KPMG’s Week in Tax: 22 - 26 June 2020

KPMG’s Week in Tax: 22 - 26 June 2020

Tax developments from around the globe continue to focus on tax and economic relief in response to the coronavirus (COVID-19) pandemic.

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For more on these COVID-19-related tax developments, read: Coronavirus (COVID-19) tax developments

The following discussion generally focuses on other tax developments reported this week.

Transfer Pricing

  • South Africa: The Supplementary Budget 2020 specifically mentions improved tax collection and administration, and with respect to this goal, the South African Revenue Service will focus on increasing international tax collection and transfer pricing.
  • Netherlands: A decree provides, from a Dutch perspective, a detailed explanation and interpretation of the implementation of the mutual agreement procedures (MAP).
  • Australia: The Australian Taxation Office issued guidance addressing how taxpayers can evidence the impact of COVID-19 on their transfer pricing.
  • United States: The U.S. Supreme Court denied a taxpayer’s petition for certiorari in a case from the Ninth Circuit that in 2019 reversed the Tax Court and instead upheld as valid Treasury regulations requiring the sharing of stock-based compensation costs between parties in a qualified cost-sharing arrangement.

Read TaxNewsFlash-Transfer Pricing

United States

  • Updated FAQs from the IRS address the employee retention credit and include clarifications and expanded examples.
  • The U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) further extended through 1 September 2020 the waiver of a requirement that brewers must first submit to TTB a “Notice of Intent” regarding permission to destroy tax-paid beer at off-brewery premises.
  • Notice 2020-48 extends the deadline to 31 October 2020 for the federal excise tax on sales of sport fishing equipment and on sales of archery equipment (bows and arrows).
  • Notice 2020-51 concerns waivers of the required minimum distributions from certain retirement plans for 2020, allowed as relief pursuant to the CARES Act.
  • The Office of the Comptroller of the Currency announced relief for banks in the form of reduced assessments.
  • KPMG updated a report of relief measures provided by state and local governments, with new information from Colorado, Iowa, and New York City.
     

Other U.S. tax developments this week include:

  • Proposed regulations concerning the 2017 tax law changes that disallow a deduction for the expense of any section 132(f) qualified transportation fringe benefits, including qualified parking, provided to an employee.
  • Relief (such as extensions of time) was provided to taxpayers affected by April 2020 tornadoes, severe storms, and flooding in Mississippi, South Carolina, and Tennessee.
  • The U.S. Supreme Court denied a taxpayer’s petition for certiorari in a case from the Ninth Circuit that upheld as valid Treasury regulations requiring the sharing of stock-based compensation costs between parties in a qualified cost-sharing arrangement.
  • Updates from Colorado, Louisiana, and Mississippi concern remote sellers and marketplace facilitators.
  • Alabama’s tax tribunal held that amounts paid by a taxpayer to a related company for services performed by workers employed by the related company were not includable in the taxpayer’s own payroll factor.
  • The Arkansas Department of Finance and Administration determined that although commissions received from restaurants by a food delivery service provider were not taxable, the provider was required to collect and remit tax on sales of food ordered through its online platform because it was considered a marketplace facilitator under Arkansas law.
  • The California Office of Tax Appeals released what appears to be conflicting decisions in two cases involving partnerships seeking relief from per-partner late-filing penalties. 

Read TaxNewsFlash-United States
 

  • The U.S. House Rules Committee released the text of an infrastructure bill—“The Moving Forward Act” (H.R. 2)—that includes a host of tax provisions. House floor action is likely before 4 July 2020.

Read TaxNewsFlash-Legislative Updates

Exempt Organizations

  • The IRS updated a “frequently asked question” (FAQ) on the employee retention credit concerning the definition of gross receipts for a tax-exempt employer.

Read TaxNewsFlash-Exempt Organizations

Asia Pacific

  • Singapore: The Board of Review addressed what is the appropriate determination of “residue of expenditure” (ROE) and capital allowances available for the taxpayer’s ships when the ships are de-registered.
  • Cambodia: Rules concern application of value added tax (VAT) on the sale of long-term tangible assets.
  • India: A tribunal—in a case concerning the tax treatment under the income tax treaty between India and the Netherlands of a payment of guarantee fees made to a Netherlands-based holding company—held that in general the guarantee fees paid by the taxpayer to the holding company were not payments of interest under the tax treaty.
  • Vietnam: New withholding tax rules for non-resident enterprises selling goods and services into Vietnam via digital and e-commerce supply chains will be effective beginning in 2021.
  • Malaysia: Payments of goods and services tax (GST) refunds are scheduled to begin 22 June 2020 and continue through December 2020. 

