KPMG’s Week in Tax: 9 - 13 April 2018 | KPMG | GLOBAL

KPMG’s Week in Tax: 9 - 13 April 2018

KPMG’s Week in Tax: 9 - 13 April 2018

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

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Transfer Pricing and BEPS

  • United States: An updated version of “frequently asked questions” concerning country-by-country (CbC) reporting reflects IRS guidance for “specified national security contractors” pursuant to Notice 2018-31.
  • OECD: New transfer pricing country profiles were published for 14 countries—Australia, China, Estonia, France, Georgia, Hungary, India, Israel, Liechtenstein, Norway, Poland, Portugal, Sweden, and Uruguay—and reflect the current transfer pricing rules and practices of each country.

 

Read TaxNewsFlash-Transfer Pricing

Americas

  • Argentina: Guidance implements measures from Argentina’s 2017 tax reform, concerning the tax treatment of Argentine-source financial income earned by foreign beneficiaries.
  • Canada: The goods and services tax / harmonized sales tax (GST/HST) and Quebec sales tax (QST) returns for selected listed financial institutions (SLFIs) with a 31 December year-end are due 30 June 2018.
  • Canada: Insurance companies must issue by 30 June 2018, to policyholders, refunds of Saskatchewan provincial sales tax collected on certain life and health insurance products since 1 August 2017.
  • Canada: The 2018 Saskatchewan budget contains no corporate tax rate change, but does include certain changes for individual taxation and the dividend tax credit.
  • Canada: The 2018 Prince Edward Island budget reduces the small business tax rate to 4% (from 4.5%), increases the provincial basic personal (individual) amount by $500 for each of the next two years, and introduces a new investment grant for small businesses.
  • Canada: There is a proposal to require businesses with no physical or significant presence in Quebec to register for and collect QST beginning 1 January 2019. 

 

Read TaxNewsFlash-Americas

Asia Pacific

  • Myanmar: There are no income tax rate changes in the 2018 tax legislation, but there are amendments concerning the goods and services tax on automobiles and the commercial tax for inbound flights of air travel.
  • New Zealand: Legislation extending to five years the holding period for purposes of taxation of sales of residential property received Royal Assent. Also, a consultation document was released on restricting (“ring fencing”) certain residential rental tax losses.
  • Australia: Changes to the research and development (R&D) tax incentive are expected in the May 2018 federal budget.
  • India: The Supreme Court of India held that payments made by a taxpayer to advertising agencies were payments of “commission,” and as such, the taxpayer was required to withhold (deduct) tax at source on making payments to the advertising agencies. 
  • India: A tribunal held that the payment of a royalty for intellectual property rights to a U.S. entity was taxable in India. In this case, the patent and copyrights were used by the taxpayer’s holding company in India for the manufacture of products that were sold in the United States.
  • India: A tribunal held that the reimbursement of expenses by the taxpayer to its U.S. parent company did not include an income element and, therefore, was not subject to tax in India. The expenditure was charged on a cost-to-cost basis, and as such, there was no income element and no requirement to withhold tax on the payments. 
  • Pakistan: Following the release of an economic and tax reforms package, tax ordinances were released and became effective on 10 April 2018.

 

Read TaxNewsFlash-Asia Pacific

Europe

  • Austria: A draft of changes to Austrian tax law would introduce the concept of controlled foreign corporation (CFC) rules, to allow for the reallocation of income of subsidiaries in “low tax” or no tax jurisdictions to the Austrian parent company and thus subject to Austrian corporate income tax at a rate of 25%. Other measures would codify the concept of “horizontal monitoring” and allow for expanded use of binding rulings.
  • Ireland: Legislative measures for the modernisation of pay-as-you-earn (PAYE) reporting will be effective 1 January 2019.
  • Slovakia: The Court of Justice for the European Union (CJEU) concluded that EU law precludes a Slovak tax on the value of sold and unused greenhouse gas emission allowances.
  • Sweden: The government presented its proposals to regulate the gaming industry, to require licensing of gaming activities—including online gaming—with the licensing fee set at 18%. Tax measures are included.
  • Malta: The European Commission approved Malta’s tonnage tax regime, following a six-year period of review.

 

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • India: A notification amends the procedures for registration and for submission of Form 61B under the FATCA and common reporting standard (CRS) regimes.
  • Belgium: The online FATCA portal is now open for the declaration of FATCA returns relating to income year 2017, with a filing deadline of 30 June 2018. 
  • Belgium: A common reporting standard (CRS) correction process brochure was issued with guidelines and examples to help financial institutions in preparing CRS corrective files, and a new version of an application is available for the creation of CRS corrective files.
  • Hungary: The tax authorities issued an updated version of the automatic exchange of information (AEOI) filing instructions for completing the financial account information reporting under the CRS regime. The instructions also include the updated list of participating jurisdictions for 2018.

 

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • United States: A final rule from U.S. Customs and Border Protection (CBP) broadens the definition of “importer security filing” importer to include the goods’ owner, purchaser, consignee, or agent (such as a licensed customs broker).
  • China: World Trade Organization (WTO) dispute consultations with the United States concerning certain U.S. duties to be imposed on imports of steel and aluminum products have been requested by China.

 

Read TaxNewsFlash-Trade & Customs

United States

  • Notice 2018-34 provides transitional guidance for accrual method taxpayers electing to defer advance payments from gross income in the year of receipt.
  • The Treasury Department released a memorandum of agreement concerning the regulatory review process.
  • Rev. Proc. 2018-26 provides remedial actions that issuers of state and local tax-exempt bonds—and other tax-advantaged bonds—may apply to preserve the tax-advantaged status of the bonds when nonqualified uses of the bond proceeds occur.
  • IRS Publication 5292, “How to Calculate Section 965 Amounts and Elections Available to Taxpayers” addresses the transition tax imposed under section 965 as enacted by the new tax law in December 2017.
  • The first round of opportunity zone designations in 18 states, under the new tax law, has been released. These qualified opportunity zones retain the designation for 10 years.
  • Pending legislation in Alabama would require certain “marketplace facilitators” either to: (1) register to collect and remit simplified sellers use tax (SSUT) on sales facilitated by the marketplace and delivered in Alabama; or (2) comply with unspecified notice and reporting requirements. 
  • A new law in Arizona (Senate Bill 1405) revises the definition of “multistate service provider” to include sales from intangibles in the 85% test. A “multistate service provider” is generally a taxpayer that derives more than 85% of its sales from services provided to purchasers that receive the benefit of the service outside of Arizona.
  • Georgia House Bill 61 would require certain retailers: (1) to collect and remit sales and use tax; or (2) to comply with specified notice and reporting obligations.
  • The Tennessee Department of Revenue issued guidance that addresses the state treatment of income repatriated into the United States under the provisions of IRC section 965 (as added to the Code by the new federal tax law).
  • Wisconsin Assembly Bill 259 was signed into law, updating the state’s conformity to the Internal Revenue Code (in light of the new federal tax law).
  • The U.S. Court of Appeals for the First Circuit reversed the findings of the U.S. Tax Court that the individual taxpayers owed excise tax for excess contributions made to their Roth IRAs. The First Circuit rejected the IRS’s application of the substance-over-form doctrine to recharacterize payments from a domestic international sales corporation (DISC) to the taxpayers’ Roth IRAs as contributions in excess of the contribution limits.

 

Read TaxNewsFlash-United States

 

  • The U.S. House Ways and Means Committee approved a slate of IRS restructuring and taxpayer protection bills. The bills had bipartisan support and will be reported to the full House for possible future consideration.

 

Read TaxNewsFlash-Legislative Updates

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