KPMG’s Week in Tax: 29 February - 4 March 2016

KPMG’s Week in Tax: 29 February - 4 March 2016

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

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Transfer pricing

  • EU: The European Commission issued a letter to respond to concerns expressed by the U.S. Treasury Secretary about EC state aid investigations of “tax rulings” issued by EU Member States to multinational companies.
  • United Kingdom: Final country-by-country reporting regulations were published, and reflect changes from the October 2015 draft version.
  • Dominican Republic: The “base amount” that will cause a taxpayer to be subject to the transfer pricing regime for fiscal year 2016 because of transactions involving related parties is RD$10,395,697.220 (approximately U.S. $227,500).
  • India: The Union Budget 2016 introduces country-by-country reporting for transfer pricing documentation purposes, effective from Assessment Year 2017-18.
  • United States: The U.S. Tax Court issued an opinion concluding that the IRS Commissioner was not required to determine the “true separate taxable income” of each member of a taxpayer consolidated group contemporaneously with making a transfer pricing adjustment.

 

Read TaxNewsFlash-Transfer Pricing

BEPS

  • OECD: The OECD issued a release, inviting comments about a discussion draft that includes proposals for changes to the OECD model tax treaty concerning the “treaty residence” of pension funds.

 

Read TaxNewsFlash-BEPS

Africa

  • Nigeria: Pending legislation would impose a “communication service tax” at a rate of 9% on users of electronic communication services.

 

Read TaxNewsFlash-Africa

Asia Pacific

  • Australia: Legislation tabled in February 2016 would amend the application of the goods and services tax (GST) to supplies made by and to non-residents via offshore intangible supplies and cross-border transactions.
  • China: A report examines the value added tax (VAT) implications for the healthcare sector as China transitions from the business tax regime to unified VAT system.
  • Vietnam: An update on corporate income tax developments discusses the treatment of losses in acquisitions and of service management fees.
  • Cambodia: The tax department issued guidance concerning the use and issuance of invoices for registered “real regime” taxpayers.
  • India: The Finance Minister presented the Union Budget 2016 that includes tax measures.
  • Indonesia: Regulations were issued under a revised policy concerning the import and/or delivery of certain taxable goods classified as “strategic goods” that are exempt from VAT.
  • New Zealand: A court found that New Zealand property owned by an individual, but never lived in by that person, cannot be the foundation of a “permanent place of abode.”

 

Read TaxNewsFlash-Asia Pacific

Europe

  • Netherlands: A case referred to the Court of Justice of the European Union (CJEU) from Hungary concerning VAT deductions of holding companies actively involved in the management of participations within a group could have implications for Dutch holding companies.
  • France: A court determined that a rental car company operating a website was providing “travel agent” services and as such was subject to the special VAT regime under the “margin scheme.”
  • Luxembourg: The Luxembourg government released an outline of the proposals for tax reform in 2017 that includes corporate and individual tax proposals.
  • Luxembourg: The VAT treatment of fees paid to company directors has been unsettled, but recent statements from tax authorities appear to indicate some resolution of the issue may be forthcoming.
  • Poland: The Ministry of Finance published a statement concerning implementation of and schedule for the “standard audit file.” A provision requiring that a standard audit file be implemented is effective 1 July 2016.
  • Serbia: Withholding tax applies on fees for services and paid to non-resident legal entities, and effective 1 March 2016, only electronic tax return submissions are to be filed.

 

Read TaxNewsFlash-Europe

United States

  • Treasury’s FinCEN announced that a notice of proposed rulemaking would be issued to revise the regulations implementing the Bank Secrecy Act regarding “Reports of Foreign Bank and Financial Accounts” (FBAR) and affecting individuals with signature or other authority over foreign financial accounts.
  • Puerto Rico issued guidance providing the transition rules for the VAT regime that will be effective beginning 1 April 2016.
  • Regulations concern the basis of property transferred from estates to beneficiaries, with basis reporting to be completed by executors, and also provide transition rules for statements required to be filed before 31 March 2016. 
  • Regulations relate to the allowance for utility costs and implications for the low-income housing credit.
  • The U.S. Court of Federal Claims concluded that a provider of “voice over internet protocol” was not entitled to a refund of the excise tax imposed under section 4251 on certain communication services because the company was merely the “collector” of the tax.
  • Rev. Rul. 2016-8 removes Cuba from the list of countries subject to U.S. tax law restrictions that deny a foreign tax credit for income taxes paid to Cuba and disallow the deferral on income earned in Cuba through a controlled foreign corporation (CFC).

 

Read TaxNewsFlash-United States

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