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KPMG’s Week in Tax: 30 September - 4 October 2019

KPMG’s Week in Tax: 30 September - 4 October 2019

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

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Transfer Pricing

  • Greece: New country-by-country (CbC) notification procedures require electronic submissions via the tax administration’s website, effective 15 October 2019.
  • Nigeria: Federal Inland Revenue Service (FIRS) is preparing for the electronic submissions of transfer pricing forms and CbC reports in 2020. Once the electronic portal is operational, taxpayers will be able to complete and submit transfer pricing declaration and transfer pricing disclosure forms, CbC notification forms, and CbC reports electronically.
  • Zambia: Transfer pricing amendments in the 2020 budget concern price premium adjustments; sales agreements and third-party invoices relating to the sale of minerals; and “reference pricing” extensions to adjust the pricing of purchase between related or associated persons, among other items.
  • OECD: The “Platform for Collaboration on Tax” (a joint initiative of the IMF, OECD, UN and World Bank) is seeking feedback on a draft toolkit designed to help developing countries in the implementation of effective transfer pricing documentation requirements. Comments are requested by 8 November 2019.
  • Qatar: A ministerial decision includes guidance concerning: (1) CBC reporting requirements; (2) reporting period, due date, and format; (3) penalties for non-compliance; and (4) measures addressing Multilateral Competent Authority Agreement (MCAA) implications

Read TaxNewsFlash-Transfer Pricing

Asia Pacific

  • Taiwan: The Ministry of Finance announced a change in its policy to provide certain tax relief to foreign companies without a permanent establishment but that receive Taiwan-sourced income. Under this new policy, these foreign companies can now adopt a “deemed profit” approach to calculate their taxable Taiwan-sourced income—instead of trying to claim actual costs and expenses incurred—and then apply for refund on amounts of overpaid withholding tax.
  • Hong Kong: Guidance from the tax authority reflects a new position that foreign income taxes imposed on gross income—for instance, withholding tax imposed on gross royalties, service fees, and management fees—are no longer deductible under the general deductibility rules of Hong Kong tax law.
  • Indonesia: The tax authority issued technical guidance regarding the value added tax (VAT) treatment of “temporary imports” of goods that are used in providing taxable services from overseas.
  • Oman: Guidance has been issued to determine the type, value, and tax rate applicable to goods subject to excise tax.

Read TaxNewsFlash-Asia Pacific

Europe

  • Italy: A provincial tax court concluded that Italian withholding tax imposed on dividends paid to foreign foundations is discriminatory because Italian foundations benefit from lower taxation on the same dividends.
  • Switzerland: A proposal to revise the Swiss withholding tax and Swiss stamp tax regimes would introduce new rules with regard to withholding tax on certain interest payments and would provide an exemption from Swiss stamp tax for transactions with debt securities issued by Swiss entities.
  • Ireland: The deadline for corporate entities to register and disclose their beneficial owners is 22 November 2019.
  • Ireland: The government will announce details of budget 2020 on Tuesday, 8 October 2019.
  • Malta: Patent box rules (introduced in August 2019) provide incentives for taxpayers involved in the development and use of intangible assets.

Read TaxNewsFlash-Europe

Africa

  • Zambia: The 2020 budget was released, and includes measures concerning individual taxation, corporate taxation, carbon tax, transfer pricing, property transfer tax, VAT, and customs and excise tax.

Read TaxNewsFlash-Africa

Americas

  • Chile: Certain taxpayers may be eligible for abatement of interest and penalties.
  • Mexico: A legislative proposal concerning the taxation of services provided by digital platforms (in particular, foreign-based digital platforms) includes provisions to allow for the appropriate collection of tax and VAT in Mexico.

