KPMG’s Week in Tax: 10 - 14 September 2018 | KPMG | US
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KPMG’s Week in Tax: 10 - 14 September 2018

KPMG’s Week in Tax: 10 - 14 September 2018

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

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Europe

  • Belgium: The rate of the notional interest deduction for assessment year 2020 is 0.726%.
  • Ireland: A proposed controlled foreign corporation (CFC) regime would follow “Option B” of the EU anti-tax avoidance directive. Comments are due on Ireland’s proposed CFC regime by 28 September 2018.
  • EU: ECOFIN (the economic and finance ministers) met to consider a proposed digital services tax.
  • Germany: The federal tax court changed its position on certain invoice requirements for input value added tax (VAT) deduction. Previously, the court conditioned the ability to deduct input VAT as being dependent on the address provided on the invoice; this location had to be where the issuer of the invoice conducted or carried out the economic activity. The court, however, found that any type of address (including a post office box address) is sufficient as long as the contractor is contactable at this address. 
  • Netherlands: The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion in case from Denmark concerning VAT recovery on professional fees incurred in a sale of shares that was abandoned. Dutch businesses considering or involved in the sale of participations for which costs are incurred in connection with the preparation of the sale would need to review their VAT positions because if the CJEU were to adopt the opinion of the Advocate General, this might affect the right to recover VAT in the case of proposed (VAT-exempt or VAT-taxed) services in certain sectors.
  • Poland: The Ministry of Finance proposed measures that would amend the corporate income tax law; impose an “exit tax” on the transfer of assets from Poland or a change of tax residency; regulate taxation of income from cryptocurrency transactions; and create a preferential tax regime for income generated from certain intellectual property (IP) rights. 
  • Sweden: The government has proposed “stricter” CFC rules when companies are subject to low taxation, and that would expand the Swedish CFC rules so that in some instances, income of foreign entities subject to low taxation could be subject to taxation in the hands of Swedish shareholders.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Taiwan: The tax authority issued the form and related instructions for common reporting standard (CRS) purposes. 

Read TaxNewsFlash-FATCA / IGA / CRS

Transfer Pricing and BEPS

  • Ireland: A proposed controlled foreign company (CFC) regime would determine profit using arm’s length, transfer pricing principles. 
  • OECD: The Organisation for Economic Cooperation and Development issued updated country-by-country (CbC) reporting guidance in a “question and answer” format concerning dividends received and employee numbers.
  • Asia Pacific: A transfer pricing review (the 2018 edition) includes discussions and articles about the transfer pricing environment in various countries in the Asia Pacific region and reflects the tax rules and the experience of KPMG tax professionals in their local countries.
  • Malta: Taxpayers are reminded to file CbC reporting notification, as needed. 
  • China: A World Customs Organization guide that addresses customs valuation and transfer pricing has implications for Chinese entities.
  • OECD: Tax professionals with KPMG’s Global Transfer Pricing Services provided comments to an OECD discussion draft concerning the transfer pricing aspects of financial transactions.

Read TaxNewsFlash-Transfer Pricing  and TaxNewsFlash-BEPS

Americas

  • Brazil: A Protocol amending the income tax treaty between Brazil and Argentina has been approved with the publication of Decree nº. 9482/18 in Brazil. The Protocol includes reduced rates of withholding tax on payments of dividends, interest, and royalties and a limitation on benefits provision.

Read TaxNewsFlash-Americas

Asia Pacific

  • India: The Central Board of Indirect Tax and Customs issued notifications (releases) to encourage taxpayers to file GST forms and that provide a one-time waiver of late-payment penalties for late filing of GST returns. 
  • India: The Bombay High Court held that a deduction under section 80-IA of the Income-tax Act, 1961 cannot be denied with respect to interest on fixed deposits and with respect to compensation received for the non-supply of spare parts. 
  • India: The Customs, Excise and Service Tax Appellate Tribunal, Mumbai held that corporate social responsibility is an input service in relation to a business, and accordingly, the credit for payments of corporate social responsibility must be made available. 
  • India: The Central Board of Direct Taxes issued draft guidance proposing to introduce rules that would set forth the manner for determining the fair market value of the inventory that was converted into, or treated as, capital assets. 
  • India: The Central Board of Direct Taxes proposed amendments to the rules that certain individuals have the authority to file for a PAN for a business taxpayer, and that such applications are due by 31 May. 

Read TaxNewsFlash-Asia Pacific

United States

  • Proposed regulations were released as guidance relating to the “global intangible low-taxed income” (GILTI) provisions under the new U.S. tax law. 
  • A revenue procedure provided guidance to real estate investment trusts (REITs) concerning the GILTI provisions.
  • The U.S. Senate voted to confirm Charles Rettig to be the Commissioner of Internal Revenue.
  • A report from KPMG addresses the drawback rules for manufacturers of nonbeverage products that use tax-paid alcohol in the production of certain products. 
  • A report from KPMG explores the IRS’s decision to continue and change the Compliance Assurance Process (CAP) program for 2019.
  • A Government Accountability Office (GAO) report reviews IRS performance during the 2018 filing season and its efforts to implement the measures enacted under the new U.S. tax law for the 2019 filing season.
  • More U.S. states—Indiana, Maryland, New Jersey, Oklahoma and South Dakota—responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. that concerns the sales tax implications of remote or online sales.
  • The Maine legislature passed a bill that updates Maine’s conformity to the Internal Revenue Code and also addresses implications of the new U.S. federal tax reform—including Code section 965 and the “GILTI” provisions—for both individuals and corporations.
  • The New Jersey Tax Court denied a summary judgment motion in a sales tax sourcing dispute involving retailers with in-state home offices. The court found a lack of evidence to establish whether advertising materials printed in-state for distribution all over the United States and Canada were actually shipped by an employee of the retailers—and therefore subject to New Jersey sales tax—or by a common carrier and thus not subject to sales tax.
  • Oregon’s Tax Court held that there was no basis for requiring a nonresident individual’s Oregon-sourced income, derived from investments in several pass-through entities, to be determined using combined reporting.

Read TaxNewsFlash-United States

 

  • U.S. House Ways and Means Committee marked up three bills that are proposed as the “tax reform 2.0” package. The bills would make individual and small business tax reductions in last year's tax act permanent; enhance retirement savings opportunities for individuals; and provide incentives to support innovation by startup businesses.

Read TaxNewsFlash-Legislative Updates

Indirect Tax

  • EU: ECOFIN (the economic and finance ministers) met to consider a proposed digital services tax.
  • India: The Central Board of Indirect Tax and Customs issued notifications (releases) to encourage taxpayers to file GST forms and that provide a one-time waiver of late-payment penalties for late filing of GST returns. 
  • Netherlands: The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion in case from Denmark concerning VAT recovery on professional fees incurred in a sale of shares that was abandoned. Dutch businesses considering or involved in the sale of participations for which costs are incurred in connection with the preparation of the sale would need to review their VAT positions because if the CJEU were to adopt the opinion of the Advocate General, this might affect the right to recover VAT in the case of proposed (VAT-exempt or VAT-taxed) services in certain sectors.
  • Germany: The federal tax court changed its position on certain invoice requirements for input value added tax (VAT) deduction. Previously, the court conditioned the ability to deduct input VAT as being dependent on the address provided on the invoice; this location had to be where the issuer of the invoice conducted or carried out the economic activity. The court, however, found that any type of address (including a post office box address) is sufficient as long as the contractor is contactable at this address. 
  • United States: A report from KPMG addresses the drawback rules for manufacturers of nonbeverage products that use tax-paid alcohol in the production of certain products. 
  • United States: More U.S. states—Indiana, Maryland, New Jersey, Oklahoma and South Dakota—responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. that concerns the sales tax implications of remote or online sales.

Read TaxNewsFlash-Indirect Tax

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