KPMG’s Week in Tax: 1 – 5 April 2019 - KPMG Luxembourg
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KPMG’s Week in Tax: 1 – 5 April 2019

KPMG’s Week in Tax: 1 – 5 April 2019

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

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Transfer Pricing

  • Ireland: Comments were made with regard to a consultation on a new transfer pricing regime, expected to be included in the Finance Bill 2019.
  • Nigeria: Guidelines were released by the tax authority concerning the mutual agreement procedure (MAP) regime for use in resolving income tax treaty-related disputes.
  • United States: Taxpayers making advance pricing agreement (APA) submissions may be asked to use the new “functional cost diagnostic model”—a taxpayer information data analytics tool.


Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • OECD: A series of documents were released relating to the common reporting standard (CRS).
  • Hong Kong: Guidance concerning the CRS regime includes the launch of a new webpage for mandatory provident fund schemes and occupational retirement schemes, and a new “frequently asked question” (FAQ) about the due diligence procedures of financial institution in verifying the authenticity of a private investment company declaring itself a “passive non-financial entity (NFE)” in the self-certification.
  • Italy: The FATCA and CRS reporting deadlines for FY 2018 were extended to 20 June 2019 (from 30 April 2019).
  • Liechtenstein: The tax authority issued guidelines for independent third-party auditors to follow in monitoring FATCA and CRS compliance by financial institutions.


Read TaxNewsFlash-FATCA / IGA / CRS

Africa

  • Nigeria: MAP guidelines were released.
  • Namibia: The budget for 2019-2020 includes revenue raising measures as well as tax policy and administration reforms, including proposals to introduce a 10% tax on dividends paid to residents, and to disallow deductions for the amount of fees and interest paid to non-residents who are not subject to withholding tax.


Read TaxNewsFlash-Africa

Asia Pacific

  • Thailand: Royal Decrees would cancel certain tax incentives under the regional operating headquarters (2010) regime, the international headquarters regime (including Treasury Centres), and the international trade center regime. The incentives under these regimes will no longer be available effective 1 June 2019 as corporate income tax incentives, and effective 1 January 2020 as individual income tax incentives.
  • Australia: The Full Federal Court issued a decision concerning the taxation of income of a corporate limited partnership.
  • Australia: The 2019-2020 federal budget includes tax measures that have implications for Australian businesses, industries, and sectors.
  • Japan: The 2019 tax reform bills were passed by the National Diet.
  • New Zealand: Accounting for the research and development (R&D) tax incentive needs to reflect two accounting standards.


Read TaxNewsFlash-Asia Pacific

Europe

  • Serbia: There are new income tax treaties with Indonesia and San Marino, and seven income tax treaties are amended to reflect application of the multilateral instrument (MLI) or convention for implementing tax treaty-related measures to prevent base erosion and profit shifting (BEPS).
  • Switzerland: A report compares corporate and income tax rates in all 26 cantons.
  • Italy: A bill would replace and expand the existing value added tax (VAT) rules that currently apply to electronic marketplaces for certain types of electronic goods. The proposed measures would require additional information reporting about the sales for all types of goods.
  • Italy: Guidance is provided for various Italian industries and sectors in the event of a “no-deal” Brexit, and includes specific measures concerning VAT.
  • Slovakia: The European Commission (EC) opened an investigation into a tax on the food retail sector in Slovakia.
  • UK: The EC found the UK controlled foreign company (CFC) rules targeting tax avoidance were partly justified and did not constitute state aid, but that the tax regime unduly exempted certain multinational groups from the UK regime (hence, constituting illegal state aid).
  • Ireland: Regulations provide for a central register of “beneficial ownership” of corporations


Read TaxNewsFlash-Europe

Americas

  • Canada: Finance has recognized industry concerns that the tracking arrangement rules (in some certain circumstances) are not intended to not cause the foreign affiliate regime to apply to investments in foreign investment funds, and has indicated that it is prepared to recommend amendments to these rules. 
  • Canada: Saskatchewan's 2019 budget does not include any new changes to the corporate or individual income tax rates, but would eliminate certain deductions used to calculate the potash production tax, and would provide new non-refundable provincial tax credits for volunteer firefighters and volunteer emergency medical first responders. The budget does not include any changes to the sales tax.
  • Barbados: Several corporate tax changes were proposed in the 2019 budget including thin-capitalization rules, repeal of the deduction for management fees paid to non-residents, and new transfer pricing rules (details are not provided).


