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KPMG’s Week in Tax: 14 - 18 October 2019

KPMG’s Week in Tax: 14 - 18 October 2019

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

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Europe

  • Ireland: Finance bill 2019 was published, and provides tax measures that are being considered for the Finance Act 2019.
  • Italy: A digital services tax—proposed to be effective 1 January 2020—would be imposed at a rate of 3% on revenues generated from certain business-to-business and business-to-consumer digital services that are provided to Italian customers by companies or groups of companies that satisfy certain revenue-related criteria.
  • Czech Republic: Businesses and entrepreneurs that were previously exempted from mandatory electronic reporting of sales will be subject to these rules. Moreover, catering services, selected services with a high degree of human labor, and e-books are re-classified and subject to value added tax (VAT) at a rate of 10%.
  • Czech Republic: A legislative amendment that would implement in 2020 measures referred to as the VAT “quick fixes” has been submitted to the Chamber of Deputies.

Read TaxNewsFlash-Europe

Africa

  • Kenya: The VAT law has been amended to allow offsetting withholding VAT credits against other tax obligations or refunds of the credits when set-offs are not possible.

Read TaxNewsFlash-Africa

Americas

  • Dominican Republic: A new law would provide a special tax regime for the promotion of cultural sponsorship projects in the Dominican Republic, and would provide incentives (such as exemption from corporate income tax) relating to certain programs and projects for cultural development.
  • Mexico:  The tax administration has identified taxpayers that are involved in activities that may be vulnerable to assertions of money laundering and has sent letters “inviting” these taxpayers to regularize or clarify their legal status. The letters advise taxpayers that they have 15 business days, beginning from the date following the date of notification, to respond to certain items and when necessary, to regularize the activities.
  • Panama: Legislation provides an increase with regard to a preferential interest regime on certain home mortgage loans and also rules for an exemption from the real estate transfer tax. The real estate transfer tax exemption is available with regard to the sales of new homes that occur within the first five years after the issuance of the occupancy permit if the construction permit was issued between 1 July 2016 and 1 July 2019 or if the occupancy permit was issued before 1 July 2022.

Read TaxNewsFlash-Americas

Asia Pacific

  • Kazakhstan: There have been changes to the tax law in 2019 concerning controlled foreign companies, large taxpayers, VAT, tax administration, and administrative penalties.
  • Myanmar: Revisions to the advance income tax system in Myanmar removed exemptions for taxpayers under the jurisdiction of the “large taxpayers’ office” and the “medium taxpayers’ office” sections of the tax authority. Additional guidance addresses import/export-related items.
  • Indonesia: A regulation relating to upstream oil and gas activities includes guidance about the tax treatment of shared facilities and for claiming head office cost allocations.

Read TaxNewsFlash-Asia Pacific

Transfer Pricing

  • A KPMG report focuses on transfer pricing transactions from start to finish, and considers how financial institutions can use opportunities to add value.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Taiwan: The tax authority issued updated versions of documents related to XML schema and items under the common reporting standard (CRS) regime.
  • Switzerland: The Swiss federal tax administration suspended the automatic exchange of financial account information (AEOI) with Bulgaria reportedly because of challenges related to Bulgaria’s data security.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The IRS released a directive jointly issued by the Large Business & International (LB&I) and Small Business/Self-Employed (SB/SE) divisions as instructions for IRS examiners on the treatment of work opportunity tax credit (WOTC) examinations under section 51. The joint directive directs examiners not to challenge the timing of when a taxpayer claims the WOTC, if the claimed WOTC complies with all requirements of section 51, but the WOTC is claimed in the year the taxpayer receives a delayed certification from the state workforce agency.
  • California, Maine, Massachusetts, and Texas issued guidance on marketplace nexus rules, following the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc.
  • The Louisiana Department of Revenue issued guidance concerning the state tax treatment of global intangible low-taxed income (GILTI).
  • A Washington state tax review officer determined that the Department of Revenue properly reclassified a taxpayer’s income for business and occupation (B&O) tax purposes.

Read TaxNewsFlash-United States
 

  • The U.S. Senate Finance Committee released the final report (this one examining disaster tax relief issues) from bipartisan taskforces charged with addressing temporary tax policy.

Read TaxNewsFlash-Legislative Updates

Cooperatives

  • The U.S. Tax Court issued an opinion concluding that soybean and grain payments that a cooperative made to its patrons (and similar payments that the cooperative itself received as a member of another cooperative) constituted “per-unit retain allocations paid in money” (PURPIMs) for purposes of section 1388(f) and had to be treated as such for purposes of the “domestic production activities deduction” (DPAD) computation under section 199.
  • The IRS posted a draft version of instructions for Form 1099-PATR, Taxable Distributions Received From Cooperatives, proposed for 2020.

Read TaxNewsFlash-Cooperatives

Exempt Organizations

  • The IRS Tax Exempt and Government Entities (TE/GE) division released a program letter for fiscal year (FY) 2020 that outlines projects and priorities for FY 2020 regarding exempt organizations, employee plans, Indian tribal governments, and tax-exempt bonds.
  • The IRS posted a draft Form 8283, Noncash Charitable Contributions, that contains changes to the current version of the form—changes that reflect final regulations released last year on the substantiation and reporting requirements for charitable contributions of certain types of property and eliminate lingering uncertainty as to the applicable requirements.

Read TaxNewsFlash-Exempt Organizations

Trade & Customs

  • The Office of the U.S. Trade Representative released a “notice of technical adjustments” with respect to an earlier notice concerning additional customs duties on products of certain EU Member States, with an effective date of 18 October 2019.

Read TaxNewsFlash-Trade & Customs

Indirect Tax

  • Italy: A digital services tax will be effective 1 January 2020, and will be imposed at a rate of 3% on revenues generated from certain business-to-business and business-to-consumer digital services that are provided to Italian customers by companies or groups of companies that satisfy certain revenue criteria.
  • Czech Republic: Legislation requires businesses and entrepreneurs to comply with rules for mandatory electronic reporting of sales (in particular, businesses that were previously exempted from these requirements will be subject to these rules).
  • Czech Republic: A legislative amendment to the VAT law would implement in 2020 measures referred to as the VAT “quick fixes.”
  • Kazakhstan: There have been changes to the tax law in 2019 concerning VAT, among other items.
  • Indonesia: A regulation relating to upstream oil and gas activities addresses the tax treatment of shared facilities and rules for claiming head office cost allocations.
  • Kenya: The VAT law was amended to allow offsetting withholding VAT credits against other tax obligations or refunds of the credits when set-offs are not possible.
  • Panama: Legislation provides rules for an exemption from the real estate transfer tax.
  • United States: The California Department of Tax and Fee Administration issued a proposed regulation containing examples of transactions in which a company would be considered “facilitating” a sale for purposes of the marketplace law, including a few examples addressing the “carve-out” from the marketplace rules for entities that merely advertise goods for sale and refer purchasers to a seller.
  • United States: The Maine Revenue Services issued “frequently asked questions” (FAQs) for marketplace facilitators that address registration, reporting and filing requirements.
  • United States: The Massachusetts Department of Revenue adopted an emergency regulation addressing the sales and use tax obligations of remote sellers and marketplace facilitators.
  • United States: The Texas Comptroller issued guidance for remote sellers and marketplace facilitators, which includes information on registration and reporting requirements.

Read TaxNewsFlash-Indirect Tax

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