close
Share with your friends

KPMG’s Week in Tax: 24 - 28 August 2020

KPMG’s Week in Tax: 24 - 28 August 2020

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

1000

Related content

United States

  • The IRS announced applications for the 2021 Compliance Assurance Process (CAP) program are due beginning 1 September 2020 and ending 13 November 2020.
  • An IRS practice unit focuses on the foreign-earned income of individuals for purposes of section 911.
  • The U.S. Tax Court held that the taxpayer’s gross receipts from the leasing of processed marine seismic data during 2008 were not eligible for the then-available deduction under section 199(c)(5). (Section 199 was repealed for tax years beginning after 31 December 2017 by the 2017 tax law.)
  • U.S. Senate Finance Committee leaders released a report on their investigation into the abuse of syndicated conservation-easement transactions—expressing a belief that Congress, the IRS, and the Treasury Department need further action to preserve the integrity of the conservation-easement tax deduction.
  • OMB’s Office of Information and Regulatory Affairs (OIRA) completed its review of final regulations under section 59A—the “base erosion and anti-abuse tax” or “BEAT” provisions that were enacted as part of the 2017 tax law. Treasury and the IRS can now be expected to release these final regulations for publication in the Federal Register—the exact date of publication not being known.
  • An IRS memorandum provides interim guidance for IRS field personnel on the criteria to be applied and the process to be used when considering requests for designation of issues (cases) for litigation made to the Office of Chief Counsel.
  • An IRS release reminds individual taxpayers that the deadline to rollover or repay retirement plan “required minimum distributions” is 31 August 2020. Certain required minimum distributions that are not rolled over or repaid could be subject to income tax.
  • A KPMG report on Joe Biden’s possible federal tax agenda was updated to include a new “frequently asked question” (FAQ): Could legislation be enacted increasing tax rates retroactively?
  • The IRS announced relief for taxpayers affected by the California wildfires and for taxpayers affected by the derecho in Iowa. In general, tax returns and tax payments with a 15 October 2020 due date are postponed to 15 December 2020.


State and local tax updates

  • Tax authorities in Hawaii, Montana, New Hampshire, and Ohio released guidance to provide tax relief in response to the COVID-19 pandemic.
  • Arizona’s Supreme Court held a ballot initiative that would impose a 3.5% income tax surcharge on taxable income above $250,000 annually for single persons or married persons filing separately, and on taxable income above $500,000 annually for married persons filing jointly (with the revenue raised to fund an education initiative) was eligible to be placed on the November 2020 ballot for consideration by the voters.
  • Nebraska’s Supreme Court held that a contractor specializing in building and maintaining cellular towers, transmission lines, and other improvements at cellular sites was liable for uncollected sales tax on its service receipts  The Tennessee Department of Revenue issued guidelines concerning the use of IRC section 163(j) interest-expense carryforwards for tax years beginning on or after 1 January 2020 (when Tennessee decoupled from section 163(j) and no longer limits the deduction for interest expense).

Read TaxNewsFlash-United States

Exempt Organizations

  • OIRA received for review final regulations under section 4968 relating to the excise tax on college net investment income. Once review is complete, Treasury and the IRS can be expected to release these final regulations for publication in the Federal Register.

Read TaxNewsFlash-Exempt Organizations

Transfer Pricing

  • Australia: Guidance from the ATO addresses its concerns regarding “offshore gearing” structures and related-party financing.
  • UAE: Amendments to the country-by-country (CbC) reporting requirements modify the definition of “reporting entity” to specify that the ultimate parent entity of a multinational enterprise (MNE) group is the only entity of the MNE group required to comply with CbC reporting obligations.
  • Taiwan: The Ministry of Finance proposed measures to address disputes in transfer pricing audits with the release of draft amendments to the regulations governing transfer pricing assessments of non-arm’s length transactions.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Luxembourg: The tax authorities issued new versions of XSD schema and technical guidance under the FATCA and common reporting standard (CRS) regimes.
  • UAE: There is updated guidance, legislation, and regulations under the CRS regime.
  • China: The AEOI portal for the submission of CRS reports will remain closed through 31 August 2020 to allow for “network adjustments.”
  • Singapore: The Inland Revenue Authority of Singapore (IRAS) announced that beginning February 2021, it will adopt the new CRS XML schema (version 2.0) from the Organisation for Economic Cooperation and Development (OECD).

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • EU: The European Commission adopted measures to increase trade between the European Union and neighbouring countries in the Pan-Euro-Mediterranean (PEM) region, and specifically to update the “rules of origin” in certain preferential trade agreements with 20 PEM trading partners.

Read TaxNewsFlash-Trade & Customs

Africa

  • Nigeria: The National Industrial Court of Nigeria (Abuja judicial division) held that measures limiting retirees above the age of 50 years to 25% lump-sum payments were contrary to provisions of Nigerian law.

