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KPMG’s Week in Tax: 9 - 13 March 2020

KPMG’s Week in Tax: 9 - 13 March 2020

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

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Europe

  • UK: The 2020 budget proposes certain business-related tax measures, but would maintain the 19% corporation tax rate from April 2020. The budget proposes a 2% digital services tax.
  • Italy: The Court of Justice of the European Union (CJEU) issued a judgment finding that the Italian VAT treatment of seconded staff is inconsistent with an EU VAT directive.
  • UK: A report lists and reports on the status of new income tax treaties within the UK’s treaty network.
  • Czech Republic: The tax authority agreed with a tax advisory group concerning the value added tax (VAT) treatment of benefit cards vouchers. 
  • Italy: The authorities and ministries have provided certain guidelines for businesses as a result of the coronavirus (COVID-19).
  • Italy: The tax authority issued a regulation to update the rules with regard to electronic invoicing (e-invoicing), for e-invoices issued and received as of 4 May 2020.

Read TaxNewsFlash-Europe

Americas

  • Canada: There are two measures to address taxpayer issues related to the coronavirus (COVID-19).
  • Canada: The Finance Minister is scheduled to deliver Canada’s 2020 federal budget on 30 March 2020.
  • Canada: The Department of Finance announced it will propose a temporary enhanced first-year capital cost allowance (CCA) rate of 100% for qualifying zero-emission off-road automotive vehicles and equipment, acquired on or after 2 March 2020.
  • Canada: Legislation in Nova Scotia—that would decrease the general corporate income tax rate and small business income tax rate—has advanced.
  • Canada: The 2020 budget in New Brunswick does not propose any changes to the corporate or individual (personal) tax rates but does include proposals concerning reduced property tax rates for commercial properties and for residential non-owner-occupied properties and reduced rates for the gasoline tax and diesel tax.
  • Canada: Quebec’s 2020 budget proposes tax relief measures for certain investments and innovation projects, but no changes to the individual (personal) or corporate tax rates.
  • Mexico: The Federal Executive intends to introduce an amendment to the Mexican Constitution to establish that no tax debt forgiveness can be granted by presidential decree. It is uncertain whether this ban would also apply to penalties or tax surcharges.
  • Panama: Taxpayers must certify that their current “tax equipment” that produces receipts and documents follows the requirements of new regulations.
  • Dominican Republic: Taxpayers with a fiscal year-end of 31 March and that want to acquire transferrable tax credits have until 31 March 2020.
  • Dominican Republic: A new regime is intended to promote alliances between the government and the private sector by providing special tax relief for eligible projects.

Read TaxNewsFlash-Americas

Africa

  • Nigeria: While details of the Finance Act, 2019 (Amendment) Bill, 2020 have not been made public, there are reports that proposals would establish that 1 February 2020 is the effective date of the legislative changes to the value added tax (VAT) law.
  • Nigeria: The upper house passed a bill that would aim for efficient regulation of businesses while minimizing the compliance burden of small and medium enterprises.

Read TaxNewsFlash-Africa

Asia Pacific

  • Australia: The High Court of Australia held that the phrase “sufficiently influenced” as used in the tax law does not mean control.
  • Australia: The tax authority announced tax relief administrative measures to assist Australian busineses experiencing financial difficulty as a result of the coronavirus (COVID-19) outbreak.
  • Japan: The deadline for individual income tax returns and payments is extended to 16 April 2020. The deadline for certain reports—known in English as the “Report of foreign assets” and “Report of assets and liabilities"—is also extended to 16 April 2020.
  • Cambodia: Guidance is intended to strengthen intellectual property agreements including trademark or service-mark licenses and franchise agreements.
  • Vietnam: Each year, the number of tax audits of companies in Vietnam continues to grow. The tax authorities are using more sophisticated methods for targeting companies—both international and domestic companies—from across many sectors. 

Read TaxNewsFlash-Asia Pacific

Transfer Pricing

  • Serbia: A “rulebook” contains the prescribed interest rates applicable for taxpayers that had or will have related-party financing during 2020. The rulebook has transfer pricing documentation implications.
  • OECD: Comments received in response to a consultation document on the 2020 review of country-by-country (CbC) reporting were publicly released. 