Read TaxNewsFlash-Americas

FATCA / IGA / CRS

  • Finland: The tax administration issued updated versions of guidance under the common reporting standard (CRS) / DAC2 and FATCA regimes.
  • Netherlands: A “practical guide” explains steps for financial institutions to follow in reporting information to the tax authorities under FATCA and CRS regimes.
  • Singapore: A new user guide provides additional guidance to reporting “Singapore-based financial institutions” with regard to certain data elements under the FATCA regime.
  • UAE: The Board of Directors for the Abu Dhabi Global Market approved regulations with regard to the CRS regime.
  • Saint Vincent and the Grenadines: The deadlines for submitting FATCA and CRS reports were extended again to 2 October 2019.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • The World Trade Organization (WTO) announced its decision in a dispute between United States and the European Union involving large civilian aircraft. A WTO arbitrator concluded the United States may request authorization to take countermeasures (that is, additional tariffs) for approximately U.S. $7.5 billion annually against the EU.
  • The European Commission launched the “EU customs trader portal”—an electronic single point-of-access to a number of EU customs systems.
  • The Office of the U.S. Trade Representative (USTR) released notices of product exclusions with regard to additional customs duties imposed on certain imports into the United States from China under the Section 301 investigation.

Read TaxNewsFlash-Trade & Customs

United States

  • In a Chief Counsel Advice (CCA) memorandum concerning life insurance companies, the IRS addressed the effect of an election to update the discounting interest rate when calculating tax reserves under prior law section 807(d)(4)(A).
  • A KPMG report highlights challenges encountered by multistate employers and their third-party providers in managing compliance issues associated with domestic, state-to-state, and short-term travel of their globally mobile workforce.
  • Proposed regulations under section 958(b)(4) and a related revenue procedure, Rev. Proc. 2019-40, aim to provide relief to U.S. persons that have ownership interests in or that make or receive payments to or from certain foreign corporations. Rev. Proc. 2019-40 limits the inquiries required by U.S. persons to determine whether certain foreign corporations are controlled foreign corporations (CFCs).
  • The IRS released draft versions of Form 1065 and Form 1120-S (and the related Schedules K-1) for the 2019 tax year of partnerships and S corporations.
  • Rev. Proc. 2019-39 provides a system of recurring remedial amendment periods for correcting “form defects” in a section 403(b) plan first occurring after 31 March 2020.
  • New Hampshire’s budget agreement reflects increased rates for business profits tax and business enterprise tax and updated tax, and reflects provisions concerning the federal tax provision referred to as “GILTI” (global intangible low-taxed income).
  • The Rhode Island Department of Revenue, in an administrative hearing decision, ruled that the taxpayer (a pass-through entity engaged in the business of repairing, leasing and selling large construction equipment) was required to collect and remit sales tax on transactions with an affiliate.
  • The Utah Tax Commission issued a private letter ruling concluding that a taxpayer—an online marketplace that facilitated third-party sales and sold internet-based advertising for third-party merchants’ goods and services under a “referral” business model—was not a “marketplace facilitator” for sales tax purposes for those sales occurring through its referral business.

Read TaxNewsFlash-United States

Cooperatives

  • The IRS released a draft version of Form 1120-C, U.S. Income Tax Return for Cooperative Associations, for the tax year 2019.
  • Notice 2019-54 provides tax relief for farmers and ranchers who were forced to sell livestock on account of drought in specific counties.

Read TaxNewsFlash-Cooperatives

Indirect Tax

  • Switzerland: Additional guidelines on a proposed reform of the Swiss stamp tax regimes would provide an exemption from Swiss stamp tax for transactions with debt securities issued by Swiss entities.
  • Indonesia: Technical guidance released by the tax authority concerns the VAT treatment of “temporary imports” of goods that are used in providing taxable services from overseas.
  • Zambia: There are tax measures included in the 2020 budget that relate to VAT and excise tax.
  • Mexico: A proposal concerning the taxation of services provided by digital platforms (in particular, foreign-based digital platforms) would provide for collection of VAT in Mexico.
  • Oman: Guidance concerns the type, value, and tax rate applicable to goods subject to excise tax.
  • United States: The Rhode Island Department of Revenue concluded the taxpayer (a pass-through entity engaged in the business of repairing, leasing and selling large construction equipment) was required to collect and remit sales tax on transactions with an affiliate.
  • United States: The Utah Tax Commission concluded a taxpayer (an online marketplace operating under the referral business model) was not a “marketplace facilitator” for sales occurring through its referral business.

Read TaxNewsFlash-Indirect Tax

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