KPMG’s Week in Tax: 15 - 19 April 2019 - KPMG Luxembourg
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KPMG’s Week in Tax: 15 - 19 April 2019

KPMG’s Week in Tax: 15 - 19 April 2019

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

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Europe

  • Netherlands: A proposal to mend the liquidation and cessation loss rules in the Dutch corporate income tax law would provide that losses in liquidation or cessation of business situations would be deductible if certain conditions are satisfied.

Read TaxNewsFlash-Europe

Asia Pacific

  • Hong Kong: The Inland Revenue Department released guidance concerning the research and development (R&D) tax incentive, providing clarification on qualifying activities and deductible expenditures.
  • New Zealand: The government rejected the Tax Working Group majority’s recommendation for capital gains taxation.
  • New Zealand: A bill that would introduce an R&D tax incentive passed its first reading in Parliament.
  • Indonesia: The Minister of Finance withdrew and revoked a regulation concerning the imposition of value added tax (VAT) on e-commerce transactions.
  • Indonesia: A regulation concerns the availability to claim foreign tax credits in Indonesia for taxes paid abroad.
  • Indonesia: The “corporate tax holiday” rules, intended to encourage investment in Indonesia, were amended.
  • Qatar: The due date for filing income tax returns by taxpayers with a financial year ended 31 December 2018 is 30 April 2019.
  • India: The Supreme Court of India upheld a decision of a tribunal finding that an Indian company (taxpayer) did not owe service tax on the salaries paid to employees deputed (assigned) by a foreign parent company to work for the taxpayer in India.

Read TaxNewsFlash-Asia Pacific

Americas

  • Mexico: A program that provides for the disclosure and resolution of unsettled income tax obligations, under what might be described as “tax amnesty,” was announced in the official gazette. The program is offered under the “money laundering” rules, and applies for tax liabilities for the period from 1 July 2013 through 31 December 2018.
  • Canada: Two bills in British Columbia—one enacting measures from the province’s budget and another introducing a new liquid natural gas (LNG) tax credit—received Royal Assent and were enacted.
  • Canada: Corporate tax measures (namely, an equity tax credit and a venture capital tax credit) in Nova Scotia’s 2019 budget were enacted.
  • Canada:  The 2019 budget bill in Ontario, that introduces a childcare credit and estate tax changes, received first reading.
  • Canada: The 2019 budget bill in Saskatchewan introduces three non-refundable tax credits, and received first reading.
  • Canada: Newfoundland and Labrador’s 2019 budget did not include any changes to corporate or individual tax rates, but did extend a film tax credit.
  • Canada: News organizations in Canada may be able to benefit from a 25% refundable tax credit that would be available in 2019 for salary or wages of eligible news organizations that are primarily engaged in producing certain types of original news content.

Read TaxNewsFlash-Americas

Transfer Pricing

  • United States: One new compliance campaign of the IRS Large Business & International (LB&I) division concerns captive service providers and the payment of arm’s length prices.
  • United States: A report by KPMG examines related-party services that meet certain eligibility requirements for the use of the services cost method (SCM), and whether U.S. taxpayers could qualify for an exception to the base erosion and anti-abuse tax (BEAT).

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Australia: Reporting financial institutions that are unable to file a common reporting standard (CRS) report by 31 July 2019 can request an extension of time through the Australian Taxation Office (ATO) business and tax agents portal.
  • Cayman Islands: The deadline for completing the 2018 FATCA and CRS reporting obligations has been extended to 31 July 2019.
  • Cayman Islands: An updated version (v5.0) of the automatic exchange of information (AEOI) portal user guide was issued to help financial institutions with access to and use of the AEOI portal as they comply with certain notification (registration) and reporting obligations under the FATCA and CRS regimes.
  • Singapore: A paper (hardcopy) “nil return” for FATCA purposes is available for the reporting year 2018.
  • Channel Islands (Jersey): The government of Jersey issued an updated version (v3.0) of the CRS practical guidance to assist Jersey financial institutions preparing reports under CRS (effective 5 April 2019).
  • Switzerland: The Swiss federal tax administration is planning to conduct AEOI audits involving Swiss financial institutions.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • The U.S. State Department released a final rule amending the International Traffic in Arms Regulations (ITAR) by revising the licensing exemption for transfers made by or for an agency of the U.S. government.
  • The European Commission launched a public consultation with regard to a preliminary list of products imported from the United States, for which the European Union may take countermeasures under an ongoing aircraft-related dispute at the World Trade Organization (WTO).
  • The Office of the U.S. Trade Representative (USTR) released a notice providing a list of imports from China that are exempt from the 25% additional customs duty pursuant to the action relating to Section 301 of the Trade Act of 1974.
  • The U.S. Commerce Department announced an “affirmative preliminary determination” in an antidumping duty (AD) investigation of imports of certain types of steel wheels from China.

