KPMG’s Week in Tax: 11 - 15 February 2019 - KPMG Global
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KPMG’s Week in Tax: 11 - 15 February 2019

KPMG’s Week in Tax: 11 - 15 February 2019

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

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Transfer Pricing

  • OECD: A public consultation document addressing tax challenges arising from digitalisation of the economy was released as part of the OECD’s announcement about the public consultation meeting scheduled for 13 and 14 March 2019.
  • Korea: Transfer pricing standards are reflected in amendments to the "enforcement decrees" for implementing tax legislation.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • India: Updated versions of user guides relating to the FATCA and common reporting standard (CRS) regimes were released, and a list of “frequently asked questions” (FAQs) concerning the FATCA and CRS regimes was revised and updated.
  • France: Updated guidance was released concerning the FATCA and CRS regimes for financial institutions in France.
  • Hungary: An updated version of filing instructions for financial account information reporting under the FATCA regime includes additional instructions for the method of data submission.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • EU: An agreement (in the form of an exchange of letters) between the European Union and Switzerland and the EU and Norway concerning the origin of goods under the framework of the Generalised System of Preferences (GSP) entered into force in February 2019. The agreements allow goods from the beneficiary countries of the GSP to be considered as originating in these countries after materials originating in the EU, Switzerland, or Norway have been included in their complete manufacturing.
  • EU: The European Commission announced a new version of the EU customs data model—a web-based publication.

Read TaxNewsFlash-Trade & Customs

Africa

  • South Africa: The budget is expected to be presented on 20 February 2019.
  • South Africa: A carbon tax bill is under consideration by the National Assembly and, if passed, would be effective beginning 1 June 2019.
  • Nigeria: The tax authority appointed certain banks to serve as tax collection agents with respect to customers that are identified as “affected companies,” that maintain bank accounts with those banks, and that have not paid their taxes.
  • Nigeria: An appeals court issued a judgment that a company providing educational services in Nigeria was subject to income tax imposed on companies.

Read TaxNewsFlash-Africa

Asia Pacific

  • Singapore: The Minister for Finance is scheduled to present the budget on 18 February 2019.
  • Jordan: A new income tax law provides corporate and individual tax rates effective for 2019.
  • UAE: The network of the UAE’s income tax treaties is expanding, and there are recently signed income tax treaties between the UAE and Niger, St. Vincent and the Grenadines, Brazil, Suriname,  Botswana, Chad, San Marino, Zimbabwe, and Saudi Arabia.
  • UAE: The 2019 fiscal budget for Dubai contains a projected revenue contribution of 25% from taxes.
  • Korea: Amendments to “enforcement decrees”—that may affect foreign investors, foreign invested companies and the corporate income tax—concern the tax incentive limitation law and the value added tax (VAT) law. The changes are to be effective in February 2019 after certain steps are completed.
  • Oman: A ministerial decision includes provisions that supplement and clarify the application of certain provisions—including withholding tax and procedural rules—under Oman’s tax law.
  • Philippines: The deadline for submission of the alphabetical list of employees or payees from whom taxes were withheld (the “alphalist”) as part of the filing of the annual information return was extended to 15 February 2019. The original due date for filing the alphalist was 31 January 2019.
  • Qatar: A VAT regime in Qatar is expected to be effective beginning from 1 January 2020, with VAT being broadly imposed at a rate of 5%.

Read TaxNewsFlash-Asia Pacific

Europe

  • Czech Republic: Changes to the 2019 tax package as approved by the Senate include a reduced rate of VAT for certain goods and services and an extended deadline for electronically filed tax returns. The measures were returned to the Chamber of Deputies for its consideration.
  • Italy: A new measure concerns the VAT implications of remote sales of certain types of electronic goods. This will implement into Italian national tax law portions of the EU VAT e-Commerce Directive. The measure applies to taxable persons that facilitate—through the use of electronic interfaces such as marketplaces, platforms, portals or similar tools—remote or distance sales of mobile phones, video game consoles, tablet PCs, and laptops.
  • Netherlands: The Dutch Lower House of Parliament passed legislation for ratifying the multilateral convention to implement tax treaty-related measures to prevent base erosion and profit shifting (BEPS)—also referred to as the MLI—and to improve dispute resolution mechanisms. The Lower House agreed to change the MLI position of the Netherlands with respect to preventing the artificial avoidance of permanent establishment status.
  • EU: The European Council formally approved proposals for four “quick fixes” concerning VAT to simplify international trade. The “VAT quick fixes” will be effective beginning 1 January 2020, and will be expected to have considerable implications for businesses trading in international goods.

