KPMG’s Week in Tax: 2 - 6 November 2020
KPMG’s Week in Tax: 2 - 6 November 2020
Tax developments or tax-related items reported this week include the following.
- Belgium: Draft legislation introduces a new annual tax on securities accounts—to be reinstated as an indirect tax—that includes an anti-abuse provision that would apply retroactively as from 30 October 2020.
- Belgium: The Walloon government is strengthening the attractiveness of the “coup de pouce” loan program that provides a tax credit when individuals lend money to qualifying small and medium-size enterprises (SMEs) and to the self-employed in Wallonia.
- Sweden: Legislation to introduce the “economic employer concept” is effective 1 January 2021.
- Czech Republic: A municipal court in Prague issued a decision holding that the amount of consideration received from a third party for marketing services rendered abroad was includible in the tax base for purposes of determining a local supply of goods for value added tax (VAT) purposes.
- Italy: New requirements are effective beginning in 2021 concerning mandatory e-invoicing requirements. Also, the deadline for taxable persons and their intermediaries to activate a service portal for e-invoices has been extended to 28 February 2021.
- Slovakia: The Court of Justice of the European Union (CJEU) determined that an importer could not claim an import VAT deduction if the importer did not become the owner of the imported goods.
- UK: The coronavirus job retention scheme has been extended until December 2020.
- UK: HM Revenue & Customs issued guidance on the enhanced coronavirus job support scheme that is expected to be introduced in December 2020.
- Australia: A decision of the Full Federal Court concerns questions regarding ordinary income and the arm’s length value of “uneconomic assets” (wind and solar farms).
- Bahrain: Guidelines were issued to determine whether a transaction is a taxable reimbursement or a non-taxable disbursement for VAT purposes.
- Canada: The newly elected majority government in Saskatchewan is expected to introduce tax measures based on election platform promises, including a temporary reduction of the province's small business income tax rate.
FATCA / IGA / CRS
- United States: The IRS updated FAQs as guidance on how a QI (qualifying intermediary) that is not acting as a QDD (qualified derivatives dealer) is to take into account the good faith standard with respect to its section 871(m) transactions as an intermediary for purposes of its periodic review.
- Germany: The central tax office (BZSt) provided information for financial institutions concerning the common reporting standard (CRS) regime.
- Australia: Updated automatic exchange of information (AEOI) guidance incorporates changes made to the due diligence procedures for new individual account self-certifications.
- Cayman Islands: The FATCA and CRS reporting deadlines have been extended to 16 December 2020 (from the previously extended deadline of 16 November 2020).
- Netherlands: The Dutch tax administration released a document that answers questions from Parliament about the outcome of a test by the central bank with regard to Dutch citizens who have U.S. nationality.
Trade & Customs
- Saudi Arabia: New measures concerning the entry of certain consumer goods require manufacturers and importers to obtain clearance through the “SABER platform.”
- United States: The Office of the United States Trade Representative (USTR) announced that—effective 30 December 2020—$817 million in trade preferences for Thailand under the Generalized System of Preferences (GSP) program will be suspended.
- Lithuania: New transfer pricing documentation requirements generally will be effective 1 January 2021.
- Final regulations regarding the additional first year depreciation deduction under section 168(k) were released for publication in the Federal Register. A version of these regulations was previously released by the IRS.
- Final regulations update the life expectancy and distribution period tables that are used to calculate required minimum distributions from qualified retirement plans, individual retirement accounts (IRAs) and annuities, and certain other tax-favored employer-provided retirement arrangements.
- Final and temporary regulations were published in the Federal Register as rules for determining the amount of gain or loss treated as effectively connected with the conduct of a trade or business within the United States—“effectively connected gain” or “effectively connected loss”—under section 864(c)(8). The regulations concern foreign persons that recognize gain or loss from the sale or exchange of an interest in a partnership that is engaged in a trade or business within the United States.
- Final and proposed regulations implementing foreign tax credit measures were released for publication in the Federal Register (with publication scheduled for 12 November 2020).
- Through the end of this calendar year, employers have additional leeway to amend nonqualified deferred compensation (NQDC) arrangements, to remove outdated provisions requiring the delay of payments expected to be nondeductible under section 162(m).
- Rev. Rul. 2020-23 provides that section 403(b) retirement plans funded through individual or group section 403(b)(7) custodial accounts can be terminated through the distribution of individual custodial accounts, If a distributed custodial account continues to comply with certain requirements, no portion of the distributed custodial account is includible in gross income until amounts are actually paid out of the account to a participant or beneficiary.
- Notice 2020-80 requests comments on the application of annuity and spousal rights provisions related to distributions in certain plans described in Rev. Rul. 2020-23. Comments are due on or before 3 February 2021.
- A final rule requires group health plans and health insurance issuers in the individual and group markets to disclose, upon request, cost-sharing information to a participant, beneficiary, enrollee or that person’s authorized representative. The final rule also requires health plans and issuers to disclose in-network provider rates, historical out-of-network allowed amounts and the associated billed charges, and negotiated rates for prescription drugs.
- An interim final rule describes implementation of a provision of the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) that established Medicare Part B coverage and payment for a COVID-19 vaccine and its administration.
- Rev. Proc. 2020-48 provides discount factors for the 2020 accident year for use by insurance companies in computing discounted unpaid losses under section 846.
- Rev. Proc. 2020-49 extends until 30 September 2021 relief measures (allowing teleconferences) regarding the public approval requirement under section 147(f) for tax-exempt bonds.
- Correcting amendments made changes to final regulations governing the deduction for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI).
- A KPMG report outlines certain considerations for late year like-kind exchanges, including extending return filing deadlines, installment sale reporting, and allocating partnership liabilities under section 752.
State and local tax
- The New Jersey Division of Taxation posted guidance on its website explaining how combined groups can fix the “trapped dividend exclusion” issue.
- A ballot initiative in California proposed revisions to the taxation of commercial and industrial properties.
- The Indiana Department of Revenue issued a “letter of findings” rejecting a recreational vehicle (RV) dealer’s position that it was taxable in other jurisdictions so that its receipts did not have to be “thrown back” to Indiana and included in the Indiana sales factor numerator.
- A New Mexico appeals court held that a taxpayer was not required to file an amended return as a prerequisite to requesting a refund claim.
- A South Carolina administrative law court concluded that a statute allowing an investment tax credit for qualifying property placed in service was ambiguous as to whether the credit limitation was $5 million annually or $5 million over the taxpayer’s lifetime. Because the credit functioned as a deduction, the court concluded that ambiguity was resolved against the taxpayer.
- The IRS Tax Exempt and Government Entities (TE/GE) division released a fiscal year 2021 “program letter” (alternatively called a “work plan” or “priority letter” in past years) that sets out the TE/GE compliance priorities.
- Rev. Proc. 2020-49 extends temporary relief measures regarding the public approval requirement under section 147(f) for tax-exempt bonds. The revenue procedure extends until 30 September 2021 the period during which hearings may be held by teleconference for the purpose of satisfying the public approval requirement.
The items described above are also reported as editions of TaxNewsFlash:
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