KPMG’s Week in Tax: 10 - 14 October 2016

KPMG’s Week in Tax: 10 - 14 October 2016

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

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Africa

  • Egypt: A value added tax (VAT) law was enacted. VAT is to be levied on all commodities and services, including domestic or imported commodities and services listed in a table that is attached to the tax law.

 

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Americas

  • Dominican Republic: The tax authorities released information identifying recurring issues relating to tax obligations.

 

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Asia Pacific

  • Japan: A new income tax treaty was signed with Belgium. 
  • Australia: The Queensland state revenue commissioner released guidelines to assist taxpayers in determining when the new Additional Foreign Acquirer Duty (AFAD) rules will apply.
  • Australia: A decision examines royalties vs. business profits under the Australia and India income tax treaty.
  • Taiwan: Proposed changes to the VAT rules are intended to bring foreign e-commerce providers within the “VAT net.”
  • UAE: The Ministry of Finance released additional FAQs to assist businesses in understanding VAT rules expected for 2018.
  • China: Policies to simplify the entry of high-level foreign talents and innovators, in order to support the establishment of a free trade zone and to foster innovation in Guangdong province, were presented.

 

Read TaxNewsFlash-Asia Pacific

Europe

  • Ireland: Tax provisions were included in Budget 2017 released this week.
  • Norway: The Norwegian conservative government published a proposed state budget plan for 2017. The tax proposals include a reduction in the corporate income tax rate to 24%, an increased tax burden for the financial sector, and increases to “environmental taxes.”
  • EU: The European Commission proposed updating the current EU dual-use regulation for export control in order to modernize the system so as to address potential threats and to reflect technological changes.
  • Finland: The tax administration determined that a German special investment fund was exempt from Finnish withholding tax on dividends paid from sources in Finland.
  • Spain: Royal Decree-Law 2/2016 introduces measures aimed at reducing the public deficit and, assuming enactment by the Spanish parliament, would apply to the next “prepayments” (estimated tax payments) of corporate income tax due in October and December 2016, and for subsequent tax periods.

 

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Transfer Pricing

  • India: A tribunal (1) allowed an adjustment to an import price to reflect an extra period of credit availed by the taxpayer on credit offered by a related party, and (2) accepted LIBOR plus 200 basis points as an arm’s length interest rate for the “external commercial borrowing” of the taxpayer.
  • India: A tribunal returned a case to the Transfer Pricing Officer with instructions that, in determining the arm’s length price, various adjustments for customs duty, air freight, and foreign exchange fluctuations are to be taken into account.
  • France: A decree providing insight into the practical application of country-by-country (CbC) reporting and introducing into French regulations certain provisions included in the OECD’s base erosion and profit shifting (BEPS) Action 13 was approved.

 

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United States

  • Final and temporary section 385 regulations address the treatment of related party debt for U.S. tax purposes. These regulations had been proposed on 4 April 2016. The final rules offer significant relief for U.S. multinational groups, and offer some, but less significant, relief for foreign multinational groups.
  • An IRS “practice unit” (guidance for IRS personnel) concerns identifying foreign goodwill or going concern.
  • Regulations relate to the election to accelerate the timing of a loss sustained by a taxpayer attributable to a federally declared disaster.
  • A letter from Senate Finance Committee Chairman Hatch to Treasury Secretary Lew posed questions for answers before final regulations are released under section 385.
  • The U.S. Supreme Court denied certiorari in a case concerning California’s treatment of a taxpayer’s claim to elect and apply the Multistate Tax Compact rules.
  • Taxpayers in North Carolina affected by Hurricane Matthew will have until 15 March 2017 to file certain individual and business tax returns and make certain tax payments.
  • The IRS has indicated that, under sequestration, certain alternative minimum tax (AMT) credits for corporations and refund offset transactions will be reduced.
  • Some 45 cities and local jurisdictions in California are reportedly exploring the possibility of taxing streaming video services and “over-the-top” television services under the existing “utility users tax.”
  • The California Franchise Tax Board issued a release that addresses how to apportion losses generated in early years when a company—such as a start-up—has no sales.
  • The Missouri Supreme Court held that sales of frozen meals to commercial airlines did not qualify for the reduced sales tax rate imposed on certain sales of food.
  • In Puerto Rico, beginning 31 October 2016, a new electronic web-based platform system will replace the current sales and use tax electronic system (known as PICO).

 

Read TaxNewsFlash-United States

 

  • A final rule amends the International Traffic in Arms Regulations (ITAR) by revising Category XII (fire control, laser, imaging, and guidance equipment) of the U.S. Munitions List (USML) to remove certain items from control on the USML and to describe more precisely the articles continuing to warrant control on the USML.

 

Read TaxNewsFlash-Trade & Customs

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