KPMG Week in Tax: 2 - 6 January 2023

Recent tax developments from around the globe for the week of 2 - 6 January 2023

Recent tax developments from around the globe for the week of 2 - 6 January 2023

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

Americas

  • 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 year-end financial statements.
  • Chile: All services provided or used within Chile are subject to value added tax (VAT) as of 1 January 2023.
  • Mexico: The tax administration service released the application for filling out the 2022 annual declaration for legal entities, which is due 31 March 2023. 
  • Mexico: The Miscellaneous tax resolution for 2023 (Resolución Miscelánea Fiscal para 2023) includes a variety of direct and indirect tax items.
  • Mexico: Taxpayers that manufacture, produce, process, transport, store, distribute, or dispose of any type of hydrocarbon or petroleum must have the computer equipment and software to carry out “volumetric controls,” which will form part of the accounting. The obligation to present the certificate of the correct operation and functioning of the computer programs corresponding to 2022 is extended to 31 July 2023.
  • Costa Rica: Updated tax brackets of salary tax and credits, corporate income tax, and individual income tax and credits were indexed with an 8.99% adjustment. The updated brackets apply from 1 January 2023.

Read TaxNewsFlash-Americas

Asia Pacific

  • Bahrain: With Bahrain soon to be the only Gulf Cooperation Council (GCC) country without a broad-based corporate tax, it appears that to be only a question of when Bahrain will introduce corporate tax, which will create numerous implications for Bahrain businesses.
  • Cambodia: The KPMG member firm in Cambodia prepared a report highlighting key annual tax, corporate and accounting compliance obligations for 2022 and 2023.
  • Oman: The budget for 2023 does not include tax proposals but reflects anticipated tax revenue collections. 
  • Azerbaijan: Direct and indirect tax-related changes in the Azerbaijani legislation could affect businesses.
  • Saudi Arabia: The Zakat, Tax and Customs Authority (ZATCA) announced the second wave for implementing electronic invoicing (e-invoicing) from 1 July 2023. This wave will cover the taxpayers whose sales subject to VAT exceeded SAR 500 million for the year 2021.
  • Saudi Arabia: The Minister of Finance has approved the Zakat rules for investments in investment funds approved by Capital Market Authority (CMA). These rules apply to the fiscal years starting on or after 1 January 2023.
  • Sri Lanka: The Department of Inland Revenue issued tax-related guidance concerning tax clearance for foreign outward remittances, the deduction of withholding tax and advance income tax, advance individual (personal) income tax (APIT) tables, and the deduction of advance income tax on interest or discount on deposits

Read TaxNewsFlash-Asia Pacific

Europe

  • Austria: Amendments to the ordinance on benefits in kind relating to electric vehicles provide that if an employee has the opportunity to use an employer-owned motor vehicle or motorcycle with CO2 emissions of 0 grams per kilometer or an employer-owned bicycle for non-work-related journeys, a non-cash benefit value of zero is applied.
  • Bulgaria: Amendments to the corporate income tax law include changes to regional state aid, state aid for farmers, general requirements for corporate income tax retention, and temporary solidary contribution.
  • EU: A report from the KPMG member firm in the Netherlands provides an overview of “plastics taxes” in the European Union.
  • Netherlands: The VAT deduction exclusion decree (DED) precludes the recovery of VAT on promotional gifts and staff benefits if they were provided free or below cost by the business.
  • Poland: The Supreme Administrative Court determined that the corporate tax exemption applied to a company’s total revenue from activities performed in special economic zones.
  • Poland: The Ministry of Finance announced the launch of a public consultation on the new logical structure of internal records kept by the members of a VAT group (i.e., the JPK_GV(1) structure). The structure enables VAT group members to submit to the tax office, starting from 1 July 2023, records of activities performed within the VAT group for monthly periods by the 25th day of the month following each subsequent month.
  • Poland: Amendments to the excise duty law and certain other laws were published on 21 December 2022 that (1) extend the temporary exemption of sales of motor fuels from retail tax until 30 June 2023, and (2) postpone the application of the property tax exemption for rail freight terminals until 1 January 2024.

