KPMG’s Week in Tax: 13 - 17 March 2017 | KPMG | GLOBAL

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

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

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

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BEPS and Transfer Pricing

  • Australia: Country-by-country (CbC) reporting under the OECD’s base erosion and profit shifting (BEPS) project is effective in Australia for tax years beginning on or after 1 January 2016. Human resource and mobility teams are reminded to work with tax and transfer pricing teams because the CbC report requires the reporting of “employees on a full-time equivalent basis.”
  • Australia: Guidance was published on the “international related-party agreements” to be furnished in Part B of the Australian Local file for reporting controlled transactions disclosed in Part A. 
  • India: A tribunal held that under a provision of India’s tax law, “influence” implies dominant influence when “a person who purchased more than 1/5th of the total sales of the taxpayer would have a distinctly dominant influence on the pricing and can exercise a de facto control.” The tribunal, thus, concluded that sales to two customers constituting more than 20% of the taxpayer’s total sales constituted “dominant influence.” The related-party relationship was upheld.
  • India: The Delhi High Court agreed with a tribunal's decision, to remove a penalty imposed on the taxpayer for an alleged concealment of income with respect to certain related-party transactions even though the taxpayer accepted the transfer pricing adjustment. The High Court held that because the taxpayer had entered a new line of business (manufacturing), the taxpayer’s failure to disclose certain benefits and advantages from related-party services could not have triggered the automatic presumptive application of the penalty.
  • Serbia: The Ministry of Finance, with respect to arm’s length interest rates for 2017, announced prescribed interest rates for taxpayers who had or will have related-party financing during 2017. 

Read TaxNewsFlash-Transfer Pricing and TaxNewsFlash-BEPS

Africa

  • Ghana: Ghana's budget for 2017 includes a proposal to strengthen the transfer pricing unit of the Ghana Revenue Authority for purposes of “rigorous audits” of entities in the extractive sector. Other measures reflect a reduction or repeal of certain indirect taxes, including value added tax (VAT) on certain items.
  • South Africa: Persons deriving remuneration from an employer that is not registered for employment tax purposes with the South African Revenue Service (SARS), will be included in the definition of “provisional taxpayer” from 1 March 2017.

Read TaxNewsFlash-Africa

Asia Pacific

  • New Zealand: Taxpayers need to consider a number of new tax rules when planning for the 2018 year.
  • Japan: A bill approved by the Cabinet would provide for partial revision of the Foreign Exchange and Foreign Trade Act, and specifically would affect the penalty provisions that can be imposed with respect to certain trade items.
  • Thailand: Legislation amending some 76 provisions under Thai law—including the tax law—reflect measures concerning the potential criminal liability of company representatives.

Read TaxNewsFlash-Asia Pacific

Europe

  • Italy: Persons subject to value added tax (VAT) may elect for electronic submissions of VAT invoice data and/or for the remittance of daily VAT payments to the Italian tax authorities. The deadline for making the election is 31 March 2017.
  • Serbia: Changes to the VAT law, effective in 2017, include provisions with respect to the VAT liabilities of foreign entities.
  • Norway: The statute of limitations for filing timely claims for refunds of withholding tax has been extended to five years.
  • UK: The Supreme Court granted HM Revenue & Customs permission to appeal the Court of Appeal’s judgment in a test case in the “CFC & Dividend GLO.”
  • UK: There is a contrast between the new EU Hybrids Directive draft amendment and the UK’s hybrid mismatches legislation.
  • UK: The effect of the hybrid rules on trading companies that are tax residents in two jurisdictions needs to be considered.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • United States: The IRS issued a reminder of the approaching 31 March 2017 deadline for renewing all qualified intermediary (QI), withholding foreign partnerships (WP) and withholding foreign trust (WT) agreements. 
  • Germany: There is new information for financial institutions and foreign “service providers” about the new FATCA XML schema and the filing of “nil returns,” among other items.
  • Luxembourg: An updated version of the “frequently asked questions” (FAQs) provides guidance for financial institutions in complying with the common reporting standard (CRS) regulations.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The IRS granted tax return filing relief to certain business taxpayers that were affected by a winter storm this week.
  • he Trump Administration outlined its “skinny budget” for the fiscal year that will begin October 1, 2017. Tax policy is not addressed in the preliminary budget. A more complete budget is expected in May 2017.
  • The White House announced the names of individuals that President Trump intends to nominate for certain U.S. Treasury Department positions. The release did not include any nominations for Treasury’s Office of Tax Policy.
  • Notice 2017-21 provides the adjustments to the limitation on housing expenses, under section 911, for specific locations for 2017. 
  • Rev. Proc. 2017-26 announces that the section 911(d)(1) eligibility requirements are waived for South Sudan for a portion of the 2016 tax year.
  • The Alabama Department of Revenue has proposed regulations that would treat “streaming services” as rentals of tangible personal property and thus would extend the state's rental tax to streaming services.
  • A proposed bill in California would eliminate the water’s-edge election and would affect corporate taxpayers and their ability to make the election for tax years beginning after 1 January 2017. Other proposals would affect individual taxpayers. 
  • A South Dakota court issued a decision in favor of three internet retailers in a case challenging the constitutionality of the state’s economic nexus sales tax standard. The court held that the state is prohibited from imposing sales tax collection and remittance requirements on the retailers.

Read TaxNewsFlash-United States

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