KPMG’s Week in Tax: 11 - 15 September 2017 - KPMG Luxembourg
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KPMG’s Week in Tax: 11 - 15 September 2017

KPMG’s Week in Tax: 11 - 15 September 2017

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


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Transfer Pricing and BEPS

  • Lithuania: Country-by-country (CbC) rules were approved and released by the tax administration.
  • Spain: A new form for reporting related-party transactions and transactions involving parties located in countries or territories identified as “tax havens” was added to the reporting requirements for corporate taxpayers. Form 232 must be used for tax periods beginning as of 1 January 2016.
  • Ireland: A government report provides recommendations for changes to broaden the scope of Ireland’s transfer pricing regime as well as changes to the tax regime for intangible assets.


Read TaxNewsFlash-Transfer Pricing


  • Czech Republic: An amendment to the value added tax (VAT) law accelerates the process of terminating VAT group registrations. 
  • Czech Republic: The Supreme Administrative Court addressed measures (as in effect until the end of 2014) concerning the treatment of non-deductible expenses with “directly related revenue.” In this case, the court held expenses arising from the write-off of receivables originally treated as non-deductible could be treated as deductible up to the amount of the received insurance settlement.
  • EU: The Court of Justice of the European Union held that the phrase “income from debt-claims with participation in profits” must be interpreted as excluding income from certificates in a case concerning the taxation of interest from registered certificates purchased by an Austrian company from a German bank.
  • Ireland: A government report includes recommendations for changes to Ireland’s corporation tax regime, but not any recommendations for changes to the 12.5% rate of corporation tax.
  • Romania: Guidance concerning the exemption from income tax of salary paid to employees conducting research and development (R&D) and innovation activities was issued to reflect changes to the tax law.
  • Belgium: The rate for the notional interest deduction that applies for assessment year 2019 will be 0.746% (subject to official confirmation).
  • EU: A reminder—the deadline for filing VAT refund claims for transactions in EU Member States is 30 September 2017.
  • France: The CJEU issued a judgment concerning an exemption, in France, from withholding tax on dividend distributions by a resident subsidiary to its parent company located in the EU that, in turn was controlled by shareholders in third countries. France had denied the exemption from withholding tax on the grounds of preventing tax evasion or abuse, but the CJEU held that the French rules were contrary to provisions of the Parent-Subsidiary Directive and the EU freedom of establishment.
  • Italy: A decree re-defines the anti-avoidance rules that apply with respect to the “allowance for corporate equity” with an aim of preventing duplication of the tax benefit within a group of enterprises (in particular, when intra-group transactions involve non-residents) and thus trigger a decrease in the amount of the allowance that is available as a reduction applied against taxable net income.


Read TaxNewsFlash-Europe


  • Nigeria: The Central Bank of Nigeria issued guidance on deploying an electronic certificate of capital importation platform, effective 11 September 2017.


Read TaxNewsFlash-Africa


  • Canada: A new tax incentive under a “patent box” regime in Saskatchewan is now accepting applications for taxable income earned from the commercialization of intellectual property.
  • Canada: Proposals would subject certain investment limited partnership distributions to goods and services tax / harmonized sales tax (GST/HST) when paid or when they became payable to general partners, with a proposed effective date of 8 September 2017.
  • Canada: The 2017 budget in British Columbia 2017 includes rate increases for the individual (personal) and corporate income taxes.
  • Mexico: Transactions with entities that allegedly engage in “nonexistent transactions” may have tax implications for companies.


Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: ATO guidelines provide a “safe harbor” rate of 18% for customer-owned banking institutions to recover GST in certain situations.
  • India: A tribunal held that a compounding fee paid to a municipal corporation for regularising a building plan was allowable as a deduction because the project was completed and the deviations were within the limits for which the municipal corporation had approved the project.
  • India: The Delhi High Court held that a non-compete fee received by the taxpayer was not taxable because it was in the nature of capital receipt.
  • India: A tribunal held that foreign taxes and Medicare, while offering overseas salary to tax in India, would not constitute taxable salary in India.
  • India: A tribunal held, in a case when the taxpayer created a provision for lease rent and did not withhold tax at the source, that the tax withholding provisions were not applicable when there is no claim of expenditure made by the taxpayer and the taxpayer made “disallowance” on its own.
  • India: Instructions were given to field offices of the Employees’ Provident Fund Organisation to process provident fund / pension withdrawals for those Japanese expatriates who left India before 1 October 2016.
  • New Zealand: Tax positions of the political parties were presented ahead of the 23 September election.
  • Vietnam: A proposal for draft legislation would include amendments to the corporate income tax, the individual (personal) income tax, the VAT, the special consumption tax, the foreign contractor tax, and the natural resources tax.
  • Taiwan: Proposed tax reform changes—expected to be submitted to the legislature in October 2017—would adjust the tax rate structure for both individual and corporate income taxpayers; reduce the tax burden for domestic investors on dividend income; reduce the individual income tax rate; raise the corporate income tax rate; reduce the surtax rate; and implement a new passthrough regime for the taxation of sole proprietorships and partnerships, among other items.


