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KPMG’s Week in Tax: 13 - 17 August 2018

KPMG’s Week in Tax: 13 - 17 August 2018

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


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  • Mexico: Changes to the tax law grant the tax administration the authority to make “site visits” or on-site inspections of taxpayers and use the information to presumptively determine a taxpayer’s gross income.
  • Mexico: There are potential tax benefits available for those holding clean energy certificates—intended to promote investment in certain types of energy.
  • Canada: Draft guidance was released on the carbon tax framework for Manitoba, with reporting required beginning 1 January 2019.

Read TaxNewsFlash-Americas


  • Sweden: A proposal would affect the tax rules that apply with respect to the taxation of temporary agency work performed in Sweden, specifically introducing the “economic employer concept” into Swedish tax law.
  • Austria: The Austrian Federal Finance Court in separate cases: (1) decided that a sub-subsidiary located in the European Union, and held by a foreign member of the corporate group, cannot become a member of the Austrian tax group; and (2) denied recognition of final losses as qualifying as a tax-deductible expense if the participation in the subsidiary is sold at a loss. These and other court and administrative actions are summarized in a report prepared by the KPMG member firm in Austria.

Read TaxNewsFlash-Europe


  • Taiwan: Updated “frequently asked questions” (FAQs) were issued related to common reporting standard (CRS) implementation and due diligence procedures.

Read TaxNewsFlash-FATCA / IGA / CRS

Transfer Pricing

  • United States: The U.S. Court of Appeals for the Eighth Circuit vacated an opinion of the U.S. Tax Court concerning the transfer pricing method for the determination of income from intercompany licenses for intangible property required to manufacture certain medical devices and leads. The Eighth Circuit remanded the case to the Tax Court for further development of the findings.

Read TaxNewsFlash-Transfer Pricing

United States

  • The IRS issued several releases reminding individual taxpayers of tax law changes and of the need to verify and possibly adjust their income tax withholdings for 2018. 
  • Republicans on the U.S. Senate Finance Committee wrote to the Treasury Secretary and acting IRS Commissioner, noting that technical corrections had been identified with respect to three provisions of the new tax law—qualified improvement property cost recovery, net operating loss (NOL) deduction, and sexual misconduct settlement deduction—and requested guidance that was consistent with congressional intent.
  • Rev. Proc. 2018-42 extends the deadline for submitting on-cycle applications for opinion letters for pre-approved defined contribution plans for the third six-year remedial amendment cycle to 31 December 2018 (from 1 October 2018). 
  • An interim final rule announces updates to U.S. regulations to reflect the authority to refund customs duties, excise taxes, fees, or interest imposed on certain distilled spirits, wine, and beer.
  • The U.S. Court of Appeals for the D.C. Circuit affirmed a decision of the U.S. Tax Court that had upheld the IRS’s disallowance of credits under then-applicable section 45K relating to certain landfill gas operations. This particular section 45K credit expired in 2007.
  • The U.S. Court of Appeals for the Fifth Circuit affirmed a determination of the U.S. Tax Court, holding in part that a conservation easement did not satisfy the perpetuity requirement and, thus, that the donation of the conservation easement did not qualify for a charitable deduction.
  • The U.S. Court of Appeals for the Ninth Circuit—in a case of “first impression”—affirmed a federal district court’s decision for the government in its action to collect federal excise tax on tobacco products from a Native American tribe. 
  • Proposed regulations were released for purposes of implementing the centralized partnership audit regime, and to reflect certain legislative changes. Earlier proposed regulations were withdrawn.
  • U.S. states—including Arkansas, California, Louisiana, Maine, Maryland, Mississippi, North Carolina, South Dakota, and Wyoming—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 Indiana Department of State Revenue denied a hospital’s claim for refund of sales and use tax because the hospital used a “third-party manager” company for certain administrative duties including purchases of tax-exempt equipment. The hospital’s refund claim was denied on the basis that the hospital lacked standing—that is, the sales invoice stated that the equipment was sold to the third-party management company and not to the hospital.
  • The Wyoming Supreme Court held that certain in-home wine tasting events (hosted by independent contractors of an out-of-state vineyard) constituted the sale of alcohol under Wyoming’s alcoholic beverage law.

Read TaxNewsFlash-United States

Trade & Customs

  • U.S. Customs and Border Protection (CBP) announced import restrictions on certain fish and fish products from Mexico. 
  • The U.S. Trade Representative announced the initiation of a country practice review of the eligibility of Turkey for benefits under the Generalized System of Preferences (GSP) program. 
  • The U.S. Commerce Department issued its findings in antidumping duty (AD) and countervailing duty (CVD) investigations of imports of stainless steel flanges from India.
  • A CBP release directs importers of iron and steel products from Turkey to use a classification under the Harmonized Tariff Schedule of the United States (HTSUS) that reflects additional customs duty at a rate of 50% on these imports.

Read TaxNewsFlash-Trade & Customs

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