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KPMG’s Week in Tax: 23 - 27 November 2020

KPMG’s Week in Tax: 23 - 27 November 2020

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

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Europe

  • Austria: Draft legislation would implement an interest limitation rule in the corporate income tax law. Tax relief measures provided in response to the coronavirus (COVID-19) pandemic have been extended. There are proposed measures regarding “ecological tax reform” submitted to the Austrian parliament.
  • Belgium: Guidance concerning the mandatory disclosure and reporting of certain cross-border arrangements under DAC6 includes a user guide describing the electronic form to be used by an intermediary or the taxpayer for filing these reports.
  • Hungary: A temporarily reduced rate of VAT of 5% applies to early February 2021 for the supply of meals and non-alcoholic drinks prepared on site for takeaway. 
  • Lithuania: An exemption from corporate income tax is available as an incentive for qualifying investment projects for the period 1 January 2021 through 31 December 2025.
  • Germany: German tax filing and withholding tax obligations can be triggered by intellectual property (IP) structures without an obvious nexus to Germany.
  • Germany: Tax-related developments include judgments from lower tax courts concerning the termination and non-performance of a profit-transfer agreement in the event of insolvency, and  financial integration in the event of merger during the year. There is administrative guidance on the tax exemption of gains on foreign currency hedges, and application of the group exemption provision for real estate transfer tax purposes.
  • Ireland: Qualifying businesses can file a claim for weekly cash payments under the “COVID restrictions support scheme” (CRSS).

Read TaxNewsFlash-Europe

Africa

  • South Africa: A clarification of the position of the South African Revenue Service (SARS) regarding VAT apportionment rulings is that these rulings do not constitute an “official publication” of the tax administration.
  • Nigeria: A tax guide for 2020 provides an overview of Nigeria’s taxes, regulations, and investment incentives available to companies and individuals.
  • Nigeria: Tax provisions included in the proposed Finance Bill, 2020 concern a reduction in the minimum tax rate of gross turnover for two financial years, an exemption from having to pay tertiary education tax by small companies, and tax relief for companies that donate to a COVID-19 relief fund.

Read TaxNewsFlash-Africa

Americas

  • Canada: New trust reporting rules apply to tax years ending after 30 December 2021 (that is, the rules effectively apply to trust's tax years ending on or after 31 December 2021). Trusts that fail to report this required information may face significant penalties of up to 5% of the highest total fair market value of all property held within the trust during the year.
  • Canada: Individual taxpayers need to consider their tax position as 2020 draws to a close, and in particular to evaluate important tax issues, deadlines, and planning opportunities for 2020.
  • Canada: The Canada Revenue Agency (CRA) launched a new online application portal for the Canada emergency rent subsidy (CERS). Eligible tenants and property owners may receive support payments as early as 4 December 2020.
  • Mexico: A proposal to revise provisions of the labor and income tax laws concerns the subcontracting of personnel. 

Read TaxNewsFlash-Americas

Asia Pacific

  • Bahrain: The VAT law has a specific “related-party” provision governing the “employer-employee” relationship, and in particular VAT implications on the provision of medical coverage provided by insurance companies to their staff.
  • Malaysia: An updated framework for tax audits of finance and insurance sector is effective 18 November 2020.
  • Qatar: Contracts concluded by taxpayers must be submitted and reported through the new tax administration portal (Dhareeba).
  • Australia: The Victoria state government’s budget for 2020-2021 includes (1) a new jobs tax credit program providing a payroll tax reduction, (2) proposals for targeted land tax and transfer duty concessions, and (3) other tax relief measures.

Read TaxNewsFlash-Asia Pacific

BEPS

  • OECD: The Organisation for Economic Cooperation and Development (OECD) released a report of the 2020 reviews by the OECD Forum on Harmful Tax Practices, revealing the tax regimes of 18 jurisdictions are now in line with the BEPS Action 5 minimum standard.

Read TaxNewsFlash-BEPS

Transfer Pricing

  • Australia: Practical considerations can be gleaned from a Full Federal Court decision to assist taxpayers in managing the pricing of cross-border arrangements.

Read TaxNewsFlash-Transfer Pricing

United States

  • The IRS posted to its website a version of final regulations as guidance implementing legislative changes to the like-kind exchange rules under Code section 1031.
  • OMB’s Office of Information and Regulatory Affairs (OIRA) completed its review of final and proposed regulations relating to the exception from passive income for certain foreign insurance companies.
  • The adjusted applicable dollar amount that applies for determining the Patient-Centered Outcomes Research Trust Fund (PCORTF) fee for policy years and plan years ending on or after 1 October 2020, and before 1 October 2021, is equal to $2.66.
  • President-elect Biden reportedly selected Janet Yellen to be the Secretary of the U.S. Treasury.
  • KPMG reports:
    • Provide analysis of final and proposed foreign tax credit regulations
    • Offer initial impressions of the final regulations under sections 245A and 954(c)(6) and correcting amendments that were released in November 2020
    • Provide year-end tax planning as well as planning for the year ahead for individual taxpayers


State and local tax

  • California: A state trial court issued an order barring the Department of Tax and Fee Administration from enforcing a sales tax regulation regarding “bundled sales” of mobile devices and wireless telecommunications service. 
  • Massachusetts: Separate versions of an appropriations bill were passed by the House and Senate, and include accelerated sales tax remittances by certain vendors.
  • Massachusetts: The Appellate Tax Board recently upheld the imposition of tax on capital gain realized by a non-resident S corporation from the sale of an interest in a Massachusetts limited liability corporation (LLC).
  • Nebraska: The Department of Revenue revised a general information letter addressing the state tax treatment of global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII). 

Read TaxNewsFlash-United States

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