KPMG’s Week in Tax: 13 - 17 February 2017

KPMG’s Week in Tax: 13 - 17 February 2017

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

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Transfer Pricing and BEPS

  • France: “Form 2258” provides the format of French country-by-country (CbC) reporting for accounting periods beginning on or after 1 January 2016.

Read TaxNewsFlash-Transfer Pricing and TaxNewsFlash-BEPS

Europe

  • Netherlands: A new decree on insurance premium tax was issued, replacing a decree from 2014.
  • Cyprus: A reduced VAT rate of 5% is available for the acquisition of residential dwellings.
  • Luxembourg: Modernisation of the company law is intended to offer more freedom and flexibility on certain aspects, but also has new legal requirements at the management level and in the working relationship with Réviseurs d’Entreprises.
  • Switzerland: A referendum on corporate tax reform did not receive (majority) approval by Swiss voters. The corporate tax reform would have repealed the cantonal tax regime, and replaced it with certain measures intended to enhance the attractiveness of Switzerland for businesses.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Korea: A revised version of regulations was issued for implementing the automatic exchange of financial information with foreign countries (territories) for tax purposes under the common reporting standard (CRS) and Foreign Account Tax Compliance Act (FATCA) regimes.
  • British Virgin Islands: An updated version of the user guide on BVI Financial Account Reporting System (BVIFARS) was issued to reflect changes to the portal and the reporting schema, in accordance with the updated FATCA XML Schema v2.0 released by the IRS.

Read TaxNewsFlash-FATCA / IGA / CRS

Africa

  • South Africa: Legislation for a “special voluntary disclosure programme” was promulgated in early 2017, with an effective date of 1 October 2017 and an application deadline of 31 August 2017.

Read TaxNewsFlash-Africa

Americas

  • Canada: An agreement between Canada and the UK on arbitration provisions of the income tax treaty is now in force. 

Read TaxNewsFlash-Americas

Asia Pacific

  • Japan: Proposed measures would postpone the timing of amendments to local tax rates for businesses in Tokyo. 
  • Hong Kong: New “managers-in-charge” incentives are intended to heighten the accountability of senior management of all licensed corporations and to promote awareness of senior management obligations. 
  • Hong Kong: A report addresses expectations of the 2017-2018 budget, scheduled to be delivered 22 February 2017.
  • Hong Kong: The Inland Revenue Department clarified its position concerning grants of tax residency certificates, and specifically that “beneficial ownership” is a pre-requisite for granting the preferential tax treatment in the passive income articles of an income tax treaty.
  • India: A tribunal held that an Indian subsidiary of the taxpayer—a Dutch group holding company, engaged in selling storage system equipment and products (including embedded software) and rendering certain services in India—is not a permanent establishment under provisions of the India-Netherlands income tax treaty. 
  • India: A tribunal held that payments received by the taxpayer (operating a call center) for bandwidth connectivity charges are not taxable as royalty payments or as “fees for technical services” under provisions of the Income-tax Act, 1961 or the India-United States income tax treaty.
  • India: The Employees’ Provident Fund Organisation issued guidance concerning applications for expedited employee deposit-linked insurance exemptions.
  • Vietnam: No value added tax (VAT) refund is available for the input VAT accumulated prior to 1 July 2016, and yet to be declared as a VAT refund item in the VAT declaration for June 2016 or the second quarter of 2016.
  • Australia: The Australian Taxation Office (ATO) released two research and development (R&D) tax guidance concerning: (1) expenditures for R&D activities in the building and construction industries; and (2) expenditures for R&D activities when there appears to be overlap with the taxpayer’s ordinary business activities.
  • Singapore: A court held fees paid by the taxpayer for access to a pool of funds for purposes of financing working capital requirements were not deductible expenses, but were capital in nature.
  • Singapore: Tax incentives promoting innovation, R&D, and intellectual property management are intended to attract new technologies into Singapore.

Read TaxNewsFlash-Asia Pacific

Trade & Customs

  • United States: The U.S. Court of International Trade concluded that imports of a polyester fleece knit article—referred to as a “Snuggle®”—were properly liquidated as “blankets” subject to customs duty at 8.5% and not as “other garments, knitted or crocheted” dutiable at 14.9%.
  • Vietnam: The UN agreement on contracts for the international sale of goods was ratified, effective 1 January 2017—thereby expanding and complementing Vietnam’s existing domestic legal framework for the sale of goods between Vietnamese and foreign entities.
  • China: An update on customs policies includes information concerning the newly-issued import tax policy of the “13th Five-Year Plan,” management of inspection and clearance of foreign aid materials, and items included into the catalogue of dual-use items and technologies prohibited from being exported to North Korea.

Read TaxNewsFlash-Trade & Customs

United States

  • A “tax calendar” provides, in table format, the revised due dates and extension periods for various tax returns and forms in the United States.
  • IRS “practice units” (guidance for IRS personnel) were publicly issued concerning: (1) hedge fund basics; and (2) monetary penalties for failure to timely file a complete and accurate Form 8865 – Category 1 and 2 filers.
  • Steven Mnuchin on was sworn in as Treasury Secretary, following confirmation by the U.S. Senate.
  • A Colorado court addressed a number of issues with respect to the audit and assessment of an intangible holding company subsidiary of a multistate retailer that had no physical presence in Colorado and never filed Colorado returns.  Concerning the “nexus” question, the court concluded that the taxpayer was “doing business” in Colorado for the tax years at issue.
  • The Massachusetts Appellate Tax Board found for the taxpayer (a dental insurance provider) and concluded that the premiums excise tax is limited to premiums derived from resident individuals.
  • The New Jersey tax court found for the taxpayer, holding that certain receipts were not subject to New Jersey’s “throwout rule”—a now-repealed rule concerning the computation of the New Jersey sales factor by excluding from the numerator and denominator, receipts attributable to a state or foreign country “…in which the taxpayer is not subject to a tax on or measured by profits or income, or business presence or business activity.”  
  • The Pennsylvania governor’s budget for 2017-2018 includes proposed tax changes aimed at business taxpayers, including a proposal concerning the “flat dollar cap” on net operating losses (NOLs).

Read TaxNewsFlash-United States

 

  • President Trump signed into law H.J.Res.41—a joint resolution that nullifies requirements that commercial developers of oil, natural gas, or minerals to report payments made to foreign governments. These reportable payments include taxes.
  • The House Steering Committee recommended that Rep. Mike Bishop (R-MI) be appointed to serve on the Ways and Means Committee now that former Rep. Tom Price (R-GA) has been sworn in as the Secretary of Health and Human Services.

Read TaxNewsFlash-Legislative Updates

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