KPMG’s Week in Tax: 11 - 15 July 2022

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

• Tanzania: Finance Act, 2022—effective 1 July 2022—includes tax measures concerning digital transactions and VAT and excise changes, among others.
  
• Kenya: Finance Act, 2022 raises the capital gains tax to 15% (from 5%), among other measures.
• Mauritius: Alternative investment funds (AIFs) will be treated as tax transparent vehicles for income tax purposes.
• Nigeria: The Lagos State Internal Revenue Service (LIRS) issued a public notice introducing the “eTax-generated bill reference” to facilitate and optimize the ease of tax payments in line with its digitalization policy. 
• Nigeria: Recently passed legislation establishes a National Youth Service Corps Trust Fund, which aims to provide sustainable funding for the monthly allowances for corps members, skill acquisition, training, and development of orientation camps. The fund would be supported in part by an earmarked levy of 1% of the net profit of companies operating business in Nigeria.

Read TaxNewsFlash-Africa

• Canada: Alberta has reduced its regulatory fee related to business insurance premiums to 10% (from 50%), effective 31 May 2022.
• Canada: Corporations and other organizations preparing financial reports need to be aware of certain 2022 Canadian income tax rate and other changes that may need to be reflected in interim financial statements.
• Canada: The Canada Border Services Agency (CBSA) released an updated list of more than 20 imported goods that will be targeted for potential audits. The updated list now includes indicator panels and light-emitting diodes (LED).
• Mexico: The tax administration published a list of the 155 foreign providers of digital services that are registered for tax purposes in Mexico as of 30 June 2022. With the most recent report, 14 new entities were added to the list.
• Mexico: The Institute of the National Workers' Housing Fund (Infonavit) implemented a credit procedure confirmation process—one that replaces the withholding notice in paper format and allows for electronic notification of a “credit discount,” effective 12 July 2022.
  
• Panama: Executive Decree No. 25 (27 June 2022) establishes the calendar to implement the use of authorized fiscal equipment and electronic invoicing.
• Panama: A new law provides incentives for investment and financing for new tourism establishments or expansions of existing ones.

Read TaxNewsFlash-Americas

• India: The Kolkata Bench of the Income-tax Appellate Tribunal held that a private company is treated as earning “income from other sources” upon the conversion of compulsorily convertible debentures into equity shares—in an amount equal to the aggregate consideration received for such shares over the fair market value of the shares.
• India: The Central Board of Direct Taxes (CBDT) issued guidance regarding the definition of a virtual digital asset for purposes of the new tax regime for income arising from virtual digital assets introduced by the Finance Act, 2022.
• India: The CBDT issued guidance regarding the rules for withholding (deducting) tax at source for consideration paid for the transfer of a virtual digital asset other than through an exchange.
• India: The government issued notifications of measures to give effect to recommendations made by the Goods and Services Tax (GST) Council that are focused on trade facilitation and streamlining GST compliance
• India: The Rajasthan High Court held that a taxpayer who supplied goods at a concessional GST rate to a company granted exclusive rights by the Indian government to carry out petroleum operations was entitled to a refund of accumulated input tax credit under the inverted tax structure.
• Indonesia: New implementing regulations of the recently reformed VAT law were issued.
  
• Indonesia: KPMG reports summarize tax implications of the trading of cryptoassets and fintech transactions.
• Philippines: A KPMG report discusses the tax treatment of sales of stocks listed on the Philippine Stock Exchange.
• Philippines: The Department of Finance issued guidance regarding receipts and invoices.
• Philippines: The Bureau of Internal Revenue issued guidance to address issues and concerns with respect to the service of the electronic letter of authority to the taxpayer within 30 days from its date of issuance.
• Pakistan: The Finance Act 2022—which would be enacted after passage by the National Assembly and assent of the president—includes measures concerning or revisions affecting the income tax, withholding tax, capital value tax, sales tax, excise tax and customs duties laws.
• UAE: The tax authority issued a new decision that establishes a one-year time limit for tourists to claim refunds of VAT on purchases made in the country.