Read TaxNewsFlash-Europe

United States

  • Rev. Proc. 2019-13 provides a safe harbor method of accounting for determining depreciation deductions for passenger automobiles that qualify for the 100% additional first-year depreciation deduction under section 168(k) and that are subject to the depreciation limitations for passenger automobiles of section 280F(a).
  • Virginia’s conformity legislation to the federal tax law known as the “Tax Cuts and Jobs Act” was passed and sent to the governor for signature. The measures would apply retroactively to tax years beginning on or after 1 January 2018.
  • The IRS National Taxpayer Advocate released to Congress the annual report for 2018 that, in part, describes challenges the IRS encountered because of the recent partial shutdown of the federal government.
  • Reports prepared by KPMG LLP examine:
    • The final section 263A regulations and that describes significant burdens for taxpayers that have no practical alternatives to accounting for “negative adjustments” under the simplified methods
    • “Payment-acceleration events” for section 965 installment payments and transfer agreements
    • Section 451(b) and new book-tax conformity rules
    •  A list of many recent U.S. federal tax developments (an index of what happened in 2018 in the federal tax arena)
  • The Iowa Department of Revenue issued a declaratory order that addresses an important question for many service providers—how to determine where the benefit of a service is received. In this situation, the taxpayer was a “transportation brokerage specialist” that connected clients needing to transport goods with transportation service providers (trucking companies). The taxpayer did not transport the goods itself and did not hold title to the goods. Because the company did not actually transport goods, it was found not to qualify as a transportation service company that would apportion its income using the specific rules applicable to such companies (miles in the state over miles everywhere).
  • The Mississippi Department of Revenue issued revised guidance concerning the state tax treatment of “global intangible low taxed income” (GILTI). The revised state guidance explains that IRC section 951A requires GILTI to be included in a U.S. shareholder’s current taxable income, but does not state that Mississippi will not follow the GILTI provision (rather, the revised notice simply states that “Mississippi considers foreign sourced income to be non-business income”).
  • New Jersey’s tax court addressed whether a corporate business taxpayer filing a separate New Jersey return was required to add back amounts paid to its parent corporation under a tax-sharing agreement. The court determined the income tax addback must be calculated based on the taxpayer’s liability as calculated by its pro rata share of the parent’s total tax obligation in the non-separate reporting states. Because the parent had added back all of the state income taxes it paid to the non-separate reporting states, the tax court found that equity demanded that the taxpayer’s corporation business tax liability be reduced by any overpayment of this tax made by the parent on the taxpayer’s behalf.
  • A Washington State appellate court held that a taxpayer that sold meals to colleges (which in turn sold the meals to students) did not qualify as a wholesaler subject to the wholesaling B&O rate (0.484%) but was a food service management operator subject to B&O tax under the “services and other business activities” classification at the services rate of 1.5%. The Department of Revenue successfully argued that, based on the taxpayer’s contracts, it was not reselling meals but was being compensated for the service of assisting the schools with operating and managing their meal plans.  

Read TaxNewsFlash-United States

Indirect Tax

  • South Africa: A carbon tax bill is under consideration by the National Assembly..
  • Italy: A new measure concerns the VAT treatment of remote sales of certain types of electronic goods (mobile phones, video game consoles, tablet PCs, and laptops).
  • EU: A discussion further examines a judgment of the CJEU concerning how the expense allocation of a branch located in France (whereas the head office was located in the UK) would be determined in order to calculate the input VAT recovery right.
  • EU: Four “quick fixes” concerning VAT were approved in an effort to simplify international trade.
  • Korea: Amendments to “enforcement decrees” include VAT measures.
  • Qatar: A VAT regime is expected to be effective beginning from 1 January 2020, with VAT being broadly imposed at a rate of 5%.
  • United States: The Iowa Department of Revenue issued a declaratory order that addresses an important question for many service providers—how to determine where the benefit of a service is received.
  • United States: A Washington State appellate court held that a taxpayer that sold meals to colleges (which in turn sold the meals to students) did not qualify as a wholesaler subject to the wholesaling B&O rate, but was a food service management operator subject to B&O tax under the “services and other business activities” classification.

Read TaxNewsFlash-Indirect Tax

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