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KPMG’s Week in Tax: 29 July - 2 August 2019

KPMG’s Week in Tax: 29 July - 2 August 2019

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

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Transfer Pricing

  • United States: KPMG LLP joined other professional services firms requesting en banc review by the Ninth Circuit of a case that questioned the validity of Treasury regulations requiring the sharing of stock-based compensation (SBC) costs in qualified cost sharing arrangements (QCSAs).
  • Argentina: The tax administration announced it was extending the deadlines for taxpayers subject to transfer pricing reporting requirements with fiscal year-ends during the period December 2018 to April 2019. The new deadlines will be during the week of 16-20 December 2019.
  • EU: The European Commission published statistics on pending advance pricing agreements (APAs) and mutual agreement procedures (MAPs) for 2018.

Read TaxNewsFlash-Transfer Pricing


BEPS

  • Belgium: The multilateral instrument (MLI) to implement the tax treaty-related measures of the OECD action plan on base erosion and profit shifting (BEPS) into existing income tax treaties was ratified. The MLI will apply for Belgium, at the earliest, as from 1 January 2020 for withholding tax purposes and, in principle, as from tax periods starting on or after 1 April 2020 for other tax purposes.

Read TaxNewsFlash-BEPS


FATCA / IGA / CRS

  • Saint Kitts and Nevis: The reporting deadline for the 2018 reportable year for the common reporting standard (CRS) regime has been extended to 29 August 2019.
  • Singapore: The Inland Revenue Authority of Singapore (IRAS) finalized guidance under the common reporting standard (CRS).

Read TaxNewsFlash-FATCA / IGA / CRS


Africa

  • South Africa: The government is considering a tax on single-use plastics (items that are used only once before they are thrown away or recycled). The objective would be to reduce the use of these items and encourage recycling.
  • Mauritius: Tax measures in the Finance Act 2019 include measures providing “tax holidays” for companies engaged in certain activities; an 80% partial exemption regime extension; consolidation of anti-avoidance rules; a voluntary disclosure program for taxpayers with overseas assets; an increase of the special tax levy on certain banks; and the personal liability of principal officers of private companies for unremitted amounts of value added tax (VAT).

Read TaxNewsFlash-Africa


Americas

  • Brazil: A tribunal in São Paulo recognized a taxpayer’s right to a full tax credit with regard to ICMS / ST imposed on fuel acquisitions relating to the production process of sugar and ethanol plants.  ICMS / ST refers to the ICMS (state-level sales tax imposed on the physical movement of merchandise) collected by refineries with regard to fuels during the initial phase of the production chain.
  • Canada: Quebec announced new harmonization measures to align two Quebec sales tax (QST) measures with proposed changes to federal goods and services tax / harmonized sales tax (GST/HST) legislation. Quebec is also harmonizing certain Quebec education incentive rules with amendments to the Canada education savings regulations.

Read TaxNewsFlash-Americas


Asia Pacific

  • Indonesia: There is a reduced rate of withholding tax with respect to “luxury residential” purchase transactions, an increase in the exemption threshold, and changes to the sales tax applicable to ultra-luxury properties.
  • India: The government of Kerala state released a set of “frequently asked questions” (FAQs) concerning a flood “cess” (a term for local taxation in India) regarding flooding that occurred in the state in August 2018. The cess would apply to all intra-state business-to-consumer supplies, effective for two years from 1 August 2019.
  • India: The High Court of Bombay directed an adjudicating authority to re-consider an assessment order challenge, finding that the adjudicating order had not dealt with the submission made by the taxpayer. The taxpayer had asserted that it was not a dealer under the VAT laws.
  • India: The Finance Minister of Maharashtra announced certain amendments to the state’s tax amnesty plan.
  • India: The Delhi High Court held that the taxpayer (non-resident company) was allowed to file a revision petition under section 264 of the Income-tax Act, 1961 to claim the “most favored nation” benefit under the India-Spain income tax treaty. The taxpayer had not claimed the benefit on the original tax return. 
  • India: The Calcutta High Court held that interest and power subsidies are capital in nature and thus are to be excluded for purposes of computing book profits under the provisions of minimum alternate tax.
  • India: The Goods and Services Tax (GST) council announced a reduction in the GST rate for electric vehicles.

