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KPMG’s Week in Tax: 5 - 9 August 2019

KPMG’s Week in Tax: 5 - 9 August 2019

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

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Americas

  • Brazil: An “annual inspection plan” for 2019 focuses on identifying ultimate beneficial owners that use offshore structures for purposes of obtaining tax benefit.
  • Mexico: Taxpayers with unreported income or undisclosed assets may be able to participate in a voluntary disclosure-type program—available with respect to the period 1 July 2013 through 31 December 2018—provided that permission to participate in the program is granted by the tax administration. Applications are due by 15 August 2019.
  • Uruguay: A new income tax treaty between Uruguay and Brazil—intended to eliminate double taxation—is pending ratification.
  • Canada: The Canada Revenue Agency announced that there will be no changes to the prescribed income tax rates for taxable benefits, overpaid taxes, and underpaid taxes for the fourth quarter of 2019. The quarterly prescribed interest rate that will be used to determine the deemed interest income inclusion from a pertinent loan or indebtedness (PLOI) is expected to decrease slightly.
  • Canada: The Department of Finance is accepting comments until 7 October 2019 on draft legislation to implement certain corporate individual tax changes and accelerated investment incentive changes.
  • Canada: The Department of Finance released a revised version of draft legislation concerning mutual fund trusts and related to the allocation of capital gains or income, or both, to redeeming unitholders (sometimes referred to as the “allocation to redeemers” methodology). The draft legislation includes two relief measures in addition to the allocation to redeemer restrictions.
  • Canada: Co-owners who are considering options for a shareholders' agreement may want to consider the tax implications of their choices.
  • Colombia: New customs measures—intended to provide certainty and stability with regard to the customs regime—were effective 2 August 2019. The tax authority (DIAN) is expected to issue regulatory guidance to implement the measures.
  • Dominican Republic: Pending legislation would create a special tax regime for multinational corporate headquarters in the Dominican Republic.

Read TaxNewsFlash-Americas
 

Asia Pacific

  • Australia: Taxpayers may want to consider avoiding “tie-breakers” in the event of an Australian multinational group that operates in a country subject to the multilateral instrument (MLI). Under the MLI, many (but not all) of Australia’s treaties will be modified so that the residency of a company for the purposes of the treaty would be determined by the mutual agreement of the competent authorities of the treaty partners. 
  • China-Hong Kong: A Protocol to the income tax treaty between China and Hong Kong would implement certain measures to address perceived treaty abuse pursuant to the OECD’s base erosion and profit shifting (BEPS) project. The Protocol would expand the definition of “permanent establishment” (PE) under Article 5 the income tax treaty. There are tax relief measures for certain researchers and teachers.

Read TaxNewsFlash-Asia Pacific
 

Europe

  • EU: Several jurisdictions have introduced or are discussing draft legislation to implement mandatory disclosure rules (DAC 6), including Denmark, Luxembourg, the Netherlands, and the UK.
  • Greece: A foreign tax credit may be available for Greece’s “special solidarity contributions” on foreign-sourced income under certain existing income tax treaties. Refund opportunities may be available for foreign tax credits relating to special solidarity contributions for tax years 2015 and later.
  • Serbia: A “rulebook” provides guidance concerning the treatment of shares transferred to employees without consideration or at a preferential price.
  • Slovakia: Changes to the VAT law are proposed to be effective 1 January 2020.
  • Ireland: The central register of beneficial ownership is effective in Ireland, and the deadline to file information with the central register is 22 November 2019.

Read TaxNewsFlash-Europe
 

Transfer Pricing

  • United States: The IRS formally revised its position by withdrawing a transfer pricing-related directive from the IRS Large Business and International (LB&I) division concerning transfer pricing issues related to stock-based compensation in cost-sharing arrangements.

Read TaxNewsFlash-Transfer Pricing
 

FATCA / IGA / CRS

  • Germany: The central tax office corrected an error in earlier guidance issued for purposes of the common reporting standard (CRS) regime.
  • United States: There was a scheduled outage of the International Data Exchange Service (IDES) from 7 August 2019 - 9 August 2019. 

Read TaxNewsFlash-FATCA / IGA / CRS
 

United States

  • Rev. Proc. 2019-34 provides simplified procedures for an insurance company to obtain the automatic consent of the IRS Commissioner to change its methods of accounting to comply with amendments to sections 807 and 848 (made by the U.S. tax law enacted in 2017) for the first tax year beginning after 31 December 2017.
  • The Kansas Department of Revenue issued a notice that addresses the state’s sales tax collection requirements for remote sellers and marketplace facilitators. Remote sellers that are not already registered to collect and remit must register by 1 October 2019.
  • New law in Massachusetts provides that—effective 1 October 2019—remote retailers must collect and remit sales and use taxes if the remote retailer has over $100,000 in Massachusetts sales in the prior or current tax year.
  • The Philadelphia Department of Revenue issued an advisory notice addressing the calculation of the IRC section 163(j) interest expense limitation for purposes of the city’s business income and receipts tax (BIRT).

Read TaxNewsFlash-United States
 

Cooperatives

  • Corrections to proposed regulations under the section 199A changes, with regard to the application of a deduction for certain cooperatives and grain companies under section 199A, were made in response to two typographical errors.

Read TaxNewsFlash-Cooperatives
 

Trade & Customs

  • The Office of the U.S. Trade Representative (USTR) released a notice of product exclusions 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).
  • The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that a Washington State company agreed to pay just over $1.7 million to settle its potential civil liability for apparent violations of the Iranian transactions and sanctions regulations by a wholly owned subsidiary located in the Netherlands.
  • OFAC issued a release concerning: (1) an executive order blocking property of the government of Venezuela; (2) Venezuela-related general licenses and new and revised “frequently asked questions” (FAQs); and (3) guidance on humanitarian assistance and support to the Venezuelan people.

Read TaxNewsFlash-Trade & Customs
 

Indirect Tax

  • Slovakia: Proposed changes to the VAT law would be effective 1 January 2020.
  • United States: The Kansas Department of Revenue addressed the state’s sales tax collection requirements for remote sellers and marketplace facilitators.
  • United States: In Massachusetts, remote sellers must collect and remit sales and use taxes if the remote retailer has over $100,000 in Massachusetts sales in the prior or current tax year, effective 1 October 2019.

Read TaxNewsFlash-Indirect Tax

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