by non-resident taxpayers, from the transfer of “qualifying” shares in Italian companies, and included in the taxable income of the seller for purposes of the Italian corporate income tax. The new percentage is 58.14% (up from 49.72%) and applies to capital gains and losses realized since 1 January 2018.
  • Netherlands: A social security agreement between the Netherlands and China has been approved and ratified by both countries, and will enter into force on 1 September 2017. 
  • Netherlands: The Dutch Supreme Court held that all days of a person’s stay in the Netherlands are to be counted for purposes of applying the “183-day rule.” The Supreme Court, thus, followed the “days of physical presence” method. 
  • Cyprus: Temporary tax returns are due before 31 July. 
  • Cyprus: The definition of “resident of the Republic” has been revised with respect to individuals.
  • Poland: A draft bill—expected to be effective 1 January 2018—includes provisions that would revise the corporate income tax and individual income tax laws. 

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Cayman Islands: The deadline for reporting, filing FATCA and common reporting standard (CRS) returns has been extended to 31 August 2017. 
  • Hong Kong: The AEOI guidance for financial institutions has been updated, specifically to chapter 8 (Due Diligence: General Requirements) and chapter 9 (Due Diligence: Pre-existing Individual Accounts).
  • Malta: An updated version of guidelines was issued for implementation of the EU Council Directive 2014/107/EU (DAC2) and the CRS to help financial institutions comply with the CRS requirements.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • United States: A U.S. oil and gas corporation was assessed a civil penalty of $2 million for violations of the Ukraine-related sanctions.
  • United States: The first round of negotiations for the North American Free Trade Agreement (NAFTA) involving the United States, Canada, and Mexico will take place beginning 16 August 2017. During the week, the U.S. Trade Representatives announced the NAFTA negotiating objectives, and the Trade Subcommittee of the U.S. House Ways and Means Committee held a hearing concerning NAFTA.
  • United States: The U.S. Court of Appeals for the Federal Circuit reversed and remanded to the U.S. Court of International Trade a case concerning the appropriate import classification for a system of tracks and hanging standards under the Harmonized Tariff Schedule of the United States (HTSUS).
  • EU: A report of customs seizures made during 2016 reveals that in the EU, more than 41 million fake and counterfeit products were detained at the EU's external border in 2016 (a 2% increase compared to 2015).
  • EU: The European Commission has launched a public consultation concerning a proposal for a systematic exchange of customs-related information between the EU Member States and third countries.
  • China: A report summarizes recent customs-related developments and news about customs developments in other jurisdictions including New Zealand and Hong Kong.

Read TaxNewsFlash-Trade & Customs

United States

  • Regulations reflect legislative changes to the due dates and extensions of time to file certain tax returns and information returns.
  • A report examines a decision of the U.S. Tax Court that rejected Rev. Rul. 91-32 (foreign partner’s capital gain from the sale of an interest in a partnership that is engaged in a U.S. trade or business is treated as gain that is effectively connected to a U.S. trade or business and therefore subject to U.S. federal income tax).
  • The Colorado Department of Revenue published an emergency rule addressing the state’s use tax notice and reporting requirements that became effective 1 July 2017.
  • A hearing on the Cook County (Chicago) Illinois sweetened beverage tax restraining order was extended until 21 July 2017.
  • Indiana’s tax court addressed a number of issues stemming from a taxpayer’s corporate income tax audit, including liability that arose as a result of reclassifying the taxpayer’s gain from the sale of a subsidiary as business income.
  • Washington State House Bill 2163 extends the state’s business and occupation (B&O) tax economic nexus provisions to remote seller making retail sales in the state.
  • The Seattle (Washington) City Council approved a measure that increase the rate of individual income tax on certain city residents.

Read TaxNewsFlash-United States

 

  • The Joint Committee on Taxation (JCT) released a report about the effects of tax reform on individuals and families, in advance of a hearing scheduled by the Tax Policy Subcommittee of the U.S. House Ways and Means Committee.

Read TaxNewsFlash-Legislative Updates

© 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

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.