KPMG’s Week in Tax: 18 - 22 February 2019 - KPMG Global
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KPMG’s Week in Tax: 18 - 22 February 2019

KPMG’s Week in Tax: 18 - 22 February 2019

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

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BEPS and Transfer Pricing

  • Luxembourg: Parliament passed legislation for ratification of the multilateral instrument (MLI) provisions into Luxembourg domestic tax law and to apply the MLI measures to the network of Luxembourg income tax treaties.
  • OECD: The comment period with respect to a consultation on the tax challenges of digitalisation has been extended to 6 March 2019. Comments were originally due by 1 March 2019.
  • Saudi Arabia: Final transfer pricing regulations were released, as well as a set of “frequently asked questions” (FAQs). Transfer pricing documentation requirements included concern country-by-country reporting, Master file, and Local file.
  • Slovakia: New guidelines reflect changes to the transfer pricing documentation requirements.
  • Ireland: A consultation seeks feedback on a number of aspects of Ireland’s current transfer regime. Ireland intends to update the transfer pricing rules, with an effective date of 1 January 2020. The consultation period will run until 2 April 2019.

Read TaxNewsFlash-BEPS and TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Italy: A decree amends the requirements under the common reporting standard (CRS) regime to include certain pension funds and pension plans, effective 1 April 2019.
  • Germany: The central tax office released information to financial institutions and foreign service providers concerning the CRS regime.     

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • United States: The U.S. Court of Appeals for the Federal Circuit affirmed a decision of the trade court concerning the tariff classification of imported fiber optic telecommunications network equipment. 
  • Indonesia: A regulation concerning the taxation of e-commerce transactions is effective 1 April 2019 and applies to all e-commerce transactions—including transactions made by online retailers or through social media or made as classified advertisements or daily deals. 
  • EU: The European Commission issued a release for EU businesses in the event of a “no-deal” Brexit—i.e., the risk that the UK may leave the EU on 30 March 2019 without a deal. The EC release is intended to help EU businesses in the area of customs and indirect taxation, and is part of ongoing efforts to prepare for the UK's exit from the EU without a deal being concluded.

Read TaxNewsFlash-Trade & Customs

Africa

  • South Africa: The budget speech for 2019 did not reflect increases to any taxes, but reflects an intention to increase revenue (tax) collection. 
  • South Africa: Legislation makes changes to the South African competition law regime.
  • Nigeria: The Federal Inland Revenue Service directed banks to suspend tax liens on bank accounts of taxpayers in default status for a period of 30 days, so as to allow taxpayers with frozen bank accounts an opportunity to regularize their tax positions.

Read TaxNewsFlash-Africa

Americas

  • Canada: It was announced that the date of the federal budget will be 19 March 2019.
  • Canada: There are no changes to the corporate and individual tax rates in British Columbia’s 2019 budget.
  • Canada: Businesses outside Saskatchewan may be required to register and collect the provincial sales tax (PST) following certain legislative changes.
  • Canada: A lifetime capital gains exemption on qualifying small business shares (and farming and fishing property) may help taxpayers realize tax savings.
  • Costa Rica: A draft law aims to categorize and give recognition to electronic invoices so that they are treated as valid documents for collection process purposes.

Read TaxNewsFlash-Americas

Asia Pacific

  • New Zealand: “Tax Working Group” recommendations include four revenue neutral packages: (1) increased progressivity, (2) business and housing affordability, (3) savings, and (4) diversification.
  • Singapore: The 2019 budget was presented, and includes corporate and individual tax measures.
  • Singapore: A new formula was announced for calculating taxable benefits of employer-provided automobiles—effective from the year of assessment 2020. 

Read TaxNewsFlash-Asia Pacific

Europe

  • Luxembourg: Parliament moved forward on ratification of the multilateral instrument (MLI).
  • Czech Republic: The Supreme Administrative Court concluded that a customer’s liability for VAT that was not paid by the supplier does not always take precedence over denying the customer’s entitlement to VAT deduction.
  • Hungary: Companies qualifying as micro- or small-size enterprises (SMEs) continue to be exempt from the “innovation contribution.” However, beginning 1 January 2019, whether SMEs qualify for exemption from the innovation contribution is no longer based solely on the financials of the individual company. Rather, the exemption qualification is also based with consideration given to the financials of so-called partner and related companies (as defined by the law).

