KPMG’s Week in Tax: 23 - 27 April 2018 | KPMG | US
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KPMG’s Week in Tax: 23 - 27 April 2018

KPMG’s Week in Tax: 23 - 27 April 2018

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

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Europe

  • France: The French Constitutional Court issued a decision holding that a French anti-avoidance tax provision—that denies a deduction of a portion of interest related to a French tax group’s acquisition of shares of a French company that was not previously member of the tax group, and acquired from a company that controls the acquiring company or is under common control with the acquiring company—was constitutional.
  • Spain: The Court of Justice of the European Union (CJEU) found regional taxes imposed by certain Spanish autonomous communities on large retail establishements are compatible with EU law. 
  • EU: Proposed company law rules would make it easier for companies to merge, divide, or move within the EU single market. The rules aim to stimulate the growth potential of European companies by digitalising the process of setting up and running a business.
  • Sweden: The Swedish government published a final bill regarding re-regulation of the gambling market.
  • Netherlands: Implementation of the “ultimate beneficial owner” register is being postponed because of action by the European Parliament that would amend the directive concerning the rules for an ultimate beneficial owner register.
  • Netherlands: The Dutch government announced that the period for which the “30% ruling” (a tax benefit for certain workers) is granted will be shortened from eight years to five years as of 1 January 2019. 
  • Ireland: The European Commission concluded that Ireland's sugar-sweetened drinks tax does not involve state aid. 
  • Italy: Income tax treaties with Barbados and Panama entered into force, and the effective date of the treaties is 1 January 2018.
  • Malta: New tax measures include provisions for a reduced permanent establishment threshold, revise the notional interest deduction computation, and include other items.

Read TaxNewsFlash-Europe

Transfer Pricing

  • India: A tribunal held that the tax authority is free to examine the arm’s length price for the taxpayer, even though the arm’s length price as declared by a party to the transaction was accepted. In other words, this situation does not preclude the tax authority from examining what would be the arm’s length price in the hands of the other party—the taxpayer—to the same transaction.

Read TaxNewsFlash-Transfer Pricing

Africa

  • Kenya: Pending tax legislation includes measures that would exempt additional goods from the value added tax (VAT); allow an exemption from stamp duty for first-time purchases of residential housing; and exempt certain developers and operators in “special economic zones” from the tax on capital gains and from payment of the compensating tax.
  • South Africa: The rate of VAT imposed on retention payments within the construction sector may be affected by what was the rate of VAT when the payments are invoiced, become due, or are received. The VAT rate changes was effective 1 April 2018. 
  • South Africa: An intergovernmental agency program to foster investments in South Africa was re-launched.
  • South Africa: New rules effective 1 March 2018 require an employee to remit tax upfront under the PAYE (pay as you earn) withholding process on reimbursements for travel allowances, if the employee is reimbursed at a higher rate than the prescribed rate.
  • Africa: Tax guides produced by KPMG provide information about the tax systems of selected African countries. Each country guide contains information about income tax, corporate tax, tax implications for non-residents, capital gains, transfer pricing rules, transaction taxes, transfer duties, and other items.

Read TaxNewsFlash-Africa

Asia Pacific

  • India: A tribunal held that the amount of tax paid in respect of income realized in a foreign country, but subject to tax both in India and in the foreign country, is allowable as a foreign tax credit against Indian tax. 
  • India: New guidance outlines the process for start-ups to apply for and claim certain available tax relief. Also, an intergovernmental board will be formed to consider applications of start-ups that are claiming tax benefits.
  • Myanmar: Investors may be able to obtain tax incentives when making investments in private education services.

Read TaxNewsFlash-Asia Pacific

Americas

  • Canada: A bill in Alberta contains measures affecting the corporate income tax—specifically, a digital media tax credit and an Alberta investor tax credit.
  • Canada: The Nova Scotia budget bill received Royal Assent. The legislation includes all of the tax measures that were announced in the province's 2018 budget, including an equity tax credit for eligible investments made after 31 December 2018 and before 1 March 2024.
  • Canada: A bill in British Columbia that contains miscellaneous tax measures, including an amendment aligning the province's rules for determining a corporation's “specified partnership income” with federal changes, received a third reading.

