KPMG’s Week in Tax: 19 - 23 September 2016

KPMG’s Week in Tax: 19 - 23 September 2016

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

Related content


  • Colombia-Costa Rica: A free trade agreement provides relief from tariff duties for goods traded between the countries.
  • Canada: The employment insurance (EI) premium rates for employees will decrease to $1.63 (from $1.88) per $100 of insurable earnings in 2017.
  • Canada: New draft legislation has been issued for consultation, and if enacted, would affect over 60 sections of Canada’s income tax law.
  • Peru: New guidance includes measures concerning the electronic means for “rectification” information submitted on customs declaration forms.
  • Uruguay: The tax authority issued guidance addressing the effects of an incorrect income determination in relation to a value added tax (VAT) settlement.

Read TaxNewsFlash-Americas

Asia Pacific

  • Vietnam: The tax authorities issued rulings concerning indirect capital transactions that are based on tax legislation, and not on guidance from the Ministry of Finance, with respect to indirect transfers in the oil and gas sector and involving foreign companies.
  • India: An income tax treaty between India and South Korea (signed in May 2015) is pending ratification and notification procedures for the treaty’s provisions to enter into force.
  • India: A tribunal held that foreign travel expenditures incurred to reward medical doctors for “patient-referrals” were not allowable as a deduction.
  • India: The Authority for Advance Ruling (AAR) determined that payments of service fees for product promotion services cannot be categorized as “fees for technical services” under the India-Russia income tax treaty or under the provisions India’s tax law. Accordingly, the payments were not subject to tax withholding.
  • India: The AAR determined that capital gains realized on the transfer of shares are not taxable in India under provisions of the India-Mauritius income tax treaty. The AAR found that the control and management of the company was not wholly in India.
  • Australia: The Senate passed a bill to reduce the rates of the tax offset available under the R&D tax incentive for the first $100 million of eligible expenditure.

Read TaxNewsFlash-Asia Pacific

Transfer Pricing

  • India: An income tax treaty between India and South Korea includes provisions that would allow for bilateral advance pricing agreements (APAs) and mutual agreement procedures (MAPs) to resolve transfer pricing issues. 
  • Denmark: A new executive order relevant for Danish and foreign groups in Denmark with a consolidated group turnover of more than approximately €750 million has been issued to provide detailed rules for country-by-country (CbC) reporting.

Read TaxNewsFlash-Transfer Pricing


  • Finland: The Finnish tax administration concluded that an Australian public entity was comparable to the Finnish government and public entities as listed in section 20 of Finland's income tax law and, as such, was exempt from withholding tax on dividends paid from sources in Finland.
  • Netherlands: The Dutch Cabinet included tax measures in its "Budget Day" package. The measures generally would be effective 1 January 2017.
  • Bulgaria: A new income tax treaty between Bulgaria and Romania has been ratified and entered into force, and the treaty provisions generally will be effective beginning 1 January 2017.
  • Switzerland: The "smaller chamber" of the Swiss parliament voted to amend the withholding tax rules. The pending legislation would provide that a failure of late notification of dividends would not trigger interest, but would only trigger the imposition of a penalty.
  • Luxembourg: The KPMG member firm in Luxembourg prepared a report that provides a general overview of the different fund vehicles that can be established in Luxembourg, across all asset classes and investment strategies. 
  • Luxembourg: The European Commission announced the opening of an in-depth “state aid” investigation into Luxembourg's tax treatment of a French electric utility.
  • Poland: The European Commission announced the opening of an in-depth state aid investigation into a Polish tax on the retail sector.
  • Russia: New law—effective 1 January 2017—introduces comprehensive VAT rules for the supply of e-services to Russian consumers.

Read TaxNewsFlash-Europe

Trade & Customs

  • Norway: The VAT return in Norway will be replaced with a new and more detailed version of the form, effective from the first VAT reporting period of 2017.
  • United States: U.S. Customs and Border Protection (CBP) and the U.S. Treasury Department together recently released an interim final rule that amends existing regulations to reflect an increase to the duty-free value of certain imported articles to $800 (up from $200).

Read TaxNewsFlash-Trade & Customs


  • Hong Kong: Guidance was issued for financial institutions with respect to common reporting standard (CRS) compliance.
  • Singapore: An agreement for the automatic exchange of financial information (AEOI) under CRS was signed with the United Kingdom.
  • Malta: The registration deadline for financial institutions with respect to CRS is 30 September 2016.
  • Andorra: The EU approved an AEOI taxation agreement.
  • Japan: Guidance was issued for AEOI purposes under CRS.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • New law in California requires reporting of fees paid by public investment funds to alternative investment vehicles. 
  • The IRS Large Business and International (LB&I) operating division issued an “audit techniques guide” providing guidance to IRS examination teams auditing taxpayer implementation of the tangible property regulations.
  • The U.S. Tax Court issued an opinion concluding that an electric power corporation that had sought to manage its taxable gain of $1.6 billion from the sale of fossil fuel power plants in 1999—through a series of like-kind exchanges using sale-leaseback strategies entered into between the taxpayer and unrelated third parties (tax-exempt public utilities)—did not satisfy the like-kind exchange requirements of section 1031 and that the agreements it entered into and involving the public utilities were not true leases, but were loans because the transactions did not transfer the benefits and burdens of ownership to the taxpayer.
  • IRS Notice 2016-57 extended—for a second time—temporary nondiscrimination relief for certain “closed” defined benefit pension plans (i.e., defined benefit plans that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date).
  • The Chicago city council approved a new tax on water and sewer services, with the revenue intended to fund municipal employee pensions.
  • The Colorado Department of Revenue issued an information letter concluding that when customers return goods (on which mandatory shipping fees were charged) and the retailer refunds the purchase price of the returned goods—but not the shipping charges—the shipping charges become a separate transaction, and because the shipping is no longer subject to sales tax, the retailer must return to its customers any sales tax paid on the shipping charges.
  • A Louisiana state appeals court concluded, in an unpublished decision, that a taxpayer (performing medically prescribed diagnostic testing services at laboratories around the country) was entitled to corporate income tax refunds because, regardless of the apportionment formula used, service receipts are to be sourced to Louisiana if the services were performed in the state under a “location of performance” rule.
  • The Pennsylvania Department of Revenue issued guidance on a tax amnesty program to be implemented in 2017.
  • The Texas Comptroller issued a private letter ruling concluding that receipts from sales of liquefied natural gas (LNG) are sourced to Texas when the LNG is loaded onto chartered vessels at Texas ports for export.

Read TaxNewsFlash-United States

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal



KPMG's new digital platform

KPMG's new digital platform