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KPMG’s Week in Tax: 5 - 9 February 2018

KPMG’s Week in Tax: 5 - 9 February 2018

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


Related content

New tax law in the United States

KPMG LLP prepared a report about the new tax law in the United States. The report includes expanded discussions, analysis, and observations about provisions of the new tax law. 


Transfer Pricing and BEPS

  • OECD: Additional guidance on implementation of country-by-country (CbC) reporting under base erosion and profit shifting (BEPS) Action 13 addresses two specific issues: (1) the definition of total consolidated group revenue; and (2) whether non-compliance with the confidentiality, appropriate use, and consistency conditions constitutes systemic failure.
  • Poland: The Minister of Finance issued a general interpretation of tax law provisions regarding the requirements to prepare documentation of transactions concluded between related parties—that is, transfer pricing documentation.
  • Malaysia: The Inland Revenue Board amended the rules that apply with respect to the advance pricing arrangement (APA) regime, and revised the mutual agreement procedure (MAP) guidelines.
  • Costa Rica: Certain multinational enterprises (MNEs)—in general, those with an annual consolidated group revenue of €750 million or more (or an equivalent amount in the local currency)—must file CbC reports with the Costa Rican tax administration by 31 December 2018.


Read TaxNewsFlash-Transfer Pricing


  • Botswana: Tax measures included in the 2018-2019 budget concern a tax administration law draft, transfer pricing rules, and money laundering issues.
  • Nigeria: For purposes of a tax amnesty program, a “fact sheet” was provided.
  • South Africa: The 2018 budget could propose new taxes or tax rate increases.
  • South Africa: A second draft of a carbon tax bill generally follows the first version, but reflects a few changes that take into account certain public comments.


Read TaxNewsFlash-Africa


  • Canada: Not-for-profits in British Columbia must transition to a new online filing system by 28 November 2018 to comply with the province’s new Societies Act.
  • Canada: The prescribed interest rate was provided for the second quarter of 2018 for purposes of determining the deemed interest income inclusion from a pertinent loan or indebtedness (PLOI).
  • Canada: The Finance Department released draft legislation and then details of a related regulatory framework that would apply to any province or territory that does not implement a carbon pricing system before 2019 if that system does not satisfy federal standards.


Read TaxNewsFlash-Americas

Asia Pacific

  • Australia: The Australian Taxation Office (ATO) released a draft practical compliance guide under the diverted profits tax.
  • Philippines: Employees of regional headquarters and regional operating headquarters of multinational companies who previously benefited from preferential tax treatment prior to 2018 are now subject to regular income tax rates.


Read TaxNewsFlash-Asia Pacific


  • Germany: The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion finding that the German participation exemption regime as applicable to dividends originating in third countries was contrary to the free movement of capital. 
  • Italy: The Budget Law 2018 includes measures affecting high net-worth individuals—measures such as the tax treatment of capital gains and dividends from qualifying shareholdings, the step-up regime for land and shares, tax amnesty for cross-border workers, changes to the rules for permanent establishment, dividends from tax havens, and a new due date of 31 October for filing individual income tax returns.
  • Netherlands: A draft decree provides definitions of who is an “ultimate beneficial owner” (UBO) and clarifies the categories of persons regarded as the UBO for purposes of the UBO register. A bill is expected to be presented to the Lower House in the coming months.
  • Sweden: New gambling regulations were proposed to regulate the gaming sector.


Read TaxNewsFlash-Europe


  • Cayman Islands: An industry advisory notice contains the updated list of participating jurisdictions and reportable jurisdictions.
  • Hong Kong: An ordinance makes technical amendments to certain provisions on the automatic exchange of financial account information (AEOI), so as to align the provisions with the common reporting standards (CRS) promulgated by the OECD.
  • Japan: An updated version of “frequently asked questions” (FAQs) relates to the international tax reporting of non-residents under the CRS regime.
  • India: Proposals in Finance Bill 2018 would amend the penalties for late filing of certain reports, including the FATCA-CRS (common reporting standard) return (Form 61B).
  • Liechtenstein: Additional specifications relate to the FATCA XML schema V2.0 for financial institutions, effective 1 January 2017.
  • Singapore: A new “public key” was issued for preparing a FATCA reporting packet. 


Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The IRS issued an update to its priority guidance plan for the second quarter of 2018. The update includes measures to implement items enacted under the new tax law (Pub. L. No. 115-97).
  • The White House announced the president intends to nominate Charles Rettig to be the next IRS Commissioner.
  • Notice 2018-17 expands certain low-income housing credit relief relating to the hurricane damage in Puerto Rico.
  • Guidance issued in Rev. Proc. 2018-16 reflects implementation of the qualified opportunity zone measures contained in the new tax law.
  • The second quarter update to the 2017–2018 priority guidance plan includes plans for future guidance for implementing certain measures under the new tax law (Pub. L. No. 115-97)
  • The IRS made changes to Form SS-4 that specifically affect eligible entities requesting an employer identification number (EIN) solely for purposes of filing Form 8832, Entity Classification Election, pursuant to the “check-the-box” regulations.
  • The IRS released revised instructions (Rev. December 2017) for filing Form 7004 and the application for an automatic extension of time to file certain tax returns. 
  • Rev. Proc. 2018-14 extends the time under a “safe harbor” that allows individual taxpayers to pay to repair damage to their personal residences resulting from deteriorating concrete foundations caused by the presence of pyrrhotite.
  • The IRS announced the new tax law (Pub. L. No. 115-97) does not affect the tax year 2018 dollar limitations for retirement plans, as previously announced in October 2017.
  • Related companies will be aggregated to determine whether the base erosion and anti-abuse tax (BEAT) measures from the new tax law apply. There are new reporting requirements.
  • The governor of Missouri’s tax reform plan would: (1) reduce the individual (personal) income tax rate; (2) reduce the corporate income tax rate from 6.25% to 4.25%; (3) require all corporate taxpayers to use single-sales factor apportionment; and (4) eliminate certain tax breaks and close certain “loopholes” including the current 2% discount that is allowed when vendors timely file their sales and use tax returns or employers timely file and pay their withholding taxes. 
  • The New York Department of Taxation and Finance issued guidance providing that non-transplantable human tissue transferred to medical facilities and laboratories for use in medical research and training was not subject to sales tax.
  • The Pennsylvania Secretary of Revenue issued guidance that implements a tax legislative change providing for an enhanced percentage of net operating loss (NOL) limitation for future tax years—35% for tax year 2018 and 40% for tax year 2019 and beyond. 
  • A tax amnesty program in Texas will run from 1 May 2018 through 29 June 2018.


Read TaxNewsFlash-United States


  • A budget bill includes measures that extend “tax extenders” and includes other tax measures.
  • The Joint Committee on Taxation (JCT) issued a report that provides a summary of the federal tax system as in effect for 2018.


Read TaxNewsFlash-Legislative Updates

Trade & Customs

  • A company headquartered in Tennessee agreed to pay $500,000 to resolve allegations that it violated the False Claims Act by making false statements on customs declarations in an effort to avoid paying antidumping duties on wooden bedroom furniture imported from China.


Read TaxNewsFlash-Trade & Customs


  • The IRS posted the 2017 instructions for Form 1120-C, U.S. Income Tax Return for Cooperative Associations.


Read TaxNewsFlash-Cooperatives

Exempt Organizations

  • Rev. Proc. 2018-15 provides that new applications for recognition of exemption will not be required of domestic section 501(c) organizations that change their legal form or place of organization.
  • Certain guidance projects listed in the second quarter update to the 2017-2018 priority guidance plan specifically concern exempt organizations. 


Read TaxNewsFlash-Exempt Organizations

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