KPMG’s Week in Tax: 1 - 5 January 2018 | KPMG | ZA
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KPMG’s Week in Tax: 1 - 5 January 2018

KPMG’s Week in Tax: 1 - 5 January 2018

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

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Americas

  • Argentina: Comprehensive tax reform has been enacted, and includes changes concerning the corporate income tax rates, dividend withholding tax, taxation of certain financial investments, indirect capital gains taxation, thin capitalization rules, the definition of a permanent establishment, transfer pricing, fiscal transparency rules, value added tax (VAT) on digital services, refund of VAT credit balances, revaluation of assets, and social security contributions, among others.
  • Canada: Corporations or other organizations may need to reflect certain 2017 income tax rate and other changes in their year-end financial statements under International Financial Reporting Standards (IFRS), Accounting Standards for Private Enterprises (ASPE) or U.S. generally accepted accounting principles (U.S. GAAP).
  • Canada: The deadline for taxpayers to access the current voluntary disclosures program has been extended to 28 February 2018, and other changes to the program will be effective 1 March 2018.

Read TaxNewsFlash-Americas

Transfer Pricing and BEPS

  • Argentina: As part of the comprehensive tax reform, there are new rules concerning transfer pricing.
  • EU: The Court of Justice of the European Union (CJEU) issued a judgment concerning retroactive transfer pricing adjustments and implications for the customs valuation of goods imported into the European Union. The CJEU found that if the initial transfer price could be subject to retroactive adjustments, it cannot be used for customs valuation purposes.
  • Hong Kong: A bill proposes to introduce a mandatory transfer pricing regime and anti-base erosion and profit shifting (BEPS) changes into Hong Kong tax law. The introduction of mandatory documentation requirements is based on the three-tiered approach of country-by-country (CbC) reporting, Master file, and Local file measures.

In case you missed it, the following item was released over the holidays:

  • China: China’s tax authority issued an announcement clarifying that certain provisions of CbC reporting will not apply for the CbC report for 2016.

Read TaxNewsFlash-Transfer Pricing

Asia Pacific

  • Taiwan: The Ministry of Finance released rules for the income tax treatment of revenue received by foreign e-services providers. Similar to the value added tax (VAT) regime, the income tax regime focuses on the revenue derived by foreign e-services providers from e-services provided to onshore Taiwan customers.
  • Hong Kong: A new two-tiered profits tax rate regime was introduced in Hong Kong through a “profits tax bill” that aims to maintain a competitive taxation system to promote economic development while maintaining a simple and low tax rate regime.

Read TaxNewsFlash-Asia Pacific

Europe

  • Italy: Contrary to earlier plans for an increase in the VAT rate, the rate remains the same. There is no VAT rate increase in 2018. Other VAT measures, however, are enacted and some are effective 1 January 2018.
    In case you missed it, the following items were released over the holidays:
  • Latvia: Tax reform measures, including changes to the corporate income tax and individual (personal) income tax rates, generally have an effective date of 1 January 2018.
  • Serbia: The Serbian Parliament approved amendments to the corporate income tax, VAT, and individual (personal) income tax laws, generally effective 1 January 2018.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Germany: The central tax office (BZSt) released a newsletter providing information to foreign institutions and foreign service providers.
  • Isle of Man: The tax authority updated a version of the guidance notes for effective implementation of the common reporting standard (CRS). The guidance aims to help financial institutions determine their obligations under the CRS regime.
  • Netherlands: The Dutch tax administration issued a manual for banks and investment products that provides guidance to financial institutions—under the FATCA and CRS regimes—on how to report information relating to bank and investment products to the Dutch tax authorities.
  • UK: HM Revenue & Customs issued updates to the guidance for automatic exchange of financial account information under the FATCA and CRS regimes.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The “oil spill” excise tax imposed on crude oil and imported petroleum products under section 4611 expired at the end of 2017. 
  • The two-year moratorium suspending the medical device excise tax has expired. Thus, absent congressional action, the first semi-monthly deposit of the 2.3% excise tax on sales of taxable medical devices by manufacturers and importers will be due January 29, 2018, and the first return for the medical device excise tax—filed on Form 720, Quarterly Federal Excise Tax Return—will be due April 30, 2018.
  • The U.S. Tax Court issued an opinion holding that the six-year statute of limitations period, expanded in 2010 with respect to reporting requirements for “specified foreign financial assets,” is effective only for tax years to which the reporting requirement is applicable.
  • The IRS released a “practice unit” titled: Substantial contribution test for CFC manufacturing exception.

In case you missed it, the following items were released over the holidays:

  • Notice 2018-08 states the IRS and Treasury Department are suspending the application of withholding measures under new Code section 1446(f) in the case of a disposition of certain publicly traded partnership interests.
  • Notice 2018-07 provides guidance for computing the “transition tax” on untaxed foreign earnings of foreign subsidiaries of U.S. companies that are deemed to be repatriated pursuant to new Code section 965. The transition tax generally may be paid in installments over an eight-year period.
  • Certain mandatory repatriation measures in the new tax law may affect insurers.
  • Final regulations set forth rules and procedures for electing out of the centralized partnership audit regime.
  • Six “annual revenue procedures” for 2018 were released by the IRS.

Read TaxNewsFlash-United States

<p>© 2018 KPMG Services (Pty) Limited, a South Africa private company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.</p> <p>KPMG International Cooperative (“KPMG International”) is a Swiss entity. &nbsp;Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.</p>

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