KPMG’s Week in Tax: 25-29 April 2016

KPMG’s Week in Tax: 25-29 April 2016

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

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Transfer Pricing

  • WCO: The World Customs Organization announced a final agreement on transfer pricing and customs valuation, whereby customs authorities may consider transfer pricing information in the course of verifying the value of goods for customs purposes.
  • Japan: A new transfer pricing regime generally puts into effect the provisions under Action 13 of the OECD’s base erosion and profit shifting (BEPS) project requiring country-by-country (CbC) reporting and rules for Master and Local files.
  • India: A tribunal addressed how to determine a “tested party” and concluded that foreign related parties that are the “least complex” entities in the transaction must be selected as tested parties for the purpose of determining arm’s length nature of international transactions, and that an advance pricing agreement (APA) for a prior year is also appropriate to be considered in a later year.
  • Switzerland: The Swiss Federal Council initiated a consultation on the multilateral agreements for the exchange of CbC reports and legislation required for implementation of the CbC regime. The first exchange of CbC reports would occur in 2020—but earlier exchanges could take place on a voluntary basis.

 

Read TaxNewsFlash-Transfer Pricing

BEPS

  • OECD: The OECD released the public comments received with respect to a discussion draft on treaty entitlement of non-CIV funds—one of the items under BEPS Action 6.

 

Read TaxNewsFlash-BEPS

Europe

  • EU: The Court of Justice of the European Union (CJEU) issued a judgment in a matter in which the EC regime for greenhouse gas emission allowances was challenged. The CJEU found that certain measures allowed as an annual amount of free allowances for greenhouse gas emissions were invalid, but granted the EC more time—10 months—to establish a new amount.
  • Bulgaria: There are new mandatory reporting obligations of certain entities (typically, large enterprises) concerning payments made to governments, among other information reporting requirements.
  • Cyprus: A “tax card” provides the various tax rates for 2016, and a report addresses the Cyprus holding company regime. 
  • Luxembourg: The prime minister delivered the “state of the nation” speech that highlighted some of the proposed changes to the Luxembourg tax system to be implemented in 2017—including a phased-in decrease of the corporate income tax rate.
  • Italy: The Italian customs agency issued operating instructions and procedures with respect to implementing in Italy, the EU’s new customs code—the Union Customs Code—that will be effective beginning 1 May 2016.
  • Poland: A draft amendment to Poland’s value added tax (VAT) would repeal a requirement for quarterly VAT settlement, expand joint and several VAT liability to purchasers, and modify the protection provided under binding VAT rulings. 

 

Read TaxNewsFlash-Europe

Americas

  • Canada: Federal legislation—that includes corporate tax and individual tax proposals introduced by the 2016 federal budget and several outstanding 2015 federal budget measures—received its first reading on 20 April 2016. 
  • Canada: Credit unions and related entities with a 31 December year-end must comply with the rules for filing their indirect tax (GST/HST and QST) returns by 30 June 2016.
  • Canada: Real estate businesses that do not fully comply with their indirect tax (for instance, GST or HST) obligations may be subject to additional taxes, interest or non-compliance penalties or may forfeit indirect tax credit opportunities.
  • Canada: Ontario’s 2016 budget bill that reduce rates for the Ontario research and development tax credit and the Ontario innovation tax credit, as well as includes various individual (personal) tax measures, received Royal Assent.
  • Honduras: Honduras replaced its tax department with a new decentralized tax service agency—the Servicio de Administración de Rentas.

 

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: The Victorian government plans to increase the stamp duty surcharge for foreign buyers of residential real estate.

 

Read TaxNewsFlash-Asia Pacific

United States

  • Rev. Proc. 2016-28 provides the inflation adjusted amounts for health savings accounts (HSAs) for calendar year 2017. 
  • The U.S. Tax Court agreed with the IRS to disallow a golf course’s claim for a charitable contribution deduction of $16.4 million related to a donation of a conservation easement because all of the requirements of section 170 were not satisfied. 
  • The inflation adjustment factors and reference prices used in determining the availability of the credit for renewable electricity production and refined coal production under section 45 were released for 2016.
  • Regulations were finalized concerning the requirements under section 432(e)(9) about a suspension of benefits under a multiemployer defined benefit plan that is in “critical and declining status.” The IRS issued a related revenue procedure.
  • The IRS announced that taxpayers in the Houston area, that were affected by recent storms, will have more time to file their returns and pay the amount of taxes due.
  • Final regulations concern the methods used to determine the adjusted applicable federal rates (adjusted AFRs) under section 1288 for tax-exempt obligations and the adjusted federal long-term rate under section 382.

 

Read TaxNewsFlash-United States

 

  • The ranking member of the Senate Finance Committee introduced a bill—The Cost Recovery Reform and Simplification Act of 2016—that would replace the current cost recovery system under the U.S. tax law.

 

Read TaxNewsFlash-Legislative Updates

 

  • The IRS issued Announcement 2016-17 to offer limited penalty relief for eligible educational institutions with respect to the Forms 1098-T, Tuition Statement, required to be filed for the 2016 calendar year under section 6050S.
  • An IRS adverse determination denied tax exemption status to an accountable care organization that did not participate in the “Medicare shared savings program” (MSSP), with the IRS finding that negotiations of payer agreements on behalf of unrelated healthcare providers did not constitute a charitable activity.

 

Read TaxNewsFlash-Exempt Organizations

Trade & Customs

  • United States: The House of Representatives passed legislation that would affect the tariffs on certain imported products by reviving the miscellaneous tariff bill (MTB) process. The MTB process—which expired in 2012—provided rules concerning suspended or reduced tariffs for certain imported products not made in the United States.
  • United States: The customs agency announced plans for a program test relating to shipments of commercial goods by truck—with the shipment originating in Canada and then with the goods passing in transit through the United States to a point of destination also in Canada.

 

Read TaxNewsFlash-Trade & Customs

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