KPMG’s Week in Tax: 28 November - 2 December 2016

KPMG’s Week in Tax: 28 November - 2 December 2016

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

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Africa

  • Madagascar: An income tax treaty was signed with Canada.
  • Zambia: The 2017 budget includes tax proposals that would affect business and individual taxpayers, and would be effective 1 January 2017.

Read TaxNewsFlash-Africa

Americas

  • Canada: An overview of the legislation and tax principles for the oil and gas industry was prepared by the KPMG member firm in Canada.
  • Canada: Multinational entities may see changes to tax treaties that affect their organization’s global structure and operations in light of the fact that the Organisation for Economic Cooperation and Development (OECD) concluded negotiations on its “multilateral instrument.”

Read TaxNewsFlash-Americas

Asia Pacific

  • Vietnam: Guidance from Vietnam’s tax authorities addresses certain corporate income tax, value added tax (VAT), labor compliance, and customs duty issues.
  • Indonesia: The Ministry of Finance issued a decree amending the procedures for VAT reimbursements concerning production sharing contractors under upstream oil and gas activities.
  • Australia: The proposed “diverted profits tax” and its implications for foreign companies, is moving forward and expected to be effective for income years beginning on or after 1 July 2017.
  • Australia: The new “attribution managed investment trust” (AMIT) affects pricing transactions between stapled entities.• Japan: The national tax agency released guidance and forms relating to Japan’s tax agreement with Taiwan.
  • India: India’s government introduced a bill in Parliament that would amend tax law provisions to provide that “defaulting taxpayers” are subjected to tax at a higher rate and that stringent penalty provision would apply to curb “black money.”
  • India: A tribunal held that no capital gain tax is to be levied (absent any consideration received / accrued to the taxpayer) for transfers of undertakings under a plan of demerger.
  • India: The Central Board of Direct Taxes issued guidance (a notification) amending the rules concerning the business connection of offshore funds.
  • Myanmar: The “large taxpayer office” of Myanmar’s tax authority clarified a few points with a special focus on withholding taxes and their application in Myanmar.
  • New Zealand: A bill has been reported back by the Finance and Expenditure Select Committee, and include foreign trust disclosure requirements. automatic exchange of information (AEOI) rules, business tax measures, and regulation-making authority measures.
  • New Zealand: Pending legislation would revise certain tax rules concerning closely held companies.
  • Sri Lanka: Legislation continues the “nation building tax” rate of 2%, but retroactively reduces the threshold amount of profit or turnover that is subject to the tax, effective from 1 April 2016.
  • Sri Lanka: Legislation includes provisions establishing, among other measures, the VAT rate for supplies of both goods and services.
  • Thailand: A government authority formally announced the adoption of rules allowing corporate meetings to be held via electronic media.  

Read TaxNewsFlash-Asia Pacific

Europe

  • EU: The European Commission released a proposal with respect to VAT on e-publications. It is expected that certain VAT e-commerce proposal would be effective in 2018, and other measures to be effective in 2021.
  • Germany: The KPMG member firm in Germany prepared a report discussing the creation of the “common consolidated corporate tax base,” country-by-country (CbC) reporting, and the beneficial ownership of securities in the context of securities transactions.
  • Germany: VAT developments are provided in a report prepared by the KPMG member firm in Germany.
  • Netherlands: The Upper House passed a bill that amends the Dutch corporate income tax fiscal unity rules. The bill will be enacted on publication.
  • Netherlands: The Dutch Supreme Court rendered a judgment that seemingly limits the VAT exemption for the management of real estate companies.
  • Netherlands: The effective date of legislation that would amend the rules for purposes of determining employment relationships is being extended from 1 May 2017 to 1 January 2018, because of uncertainty about the pending legislative provisions.
  • Austria: Draft tax legislation provides guidance concerning the lump-sum calculation with respect to calculated profits or losses.
  • Czech Republic: A document from the Ministry of Finance represents a possible plan for a new income tax law that would split income tax rules into two separate acts, reduce the number of depreciation categories, revise the rules for improvements and distinguish between repairs and reconstruction, impose an exit tax, and resolve current inconsistencies in the tax rules.
  • OECD: Tax revenues collected in advanced economies have continued to increase from last year’s all-time high, with taxes on labor and consumption representing an increasing share of total tax revenues.
  • Italy: VAT measures contained in Law Decree no. 193 have been “converted into law,” effective 1 January 2017.
  • Ireland: Corporate tax policies in the UK and United States pose challenges for Ireland policymakers.
  • Luxembourg: Measures that would transpose EU directives into Luxembourg’s domestic law could possibly position Luxembourg as an entryway for entrepreneurs and investors into Europe through the possible use of residency permits.
  • Poland: Legislation amending the VAT law has been adopted by the government. The measures provide for the reinstitution of VAT penalties, detailed verification of newly registered taxpayers, a requirement to file VAT declarations in electronic format, and a tightening of liability for violations of the rules.