Read TaxNewsFlash-Americas

United States

  • Proposed regulations relating to application of the domestic production activities deduction for specified agricultural or horticultural cooperatives are pending OMB (OIRA) review.
  • Rev. Proc. 2019-17 concerns the general public use requirements for qualified residential rental projects financed with tax-exempt bonds under section 142(d).
  • Concerning the Craft Beverage Modernization and Tax Reform Act of 2017 (CBMA) provisions that provide reduced tax rates or allow tax credits with respect to certain alcoholic beverages, U.S. Customs and Border Protection issued guidance describing the procedures and requirements for implementing these tax measures.
  • The U.S. Court of Appeals for the Second Circuit, in a case of “first impression,” reversed and remanded a decision to the U.S. Tax Court with regard to the Tax Court’s jurisdiction concerning overpayments of tax pursuant to section 6512(b)(3). The taxpayer had been granted a six-month extension of time to file an income tax return, but did not file a tax return before the IRS mailed a notice of deficiency. The Second Circuit held the taxpayer was to be allowed a “look-back” period of three years under section 6512(b)(3) (and not a look-back of two years).
  • Taxpayers making advance pricing agreement (APA) submissions may be asked to use the new “functional cost diagnostic model"—a taxpayer information data analytics tool.
  • A KPMG report examines certain provisions in the U.S. tax law (Pub. L. No. 115-97) concerning tax accounting and compensation and benefits.
  • More states—California, Kentucky, New York, North Dakota, and Virginia—responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).
  • In Kentucky, a FAQ indicates that the bright-line sales and use tax economic nexus thresholds (sales of 200 or more sales or sales of $100,000) do not apply to Kentucky’s corporate income tax or limited liability entity tax. A company that has any amount of sales, property, or payroll in Kentucky must file a corporate income tax or limited liability entity tax return.
  • The Oregon Tax Court determined that legislation to decouple from the section 199A deduction for qualified business income did not require a supermajority vote. The tax court reasoned that the legislation did not “levy a tax” but instead merely changed the tax base of an already existing tax. Therefore, the legislation was not subject to the three-fifths majority vote requirement.
  • A Tennessee appeals court concluded that the Department of Revenue had improperly reclassified a taxpayer’s business activities for purposes of the state business tax. The court rejected the state’s determination that all sales of the tangible personal property sold (plus the labor charges for installing the property) were to be treated as service receipts given that most of the taxpayer’s gross receipts were attributable to the sale of property.


Read TaxNewsFlash-United States

 

  • The U.S. House of Representative’s Ways and Means Committee approved two bipartisan tax bills for consideration by the full House.
    • H.R. 1994, Setting Every Community Up for Retirement Enhancement Act (SECURE) of 2019
    • H.R. 1957, Taxpayer First Act of 2019


Read TaxNewsFlash-Legislative Updates

Cooperatives

  • Proposed regulations relating to application of the domestic production activities deduction for specified agricultural or horticultural cooperatives are pending OMB (OIRA) review.


Read TaxNewsFlash-Cooperatives

Trade & Customs

  • The U.S. International Trade Commission (ITC) announced its findings in the antidumping and countervailing duty (CVD) investigations concerning large-diameter welded (LDW) pipe imported from Canada, Greece, Korea, and Turkey.
  • The U.S. Commerce Department announced the affirmative preliminary determinations in CVD investigations of imports of aluminum wire and cable from China and of imports of refillable stainless steel kegs from China.
  • U.S. Customs and Border Protection announced the procedures and requirements for implementing certain tax measures regarding imported alcoholic beverages.


Read TaxNewsFlash-Trade & Customs

Indirect Tax

  • Italy: A bill would replace and expand the existing value added tax (VAT) rules that currently apply to electronic marketplaces for certain types of electronic goods. The proposed measures would require additional information reporting about the sales for all types of goods.
  • Italy: There is VAT and other tax guidance for Italian industries and sectors in the event of a “no-deal” Brexit.
  • Namibia: The budget for 2019-2020 includes indirect tax measures.
  • United States: Guidance addresses the tax treatment of certain imports of alcoholic beverages.
  • United States: Kentucky issued guidance about the sales and use tax economic nexus thresholds for purposes of determining implications for Kentucky’s corporate income tax or limited liability entity tax.
  • United States: More states responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).


Read TaxNewsFlash-Indirect Tax

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