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KPMG’s Week in Tax: 9 - 13 September 2019

KPMG’s Week in Tax: 9 - 13 September 2019

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

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Europe

  • Belgium: The tax authorities issued guidance that in part addresses the “grandfather rule” under the new earnings stripping regime. 
  • Czech Republic: The Ministry of Finance prepared a digital service tax bill—one proposing a tax rate of 7% on selected digital services.
  • Czech Republic: In response to a CJEU judgment, an amendment to the VAT law is being prepared to address the VAT exemption for goods are released into a customs regime.
  • Netherlands: It was announced that a bill would be presented before the summer of 2020 to amend the taxation of income from savings and investments in Box 3. According to initial calculations, taxpayers with savings only would, in effect, no longer pay tax on their savings on amounts up to a threshold of approximately €440,000.
  • EU: Statistics for the “VAT mini one stop shop” for the period from 2015 to 2018 show “a clear positive result in terms of VAT collection for all EU countries.”
  • Ireland: Many Irish businesses are considering how to prepare for a “no deal” Brexit. The KPMG member firm in Ireland prepared a series of reports to assist in preparing for the challenges and opportunities that may emerge.
  • Poland: Changes to Poland’s corporate income tax intended to counteract tax optimization using hybrid structures will be effective beginning 1 January 2020.
  • Switzerland: The Swiss Parliament in December 2018 adopted an amendment to the “Equality Act” to add a new section related to equal pay requirements between female and male employees. Business organizations with 100 or more employees need to complete their first equal pay analysis by 30 June 2021.
  • Germany: Tax developments include: (1) the lower tax court of Cologne found that there are no concerns under EU law regarding the application of an anti-treaty shopping directive to royalty payments made to recipients in non-EU countries; (2) the EC sent a formal notice to Germany requesting recognition of profit and loss transfer agreements (that are a pre-condition for tax consolidation) that have been concluded under the law of a different EU Member State or an EEA country; and (3) the German federal government issued a draft bill that would amend the real estate transfer tax law.

Read TaxNewsFlash-Europe

United States

  • The application period for the 2020 Compliance Assurance Process (CAP) program begins 16 September 2019 and ends 31 October 2019. An IRS announcement includes instructions for large corporate taxpayers that may wish to apply for the 2020 CAP program.
  • Proposed regulations concern the treatment of built-in gains and losses under section 382(h) and reflect legislative changes made by the 2017 U.S. tax law (Pub. L. No. 115-97), the law that is often referred to as the “Tax Cuts and Jobs Act."
  • OMB’s Office of Information and Regulatory Affairs (OIRA) completed its review of regulations under section 168(k)—the “bonus depreciation” provision added to the Code by the 2017 U.S. tax law.
  • The Alabama Department of Revenue will provide relief from late-filing penalties for corporate taxpayers facing challenges meeting the 15 October2019 due date for their state corporate tax returns because of the added complexity of federal tax law measures.
  • An order of the Florida Department of Revenue allows more time—until 27 October 2019—for corporate taxpayers to comply with the filing requirements for new information reports.
  • A Georgia tax tribunal held that the taxpayer (an accrual method used car dealer) was not entitled to bad debt deductions for sales tax purposes on loans written off by an affiliated financing entity.
  • An administrative law judge in Utah, in a case of first impression, concluded that foreign corporations were not required to be included in a Utah water’s-edge combined group.
  • More states—Arizona, Arkansas, Iowa, Ohio, and South Carolina—responded to a U.S. Supreme Court case (Wayfair) and addressed the state sales tax implications of remote or online sales. In addition:
    • Remote seller and marketplace laws in Arizona, California, Colorado, Massachusetts, Maryland, Maine, Nevada, North Dakota, Tennessee, Texas, and Utah are effective 1 October 2019.
    • The Kansas Department of Revenue will begin enforcing sales tax collection requirements for remote sellers effective 1 October 2019.
    • Tax authorities in Arizona, Arkansas, California, Iowa, Minnesota, Ohio, Oklahoma, and South Carolina have all issued guidance in the past few weeks.
    • The tax authority in New Hampshire issued guidance with regard to the so-called “anti-Wayfair” law.
    • The City Council in Nome, Alaska adopted an ordinance (effective 1 September 2019) providing that a seller will be required to collect Nome local tax if it satisfies certain conditions.

