KPMG’s Week in Tax: 25 - 29 June 2018 | KPMG | US
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KPMG’s Week in Tax: 25 - 29 June 2018

KPMG’s Week in Tax: 25 - 29 June 2018

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

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Europe

  • France: The Supreme Tax Court (Conseil d’État) held that the French tax authorities can consider income that is not “booked” in the accounts of the taxpayer-company for purposes of determining a tax dedicated to local purposes and imposed on added value (Cotisation sur la Valeur Ajoutée—CVAE). In this case, the amount at issue related to a transfer pricing re-assessment.
  • Hungary: Proposed corporate income tax and individual income tax legislative changes for next year were submitted to Hungary’s Parliament.
  • Switzerland: Swiss fund managers of Swiss regulated investment funds may unnecessarily be paying value added tax (VAT) on the asset management / performance fees invoiced to institutional clients (such as Swiss pension funds). The actual service is the management of the assets of a regulated Swiss investment fund—and is VAT-exempt in Switzerland.
  • EU: The ECOFIN Council adopted conclusions on the work of the Code of Conduct Group (business taxation) during the first half of 2018.
  • EU: VAT recovery rate adjustments for businesses involved in both VAT exempt and VAT taxable activities with a 31 December year end (and filing VAT returns on a bi-monthly basis) are due by 23 July 2018.
  • Germany: The German federal tax court (BFH) issued a judgment in a case concerning the input VAT deduction when the invoice did not provide specific details about the time of the supply. The BFH held that the tax authorities cannot simply examine the invoice, but must also take into consideration additional information provided by the taxpayer.
  • Poland: The VAT “split payment” mechanism will be effective 1 July 2018.
  • Serbia: New procedures and rules were added to the law governing companies. Most provisions are effective 1 October 2019, but provisions relating to the valuation of shares and market value of shares in joint stock companies were effective 9 June 2018.

Read TaxNewsFlash-Europe

Africa

  • Nigeria: Companies that are calendar-year taxpayers (with a financial year-end of 31 December) must file their company income tax returns by 30 June 2018.
  • Mauritius: The budget for 2018/2019 reflects tax reform efforts in the global business sector and incentives for certain foreign persons.

Read TaxNewsFlash-Africa

Americas

  • Canada: New private company tax rules were enacted. The legislation implements the passive investment income tax rules and the new tax on split income rules (TOSI), among several other measures that were announced in the 2018 federal budget.
  • Canada: The budget in Prince Edward Island was enacted, and includes some tax measures that were introduced in the province's 2018 budget such as a reduced rate of small business tax to 4% (from 4.5%) effective 1 January 2018, among other changes.
  • Brazil: In the State of São Paulo, certain information relating to the state-level tax on goods (ICMS) will be required to be presented monthly. 
  • Brazil: Guidance published in June 2018 provides rules relating to tax refunds and the interaction with social security liabilities. 

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: There may be tax opportunities for investments in the space industry and satellite sector.
  • Australia: The Australian Taxation Office (ATO) released a taxation ruling concerning the central management and control test of residency for when a foreign-incorporated entity may be considered to be an Australian tax resident. 
  • China: Text of proposed amendments to individual income tax was released. There are measures that address tax residency and that would adjust income tax brackets.
  • Hong Kong: An increase in “new economy” companies resulted in a change in equity-based compensation that, in turn, has tax implications.

Read TaxNewsFlash-Asia Pacific

BEPS

  • OECD: Representatives of the governments of Kazakhstan, Peru, and the United Arab Emirates signed the base erosion and profit shifting (BEPS) multilateral convention (the multilateral instrument or MLI).

