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KPMG’s Week in Tax: 6 - 10 January 2020

KPMG’s Week in Tax: 6 - 10 January 2020

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

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Asia Pacific

  • China: Guidance clarifying details of the 2019 annual comprehensive income tax reconciliation generally adopts policies set out in a consultation document, but introduces additions and changes to the obligations of withholding agents and information reporting and retention.
  • India: The union budget for 2020 is scheduled to be presented on 1 February 2020.
  • India: A new income tax rule prescribes the rules for electronic tax payments by taxpayers with sales exceeding INR50 crore.
  • India: The High Court of Madras held that the social welfare surcharge is an independent levy and, accordingly, must be remitted in cash and cannot be discharged by debiting the merchandise exports from India scheme (MEIS) / services export from India scheme (SEIS) scrips. 
  • India: The Karnataka High Court dismissed a writ petition filed by the taxpayers against prosecution proceedings initiated by the tax department for the company’s failure to deposit tax withheld at source.
  • Myanmar: Rules implementing beneficial ownership disclosure requirements, effective 1 January 2020, provide that records generally must be retained for five years.

Read TaxNewsFlash-Asia Pacific

Europe

  • Switzerland: The Swiss federal high court issued a decision in a case concerning what is referred to as a “perceived dividend stripping transaction.” The high court—following prior judgments—once again rejected a claim for a refund of Swiss withholding tax when the dividends were eventually distributed.
  • Croatia: Tax amendments are effective 1 January 2020 concerning corporate profit (income) tax, individual (personal) income tax, and the VAT regimes.
  • Ireland: Information returns relating to employee share participation schemes with respect to 2019 must be filed by 31 March 2020.
  • Italy: The “budget law” was enacted with an effective date of 1 January 2020, and includes value added tax (VAT) measures, a digital services tax, and a tax on single-use plastic items.
  • Sweden: The fees for applications related to work permits and residence permits have increased, effective 1 January 2020.
  • Austria: The new government has published its plans for governing, including its intentions in terms of taxation. Tax changes that possibly could be proposed include a reduction of the rate of corporate income tax, a focus on making taxation “more ecological,” and a taxpayer right to request an audit.

Read TaxNewsFlash-Europe

Transfer Pricing

  • EU: Transfer pricing developments that may be expected in Europe in 2020 concern base erosion and profit shifting (BEPS) implementation, new disclosure rules, international consensus on transfer pricing in a digital economy environment, operational transfer pricing, transfer pricing dispute resolution, and value chain analysis.

Read TaxNewsFlash-Transfer Pricing

Africa

  • Algeria: Tax-related provisions in the Finance Law 2020 concern a “flat tax” system, VAT, and the taxation of certain undistributed amounts, among other items.

Read TaxNewsFlash-Africa

Americas

  • Mexico: Tax measures for 2020 include a 6% VAT withholding rate for certain services; new provisions with respect to certain foreign transparent entities; and rules regarding the taxation of digital services.
  • Canada: There is a one-cent increase to the income tax deduction limits on tax-exempt allowances paid by employers to employees who use their personal vehicles for business purposes in 2020.
  • Canada: The interest on family income-splitting loans for 2019 must be paid by 30 January 2020 to avoid the application of attribution rules to investment income earned on the borrowed funds.
  • Canada: A proposal would extend the expiration period for amateur athlete trusts by one year (from eight years to nine years) for trusts that otherwise would have expired in 2019.
  • Canada: Corporations and other organizations preparing financial reports need to be aware of certain 2019 Canadian income tax rate and other changes that may need to be reflected in year-end financial statements.
  • Colombia: Tax reform legislation that includes “economic growth” provisions has been enacted. The law aims to: (1) reduce “effective corporate taxation” (corporate income tax plus dividend taxation) of non-treaty investors: and (2) provide tax stimulus measures to encourage investments in Colombia. 

