KPMG’s Week in Tax: 22 - 26 May 2017

KPMG’s Week in Tax: 22 - 26 May 2017

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

1000

Related content

Transfer Pricing

  • Israel: The tax authority announced the signing of a multilateral agreement for the automatic exchange of country-by-country (CbC) reports and of common reporting standard (CRS) information. Implementing legislation is pending in the Knesset.
  • OECD: The Organisation for Cooperation and Development (OECD) released a discussion draft of guidance for implementing rules on “hard-to-value intangibles,” as described in the OECD Transfer Pricing Guidelines. Comments are due by 30 June 2017.
  • India: A high court dismissed the tax department’s appeal, and upheld the decision of a tribunal regarding the exclusion of cost reimbursements (without mark-up) from related parties in respect of the cost incurred by the taxpayer for spare capacity while computing taxpayer’s operating costs. 
  • India: A high court held that the taxpayer’s payment of an export commission to a related party in Japan cannot be construed as payment of royalty, given there were two distinct and independent agreements for the payment of a royalty and of an export commission.
  • India: A tribunal held that reimbursements the taxpayer received for training-related travel expenses, group health insurance, and other incidental expenses under a technical service agreement were not taxable as fees for technical services. Relying in part on the transfer pricing study and transfer pricing order, the tribunal found that there was no element of profit embedded in the expense reimbursements, and thus, the reimbursements were not taxable.

Read TaxNewsFlash-Transfer Pricing

Europe

  • EU: ECOFIN (a council of finance ministers) discussed two initiatives—double taxation dispute resolution mechanisms in the EU and the Common (Consolidated) Corporate Tax Base or C(C)CTB—as part of a package for corporate tax reform.    
  • France: The Court of Justice of the European Union (CJEU) issued a judgment concluding that the 3% tax on certain distributions of profits made by French companies is not compatible with provisions of the EU Parent/Subsidiary Directive when the parent company redistributes dividends received from its subsidiaries.
  • Netherlands: A proposal to amend the value added tax (VAT) regime would extend application of VAT to the refurbishment of real estate and other “expensive services” such as software.
  • UK: Expected to be effective in September 2017, the Criminal Finances Act contains provisions requiring businesses to prevent facilitation of tax evasion.

Read TaxNewsFlash-Europe

Africa

  • Nigeria: Taxpayers will be liable to interest for non-payment and late payment of taxes at a rate of 19%, effective 1 July 2017.

Read TaxNewsFlash-Africa

Americas

  • Canada: Canadian corporations that operate in the United States through a sales and distribution subsidiary may be targeted by the IRS for audit.
  • Canada: Saskatchewan is proposing to postpone the application of the provincial sales tax (PST) to insurance premiums until 1 August 2017 (from 1 July 2017).
  • Canada: Ontario’s Bill 134, which would enact a foreign buyer’s tax on Toronto-area housing, and Alberta’s 2017 budget bill each received first readings. 
  • Canada: Budget bills for Ontario—including corporate and individual (personal) tax measures—and for Saskatchewan—including a reduced corporate income tax rate and introducing a patent box regime—received Royal Assent.
  • Canada: The deadline for insurers to request that the Canada Revenue Agency reassess previously self-assessed goods and services tax / harmonized sales tax (GST/HST) paid related to cross-border reinsurance with affiliates is 22 June 2017.

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: An employer was held liable to its employees’ former employer for their breach of confidential information used to expand the present employer’s business.
  • Hong Kong: Amendments were proposed to the aircraft leasing regime so that it would apply to operating leases of all airlines and not just airlines in countries that have tax treaties with Hong Kong. The changes are in response to submissions and concerns that the regime may be considered as a harmful tax practice by the OECD.

Read TaxNewsFlash-Asia Pacific

FATCA / IGA / CRS

  • China: A tax regulatory circular was released that provides the overall framework for implementing the standard for automatic exchange of financial information in tax matters (AEOI standard) in China that was formulated by the OECD.
  • Cayman Islands: An updated version of the AEOI portal user guide was issued for financial institutions to follow concerning their notification (registration) and reporting obligations in respect of U.S. FATCA regime and the OECD’s common reporting standard (CRS).
  • Indonesia: Guidance requires financial service institutions—including commercial banks, securities companies, custodian banks, life insurance companies, and sharia life insurance companies—to report information related to their “foreign customers” by 2018.
  • United States: The IRS released a draft version of instructions for financial institutions (or other entities) to apply in registering for FATCA purposes.
  • Belgium: A note from Belgium’s federal public service of finance to financial institutions provides information relating to the opening of a CRS simulation portal for sending CRS test files.
  • Bulgaria: The tax authority issued instructions that specify the functional and technical requirements for the preparation and reporting of financial account information under the FATCA and the CRS or the EU Council Directive 2014/107/EU (DAC2) regimes.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • Japan: The customs authority has proposed a regime that would allow customs declarations to be filed from any customs area, provided that the importer or exporter is certified as an Authorized Economic Operator (AEO). The amendment, if enacted, is expected to be effective in October 2017.
  • United States: The Office of the United States Trade Representative (USTR) released a notice requesting comments and announcing a June 2017 public hearing on negotiation objectives regarding modernization of the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

Read TaxNewsFlash-Trade & Customs

United States

  • The Trump Administration released its fiscal year (FY) 2018 budget that contains the administration’s recommendations to Congress for spending and taxation for the fiscal year that begins on 1 October 2017. Details of tax reform proposals for individuals and businesses were not included, and the Treasury Department did not release a “Green Book” of tax proposals (as had been released with prior budgets).
  • The U.S. Supreme Court denied certiorari in several cases challenging the constitutionality of retroactive state tax law changes.
  • A “commercial activity tax” is being considered in Oregon, with the release of a draft proposal.
  • The California Franchise Tax Board will hold an “interested parties meeting” on 30 June 2017, to discuss potential revisions to the state law measures concerning alternative apportionment procedures. 
  • The New York Department of Taxation and Finance ruled that a taxpayer’s online, web-based product that allowed customers to create customized videos was subject to sales tax.
  • The Oklahoma Tax Commission issued a ruling addressing issues related to an oil well operator’s sales tax refund claims, and whether vendors providing certain oil well fracturing (“fracking”) services were considered real property contractors. 
  • A Texas administrative law judge for the Comptroller of Public Accounts found that certain revenue could not be excluded from the Texas franchise tax base as flow-through funds and that a taxpayer that sold cell phones, accessories, and service plans had failed to demonstrate that certain purchases could be deducted as costs of goods sold (COGS).

Read TaxNewsFlash-United States

 

  • The Joint Committee on Taxation (JCT) released a revenue estimate of tax provisions in the American Health Care Act of 2017 (AHCA) that was passed by the House on 4 May 2017. A cost estimate of the direct spending and revenue effects of the bill was also released by the Congressional Budget Office.
  • The House Committee on Ways and Means scheduled a markup of three health insurance-related bills. 
  • The JCT released a report that provides an overview and analysis of destination-based taxation and border adjustments.
  • A report explains the AHCA by answering frequently asked questions (FAQs) about the bill and comparing it to an earlier proposal.

Read TaxNewsFlash-Legislative Updates 

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.