KPMG’s Week in Tax: 24 - 28 October 2016

KPMG’s Week in Tax: 24 - 28 October 2016

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

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Americas

  • Panama: It is being reported that the tax administration recently implemented an audit and supervision program with respect to entities registered under the regime for multinational enterprises.
  • Brazil: Guidance issued by the Brazilian Central Bank authorities concerns accounting procedures for recognition of the effects of exchange rate differences and changes resulting from foreign currency transactions, about financial statements of foreign investees, and transactions involving hedges of foreign exchange and on foreign investments.
  • Canada: KPMG in Canada has prepared a checklist that can be used to determine potential tax savings this year. The checklist can be used to review investments, family tax situation, retirement and estate planning, and key tax return filing or payment deadlines.
  • Colombia: A bill was presented to Congress that would introduce tax reform changes that are intended to balance the budget and preserve the country’s BBB investment-grade credit rating.

Read TaxNewsFlash-Americas

Asia Pacific

  • India: The Supreme Court held that the taxpayer, a partner, was liable for capital gains tax on the sale of the partnership because the partnership’s assets were “capital assets” as defined by a provision of India’s tax law.
  • India: A tribunal held that when a taxpayer claimed both a deduction for expensing the purchase of fixed assets and deprecation on the assets (thus, a double deduction), a penalty applies because the claim itself was not bona fide and lacked good faith.
  • India: The Bombay High Court, in addressing a taxpayer’s writ for mandamus, held that the Assessing Officer is to make a determination about a taxpayer’s request for refund independently and directed the Assessing Officer to consider and process the taxpayer's representation to process the return and refund request as expeditiously as possible, within a period of eight weeks.
  • Australia: Taxpayers seeking the full rate of the research and development (R&D) incentive must comply with a statutory deadline of 31 October 2016 (for the income year ended 31 December 2015).
  • Malaysia: The prime minister tabled the 2017 budget that includes tax proposals.

Read TaxNewsFlash-Asia Pacific

BEPS and Transfer Pricing

  • Channel Islands: The government of Jersey published draft regulations for the purpose of implementing country-by-country (CbC) reporting for accounting periods beginning on or after 1 January 2016.
  • Singapore: A guide on CbC reporting requires multinational enterprise groups with a Singapore-based ultimate parent company to compile information on the group’s profits from worldwide operations. The issuance of the CbC reporting guide follows Singapore’s decision to participate in the inclusive framework under OECD’s base erosion and profit shifting (BEPS) project.

Read TaxNewsFlash-BEPS and TaxNewsFlash-Transfer Pricing

Europe

  • Italy: Law Decree no. 193 transfers tax collection activities to a department of the Italian revenue agency and implements other changes with respect to amending tax returns and tax collection. The decree also replaces a requirement that value added tax (VAT) payers must file an annual “communication of sales and purchases list” (Spesometro) with the Italian tax authorities, with quarterly VAT reporting.
  • Malta: Changes to the Maltese Companies Act generally reflect the transposition of the EU Single Accounting Directive into Maltese law. The key changes have an effective date of 1 January 2016.
  • EU: The European Commission published legislative proposals to re-launch its Common Consolidated Corporate Tax Base (CCCTB) initiative, as well as new measures to combat hybrid mismatches, including those involving non-EU countries, and to improve the existing procedures for resolving disputes involving double taxation within the EU. KPMG has prepared a guide to CCCTB that includes details and comments on the new proposals.
  • Belgium: A withholding tax exemption for dividends paid to companies in certain non-EU countries—now including Switzerland—has been extended.
  • Central and eastern Europe: KPMG member firms in the central and eastern Europe (CEE) region have prepared a guide about the tax law in each market with respect to real estate.
  • Finland: The tax administration determined, based on a taxpayer’s advance ruling application, that a Delaware trust series fund was comparable to a Finnish special investment fund and thus exempt from withholding tax on dividends from Finnish sources.
  • Poland: A draft bill aims at developing a regime for companies operating in the real estate market as SRWNs (the Polish acronym for entities that are similar to real estate investment trusts (REITs) in other countries).
  • Switzerland: The UK’s new anti-hybrid rules will affect “hybrid arrangements” beginning 1 January 2017, and therefore could affect payments by a UK entity to a Swiss company.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Liechtenstein: The tax authority published the final version of the automatic exchange of information (AEOI) guidance that provides guidelines for Liechtenstein’s financial institutions on aspects of registration, entity classification, due diligence and reporting obligations for effective implementation of the common reporting standard (CRS).

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • Australia: Legislation implemented a range of import goods and service tax (GST) changes, including providing an alternate method for the calculation of overseas freight and insurance when those amounts are unknown at the time of importation.
  • China: New customs audit rules, issued by China’s General Administration of Customs, are effective 1 November 2016.
  • Jamaica: The Special Economic Zone Act, 2016, repealing the Jamaica Export Free Zone Act and effective 1 August 2016, includes tax and customs incentives for qualifying entities.

Read TaxNewsFlash-Trade & Customs

United States

  • Notice 2016-62 provides the dollar limitations for qualified retirement plans for tax year 2017.
  • The FASB issued an Accounting Standards Update that requires entities to recognize at the transaction date the income tax consequences of many intercompany asset transfers.
  • The FASB decided to retain the current guidance on capitalization of pre-production costs related to long-term supply arrangements while it conducts outreach to decide whether it would propose additional changes. 
  • Rev. Proc. 2016-55 provides the annual inflation adjustments for more than 50 tax provisions, including the tax rate schedules and other tax amounts as adjusted for inflation for 2017.
  • The Washington State Department of Revenue is imposing penalties as high as 29% on certain taxpayers that did not file an annual reconciliation of “apportionable income” form.
  • Guidance issued by the Colorado Department of Revenue concludes that a company’s “management fee” combined with sales of taxable services was subject to sales tax. 
  • A proposed regulation issued by the Louisiana Department of Revenue is intended to implement certain corporate tax changes enacted earlier this year—provisions that require a corporation to add back otherwise deductible interest expenses and costs, intangible expenses and costs, and certain management fees incurred with related members.
  • There is an initiative on the 8 November ballot in Missouri that will allow voters to determine whether sales taxes could be expanded to include service transactions in the future.
  • The West Virginia Office of Tax Appeals ruled that sales of raffle tickets were sales of intangible property not subject to sales tax.

Read TaxNewsFlash-United States

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