KPMG’s Week in Tax: 2 - 6 January 2017

KPMG’s Week in Tax: 2 - 6 January 2017

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

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Transfer Pricing and BEPS

  • Dominican Republic: The tax authority updated its “white list”—that is, the list of countries and jurisdictions that are not considered as having preferential tax regimes or are not “tax havens.” Transactions with parties that are not located in countries on the “white listed” trigger application of the transfer pricing rules—even if the transactions are not with related parties.
  • United States: An IRS “practice unit” (guidance for IRS personnel) addresses section 367(d) transactions in conjunction with cost sharing arrangements.
  • South Africa: Country-by-country (CbC) regulations were finalized, and may trigger reporting requirements for 2016 by certain taxpayers.
  • Brazil: The tax authorities established rules for mandatory annual filing of CbC reports, with the first CbC report relating to calendar year 2016.
  • Chile: A new transfer pricing affidavit is to be filed for purposes of CbC reporting, and will be due by the last business day of June with respect to the preceding year’s business operations. 
  • Korea: A proposal of details with respect to CbC reporting was released.

Read TaxNewsFlash-Transfer Pricing and TaxNewsFlash-BEPS

Europe

  • Austria: The Federal Finance Court addressed the timing of a claw-back of foreign losses when the Austrian tax group is dissolved, and held the claw-back is made in the financial year of dissolution.
  • Belgium: The program law implementing the Budget 2017 legislation and concerning direct and indirect taxation was published.
  • Bulgaria: Tax changes affecting individual (personal) taxpayers in Bulgaria were enacted towards the end of 2016.
  • France: With their publication in the official gazette, corporate income tax and individual income tax provisions contained in two Finance laws are enacted.
  • Serbia: The official position concerning individuals who purchase shares of a foreign entity through their employer in Serbia (when the foreign entity is the “founder” of the Serbian employer) has been clarified.
  • Turkey: An “asset amnesty” program is expected to be extended for six months, to allow corporate and individual taxpayers to bring their assets located abroad into Turkey without being subject to any taxation and without any inspection, assessment, investigation, or prosecution.

Read TaxNewsFlash-Europe

Americas

  • Argentina: An income tax treaty with Mexico is expected to enter into force in 2018. The treaty allows for reduced rates of withholding tax on dividends, interest, royalties, capital gains, and certain other items of income. A non-discrimination clause would allow taxpayers to fully deduct certain expenses without limitations.
  • Canada: Income tax rate and other changes for 2016 may affect corporations or other organizations (and their financial statements).
  • Uruguay: Legislation currently being considered by the parliament would address how income generated by derivative financial instruments is to be treated for tax purposes, by defining the type of instruments subject to new rules and by providing source rules for income generated by derivative instruments.
  • Uruguay: New law introduces reporting requirements and is effective as of 1 January 2017.

Read TaxNewsFlash-Americas

Asia Pacific

  • India: A Protocol has been signed by India and Singapore to amend the India-Singapore income tax treaty.
  • India: A list of “frequently asked questions” (FAQs) clarifies provisions of indirect transfer taxes.
  • India: Proposals have been presented to the government concerning: (1) the provident fund interest rate; (2) relief for past defaults; (3) guidelines for streamlining surrender of exemption; and (4) reduction of administrative charges.
  • India: The Supreme Court of India held that an employee is not liable for underpayment interest in relation to any income taxable as the employee’s salary, since tax on such income would be the responsibility of the employer.
  • India: The deemed profit rate of 8% is reduced to 6% for amounts of total turnover or gross receipts received through banking channels (digital means) for the financial year 2016-17. 
  • India: A provident funds enrolment campaign for 2017 began 1 January 2017 and runs through 31 March 2017

Read TaxNewsFlash-Asia Pacific

FATCA / IGA / CRS

  • Denmark: Information about registration, reporting deadline, channels and processes for both FATCA and the common reporting standard (CRS) has been published.
  • Portugal: The FATCA reporting deadline was extended to 10 January 2017.
  • Malaysia: New regulations establish rules and procedures for financial institutions to follow with respect to the automatic exchange of information (AEOI) of financial accounts under the CRS regime.
  • Isle of Man: An advisory notice reminds sponsors to register their “sponsored entities” that have U.S. reportable accounts with the IRS. The temporary transition rule that allowed sponsored entities to use the GIIN of their sponsor expired 31 December 2016.
  • Liechtenstein: An updated version of AEOI guidance provides guidelines for Liechtenstein’s financial institutions on aspects of registration, entity classification, due diligence, and reporting obligations for effective implementation of the CRS.
  • Monaco: Guidance concerns implementation of AEOI in tax matters.
  • Singapore: An updated FAQ list was released as guidance on the implementation of the CRS regime.
  • Brazil: Guidance addresses implementation of the CRS regime in Brazil.
  • Germany: Information was provided to financial institutions and foreign service providers about the revision of the communication manual, test manual, participating jurisdictions, and expiry of BOP certificates.
  • Ireland: Bilateral and multilateral agreements have been signed with a number of jurisdictions to exchange financial account information on an automatic basis under the CRS.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • EU: Within the framework of the Generalized System of Preferences (GSP), a new system for certification of the origin of goods—the Registered Exporter system (REX; Registered Exporter)—was implemented 1 January 2017.

Read TaxNewsFlash-Trade & Customs

Africa

  • Nigeria: The withholding tax rate on payments for buildings, construction services, and related items is set at 5% (thus reversing application of a reduced withholding tax rate of 2.5%).

Read TaxNewsFlash-Africa

United States

  • The 115th Congress convened this week, with Republicans controlling both the House and the Senate. The legislative agenda includes tax issues.
  • The U.S. House of Representatives approved H.R. 21, the “Midnight Rules Relief Act of 2017,” which would allow Congress to pass a single resolution disapproving any number of regulations issued near the end of a president’s term—rather than passing separate resolutions for each regulation of which Congress disapproves.
  • The Joint Committee on Taxation (JCT) released a report listing the federal tax provisions that generally expired or are scheduled to expire during the 10-year period 2016 – 2026.

Read TaxNewsFlash-Legislative Updates

 

  • Notice 2017-09 concerns a “de minimis error” safe harbor that is available with respect to the information reporting penalties imposed under sections 6721 and 6722, and the payee election to have the safe harbor not apply. These provisions are effective for information returns required to be filed and payee statements required to be furnished after 31 December 2016.
  • The IRS released the first edition of the Internal Revenue Bulletin for 2017 that provides text of “annual revenue procedures” for 2017. There is guidance about private letter rulings, determination letters, and other procedural items.
  • Regulations implement legislative changes concerning alcohol-related excise taxes.

Read TaxNewsFlash-United States

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