KPMG’s Week in Tax: 20 - 24 June 2016

KPMG’s Week in Tax: 20 - 24 June 2016

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

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  • EU: The European Commission announced that the EU Member States agreed to a directive to target tax avoidance reportedly practiced by certain large multinationals, and to build on standards developed by the OECD in the base erosion and profit shifting (BEPS) project. The directive will include CFC rules, exit taxation measures, a general anti-abuse rule, and interest limitation rules. Concerning "hybrid mismatches," the directive covers only intra-EU situations involving hybrid entities and hybrid instruments.


Read TaxNewsFlash-BEPS

Transfer Pricing

  • India: A tribunal found that a corporate guarantee did not justify a transfer pricing adjustment.
  • Finland: A draft bill was released to amend Finnish transfer pricing documentation requirements as well as introduce country-by-country reporting. The updated transfer pricing rules are proposed to be effective 1 January 2017.


Read TaxNewsFlash-Transfer Pricing

Asia Pacific

  • Australia: The New South Wales budget released this week confirms a number of tax measures previously announced, and scheduled to take effect for the 2016-2017 year.
  • Hong Kong: The Inland Revenue Department issued guidance addressing its interpretation of measures enacted last year that sought to extend the tax exemption for offshore funds to private equity firms. 
  • India: The customs authority issued draft guidance concerning an Authorised Economic Operator (AEO) regime that would provide benefits to importers and exporters.
  • China: Guidance was issued by the tax authorities concerning the value added tax (VAT) treatment of reinsurance arrangements. The circular is effective 1 May 2016.
  • India: A tribunal held that tax must be withheld (deducted) from the amount of payments made to highway toll-collecting agencies under section 194C of the Income-tax Act, 1961.
  • Singapore: Guidance issued by the tax administration concerns the goods and services tax (GST) treatment of fringe benefits. In general, the GST treatment turns on what constitutes a “business purpose.”
  • Thailand: Guidance concerns the tax treatment of profits and losses from multiple Board of Investment (BOI) privileges, and provides certain penalty relief for taxpayers that did not appropriately offset their profits and losses from multiple BOI privileges.
  • Australia: New rules concerning the tax treatment of earn-out payments or receipts apply to arrangements entered into on or after 24 April 2015.
  • India: The government released a “model” GST law that would move India closer to implementing a GST by 1 April 2017.
  • Pakistan: Pakistan’s finance bill 2016 includes tax provisions that generally have an effective date of 1 July 2016.


Read TaxNewsFlash-Asia Pacific


  • Poland: Businesses in Poland can apply for government-sponsored funding and support for research and development (R&D) projects for 2016.
  • Czech Republic: An EU directive that introduces a system of non-financial reporting is to be transposed into the Czech legal system by December 2016. 


Read TaxNewsFlash-Europe


  • Canada: Prince Edward Island has released transitional rules for its upcoming increase of the HST to 15% (from 14%) effective 1 October 2016.
  • Canada: Retailers are contending with the latest round of indirect tax rate changes, including HST tax rate increases in several provinces.
  • Canada: Manitoba Bill 11 includes certain measures announced in Manitoba's 2016 budget, and received first reading on 15 June 2016.
  • Canada: Alberta Bill 20, which enacts certain tax measures from the Alberta 2016 budget including a reduction to the corporate income tax rate for small businesses, received Royal Assent on 13 June 2016.
  • Canada: Federally regulated Canadian pension plans that hold controlling interests in businesses may be affected by a government consultation.


Read TaxNewsFlash-Americas

United States

  • As part of a series of six “blueprints” under U.S. House Speaker Paul Ryan’s initiative for “a better way,” Speaker Ryan released a House Republican plan for health care that would replace “Obamacare” and that includes tax components. Speaker Ryan also was set to release a “blueprint” for tax reform on 24 June. The blueprint for tax reform will not be a legislative draft that can be acted on by the House, but is intended to provide a new approach for the tax reform discussion that started in 2011 under the then-chairman of the Ways and Means Committee, Dave Camp. 
  • The U.S. House of Representatives passed two health-related tax bills. 


Read TaxNewsFlash-Legislative Updates


  • The IRS announced that all empowerment zone designations and the related tax incentives will remain in effect through December 31, 2016.
  • Final regulations provide guidance to Blue Cross and Blue Shield organizations and other entities that qualify under section 833 on the computation of the medical loss ratio (MLR) and the consequences of not satisfying the MLR requirement.
  • Proposed regulations concern the application of section 409A to nonqualified deferred compensation plans.
  • Proposed regulations provide guidance under section 457 with respect to the tax rules for compensation that is deferred under plans established and maintained by state or local governments or other tax-exempt organizations.
  • The Alcohol and Tobacco Tax and Trade Bureau (TTB) released: (1) a final rule concerning requirements related to importers and manufacturers of tobacco products and processed tobacco; and (2) a notice of proposed rulemaking that would aim to streamline the importation of distilled spirits, wine, beer, malt beverages, tobacco products, processed tobacco, and cigarette papers and tubes.


Read TaxNewsFlash-United States


  • India: The Central Board of Direct Taxes (CBDT) issued guidance concerning FATCA and common reporting standard (CRS) requirements.
  • Cayman Islands: A “final extension” of the soft enforcement due dates for notification and reporting under United Kingdom’s CDOT and the United States’ FATCA regimes was announced.


Read TaxNewsFlash-FATCA / IGA / CRS

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