Read TaxNewsFlash-Europe

Transfer Pricing

  • Czech Republic: The Supreme Administrative Court agreed with a tax adjustment made by the tax administration in a case involving a "toll manufacturer" (contract manufacturer) that claimed losses due to unfavorable developments in the target market.
  • Finland: Legislation provides for new transfer pricing documentation requirements—CbC reporting, Master file and Local file measures, and penalty provisions—that are consistent with Action 13 of the OECD’s BEPS project with respect to transfer pricing documentation and CbC reporting.
  • Luxembourg: Taxpayers in Luxembourg need to consider the implications of a pending draft law and the five comparability factors listed in the draft law on their transfer pricing studies.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Belgium: A document highlights changes to the file validation rules in accordance with the IRS’s FATCA XML schema v2.0.
  • Netherlands: As of 1 January 2017, a foreign financial institution (FFI) that is a “sponsored entity” may no longer use the global intermediary identification number (GIIN) of its sponsoring entity.
  • United States: An updated FATCA Notification XML Schema v2.3 includes new file and record level error notification codes for “nil reports” and FATCA XML Schema v2.0.
  • New Zealand: A tax bill contains draft legislation to implement the common reporting standard (CRS) for the automatic exchange of information (AEOI) in New Zealand and also imposes new registration and annual reporting requirements on foreign trusts with New Zealand-resident trustees. AEOI is on track for implementation from 1 July 2017.
  • Ireland: A guidance document sets forth the naming conventions to be used by financial institutions in filing their returns under the CRS regime.
  • Switzerland: The Swiss Federal Council adopted an ordinance for AEOI in tax matters. The ordinance is effective 1 January 2017 and provides rules for implementing the AEOI measures. 

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • Global: A global trade management survey for 2016 reflects information from over 1,700 global trade specialists from multinational companies in 30 countries, and presents findings of an extensive study on the state of global trade today.
  • Vietnam: Because of a downturn in the government’s collection of revenue in the third quarter of 2016, the General Department of Customs has taken certain actions to increase the collection of customs revenue.

Read TaxNewsFlash-Trade & Customs

United States

  • Treasury released a quarterly list of countries that require (or may require) participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3)).
  • Two annual revenue procedures provide guidance for use by property and casualty insurance companies in computing discounted unpaid losses and salvage recoverable for the 2016 accident year.
  • President-elect Donald Trump announced his intention to nominate Steven Mnuchin to serve as his Treasury Secretary.
  • The U.S. Tax Court determined that the taxpayers were liable for a 20% penalty under section 6662(a) concerning the disallowance of their claimed charitable contribution deductions relating their claimed donations of a façade easement.
  • Notice 2016-72 provides guidance concerning the discharge of qualified principal residence indebtedness that is initiated in 2016 but not completed before 2017.
  • A notice provides the Tier 2 tax rates for 2017 (Tier 2 taxes imposed on railroad employees, employers, and employee representatives are a source of funding for benefits under the Railroad Retirement Act).

Read TaxNewsFlash-United States

 

  • The structure and design of healthcare reform under the incoming administration of President-elect Trump is likely to include tax law changes.
  • The Joint Committee on Taxation (JCT) issued a report describing how the JCT staff estimates proposals to improve tax compliance.

Read TaxNewsFlash-Legislative Updates

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