Read TaxNewsFlash-Asia Pacific


Europe

  • Switzerland: Tax reform—with measures effective 1 January 2020—repeals certain corporate tax regimes and Introduces new measures under a patent box regime, a “super deduction” for research and development (R&D), a notional interest deduction, and other provisions.
  • Luxembourg: A bill would transpose an EU Directive (DAC 6) into domestic law to require EU intermediaries (and taxpayers, in some instances) to disclose certain reportable cross-border arrangements to the Luxembourg tax authorities.

Read TaxNewsFlash-Europe
 

Trade & Customs

  • United States: A federal grand jury has issued an indictment against a Chinese company and related persons for fraudulently exporting into the United States, aluminum disguised as “pallets” in an effort to avoid approximately $1.8 billion of customs duties.
  • United States: The Office of the U.S. Trade Representative (USTR) released another notice of products that are excluded from the additional 25% customs duty on goods imported into the United States from China (pursuant to the investigation and action under Section 301 of the Trade Act of 1974).
  • Australia: Importers need to consider due diligence of imports in light of Australian law that concerns illegal logging practices, and to prohibit the importation into Australia of timber and timber products that have been ille

Read TaxNewsFlash-Trade & Customs


United States

  • The IRS issued a reminder to heavy vehicles that their highway use tax return for July 2019 will be due on Tuesday, 3 September 2019 (because Monday, 2 September is a federal holiday).
  • The IRS Large Business and International (LB&I) division released a “practice unit” concerning source income for nonresident alien individuals. The practice unit was updated to reflect U.S. tax law changes enacted in December 2017 as the “Tax Cuts and Jobs Act” (TCJA).
  •  Rev. Proc. 2019-33 provides relief and guidance relating to bonus depreciation rules enacted by the TCJA. The revenue procedure explains how taxpayers can make a late election (or revoke a prior election) under section 168(k) for certain property acquired by the taxpayer after September 27, 2017, and placed in service by the taxpayer during its tax year that includes September 28, 2017.
  • The New Jersey Division of Taxation released guidance concerning combined reporting provisions that are effective for banking corporations having privilege periods ending on and after 31 July 2019.
  • Newly enacted legislation in Oregon includes technical corrections to the new corporate activity tax (CAT) law.
  • Oregon Senate Bill 851, that revises the state’s treatment of global intangible low-taxed income (GILTI), was enacted. Specifically, effective for tax years beginning on or after 1 January 2018, the amount of GILTI included in gross income will be treated as a dividend eligible for an 80% dividends-received deduction.
  • Newly enacted legislation in Rhode Island adopts a 10-year statute of limitations for purposes of sales and use, corporate income, personal income, and estate taxes (generally effective for state tax liabilities that were final, due and payable after 1 July 2019).
  • The Tennessee Department of Revenue ruled that subpart F income is treated as a dividend for franchise and excise tax purposes.

Read TaxNewsFlash-United States


Exempt Organizations

  • A federal district court (for Montana) determined that IRS guidance relieving certain tax-exempt organizations of donor disclosure requirements was “unlawful” because the IRS had failed to follow notice-and-comment procedures before promulgating the revenue procedure.

Read TaxNewsFlash-Exempt Organizations


Indirect Tax

  • Indonesia: There are reduced rates of withholding tax and changes to the sale tax for “luxury residential” purchase transactions.
  • Brazil: A tribunal in São Paulo recognized a taxpayer’s right to a full tax credit with regard to ICMS / ST imposed on fuel acquisitions relating to the production process of sugar and ethanol plants.
  • Canada: Quebec announced new harmonization measures to align two QST measures with proposed changes to federal GST/HST legislation.
  • South Africa: A tax on single-use plastics (items that are used only once before they are thrown away or recycled) is being considered.
  • Mauritius: Tax measures in the Finance Act 2019 include measures imposing personal liability on principal officers of private companies for unremitted amounts of VAT.
  • India: The GST Council announced a reduction in the GST rate for electric vehicles.

Read TaxNewsFlash-Indirect Tax

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