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KPMG’s Week in Tax: 25 - 29 November 2019

KPMG’s Week in Tax: 25 - 29 November 2019

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

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Transfer Pricing

  • Taiwan: A taxpayer (multinational company) that conducts controlled transactions and makes a one-time transfer pricing adjustment prior to closing the accounts for that fiscal year needs to satisfy certain requirements. The taxpayer must pay all relevant taxes and levies based on the adjusted transaction price, and the arm’s length standard must be satisfied.

Read TaxNewsFlash-Transfer Pricing

BEPS

  • Costa Rica: The OECD multilateral convention (MLI) was approved by Costa Rica to implement tax treaty-related measures to prevent base erosion and profit shifting (BEPS). Tax treaties wth Mexico and Spain will be affected.

Read TaxNewsFlash-BEPS

FATCA / IGA / CRS

  • Montserrat: Regulations are intended to provide financial institutions with information and details regarding their obligations under the FATCA and common reporting standard (CRS) regimes.
  • United States: The next testing phase for the FATCA International Data Exchange Service (IDES) will start 16 December and continue through 24 January 2020.
  • Austria: Amendments to the CRS rules—generally effective 1 January 2020—reflect changes to the list of non-reporting financial institutions, and the list of accounts that are to be treated as excluded accounts.
  • China: There are updated frequently asked questions (FAQs) on the automatic exchange of information (AEOI).
  • Finland: There is an updated list of FAQs relating to the FATCA, common reporting standard (CRS), and DAC2 rules.
  • Switzerland: The Swiss Federal Council adopted amendments to the automatic exchange of information (AEOI) rules that reflect recommendations of the Global Forum on Transparency and Exchange of Information for Tax Purposes.

Read TaxNewsFlash-FATCA / IGA / CRS

Africa

  • Kenya: The Finance Act, 2019 has been published in the official gazette, and includes provisions concerning income tax, value added tax (VAT), and excise tax. There also are measures addressing digital economy taxation issues.
  • Nigeria: There is new guidance concerning expatriate workers in the oil and gas industry.
  • South Africa: A decision from the tax court concerns retroactive (retrospective) application of an approval by the South African Revenue Service (SARS) of an alternative method of apportionment for VAT purposes.
  • South Africa: Pending legislation would limit the discretion of the SARS concerning retroactive approvals of tax-exempt status for organisations engaged in activities for the benefit of the public. 

Read TaxNewsFlash-Africa

Americas

  • Colombia: A bill proposes changes that concern the corporate income tax rate, VAT rules, and controlled foreign company (CFC) regime, among other items.
  • Costa Rica: Guidance items concern an exemption from income tax on certain profits of savings and credit cooperatives, and define “strategic sectors” for purposes of the free trade zone system.
  • Costa Rica: A new law focuses on regulating tourist rental services of non-traditional hosting provided through digital platforms and clarifies that the trading companies are responsible for paying the subject taxes.
  • Dominican Republic: Tax measures in the 2020 budget bill include various VAT rules such as expanded rules to include online or digital services as well as other tax measures.

Read TaxNewsFlash-Americas

Asia Pacific

  • Singapore: There may be tax implications for existing structures with payments between Singapore and Mauritius following the ratification by Mauritius of the multilateral instrument (MLI) pursuant to the base erosion and profit shifting (BEPS) project.
  • Singapore: The tax authority previously announced that administrative concessions allowing Singapore individuals to elect to be treated as non-residents for tax purposes will no longer be available. The tax authority subsequently clarified, in November 2019, that this rule would only affect Singaporeans who have not been employed overseas for the whole year.

Read TaxNewsFlash-Asia Pacific

Europe

  • Poland: The European Commission made a referral to the Court of Justice of the European Union for Poland’s rules that allow energy-intensive businesses to be exempted from the excise tax on coal and gas.
  • Poland: There is a new regime concerning a central register of beneficial owners requiring certain information be provided about companies and their owners.
  • Poland: The withholding tax regime that applies on certain payments has been postponed to 1 January 2020.
  • Sweden: Business taxpayers may want to consider certain tax changes before the end of 2019, such as new rules that may limit the deduction of interest and a reduced corporate income tax rate of 21.4%.

Read TaxNewsFlash-Europe

United States

  • The IRS released an interim guidance memorandum outlining field examination procedures for use by IRS examiners when auditing partnership returns under the centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015 (BBA).  
  • The Office of the U.S. Trade Representative (USTR) announced it expects to issue a report of the trade-related investigation of France’s digital services tax on 2 December 2019.  
  • Rev. Proc. 2019-48 provides guidance for taxpayers using per diem rates to substantiate the amount of ordinary and necessary business expenses paid or incurred while traveling away from home.
  • The California Office of Tax Appeals concluded that for the tax year at issue (2008), VAT and other taxes imposed on the provision of services to foreign customers were properly included in the sales factor for 2008. [Tax years after 2011, the sales factor statute was revised and adopted a new definition of gross receipts.]
  • An Illinois tax tribunal will review two deficiency notices that the taxpayer (a global payment business) challenged because the Department of Revenue applied the “throwout” rule and excluded certain of the taxpayer’s receipts from the sales factor denominator. Under Illinois law, receipts that are attributed to a jurisdiction where the taxpayer is not subject to tax are excluded from the denominator of the sales factor, and under Illinois rules, taxpayers are required to pay tax in another jurisdiction for the receipts to be considered “subject to tax” in that state or foreign country.
  • Certain life sciences companies creating net new jobs in Massachusetts in 2020 may be eligible for tax incentives.
  • The Ohio Board of Tax Appeals concluded that an individual who was the primary contact with the state tax auditors was a responsible person and was liable for unremitted sales taxes.

Read TaxNewsFlash-United States

Indirect Tax

  • Kenya: The Finance Act, 2019 includes provisions concerning VAT, excise tax, and digital tax measures
  • South Africa: A decision from the tax court concerns retroactive (retrospective) application of an approval by the South African Revenue Service (SARS) of an alternative method of apportionment for VAT purposes.
  • Costa Rica: A resolution provides that wire transfers of certain financial entities are not exempt from VAT.
  • Dominican Republic: Tax measures in the 2020 budget bill include the expanded application of VAT to online and digital services.
  • United States: The California Office of Tax Appeals concluded VAT and other taxes imposed on the provision of services to foreign customers were properly included in the sales factor for 2008. [Note the law changed in 2011.]
  • United States: An Illinois tax tribunal will review two deficiency notices that the taxpayer (a global payment business) challenged because the Department of Revenue applied the “throwout” rule and excluded certain of the taxpayer’s receipts from the sales factor denominator.
  • United States: The Ohio Board of Tax Appeals concluded an individual who was the primary contact with the state tax auditors was a responsible person and was liable for unremitted sales taxes.

Read TaxNewsFlash-Indirect Tax

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