KPMG’s Week in Tax: 3 - 7 January 2022
Recent tax developments from around the globe for the week of 3 - 7 January 2022
Recent tax developments from around the globe for the week of 3 - 7 January 2022
Tax developments or tax-related items reported this week include the following.
- Final regulations published in the Federal Register in January 2022 concern (1) the foreign tax credit; and (2) the tax consequences of the transition away from the use of certain “interbank offered rates” (IBOR) in debt instruments, derivative contracts, and other contracts. KPMG LLP has prepared reports on both these final regulations, including one that addresses the consequences of the final foreign tax credit regulations for insurance companies.
- The IRS published a set of “frequently asked questions” (FAQs) concerning claims for the research credit and released a memo from the IRS Large and Midsize Business (LB&I) division as interim guidance on claims for refund that include a claim for credit for increasing research activities.
- Rev. Rul. 2022-2 provides that for purposes of determining covered compensation for the 2022 year, the taxable wage base is $147,000.
- An IRS practice unit provides an overview of the section 245A dividends received deduction.
- The IRS modified the tax relief previously granted to taxpayers in six states affected by Hurricane Ida—Louisiana, Mississippi, New York, New Jersey, Connecticut, and Pennsylvania—to revise the due date for estimated tax payments in 2022.
- The IRS announced Colorado taxpayers affected by wildfires now have until 16 May 2022 to file individual and business tax returns and to make certain tax payments.
- Nigeria: The president of Nigeria signed into law two bills—the Appropriation Bill, 2022 and Finance Bill, 2021. There were changes made to the tax proposals in the Finance Bill, 2021 during the legislative process, including updates to the provisions of the laws concerning the capital gains tax and the tertiary education trust fund.
- Nigeria: A reminder—the deadline is 31 January 2022 for employers filing Pay-As-You-Earn (PAYE) tax returns for 2021.
- Nigeria: Interest income and proceeds from the disposal of certain bonds and short-term securities no longer qualify as tax-exempt for purposes of the companies income tax and value added tax (VAT).
- Mexico: Certain revisions have been made with regard to the online digital tax receipt (CFDI) system regarding payroll tax.
- Mexico: Increased rates of payroll tax apply in Chihuahua State for 2022 and 2023.
- Mexico: The state government of Nayarit announced changes to the payroll tax, lodging tax, and tax on the sale of alcoholic beverages.
- China: Guidance concerns individual income tax policies and may benefit salary income earners and encourage entrepreneurship while strengthening tax compliance.
- Japan: Transitional recordkeeping measures for electronic transactions allows for the preservation of documents by means of electromagnetic records relating to electronic transactions during the period 1 January 2022 through 31 December 2023 (under certain conditions). The tax authority also updated administrative guidelines and “questions and answers” (Q&As) reflecting the transitional measures.
- Japan: Guidance addresses what parties can be appointed by the tax authority to act as a taxpayer’s representative.
- Oman: The tax authority released a guide concerning VAT treatment of transactions involving the oil and gas sector.
- Oman: The general budget for fiscal year 2022 does not include tax proposals, but reflects anticipated tax revenue collection.
- Pakistan: The “mini budget” is pending consideration in the Parliament, having been already approved by the Cabinet. The focus of the pending bill concerns the repeal of certain sales tax exemptions.
- Malaysia: The tax authority issued updated guidance regarding the service tax treatment of food and beverages, motor vehicle repairs, and parking services and service tax exemptions for certain brokerage services and tourism services.
- Malaysia: The Finance Act 2021 has been enacted, and includes tax measures that are substantially similar to the tax provisions as provided in the Finance Bill 2021 (November 2021).
- Malta: Taxpayers are required to file “Intrastat Declarations” when there are transactions involving goods transported between Malta and other EU Member States.
- Bulgaria: Measures transpose requirements under an EU directive prohibiting the use of certain single-use plastic products and implement certain recycling requirements.
- Cyprus: An income tax treaty with Jordan was ratified by Cyprus and is pending ratification by Jordan.
- Finland: A court in Helsinki held that a Luxembourg-based listed Société d'investissement à Capital Variable (SICAV) fund (the taxpayer) was entitled to a refund of withholding tax. The decision may provide refund opportunities for other funds.
- Greece: Newly enacted legislation (Law 4876/2021) includes various income tax and indirect tax law changes.
- Malta: The 15% tax rate on profits derived from the assignment of rights under promise of sale agreements has been deferred to the end of 2022.
- Serbia: Legislative measures concerning the property tax law are effective 1 January 2022.
- Ukraine: Digital services provided by non-residents to individuals or private entrepreneurs in Ukraine are subject to VAT at a rate of 20% (provided the Ukrainian recipients of the services are not registered as VAT-payers).
- Nigeria: Nigerian resident branches and subsidiaries (constituent entities) of foreign multinational enterprises (MNEs) must comply with the country-by-country (CbC) filing requirement, effective from 1 January 2022.
- Malta: Draft transfer pricing rules presented for public consultation include a requirement for application of the arm’s length principle with regard to the pricing of cross-border transactions between associated enterprises (related parties) and with permanent establishments. The closing date for submitting comments is 28 February 2022.
- Poland: The Ministry of Finance announced the base interest rate and margin for transfer pricing purposes for 2022. The interest rate “safe harbor” is applicable when there are loans (as well as certain credits and bonds) concluded between related parties.
FATCA / IGA / CRS
- Japan: An updated “frequently asked question” (FAQ) under the common reporting standard (CRS) regime concerns the country (region) code that is to be used while creating the data provided for the report items.
- Guernsey: The tax authority issued guidance regarding the FATCA and common reporting standard (CRS) regimes.
- Russia: The Russian Federation’s tax authority finalized a report regarding financial sector customers who are tax residents of foreign countries (version 5.05) and the XSD schema for CRS reporting.
Trade & Customs
- The Bureau of Industry and Security (BIS) of the U.S. Commerce Department released an interim final rule that extends the controls on an emerging technology—that is, software specifically designed to automate the analysis of geospatial imagery.
- Legislative changes to the customs rules in Serbia have an effective date of 1 January 2022.
- The Regional Comprehensive Economic Partnership (RCEP) agreement—a free trade agreement among the Asia-Pacific countries of Australia, Brunei Darussalam, Cambodia, China, Japan, Laos, New Zealand, Singapore, Thailand, and Vietnam—entered into force on 1 January 2022. The RCEP agreement will enter into force on 1 February 2022 for South Korea.
- U.S. Customs and Border Protection (CBP) issued a release reflecting the determination that Ethiopia, Guinea, and Mali will no longer receive preferential customs benefits under the African Growth Opportunity Act (AGOA). The Automated Commercial Environment (ACE) will be modified to reflect this update.
- The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that a registered money services business (a wholly owned subsidiary of an entity that operates an online marketplace for lodging (primarily homestays for vacation rentals, and tourism activities) and headquartered in San Francisco, California) agreed to remit approximately $91,000 to settle its potential civil liability for apparent violations of sanctions against Cuba.
- The IRS Tax Exempt and Government Entities (TE/GE) division released a report with information about the TE/GE function’s accomplishments during 2021.
- The IRS announced that beginning 3 January 2022, applications for recognition of exemption on Form 1024 must be submitted electronically (online).
The items described above are also reported as editions of TaxNewsFlash:
- Indirect Tax
- Taxation of the Digitalized Economy
- Tax Dispute Resolution
- Tax Developments Relating to Coronavirus (COVID-19)
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 3712, 1801 K Street NW, Washington, DC 20006.