KPMG’s Week in Tax: 22 - 26 January 2018 | KPMG | US
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KPMG’s Week in Tax: 22 - 26 January 2018

KPMG’s Week in Tax: 22 - 26 January 2018

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

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Transfer Pricing and BEPS

  • OECD: Eleven countries will participate in a new voluntary pilot program for multilateral risk assessment of large multinational entity (MNE) groups. The pilot program will use country-by-country (CbC) reports and other transfer pricing information intended to provide tax certainty and assurance for both taxpayers and tax administrations.
  • Sweden: The Administrative Court of Appeal in Stockholm held that the current year and prior years are applicable for purposes of a benchmarking search to test whether a price is at arm’s length, but that subsequent years are not to be used.
  • Australia: The Australian Taxation Office (ATO) released a “practical compliance guideline” on its approach to tax issues associated with cross-border related-party financing arrangements and related transactions. 
  • Belgium: Tax inspectors are focusing on transfer pricing and complex international tax issues using a three-layered approach.

Read TaxNewsFlash-Transfer Pricing

Americas

  • Canada: The deadline for paying interest on family income splitting loans for 2017 to lenders is 30 January 2018.
  • Canada: The Canada Revenue Agency has initiated a new educational program that is meant to help charities comply with their tax obligations and to avoid common errors.
  • Canada: There are new hotel taxes in Ontario.
  • Brazil: The federal tax authority issued guidance for implementing tax incentives for the oil and gas industry.

Read TaxNewsFlash-Americas

Asia Pacific

  • Asia Pacific: Eleven countries have agreed to the Trans-Pacific Partnership (TPP). The TPP will eliminate more than 98% of tariffs in a trade zone and will deliver 18 new free trade agreements involving the TPP parties.
  • China: Interim administrative measures for advance rulings from the customs offices are effective 1 February 2018, and are available for foreign trade operators registered with the customs authority. 
  • Philippines: A tax advisory instructs all users of the “electronic documentary stamp tax” (eDST) system to adopt the constructive stamping procedures for DST transactions in early 2018.
  • India: A tribunal held that a UAE-based taxpayer did not have a service permanent establishment (PE) in India under terms of the India-UAE income tax treaty because the period (days) of working by the taxpayer’s employees was less than nine months.
  • India: The Authority for Advance Rulings (AAR) concluded that capital gains arising from the indirect transfer of shares of an Indian company on the sale of shares of a German company were not taxable in India. The German company derived its value substantially from its other companies, whereas its value of assets in its Indian company was 5.4% (i.e., less than the required 50%) and thus did not derive value substantially from the Indian company. 
  • India: The AAR found that a payment for an offshore supply of equipment to a French company under an “umbrella agreement” was not taxable in India. The delivery of the equipment took place outside India; title to the equipment was transferred outside India; and thus, it was an offshore equipment supply contract. 
  • India: The AAR concluded that event space and related services provided by an event organiser to a foreign service provider constituted a permanent establishment (PE) in India.  
  • India: Concerning revenue recognition by a real estate developer, a tribunal concluded that the taxpayer did not recognise the entire amount of revenue collected because the taxpayer was required to perform certain specified development activities even after the deeds of sale have been duly executed.
  • Thailand: A revised draft of tax legislative proposals focuses on bringing e-commerce transactions involving persons that are not registered for value added tax (VAT) in Thailand within the scope of the VAT rules.
  • Thailand: An income tax treaty with Cambodia entered into force and is effective as of 1 January 2018.

Read TaxNewsFlash-Asia Pacific

Europe

  • EU: The Economic and Financial Affairs Council of the EU (ECOFIN) agreed to remove eight countries—Barbados, Grenada, South-Korea, Macao SAR, Mongolia, Panama, Tunisia, and the United Arab Emirates—from the EU “blacklist” of non-cooperative jurisdictions, and move them to the “grey list” (requiring continued monitoring).
  • Romania: An exemption from the tax on salary for the software development industry has been extended to include certain employees who are currently enrolled in an accredited university (instead of university graduates).
  • Czech Republic: Tax developments in the Czech Republic concern: (1) value added tax (VAT) ledger statements; (2) electronic reporting of sales; and (3) the income tax law.
  • Malta: Effective January 2018, all Maltese express trusts, foundations, associations, and corporations have new obligations with respect to reporting information about “beneficial owners.” 

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Ireland: An updated version of “frequently asked questions” (FAQs) concerning the common reporting standard (CRS) and an updated version of the guidance notes on the implementation of the FATCA regime were issued.
  • India: There is follow-up on the reporting of U.S. taxpayer identification numbers (TINs) for pre-existing accounts (as of 30 June 2014) in annual FATCA returns filed by financial institutions in India.
  • Portugal: An updated version of a CRS user manual describes certain steps for registration of reporting entities.
  • Singapore: An updated version of FATCA FAQs reflects revised guidance related to obtaining and reporting U.S. TINs and dates of birth by financial institutions.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • A two-year moratorium on the medical device excise tax applies through 31 December 2019, for sales after 31 December 2017.
  • Rev. Proc. 2018-12 provides safe harbor methods for taxpayers to use to value certain stock received by a target corporation’s shareholders in a potential reorganization, for purposes of determining whether the “continuity of interest” (COI) requirement under Reg. section 1.368-1(e) has been satisfied.
  • The New York Department of Taxation and Finance issued a preliminary report addressing New York’s conformity to the recently enacted federal tax reform bill and how the federal changes will affect New York taxpayers. The report outlines certain actions that the state may want to take in light of tax reform. 
  • The New York governor released an executive budget for fiscal year 2019, and included is a proposal to treat carried interest as ordinary income for New York State tax purposes.
  • An administrative law judge in Texas determined that an out-of-state company that provides electrical repair and maintenance services to retail stores operating in the state had Texas sales and use tax nexus.
  • Multiple states have enacted use tax notice and reporting requirements for remote sellers that do not collect and remit sales tax. The first annual reporting obligations are fast approaching in Colorado, Louisiana, Pennsylvania, Puerto Rico, Rhode Island, and Vermont. 

Read TaxNewsFlash-United States

 

  • The U.S. Congress passed and the president signed into law, H.R. 195—legislation to extend government funding through 8 February 2018. The law includes measures relating to and suspending certain health-related taxes.

Read TaxNewsFlash-Legislative Updates

Exempt Organizations

  • Rev. Proc. 2018-10 modifies the annual revenue procedure for exempt organizations determination letters (Rev. Proc. 2018-5) to reflect the recent release of a new IRS form for social welfare organizations under section 501(c)(4) that choose to apply for recognition of tax-exempt status.

Read TaxNewsFlash-Exempt Organizations

Trade & Customs

  • Eleven countries have agreed to the Trans-Pacific Partnership (TPP). The TPP will eliminate more than 98% of tariffs in a trade zone and will deliver 18 new free trade agreements involving the TPP parties.
  • Interim administrative measures for advance rulings from China’s customs offices are effective 1 February 2018, and are available for foreign trade operators registered with the customs authority.
  • The U.S. president approved recommendations to impose safeguard tariffs on imported large residential washing machines and imported solar cells and modules.
  • There is a summary of trade and customs updates prepared by KPMG LLP.

Read TaxNewsFlash-Trade & Customs

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