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KPMG’s Week in Tax: 8 – 12 July 2019

KPMG’s Week in Tax: 8 – 12 July 2019

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

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Europe

  • France: The French Senate approved legislation for a digital services tax, thereby completing parliamentary action on the legislation. The legislation has yet to be enacted into law.
  • UK: Draft legislation for the next Finance Bill includes proposals that would impose a digital services tax on large digital companies.
  • Switzerland: The Swiss Federal Council released a circular on the revised federal withholding tax laws for individuals, effective in 2021.
  • UK: The Court of Justice of the European Union (CJEU) issued a judgment concluding that the collection and investment of gifts and donations by a UK university were non-economic activities. Therefore, according to the CJEU, the VAT paid on the directly related costs was not recoverable.
  • Netherlands: The Dutch Supreme Court issued two judgments broadly interpreting the economic interdependence standard required when entities or persons seek to function as a single tax entity for VAT purposes—that is, a VAT group.
  • Czech Republic: The formal legislative process has begun to introduce a digital services tax that would be imposed at a rate of 7%.

Read TaxNewsFlash-Europe

 

Transfer Pricing and BEPS

  • UAE: Country-by-country (CbC) reporting rules were introduced.
  • United States: The IRS updated the instructions for Form 8975, Country-by-Country Report. The new information concerns a new mailstop for U.S. multinational entities (MNEs) filing paper versions of Form 8975, and guidance on country codes and the tax jurisdiction table for Schedule A (Form 8975). 
  • Qatar: The general tax authority issued a circular providing updates and clarifications for CbC reporting obligations in Qatar.
  • Switzerland: Decommissioning the LIBOR benchmark in 2021 will affect tax and transfer pricing-related documentation, agreements, and systems enablement. 

Read TaxNewsFlash-Transfer Pricing

 

Africa

  • Africa: The Africa Continental Free Trade Area agreement entered into force on 30 May 2019, having been ratified by 22 countries (the threshold requirement). The next step is for completion of the negotiations on the rules of origin and the tariff schedules setting out the preferential rates of duty for trade between member countries.

Read TaxNewsFlash-Africa

 

Americas

  • Canada: Certain 2019 tax changes need to be reflected in interim financial statements.
  • Costa Rica: Value added tax (VAT) developments include a moratorium on VAT penalties, an opinion from the Attorney General concerning the status of certain VAT exemptions, and guidance concerning the use of electronic receipts.

Read TaxNewsFlash-Americas

 

Asia Pacific

  • Thailand: Mutual funds will be subject to income tax at a rate of 15% on a fund’s gross income, effective 20 August 2019.
  • UAE: New economic substance regulations apply for UAE companies. 
  • India: Tax measures are included in the Union Budget 2019, including increased customs duties on various products and a reduction of the compliance burden under goods and services tax (GST) measures.
  • India: The Reserve Bank of India issued guidance replacing what had been the existing system for reporting annual returns on foreign-held liabilities and assets.

Read TaxNewsFlash-Asia Pacific

 

FATCA / IGA / CRS

  • Barbados: Financial institutions must report relevant 2018 AEOI information by 31 July 2019.
  • Netherlands: The Dutch tax administration released a document in response to parliamentary questions about the effects of the FATCA regime for U.S. persons who are residents of the Netherlands.
  • Germany: The deadline for transmission of FATCA returns for the 2018 reporting year is 31 August 2019.
  • Taiwan: CRS-related guidance includes: (1) a list of low-risk tax avoidance accounts that would be excluded from the CRS due diligence and reporting obligations; and (2) an updated version of “frequently asked questions” (FAQs) as guidance related to CRS implementation and due diligence procedures. 

Read TaxNewsFlash-FATCA / IGA / CRS

 

Trade & Customs

  • The Office of the United States Trade Representative (USTR) announced the launch of a Section 301 investigation of France’s digital services tax.
  • The U.S. Court of International Trade granted the government’s motion for partial summary judgment in a case concerning the tariff classification of bicycle child carriers (items that allow a child to ride on an adult’s bicycle, situated between the adult seat and the front handlebars).
  • The U.S. Commerce Department announced affirmative determinations in the countervailing duty (CVD) investigations of imports of fabricated structural steel from China and Mexico. Commerce made a negative determination in the investigation of these imports from Canada.
  • The USTR released a notice of product exclusions with respect to additional duties imposed on goods of China having an annual trade value of approximately $34 billion as part of the action in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.
  • Australia: The Administrative Appeals Tribunal affirmed the denial of a tariff concession order (TCO) for an importer of driverless passenger trains. The tribunal held that “substitutable goods” in the form of driven passenger trains are produced in Australia.

Read TaxNewsFlash-Trade & Customs

 

United States

  • U.S. Senate consideration of four Protocols to amend the income tax treaties with Switzerland, Luxembourg, Spain, and Japan is expected to advance. Senate Majority leader Mitch McConnell (R-KY) filed cloture motions for the four tax treaty Protocols (that have been awaiting Senate action for several years).
  • New law in California generally adopts certain provisions of the U.S. 2017 federal tax law (Pub. L. No. 115-97)—the law that is commonly referred to as the “Tax Cuts and Jobs Act” (TCJA). California continues in general to conform to the Internal Revenue Code as of January 1, 2015, but certain provisions of TCJA are adopted into California law for tax years beginning on or after January 1, 2019.
  • Proposed regulations concern passive foreign investment companies (PFICs) and specifically concerning legislative changes made by the 2017 U.S. tax law with regard to the “PFIC insurance exception.”
  • An investigation of the French digital services tax was launched by the U.S. Trade Representative.


Read TaxNewsFlash-United States

 

  • The U.S. House Ways and Means Committee approved H.R. 397, the “Rehabilitation for Multiemployer Pensions Act of 2019,” as modified by a chairman’s amendment that focuses upon the funding crisis facing many multiemployer defined benefit plans (MEPs).
  • The Joint Committee on Taxation (JCT) released a report providing descriptions of the tax proposals included in the Trump Administration’s FY 2020 budget recommendations.

Read TaxNewsFlash-Legislative Updates

 

Indirect Tax

  • France: The Senate passed legislation for a digital services tax.
  • UK: Draft legislation includes proposals for a digital services tax.
  • United States: An investigation of the French digital services tax was initiated under the “Section 301” provisions.
  • UK: The Court of Justice of the European Union (CJEU) issued a judgment concluding that the collection and investment of gifts and donations by a university were non-economic activities, and concluding the VAT paid on such directly related costs was not recoverable.
  • Costa Rica: VAT developments include a moratorium on VAT-related penalties; an opinion from the Attorney General concerning the status of certain exemptions; and guidance concerning the use of electronic receipts.
  • Netherlands: The Dutch Supreme Court issued judgments broadly interpreting the economic interdependence standard required when entities or persons seek to function as a single tax entity for VAT purposes—the VAT group rules.
  • Czech Republic: The formal legislative process has begun to introduce a digital services tax that would be imposed at a rate of 7%.

Read TaxNewsFlash-Indirect Tax

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