Read TaxNewsFlash-Americas

FATCA / IGA / CRS

  • Channel Islands: The government of Jersey issued updated versions of the FATCA and common reporting standard (CRS) practical guidance to help financial institutions prepare FATCA and CRS reports. 
  • Russia: Regulations were issued relating to the transfer and receipt of financial information and the exchange of country reports with competent authorities of foreign countries.
  • South Africa: The South African Revenue Service (SARS) opened the third-party data annual submissions process for the period 1 March 2017 - 28 February 2018. Submissions will be accepted until 31 May 2017.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • EU and Mexico: Representatives of the European Union and Mexico reached a new “agreement in principle” on trade as part of a broader, updated EU-Mexico global agreement.
  • United States: The U.S. Court of Appeals for the Federal Circuit addressed the “country of origin” rules for imports of oil country tubular goods (OCTG) and whether OCTG imports fabricated as unfinished OCTG in China and finished in other countries were subject to antidumping and countervailing duty orders covering OCTG imported from China.
  • United States: A new set of FAQs and a “general license” relating to sanctions concerning Ukraine and Russia were released. 

Read TaxNewsFlash-Trade & Customs

United States

  • Rev. Proc. 2018-27 reports a change to the health savings account (HSA) contribution limitation for 2018, and offers certain relief measures.
  • The IRS provided a list of frequently asked questions (FAQs) with respect to the qualified opportunity zone provisions under new tax law.
  • Notice 2018-39 announces an extension of temporary relief for taxable fuel removals from certain Wisconsin terminals.
  • The IRS announced that future regulations will be proposed concerning information reporting on reportable policy sales of life insurance contracts (under new Code section 6050Y).
  • Rev. Rul. 2018-13 provides the schedules of prevailing state-assumed interest rates for use by insurance companies to compute their reserves for tax years beginning after December 31, 2016, and on or before December 31, 2017. This revenue ruling is the last in a series of supplements to the interest rate schedules (originally set forth in Rev. Rul. 92-19) because of changes enacted under the new tax law in the United States.
  • The Eleventh Circuit concluded that Alabama’s tax regime that imposes a sales or use tax on rail carriers when they buy or consume diesel fuel—but exempts competing motor and water carriers from those taxes—does not violate provisions of the “Railroad Revitalization and Regulatory Reform Act” (4-R Act) with respect to motor carriers, but does violate the 4-R Act rules with respect to water carriers. The case was previously before the U.S. Supreme Court.
  • The U.S. Senate Finance Committee held a hearing about “early impressions of the new tax law.” This was the first congressional review of the tax law (that was enacted as Pub. L. No. 115-97, December 22, 2017).
  • In Kentucky, a package of tax reform legislation (in the form of two bills) has been passed by the legislature. The legislation includes federal tax conformity measures as well as changes to the tax rates and tax rules for individual and corporate taxpayers.
  • The U.S. Treasury Department released a report about regulatory reform actions in response to a 2017 executive order. 
  • A KPMG report examines a tax credit available, under the new tax law, for employers that pay employees while on family and medical leave.
  • A KPMG report summarizes state and local tax developments concerning technology-related issues, for the first quarter of 2018 (the topics covered include access to web-based services, guidance on digital equivalents, and the taxability of software).
  • Nebraska enacted federal tax conformity legislation. Unlike certain other states, Nebraska’s conformity bill did not address any aspect of the new federal tax law.
  • Oregon legislation updates the state’s federal tax conformity, and also addresses the state tax treatment of amounts repatriated and subject to the “transition tax” under IRC section 965. 
  • The Rhode Island Division of Taxation announced that concerning the repatriation of deferred foreign income under the “transition tax” of IRC section 965, guidance for corporate taxpayers will be issued.
  • The Texas Comptroller announced a tax amnesty program will run from 1 May 2018 through 29 June 2018.

Read TaxNewsFlash-United States

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