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KPMG’s Week in Tax: 10 – 14 June 2019

KPMG’s Week in Tax: 10 – 14 June 2019

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

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Transfer Pricing and BEPS

  • Nigeria: Companies with a 31 December year-end and required to file a transfer pricing return need to complete a filing requirement by the 30 June 2019 deadline.
  • India: The Union Cabinet approved the ratification of the multilateral convention or instrument (MLI) to implement tax treaty-related measures.
  • Bahamas: The tax authority issued a press release announcing that until the country-by-country (CbC) reporting portal is available for registration (at a date to be announced), no CbC notification is required, and no penalties will apply.
  • Singapore: Transfer pricing guidelines for commodity marketing and trading activities were released.
  • Slovakia: The OECD multilateral instrument (MLI) was ratified, and therefore affects and modifies the wording of the real estate clause in 10 income tax treaties to which Slovakia is a party.
  • United States: A discussion examines a June 2019 decision of the Ninth Circuit that upheld the validity of a Treasury regulation with regard to cost sharing arrangements.

Read TaxNewsFlash-Transfer Pricing and TaxNewsFlash-BEPS

FATCA / IGA / CRS

  • South Korea: Revised regulations for implementing the automatic exchange of financial information (AEOI) under the common reporting standard (CRS) regime have been issued in South Korea.
  • South Africa: The third-party data annual submissions process for the period 1 March 2018 through 28 February 2019 has closed.

Read TaxNewsFlash-FATCA / IGA / CRS

Africa

  • Mauritius: The 2019-2020 budget includes tax-related measures such as proposals for implementing or making changes to the tax rules under an innovation box regime, real estate investment trusts (REITs), and rules for controlled foreign companies (CFC).
  • Nigeria: The Lagos state tax authority announced its intention to integrate the state’s existing taxpayer identification system with the national tax identification number (TIN) system.

Read TaxNewsFlash-Africa

Americas

  • Canada: Legislation in British Columbia includes provisions that largely mirror the federal corporate “significant control” requirements. Thus, B.C. private corporations need to maintain up-to-date records reporting details about “significant individuals” (that is, individuals who meet certain ownership or control factors of the corporations).
  • Canada: Manitoba’s budget implementation legislation includes income tax measures that affect the province’s corporate income tax, tax credit regimes, general retail sales tax, and the ”split income rules.”
  • Colombia: Certain taxpayers (both individuals and legal entities) have reporting obligations for the 2018 tax year concerning transactions with third parties (including clients).
  • British Virgin Islands: A draft “economic substance code” (that is, regulations or rules) would implement and serve as supplemental guidance with regard to the “Economic Substance (Companies and Limited Partnerships) Act, 2018.” The deadline for filing the first report for legal entities conducting relevant activities is expected to be 30 June 2020.
  • Costa Rica: VAT regulations implement and provide details on certain provisions under the law including credits, rates, exemptions, taxpayer obligations, transition measures, and digital or remote sales.

Read TaxNewsFlash-Americas

Asia Pacific

  • India: The government announced a plan for transitioning to a new, simplified goods and services tax (GST) return.
  • Pakistan: The budget 2019 contains indirect taxes (sales tax) proposals.
  • New Zealand and Australia: The tax authorities of New Zealand and Australia reached an agreement for determining the tax residency of dual-resident companies. Companies can self-assess their residency to be New Zealand or Australian if certain conditions are satisfied.
  • Philippines: The Bureau of Internal Revenue set forth the administrative procedures for processing and granting claims for VAT refunds or credits. 

Read TaxNewsFlash-Asia Pacific

Europe

  • Cyprus: A “tax card” for 2019 sets forth information about the tax system in Cyprus such as listing the rates for individual (personal) income tax and corporate income tax, and information about employer's contributions, social insurance, and certain tax incentives.
  • Czech Republic: The Court of Justice of the European Union (CJEU) issued a judgment concluding that certain Czech rules with regard to refunds of VAT are contrary to an EU directive and the fundamental principles of VAT.
  • Czech Republic: The VAT treatment of employer-provided meal vouchers has been clarified in reports jointly issued by the Czech tax administration and a chamber of tax advisors. The VAT treatment of meal vouchers will depend on whether they are single-purpose or multi-purpose vouchers. 
  • Montenegro: The Ministry of Finance adopted a “rulebook” providing in part that non-resident legal entities with income from capital gains and leasing transactions of property located in the territory of Montenegro must file a tax return within 30 days from realizing this income.
  • Poland: Persons remitting withholding tax must exercise “due care” when applying a reduced rate of withholding tax or an exemption from withholding tax, or when determining there is no withholding tax obligation and that no amount is to be remitted. 
  • Romania: A tax guide—with information generally provided in tables or in an outline format—provides a brief overview of the taxation of corporations and individuals for 2019.

