KPMG’s Week in Tax: 13 - 17 November 2017 | KPMG | US

KPMG’s Week in Tax: 13 - 17 November 2017

KPMG’s Week in Tax: 13 - 17 November 2017

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

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U.S. tax reform

  • The U.S. House of Representatives passed H.R. 1, the “Tax Cuts and Jobs Act.” The bill is identical to the bill previously approved by the Ways and Means Committee.
  • The Senate Finance Committee completed its markup of its version (the Chairman’s modified mark) of tax reform legislation, sending the bill to the full Senate for its consideration (expected after the U.S. Thanksgiving holiday).

Read TaxNewsFlash-Tax Reform

Americas

  • Brazil: A “provisional measure” introduces withholding tax changes that affect certain “closed” investment funds and private equity funds. The provisional measure is scheduled to be effective 1 January 2018 (pending approval by Brazilian Congress and conversion into law).
  • Brazil: Activities have been added to the list of services subject to a municipal tax (ISS) in Rio de Janeiro and now include streaming, advertising, data processing services, and computer programs (including electronic games).
  • Canada: British Columbia’s 2017 budget update—including a corporate income tax rate increase—received Royal Assent.
  • Canada: A federal bill includes amendments to the rules for when a trust is eligible to claim the principal residence exemption, and generally would be effective for trust years beginning after 2016.
  • Canada: Saskatchewan’s corporate tax bill—that would increase the corporate tax rate and the small business income threshold—received first reading.
  • Canada: Penalties in Quebec would be increased to address what has been perceived to be “aggressive tax planning.” Specifically, the existing penalty for a general anti-avoidance rule (GAAR) assessment is planned to be increased to 50% (from 25%), effective 1 February 2018.
  • Canada: The Ministry of Finance has determined that the cash-purchase ticket system for grain deliveries will not change.
  • Canada: Ontario’s Minister of Finance announced a reduction in the small business tax rate to 3.5% (from 4.5%) effective for 2018 and an increase of the non-eligible dividend tax rate for individuals.

Read TaxNewsFlash-Americas

Asia Pacific

  • China: New administrative guidance concerning withholding taxes aims to clarify and simplify the withholding tax rules.
  • China: The Chinese government has issued a number of circulars in the past year to clarify uncertainties and update the rules under the new value added tax (VAT) system, and it is expected that in the next few years, China will move from a multiple rate VAT system to a system with fewer VAT rates.
  • Hong Kong: An Inland Revenue Department release clarifies various tax issues concerning the application of the new concessionary tax regime for aircraft leasing. 
  • Singapore: The results of a peer review indicate that Singapore’s tax incentives meet BEPS international standards.
  • Singapore: Regulations are effective to provide tax relief for the “re-domiciliation” of foreign corporations into Singapore.

Read TaxNewsFlash-Asia Pacific

Europe

  • France: A draft “corrective” finance bill for 2017 includes proposals addressing cross-border mergers, the treatment of foreign tax credits, interest rates on tax underpayments and overpayments, and an extension of the effective date of a PAYE withholding tax system.
  • Romania: An ordinance to amend the Romanian tax law includes revisions to the corporate income tax and individual tax changes, effective beginning 1 January 2018.
  • Switzerland: Legislative plans for the canton of Vaud include a reduced corporate tax rate of 13.79% (from 20.95%) to be effective 1 January 2019.

Read TaxNewsFlash-Europe

Transfer Pricing

  • Canada: An advance pricing arrangement (APA) program report for 2016 reveals APA statistics and that the Canada Revenue Agency is focused on a backlog of existing APAs.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Guernsey: Financial institutions will be issued formal notices and instructions to file corrective reports due to “record level errors” in FATCA data transmitted to the U.S. tax agency and in common reporting standard (CRS) reports to CRS jurisdictions in 2016.
  • Cayman Islands: The Department for International Tax Cooperation announced an AEOI Portal status update.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • Rev. Proc. 2017-59 amends Rev. Proc. 2015-13 with respect to changes in accounting method to specify the adjustment period is 15 tax years for elections under section 404A (treated as changes in method of accounting for purposes of section 481).
  • Rev. Rul. 2017-22 provides the “covered compensation” tables for determining the permitted disparity in employer-provided contributions or benefits for the 2018 plan year.
  • In Arkansas, the taxpayer (a dog breeder) was assessed for failing to collect sales and use tax on sales of tangible personal property (puppies), and the assessment was not barred under claims of estoppel with respect to a previously issued opinion.
  • A Colorado appeals court affirmed a lower court decision that a domestic holding company was not includible in a taxpayer’s Colorado combined report for the years at issue. The taxpayer owned a domestic holding company that in turn owned four foreign companies. The four foreign subsidiaries conducted no business within the United States, and had made check-the-box elections to be disregarded as separate legal entities. Thus, for federal income tax purposes, the holding company and the four subsidiaries were treated as a single C corporation.
  • The Mississippi Department of Revenue finalized a regulation that adopts an economic nexus standard for remote sellers with respect to sales and use tax.
  • The Pennsylvania Department of Revenue added a prospective enforcement date to a letter ruling that addresses the taxability of subscription fees for “information retrieval products.”

Read TaxNewsFlash-United States

Exempt Organizations

  • A KPMG report (in chart format) identifies some of the pending tax reform provisions that may affect tax-exempt organizations and donors.

Read TaxNewsFlash-Exempt Organizations

Trade & Customs

  • United States: A notice of import statistics was released for the first nine months of 2017 relating to competitive need limitations (CNLs) under the Generalized System of Preferences (GSP) program. The import statistics identify some articles for which the 2017 trade levels may exceed statutory CNLs.
  • Australia: A “goods compliance update” concentrates on voluntary compliance and risk-based assessments, specifically concerning a trusted trader program.

Read TaxNewsFlash-Trade & Customs

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