KPMG’s Week in Tax: 5 - 9 March 2018 | KPMG | US
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KPMG’s Week in Tax: 5 - 9 March 2018

KPMG’s Week in Tax: 5 - 9 March 2018

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

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Transfer Pricing and BEPS

  • EU: A report from the European Commission examines “aggressive tax planning structures” for all EU Member States, and how such structures may affect their tax base (erosion or increase).
  • Mauritius: Regulations implement the country-by-country (CbC) reporting requirements in Mauritius, effective for accounting years beginning on or after 1 July 2018.
  • Malaysia: A form was updated by the tax authority to collect information from certain taxpayers about cross-border transactions and to conduct transfer pricing risk assessments.

Read TaxNewsFlash-Transfer Pricing

Africa

  • South Africa: Measures in the 2018 budget and a draft regulation would broaden the scope of taxable electronic services, effective 1 October 2018. Separately, a report provides follow-up discussions of economic and tax measures included in the budget.
  • South Africa: Government efforts aim to revise and improve the research and development (R&D) tax incentive.

Read TaxNewsFlash-Africa

Americas

  • Bermuda: The budget 2018-2019 includes tax proposals.
  • Panama: Companies that are established in a special economic zone are eligible for certain tax incentives, including certain municipal tax relief.

Read TaxNewsFlash-Americas

Asia Pacific

  • New Zealand: Legislation that would revise the rules for “pay as you earn” (PAYE) and certain investment income information reporting advanced after being reported back from a parliamentary select committee.
  • China: Guidance—effective beginning in April 2018—clarifies the “beneficial ownership” requirement with respect to dividends, interest, and royalties under certain articles of income tax treaties for the avoidance of double taxation.
  • Hong Kong: In an attempt to counter money laundering and terrorist financing, all companies incorporated in Hong Kong (except listed companies) are required to obtain and maintain up-to-date beneficial ownership information.
  • Australia: An opportunity to reduce interest and penalty assessments was made available to India-based companies that provide Australian customers with technical services. 

Read TaxNewsFlash-Asia Pacific

Europe

  • France: An appeals court issued a decision that affirms the criteria to be used by French courts to find the presence of a permanent establishment.
  • EU: Concerning the “economic operators registration and identification” (EORI) number, a new process—EORI2—reflects enhancements for trade and customs purposes.
  • EU: The European Commission proposed that customs authorities and economic operators be allowed to continue using, until 2025, existing systems for the completion of certain customs formalities.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Isle of Man: Guidance was issued on the reporting of unknown U.S. taxpayer identification numbers (TINs) for pre-existing accounts under the FATCA regime.
  • Bermuda: Updated versions of the “tax information reporting portal user guide” and the portal “frequently asked questions” (FAQs) for purposes of the common reporting standard (CRS) regime were issued.
  • Singapore: The date for filing the FATCA return for the 2017 reporting year will begin 16 April 2018 and ends 31 May 2018. The CRS registration deadline for all reporting Singapore financial institutions is 31 March 2018.
  • Brazil: A new, updated version of a manual with respect to FATCA and CRS information was approved by the Brazilian tax authority.
  • United States: The IRS is expanding the list of jurisdictions that do not issue TINs to include Australia.
  • Ireland: Regulations that define certain concepts are effective retroactively to 1 January 2018, with respect to the FATCA rules and guidelines.
  • Liechtenstein: The tax administration released English language translations of automatic exchange of information (AEOI) rules and guidance.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • Notice 2018-21 provides guidance for making a one-time claim for payment of the credits and payments allowable for biodiesel (including renewable diesel) mixtures and alternative fuels sold or used during calendar year 2017. The notice also includes instructions about offsetting an excise tax liability with the alternative fuel mixture credit for 2017, and instructions as to how to make certain income tax claims relating to biodiesel, second generation biofuel, and alternative fuel. A temporary modified safe harbor for semi-monthly deposits of the oil spill liability tax is being made available.
  • Rev. Rul. 2018-7 provides the rates of interest for underpayments and overpayments of tax for the second quarter of 2018. The interest rates increase for the first time since 2016.
  • Notice 2018-12 addresses the treatment of health plans providing benefits for male sterilization or male contraceptives. 
  • The U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) provided federal excise tax relief for wineries and bonded wine cellars, in light of changes made by the new U.S. tax law. 
  • The U.S. Tax Court in a “reviewed opinion” upheld an IRS determination that payments made from a foreign sales corporation (FSC) to Roth IRAs were, in substance, contributions made by the taxpayers to their Roth IRAs. The court majority concluded that the taxpayers owed excise taxes under section 4973 for the excess contributions made to their Roth IRAs.
  • A release from the Colorado Department of Revenue announces that all prior Revenue Bulletins and Policy Positions are rescinded. The subject documents were last published during the late 2000s, and no longer represent the Department’s official position on any tax matter.
  • The Colorado Department of Revenue issued a private letter ruling concluding that gain from the sale of an interest in a limited liability corporation (LLC) was eligible for exclusion under the sales factor of the business tax law and apportionment regime. Under Colorado law, gains from sales of intangible property are sourced to the taxpayer’s commercial domicile (in this case, Illinois).
  • New Jersey’s tax court held that a partnership was not “per se” taxable under the state’s corporation business tax law. The court explained that a partnership, by virtue of having a nonresident corporate partner, was not a taxable entity. The taxable entity, rather, was the corporate partner. The partnership had no independent tax liability of its own.
  • Two companion conformity bills in Virginia generally adopt only the provisions of the new U.S. federal tax law (Pub. L. No. 115-97) that affect the computation of federal adjusted gross income for individuals or federal taxable income for corporations for the 2017 tax year.

Read TaxNewsFlash-United States

 

  • U.S. Senate Democrats proposed a $1 trillion infrastructure plan that would be paid for by repealing numerous tax cuts that were enacted in December 2017 (Pub. L. No. 115-97, also referred to as the “Tax Cuts and Jobs Act”).

Read TaxNewsFlash-Legislative Updates

Exempt Organizations

  • The IRS issued a reminder to entities seeking tax-exempt status to use the current version of forms to avoid processing delays. If a prior version of Form 1023 or Form 1024 is used, the IRS said it would return the application and ask for the application to be resubmitted using the current version of the form.

Read TaxNewsFlash-Exempt Organizations

Trade & Customs

  • President Trump signed an executive order imposing a 25% tariff on imported steel and a 10% tariff on imported aluminum products. 
  • The U.S. Court of International Trade granted summary judgment for an importer with respect to the correct Harmonized Tariff Schedule of the United States (HTSUS) classification of toilet paper holders for duty-free treatment.
  • The U.S. International Trade Commission (ITC) found a “reasonable indication” that a U.S. industry was being materially injured because of imports of large diameter welded pipe from Canada, China, Greece, India, Korea, and Turkey. 

Read TaxNewsFlash-Trade & Customs

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