KPMG’s Week in Tax: 24 - 28 October 2022

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

• Australia: The 2022-2023 federal budget includes proposals for new public reporting of certain country-by-country (CbC) tax information by multinational enterprises (MNEs) beginning 1 July 2023.
• Netherlands: An internet consultation concerns a legislative proposal to implement the Pillar Two rules of the OECD/G20 Inclusive Framework’s proposed solution to the tax challenges arising from digitalisation of the economy.
• Poland: The Ministry of Finance has published an updated TPR guidebook, (i.e., a list of answers to questions on transfer pricing reporting obligations).
• Poland: The Lower House of the Polish Parliament passed legislation amending corporate income tax provisions enacted as part of the “Polish Deal” that includes transfer pricing-related measures.

Read TaxNewsFlash-Transfer Pricing

• Liechtenstein: Updated FATCA reporting technical guidance concerns non-U.S. entity account holders.

Read TaxNewsFlash-FATCA / IGA / CRS

• Malaysia: New guidelines explain what constitutes foreign-source income and how it would be taxed in Malaysia as well as any deductions or relief available.
• Qatar: The tax authority issued guidance on the submission of a no-objection certificate (NOC) / tax clearance required to disburse amounts retained by the tax authority with respect to relevant contracts (i.e., those subject to “retention” rules in Qatar). 
• Australia: The 2022-2023 federal budget was released, including individual and business tax proposals.
• Sri Lanka: The Inland Revenue (Amendment) Bill amends the law applicable on income tax.
• Sri Lanka: The Inland Revenue Department issued a notice to taxpayers regarding the registration for the social security contribution levy.
• Saudi Arabia: Draft legislation suggests changes to Article 33 of the VAT regulations, including an additional rule for applying a zero VAT rate to the “export” of services. The public discussion of the draft is scheduled to begin 11 November 2022.

Read TaxNewsFlash-Asia Pacific

• Cyprus: The reverse-charge mechanism is applicable to the acquisition of raw and semi-finished precious metals effective 7 October 2022. The recipient of the precious metals is therefore obligated to self-account for and pay 19% output VAT on the value of the acquired goods.
• Germany: The Federal Tax Court (BFH) held that the allocation of taxing rights over third-country income to Germany under the Germany-France income tax treaty did not override the exemption of that income under the Germany-Switzerland income tax treaty.
• Germany: The BFH held that only 5% of the dividend distributed by a dual resident corporation (DRC) to its German parent corporation was subject to trade tax in Germany.
  
• Spain: The “draft 2023 budget law” provides for a range of VAT measures, the majority of which would become effective 1 January 2023.
• Malta: Tax provisions in the budget for 2023 would affect business and individual taxpayers.
  
• Belgium: The Court of Justice of the European Union (CJEU) decided that the limitation on dividends received deduction surpluses carried over to an absorbing company is compatible with EU law.
• Poland: A draft decree would amend the regulations on the sugar tax and the fee on alcohol bottles of up to 300ml. The proposed amendments are expected to become effective 1 July 2023.
• Poland: The Lower House of the Polish Parliament passed legislation amending corporate income tax provisions enacted as part of the “Polish Deal.”

Read TaxNewsFlash-Europe

• East Africa: A KPMG report focusing on the trade and customs environment clarifies compliance requirements in the context of import and export operations.
• Nigeria: A KPMG report reviews the concept of VAT, the provisions of the VAT (Modification) Order 2021, and its potential influence on the various renewable energy solutions offered by renewable energy companies.
• Uganda: Changes made to the “pay as you earn (PAYE)” return concern secondary employment income. 

Read TaxNewsFlash-Africa

• Canada: Ontario increased its non-resident speculation tax that applies to certain foreign buyers of Ontario homes. The tax is now 25% of the purchase price for the transferred property.

Read TaxNewsFlash-Americas

• The Department of Justice (DOJ) has decided not to file a petition for a writ of certiorari in a case in which the U.S. Court of Appeals for the Fifth Circuit concluded that the federal tax on crude oil imposed by section 4611(b) cannot constitutionally be applied to exporters.
• Foreign alcohol producers may now register using the myTTB system and then use the system to make assignments to importers for calendar year 2023.

State and local tax

• Illinois: The state tax authority issued a general information letter responding to an annual survey on its tax policies that included guidance on the taxation of cryptocurrency. Specifically, the letter confirmed that (1) Illinois conforms to the federal treatment of cryptocurrency as property, and (2) sales of cryptocurrency are treated as sales of intangibles for purposes of apportionment and the application of Pub. L. No. 86-272.
• Maryland: A state circuit court judge struck down Maryland’s digital advertising tax following a hearing on certain motions associated with the case. It has been reported that the judge ruled from the bench that the digital advertising tax violated the Internet Tax Freedom Act, the Commerce Clause, and the First Amendment.
• Multiple states: On election day, voters in Colorado, California, Massachusetts, and Los Angeles, California will cast ballots on measures that would implement tax rate increases and decreases.

Read TaxNewsFlash-United States

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)