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KPMG’s Week in Tax: 1 - 5 July 2019

KPMG’s Week in Tax: 1 - 5 July 2019

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

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Asia Pacific

  • Thailand: Foreign business license exemptions have been expanded for foreign entities providing certain services to related companies.
  • China: An individual income tax subsidy is available for certain individuals with “high-end and urgently-needed talent” and working in the “Greater Bay Area.”
  • Vietnam: A new tax administration law will be effective 1 July 2020, and may affect many non-resident enterprises selling goods and services into Vietnam via digital and e-commerce business models. The financial sector may be affected because it will be that sector’s duty to identify transactions subject to tax and to collect the tax.

Read TaxNewsFlash-Asia Pacific


Europe

  • Luxembourg-France: Luxembourg's Parliament on 2 July 2019 ratified a new income tax treaty with France. Treaty ratification by France was completed in February 2019; accordingly, the treaty provisions are expected to apply 1 January 2020 (assuming Luxembourg and France exchange their instruments of ratification by 31 December 2019).
  • Netherlands: A bill to implement an amendment to the EU Anti-Tax Avoidance Directive (ATAD2) was presented on 2 July 2019 to the Dutch Lower House. With this amendment, the EU Directive would address both hybrid mismatches among EU Member States and between EU Member States and third countries. 
  • Norway: There are proposals to repeal the exemption from value added tax (VAT) that applies for imports of “low-value goods” and to introduce new measures providing that sellers and online marketplaces would be liable for VAT on cross-border sales of such low-value goods to consumers in Norway.
  • Denmark: The Danish high court has addressed the compatibility with EU law of the Danish withholding tax on dividends distributed to non-resident investment funds.
  • Germany: The federal tax court issued a decision amending its position from prior decisions concerning the treatment of adjustments to income for the profit-reducing derecognition of an unsecured intragroup loan. The court’s position now is that such loss is not tax deductible.
  • Italy: VAT measures have been “converted” into law, and include rules for invoices and clarifications concerning e-invoicing.
  • EU: New rules are effective in July 2019 providing for quicker and more effective resolution of tax disputes between EU Member States, thus allowing greater tax certainty for businesses and individuals experiencing double taxation issues.

Read TaxNewsFlash-Europe


Transfer Pricing

  • Thailand: A draft ministerial regulation concerns information required for transfer pricing documentation submissions under Thailand’s transfer pricing law (finalized in 2018).
  • Netherlands: The Deputy Minister of Finance finalized a revised ruling policy for “rulings with an international character.”

Read TaxNewsFlash-Transfer Pricing


United States

  • Final regulations allow the use of truncated social security numbers—that is, "truncated taxpayer identification numbers" (TTINs)—on statements that employers furnish to their employees, specifically on Form W-2.
  • Proposed regulations provide rules for the tax qualification of plans maintained by more than one employer—that is, “multiple employer plans” or MEPs.
  • The IRS updated a list of “frequently asked questions” (FAQs) concerning the opportunity zone rules enacted under the 2017 U.S. tax law.
  • The unclaimed property rules in Colorado and Washington State have been amended concerning the treatment of gift cards and gift certificates. The new rules have an effective date of 1 July 2020.
  • The legislatures in California, Connecticut, and Maine have responded with new rules to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales), and the tax authority in Utah has issued guidance summarizing recently enacted marketplace provisions.
  • Newly enacted legislation in Louisiana allows S corporations and other passthrough entities to elect to be taxed at the entity level—that is, as if the entity were a C corporation.
  • A Mississippi state court issued a decision in a case concerning a taxpayer that excluded capital related to passive investments in 10 subsidiaries unrelated to the taxpayer’s cable television business activities from its franchise tax base.
  • Pending legislation in Oregon provides that any “global intangible low-taxed income” (GILTI) described in IRC section 951A and included in gross income would be treated in the same manner as a dividend received from a 20%-owned corporation.

Read TaxNewsFlash-United States
 

  • President Trump signed into law an IRS administration bill—H.R. 3151, the “Taxpayer First Act.”

Read TaxNewsFlash-Legislative Updates

 

FATCA / IGA / CRS

  • Belgium: The deadline to file common reporting standard (CRS) reports for the 2018 reportable year was extended to 16 July 2019.
  • Costa Rica: An executive decree provides for the implementation of an intergovernmental agreement (IGA) between Costa Rica and the United States for purposes of the FATCA regime.

Read TaxNewsFlash-FATCA / IGA / CRS


Trade & Customs

  • The European Union and Vietnam signed a free trade agreement and investment protection agreement.
  • The U.S. Commerce Department announced various determinations in antidumping duty investigations of imports of magnesium from Israel, and of imports of certain steel wheels from China; and affirmative circumvention rulings involving exports of steel products from Vietnam.
  • U.S. Customs and Border Protection (CBP) noted that effective 29 July 2019, all in-bond exports, arrivals, and diversions will be required to be reported electronically through the Automated Commercial Environment (ACE).
  • The Office of the U.S. Trade Representative (USTR) issued a release relating a dispute with the EU concerning EU subsidies on large civil aircraft. The USTR release lists products that could potentially be subject to additional duties in order to enforce U.S. rights in the World Trade Organization (WTO) dispute.

Read TaxNewsFlash-Trade & Customs


Indirect Tax

  • Norway: There is a proposal to repeal the exemption from value added tax (VAT) for imports of “low-value goods” and to introduce new measures for remote sellers and online marketplaces to be liable for VAT on cross-border sales of such low-value goods to consumers in Norway.
  • Italy: VAT measures include rules for invoices and clarifications concerning e-invoicing.
  • Vietnam: Provisions effective 1 July 2020 concern goods and services sold into Vietnam via digital and e-commerce business models.
  • Costa Rica: A reduced rate of VAT of 2% applies for medicines and supplies for the preparation of medicines effective 1 July 2019.
  • United States: California, Connecticut, and Maine have enacted measures concerning remote sellers and marketplace facilitators, and in Utah, guidance summarizes the treatment of remote sales.

Read TaxNewsFlash-Indirect Tax


Americas

  • Costa Rica: Updated income tax regulations include measures relating to, among other topics, dividend distributions, the tax treatment of real estate capital, and transfer pricing.

Read TaxNewsFlash-Americas

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