KPMG’s Week in Tax: 14 - 18 January 2019 - KPMG Global
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KPMG’s Week in Tax: 14 - 18 January 2019

KPMG’s Week in Tax: 14 - 18 January 2019

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

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Americas

  • Brazil: Updated common nomenclature of the Mercosur trading block and new units of measures for foreign trade apply beginning 1 January 2019.
  • Mexico: There are certain income tax and value added tax (VAT) incentives available with regards to income from certain investments made in Mexico’s northern border region for the period 1 January 2019 through 31 December 2020.
  • Panama: Tax incentives apply for companies established in the Panama-Pacific special economic zone, and there have been changes to expand availability of the incentives with respect to “office administration services.”
  • Costa Rica: The deadline for corporations and legal entities to remit certain taxes, including income tax, for the fiscal period 2019 expires 31 January 2019.
  • Canada: Collection of GST/HST on digital transactions has been based on a self-assessment system, but because this has been viewed as ineffective, it may be only a matter of time before Canada joins the growing global trend of requiring non-resident suppliers to account for a jurisdiction's VAT on digital supplies made to consumers. 

Read TaxNewsFlash-Americas

Asia Pacific

  • Thailand: The amended labor protection legislation will affect many employers’ work rules (an employer with 10 or more employees must prepare and announce the work rules with certain information required by Thai labor law).
  • Thailand: Royal decrees implementing the new “international business center” regime to replace IHQ, ROH and ITC regimes were published in the official gazette in late 2018.
  • Indonesia: The forms for reporting the domicile of non-residents of Indonesia (forms DGT-1 and DGT-2) have been revised.
  • Myanmar: The Ministry of Planning and Finance issued an announcement in January 2019 inviting domestic and foreign insurers interested in operating an insurance business in Myanmar to submit an expression of interest.

Read TaxNewsFlash-Asia Pacific

Europe

  • Czech Republic: Changes to the research and development (R&D) allowance rules have been proposed as part of legislation that has already been passed by the Chamber of Deputies and is pending consideration by the Senate.
  • Czech Republic: The Supreme Administrative Court issued a judgment finding that the difference between the nominal value of a receivable and its purchase price upon its transfer may be viewed as consideration under a factoring contract and thus subject to VAT.
  • Italy: Two EU anti-tax avoidance directives have been transposed into Italian law, and include anti-abuse rules to address tax evasion by multinational companies. The new measures include an interest limitation rule, an exit tax, controlled foreign company (CFC) rules, and rules regarding hybrid mismatches with third countries.
  • Sweden: Beginning in 2019, all employers required to file a monthly employer tax return must now report such tax information at both an individual level and a company level.
  • Switzerland: A new regime requires the customs administration to review and re-evaluate permits relating to authorized consignee and consignor status in Switzerland. Companies with AEO status are excluded from this review process because they are deemed already to satisfy the applicable conditions.
  • EU: The European Commission announced that it is taking a progressive approach to phase out national vetoes on matters of taxation by the end of 2025 and replace the current unanimity rule with a qualified majority voting rule.
  • OECD: A report provides internationally comparable statistics and analysis from approximately 100 countries on four main categories of data: (1) corporate tax revenues, (2) corporate income tax rates, (3) corporate effective tax rates, and (4) tax incentives related to innovation.
  • Poland: Certain VAT amendments were effective beginning in 2019, and these include bad debt relief; VAT on vouchers exchanged for goods or services; and provisions related to VAT and determining the place of supply of telecommunication, broadcasting, and electronic services provided to consumers in Poland.

Read TaxNewsFlash-Europe

FATCA / IGA / CRS

  • Bulgaria: The tax authority issued a document concerning the reporting service offered for the common reporting standard (CRS) and the EU Council Directive 2014/107/EU (DAC2) regimes.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • OMB’s Office of Information and Regulatory Affairs (OIRA) reported that it completed review of final regulations concerning whether and to what extent an individual (including a trust or estate) is entitled to a deduction under section 199A with regard to trade or business income earned through a sole proprietorship, partnership, or S corporation. OIRA review was also completed of proposed regulations under section 199A for regulated investment companies (RICs) and real estate investment trusts (REITs).
  • Notice 2019-11 provides a waiver of the estimated tax penalty (the addition to tax under section 6654 for the underpayment of estimated income tax) for certain individuals who paid 85% or more of their tax liability for 2018. The notice is intended to provide relief given the variety of changes made to the individual income tax rules by the tax law enacted in December 2017.
  • The IRS updated its contingency plan concerning IRS operations during the partial government shutdown. Certain functions (including audit) remain closed during the shutdown. However, the IRS announced the start of the tax season for filing returns, and that refunds would be issued. 
  • A KPMG report examines the interim guidance on taxing “excess” executive compensation of exempt organizations.
  • Final regulations (305 pages) concerning the transition tax under section 965 were released by the IRS, following completion of OIRA review.
  • The IRS posted a statement regarding the effect of sequestration on the alternative minimum tax credit for corporations for fiscal year 2019.
  • More states—Missouri, Pennsylvania, South Carolina, Texas, and Virginia—responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).
  • The New Jersey Division of Taxation released two technical bulletins providing guidance on the state tax treatment of GILTI and FDII (“global intangible low-taxed income” and “foreign-derived intangible income”) as enacted under the 2017 federal tax reform legislation.
  • A hearing officer in New Mexico ruled that the Department of Taxation and Revenue had failed to establish that deviation from a financial institution’s apportionment factor was warranted.
  • The Pennsylvania Department of Revenue issued guidance (a bulletin) concluding that hedging-related and certain other receipts are excluded entirely from both the sales factor numerator and denominator.
  • A KPMG report considers the environment and prospects for tax legislation in the new Congress.

Read TaxNewsFlash-United States

Indirect Tax

  • Czech Republic: A court judgment concludes the difference between the nominal value of a receivable and its purchase price upon its transfer may be viewed as consideration under a factoring contract and thus subject to VAT.
  • India: The Goods and Services Tax (GST) Council in January 2019 made certain recommendations with respect to increasing the threshold limit for GST registration, concerning the composition scheme for suppliers of goods, and introducing a composition scheme for the supply of services.
  • Mexico: Tax incentives—including VAT incentives—are intended to promote the development of Mexico’s northern border region.
  • Panama: The rules for tax incentives for companies established in the Panama-Pacific special economic zone have been expanded.
  • Canada: There are GST/HST challenges with respect to the digital transactions that may warrant changes.
  • Poland: Certain VAT amendments were effective beginning in 2019.
  • United States: More states have responded legislatively to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).

Read TaxNewsFlash-Indirect Tax

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