Read TaxNewsFlash-Asia Pacific

Europe

  • Poland: Tax measures are included in new law and concern the treatment of hybrid transactions and hybrid entities, “call-off stock” arrangements, and the automatic exchange of information on cross-border arrangements.
  • Poland: The effective date of withholding tax rules for corporate income tax purposes has again been postponed. The new effective date is 31 December 2020. 
  • Sweden: A proposal to introduce an “economic employer concept” could affect foreign employers that have employee temporarily working in Sweden.
  • EU: The European Council announced more time for EU Member States to comply with certain rules on cross-border information reporting (MDR and CRS).
  • Belgium: The Belgian Constitutional Court—in a case that previously had been referred to the Court of Justice of the European Union (CJEU)—held that the stock exchange tax is compatible with EU law.

Read TaxNewsFlash-Europe

Africa

  • Nigeria: The taxation of digital activities and services provided by non-Nigerian companies having a “significant economic presence” in Nigeria is addressed in guidance.
  • Nigeria: Guidance implements provisions of Finance Act, 2019 concerning VAT, regulated securities lending transactions, companies income tax, stamp duty, business reorganisations, real estate investment companies, and insurance company taxation, among others.

Read TaxNewsFlash-Africa

Americas

  • Canada: Certain non-resident individuals have more time—until 1 September 2020—to file form T1159 for their 2019 tax year.

Read TaxNewsFlash-Americas

FATCA / IGA / CRS

  • Luxembourg: Parliament passed a bill that enacted into domestic tax law the common reporting standard (CRS) and FATCA rules.
  • Liechtenstein: The tax authority (1) updated the XML schema under the CRS and (2) announced that Kuwait will now be a non-reciprocal automatic exchange of information (AEOI) partner country until further notice.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • United States: The Office of the U.S. Trade Representative (USTR) released a “request for comments” about increased duties on products imported from the EU concerning enforcement of U.S. World Trade Organization (WTO) findings in the large civil aircraft dispute.
  • United States: The USTR is considering a possible extension for up to 12 months of particular exclusions granted under the initial five product exclusion notices concerning the investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.
  • Poland: Legislation amends “call-off stock” arrangement rules.
  • Saudi Arabia: An increase to the rates of customs duties is effective 20 June 2020. The increased customs duties rates will range from 0.5% to 15%.

Read TaxNewsFlash-Trade & Customs

Indirect Tax

  • United States: A waiver of the requirement that brewers first submit a “Notice of Intent” regarding permission to destroy tax-paid beer at off-brewery premises is extended through 1 September 2020.
  • United States: More time is allowed to file returns and to remit federal excise taxes on sales of sport fishing equipment and on sales of archery equipment (bows and arrows). 
  • Bulgaria: A temporary reduction to 9% for VAT on certain goods and services is effective 1 July 2020.
  • Cambodia: Rules concern when VAT is applicable on the sale of long-term tangible assets.
  • Vietnam: New withholding tax rules apply for non-resident enterprises selling goods and services into Vietnam via digital and e-commerce supply chains, effective 2021.
  • Belgium: The Belgian Constitutional Court held that the stock exchange tax is compatible with EU law.
  • Malaysia: Payments of GST refunds are schedule to be made from 22 June 2020 and targeted to be completed by December 2020.
  • Nigeria: Digital activities and services of non-Nigerian companies with a “significant economic presence” in Nigeria are subject to tax, provided certain thresholds are satisfied.
  • Saudi Arabia: An increase to the rates of customs duties is effective 20 June 2020. The customs duties rate will be increased in a range from 0.5% to 15%.
  • United States: In Arkansas, commissions received from restaurants by a food delivery service provider were not taxable; however, the provider was required to collect and remit tax on sales of food ordered through its online platform because it was considered a marketplace facilitator under Arkansas law.
  • United States: Updates from Colorado, Louisiana, and Mississippi concern remote sellers and marketplace facilitators.

Read TaxNewsFlash-Indirect Tax

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