Read TaxNewsFlash-Trade & Customs

United States

  • Proposed regulations reflect statutory changes from the U.S. tax legislation (2017) that allow nonresident aliens to be potential current beneficiaries of an electing small business trust (ESBT). Under the proposed regulations, the income of an S corporation will continue to be subject to U.S. federal income tax when a nonresident alien is a deemed owner of a grantor trust that elects to be an ESBT.
  • The IRS Large Business & International (LB&I) division added three new compliance campaigns concerning captive service providers, offshore private banking, and loose-filed Forms 5471.
  • Proposed regulations and a notice of withdrawal of earlier proposed regulations were released as guidance concerning investments in qualified opportunity funds under section 1400Z-2.
  • Corrections and correcting amendments were made to the final regulations under section 199A relating to the qualifying business income deduction.
  • The U.S. Court of Appeals for the Ninth Circuit held that regulations under section 7502 provide that the taxpayers’ exclusive means to prove delivery of a timely mailed return to the IRS is a registered mail receipt, rendering the common-law mailbox rule unavailable.
  • Rev. Rul. 2019-10 provides information for determining the value of noncommercial flights on employer-provided aircraft for the first half of 2019.
  • A notice provides the reference price under section 45K(d)(2)(C) for calendar year 2018 is $61.81 with respect to determining the amount of the enhanced oil recovery credit, the marginal well production credit for qualified crude oil production, and the percentage depletion for oil and natural gas produced from marginal properties.
  • More states—Arkansas, Idaho, and Indiana—responded to a U.S. Supreme Court case (Wayfair) and addressed the state sales tax implications of remote or online sales. An increasing number of states are imposing a tax collection obligation on “marketplace facilitators” or “marketplace providers.”
  • Newly enacted legislation in Arkansas reduces the corporate income tax rate; requires corporations, including financial institutions, to use single-sales factor apportionment; and extends the net operating loss (NOL) carryforward period.
  • The Indiana Department of Revenue ruled that a taxpayer making remote sales of food products (exempt goods) to customers in Indiana was required to register with the state and then file periodic “zero” returns.
  • A Massachusetts appellate tax board vacated its prior position in a case involving a refund claim filed by a software provider that had sold software to a company headquartered in Massachusetts. The software was used in multiple locations, and a refund of sales tax was warranted under the “multiple points of use” exemption. 

Read TaxNewsFlash-United States

Indirect Tax

  • Germany: A judgment of the Court of Justice of the European Union involving a Belgian company (taxpayer) has implications with regards to the value added tax (VAT) treatment of sale and lease-back transactions.
  • Canada: Newfoundland and Labrador’s 2019 budget would repeal the province’s 13% retail sales tax payable on automobile insurance premiums.
  • India: The Supreme Court of India upheld a tribunal’s decision that an Indian company (taxpayer) did not owe service tax on the salaries paid to employees deputed (assigned) by a foreign parent company to work for the taxpayer in India.
  • Indonesia: A regulation was revoked a regulation concerning the imposition of VAT on e-commerce transactions.
  • United States: More states responded to the state sales tax implications of remote or online sales. An increasing number of states are imposing a tax collection obligation on “marketplace facilitators” or “marketplace providers.”

Read TaxNewsFlash-Indirect Tax

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