KPMG’s Week in Tax: 12 - 16 June 2017 | KPMG | GLOBAL

KPMG’s Week in Tax: 12 - 16 June 2017

KPMG’s Week in Tax: 12 - 16 June 2017

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

1000

Related content

BEPS

  • Following last week’s OECD signing ceremony of the “multilateral instrument” (MLI) to implement tax treaty related measures to prevent base erosion and profit shifting (BEPS) under BEPS Action 15, tax professionals in countries around the globe continue to evaluate the effects of MLI on their network of tax treaties. Read a KPMG analysis of the MLI and a June 2017 report with updates from KPMG member firms around the globe.
  • Botswana: The OECD announced that Botswana has joined the “inclusive framework” for purposes of the BEPS project.

Read TaxNewsFlash-BEPS

Transfer Pricing

  • Costa Rica: The time for filing transfer pricing information returns has been extended indefinitely. The due date was originally 30 June 2017.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • United States: The IRS announced the next testing phase for the FATCA International Data Exchange Service (IDES)
  • Singapore: A draft user guide was issued for common reporting standard (CRS) return XML schema that provides the information required in each CRS data element of the XML schema when reporting to the Inland Revenue Authority of Singapore.

Read TaxNewsFlash-FATCA / IGA / CRS

Africa

  • Tax provisions were contained the 2017 budgets for Rwanda, Tanzania, and Uganda (all released in June 2017).
  • The semi-annual update of tax, legal and compliance developments for 17 African countries is available as “country snapshots.”

Read TaxNewsFlash-Africa

Americas

  • Brazil: A formal request to become a member of the Organisation for Economic Cooperation and Development (OECD) has been submitted by Brazil.
  • Brazil: A provisional measure to reinstate a “special tax regularization” program to allow taxpayers to resolve and settle their federal tax debts has been issued. 
  • Canada: Alberta’s 2017 budget, including individual (personal) tax measures and changes to the small business deduction, was enacted.
  • Canada: Negotiations have begun to update Canada’s income tax treaties with Germany and Switzerland.
  • Canada: New guidelines have been proposed to restrict the use of a voluntary disclosures program by large Canadian companies. Some relief may remain for indirect (GST/HST) matters.
  • Mexico: Rules concerning capital repatriation measures, the annual information statements of related parties, and the factor for interest income and foreign exchange gain via foreign financial institutions have been issue. 

Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: The Australian Taxation Office (ATO) issued new guidelines for determining tax residency, and clarified that when central management and control is situated in Australia, the business is considered be conducting business in Australia.
  • India: Guidance from the Reserve Bank of India amends rules relating to the issuance of rupee-denominated bonds overseas (Masala bonds). 
  • India: Under the goods and services tax (GST) regime, recent developments include: (1) GST rates for goods and services; (2) finalization of rules in respect of various procedures under GST including registration; (3) refund, payment of tax, invoice, debit and credit note; (4) input tax credit; (5) returns; (6) transitional provisions; and (7) release of various formats under the rules.
  • India: A tribunal held that a payment with respect to a “standard operating procedure” is taxable as a royalty under the income tax treaty with Germany. The tribunal found that sharing of standard operating procedure was akin to the sharing of information concerning industrial, commercial, or scientific experience and comes within the scope of “royalty” under the tax treaty.
  • India: The Central Board of Direct Taxes (CBDT) released final rules for exemption of acquisitions of equity shares from long-term capital gain tax, and thus provided relief to certain additional transactions.

Read TaxNewsFlash-Asia Pacific

Europe

  • Czech Republic: The Ministry of Finance released a revised summary of income tax amendments that would affect the direction of the new income tax law, expected after the autumn elections.
  • Belgium: The Court of Justice of the European Union (CJEU) held that the tax exemption available for interest on savings deposits in Belgian banks, but not with respect to banks in other EU Member States, violates the freedom to provide services. 
  • Belgium: Guidance provides handling services concerning insurance claims are no longer exempt from VAT when the services they are performed by a third party that did not intervene as agent or broker in concluding or changing an insurance contract.
  • EU: Corrections and amendments to the Uniform Customs Code (UCC) implementing regulation entered into force on 14 June 2017.
  • Finland: The tax administration granted a refund of taxes withheld on dividends paid to an open-ended Massachusetts business trust (one that was legally a partnership in the United States and registered as a regulated investment company (RIC)). There may be refund opportunities for other third-country investment funds whose legal form is a partnership.
  • Switzerland: Tax reform proposals are expected to be communicated later in June 2017. The Canton of Vaud postponed a report defining the cantonal law proposals, pending the federal legislative process. The Canton of Zug confirmed an outline of tax proposals for 2017 that include a patent box regime and a reduction of the ordinary combined corporate income tax rate.

Read TaxNewsFlash-Europe

United States

  • Proposed regulations regarding implementation of the centralized partnership audit rules were released, and generally contain measures similar to those in regulations that were posted and then almost immediately removed by the IRS in January 2017.
  • The U.S. Tax Court—in a case of “first impression” concerning application of section 267(a) to S corporation employers and ESOP participants—concluded that an employee stock ownership plan (ESOP) formed by an S corporation and the ESOP-participating employees are “related persons” for purposes of section 267. As such, the court held that deductions for accrued but unpaid payroll expense must be deferred until the pay was received by the employees and includible in their gross income.
  • The IRS provided a reminder that the deadline for reporting foreign financial accounts on FinCEN Form 114, “Report of Foreign Bank and Financial Accounts,” (the FBAR) is now the same as the deadline for filing a federal income tax return, but that the FBAR for 2016 may be filed by the extended deadline of October 16, 2017.
  • The California Franchise Tax Board (FTB) scheduled its second “interested parties meeting” to discuss the second round of proposed amendments to a regulation that addresses “sourcing for sales other than sales of tangible personal property” with respect to management fees of asset managers.
  • The Indiana Department of Revenue denied a taxpayer’s refund request based on the taxpayer’s sourcing of certain of sales to out-of-state customers to the places where the customers were located. It was determined that the Indiana-based company was a service provider of a galvanization process and that its income-producing activity occurred in Indiana.
  • A hearing officer in New Mexico determined that two pharmaceutical companies were not protected from corporate income tax by virtue of Public Law 86-272 in part because of their own activities (through ownership of an LLC that was the selling entity of a branch of a French pharmaceutical company) and in part because of activities attributed to them from another affiliate. It was determined that the LLC’s activities in New Mexico exceeded the protection under Public Law 86-272, and therefore, the corporations were subject to New Mexico corporate income tax on their flow-through income.
  • A South Carolina administrative law court held that a bookseller’s sales of memberships to customers—i.e., the membership fees—were subject to sales tax.
  • A Washington State administrative law judge found that accessories added to vehicles after import “interrupted” the availability of the state’s import transportation exemption, so that the taxpayer owed wholesaling B&O tax on imported vehicles later delivered to Washington dealers.
  • A Washington State administrative law judge concluded that the resale exemption did not apply to beverage mixers used by airlines in mixed drinks (containing alcohol) sold to customers.

Read TaxNewsFlash-United States

 

  • Members of the U.S. Senate Finance Committee introduced a bill to encourage charitable giving and make it easier for foundations and other tax-exempt organizations to conduct their charitable mission.
  • The Ways and Means Committee of the U.S. House of Representatives scheduled a markup of H.R. 1551—legislation that would modify the tax credit for production from advanced nuclear power facilities. 

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