Read TaxNewsFlash-Africa

Americas

  • Argentina: Guidance concerns the electronic registration and reporting regime for sales, purchases, exports, and imports of goods and services for value added tax (VAT) purposes.
  • Costa Rica: Guidance on the registry of ultimate beneficiaries provides, among other items, a period of time for reporting the legal identity of the ultimate beneficiary and also when the interest of any shareholder equals or exceeds 15%. 
  • Canada: In Quebec, relief from late-filing penalties and an extension of time for the employer contribution credit to the health services fund are provided in response to the coronavirus (COVID-19) pandemic.
  • Canada: The Department of Finance announced a proposed four-week extension (to 26 September 2020) of the current treatment of furloughed employees under the Canada emergency wage subsidy.
  • Canada: Distributed investment plans—including investment limited partnerships—need to obtain specific details from investors by 15 October 2020 in order to comply with their goods and services tax / harmonized sales tax and Quebec sales tax (GST/HST and QST) obligations.
  • Canada: Tax provisions enacted in British Columbia’s budget bill include corporate income tax, indirect tax and provincial sales tax, and individual (personal) tax measures.
  • Canada: The federal government announced that it will extend the Canada emergency response benefit (CERB) program by four weeks and will simplify the employment insurance (EI) program to help eligible individuals transition from CERB to the EI system starting 27 September 2020.

Read TaxNewsFlash-Americas

Asia Pacific

  • Cambodia: The taxpayer registration process has been updated.
  • Japan: An updated list of “questions and answers” (Q&As) under the Japanese group relief system was released as guidance to implement the 2020 tax reform.
  • UAE: Guidance concerns the VAT treatment of e-commerce sales and of electronic services.
  • Singapore: Pending legislation would allow the Inland Revenue Authority of Singapore (IRAS) to address goods and services tax (GST) fraud committed by certain traders.
  • New Zealand: There are tax obligations for employers with employees who have relocated or become stranded in jurisdictions due the COVID-19 pandemic. Under a draft rule, non-resident employers would only have an obligation to withhold PAYE or return fringe benefit tax (FBT) and employers superannuation contributions tax (ESCT) when certain conditions are met.
  • Australia: The ATO released a “fact sheet” as guidance for employers regarding the proposed extension to the JobKeeper payment program. Once enacted, the changes would be effective from 28 September 2020.
  • India: A tribunal held that a long-term capital loss on the sale of equity shares/equity-oriented mutual funds on which security transfer tax has been paid is not allowed to be set-off and carried forward.
  • India: A tribunal noted that as facilitators to an Indian exporter, Indian banks act as a mediator between the exporter and the foreign bank representing the foreign importer. As such, the Indian banks are not the recipient of the services provided by the foreign bank. Thus, regarding the charges that are recovered or collected by the foreign bank, the Indian bank is not liable to pay services tax under the reverse-charge mechanism.
  • India: A tribunal held that the reimbursement made to foreign entities by an Indian company, for salary and other costs of seconded employees working in India, does not constitute fees for technical services under the applicable income tax treaties; and thus, there was no requirement to withhold tax.

Read TaxNewsFlash-Asia Pacific

Europe

  • Poland: Legislative proposals would introduce changes the Polish VAT law and would simplify VAT settlements and amend the “tax-free” travel tax refund system.
  • Sweden: Proposed changes to the tax relief rules available for foreign experts, scientists, and other key personnel that are temporarily in Sweden would apply for a maximum of five years (instead of the current three years). 
  • Italy: The tax authorities issued guidance that confirms the right of the recipient to recover VAT recharged by a supplier, following a self-disclosure by the supplier to correct the VAT treatment of the original transaction.
  • Netherlands: A judgment of the Court of Appeals (The Hague) addressed the tax treatment of bonus shares in respect of the fixed exemption under the work-related costs rules.

Read TaxNewsFlash-Europe

Indirect Tax

  • Argentina: Guidance concerns the electronic registration and reporting regime for sales, purchases, exports, and imports of goods and services for VAT purposes.
  • Canada: Distributed investment plans need to obtain specific details from investors by 15 October 2020 in order to comply with their GST/HST and QST obligations.
  • Canada: Tax provisions enacted in British Columbia’s budget bill include indirect tax and provincial sales tax measures.
  • Poland: Legislative proposals are intended to simplify the Polish VAT law.
  • UAE: Guidance concerns the VAT treatment of e-commerce sales and electronic services.
  • India: A tribunal held that a long-term capital loss on the sale of equity shares/equity-oriented mutual funds on which security transfer tax has been paid is not allowed to be set-off and carried forward.
  • India: A tribunal found Indian banks are not the recipient of the services provided by the foreign bank, and regarding the charges that are recovered or collected by the foreign bank, the Indian bank is not liable to pay services tax under the reverse-charge mechanism.
  • Singapore: Pending legislation would grant authority to the Inland Revenue Authority of Singapore (IRAS) to address GST fraud.
  • Italy: Guidance confirms the right of the recipient to recover VAT recharged by the supplier, following a self-disclosure by the supplier to correct the VAT treatment of the original transaction.
  • United States: Nebraska’s Supreme Court held that a contractor specializing in building and maintaining cellular towers, transmission lines, and other improvements at cellular sites was liable for uncollected sales tax on its service receipts.

Read TaxNewsFlash-Indirect Tax

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal