KPMG’s Week in Tax: 15 - 19 August 2016

KPMG’s Week in Tax: 15 - 19 August 2016

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

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Transfer Pricing and BEPS

  • Czech Republic: A draft amendment would transpose, into Czech law, an amendment reflecting an EC Directive on the mandatory automatic exchange of information in the field of taxation. The draft amendment introduces the automatic exchange of information concerning tax rulings with cross-border elements.
  • India: The Delhi High Court held that the “Berry ratio” can be applied with respect to transfer pricing methodology when the value of the goods is not directly linked to the quantum of profits, and the profits are mainly dependent on expenses incurred.
  • Israel: The Israeli government approved the Ministry of Finance’s budget plan for 2017-2018 that includes measures for country-by-country (CbC) reporting and transfer pricing documentation requirements.
  • Hong Kong: The Inland Revenue Department continues to challenge transfer pricing arrangements with regards to management fee or head office recharges, and there are reports that the tax authorities are requesting sophisticated information on such cost-recharge arrangements.
  • Turkey: There is new law with changes made to article 13 of Turkey’s corporate tax law (no. 5520) to align Turkish transfer pricing rules to OECD transfer pricing guidelines.
  • Greece: New legislation in Greece extends the due date for transfer pricing documentation preparation and submission.

 

Read TaxNewsFlash-Transfer Pricing

Asia Pacific

  • Australia: The Australian Taxation Office (ATO) released new draft guidance concerning foreign hybrid rules.
  • Australia: The OECD proposal to recognise pension funds has implications for Australia superannuated funds.
  • Israel: The budget plan proposed for 2017-2018 introduces significant changes with respect to international taxation, and would be relevant for individuals, multinational corporations operating in Israel, and Israeli corporations operating abroad.

 

Read TaxNewsFlash-Asia Pacific

Europe

  • Luxembourg: Tax reform concerning the family allowances has been enacted.
  • Greece: New tax legislative changes concern the due date for individuals to remit payments of income tax, the issuance of tax certificates to various entities, and value added tax (VAT) penalties and recordkeeping rules.

 

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Bahamas: The “tax information exchange” portal for Bahamian financial institutions to submit information on FATCA reportable accounts opened on 19 July 2016 and will close on 26 August 2016.
  • United States: Updates to the FATCA online registration system must made when there are changes to contact information for responsible officers and points of contact.

 

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The 2016-2017 priority guidance plan was released this week. There are insurance-specific initiatives as well as guidance projects planned for other industry sectors.
  • Final regulations under section 5000C relate to the 2% tax on payments made by the U.S. government to foreign persons pursuant to certain contracts.
  • Changes to the rules in Texas concerning when a taxpayer is considered to be a producer of goods for purposes of the reduced retailer/wholesaler franchise tax rate are expected, and prior to the release of the rules, the Comptroller’s office convened a “roundtable meeting” to discuss these pending revisions to 34 Tex. Admin. Code 3.584.
  • The IRS announced that taxpayers who are victims of the storms and flooding in Louisiana will have until 17 January 2017, to file certain individual and business tax returns and to make certain tax payments.
  • An Arkansas administrative law judge concluded that machinery used to reprocess waste material into a new product was not exempt from the sales and use tax under the state’s manufacturing exemption.
  • The California Franchise Tax Board issued a chief counsel ruling, concluding that royalty income derived from an unrelated party’s use of the taxpayer’s licensed marks was not a protected activity under Public Law 86-272 and that the taxpayer’s active involvement with the use of the licensed marks was not a de minimis activity. 
  • A lawsuit in Delaware concerning the constitutionality of certain aspects of Delaware’s unclaimed property enforcement process is pending, with the parties filing a joint motion to dismiss the case with prejudice. 
  • A Washington state administrative law judge concluded that a medical imaging service provider could not deduct from its B&O tax base, amounts received from patients that were subsequently paid to a group of physicians. The fees paid to the physicians to interpret the medical images were not excludable from the B&O tax.

 

Read TaxNewsFlash-United States

 

The U.S. Court of Appeals for the Sixth Circuit affirmed the decision of a federal district court that a hospital—a nonprofit entity—was not entitled to a higher rate of interest on its refund of FICA paid on the stipends paid to its medical students, but was only allowed interest on refunds paid to corporations.

 

Read TaxNewsFlash-Exempt Organizations

 

  • U.S. Customs and Border Protection (CPB) issued a release concerning an updated APHIS-Lacey Act implementation guide and new version of samples.
  • A final rule implements changes that were proposed in May 2015 concerning revisions to the Export Administration Regulations (EAR) for purposes of harmonizing the destination control statements.
  • A notice of proposed rulemaking concerns imports into the United States of certain vehicles and engines subject to federal antipollution emission standards under the Clean Air Act (CAA).

 

Read TaxNewsFlash-Trade & Customs

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