KPMG’s Week in Tax: 5 - 9 September 2016

KPMG’s Week in Tax: 5 - 9 September 2016

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

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  • New Zealand: A government discussion document—“Addressing hybrid mismatch arrangements”—outlines the case for implementing the OECD’s base erosion and profit shifting (BEPS) Action 2 recommendations and raises matters of technical detail to “New Zealand-ise” them.
  • OECD: Comments responding to the OECD’s request for input on two discussion drafts under BEPS Actions 8-10: Revised Guidance on Profit Splits and the BEPS Action 7: Additional Guidance on the Attribution of Profits to Permanent Establishments are released.
  • OECD: The OECD provided a report to the G20 leaders regarding progress under the BEPS project.


Read TaxNewsFlash-BEPS


  • Canada: Because the review of GST/HST and QST returns will require input from other departments and time to implement changes, selected listed financial institutions (SLFIs) would need to consider changes to system and process improvements in advance of the filing of the next returns.
  • Costa Rica: Taxpayers no longer must pay the amount of a tax assessment before protesting tax assessments administratively.


Read TaxNewsFlash-Americas

Asia Pacific

  • China: A KPMG report provides an overview of the indirect tax system in mainland China.
  • New Zealand: The Inland Revenue released a report providing updated proposals with respect to the taxation of the benefits under employee share schemes (plans).
  • India: The Authority for Advance Rulings (AAR) determined that a capital gain tax exemption is available for a non-resident taxpayer involved in an amalgamation of foreign companies by virtue of the non-discrimination clause under the India-Italy income tax treaty. 
  • India: The AAR determined that capital gains arising from the transfer of shares is not taxable in India under the India-Mauritius income tax treaty.
  • India: Guidance from the tax authorities (CBDT) aims to streamline the process with respect to the issue of voyage “no objection certificate” (NOC), the filing of voyage return, and voyage assessment for foreign shipping companies.
  • India: The Calcutta High Court held that a legislative change concerning tax withholding at source was effective 1 April 2005, and did not affect the taxpayer's pre-effective date transactions.
  • Australia: Boards need to consider tax treatment of shareholder returns. Early engagement of the tax authorities continues to be necessary to obtain the requisite certainty of character shareholder returns.


Read TaxNewsFlash-Asia Pacific


  • Poland: A grant application program for funding research and development projects conducted by companies from the automotive sector opens 5 October 2016.
  • Poland: The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion concerning application of the standard rate of value added tax (VAT) on electronically supplied digital books, newspapers, and periodicals (whereas, paper versions are subject to a reduced rate of VAT). 
  • Poland: Employers—both foreign employers and certain Polish employers—must satisfy new reporting requirements with respect to seconded workers by 18 September 2016.
  • Netherlands: The Advocate General of the CJEU issued an opinion concerning the VAT exemptions. The opinion concludes that in assessing whether a fund qualifies as a special investment fund, attention must be paid to Dutch regulatory law. General administrative services and operational management services can be regarded as exempt from VAT. 
  • EU: The European Commission (EC) reported that €159.5 billion in VAT revenues were lost across the EU in 2014—the “VAT gap.” 


Read TaxNewsFlash-Europe


  • Switzerland: Switzerland has agreed to the automatic exchange of information (AEoI) rules with the EU for all EU Member States as well as with Australia, Canada, Guernsey, Iceland, Isle of Man, Japan, Jersey, Norway, and South Korea on a first exchange of 2017 data to be made in September 2018.
  • Bahamas: The Bahamas aims to have draft enabling legislation and supporting regulations and guidance notes for the AEoI, also referred to as the common reporting standard (CRS), by the end of September 2016. 
  • OECD: The OECD provided a report to the G20 leaders regarding progress on tax transparency and the exchange of information for tax purposes under the CRS.


Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • China: Authorities have repealed the examination and approval procedures for processing trade operations, and have implemented a replacement in-process and post-process regulatory mechanism.
  • United States: A final rule amends and adds definitions to the International Traffic in Arms Regulations (ITAR). There also is a request for comments concerning the export licenses required for agricultural commodities exported to Cuba.


Read TaxNewsFlash-Trade & Customs

United States

  • Final regulations concern the minimum present value requirements applicable to certain defined benefit pension plans.
  • A federal appeals court affirmed an opinion of the U.S. Tax Court that under the then-applicable rules, a consolidated group must reduce its consolidated net operating loss (CNOL) under section 108(b)(2)(A) by the total amount of the group’s previously excluded cancellation of indebtedness income under a “single entity” approach.
  • The U.S. Tax Court issued an opinion in a case of “first impression” concluding that a limited liability company was not entitled to capital gain treatment under section 1234A for its right to retain forfeited deposits of $9.7 million realized from a canceled sale of real property used in its trade or business in 2008.
  • The U.S. Tax Court issued an opinion concluding that individuals who did not file federal income tax returns for 2001—but filed income tax returns with the Virgin Islands Bureau of Internal Revenue—were not allowed to credit the amounts paid as tax to the Virgin Islands against their U.S. income tax liabilities under section 901.


Read TaxNewsFlash-United States


  • The U.S. Congress returned to Washington this week, and may consider certain tax-related items and other pressing matters before it leaves at the end of September 2016. Congress is currently scheduled to return after the November 8th election for a possible “lame duck” session.
  • The Ways and Means Committee approved by voice-vote a bill concerning the health-care individual mandate. The next step would be for action by the full House; this has not been scheduled.   


Read TaxNewsFlash-Legislative Updates

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