KPMG’s Week in Tax: 6 - 10 March 2017 | KPMG | GLOBAL

KPMG’s Week in Tax: 6 - 10 March 2017

KPMG’s Week in Tax: 6 - 10 March 2017

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

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Europe

  • UK: The spring budget for 2017, delivered on Wednesday, 8 March, generally is intended to provide a “strong, stable platform for Brexit.” Among the tax-related provisions are measures concerning business taxation and the tax deductibility of corporate interest expense; items concerning multinationals; and individual tax provisions, specifically that the “non-dom tax rule” changes are set to go ahead beginning 6 April 2017.
  • Italy: The tax authorities have issued an initial ruling that addresses the currency exchange conversion rules (into the euro) for accounts of foreign permanent establishments listed in a foreign currency.
  • Belgium: The Court of Justice of the European Union (CJEU) issued a judgment concerning application of the EU Parent-Subsidiary Directive, and specifically upholding the withholding tax imposed by Belgium on dividends paid by a Belgian subsidiary to its parent companies located in the Netherlands that were investment funds (Dutch UCITS).
  • Channel Islands: Items from the UK spring budget concern the financial services sector.
  • EU: A free trade agreement between the European Union and Canada has been approved by the EU, and can enter into force once Canada completes its ratification procedures (possibly as early as 1 May 2017).
  • Poland: The CJEU issued a judgment concerning the standard rate of value added tax (VAT) applied to digital books, newspapers, and periodicals. The CJEU concluded that not allowing a reduced VAT rate for these digital reading materials was not contrary to the principle of equal treatment.
  • Sweden: The Supreme Administrative Court rejected claims of foreign pension funds for refunds of Swedish withholding tax. The pension funds had based their claims of discrimination under EU law, but the court rejected these claims on grounds of non-comparability. Still, the court held there was a possibility to deduct certain expenses related to the receipt of dividend income.
  • UK: New hybrid rules may cause unexpected disallowances for U.S. investors with UK “check the box” entities.
  • UK: Scottish taxpayers earning over £43,000 are subject to a higher rate of income tax than other UK taxpayers, beginning 6 April 2017.

Read TaxNewsFlash-Europe

Americas

  • Canada: The federal budget for 2017 is scheduled to be tabled on 22 March 2017.
  • Canada: The revised T3 Guide (2016) now states which trusts must report change-of-beneficiary information.
  • Canada: Finance has proposed to extend the 15% mineral exploration tax credit for an additional year. The tax credit is scheduled to expire 31 March 2017.
  • Canada: Many credit unions may now be required to file an annual goods and services tax / harmonized sales tax (GST/HST) and Quebec sales tax (QST) return for selected listed financial institutions (SLFIs).
  • Canada: “Business-friendly” tax measures are to be expanded in Quebec, including one that permits transfers of family businesses without triggering the Quebec anti-surplus stripping rules.
  • Canada: The Canada Revenue Agency (CRA) issued guidance for individuals reporting the sale of their principal residence.
  • Panama: Two tax-related agreements have been ratified by the national assembly—an income tax treaty with Vietnam, and a tax information exchange agreement with Japan.

Read TaxNewsFlash-Americas

Asia Pacific

  • India: The Supreme Court held that payments received by a Danish shipping company for its global telecommunication system (payments from Indian agents) were reimbursements in nature. Because no profit element was embedded in these payments and also because the foreign company had not provided any technical services to the Indian agents, the payments were not taxable as “fees for technical services.”
  • India: The Reserve Bank of India has issued guidance concerning foreign direct investments and specifically foreign direct investment in limited liability partnerships.
  • India: The Goods and Service Tax (GST) Council approved a draft “central goods and services tax” (CGST) and integrated goods and services tax (IGST) legislation, and plans to take up the draft “state goods and services tax” (SGST) and the union territory goods and services tax bill for approval in its next meeting scheduled on 16 March 2017. 
  • India: A tribunal held that a capital surplus in respect of the waiver of loan amount cannot be regarded as amount available for distribution through the profit and loss account. A mere disclosure of an extraordinary item in the profit and loss account does not mean that the item represents the “working result” of the company. Accordingly, the waiver of the loan as a capital receipt cannot be taxed as “book profit.”
  • India: A social security agreement between India and Portugal, signed in March 2013, entered into force and is effective from 8 May 2017.
  • Myanmar: The Myanmar Investment Commission issued a notice to implement an investment law, and established certain regions as “development zones.”
  • Myanmar: Amendments to the tax law provide a new “de minimis threshold” for withholding tax purposes. The change is effective 1 April 2017.