Read TaxNewsFlash-Europe

Transfer Pricing

  • Montenegro: The Ministry of Finance adopted the rulebook on the interest rate for financial instruments between related parties for the year 2023. Under the new transfer pricing rules, taxpayers may apply either the arm’s length interest rates prescribed by the Ministry of Finance (which for 2023 is 3.98%) or the OECD’s general rules on determining the price of a transaction based on the arm's length principle.
  • Poland: The Minister of Finance published a notice on base interest rates and margin rates established for purposes of transfer pricing for individual (personal) and corporate income taxes—effective 1 January 2023.

Read TaxNewsFlash-Transfer Pricing

BEPS

  • OECD: The OECD Forum on Harmful Tax Practices agreed to new conclusions as part of the implementation of the BEPS Action 5 minimum standard on harmful tax practices.

Read TaxNewsFlash-BEPS

FATCA / IGA / CRS

  • Germany: The federal central tax office (BZSt) released guidance (CRS Newsletter 06/2022) with updated information concerning the common reporting standard (CRS) regime.
  • Singapore: The Inland Revenue Authority of Singapore issued an updated version of the FATCA fillable PDF form, which includes tax identification number (TIN) details under the account holder or payee information.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

KPMG reports published this week provide:

  • Initial observations on round 1 of the corporate alternative minimum tax (CAMT) guidance in Notice 2023-7
  • Analysis of the safe harbor for “incremental cost” under section 45W in Notice 2023-9
  • Analysis and observations on Rev. Procs. 2023-8 and 2023-11 (accounting method change procedures applicable to companies required to capitalize and amortize specified research and experimental (R&E) expenses under section 174)
  • Year-end tax updates in Kentucky, Massachusetts, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania


In case you missed it… the following items were released before the end of 2022:

  • Final regulations regarding the section 897(l) exception from taxation with respect to gain or loss of a qualified foreign pension fund attributable to certain interests in United States real property
  •  Proposed regulations regarding the treatment of certain entities, including qualified foreign pension funds, for purposes of the exemption from taxation afforded to foreign governments
  • Proposed regulations relating to the use of an electronic medium for participant elections and spousal consents under certain qualified retirement plans
  • Two notices announcing that petitions have been filed pursuant to Rev. Proc. 2022-26, requesting that polyphenylene sulfide and polyoxymethylene be added to the list of substances under section 4672(a) subject to the excise tax imposed by section 4671(a)
  • Notice 2023-1, informing taxpayers that the Treasury Department and IRS intend to propose regulations addressing the definitions of certain terms relevant to the requirements of the clean vehicle credit available under section 30D
  • Notice 2023-2, providing taxpayers with interim guidance on the new 1% excise tax on repurchases of corporate stock under section 4501
  • Notice 2023-3, providing the standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving purposes in 2023
  • Notice 2023-7, providing taxpayers with interim guidance on the new CAMT
  • Notice 2023-9, providing a safe harbor regarding the incremental cost of certain qualified commercial clean vehicles placed in service in calendar year 2023 for purposes of the new credit for qualified commercial clean vehicles under section 45W
  • Notice 2023-11, providing temporary relief procedures for certain foreign financial institutions required to report U.S. TINs for certain preexisting accounts as defined in an applicable Model 1 intergovernmental agreement (IGA)
  • Rev. Proc. 2023-11, modifying and superseding Rev. Proc. 2023-8, to provide updated guidelines for accounting method changes for specified research or experimental (R&E) expenditures to comply with section 174
  • “Frequently asked questions” (FAQs) about clean vehicle credits for new, previously owned and commercial clean vehicles
  • Treasury white paper on critical mineral and battery component requirements for clean vehicle tax credits
  • An alert providing the deadline for all qualified intermediaries (QIs) (including QIs acting as qualified derivatives dealers) to renew QI agreements covering years 2023 through 2028
  • TTB Industry Circular 2002-3 on calculating tax rates for distilled spirits eligible for both Craft Beverage Modernization Act (CBMA) reduced tax rates and tax credits for wine and flavors content
  • OMB’s Office of Information and Regulatory Affairs (OIRA) completed its review of proposed regulations concerning electronically filed returns
  • FAQs on Form 1099-K (Payment Card and Third Party Network Transactions).
  • Tax relief for taxpayers in New York affected by the December winter storm

Read TaxNewsFlash-United States

The items described above are also reported as editions of TaxNewsFlash:

 

 

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