Read TaxNewsFlash-Americas

FATCA / IGA / CRS

  • India: There is an updated version of the reporting portal user guide (v3.4) and an updated list of “frequently asked questions” (FAQs) relating to the FATCA and common reporting standard (CRS) regimes.
  • Japan: Proposals concerning the CRS regime were included in an outline of tax reform proposals as agreed to by the ruling coalition.
  • Liechtenstein: The tax authority issued amendments to the regulations concerning the automatic exchange of financial information (AEOI) in tax matters.
  • Netherlands: The tax administration announced the 2020 reporting deadlines for information returns relating to the FATCA and CRS regimes.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The Puerto Rico Department of Treasury issued guidance providing tax relief (in general, delayed filing and payment deadlines and exemption from sales tax for prepared foods) for those taxpayers affected by the earthquake in January 2020.
  • The U.S. Tax Court determined that a UK taxpayer’s charter income was subject to U.S. federal income tax because it related to oil and gas-related work conducted on the U.S. outer continental shelf and thus was effectively connected with the conduct of a U.S. trade or business. Furthermore, the income was determined not to be exempted by tax treaty provisions.
  • New law in Utah reduces corporate income tax rates, but includes sales tax increases with regard to food and fuel; eliminates certain exemptions; and expands the state’s sales tax base to include certain services. 
  • The annual report of the National Taxpayer Advocate for 2019 reflects an IRS focus on implementation of the Taxpayer First Act and taxpayer service.
  • The Office of the U.S. Trade Representative (USTR) held a public hearing regarding France’s digital services tax.
  • The U.S. Tax Court issued two opinions that generally concern a requirement under section 6751(b)(1) that IRS supervisory approval be given before penalties are assessed.
  • The Alcohol and Tobacco Tax and Trade Bureau (TTB) of the U.S. Treasury Department issued a reminder of the 2020 due dates for filing federal excise tax returns and operational reports. The due dates will depend on the taxpayer’s circumstances and business type.
  • U.S. state and local governments continue to respond to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. In Michigan, legislation requiring marketplace facilitators to collect and remit sales tax was enacted and is effective 1 January 2020. In Missouri and Florida, multiple bills that would adopt sales and use tax economic nexus and marketplace facilitator provisions have been pre-filed.
  • The California Office of Tax Appeals concluded that shareholders of an S corporation must apportion their pro-rata share of the gain realized on the S corporation’s sale of goodwill using the S corporation’s factors.
  • A Louisiana appeals court held that sales and use taxes related to online sales were to have been remitted to the local (parish) tax authority instead of to the state-level Department of Revenue.

Read TaxNewsFlash-United States

Trade & Customs

  • The U.S. Senate Finance Committee approved the United States-Mexico-Canada Agreement Implementation Act—legislation concerning the trade agreement known as “United States-Mexico-Canada” (USMCA) and would replace or update the North American Free Trade Agreement (NAFTA).

Read TaxNewsFlash-Trade & Customs

Indirect Tax

  • Croatia: Tax amendments effective 1 January 2020 concern VAT measures.
  • Italy: VAT measures, a digital services tax, and a tax on single-use plastic have been enacted.
  • Austria: Tax measures on the possible agenda of the new government include increased airline ticket and gasoline taxes.
  • Colombia: Tax reform legislation includes new rules to serve as guidance to determine the basis for VAT purposes of goods having an embedded national component as previously exported.
  • Algeria: Tax-related provisions in the Finance Law 2020 concern VAT and indirect tax measures.
  • United States: The USTR held a public hearing regarding France’s digital services.
  • United States: New law in Utah reflects increased sales taxes on food and fuel, while certain exemptions are eliminated, and the state’s sales tax base is expanded to include certain services. 
  • United States: In Michigan, legislation requiring marketplace facilitators to collect and remit sales tax was enacted and is effective 1 January 2020. In Missouri and Florida, multiple bills that would adopt sales and use tax economic nexus and marketplace facilitator provisions have been pre-filed.
  • United States: A Louisiana appeals court held that sales and use taxes related to online sales were to have been remitted to the local (parish) tax authority instead of to the state-level Department of Revenue.

Read TaxNewsFlash-Indirect Tax

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