KPMG’s Week in Tax: 30 November - 4 December 2020

KPMG’s Week in Tax: 30 November - 4 December 2020

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

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Transfer Pricing

  • Malaysia: Transfer pricing measures included in the Finance Bill 2020, proposed to be effective beginning in 2021, would amend the rules for transfer pricing documentation and transfer pricing adjustments.
  • Peru: The deadline for filing country-by-country (CbC) reports for fiscal years 2017, 2018, and 2019 is 29 January 2021.
  • Belgium: The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion in a matter concerning the Belgian practice of granting tax rulings and making downward adjustments to profits of entities that are part of multinational groups.
  • Australia: Updated guidance addresses the advance pricing arrangements (APA) decision-making process and improved governance across certain stages of the APA process.
  • Denmark: New legislation requires taxpayers to submit annually the transfer pricing documentation package—both the Master file and Local file—to the Danish tax authority no later than 60 days after the tax return deadline. The legislation will be effective for income years beginning on or after 1 January 2021.
  • Turkey: The deadline for multinational entities with a consolidated revenue equal to or greater than €750 million to file a CbC report for 2019 is 31 December 2020.
  • Ghana: Transfer pricing regulations (2020) replace regulations from 2012 and reflect certain BEPS recommendations and introduce safe harbor rules to simplify the documentation requirements of related-party transactions.
  • Australia: Certain “significant global entities” have more time—until 29 January 2021—to file their CbC reports.
  • UK: HM Revenue & Custom’s released a 2019/2020 annual report and 2019/2020 transfer pricing and diverted profits tax statistics confirming that transfer pricing remains a major focus of HMRC Large Business enquiries.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Isle of Man: Updated guidance concerns the FATCA and CRS regimes, and specifically regarding the XML schema.
  • Netherlands: The Dutch tax administration addressed FATCA issues encountered by Dutch citizens who have U.S. nationality (so-called “accidental Americans”).
  • Australia: Updated FATCA guidance and updated CRS guidance items have been issued.
  • Finland: There are updated versions of FATCA and CRS technical guidance.
  • OECD: A toolkit is designed to assist developing countries in implementing the automatic exchange of information (AEOI) standard.
  • Russia: Updated guidance for electronic reporting of financial market information relates to taxpayer identification.
  • United States: The “public-private key pairs” used for encryption for FATCA filings expire 13 December 2020 and will be replaced with a new key, effective 31 December 2020.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • UAE: Dubai Customs announced that an 80% discount will be offered on penalties applicable for customs cases and violations detected or committed before 31 March 2020, as a response to the COVID-19 pandemic.

Read TaxNewsFlash-Trade & Customs

Americas

  • Canada: Taxpayers in Canada have until 31 December 2020 to file a “fairness relief” request relating to certain tax years.
  • Canada: There is a 31 December 2020 deadline for employers regarding pension plans and their obligations for goods and services tax / harmonized sales tax (GST/HST) and Quebec sales tax (QST).
  • Canada: The government’s 2020 fall economic update did not include any individual or corporate tax rate changes, but included extensions of certain COVID-19 tax-relief measures.
  • Canada: Manitoba's budget implementation bill received Royal Assent. The legislation extends and enhances certain tax credits.
  • Mexico: Tax incentives for Mexico’s northern and southern border regions include reduced rates of income tax and value added tax (VAT).
  • Mexico: There are rules concerning the disclosure of reportable tax schemes and for filing information returns.
  • Panama: A new law includes tax incentives for the real estate sector.

