KPMG’s Week in Tax: 25 - 29 July 2016

KPMG’s Week in Tax: 25 - 29 July 2016

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

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BEPS

  • OECD: The Organisation for Economic Cooperation and Development (OECD) released a discussion draft that concerns approaches to address base erosion and profit shifting (BEPS) involving interest in the banking and insurance sectors under Action 4 (Interest deductions and other financial payments) of the BEPS project.
  • OECD: The OECD presented a report to the finance ministers of the G20 countries that provides an update of the BEPS project and tax transparency, among other information.

 

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Europe

  • Brexit: Tax implications of the “Brexit” vote continue to be considered in the UK and by other countries and trading partners, including (1) in the UK, Brexit implications for business and how to prepare for exit; (2) Brexit implications in the UK for pension plans; considerations for employers, trustees, plan participants; and (3) the effects for UK nationals in Switzerland and the influence on lump-sum taxation, permits, and residences.
  • EU: The European Commission provided national rules, as applied in EU Member States for the use of the mini one-stop shop (MOSS) for value added tax (VAT) purposes.
  • Latvia: Changes to the individual income tax return forms are effective for tax returns filed for 2016 and subsequent years.

 

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Transfer Pricing

  • Austria: Legislation codifying prior administrative practice for transfer pricing documentation, and also including country-by-country reporting is effective for fiscal years starting on or after 1 January 2016. There were no major changes made to the draft text of the law. 
  • India: The Delhi Bench of the Income-tax Appellate Tribunal held that Transfer Pricing Officers have the authority to determine the arm’s length price of any international transaction that comes to their attention—whether or not such transactions are the subject of a referral from the Assessing Officer.

 

Read TaxNewsFlash-Transfer Pricing

Asia Pacific

  • India: The Central Board of Direct Taxes (CBDT) issued draft rules concerning the method for determining the amount received by companies under different circumstances when shares have been issued.
  • India: The Delhi Bench of the Income-tax Appellate Tribunal held that reimbursements paid by customers for the mobilisation / demobilisation of vessels used by the taxpayer in exploration for oil and gas and attributable to the distance travelled outside India are taxable.
  • Myanmar: The Ministry of Trade and Commerce expanded the types of goods that can be imported for joint ventures between Myanmar companies and foreign investors.
  • China: A list of “questions and answers” (Q&As) concerning private securities fund registration was issued. Q&A 10 describes the rules for allowing qualified wholly foreign-owned enterprises and Sino-foreign joint venture enterprises to establish private securities fund management institutions to conduct private securities fund management business—including investments in securities on the secondary market.

 

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Africa

  • South Africa: Details and draft tax legislation was released concerning the special voluntary disclosure programme, which is the final opportunity for non-compliant South African taxpayers with undisclosed assets abroad to voluntarily disclose and regularize their offshore assets and income.

 

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Americas

  • Canada: Many businesses will be affected by proposed changes to the GST/HST rules and regulations, including companies that offer registered pension plans to their employees or that use drop-shipment certificates for sales of goods to non-residents. 
  • Canada: British Columbia introduced a 15% property transfer tax for foreign buyers of residential property in the Vancouver area.
  • Mexico: The “Third Resolution on Amendments to the 2016 Omnibus Tax Bill” was published in the official journal to amend, revise or repeal various tax measures.

 

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FATCA / IGA / CRS

  • Turks and Caicos Islands: The intergovernmental agreement (IGA) between the United States and the Turks and Caicos Islands is in force as of 25 July 2016 and follows the Model 1 IGA.
  • OECD: The OECD presented a report to the finance ministers of the G20 countries that provides an update of the tax transparency standards for the automatic exchange of information (AEOI), and states that 135 countries have committed to the AEOI process and 83 countries and jurisdictions have signed the multilateral competent authority agreement for AEOI.

 

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United States

  • The U.S. Court of Appeals for the Fifth Circuit affirmed a federal district court’s grant of summary judgment for the government in a refund case concerning federal excise tax on fees collected from participants in a fractional-aircraft-ownership program. The Fifth Circuit agreed that under the “possession, command, and control test,” the taxpayer provided a crew, insurance, and all operations and maintenance, and with this finding, the excise tax was due under section 4261 for taxable transportation.
  • Final regulations change the process for taxpayers seeking to make an election under section 83(b) with respect to property that is transferred in connection with the performance of services, finalizing a requirement to submit a copy of the section 83(b) election statement with the taxpayer’s income tax return for the tax year in which the property was transferred.
  • The Indiana tax court held that the Department of Revenue was bound by a published revenue ruling interpreting the sales tax exemption for durable medical equipment with respect to a taxpayer with “substantially identical factual situations.”
  • The Ohio Board of Tax Appeals held that a business providing staffing services was not providing a taxable employment service for purposes of the sales and use tax.
  • The Texas Comptroller determined that an out-of-state company that provided waste management consulting services to Texas companies had nexus with Texas for both sales and use tax and franchise tax purposes.
  • A bill (H.R. 5983) was introduced in the U.S. House of Representatives that would codify the Quill “physical presence” standard.

 

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  • The U.S. State Department released a final rule that includes changes to the International Traffic in Arms Regulations (ITAR), revising Category XIV (toxicological agents, including chemical agents, biological agents, and associated equipment) and Category XVIII (directed energy weapons) on the U.S. Munitions List.

 

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