Read TaxNewsFlash-Asia Pacific

• Bulgaria: Changes to tax legislation include VAT, excise taxes, individual income tax, and fuel compensation or relief.
• Italy: The Italian Supreme Court issued a decision confirming that the Italian tax treatment of dividends paid to investors in the United States is discriminatory and is in breach of EU law.
• Poland: The Advocate General of the CJEU released an opinion that the European Commission's complaint that Poland breached Council Directive 92/83/EEC (harmonization of excise duties on alcohol and alcoholic beverages) and infringed the principle of proportionality—by imposing the requirement that ethyl alcohol used for the production of medicines is moved under a duty suspension arrangement in order to benefit from the exemption from excise duty—should be dismissed.
  
• Poland: The CJEU issued a decision concerning VAT on chain transactions.
• Poland: Another deputies’ draft bill on suspending a levy commonly referred to as “Belka’s tax” was submitted before the parliament. Belka’s tax is a 19% lump-sum levy imposed on interest received and other revenue earned from funds held in a taxpayer's account or by means of other forms of saving, securing, or investing. 
• UK: A consultation on the tax treatment of foreign sovereign investors closes on 12 September 2022.
• UK: HMRC published four draft notices that provide further details on the operation of making tax digital for income tax self-assessment (MTD ITSA) which is due to come into effect from April 2024.

Read TaxNewsFlash-Europe

• EU: The Czech Minister of Finance, during the first meeting of the ECOFIN under the Czech Presidency, presented the presidency’s main tax priorities for the second semester of 2022. The Czech Presidency of the European Council expressed hope for reaching a unanimous agreement regarding the EU minimum tax directive.
• Netherlands: A new decree on profit attribution to permanent establishments incorporates the results of the OECD’s BEPS project, as well as the source exemption that was introduced into the Corporate Income Tax Act 1969 in 2012.
• OECD: Comments on a progress report on Amount A of Pillar One are requested by 19 August 2022.
• Cyprus: Parliament passed transfer pricing documentation requirements that apply to Cypriot tax resident persons and permanent establishments of non-tax resident entities for certain transactions undertaken with related parties.
• Saudi Arabia: An amended draft of transfer pricing bylaws seeks to bring Zakat payers within the ambit of transfer pricing bylaws that were earlier applicable to taxpayers and mixed companies only.

Read TaxNewsFlash-Transfer Pricing

• Germany: The federal central tax office (BZSt) released guidance with updated information concerning the common reporting standard (CRS) regime.
• Romania: The tax authority issued amendments related to the FATCA and CRS regimes—generally effective as of 30 June 2022.

Read TaxNewsFlash-FATCA / IGA / CRS

• U.S. Customs and Border Protection (CBP) issued a release announcing an increase in “Column 2” duties for certain articles from Russia.
  
• The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released two general licenses issued in the Ukraine-/Russia-related sanctions program.
• OFAC issued four Russia-related general licenses, published three amended “frequently asked questions” (FAQs) and a food security fact sheet, and updated OFAC's list of specially designated nationals (SDN list).  
• The European Commission (EC) published further guidance to EU Member States on the transit of goods from Russia.
• China Customs issued guidance readjusting the scope of voluntary disclosures of customs adjustments.

Read TradeNewsFlash-Trade & Customs

• It has been widely reported that the United States is terminating its 1979 income tax treaty with Hungary, but the U.S. government has yet to issue any official written statement or press release with respect to the termination, and the exact timing of the termination is unknown.  
   

State and Local Tax

• Pennsylvania: House Bill 1342 was signed into law and makes significant changes to the Commonwealth’s corporate net income tax laws.

Read TaxNewsFlash-United States
 

Legislative Updates

• The staff of the Joint Committee on Taxation (JCT) released a report providing general background on the tax incentives for residential housing, in advance of a public hearing held by the House Committee on Ways and Means.

Read TaxNewsFlash-Legislative Updates

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)