Read TaxNewsFlash-Americas

Asia Pacific

  • New Zealand: Proposed legislation would provide a new 39% individual (personal) tax rate on income above NZ$180,000 beginning 1 April 2021.
  • Thailand: An exemption from certain taxes and fees is available with regard to debt restructuring performed or executed during the period from 1 January 2020 to 31 December 2021.
  • Australia: The Queensland budget 2020-2021 includes payroll tax relief and land tax relief measures to support those economically affected by the COVID-19 pandemic.
  • Saudi Arabia: A deadline of 31 December 2020 applies for the waiver of penalties for Zakat, income tax, withholding tax, VAT, and excise tax.
  • Hong Kong: The “double rate” of stamp tax (duty) on sales of commercial property has been repealed, effective 26 November 2020.  
  • India: The Union Cabinet approved a production-linked incentive scheme to provide financial assistance grants to promote the domestic manufacture of “white goods” (e.g., air conditioners and LED systems).
  • India: A tribunal held that the taxpayer (an individual resident of India who was on a work assignment in the UK) was eligible for a foreign tax credit with regard to the taxes paid in the UK on the UK salary paid to the taxpayer. 
  • India: A tribunal held that the taxpayer could claim a deduction under section 10AA from its “commercial profits” before claiming the tax depreciation and the investment allowance.
  • India: The Karnataka High Court held that “wheeling and transmission charges” received by the taxpayer (a government undertaking engaged in the transmission of electricity) from constituent states did not accrue to the taxpayer but was “hypothetical income.”
  • India: A tribunal held that goodwill arising during an amalgamation was part of the intangible assets and thus was eligible for amortization.
  • Japan: A KPMG report provides a general overview of the tax system in Japan.
  • New Zealand: Inland Revenue recently sent letters to tax agents informing them that certain clients may have entered into transactions subject to the residential “bright-line test.” These taxpayers are required to pay income tax on any profit they have made on the sale of bright-line residential property.

Read TaxNewsFlash-Asia Pacific

Europe

  • Poland: Legislation revising the income tax laws generally changes the tax treatment of partnerships by requiring them to pay corporate income tax beginning 1 January 2021 (except limited partnerships can elect a 1 May 2021 effective date).
  • Russia: New rules apply to the tracing of goods, and have VAT implications for invoices and reports. The rules have an effective date of 1 July 2021.
  • France: Mandatory e-invoicing will be required and phased-in beginning in 2023. Thus, companies will no longer be able to issue or receive paper invoices.
  • Germany: The language that must be used regarding certain marketing of units of EU UCITS is German.
  • EU: A compromise reached by EU Member States extends the EU tax transparency rules to digital platforms. The EU Member States also exchanged views on tax challenges of the digital economy.
  • Germany: An issue in a case referred to the Court of Justice of the European Union (CJEU) concerns what is the appropriate rate of VAT and provides a reminder for taxpayers to evaluate the categorization of their goods.
  • Luxembourg: Given that beginning 1 January 2021, the UK will be considered as a third country for VAT purposes, Luxembourg entities with UK trade need to consider appropriate steps now.
  • Netherlands: The annual salary adjustments for “highly skilled migrant workers” are effective 1 January 2021.
  • Belgium: A legislative proposal would introduce an income tax exemption for landlords of commercial real estate that voluntarily waive rent amounts for the period between 12 March 2020 and 31 December 2021, in response to the COVID-19 pandemic.
  • Belgium: The Belgian high court issued a decision regarding the tax treatment of income under provisions of the Belgium-France income tax treaty.
  • UK: Employer-provided testing for COVID-19 may qualify for a benefit-in-kind exemption, but not all testing may be eligible.
  • UK: A recent amendment to HM Revenue & Customs guidance indicates lower rates of stamp duty land tax may apply on purchases of mixed residential and non-residential property.

Read TaxNewsFlash-Europe

Africa

  • Nigeria: A tribunal held that a state tax authority failed to prove that the taxpayer had committed any act of fraud, willful default or neglect; therefore, the six-year statute of limitation bars an audit or investigation of years earlier than 2012.

Read TaxNewsFlash-Africa

United States

  • Final regulations implement the like-kind exchange rules of section 1031 as enacted by the 2017 tax law.
  • Rev. Rul. 2020-28 provides the rates of interest with regard to tax overpayments and tax underpayments for the calendar quarter beginning January 1, 2021. There are no changes from the rates of interest that apply for the fourth quarter 2020.
  • Employers are reminded to file Forms W-2 and other wage statements by February 1, 2021 (because January 31 in 2021 falls on a Sunday).
  • The IRS announced that beginning 13 December 2020, certain taxpayer-identifying information will be concealed on business tax transcripts.
  • The rates for tier 2 taxes (imposed on railroad employees, employers, and employee representatives as a source of funding for benefits under the Railroad Retirement Act) are unchanged for 2021.
  • A KPMG report examines the outlook for IRS audits of partnerships in 2021.

Read TaxNewsFlash-United States

Exempt Organizations

  • A KPMG report provides analysis of final regulations on separately computed unrelated business taxable income (UBTI).

Read TaxNewsFlash-Exempt Organizations

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