KPMG’s Week in Tax: 30 July - 3 August 2018 | KPMG | GLOBAL
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KPMG’s Week in Tax: 30 July - 3 August 2018

KPMG’s Week in Tax: 30 July - 3 August 2018

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

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Africa

  • South Africa: Proposed measures would tighten the rules for structures or transactions that include low-interest or interest-free loans to companies held by trusts.

Read TaxNewsFlash-Africa

Americas

  • Canada: Property owners in British Columbia must provide additional information on property transfer tax returns beginning 17 September 2018.
  • Canada: Draft legislation released by the Department of Finance includes measures that would affect the partnership at-risk rules and passive investment income rules.
  • Canada: A legislative proposal in Ontario would repeal the “cap and trade” carbon tax. 

Read TaxNewsFlash-Americas

Asia Pacific

  • India: The Authority for Advance Ruling Haryana found that forfeited “payback points” (loyalty reward points) on which consideration was received and retained were to be treated as supply of service and, accordingly, subject to goods and services tax (GST). 
  • India: The Supreme Court of India held that tax authorities can grant deposit orders of less than 20% for a stay of demand. 
  • India: A tribunal decided that the “most favoured nation” clause in the Protocol to the India-Israel income tax treaty was automatic and applied prospectively. At issue was the treatment of payments for active pharmaceutical ingredient and formulation services. 
  • India: The Central Board of Direct Taxes (CBDT) released its action plan for 2018-19. 
  • Singapore: A proposal would revise the rules for the tax treatment of employer-provided accommodation.

Read TaxNewsFlash-Asia Pacific

Europe

  • Ireland: Guidance was issued on the value added tax (VAT) treatment of services provided in connected with immovable property (e.g., land and buildings).
  • Italy: Tax measures in Law Decree no. 87 concern: (1) relocation of Italian and foreign enterprises that have received “state aid” (defined as including tax benefits); (2) the scope of a “hyper” (or bonus) depreciation benefit; (3) the research and development (R&D) tax credit regime; (4) the rate of tax imposed on revenue from gaming machines; (5) deadlines for filing annual “sales and purchases list” (Spesometro); and (6) the “split payment” regime.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Germany: The central tax office issued guidance concerning the FATCA rules.
  • United States: The IRS posted a draft version of the form to be used as the FATCA report for 2018 (Form 8966).
  • United States: The IRS announced that it has updated the FATCA registration system to incorporate the certification of pre-existing accounts and periodic certification process. The IRS release advises all FATCA-registered entities to login to update their FATCA classifications.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The U.S. Treasury Department and IRS released proposed regulations relating to the “transition tax” under section 965, providing guidance on the taxation of previously untaxed foreign subsidiary earnings and reflecting the U.S. international tax system’s move away from a deferral-based approach.
  • Proposed regulations to provide guidance concerning sections 199A and 385 are pending review before issuance. 
  • Final regulations concern automatic and non-automatic extension of time to file certain information returns (specifically the Form W-2 series and forms that report non-employee compensation generally on Form 1099-MISC). 
  • Final regulations concern short-term, limited-duration health insurance and reflect amendments to the definition of short-term, limited-duration insurance for purposes of its exclusion from the definition of individual health insurance coverage. The final rule is intended to lengthen the maximum duration of short-term, limited-duration insurance so as to provide more affordable consumer choices for health coverage.
  • The Senate Finance Committee voted to advance the nominations of Michael Desmond for IRS Chief Counsel and Justin Muzinich for Deputy Secretary of the Treasury. The Finance Committee will advance the nominations to the full Senate for a possible confirmation vote. It is unclear when the Senate will consider the nominations.
  • Notice 2018-58 announced that the IRS and Treasury Department intend to issue regulations to clarify: (1) re-contributions of refunded qualified higher education expenses to a qualified tuition program under section 529(c)(3)(D); (2) rollovers from a qualified tuition program to an ABLE account; and (3) treatment of certain elementary or secondary school expenses as qualified higher education expenses.
  • U.S. states—including Indiana, Minnesota, Nevada, New Hampshire, Rhode Island and Utah—continue to respond to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. concerning the sales tax implications of remote or online sales.
  • The Connecticut Department of Revenue Services issued guidance addressing the state treatment of “global intangible low-taxed income” (GILTI)—pursuant to the new federal tax law enacted December 22, 2017—for state corporate business tax purposes.
  • The Michigan Supreme Court addressed whether two financing companies were entitled to tax refunds under Michigan’s bad debt statute for taxes paid on vehicles that had been financed, repossessed, and resold for less the full amount of the outstanding debt.
  • New legislation in Utah addresses the state tax aspects of provisions in the new federal tax law enacted in December 2017—specifically the Utah tax treatment relating to IRC section 965(a), and Utah’s net operating loss (NOL) provisions to conform to changes made at the federal level. 

Read TaxNewsFlash-United States

Exempt Organizations

  • Measures in proposed regulations relating to the “transition tax” under section 965 and that may affect exempt organizations are generally limited to section 4940—the excise tax that section 501(c)(3) private foundations pay on their net investment income.

Read TaxNewsFlash-Exempt Organizations

Trade & Customs

  • The U.S. Trade Representative issued a release concerning an increase of the 10% tariffs to 25% on certain imports from China.
  • U.S. Customs and Border Protection (CBP) announced changes to the user fee schedule, effective 1 October 2018. 
  • The U.S. Treasury Department, Office of Foreign Assets Control (OFAC), released a new general license related to transactions with Ukraine and Russia.
  • U.S. CBP updated the guidelines with respect to civil penalties imposed or mitigated for a failure to comply with U.S. foreign trade regulations.

Read TaxNewsFlash-Trade & Customs

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