kpmg week in tax 12 - 16 December 2016 | KPMG | GLOBAL

KPMG's Week in Tax: 12 - 16 December 2016

Summaries of tax developments

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

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Europe

  • France: The Constitutional Court (Conseil Constitutionnel) issued a decision concluding that a provision that imposes a country-by-country (CbC) public financial reporting requirement is unconstitutional. This type of CbC public financial reporting is distinguishable from CbC reporting for tax purposes. 
  • Ireland: A year-end review provides payroll tax and employment tax reminders.
  • Italy: Tax measures including a "super depreciation" regime and revisions to the research and development (R&D) tax credit were approved.
  • Netherlands: The Dutch Supreme Court determined that pension funds with a defined benefit plan cannot be regarded as special investment funds within the meaning of the value added tax (VAT) exemption. The management of such pension funds, therefore, is not VAT-exempt. 
  • Spain: The new government announced its first package of tax measures, including proposals to limit net operating losses (NOLs) of large corporate taxpayers, impose new limits on the use of "double" tax credits, and modify the exemption rules governing dividends and the proceeds from share disposals.

Read TaxNewsFlash-Europe

Asia Pacific

  • Japan: The ruling coalition agreed to an outline for tax reform proposals for 2017. The proposals include measures that would affect corporate tax, international tax, and individual (personal) tax. Specifically, there are proposed amendments to the Japanese anti-tax haven (CFC) regime, and to the taxation of non-permanent individual residents.
  • Australia: The High Court held that a company incorporated overseas had its "central management and control" in Australia and was therefore an Australian tax resident and liable to tax in Australia because the real business of the company was undertaken by an accountant in Sydney, whose instructions were rubber-stamped by the overseas board of directors in board meetings held overseas.
  • Taiwan: The Legislative Yuan completed its third readings of amendments to the VAT provisions that would make foreign e-commerce enterprises outside Taiwan but selling e-commerce services to individuals in Taiwan subject to VAT. 
  • China: An announcement from the State Administration of Taxation establishes the VAT rules for prepaid cards. The new rules took effect on 1 September 2016 and apply to sales of prepaid cards on or after 1 September 2016. 
  • India: The Delhi High Court held that a transaction was a genuine “slump sale” that qualified for specific tax treatment. 
  • India: A report examines key provisions relating to the reduction of capital, variations of shareholders’ right and compromises, arrangements and amalgamations, and the list of pending proceedings to be transferred to National Company Law Tribunal.
  • India: The Central Board of Direct Taxes issued guidance prescribing rules and forms in respect of income distributed to investors by securitisation trust.

Read TaxNewsFlash-Asia Pacific

Americas

  • Canada: Reminders are provided of the 31 December 2016 deadline for taxpayers to file certain foreign affiliate elections; for taxpayers to file "fairness relief" requests for 2006; and for employers that offer registered pension plans to their employees to prepare to meet their 2016 and 2017 GST/HST and QST obligations. 
  • Canada: There are possible opportunities related to Ontario's new four-year property tax assessment cycle.
  • Panama: Certain tax payments and remittances are due on or before 31 December 2016.

Read TaxNewsFlash-Americas

FATCA / IGA / CRS

  • Channel Islands: Guernsey extended the deadline to 31 December 2016 for financial institutions to review accounts under the intergovernmental agreements (IGAs) with the UK and the United States for all “low value accounts” and “pre-existing entity accounts.” 
  • Portugal: A list of 86 participating jurisdictions for the exchange of financial account information in tax matters under the common reporting standard (CRS) regime was published.
  • Singapore: A list of bilateral and multilateral agreements with a number of jurisdictions, to exchange financial account information on an automatic basis under the CRS was provided. 
  • Spain: The tax authority (Agencia Tributaria) released an updated version of an annual disclosure statement of financial accounts.  
  • Cayman Islands: Financial institutions are reminded that all pre-existing high value accounts (i.e., those with an aggregate balance or value greater than U.S. $1 million as of 31 December 2015) must be reviewed to identify any “reportable accounts” by 31 December 2016.
  • France: A decree establishes rules and procedures to be followed by French financial institutions and account holders with respect to the automatic exchange of information on financial accounts under the CRS. 

Read TaxNewsFlash-FATCA / IGA / CRS

 

United States

  • Notice 2016-76 delays the effective date of certain provisions of the section 871(m) regulations, and also makes changes to the qualified derivatives dealer (QDD) rules, including a one-year extension of the qualified securities lender (QSL) rules.
  • Final regulations address the tax treatment of transfers by U.S. persons of property—including goodwill and going-concern value—to foreign corporations in nonrecognition transactions pursuant to section 367.
  • Final regulations were issued concerning the “premium tax credit” related to health insurance. 
  • The IRS announced a reduction in the standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes in 2017. 
  • The Ninth Circuit concluded that a federal district court lacked jurisdiction to hear a Native American (Indian) tribe’s claims concerning the imposition of the federal excise tax on tobacco products manufactured by an Indian-owned tobacco company. 
  • Final regulations treat a domestic disregarded entity, wholly owned by a foreign person, as a domestic corporation for the limited purposes of the reporting and recordkeeping requirements under section 6038A. 
  • The IRS issued guidance concerning the low-income housing credit under section 42. 
  • The Alabama Tax Tribunal rejected a taxpayer’s attempt to base its domestic production activities deduction limitation on Alabama taxable income, but concluded the domestic production activities deduction limitation was to be based on federal taxable income.
  • The Alaska Office of Administrative Hearings determined that federal “look-back” interest applies—i.e., interest that needs to be paid by a taxpayer or refunded to a taxpayer as the result of income from a long-term contract that has been reported on prior year tax returns using the percentage of completion method—but at a rate of interest under Alaska law.
  • Oregon's governor announced a fiscal year 2017-2019 executive budget that includes certain revenue and tax proposals to address the state’s estimated $1.7 billion shortfall. Separately, the City of Portland approved a new pay-ratio surtax.
  • A Pennsylvania Commonwealth Court concluded that purifying and distilling water was not manufacturing for purposes of the exemption from the sales and use tax.

Read TaxNewsFlash-United States

 

  • Congress adjourned without acting to extend the almost 30 temporary tax incentives that generally will expire at the end of 2016. These incentives will not be available with respect to 2017 activity unless the next Congress acts to extend them.
  • In a speech on the Senate floor shortly before the Senate adjourned, Senator Orrin Hatch (R-UT), the Chairman of the Senate Finance Committee, discussed tax reform and his efforts to develop a proposal to better integrate the corporate and individual tax systems.

Read TaxNewsFlash-Legislative Updates

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