KPMG’s Week in Tax: 10 - 14 July 2017 | KPMG | GLOBAL

KPMG’s Week in Tax: 10 - 14 July 2017

KPMG’s Week in Tax: 10 - 14 July 2017

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

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Transfer Pricing

  • Mexico: Companies in the maquila sector may elect to seek advance pricing agreements (APAs) using a “fast track” mechanism.
  • Vietnam: New measures concerning the registration of technology transfer contracts have tax and transfer pricing implications.
  • Malaysia: Updated transfer pricing guidelines include guidance for taxpayers to document intercompany transactions when they are engaged in controlled transactions with related parties or associated person(s). 
  • Singapore: Draft legislation has been proposed to amend Singapore’s tax law, to reflect certain transfer pricing requirements—including measures to define arm’s length conditions and to codify requirements that taxpayers maintain contemporaneous and adequate transfer pricing documentation.
  • OECD: The 2017 edition of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations was released.
  • Asia Pacific: A report identifies implementation issues with respect to country-by-country (CbC) reporting requirements.

Read TaxNewsFlash-Transfer Pricing

BEPS

  • OECD: Cameroon signed the multilateral instrument (MLI) that will allow certain tax treaties to reflect the base erosion and profit shifting (BEPS) recommendations.
  • Asia Pacific: A review of CbC reporting rules across jurisdictions in the region.

Read TaxNewsFlash-BEPS

FATCA / IGA / CRS

  • Italy: Guidance for implementing the common reporting standard (CRS) regime includes registration and reporting deadlines and other types of technical measures.
  • United States: The IRS updated a list of “frequently asked questions” (FAQs) concerning foreign financial institution (FFI) agreement renewals.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • Australia: A reminder that importers must be understand the rules concerning country of origin labelling requirements for the sales of goods in Australia.
  • Canada: Approximately 98% of all tariffs between Canada and the EU will be eliminated on 21 September 2017 when the Canada-EU free trade agreement enters into force.
  • United States: A final rule brings conformity to existing regulations regarding the requirements to report certain data about exported cargo.
  • United States: The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) updated a list of FAQs concerning sanctions imposed on trade or transactions with respect to Sudan and reflecting an executive order that extends the review period for actions by the Sudanese government until October 12, 2017.
  • United States: The U.S. Court of International Trade granted the government’s motion to dismiss, for lack of subject matter jurisdiction, a challenge of a ruling issued by U.S. Customs and Border Protection (CBP). The importer requested a pre-importation review of CBP’s ruling. The trade court, however, found that the importer had failed to show by clear and convincing evidence that it faced business disruption, irrecoverable financial loss, and reputational harm absent a pre-importation review of CBP’s ruling.
  • Myanmar: Foreign entities are allowed to trade fertilizer, seeds, herbicides, medical equipment, and construction materials. Previously, only joint ventures were allowed to undertake these activities.
  • Netherlands: “Brexit” may have trade and customs implications for Dutch businesses.
  • UK: Brexit negotiations may affect customs tariffs; thus, retailers need to understand the supply chains at a granular level.

Read TaxNewsFlash-Trade & Customs

Americas

  • Brazil: The tax authority issued a ruling, in which it concluded that local reinsurers are subject to corporate income tax at a rate of 45% and PIS/COFINS on gross premiums less claims paid at a rate of 4.65%. The ruling also provides that permanent establishments of foreign reinsurers are subject to the same tax rates.
  • Canada: Certain 2017 income tax rate and other tax changes may need to be reflected in interim financial statements under the International Financial Reporting Standards (IFRS), the Accounting Standards for Private Enterprises (ASPE) or under other accounting principles.
  • Jamaica: National Health Insurance (NHI) measures are to be announced soon.

Read TaxNewsFlash-Americas

Asia Pacific

  • Thailand: A new law, effective 23 June 2017, aims to improve the management of foreigners working in Thailand so that this can be carried out systematically and efficiently.

