KPMG’s Week in Tax: 14 - 18 November 2016 | KPMG | GLOBAL

KPMG’s Week in Tax: 14 - 18 November 2016

KPMG’s Week in Tax: 14 - 18 November 2016

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

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United States

  • With Donald Trump in the White House as of 20 January 2017, and Republicans controlling both the House and the Senate in the next Congress, the odds of significant tax legislation being enacted in 2017 or 2018 have increased significantly.
  • House Ways and Means Chairman Kevin Brady (R-TX) said that comprehensive tax reform will happen in 2017, with the timing to be determined.

Read TaxNewsFlash-Legislative Updates

Americas

  • Canada: Legislation in Alberta to enact certain investment tax credits received first reading.

Read TaxNewsFlash-Americas

Asia Pacific

  • China: A pilot program was launched to simplify the application of foreigners for an employment permit in the PRC.
  • China: Guidance addresses the preferential individual income tax treatment of certain employee equity incentive awards and capital contributions to PRC-resident enterprises through technology investments.
  • Thailand: The Thai customs department and revenue department can now access the other’s database in order to obtain taxpayers’ tax and duty payments records, primarily for use in tax audits.
  • Australia: The government has an inconsistent super fund policy in regard to capital gains tax rollover relief.
  • Australia: In the market of large infrastructure and property transactions, it is important to identify “associates” for the purpose of the interest withholding tax exemption.
  • India: The depreciation allowance for an eligible domestic company for “any block of assets” is limited to 40% on the written down value of that block of assets, effective 1 April 2016; and other depreciation rates are limited to 40%, effective 1 April 2017.
  • India: A tribunal held that the Department of Scientific and Industrial Research (and not the Assessing Officer) has the authority to reach a decision concerning a research and development facility, but once approved and assuming appropriate application by the taxpayer, the Assessing Officer must allow the weighted deduction as claimed by the taxpayer.

Read TaxNewsFlash-Asia Pacific

Europe

  • Belgium: The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion concluding that the Belgian “fairness tax” is, in part, contrary to European law because it violates article 4 of the Parent-Subsidiary Directive.
  • Belgium: A Royal Decree providing guidelines for implementing the new annual tax imposed on credit institutions was published in the Belgian official gazette.
  • Italy: New value added tax (VAT) grouping rules have been introduced, with a proposed effective date of 1 January 2018.
  • France: The French Ministry of Finance announced that a provision would be introduced to extend the benefit of an exemption from the 3% tax that is imposed on dividend distributions to foreign parent companies—and not just French parent companies—when the foreign parent companies satisfy, apart from their nationality, the conditions to be the head of a French tax group.
  • France: The National Assembly voted on the draft Finance Law for 2017, and the legislation is pending before the French Senate. A tax has been proposed that would resemble, to a certain extent, the UK diverted profits tax.
  • Netherlands: A social security treaty between the Netherlands and China is expected to enter into force in 2017. 

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • China: Draft guidance measures set forth the principles and procedures for Chinese financial institutions to apply in identifying and collecting the financial accounts of non-residents for purposes of the automatic exchange of financial information in tax matters (AEOI) standard.

Read TaxNewsFlash-FATCA / IGA / CRS

BEPS and Transfer Pricing

  • Brazil: Guidance addresses dispute resolution standards pursuant to the base erosion and profit shifting (BEPS) project.

Read TaxNewsFlash-BEPS and TaxNewsFlash-Transfer Pricing

Trade & Customs

  • Japan: Guidance regarding certain regulatory changes resulting from the 2016 Tax Reform Act, concerns increases in penalties that may be imposed on importers for deficient customs declarations or for non-declarations. The measures in the 2016 Tax Reform Act are effective beginning 1 January 2017.
  • United States: A Delaware corporation and its subsidiaries agreed to pay almost $6 million to settle potential civil liability for apparent violations of the Iranian, Cuban, and Sudanese sanctions.

Read TaxNewsFlash-Trade & Customs

United States

  • The U.S. Tax Court issued a memorandum opinion concluding that the taxpayer’s gain related to a disposition of real property in 2007 was not entitled to nonrecognition treatment under section 1031(a) because the replacement property was purchased from a wholly owned subsidiary that had sufficient net operating losses (NOLs) to fully offset its regular tax liability relating to the sale.
  • Voters in three California Bay Area cities (San Francisco, Oakland, and Albany) approved ballot measures to impose taxes on soda and sugary beverages.
  • An Illinois appellate court held that a bank, in seeking a refund of the portion of the sales taxes attributable to amounts written off as bad debts for federal tax purposes, was entitled to a refund of retailer’s occupation tax remitted on purchases made by account holders that later defaulted. 
  • Maine’s high court held that a telecommunications service provider was liable for sales tax on certain fees passed on to customers.
  • A Utah trial court held—in a case of first impression—that the tax authorities must apply federal regulations in transfer pricing disputes.
  • IRS “practice units” (guidance for IRS personnel) were publicly issued concerning employee share of employment taxes and self-employment taxes of U.S. citizens and resident aliens working abroad.

Read TaxNewsFlash-United States

 

  • Announcement 2016-42 offers limited relief from penalties for eligible educational institutions with respect to the Forms 1098-T required to be filed for the 2017 calendar year under section 6050S.

Read TaxNewsFlash-Exempt Organizations

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