KPMG’s Week in Tax: 7 - 11 August 2017 | KPMG | GLOBAL

KPMG’s Week in Tax: 7 - 11 August 2017

KPMG’s Week in Tax: 7 - 11 August 2017

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

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Europe

  • Luxembourg: The government introduced a bill that would provide a new intellectual property (IP) tax regime that would provide a 80% tax exemption of income derived from patents—including IP assets that are functionally equivalent to patents—and copyrighted software, as well as a full net wealth tax exemption for these assets.
  • Romania: The government is considering introducing a value added tax (VAT) split-payment mechanism that would apply with respect to taxable supplies of goods/services (except transactions subject to special regimes and those subject to the reverse-charge mechanism). 
  • UK: Revenue Scotland has provided an opinion that land and building transactions tax (LBTT) group relief is not available on the transfer of Scottish property by a parent company to a subsidiary (or between sister subsidiaries) when the parent has given a share pledge over the shares in the transferee subsidiary as security for borrowing. The position differs from the stamp duty land tax (SDLT) group relief position in the rest of the UK.

Read TaxNewsFlash-Europe

Transfer Pricing and BEPS

  • Kosovo: New documentation requirements and procedures have been introduced for purposes of implementing the transfer pricing provisions of Law No. 05/L-029. The new guidelines provide the arm’s length principle is the standard to be applied for intra-group transactions or controlled transactions.
  • New Zealand: The government released its decisions (cabinet papers), supporting policy reports, and public submissions on a number of base erosion and profit shifting (BEPS) proposals including decisions concerning transfer pricing rules, permanent establishments, and the multilateral instrument (MLI).

Read TaxNewsFlash-Transfer Pricing and TaxNewsFlash-BEPS

Africa

  • Nigeria: The federal government approved 27 new industries for inclusion in the list of “pioneer industries” as part of its efforts to diversify the economy. Companies operating in these industries may be eligible to apply for pioneer status and benefit from “tax holiday” of up to five years.
  • Nigeria: Plans have been announced to harmonize the database of the National Identify Management Commission and that of the Nigeria Immigration Service. The aim would be to improve the ease of doing business and efficiency for obtaining permits and official documents.

Read TaxNewsFlash-Africa

Americas

  • Canada: Tax relief is being offered for taxpayers affected by the wildfires in British Columbia, All collection, audit related-activities and administrative correspondence for those in areas affected by the wildfires are suspended. Penalties and interest are suspended for individuals and businesses that are affected by the wildfires and that are delayed in filing their tax return or in paying amounts owing because of the wildfires.
  • Mexico: Tax incentives were part of a decree, and include provisions concerning the identification of certain foreign accounts and capital repatriation measures.

Read TaxNewsFlash-Americas

Asia Pacific

  • China: The implementation of a national plan for customs clearance integration-regime reform is scheduled for a nationwide rollout, effective from 1 July 2017.
  • Australia: Proposals in the Federal Budget 2017-18 aim to change the capital gains tax treatment for foreign residents that have small interests, through shareholdings, in Australian real property. An “exposure draft legislation” was recently released on the Treasury’s website.
  • Australia: Taxpayers in the “top 1000” group—companies  in economic groups with a turnover of greater than A$250 million—could be required to complete the "Reportable Tax Position" (RTP) schedule.
  • Australia: Changes to the attribution managed investment trust (AMIT) regime have many trustees evaluating whether to adopt the AMIT regime and undertake extensive implementation projects.

Read TaxNewsFlash-Asia Pacific

FATCA / IGA / CRS

  • United States: The IRS has posted a draft version of instructions for Form 8966, Foreign Account Tax Compliance Act (FATCA) Report. The draft is dated “as of August 9, 2017,” and includes cautionary language that it is not to be relied upon for filing purposes and is subject to change and to OMB approval before being officially released.
  • Germany: The tax authority announced that for financial institutions: (1) common reporting standard (CRS) reports submitted by 31 July 2017 will be considered timely; and (2) there is updated FATCA guidance.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The next federal highway use tax return is due 31 August 2017, in most instances, for the owners of trucks and heavy highway vehicles.
  • The IRS announced it had started the process of mailing letters to more than one million taxpayers with expiring individual taxpayer ‎identification numbers (ITINs) and reminding these persons to renew their ITINs as quickly as possible to avoid tax refund and processing delays.
  • The U.S. Tax Court held that gain from sales of property and development rights does not constitute income from the trade or business of farming within the meaning of section 2032A(e)(5). As a result, the taxpayers who conveyed a conservation easement to a public charity and did not meet the requirement of “qualified farmers or ranchers” were not entitled to an increased or enhanced percentage limitation on deductibility.
  • The Multistate Tax Commission (MTC) acted to facilitate a special voluntary disclosure initiative for both sales and use tax and income tax for certain online sellers that use marketplace providers / facilitators to facilitate making retail sales into the state. Most participating states have agreed to forego any tax, penalty, and interest for prior periods, and the program will run from 17 August 2017 through 17 October 2017. 
  • Newly enacted legislation in Rhode Island imposes certain reporting requirements on “non-collecting retailers,” “referrers,” and “retail sale facilitators” beginning 17 August 2017.
  • A Colorado trial court held that a furniture retailer did not owe local use tax to the City of Lakewood on furniture that was displayed before being sold to customer. Because of the length of time during which the furniture remained on display, the city argued that the taxpayer was using the furniture and that it was not purchased for resale.
  • The Massachusetts Supreme Judicial Court held that a drop-shipper was required to collect and remit state sales tax. Under the “drop shipment rule,” a wholesaler engaged in business in Massachusetts is required to collect and remit sales tax due on sales shipped to Massachusetts consumers when the selling retailer is not engaged in business in the Commonwealth.
  • Minnesota’s Supreme Court affirmed that the income and factors of a foreign disregarded entity were to be included, along with those of its domestic owner, in the Minnesota combined return for the tax years at issue.
  • The Ohio Board of Tax Appeals found that a taxpayer’s receipts from forward contracts were subject to Ohio’s commercial activity tax (CAT), by concluding the receipts were sitused under provisions applicable to tangible personal property.

Read TaxNewsFlash-United States

Trade & Customs

  • An Arizona company has agreed to pay approximately $259,000 to settle its potential civil liability for 72 “apparent violations” of the OFAC sanctions program in Iran. 

Read TaxNewsFlash-Trade & Customs

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