Read TaxNewsFlash-United States
 

  • U.S. Senator Ron Wyden (D-OR)—the ranking member of the Senate Finance Committee—released a report describing a proposal for a “mark-to-market” system for taxing capital income of certain individual taxpayers who satisfy income or asset thresholds.
  • A KPMG report examines the possible tax agenda now that U.S. Congress is back in session. The big questions are: (1) whether tax provisions might be attached to “must pass” legislation (such as a continuing resolution) or otherwise make it through the legislative process and become law; and (2) if so, what those tax provisions might be. 

Read TaxNewsFlash-Legislative Updates

Africa

  • Nigeria: The Federal Executive Council approved an increase in the value added tax (VAT) rate from 5% to 7.2%—an initial step to a possible but uncertain VAT rate increase.
  • Nigeria: The tax authority of the Delta State issued guidance concerning the tax treatment for employers who pay “compensation for loss of employment” to employees as either “terminal benefit” or “termination benefit.”
  • South Africa: The South African Revenue Service will no longer be issuing printed (hardcopy) tax clearance certificates, effective 25 October 2019.
  • South Africa: Draft legislation includes proposed amendments to tax benefits and measures for special economic zones (SEZs).

Read TaxNewsFlash-Africa

Americas

  • Dominican Republic: A bill proposes changes to the tax and customs duty incentives for mining operations.

Read TaxNewsFlash-Americas

Asia Pacific

  • China: Guidance issued by China’s General Administration of Customs concerns the ASEAN-China free trade agreement and the rules for country of origin of imported and exported goods.
  • Australia: A government commission recommended repealing the “zone tax offset” program— introduced in 1945 to assist employees with the cost of living in remote areas by reducing income tax paid on higher wages.

Read TaxNewsFlash-Asia Pacific

FATCA / IGA / CRS

  • Saint Vincent and the Grenadines: The deadline for submitting FATCA and common reporting standard (CRS) reports was extended to 13 September 2019.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • EU: Beginning 1 October 2019, applications for "Authorised Economic Operator" (AEO) status will have to be made electronically through the EU trader portal. 
  • United States: The U.S. Commerce Department announced an affirmative preliminary determination in the countervailing duty (CVD) investigation of imports of ceramic tile from China.
  • United States: The U.S. International Trade Commission (ITC) determined that there is a “reasonable indication” that a U.S. industry is materially injured by reason of imports of polyethylene terephthalate (PET) sheet from Korea and Oman that are allegedly sold in the United States at less than fair value. However, the ITC found that imports of PET sheet from Mexico were “negligible” and voted to terminate the investigation concerning Mexico.

Read TaxNewsFlash-Trade & Customs

Indirect Tax

  • Czech Republic: The Ministry of Finance prepared a digital service tax bill—one proposing a tax rate of 7% on selected digital services.
  • Czech Republic: In response to a CJEU judgment, an amendment to the VAT law is being prepared to address when goods are released into a customs regime.
  • EU: Statistics for the “VAT mini one stop shop” for the period from 2015 to 2018 show “a clear positive result in terms of VAT collection for all EU countries.”
  • Nigeria: The Federal Executive Council approved an increase in the VAT rate from 5% to 7.2%—an initial step in a possible but uncertain rate increase.
  • Ireland: Many Irish businesses are considering how to prepare for a “no deal” Brexit that includes indirect tax and VAT issues.
  • United States: A Georgia tax tribunal held that the taxpayer (an accrual method used car dealer) was not entitled to bad debt deductions for sales tax purposes on loans written off by an affiliated financing entity.
  • United States: More states—Arizona, Arkansas, Iowa, Ohio, and South Carolina—responded to a U.S. Supreme Court case (Wayfair) and addressed the state sales tax implications of remote or online sales.

Read TaxNewsFlash-Indirect Tax

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