KPMG’s Week in Tax: 18 - 22 April 2022

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

• OECD: KPMG tax professionals submitted a memo with comments on the draft model rules for domestic legislation on scope under Amount A of Pillar One. 
• KPMG report: Audit committees often treat transfer pricing relatively lightly. However, because of the implications that transfer pricing can have in an organization, audit committees need to be prepared and have an overview, potentially prepared with the support of data analytics tools, of the group’s current transfer pricing status.
• Mexico: Given that advance pricing agreements (APAs) are no longer an alternative mechanism for resolving tax and transfer pricing obligations of maquiladora companies beginning 2022, the safe harbor alternative is now the only method available regarding transfer pricing compliance.
• Zimbabwe: The deadlines were extended for submission of self-assessment of corporate income tax returns for the tax year ended 31 December 2021, to 30 June 2022  for small clients, 31 July 2022 for  medium clients and 31 August 2022 for large clients. In addition, the deadline for submission of transfer pricing returns was changed to 31 August 2022.

Read TaxNewsFlash-Transfer Pricing

• Netherlands: The Deputy Minister of Finance sent two letters about “Box 3” (the wealth tax regime) to the Lower House of Parliament—(1) concerning the Supreme Court judgment in which the court held that the Box 3 tax regime for the years 2017-2022 was contrary to the European Convention on Human Rights; and (2) addressing the outlines of a Box 3 tax based on actual return on investment, which would apply as of 2025.
• Poland: Recent tax developments concern (1) real estate company reporting, (2) planned amendments to the Polish tax code, (3) prerequisite for applying tax-deductible costs to employee renumeration, and (4) value of auxiliary services included in the taxable base for VAT purposes.
• Sweden: The spring budget does not include significant tax proposals, but it does include measures concerning the risk tax for credit institutions (the “bank tax”) as well as proposals to reduce the energy tax with regard to energy used in certain water, soil, and forestry operations.
• Albania: The government has amended the national-level minimum salary and adopted a new taxation method for employment income.

Read TaxNewsFlash-Europe

• Kenya: The Finance Bill, 2022 includes tax-related proposals regarding VAT, digital taxation, customs, and transfer pricing.
• Zimbabwe: The deadlines were extended for submission of self-assessment of corporate income tax returns for the tax year ended 31 December 2021, to 30 June 2022  for small clients, 31 July 2022 for  medium clients and 31 August 2022 for large clients. In addition, the deadline for submission of transfer pricing returns was changed to 31 August 2022.

Read TaxNewsFlash-Africa

• Costa Rica: The customs authority issued a release incorporating alternative methods of operations for import transactions, due to the ongoing issues with the computer systems of the Ministry of Treasury that prevent the normal functioning of customs operations.
• Costa Rica: Recent developments concern temporary relief for domestic imports, quantification of the exchange differential, and ultimate beneficial owners reporting.
  
• Brazil: The tax authority published guidance for activities related to the monitoring and review of certifications granted under the Brazilian “Authorized Economic Operator program.”
• Mexico: The social security agency published an agreement providing guidance with respect to the requirement for periodic reporting by subcontractors.
• Canada: Businesses may be eligible for government funding and incentive programs introduced by the 2022 federal budget.

Read TaxNewsFlash-Americas

• Bahrain: Taxpayers logging in to the National Bureau for Revenue portal must complete a short digital study survey regarding invoicing.
• Malaysia: A new customs duties order has been updated with a total of 351 sets of amendments covering different new emerging products such as drones, smartphones, and vapes, in line with the everchanging trade patterns and technology.
• Philippines: The deadline for the submission of attachments to the 2021 annual income tax return is on or before 31 May 2022, whether the electronically filed return is an original or an amended return. The deadline for filing annual income tax returns for the tax year ended 31 December 2021 is 18 April 2022.
• India: The Madras High Court held that a reassessment notice e-mailed and digitally signed by the tax authority on the last day of the limitation period was valid.
• India: A tribunal held that subcontracting charges paid by the taxpayer, an Indian company, to its Chinese subsidiary are taxable as “fees for technical services” under the Income-tax Act, 1961 and the India-China income tax treaty.

Read TaxNewsFlash-Asia Pacific

• Channel Islands: The tax authority in Guernsey issued guidance to inform financial institutions that there has been no change in the deadline for FATCA and common reporting standard (CRS) reporting. Therefore, all reporting Guernsey financial institutions must submit their 2021 FATCA and CRS reports on or before 30 June 2022.
• Panama: The tax authority established a list of 71 reportable jurisdictions with which Panama must automatically exchange financial accounts information for tax purposes (for calendar year 2021) under the common reporting standard (CRS) regime. Reporting Panamanian financial institutions must submit their reports by 31 July 2022.

Read TaxNewsFlash-FATCA / IGA / CRS

• The U.S. Supreme Court held that the 30-day time limit to file a petition for review of a collection due process determination in section 6330(d)(1) is a nonjurisdictional deadline subject to equitable tolling.
• Rev. Proc. 2022-23 was issued as guidance allowing a taxpayer to make late elections: (1) under sections 168(j)(8) and 168(l)(3)(D), relating to the depreciation of qualified Indian reservation property and the special depreciation allowance for second generation biofuel plant property, respectively, for the taxpayer’s tax year ending in 2018 or in 2019, for certain property placed in service by the taxpayer after 31 December 2017; and (2) under section 181(a)(1) for the taxpayer’s tax year ending in 2018 or in 2019 for certain film, television, or live theatrical productions commenced by the taxpayer after 31 December 2017.
• The IRS issued a release in response to taxpayer requests for penalty relief when additional income tax is owed because the deduction for qualified wages is reduced by the amount of a retroactively claimed employee retention credit, but the taxpayer is unable to pay the additional income tax because the refund payment relating to the employee retention credit has not yet been received.
• The U.S. Supreme Court denied certiorari to a petition filed by four states challenging a provision of the 2017 tax legislation that limits the state and local tax (SALT) deduction for taxpayers from their federal taxable income to a maximum of $10,000 of state and local taxes.
   

State and local tax

• Kentucky: The General Assembly voted to override the governor’s veto of legislation that includes significant changes to the state’s tax laws.
• New Jersey: The state tax authority announced a change in policy around the application of P.L. 86-272 to combined groups. Under the revised policy, P.L. 86-272 protection for a member will be determined on an entity-by-entity basis.
• New York: A state appeals court upheld a New York City general corporation tax (GCT) assessment on a taxpayer’s capital gain from the sale of a partnership interest.
• Texas: A state appeals court held that a restaurant was not entitled to a “sale for resale” exemption on purchases of smallwares (dishes, glasses, and utensils) used in furnishing food and beverages to customers. 

Read TaxNewsFlash-United States

• Two U.S. companies have agreed to settle potential civil liability for apparent violations of the Cuban assets control regulations.
• The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued: (1) a fact sheet for “preserving agricultural trade, access to communication, and other support to those impacted by Russia’s war against Ukraine”; (2) three Russia-related general licenses; and (3) an updated list of specially designated nationals (SDN list).
• U.S. Customs and Border Protection (CBP) released a report on trade statistics for fiscal year (FY) 2021.

Read TradeNewsFlash-Trade & Customs

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)