KPMG’s Week in Tax: 25 - 29 April 2022

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

• Luxembourg: The supreme court with jurisdiction over direct tax matters released a series of judgments that clarify certain tax concepts regarding (1) minimum requirements for a tax exemption under the participation regime; (2) “mandatorily redeemable preferred shares” (MRPS); and (3) beneficial ownership requirements for refunds of dividend withholding tax in Luxembourg.
• Spain: New legislation introduces (1) an excise tax on non-reusable plastic packaging and (2) a tax on landfill, incineration and co-incineration of waste.
• Spain: A draft Royal Decree implements certain requirements for electronic or computer software and systems, in an effort to promote electronic invoicing systems.
• Belgium: The Court of Justice of the European Union (CJEU) issued a judgment holding that a provision of Belgian regional legislation requiring providers of property intermediation services, and in particular the operator of an electronic accommodation platform, to transmit certain particulars of tourist accommodation transactions to the tax authorities is not contrary to EU law.
  
• EU: The European Commission published its recommendation to step up cooperation between the EU and Norway to address VAT fraud and recovery of claims.
• Germany: Various consultation agreements for cross-border commuters between Germany and its neighboring countries have been extended for the last time until 30 June 2022, or terminated with effect from that date.
• Germany: The Lower Tax Court of Münster held that a change of legal form of a limited liability company into a limited partnership immediately after a qualified exchange of limited liability company shares within the meaning of Section 21 (1) sentence 2 of the German Reorganization Tax Act (UmwStG) triggers a contribution gain II.
• Germany: The CJEU Advocate General issued an opinion that Germany’s disallowance for German tax purposes, of final losses incurred by a UK permanent establishment of a German taxpayer, was not incompatible with the European freedom of establishment.
• Germany: Amendments to a coordinated decree of federal states on trade tax add-backs concern (1) when expenses are activated and (2) the existence of notional fixed assets.
• Greece: Guidance concerning intra-community transactions, widely known as “quick fixes,” for VAT purposes aims to provide further practical clarifications on issues that arose during the implementation of the relevant “quick fixes” provisions.
• Greece: A recently published law includes measures concerning the unified real estate ownership tax, and the interest limitation rule, among others.
• Poland: Among the recent tax developments in Poland are those concerning individual income tax-related amendments to the “Polish Deal” program, online purchases made via foreign marketplace sites, and VAT on invoices.

Read TaxNewsFlash-Europe

• Canada: Corporate incentives would enhance the Saskatchewan value-added agriculture incentive and increase the province’s annual cap to the Saskatchewan technology start-up incentive.
• Costa Rica: The payment of tax obligations due beginning 18 April 2022 can be submitted in two ways—Form D-110 “Official Payment Receipt” (Recibo Oficial de Pago), and a bank deposit.
• Bolivia: The deadline for filing certain reports and statements relating to corporate income tax for the tax period ending 31 December 2021 has been extended through 31 May 2022.
• Chile: The government released instructions regarding the mutual agreement procedure established in the income tax treaties signed by Chile.

Read TaxNewsFlash-Americas

• Malaysia: The Finance Act 2021 introduced several amendments that would change the tax landscape for unit trust funds in 2022. These amendments concern the taxation of foreign-sourced income, distribution from “retail money market funds” to unit holders, and withholding tax obligations.
• Bahrain: The tax authority recently updated the list of goods subject to excise tax.
• Indonesia: Guidance concerning the taxation of income from construction services introduces a new construction service category.

Read TaxNewsFlash-Asia Pacific

• A KPMG report examines how to implement audit committee involvement in transfer pricing issues.
  
• United States: The IRS Large Business and International (LB&I) division publicly released a “practice unit” concerning use of the country-by-country (CbC) report in the transfer pricing risk analysis process.

Read TaxNewsFlash-Transfer Pricing

• Proposed regulations relate to the basic exclusion amount used in computing federal estate and gift taxes for estates of decedents dying after a reduction in the exclusion amount who made certain types of gifts.
• Proposed regulations prescribe mortality tables to be used for most qualified retirement plans that are defined benefit pension plans for plan years beginning on or after 1 January 2023.
• Notice 2022-22 specifies updated mortality improvement rates and static mortality tables to be used for qualified retirement plans that are defined benefit pension plans under section 430(h)(3)(A) and under provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The updated mortality improvement rates and static tables apply for purposes of determining present value and making any other computation under section 430 for valuation dates occurring during the 2023 calendar year.
• Notice 2022-21 invites recommendations for items to be included on the 2022-2023 Priority Guidance Plan—used by the IRS and Treasury Department each year to identify and prioritize tax issues to be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance.
• The U.S. Court of Appeals for the Eighth Circuit affirmed the Tax Court’s decision granting the IRS’s motion in limine to exclude the taxpayer’s proffered expert witness testimony, and upholding the IRS’ denial of deductions claimed by the taxpayer for management fees paid to its shareholders.
   

State and local tax

• Texas: An administrative law judge (ALJ) determined that a minor league baseball team owed use tax on certain promotional items and services provided to attendees. The ALJ also determined that the taxpayer did not purchase cleaning and security services for resale to customers that attended its games.
• Virginia: Newly enacted legislation: (1) increases the deduction for disallowed business interest to 30% (from 20%) of the amount disallowed as a deduction under IRC section 163(j) (effective for tax years beginning on and after January 1, 2022); and (2) adopts a “SALT cap workaround” by allowing a qualifying passthrough entity to elect to pay tax at the entity level.
• West Virginia: Newly enacted legislation reduces the unclaimed property dormancy periods for certain property types and extends coverage of the West Virginia unclaimed property law to virtual currency. 

Read TaxNewsFlash-United States

• United States: The FATCA International Data Exchange Service (IDES) platform will be open for testing from 6 June 2022 and continue to 1 July 2022. 

Read TaxNewsFlash-FATCA / IGA / CRS

• The Office of the U.S. Trade Representative (USTR) released its annual “special 301 report” on the adequacy and effectiveness of the U.S. trading partner countries’ protection and enforcement of intellectual property rights.
• The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued general licenses and updated ”frequently asked questions” (FAQs) regarding Russia’s aggression against Ukraine.
• OFAC announced that an international freight forwarding and logistics company headquartered in Melbourne, Australia, agreed to remit approximately $6.1 million to settle its potential civil liability for 2,958 apparent violations of the Iranian Transactions and Sanctions Regulations, the North Korea Sanctions Regulations, the Syrian Sanctions Regulations, the Weapons of Mass Destruction Proliferators Sanctions Regulations, and the Global Terrorism Sanctions Regulations.

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)