Read TaxNewsFlash-Asia Pacific

Africa

  • Nigeria: The Rivers State tax authority has taken steps to address issues of multiple taxation and issues that taxpayers have faced in the state. One step includes restricting certain revenue agents from acting in the name of the tax authority.

Read TaxNewsFlash-Africa

BEPS and Transfer Pricing

  • Sweden: Following parliamentary approval of expanded transfer pricing and country-by-country (CbC) reporting rules, the tax authority issued guidance explaining how Swedish companies are to notify the tax agency as to which group entity will be filing the CbC report on behalf of the group, as well as guidance on actually submitting the CbC report.

Read TaxNewsFlash-BEPS and TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Denmark: An updated version of the FATCA reporting guidelines was published, as guidance for Danish financial institutions.
  • Ireland: An updated version of “frequently asked questions” (FAQs) concerning the common reporting standard (CRS) was released for implementation of CRS in Ireland.
  • Cayman Islands: A “soft enforcement” was announced for notification and reporting obligation due dates under the CRS.
  • Hong Kong: A user guide explains the information required for each data element of the Financial Account Information Return XML Schema (v1.0).
  • Japan: An updated a list of FAQs concerns the automatic exchange of information (AEOI) and CRS concerning international tax reporting for non-residents.
  • Singapore: The filing date for FATCA returns (2016) is 15 April 2017. 
  • Thailand: There currently is no specific requirement or enforcement in Thailand regarding the CRS, but it is expected to be in full force by 2022.
  • Sweden: Legislation containing certain changes relating to the automatic exchange of financial account information in tax matters has been passed.
  • UK: Trust and company service providers will need to provide information to HMRC in relation to the beneficial ownership of offshore entities.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • China: There is a summary of recent customs developments.
  • United States: The trade court found imports of holiday-themed dinnerware were not duty-free, but were dutiable at rates ranging from 3% to 6% ad valorem.

Read TaxNewsFlash-Trade & Customs

United States

  • Two House committees (including Ways and Means) “reported out” provisions that would “repeal and replace Obamacare” with new health-care legislation. There are tax proposals in the pending legislation.

Read TaxNewsFlash-Legislative Updates

 

  • The California Franchise Tax Board announced that it would not appeal a state appeals court decision in Swart Enterprises (corporate taxpayer found not “doing business” in California merely by virtue of passively holding a 0.2% ownership interest in a manager-managed California LLC). The decision addressed tax years before the state’s “doing business” standard was revised to include a “factor presence” test.
  • Use-tax reporting requirements in Colorado will be effective 1 July 2017, following settlement of a lawsuit challenging the state’s 2010 enactment of a law requiring certain retailers—that were not required to collect sales and use tax on sales made into the state—to report certain information to the state.
  • Michigan authorities issued guidance explaining how it will apply a state appellate court’s decision in LaBelle Management (invalidating the ownership test applied by the department in determining when entities are included in a unitary group).
  • The New Jersey tax court invalidated a regulation that excludes certain non-publicly traded pass-through ownership interests as a qualifying asset under the test for determining “investment company” status (i.e., “investment companies” eligible for certain tax benefits).
  • The New Jersey tax court held that with regards to a sales-leaseback transaction, the taxpayer did not own the assets. Because the property was not “owned” by the taxpayer, it was not included in the taxpayer’s New Jersey property factor. Further, rental income from the property was not included in the receipts factor.

Read TaxNewsFlash-United States

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