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Cayman Islands: Amendments were made to regulations concerning the FATCA and common reporting standard (CRS) regimes.
  • France: An updated version of FATCA technical guidance and an updated version of the CRS technical guidance are available for French financial institutions transmitting FATCA and CRS data.
  • France: Updated guidance relates to the collection and reporting of information on financial accounts that is to be automatically transmitted to competent foreign authorities under the FATCA and CRS regimes.
  • Germany: Updates regarding the CRS regime include a new XML schema (V2.0) for CRS purposes.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • The U.S. Court of Appeals for the Federal Circuit affirmed a grant of summary judgment for the government, concluding that U.S. Customs and Border Protection (CBP) had lawfully issued a notice to redeliver merchandise that violated 19 U.S.C. § 1526(e) by displaying a counterfeit certification mark.
  • The U.S. International Trade Commission issued a revision to the 2020 Harmonized Tariff Schedule of the United States (HTSUS) implementing: (1) recent changes to Section 301 tariffs on the European Union related to the large civil aircraft dispute at the World Trade Organization and (2) a recent round of exclusions from Section 301 tariffs on products from China.

Read TaxNewsFlash-Trade & Customs

United States

  • OMB’s Office of Information and Regulatory Affairs (OIRA) completed its review of proposed regulations concerning the net operating loss (NOL) deduction. Treasury and the IRS can now be expected to release these proposed regulations for publication in the Federal Register.
  • Notice 2020-15 was released as guidance allowing individual taxpayers with high-deductible health plans to receive testing and treatment related to the coronavirus (COVID-19) without jeopardizing the status of these health plans.
  • The IRS Large Business and International (LB&I) division publicly released a “practice unit” that concerns the calculation of the alternative minimum tax foreign tax credit (AMT FTC) for individual taxpayers.
  • The final application period for the “California competes tax credit”—an income or franchise tax credit available to businesses that relocate or remain and grow in California—for the fiscal year ending 30 June will run from 9 March to 30 March 2020.
  • The Indiana Department of State Revenue issued a revenue ruling that concludes that a print and production company domiciled in Europe must register as an Indiana retail merchant under the state’s economic nexus law.
  • North Carolina’s highest court affirmed a lower court decision that dividends, deducted for federal purposes, constitute “not-taxable income” and concluded that the taxpayer must reduce its “net economic losses” by these non-taxable dividends.
  • A Texas appeals court held that a health club that purchased gym equipment and certain kids’ club supplies was not entitled to a sale-for-resale exemption on the equipment but only for the supplies.
  • The Utah Tax Commission ruled that convenience and ticket order-processing fees were not subject to sales tax because the fees were charged only when a ticket was sold through a third-party vendor (and not when a customer purchased a ticket at the box office). 

Read TaxNewsFlash-United States

 

  • A coronavirus-related bill includes a tax provision that would exclude emergency medical leave benefits paid to individuals from their gross income.

Read TaxNewsFlash-Legislative Updates

Indirect Tax

  • UK: The 2020 budget proposes a digital services tax (to be imposed at a rate of 2%) and introduced from April 2020.
  • Czech Republic: The tax authority agreed with a tax advisory group to the VAT treatment of benefit cards vouchers. 
  • Canada: New Brunswick’s 2020 budget proposals include reduced property tax rates and reduced rates of the gasoline tax and diesel tax.
  • Panama: Taxpayers must certify that their current “tax equipment” applies the rules for receipts and other documentation.
  • Nigeria: There are reports that a legislative amendment would establish that 1 February 2020 is the effective date of the changes to the VAT law as enacted by the Finance Act, 2019.
  • Italy: A regulation updates the rules with regard to electronic invoicing (e-invoicing). The new technical specifications apply to e-invoices issued and received as of 4 May 2020.
  • Bahrain: The tax authority released guidance concerning the VAT regime.
  • United States: The Indiana Department of State Revenue issued a revenue ruling that concludes that a print and production company domiciled in Europe must register as an Indiana retail merchant under the state’s economic nexus law.
  • United States: A Texas appeals court held that a health club that purchased gym equipment and certain kids’ club supplies was not entitled to a sale-for-resale exemption on the equipment, but only for the supplies.
  • United States: The Utah Tax Commission ruled that convenience and ticket order-processing fees were not subject to sales tax because the fees were charged only when a ticket was sold through a third-party vendor (and not when a customer purchased a ticket at the box office). 

Read TaxNewsFlash-Indirect Tax

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