KPMG’s Week in Tax: 2 - 6 May 2022
Tax developments or tax-related items reported this week include the following.
Tax developments or tax-related items reported this week include the following.
- OECD: A report entitled Tax Transparency in Latin America 2022 showcases the region's recent progress in tackling tax evasion and other financial crimes through transparency and exchange of information for tax purposes.
- OECD: Comments were released on the extractives exclusion under Amount A of Pillar One.
- Mexico: KPMG professionals in Mexico prepared a report discussing BEPS 2.0 implementation considerations for Mexico.
- Poland: Draft decrees change the scope of data and information required to be disclosed via transfer pricing reports.
- Switzerland: A KPMG analysis of the 150 largest companies listed on the SIX Swiss Exchange shows that 19% of the companies publish tax transparency reports.
- UK: HMRC statistics reveal an increase in transfer pricing risks for multinational companies.
- France: Modified guidelines concerning the VAT exemption for insurance and related services aim to align the tax authorities’ position with the evolution of case law from the Court of Justice of the European Union (CJEU) and with regard to French case law.
- Switzerland: Tax professionals expect that all cantons will allow intercantonal compensation for losses resulting from the alienation of real estate recognized by tax exempt institutions.
- Switzerland: The tax rates of 18 cantons are below the minimum corporate tax rate of 15% targeted by the OECD. If these cantons or Switzerland neglect to raise their corporate tax rates to this threshold for the companies in question, the difference could be taxed in another country.
- Austria: The Ministry of Finance recently published information on the Austrian tax treatment (for VAT and income tax purposes) of donations and other aids for Ukraine.
- Italy: The regional tax court of Lombardy held that beneficial ownership requirements must be determined on a look-through basis for purposes of the Italian withholding tax exemption on cross-border interest payments.
- Estonia: Parliament passed legislation that (1) makes donations to support Ukrainian people in the current situation tax exempt if made through specified organizations; and (2) requires reporting on construction works starting 1 October 2023 or later, or before 1 October 2023 if expected to be completed by 1 October 2024 or later.
- Germany: The Federal Tax Court (BFH) held that the in-game “leasing” of virtual land in an online game is not subject to VAT.
- Malta: The temporary measure allowing for reduced tax and duty rates on transfers of immovable property has been extended by three months, until the end of September 2022.
- Netherlands: The Deputy Minister of Finance on 28 April 2022 sent another letter about “Box 3” (the wealth tax regime) to the Lower House of Parliament focusing on which taxpayers are to have their rights restored and how this will take place.
- UK: HMRC issued a revised version of supplementary page CT600B to the corporation tax return that will require a company to fill out 10 new boxes relating specifically to the hybrid mismatch rules.
- UK: Changes to the taxation of unincorporated business, including professional partnerships, will apply from 6 April 2024.
- UK: The Supreme Court issued a decision in a test case relating to the free movement of capital in relation to withholding tax on manufactured overseas dividends.
- Nigeria: A report provides a summary of tax transparency reporting developments in Nigeria, and in Africa more broadly.
- Canada: The budget bill (Bill C-19) reflects certain individual (personal) and indirect tax proposals introduced in the 2022 federal budget.
- Canada: The government released draft hybrid mismatch legislation for public consultation. Feedback will be accepted until 30 June 2022.
- Canada: The prescribed interest rates for income tax and for pertinent loan or indebtedness (PLOI) purposes increased (or are estimated to increase) for the third quarter of 2022.
- Canada: Tax relief for First Nations and indigenous taxpayers in response to COVID-19 pandemic-related restrictions that may temporarily cause employees or employers to work or reside “off-reserve” is extended through 31 December 2022.
- Canada: Ontario’s 2022 budget proposes to extend the temporarily enhanced regional opportunities investment tax credit rate of 20%; amend Ontario's cultural media tax credits; and introduce the Ontario seniors care-at-home tax credit.