Read TaxNewsFlash-Asia Pacific

Europe

  • Belgium: The Supreme Court (Cour de Cassation) issued a judgment concluding that the French withholding tax on dividends attributed to a Belgian individual resident must be (partially) credited against the Belgian tax due on those dividends.
  • Denmark: A draft bill was published to implement a political agreement regarding tax incentives for the development of the Danish hydrocarbon activities in the North Sea.
  • Netherlands: A document released for public consultation concerns the proposed introduction of anti-tax avoidance measures into Dutch tax—specifically proposals concerning: (1) interest deduction limitation; (2) exit tax; and (3) controlled foreign company (CFC) measures that would affect a taxpayer’s controlled entities and permanent establishments.
  • OECD: The OECD Committee on Fiscal Affairs released the draft contents of the 2017 update to the OECD Model Tax Convention. The update has not yet been approved by the Committee on Fiscal Affairs or by the OECD Council, although parts of the 2017 update were previously approved as part of the OECD’s BEPS project.
  • France: The French prime minister presented tax measures that are expected to be included in the draft Finance Law for 2018. Many of the proposals would aim at increasing the competitiveness of the French marketplace, among other items, by lowering tax rates.

Read TaxNewsFlash-Europe

United States

  • The U.S. Tax Court held that capital gain realized by a foreign company on the redemption of its interest in a U.S. limited liability company was not U.S.-sourced income and that it was not effectively connected with a U.S. trade or business. The court specifically rejected the position in an IRS revenue ruling—Rev. Rul. 91-32—as to what is effectively connected income. The court stated that it “will not follow Rev. Rul. 91-32.”
  • Proposed regulations concerning measures that would have required an exchange or distribution of net value for certain corporate formations and reorganizations to qualify for nonrecognition treatment—in other words, the measures would have affected transactions involving the transfer of no net value—were withdrawn.
  • Rev. Proc. 2017-43 includes changes to the existing procedures for approval from the U.S. Treasury Department for a suspension of benefits under a multiemployer defined benefit pension plan that is in “critical and declining status.”
  • The U.S. Tax Court issued a “reviewed opinion” holding that, for purposes of landfill reclamation and closing costs, references to “taxpayer” in section 468 mean both cash-method taxpayers and accrual-method taxpayers.
  • New law in Washington State requires a remote seller meeting a specified threshold of gross receipts from retail sales to “elect” either to collect retail sales or use tax on taxable retail sales or to comply with certain sales and use tax notice and reporting provisions. This new measures also extends to marketplace facilitators that facilitate sales on behalf of third-party remote sellers as well as referrers.
  • The Indiana Department of Revenue issued a “Letter of Findings,” determining that repair parts purchased for soft drink machines qualified for the state’s manufacturing exemption.
  • Newly enacted legislation in New Hampshire reduces the rate of the business profits tax (BPT) to 7.7% and then to 7.5% for subsequent tax periods. The business enterprise tax (BET) rate is reduced to 0.6%, and then to 0.5% for later tax periods.
  • An administrative law judge in Washington State found that activities of a wholesale affiliate with Washington nexus—e.g., an independent representative in the state soliciting sales from third-party retailers as well as having an employee in the state interacting with customers—did not create nexus for an online retailer.

Read TaxNewsFlash-United States

 

  • The U.S. Senate Budget Committee released text and explanations of revisions to the Better Care Reconciliation Act (BCRA) discussion draft. The new draft does not include any changes from current law to the net investment income tax, the additional Medicare health insurance (HI) tax, or the remuneration tax on executive compensation for certain health insurance executives.
  • A Joint Committee on Taxation (JCT) report describes current law and provides background information relating to federal income tax provisions that affect small businesses.
  • The JCT released a report on the estimated budget effects of certain tax provisions contained in the administration’s fiscal year 2018 budget proposal that was released on 23 May2017.

Read TaxNewsFlash-Legislative Updates

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