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KPMG’s Week in Tax: 7 - 11 September 2020

KPMG’s Week in Tax: 7 - 11 September 2020

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


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Asia Pacific

  • Bahrain: A list of “frequently asked questions” (FAQs) concerning value added tax (VAT) has been updated to include a new section about the assessment review and appeal process.
  • UAE: New economic substance regulations were issued and are effective retroactively from 1 January 2019.
  • Australia: The Australian Taxation Office (ATO) is contacting taxpayers about the reporting of certain hybrid arrangements.  
  • Australia: The ATO issued updated guidance concerning the hybrid mismatch rules. The amendments generally apply to income years beginning on or after 1 January 2019.
  • Australia: The ATO clarified for employers that JobKeeper payments do not need to be included in aggregated turnover of the taxpayer entities.
  • Australia: The South Australian government announced a six-month extension—to 30 April 2021—of the land tax relief measures provided for residential and commercial landlords affected by restrictions in response to the COVID-19 pandemic restrictions.
  • China: Guidance issued by the State Tax Administration addresses how the permanent establishment (PE) and tax residence rules will be applied in the context of the COVID-19 pandemic and the resulting disruptions to cross-border travel.
  • India: A tribunal—in a case concerning the tax treatment of testing and certification services provided by foreign entities—held that payments made by the taxpayer in India to various foreign entities (located in the United States, the Netherlands, China, and Germany) for testing and certification of its products were not taxable or alternatively were taxable, depending on the location of the foreign entity.
  • India: A tribunal held that the taxpayer was eligible for a refund of tax withheld at source even when the corresponding income was not taxable in India.
  • Japan: The cabinet orders relating to local tax for purposes of the Japanese group relief system have been published in the official gazette.

Read TaxNewsFlash-Asia Pacific


  • France: Tax measures as part of a two-year €100 billion “economic stimulus plan” include a structured decrease to the territorial economic contribution and the company property tax. 
  • Germany: A lower court decision addresses an add-back for trade tax purposes. Draft guidance on the corporate tax law was released. There are requirements for electronic cash register systems.
  • Poland: A draft bill would amend the corporate income tax and individual (personal) income tax laws as well as the flat-rate income tax for certain revenues of natural persons. There are expectations that the proposals could be passed by the Council of Ministers in the third quarter of 2020.
  • Poland: Planned amendments to the rules regarding the withholding tax imposed on payments made to foreign providers of intangible services are proposed to be effective beginning 1 January 2021.
  • Belgium: A tax exemption is available for dividends paid or allocated from 1 January 2019 at the established amount of €800.
  • Netherlands: A bill that would amend certain pension provisions includes measures concerning lump-sum payments, early retirement, and the leave-savings scheme.
  • Russia-Cyprus: Representatives from the governments of Russia and Cyprus reached a compromise in their negotiations for a new Protocol to amend the existing income tax treaty concerning the withholding tax rates on dividends and interest payments and a “limitation on benefit” measure.

Read TaxNewsFlash-Europe

Transfer Pricing

  • Poland: Proposed changes to the transfer pricing rules would make the amount of tax paid by the largest entities, especially multinationals, dependent on the place where the income is actually earned and would extend application of the arm's length principle in instances when the beneficial owner is located in a “tax haven” jurisdiction.

Read TaxNewsFlash-Transfer Pricing


  • Finland: The tax administration issued an updated list of “frequently asked questions” (FAQs) relating to the FATCA and common reporting standard (CRS) regimes.
  • Italy: The Ministry of Economy and Finance issued a decree that amends the rules related to the automatic exchange of information on financial accounts (AEOI) under the CRS regime.
  • Netherlands: Competent authorities in the Netherlands and the United States updated the FATCA intergovernmental agreement (IGA) to include additional entities as “non-reporting Netherlands financial institutions” that are treated as deemed-compliant foreign financial institutions.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • The IRS added six more forms and returns that cannot be filed electronically but are allowed to be signed digitally.
  • Final regulations concern the computation of life insurance reserves and the change in basis of computing certain reserves of insurance companies. A related revenue ruling examines 10 factual situations to determine whether there is a change in basis of computing life insurance reserves under section 807(f) as amended by the 2017 U.S. tax law.
  • Notice 2020-66 provides that certain Medicaid coverage of COVID-19 testing and diagnostic services is not “minimum essential coverage” for purposes of section 36B. Therefore, an individual’s eligibility for Medicaid coverage solely for COVID-19 testing and diagnostic services will not prevent that person from being able to claim a premium tax credit under section 36B.
  • Notice 2020-68 provides guidance in “question and answer” (Q&A) format concerning implementation of certain retirement plan measures enacted in 2019.
  • The U.S. Tax Court in a “reviewed opinion” held that a properly filed income tax return triggers the statute of limitations for a deficiency notice, regardless of the fact that IRS initially rejected the return—electronically filed—for not having a required personal identification number.
  • Rev. Proc. 2020-40 modifies prior guidance to expand situations when the plan amendment deadline for discretionary amendments made to qualified pre-approved plans and section 403(b) pre-approved plans may be extended.
  • Rev. Proc. 2020-41 provides the domestic asset / liability percentages and domestic investment yields needed by foreign insurance companies to compute their minimum effectively connected net investment income under section 842(b) for tax years beginning after 31 December 2018.
  • A KPMG report examines changes between the versions of final regulations and proposed regulations released last week for publication in the Federal Register against the versions released by the IRS in late July 2020. The changes generally relate to the effective date and reliance provisions.

Read TaxNewsFlash-United States

Trade & Customs

  • The Bureau of Industry and Security (BIS) of the U.S. Commerce Department released a final rule that revises the Commerce Control List (CCL) and other corresponding parts of the Export Administration Regulations (EAR), to implement changes made with regard to the “Wassenaar Arrangement List of Dual-Use Goods and Technologies and Munitions List.”

Read TaxNewsFlash-Trade & Customs

Exempt Organizations

  • OMB’s Office of Information and Regulatory Affairs (OIRA) completed its review of final regulations under section 4968 relating to the excise tax on college net investment income. Now that OIRA review of these final regulations has been completed, their release is expected but the exact date of release is unknown.

Read TaxNewsFlash-Exempt Organizations

Indirect Tax

  • Bahrain: An updated list of FAQs concerns VAT assessments and appeals.
  • Greece: It appears that a deadline extension for the payment of assessed tax liabilities also applies to assessed VAT liabilities. The extended deadline is 30 April 2021.
  • Australia: The South Australian government announced a six-month extension—to 30 April 2021—of the land tax relief measures provided for residential and commercial landlords affected by restrictions in response to the COVID-19 pandemic restrictions.

Read TaxNewsFlash-Indirect Tax

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