KPMG’s Week in Tax: 14-18 December

KPMG’s Week in Tax: 14-18 December

The House of Representatives and the Senate have each passed a package of tax legislation containing provisions that not only extend certain tax items permanently but also make significant changes to other tax measures.

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Read KPMG’s preliminary observations of the tax provisions in the year-end legislation.

Details about the following summaries can be found at the TaxNewsFlash Global and United States websites.

Americas

  • Chile: A bill would make changes to the tax reform legislation enacted in 2014. The current legislative proposal is intended to simplify certain aspects of the “2014 tax reform”—measures that have proven to be too complex to implement.
  • Canada: The recently announced increase to the highest federal individual (personal) income tax rate to 33% (from 29%) will become effective 1 January 2016. Taxpayers need to consider reviewing their year-end dividend planning now, to consider possible opportunities before the rate increase takes effect.
  • Canada: The new government of Newfoundland and Labrador officially confirmed that the rate of harmonized sales tax (HST) will remain at 13%, and that the proposed HST rate increase to 15% (originally planned for January 2016) has been cancelled.

Asia Pacific

  • Japan: The tax commission of the government ruling coalition agreed to an outline of tax reform proposals for 2016. The tax reform includes proposals for reduced effective corporate tax rates, revisions to the tax loss carryforward rules, depreciation methods, anti-tax haven (CFC) rules, changes to the rules for tax-qualified contributions-in-kind, as well as other business tax items.
  • Vietnam:  Guidance for implementing Vietnam’s “special” consumption tax will be effective beginning 1 January 2016.

Europe

  • EU: The Council of the European Union released details of a possible draft EU directive, addressing certain “anti-base erosion and profit shifting” (anti-BEPS) initiatives.
  • Spain: The General Court of the European Union annulled the European Commission’s findings that the Spanish tax lease system was “illegal state aid” thus possibly affecting the financing of certain maritime ship building arrangements.
  • Croatia: A decree provides for accounting law changes that will be effective beginning in 2016, including measures that postpone the application of a uniform “chart of accounts” and a definition for “reporting periods.”
  • Netherlands: Guidance announces the gross monthly salary amounts for “highly skilled migrants” for 2016.
  • Switzerland: The Swiss Council of States moved forward on proposals for corporate tax legislation. Several measures have been proposed in order to mitigate or ease the effects of repeal of “privileged tax regimes.”

Transfer Pricing

  • India: The Delhi High Court held that the taxpayer’s advertising, marketing, and sales promotion expenses were not an “international transaction” under provisions of India’s tax law, and thus, could not be the basis of a transfer pricing adjustment.
  • Jamaica: Transfer pricing rules have an effective date of 1 January 2015. Accordingly, a required report (schedule) of related-party transactions will be due by 15 March 2016 (for those taxpayers who file their tax returns by 15 March 2016).
  • India: The Ahmedabad Income-tax Appellate Tribunal held that a corporate guarantee made by a parent company for a subsidiary is not in the nature of a “provision for service” (but was more in the nature of “shareholder activities / quasi capital”) and thus could not be defined as an “international transaction” under India’s tax law, and not subject to the transfer pricing rules.
  • Mexico: Provisions under new article 76A of Mexico’s tax law reflect certain items of the OECD’s base erosion and profit shifting (BEPS) project—in particular expanded transfer pricing disclosure requirements that will apply for the 2016 tax year.

FATCA

  • Turks and Caicos: The government issued FATCA guidance notes for purposes of implementing an intergovernmental agreement (IGA) between Turks and Caicos and the United States under the FATCA regime.
  • Luxembourg: The Luxembourg Parliament unanimously passed legislation that would transpose into domestic law an EU directive concerning the automatic exchange of information in the field of taxation (a directive known as “DAC 2”).
  • EU: The European Commission announced new rules to ease the exchange of financial information by tax authorities of the EU Member States, thus allowing for tax transparency and cooperation.
  • OECD: The Organisation for Economic Co-operation and Development (OECD) announced that it has responded to a request from the European Commission to include additional fields in the common reporting standard (CRS) XML schema.

United States

  • Final regulations concern the health insurance premium tax credit, pursuant to the Affordable Care Act.
  • The IRS issued an advance version of Notice 2016-1 providing the standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes in 2016.

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