KPMG’s Week in Tax: 25 - 29 July 2022

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

• KPMG report: A report prepared by KPMG LLP discusses Amount B, which is a crucial part of the two-pillar reform but has been largely absent from public attention in recent months amid a flurry of activity on Pillar Two and Amount A.
• Poland: A ruling issued to a taxpayer by the tax authority provides that a Polish entity contributing to a foreign company’s supplementary capital is not required to establish a Local file or satisfy any other transfer pricing documentation or reporting obligation.
• UK: The government published draft clauses for the next Finance Bill that, as expected, confirm that UK members of large groups would be required to maintain transfer pricing documentation in a prescribed form. 

Read TaxNewsFlash-Transfer Pricing

• OECD: A release from the OECD describes progress on the implementation of the international standard on harmful tax practices.

Read TaxNewsFlash-BEPS

• Singapore: The Inland Revenue Authority of Singapore (IRAS) issued an updated version of IRAS FATCA file and record level errors.
• UAE: The deadline for UAE reporting financial institutions to file FATCA and common reporting standard (CRS) reports is now 15 August 2022 (extended from 20 July 2022). 

Read TaxNewsFlash-FATCA / IGA / CRS

• Poland: Real estate-related developments include an update to the maximum rates of the real estate tax on land and buildings, and a Supreme Administrative Court (SAC) decision in a case concerning a taxpayer that was a party to a contract for the transfer of title to real estate that had secured a promissory note.
• Romania: Changes to the tax law concern corporate income tax, specific tax, microenterprise income tax, VAT, excise tax, and other changes.
• UK: The government published draft legislation for Finance Bill 2023 and several consultation responses.
• UK: Draft legislation includes significant changes to research and development (R&D) tax incentives.
• UK: HMRC published a consultation document on collection data from taxpayers. The document signals an intention to increase the amount of data collected and shared by HMRC.
• UK: The “windfall tax” on extraordinary oil and gas profits received Royal Assent.

Read TaxNewsFlash-Europe

• Nigeria: Various information circulars issued by the Federal Inland Revenue Service provide clarifications to taxpayers on the implementation of the provisions of Finance Act, 2021.

Read TaxNewsFlash-Africa

• Panama: Taxpayers need to update their information in the single taxpayer registry no later than 31 July 2022. Taxpayers who do not make updates by the due date will not be able to submit the corresponding forms to comply with their tax obligations and could be subject to penalties.
• Bolivia: The legislative assembly passed legislation that amends certain tax administrative and procedural measures. Subsequent guidance was issued to implement these measures.
• Argentina: The Ministry of Economy Undersecretariat of Electric Energy approved the amounts to be allocated as a promotional benefit of the tax credit certificate within the framework of the regime for the promotion of distributed generation of renewable energy. 
• Brazil: Tax developments that may affect companies in the financial, insurance, and real estate sectors concern tax transactions, the domestic taxation of foreign subsidiary profits, real estate taxation, and creditable expenses for transportation vouchers.

Read TaxNewsFlash-Americas

• Vietnam: A KPMG report includes information about legislation or guidance concerning intellectual property, land management and use, environmental protection, the housing and real estate market, and chemical industry strategy.
• Cambodia: The General Department of Taxation will conduct site visit investigations for enterprises carrying out business activities in Phnom Penh.
• India: The Delhi High Court held that an amendment under Finance Act, 2022—confirming that expenses related to exempt income are nondeductible whether or not the taxpayer has exempt income in a particular tax year—does not have retroactive effect and is effective only from 1 April 2022.
• India: The Karnataka High Court held that guidance from the Central Board of Indirect Taxes and Customs stating that annuity (deferred payments) paid for construction of roads is not exempt from goods and services tax (GST) was invalid.

Read TaxNewsFlash-Asia Pacific

• Two sets of technical corrections make changes to final regulations relating primarily to the determination of the foreign tax credit and the allocation and apportionment of deductions (including foreign income taxes). A KPMG report provides discussion and initial analysis of the correcting amendments.
• The U.S. Court of Appeals for the Eleventh Circuit upheld a federal district court’s grant of summary judgment denying a taxpayer’s claim for reimbursement of “protest payments” made to the IRS after the IRS “claw-backed” an alternative fuel tax credit it had previously granted.
• The IRS Large Business and International (LB&I) division publicly released a “practice unit”—Allowance of Deductions and Credits on 1120-F Delinquent Returns.
• A KPMG report provides an overview of wash sale reporting rules, why they matter, and how investors can avoid inadvertently subjecting themselves to them.

State and Local Tax

• New York: An administrative law judge (ALJ) addressed whether a taxpayer could remove deferred IRC section 311(b) gain from its New York combined returns for the tax years at issue and whether the taxpayer was entitled to a bad debt deduction.
• Tennessee: The Department of Revenue addressed the taxability of certain fees charged by a delivery network company that had elected to collect sales and use tax as a marketplace facilitator.

Read TaxNewsFlash-United States
 

Legislative Updates

• Senator Joe Manchin (D-WV) announced that he had reached an agreement with Senate Majority Leader Chuck Schumer (D-NY) on provisions to be included in the Inflation Reduction Act of 2022.  The agreement reportedly would impose a new 15% book minimum tax on large corporations; would modify the carried interest rules; and would significantly increase IRS funding. 
• Congress passed H.R.  4346, “The CHIPS and Science Act of 2022,” which includes a 25% investment tax credit for certain investments in semiconductor manufacturing.
• The Joint Committee on Taxation (JCT) released revenue estimates of the tax proposals in the Biden Administration’s FY 2023 budget.

Read TaxNewsFlash-Legislative Updates

• UAE: The Ministry of Economy announced that the UAE will introduce a new set of regulations on gold imports to enhance oversight of the trade and circulation of gold, in line with international standards.
• EU: The World Trade Organization (WTO) issued an appeal arbitration award finding that Turkey’s localization measure discriminates against foreign pharmaceutical products.
• Poland: The Polish Supreme Administrative Court decided that in view of the laws effective in Poland in 2008, in line with Article 18(1)(3) of the customs duty law, all excise goods introduced into a free zone or a customs warehouse and intended for sale in local commercial units are to be exempt from the obligation to be labelled with excise markings, regardless of whether intended for consumption in Poland or abroad.
• United States: Customs and Border Protection (CBP) is adjusting certain customs user fees and corresponding limitations for fiscal year (FY) 2023. The adjusted amounts of customs user fees and their corresponding limitations for FY 2023 are effective beginning 1 October 2022.
• United States: Duty on imports of certain infant formula products will be suspended through 31 December 2022.
• Argentina: Entities in Argentina may give customers access to the foreign exchange market to make payments for imports of goods to the extent that certain conditions are verified.

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