- Costa Rica: A new law provides that national and foreign companies that relocate outside the greater metropolitan area can opt for the benefits, exemptions and incentives known as the “free trade zone regime law” if they make certain investments outside the greater metropolitan area.
- Taiwan: Tax filing and payment deadlines for individual income tax for 2021 are extended to 30 June 2022 (originally due 1 May 2022 to 31 May 2022), without late payment interest and penalties.
- Australia: The Victorian government’s budget for 2022-2023 includes land tax and stamp duty measures.
- India: The Supreme Court held that a reassessment notice issued after 1 April 2021 under the old reassessment regime, and after such provisions were amended with effect from 1 April 2021, was deemed issued under the new reassessment regime.
- India: The Central Board of Direct Taxes (CBDT) issued a notification introducing a new rule prescribing the manner for filing an updated tax return, which can be filed for the assessment year 2020-21 (which begins 1 April 2020) onwards.
- UAE: The Ministry of Finance released a consultation paper providing details of the new federal corporate income tax system to be implemented in the UAE, effective for financial years commencing on or after 1 June 2023. Comments are requested by 19 May 2022.
FATCA / IGA / CRS
- Singapore: All Singaporean reporting financial institutions need to submit their FATCA and CRS return(s) for calendar year 2021 by 31 May 2022.
- United States: Notice 2022-23 sets forth proposed changes to the qualified intermediary (QI) withholding agreement that will permit a QI to assume withholding and reporting responsibilities for purposes of the withholding of tax on gain recognized by a foreign person on the disposition of a partnership interest, to the extent such gain is treated as effectively connected income.
- Bermuda: An extension has been granted to Bermuda reporting financial institutions for common reporting standard (CRS) registration and reporting due to unplanned technical maintenance to the tax information reporting portal.
- Cayman Islands: CRS enforcement guidelines set out the enforcement process and subsequent penalties for failures to comply by any persons within the scope of the tax authority’s compliance monitoring and enforcement authority.
- OECD: The OECD released comments received on a new global tax transparency framework to provide for the reporting and exchange of information with respect to crypto-assets, as well as proposed amendments to the CRS for the automatic exchange of financial account information among countries.
Trade & Customs
- Colombia: The government extended the COVID-19 pandemic health emergency until 30 June 2022. As a result, temporary customs regulations issued in response to the COVID-19 pandemic must be taken into account.
- United States: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued five Russia-related general licenses, one new ”frequently asked question” (FAQ), and amended one FAQ.
- United States: The Office of the U.S. Trade Representative (USTR) issued a notice announcing the commencement of the statutory process required leading up to the four-year anniversaries of the two tariff actions in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.
- The IRS released a correction of certain errors in a prior notice that provides the 2022 inflation adjustment factor and reference prices used in determining the availability of the credit for renewable electricity production under section 45.
- Proposed regulations concern the use of actuarial tables in valuing annuities, interests for life or a term of years, and remainder or reversionary interests.
- Notice 2022-23 sets forth proposed changes to the qualified intermediary (QI) withholding agreement that will permit a QI to assume withholding and reporting responsibilities for purposes of the withholding of tax on gain recognized by a foreign person on the disposition of a partnership interest, to the extent such gain is treated as effectively connected income.
State and local tax
- Minnesota: The Minnesota Tax Court held that a taxpayer was not entitled to a refund of sales tax related to a credit card surcharge. The taxpayer charged customers a 4% surcharge when they opted to pay for vacation rentals using a credit card. The court concluded that the surcharge represented an expense of the seller’s and was part of the sales price.
- New York: A state appeals court affirmed a lower court’s holding that a taxpayer failed to collect the correct amount of sales tax on transactions involving the provision of free gift cards to customers that purchased items of tangible personal property.
- Oklahoma: Pending legislation would expand the definition of a marketplace facilitator for sales and use tax purposes beyond the current definition, which only captures marketplaces that facilitate sales of tangible personal property.
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)
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