Read TaxNewsFlash-Europe

United States

  • The U.S. Treasury Department along with other government agencies is seeking information regarding grandfathered group health plans and grandfathered group health insurance coverage.
  • Final regulations under Code sections 6221 through 6241 were issued for purposes of implementing the centralized partnership audit regime.
  • The U.S. Supreme Court unanimously held that West Virginia law that taxes the federal pension benefits of a retired U.S. Marshals Service employee—whereas the pension benefits of certain former state and local law enforcement employees were exempt from state taxation—violates the intergovernmental tax immunity doctrine under 4 U.S.C. section 111.
  • A KPMG report provides impressions on a hearing (held 14 February 2019) on the first round of proposed regulations for implementing the opportunity zones provisions under the tax law enacted in December 2017.
  • More states responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales) with legislation or with administrative guidance.
  • The Florida Department of Revenue issued a report addressing the state tax implications for corporate taxpayers of the U.S. federal law known as the “Tax Cuts and Jobs Act.” Florida does not have an individual (personal) income tax, so the report focuses entirely on corporate tax changes. 
  • An Illinois tax tribunal found that a taxpayer that operated a golf club that in turn was owned by an Illinois municipality could qualify for the state’s “governmental body” exemption on purchases that the taxpayer made to operate the club.
  • An Ohio appellate court affirmed a lower court decision that receipts of the taxpayer (a Georgia-based wholesaler of lawn and garden products) were “sitused” to Ohio when the goods were picked up in Georgia and shipped to addresses in Ohio. 
  • The Virginia Supreme Court rejected the taxpayer’s argument that application of Virginia’s income-producing activity test to source its service receipts was unconstitutional. Under Virginia’s three-factor double weighted apportionment formula, nearly all of the taxpayer’s service revenues were sourced to Virginia where its employees, property, and computer servers were located, but 95% of the taxpayer’s sales were to customers outside Virginia.

Read TaxNewsFlash-United States

Indirect Tax

  • South Africa: VAT thresholds and rates were announced in the 2019 budget speech. The standard rate of VAT is 15% (from 1 April 2018), and the VAT registration threshold remains at R1,000,000. 
  • Canada: Businesses outside Saskatchewan may be required to register and collect the provincial sales tax (PST).
  • Costa Rica: A draft law aims to categorize and give recognition to electronic invoices so that they are treated as valid documents for collection process purposes.
  • Singapore: The standard rate of the goods and services tax (GST) is 7%.  
  • Czech Republic: The Supreme Administrative Court concluded that a customer’s liability for VAT that was not paid by the supplier does not always take precedence over denying the customer’s entitlement to VAT deduction.
  • EU: A European Commission release is intended to help EU businesses in the event of a “no-deal” Brexit, and reflects commentary in the area of customs and indirect taxation, including VAT.
  • Indonesia: A regulation concerning the taxation of e-commerce transactions is effective 1 April 2019 and applies to all e-commerce transactions, including transactions made by online retailers or through social media or made as classified advertisements or daily deals. 
  • United States: An Illinois taxpayer operating a golf club owned by an Illinois municipality could qualify for the state’s “governmental body” exemption on purchases that the taxpayer made to operate the club.
  • United States: Receipts of the taxpayer (a Georgia-based wholesaler of lawn and garden products) were “sitused” to Ohio when the goods were picked up in Georgia and shipped to addresses in Ohio. 
  • United States: The Virginia Supreme Court rejected the taxpayer’s argument that application of Virginia’s income-producing activity test to source its service receipts was unconstitutional. Under Virginia’s three-factor double weighted apportionment formula, nearly all of the taxpayer’s service revenues were sourced to Virginia where its employees, property, and computer servers were located, but 95% of the taxpayer’s sales were to customers outside Virginia.
  • United States: More states responded 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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