Read TaxNewsFlash-Europe

Trade & Customs

  • United States: The Office of the U.S. Trade Representative (USTR) released a notice listing products excluded from the solar products safeguard measures.
  • United States: The U.S. International Trade Commission (ITC) determined that a U.S. industry is materially injured by reason of imports of quartz surface products from China.  
  • EU: The European Commission issued a release addressing certain aspects of customs and trade in the event the UK leaves the EU without a deal (a “no-deal Brexit”).

Read TaxNewsFlash-Trade & Customs

United States

  • Final regulations provide guidance with regard to discounting insurance companies’ unpaid losses and estimated salvage recoverable for federal income tax purposes.
  • Final regulations expand the class of permissible potential current beneficiaries of an electing small business trust (ESBT) to include nonresident aliens.
  • Final regulations concerning health reimbursement arrangements (HRAs) permit employers to offer a new “individual coverage HRA” as an alternative to traditional group health plan coverage, subject to certain conditions. These individual coverage HRAs can be used to reimburse premiums for individual health insurance chosen by the employee.
  • Final regulations concern the availability of charitable contribution deductions under section 170 when a taxpayer receives or expects to receive a corresponding state or local tax credit. A notice from the IRS (Notice 2019-12) provides “safe harbor” relief.
  • The U.S. Court of Appeals for the District of Columbia affirmed a decision of the U.S. Tax Court—an opinion that rejected the IRS’s position in Rev. Rul. 91-32 that a foreign partner’s capital gain from the sale of an interest in a partnership that is engaged in a U.S. trade or business is treated as gain that is effectively connected to a U.S. trade or business and therefore subject to U.S. federal income tax. The Tax Court case was cited in the legislative history to the 2017 U.S. tax law that enacted clarifying measures.
  • OMB’s Office of Information and Regulatory Affairs (OIRA) completed its review of final regulations concerning health reimbursement arrangements (HRAs). These regulations are now pending release (the exact timing of the release is not known).
  • Guidance from the tax authorities of Arizona, Illinois, New York, Tennessee, and Vermont concerns the tax treatment of remote sales as a response to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).
  • Legislation in Arizona updates the state’s conformity to the Internal Revenue Code. Provisions of the federal tax law that is often referred to as the “Tax Cuts and Jobs Act” (Pub. L. No. 115-97) are incorporated into Arizona law for the 2018 tax year.
  • Pending legislation in Connecticut includes measures that would revise the definition of tangible personal property (that is, property subject to sales and use tax at a general rate of 6.35%) to include digital goods and canned or prewritten software that is electronically accessed or transferred (other than when purchased by a business for its own use). The bill also increases the rate of sales and use tax imposed on meals and drinks sold at eating establishments and bars by 1% so that these sales would be taxed at a rate of 7.35%.
  • In Illinois, enacted legislation provides new, graduated income tax rates for individuals, trusts, and estates (increasing the flat 4.95% rate to 7.99% on all income over $1 million, subject to approval by voters) and a contingent corporate income tax increase to 7.99%, so that with the 2.5% replacement tax added in, the Illinois corporate income tax rate is increased to 10.49%.  

Read TaxNewsFlash-United States
 

  • The U.S. House of Representatives passed a revised version of an IRS administration bill—H.R. 3151, the “Taxpayer First Act.” Unlike a prior version of the bill, this one does not include a “free file” measure for income tax returns. 

Read TaxNewsFlash-Legislative Updates

Indirect Tax

  • Czech Republic: The CJEU issued a judgment concluding that certain Czech rules with regard to refunds of VAT are contrary to an EU directive and the fundamental principles of VAT.
  • Czech Republic: The VAT treatment of employer-provided meal vouchers has been clarified. The VAT treatment of meal vouchers will depend on whether they are single-purpose or multi-purpose vouchers. 
  • India: The government announced a plan for transitioning to a new, simplified GST return.
  • Pakistan: The budget 2019 includes indirect tax proposals.
  • Costa Rica: VAT regulations were issued and include rules concerning VAT credits, rates, exemptions, taxpayer obligations, and transition measures and VAT on remote sales.
  • Mauritius: The 2019-2020 budget includes proposals concerning VAT.
  • Philippines: The Bureau of Internal Revenue set forth the administrative procedures for processing and granting claims for VAT refunds or credits.
  • United States: Pending legislation in Connecticut would revise the definition of tangible personal property (that is, property subject to sales and use tax at a general rate of 6.35%) to include digital goods and canned or prewritten software that is electronically accessed or transferred (other than when purchased by a business for its own use). The bill also increases the rate of sales and use tax imposed on meals and drinks sold at eating establishments and bars by 1% so that these sales would be taxed at a rate of 7.35%.
  • United States: Guidance from the tax authorities of Arizona, Illinois, New York, Tennessee, and Vermont concerns the tax treatment of remote sales as a response 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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