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KPMG’s Week in Tax: 20 December 2019 - 3 January 2020

KPMG’s Week in Tax: 20 December 2019 - 3 January 2020

Tax developments or tax-related items reported during the holiday season (beginning 20 December 2019) include the following.

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U.S. Legislative Update

  • President Trump signed into law H.R. 1865, The Further Consolidated Appropriations Act, 2020—a government funding bill that includes significant tax provisions. A KPMG report provides preliminary analysis and observations regarding some of the key tax provisions in the new law.

Read TaxNewsFlash-Legislative Updates

United States

  • The IRS issued the annual revenue procedures for 2020.
  • Final regulations under section 1400Z-2 concern the rules for investments in opportunity zones. A KPMG report provides initial impressions and observations about these opportunity zone regulations.
  • Notice 2020-5 provides the standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving purposes in 2020.
  • The Alcohol and Tobacco Tax and Trade Bureau (TTB) issued a release noting that the craft beverage modernization and tax reform provisions of the 2017 U.S. tax law have been extended for one additional year, through 31 December 2020.
  • The IRS released updated versions of the 2019 draft instructions for Form 1065 and its Schedule K-1.
  • Final regulations provide guidance on due diligence and reporting rules that apply with regard to persons making certain U.S. source payments to foreign persons and with regard to certain aspects of reporting by foreign financial institutions on U.S. accounts.
  • Proposed regulations concern the source of income for certain sales of personal property.
  • The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a notice extending to 15 April 2021 the date for filing a “Report of Foreign Bank and Financial Accounts (FBAR)” by certain individuals who have only signature or other authority over certain foreign financial accounts.
  • The New Jersey Division of Taxation issued revised guidance to clarify that real estate investment trusts (REITs), regulated investment companies (RICs), and investment companies are not excluded from the unitary combined group for the 2019 tax year only.
  • An amended rule adopting an economic nexus standard for Texas franchise tax purposes was finalized, effective for federal accounting periods ending in 2019 and later.

Read TaxNewsFlash-United States

Americas

  • Argentina: A new law includes “emergency tax measures” to assist in recovery from the economic crisis. The tax measures include amendments in relation to income tax and dividend withholding tax rates; inflation adjustment for tax purposes; regularization of tax liabilities for micro, small or medium enterprises; personal property tax; and export duties. A new tax applies with regard to the acquisition of foreign currency and purchases made by Argentine residents using foreign currency.
  • Dominican Republic: Guidance issued by the customs authority—effective 8 January 2020—provides rules to regulate the shipping and export of merchandise from the Dominican Republic, and aims to promote exports under a new export process.

Read TaxNewsFlash-Americas

Asia Pacific

  • Oman: The 2020 budget does not reflect any revenues from the introduction of a value added tax (VAT); but the tax authority and the Ministry of Finance remain committed to the introduction of VAT and preparations continue in an effort to get the VAT legislation approved and published during 2020.
  • Thailand: A “tax calendar” for 2020 is designed to track the return filing and tax payment requirements.
  • China: The foreign exchange authorities introduced 12 new measures to facilitate China cross-border trade and investment, by removing restrictions on foreign invested enterprises from using their registered capital for domestic equity investments. 
  • China: The Ministry of Finance and the State Taxation Administration released guidance concerning the policies regarding the annual income tax reconciliation for individual taxpayers.
  • Indonesia: A regulation expands the availability of certain income tax benefits with respect to new investments made in Indonesia for a business that satisfies one of certain requirements.
  • Japan: The ruling coalition agreed to an outline of tax reform proposals that include measures relating to corporate, international tax, consumption tax, and the taxation of individuals. Details of the measures are expected when the actual bills are introduced.
  • India: The date for filing the annual goods and services tax (GST) return and reconciliation statement for FY 2017-18 has been extended to 31 January 2020 (from December 2019). The GST Council also approved GST rates for certain goods and services, scheduled to be effective in 2020.
  • New Zealand: A pending tax bill concerning research and development (R&D) and Kiwisaver was reported back from the Finance and Expenditure Committee and includes several new provisions.

Read TaxNewsFlash-Asia Pacific

Europe

  • EU: The European Commission released explanatory notes on the value added tax (VAT) “quick fixes” regime that are effective 1 January 2020.
  • Luxembourg: Parliament passed the 2020 budget bill that includes a provision concerning expiration of pre-2015 advance tax agreements as well as measures to transpose into Luxembourg domestic tax law the EU Anti-Tax Avoidance Directive 2 (ATAD 2).
  • UK: HM Revenue & Customs (HMRC) released updated guidance on the UK hybrid and other mismatches rules. The updated guidance reflects various legislative changes made to the hybrid mismatch rules and also provides clarification of HMRC’s position on a number of points of interpretation.
  • UK: A report considers what could be the possible tax agenda for corporation tax, digital services tax, and individual tax after the general election.

Read TaxNewsFlash-Europe

Transfer Pricing

  • Malaysia: The Inland Revenue Board issued a transfer pricing audit framework (2019) that replaces the transfer pricing audit framework from April 2013.
  • OECD: The Organisation for Economic Cooperation and Development (OECD) announced guidance for use by tax administrations and multinational enterprise (MNE) groups with regard to country-by-country (CbC) reporting pursuant to base erosion and profit shifting (BEPS) Action 13. The complete set of guidance concerning the interpretation and operation of BEPS Action 13 issued to date is included in the document, and it will continue to be updated with any future guidance.
  • Thailand: Beginning in 2020, certain taxpayers are required to submit a transfer pricing disclosure form. The information on the transfer pricing disclosure form may increase the customs valuation risk with regard to certain imports.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • United States: Final regulations provide guidance on due diligence and reporting rules that apply with regard to persons making certain U.S. source payments to foreign persons. The final regulations also provide guidance on certain aspects of reporting by foreign financial institutions on U.S. accounts.
  • Ireland: The Irish Revenue Commissioners updated guidance for Irish financial institutions and agents with respect to FATCA and the common reporting standard (CRS) registration and reporting procedures.

Read TaxNewsFlash-FATCA / IGA / CRS

Exempt Organizations

  • The “annual revenue procedures” for 2020 include one that specifically concerns exempt organizations described in section 501(c).
  • Notice 2020-5 provides the standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for charitable purposes in 2020.

Read TaxNewsFlash-Exempt Organizations

Indirect Tax

  • United States: The Alcohol and Tobacco Tax and Trade Bureau (TTB) issued a release noting that the craft beverage modernization and tax reform provisions of the 2017 U.S. tax law have been extended for one additional year, through 31 December 2020.
  • United States: An amended rule adopting an economic nexus standard for Texas franchise tax purposes was finalized.
  • EU: The European Commission released explanatory notes on the VAT “quick fixes” regime, effective 1 January 2020.
  • India: The date for filing the annual GST return and reconciliation statement for FY 2017-18 has been extended to 31 January 2020 (from December 2019).

Read TaxNewsFlash-Indirect Tax

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