KPMG’s Week in Tax: 17 - 21 October 2016

KPMG’s Week in Tax: 17 - 21 October 2016

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

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Africa

  • Africa: Country “snapshots” provide updates of the economic overview, tax, legal and compliance developments, risks overview, among other items for 13 African countries.

Read TaxNewsFlash-Africa

Americas

  • Canada: Tax incentives for charitable donations made in 2016 may be worth more to individual taxpayers in the new top tax bracket.
  • Canada: CPP (Canada pension plan) contributions are scheduled to increase in 2019 under a pending bill.
  • Canada: An income tax treaty signed with Israel includes an anti-treaty shopping measure.
  • Mexico: A chamber of the Supreme Court of Justice issued judgments resolving actions brought by taxpayers challenging various provisions of the 2014 Tax Reform—specifically provisions under the income tax law and the special tax on production and services.

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: The Australian Taxation Office (ATO) released guidelines about how to calculate the fringe benefits tax treatment of company cars.
  • Australia: A draft ATO ruling addresses whether a taxpayer can get an exemption for a dividend received from a foreign company. 
  • China: Tax developments are set to affect Chinese private equity funds.
  • Myanmar: With the removal of sanctions by the United States, there may be opportunities for new investment in Myanmar. 
  • Malaysia: The pending budget is expected to include tax proposals. 
  • Thailand: Royalties are to include rentals under the income tax treaty between Thailand and Singapore, effective 1 January 2017.
  • India: A tribunal held that the taxpayer cannot claim depreciation on assets, including goodwill, acquired through an amalgamation of more than the depreciation that would be allowed the amalgamating company.
  • India: A tribunal held that an amendment made to a provision of the tax law concerning the rules for determining the value of consideration for immovable property was “curative” and therefore applied retroactively (from the date when the statutory change was introduced).
  • India: Guidance clarifies that a lump-sum lease premium or one-time upfront lease charges that are not adjustable against periodic rental payments are not “rent,” and thus are not subject to tax withholding (deduction) at source.
  • India: A tribunal held that no transfer of land had taken place when the agreement for the development of the land clearly stipulated that possession of the land was allowed only upon fulfillment of certain conditions.
  • India: Final rules about the tax treatment of the buy-back of shares have an effective date of 1 June 2016.

Read TaxNewsFlash-Asia Pacific

BEPS

  • OECD: Andorra has joined the “inclusive framework” of the base erosion and profit shifting (BEPS) project.

Read TaxNewsFlash-BEPS

Europe

  • Switzerland: The Canton of Vaud’s third corporate tax reform, set to be effective in 2019, would be intended to provide companies a competitive tax framework.
  • Ireland: The 2017 Budget does not change the rate of corporate tax, but includes certain individual (personal) tax relief measures.
  • Malta: The Budget 2017 includes a number of key tax and other measures.
  • Belgium: An agreement about the Budget 2017 includes a number of tax measures.
  • Czech Republic: There are proposed value added tax (VAT) amendments and updates about VAT examinations

.Read TaxNewsFlash-Europe

Transfer Pricing

  • China: The State Administration of Taxation released an announcement that revises the administration governing advance pricing arrangements (APAs).
  • India: A tribunal admitted the taxpayer’s APA as additional evidence concerning the characterization of the taxpayer’s international transactions for years prior to the APA.
  • India: A tribunal issued a taxpayer-favorable decision concerning a corporate loan guarantee furnished by an Indian parent company with respect to a foreign subsidiary company. Another issue concerned interest on working capital loans made to related parties, with the tribunal finding that the arm’s length testing of interest on the loan was to be made by reference to credit ratings and by comparing third-party loan agreements.
  • India: A tribunal held that transfer pricing rules do not apply in respect of transactions between the Indian head office and its overseas branch office in Canada.

 

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • OECD: The OECD announced as a further step on the implementation of the common reporting standard (CRS), the first series of bilateral automatic exchange relationships established among the first batch of jurisdictions committed to the automatic exchange of information as of 2017. In total, 101 jurisdictions have agreed to start automatically exchanging financial account information in September 2017 and 2018, under the CRS.
  • Dominican Republic: An agreement or convention for mutual administrative assistance in tax matters, signed by the Dominican Republic in June 2016, is pending review by the Dominican Constitutional Court and the Congress. Because the convention has not yet been approved, it is not expected to enter into force before the first trimester of 2017.
  • United States: The FATCA online registration system requires timely updates to contact information for the responsible officer and points of contacts, to continue to allow for timely system notifications.
  • Ireland: The Irish Revenue Commissioners released a document highlighting changes to the file validation process applicable for the filing in 2016 of FATCA financial account information from 2016, and then to any other subsequent filings.
  • Portugal: A law, officially published the official gazette, provides new and/or additional rules for the automatic exchange of financial information in the field of taxation.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • EU: A decision was made to start using "business process modelling" as a tool supporting the preparation of the Union Customs Code.
  • Japan: A notice directed towards the Japanese manufacturing and export community emphasizes the importance of accurately qualifying products under “economic partnership agreements” and of obtaining certificates of origin.

Read TaxNewsFlash-Trade & Customs

United States

  • A bi-partisan letter from the congressional tax-writing committees to the Treasury concerns the recognition period for real estate investment trust (REIT) and regulated investment company (RIC) conversions in temporary and proposed section 337(d) regulations issued in June 2016.
  • An IRS Chief Counsel Advice (CCA) memorandum addresses a life reinsurance business acquisition, whereby a subsidiary entered into a retrocession agreement with a seller when it acquired the seller’s life reinsurance business. 
  • A CCA memorandum concludes that the uncollectible portion of a deductible layer reimbursement under a high deductible insurance policy is not a loss under section 832(b)(5), but may be a section 166 bad debt deductible under section 832(c)(10).
  • The IRS announced additional tax relief for taxpayers affected by Hurricane Matthew in areas of North Carolina, South Carolina, Georgia, and Florida.
  • Colorado state officials have asked the U.S. Supreme Court, should it grant certiorari in the Direct Marketing Association case addressing the constitutionality of the state’s use tax reporting requirements, to reframe the question presented to address―and overturn―the Supreme Court’s holding in Quill.
  • The New Jersey tax court issued a decision addressing how certain receipts received by a credit card bank from in-state cardholders are to be sourced under New Jersey’s apportionment provisions.
  • The Oregon tax court agreed with the tax authorities’ position, and held subscriber-based sourcing rules apply to certain non-broadcasting receipts of a cable television service provider.  
  • The Tennessee Department of Revenue approved a new rule that adopts an economic nexus standard for sales and use tax purposes.

Read TaxNewsFlash-United States

Section 385 debt-equity regulations

  • Final and temporary regulations under section 385 address the treatment of related-party debt for U.S. tax purposes. The regulations afford significant relief for U.S. multinational groups, and offer some, but less significant, relief for foreign multinational groups. KPMG reports and analyses about the section 385 regulations have been compiled on one webpage.

Read section 385 updates

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