Read TaxNewsFlash-BEPS

FATCA / IGA / CRS

  • Russia: The system for submitting common reporting standard (CRS) reports with respect to tax residents of foreign countries will be available beginning 17 July 2018.
  • Germany: The deadline for the transmitting FATCA returns for the 2017 reporting year is 31 August 2018.
  • United States: The IRS published a new “frequently asked question” (FAQ) concerning qualified intermediaries / withholding foreign partnerships / withholding foreign trusts (QI/WP/WT).
  • Belgium: The deadline for transmitting the CRS returns for the reporting year 2017 has been extended to 20 July 2018 (from 30 June 2018).
  • Liechtenstein: The reporting deadline for submitting FATCA and CRS reports for the 2017 reporting period has been extended to 31 July 2018 (from 30 June 2018).
  • OECD: A update was made to a list of FAQs for implementing the CRS.
  • Switzerland: The automatic exchange of financial account information (AEOI) portal will be unavailable on 30 June 2018 and 1 July 2018. However, financial institutions that plan on reporting on 30 June 2018 have until 11 July 2018.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • United States: Customs and Border Protection (CBP) issued a release concerning the additional import duties for certain Chinese goods under the “Section 301” action. The additional duties will be effective with respect to goods entered, or withdrawn from warehouse for consumption on or after 6 July 2018. 
  • United States: The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued two final rules that add to or supplement existing regulations concerning trade and licenses with certain jurisdictions or “blocked persons.” 
  • United States: CBP issued a release on implementing federal excise tax relief for imports of beer, wine, and distilled spirits, and outlines what refund procedures will apply with respect to such imports.
  • EU: An annual report on trade and investment barriers was issued to report statistics for 2017.
  • Turkey: There are new additional customs duties on imports of certain U.S. goods in response to new U.S. tariffs on steel and aluminum.
  • Ireland: To mitigate certain customs clearance and tariff requirements due to “Brexit,” established traders may consider applying for the authorized economic operator (AEO).
  • United States: The U.S. Court of International Trade found a countervailing duty investigation concerning pneumatic off-the-road tires imported from India were subject to “countervailable subsidies” because of the incentives associated with Indian foreign special economic zone (SEZ) and export oriented unit (EOU) programs. 

Read TaxNewsFlash-Trade & Customs

United States

  • U.S. Customs and Border Protection (CBP) issued a release on implementing federal excise tax relief for imports of beer, wine, and distilled spirits, and that outlines what refund procedures will apply with respect to such imports.
  • The U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) issued an “industry circular” concerning how to calculate the effective tax rates for distilled spirits products containing eligible wine and eligible flavors, and how to obtain approval of standard effective tax rates for imported distilled spirits products.
  • The U.S. Court of Appeals for the Eleventh Circuit affirmed a federal district court’s decision to deny the taxpayer’s claim for a tax refund for net operating losses (NOLs) resulting from fees that the taxpayer paid to the Nuclear Waste Fund for the disposal of radioactive waste. 
  • Expectations of the U.S. Securities and Exchange Commission (SEC) staff concern companies’ progress on accounting for tax reform and implementing the new revenue, lease, and credit impairment standards.
  • Residents of Puerto Rico, the U.S. Virgin Islands, and American Samoa affected by last year’s hurricanes and tropical storms were reminded of the requirements to file a 2017 federal income tax return or pay their 2017 tax by a special extended deadline of 29 June 2018.
  • A number of states issued guidance, press releases or introduced bills in response to last week’s decision on the state tax treatment of remote sellers by the U.S. Supreme Court in South Dakota v. Wayfair, Inc.
  • In Rhode Island, new law expands the definition of “retail sale” (subject to sales and use tax) to include vendor-hosted pre-written computer software.
  • A Utah taxpayer established that it was a “sales factor-weighted taxpayer”—a classification that allows the taxpayer to use a single sales factor formula to apportion its business income. An administrative law judge found the taxpayer was a multi-level marketer, rather than a manufacturer.
  • The Virginia Department of Taxation issued a policy document finding that fees or charges associated with a grocery store chain’s proposed personal shopping services would be subject to sales tax.
  • A KPMG report provides a summary of state and local tax developments for the second quarter of 2018 in table format.

Read TaxNewsFlash-United States

Exempt Organizations

  • FASB released a new accounting standards update that clarifies the scope and accounting guidance for contributions received and made. 

Read TaxNewsFlash-Exempt Organizations

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