Read TaxNewsFlash-Asia Pacific


  • OECD: Currently, there are 102 jurisdictions that have committed to implement the common reporting standard (CRS)—49 jurisdictions being committed to start exchanges in September 2017 and the other 53 jurisdiction expected to begin exchanges in September 2018.
  • Cayman Islands: The AEOI Portal was closed for reporting on 13 September 2017 because of a significant backlog of technical queries, issues, and requests. 
  • United States: The IRS released an updated version of the Foreign Account Tax Compliance Act (FATCA) International Data Exchange Service (IDES)—Publication 5190 (Rev. 04-2016).
  • Channel Islands: Guidance in Guernsey concerns the requirements for self-certification by new account holders under the CRS regime.
  • France: The tax authorities issued updates to guidance on the due diligence requirements for “low value” accounts under the CRS regime for reporting financial institutions.
  • Belgium: A portal for FATCA and CRS reporting was temporarily unavailable.


Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • NAFTA: The second round of re-negotiations of the trade agreement among Mexico, Canada, and the United States was completed.
  • United States: Customs and Border Protection (CBP) issued guidance with respect to export shipments affected by Hurricane Irma.
  • United States: CBP released a notice that requests comments—due 90 days after 12 September 2017—on identifying existing regulations that can be modified or withdrawn in order to reduce regulatory costs.


Read TaxNewsFlash-Trade & Customs

United States

  • The IRS provided tax relief relating to Hurricane Irma:
    • Individual and business taxpayers affected by the hurricane in parts of Florida, Puerto Rico, and the U.S. Virgin Islands have until 31 January 2018 to file certain individual and business tax returns and to make certain tax payments. 
    • Section 401(k) plans and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Irma and members of their families.
    • Penalties will not be imposed dyed diesel fuel is sold for use or is used on the highway in Florida (due to fuel shortages). 
  • Notice 2017-47 was re-issued to clarify that penalty relief for partnerships that filed certain untimely returns (or made untimely requests for an extension of time to file those returns)—for the first tax year that began after 31 December 2015 by the 15th day of the fourth month following the close of the tax year—also applies for real estate mortgage investment conduits (REMICs). 
  • Notice 2017-51 provides U.S. Treasury’s estimate of the annual average wellhead price per 1,000 cubic feet for all domestic natural gas, with the “reference price” for purposes of the marginal well production credit under section 45I for 2016 of $2.38 per 1,000 cubic feet. .
  • The U.S. Tax Court held that the IRS may consider the estate tax return of a predeceased spouse for purposes of determining the correct amount of the “deceased spousal unused exclusion” (DSUE) allowed the surviving spouse pursuant to section 2010(c)(2)(B).
  • The Indiana Department of Revenue determined that income from sales was not “thrown back” when the taxpayer’s subsidiary was subject to tax in foreign jurisdictions.
  • A New York administrative law judge found that web-based litigation support services provided by the taxpayer—under the law then in effect (prior to a law change in 2014)—were performed in Colorado and were properly classified as “service receipts” and not “other business receipts.”
  • A “tax amnesty” program in Virginia began 13 September 2017 and will run through 14 November 2017.


Read TaxNewsFlash-United States


  • U.S. House Speaker Paul Ryan said that an outline on tax reform legislation would be released during the week of 25 September and it that would reflect the consensus of the administration and congressional tax-writers on tax reform.
  • The U.S. Senate Finance Committee announced that a hearing on business tax reform was scheduled for Tuesday, 19 September 2017. The Finance Committee held a hearing on individual tax reform this week.


Read TaxNewsFlash-Tax Reform


  • The IRS posted a draft version of instructions for Form 1099-PATR, Taxable Distributions Received From Cooperatives, proposed for reporting information for 2018.


Read TaxNewsFlash-Cooperatives

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