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KPMG’s Week in Tax: 21 - 25 May 2018

KPMG’s Week in Tax: 21 - 25 May 2018

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


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  • Czech Republic: A draft proposal was released with measures to amend the value added tax (VAT) law to address the treatment of payments made by debit or credit cards and the electronic reporting of sales, and to reduce the rate of VAT for certain goods and services to 10%.
  • Czech Republic: The Supreme Administrative Court held that taxpayer compliance with certain formalities under the income tax law is a prerequisite for claiming research and development (R&D) allowances. If a taxpayer fails to meet these conditions, the R&D claims may be challenged by the tax administrator.
  • Germany: The Court of Justice of the European Union (CJEU) issued a judgment concerning the ability of a business to make a correction in order to assert a right (not yet lapsed) to deduct input value added tax (VAT) when the correction relates to a period of time that has already been audited.
  • Austria: Corporate and other legal entities incorporated or managed in Austria must register their “ultimate beneficial owners” with a newly established Austrian ultimate beneficial owner registry no later than 1 June 2018.
  • Bulgaria: A new law provides rules for an electronic system for creating, storing, and exchanging electronic documents between employers and employees. 
  • Serbia: Legislation revises the rules and requirements concerning foreign currency and transactions conducted with foreign currency.
  • Italy: Guidance by the tax authorities addresses the definition of permanent establishment, in light of amendments made by the budget law of 2018.


Read TaxNewsFlash-Europe

Transfer Pricing and BEPS

  • OECD: The first peer reviews of the country-by-country (CbC) reporting initiative were released, with the CbC reporting exchanges scheduled to begin in June 2018. 


Read TaxNewsFlash


  • Nigeria: Legislation to regulate businesses, minimize the compliance burden of small and medium enterprises (SMEs), enhance transparency and shareholder engagement, and promote a “friendly business climate” in Nigeria is pending.
  • South Africa: The South African Revenue Service published a draft notice concerning individuals (natural persons) who are required to submit income tax returns for the 2018 year of assessment, as well as the dates on which those returns are due.


Read TaxNewsFlash-Africa


  • Canada: Legislation in Quebec introduces an additional capital cost allowance of 35% for certain manufacturing, processing, or computer equipment acquired after 26 March 2017.
  • Canada: Legislation in British Columbia includes an amendment aligning the province’s rules for determining a corporation’s specified partnership income with federal changes to the definition.
  • Chile: Under new guidelines concerning VAT reporting and payment on purchases of certain goods or services, taxpayers that qualify as withholding agents and that purchase goods or services must remit the VAT related to the purchase. The measures are effective 1 August 2018.


Read TaxNewsFlash-Americas

Asia Pacific

  • India: The Supreme Court of India addressed when legislative changes apply retroactively in a case concerning an amount of withheld tax remitted to the government after the end of the financial year but before the due date for filing the tax return.
  • India: The Supreme Court issued a decision in a case concerning the period for measuring the start of a 10-year tax benefit available under a provision of Indian tax law. 
  • India: A tribunal held that payments for marketing and distribution rights of an “adwords” program were taxable as royalty income. 
  • Turkey: A “tax amnesty” law allows for certain penalty relief on the repatriation of capital and certain receivables. Applications are due before 31 July 2018. The tax amnesty is available for many types of taxes and for customs duties, administrative penalties, interest, and late-payment charges.


Read TaxNewsFlash-Asia Pacific


  • Netherlands: New guidance focuses on a situation when the U.S. taxpayer identification number (TIN) is missing from multiple account holders of a single account.
  • Australia: A “small reporter tool” is available for use with respect to the common reporting standard (CRS) regime. The small reporter tool allows reporting financial institutions with less than 50 reportable accounts to convert information entered into a spreadsheet to the required XML format.
  • Australia: The Australian Taxation Office updated CRS return reporting rules regarding file size.
  • Pakistan: Guidance concerning CRS is intended to provide practical assistance to financial institutions that fall within the scope of requirements of the tax rules for the CRS regime.
  • Belgium: An online portal allows corrections to CRS returns for reporting year 2016.
  • United Kingdom: HM Revenue & Customs updated an automatic exchange of information (AEOI) user guide under the FATCA and CRS regimes.


Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • Notice 2018-54 states that future regulations will be issued to address state and local tax deductions—specifically because some state legislatures are considering (or have already adopted) legislative proposals that would allow taxpayers to make transfers to funds controlled by state or local governments, or other transferees specified by the state, in exchange for credits against the state or local taxes that the taxpayer is required to pay. 
  • The IRS announced the release of a new five-year strategic plan.
  • The U.S. Court of Appeals for the District of Columbia Circuit affirmed a U.S. Tax Court’s decision that a partnership comprising of single-member LLCs did not qualify for the “small partnership” exception from the then-applicable TEFRA partnership audit proceedings.
  • Rev. Proc. 2018-34 provides indexing adjustments to provisions under section 36B concerning a refundable premium tax credit related to health insurance exchanges.
  • The U.S. Treasury’s Community Development Financial Institutions Fund (CDFI Fund) added more states and territories to the list of opportunity zone designations pursuant to measures in the new tax law enacted in December 2017.
  • The Colorado General Assembly passed legislation that would adopt market-based sourcing rules effective for income tax years beginning on or after 1 January 2019.   
  • The Massachusetts Department of Revenue issued guidance announcing penalty relief for underpayments of corporate excise tax as a result of IRC section 965, and confirming that a corporation that has federal gross income attributable to section 965 must also report that income for Massachusetts corporate excise tax purposes. 
  • Legislation in Tennessee aims to “decouple” Tennessee from certain aspects of federal tax reform—specifically, the measures concerning the net interest expense deduction limitation under IRC section 163(j) and the treatment of amounts that a company receives under state and local incentives and grants under IRC section 118. 
  • The Washington Department of Revenue issued an excise tax advisory concluding that “enhanced delivery services” (also referred to as “white glove” delivery services) generally create substantial nexus for the seller.


Read TaxNewsFlash-United States

Trade & Customs

  • The U.S. Commerce Department announced it has initiated an investigation under section 232 of the Trade Expansion Act of 1962, concerning whether imports of automobiles (including SUVs, vans, and light trucks) and automotive parts into the United States threaten to impair national security.
  • The U.S. International Trade Commission launched an investigation concerning possible changes to the U.S. Generalized System of Preferences (GSP). 
  • The U.S. Commerce Department’s Bureau of Industry and Security released a notice to remind U.S. firms of the requirement to report annually information on certain contracts for the sale of defense articles or defense services exceeding $5 million in value to foreign countries (or foreign firms).
  • The U.S. Treasury Department, Office of Foreign Assets Control, issued new general licenses concerning Ukraine-related / Russia-related transactions and also published new “frequently asked questions” (FAQs) about the general licenses.
  • U.S. Customs and Border Protection issued a release on importer declarations concerning exclusions from the customs tariffs imposed under section 232 on imports of steel and aluminum into the United States.
  • The U.S. State Department and the U.S. Commerce Department issued a proposed rule concerning changes to articles that warrant export and temporary import control on the U.S. Munitions List (USML). The proposed rule concerns proposed changes to Category I (firearms, close assault weapons, and combat shotguns), Category II (guns and armament), and Category III (ammunition and ordnance).


Read TaxNewsFlash-Trade & Customs

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