KPMG’s Week in Tax: 17 - 21 December 2018
21 December 2018
Tax developments or tax-related items reported this week include the following.
- Czech Republic: A new version of Instruction D – 32 (replacing D – 333) concerns a “binding assessment” (in other words, a binding tax ruling) of the manner by which the price agreed between related parties and the tax base of a tax non-resident relating to activities performed by a permanent establishment are determined.
- Japan: The government’s ruling coalition agreed to an outline of tax reform proposals that include transfer pricing measures that generally concern hard-to-value intangibles.
Read TaxNewsFlash-Transfer Pricing
- Costa Rica: The new tax reform law includes significant income tax law changes such as: measures concerning the taxation of capital gains; interest expense deduction limitations; rules addressing hybrid mismatch arrangements; anti-tax haven provisions; and a new value added tax (VAT) regime to replace the prior sales tax system.
- Costa Rica: The legislature in Costa Rica approved legislation concerning ratification of an income tax treaty between Costa Rica and Mexico.
- Japan: The government’s ruling coalition agreed to an outline of tax reform proposals that include corporate and international tax measures. However, the final version of the tax reform provisions could differ from these proposals.
- Australia: The Australian Taxation Office (ATO) posted two new guidance items concerning goods and services tax (GST) compliance within the retail banking sector.
Read TaxNewsFlash-Asia Pacific
- France: Measures are proposed to provide social and tax relief for low-wage earners, and to pay for these measures, there would be changes to the corporate income tax rates.
- Italy: A proposal would introduce a “web tax” to be imposed at a rate of 6% on services supplied by certain suppliers to residents of Italy.
- Netherlands: The Dutch government launched an internet consultation concerning a bill to transpose into Dutch law the EU Directive on Mandatory Disclosure—the directive that provides for the mandatory automatic exchange of information on reportable cross-border arrangements.
- Czech Republic: A legislative amendment to the VAT law received a second reading in the Chamber of Deputies, and if enacted, the measures could be effective during 2019.
- Czech Republic: Entities recorded in Czech public registers must register their beneficial owners. The rules establish a one-year time limit for such registration, effective January 2018; therefore, the one-year period to comply is coming to a close.
- Luxembourg: Because of a decision of the high court that rejected the position of the tax authorities concerning the limitation period allowed for filing refund claims with respect to tax withheld on dividend payments, there may be refund opportunities for certain taxpayers.
- Luxembourg: There have been developments concerning implementation in Luxembourg of the EU Anti-Tax Avoidance Directive (ATAD 1) as well as provisions for an interest limitation and fiscal unity bill. Also, ratification of an income tax treaty with France and of the Multilateral Instrument (MLI) advanced.
- Poland: The Minister of Finance issued tax technical explanations concerning the circumstances when a commercial real estate sale transaction is to be classified as a sale of an enterprise or an organized part of an enterprise and thus a transaction that is not subject to VAT.
FATCA / IGA / CRS
- Malta: An updated version of guidelines for implementation of the EU Council Directive 2014/107/EU (DAC2) and the common reporting standard (CRS) is intended to help financial institutions comply with the CRS requirements.
- United States: Proposed regulations under chapters 3 and 4 of the Internal Revenue Code reflect modifications resulting from industry comments and intended to provide burden relief under chapter 4 (FATCA) and chapter 3. A report prepared by KPMG describes specific highlights and includes a discussion of the modifications.
- Australia: Guidance is intended to help taxpayers understand their obligations under Australia’s participation in automatic exchange of information (AEOI) regimes for exchanges of financial account information with foreign jurisdictions.
- British Virgin Islands: Legislation includes measures to amend the CRS rules.
Read TaxNewsFlash-FATCA / IGA / CRS
Trade & Customs
- The European Commission announced it has started implementing a “no deal” contingency action plan for the UK’s planned departure from the European Union (“Brexit”) in March 2019. As a rule, the measures will be temporary in nature, limited in scope, and adopted unilaterally by the EU.
- The U.S. Treasury Department and U.S. Customs and Border Protection jointly released final regulations implementing changes to the drawback rules. The final regulations provide new processes for drawback claims pursuant to the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA).
Read TaxNewsFlash-Trade & Customs
- The staff of the Joint Committee on Taxation (JCT) released its 457-page general explanation of Pub. L. No. 115-97, commonly referred to as the “Tax Cuts and Jobs Act” (TCJA).
- Proposed regulations to implement the tax law changes about the business interest expense deduction limitation pursuant to section 163(j) were released for publication in the Federal Register.
- Proposed regulations regarding the tax law changes about hybrid dividends and certain amounts paid or accrued in hybrid transactions or with hybrid entities were released for publication in the Federal Register.
- Text of proposed regulations was released under section 864(c)(8) concerning sales of U.S. trade or business partnership interests.
- Proposed regulations relating to section 59A—the “base erosion and anti-abuse tax” (BEAT) were released for publication in the Federal Register. A KPMG report provides analysis and observations about these proposed regulations.
- OMB’s Office of Information and Regulatory Affairs (OIRA) reported it completed review of proposed regulations concerning the hybrid dividends and payments provision under the new U.S. tax law.
- OMB’s OIRA acknowledged receipt of proposed regulations under section 250 concerning the deductions for “foreign-derived intangible income” (FDII) and “global intangible low-taxed income” (GILTI).
- Rev. Proc. 2019-06 sets forth the unpaid loss discount factors and salvage discount factors for the 2018 accident year—to be used by insurance companies to compute discounted unpaid losses under section 846 and the discounted estimated salvage recoverable under section 832.
- Taxpayers that filed requests to change their entity classification in response to tax law changes may be able to withdraw those requests if recent guidance renders that change undesirable.
- Notice 2019-04 extends for all of 2019 the temporary dyed fuel relief for taxable fuel removals from certain Wisconsin terminals (Green Bay, Madison, and Milwaukee) due to the shutdown of the West Shore Pipeline.
- The Puerto Rico Treasury Department issued guidance with respect to changes to the 2018 information returns that are due in January and February 2019.
- Puerto Rico’s governor signed into law legislation that makes changes to the alternative minimum tax (AMT) for corporations and individuals as well as an optional manner of taxation for service corporations and self-employed individuals—changes that directly affect the reporting of payments and withholding of tax on services.
- The IRS posted “early draft releases” of instructions for reporting information with respect to Form 965-A and Form 965-B concerning the “transition tax” imposed under section 965.
- The IRS released an advance version of Notice 2019-01 as guidance on the treatment of “previously taxed earnings and profits” or PTEP (colloquially referred to as PTI), and a KPMG report provides initial impressions of the IRS notice.
- The U.S. District Court for the Northern District of Texas late last week issued a decision striking down the Patient Protection and Affordable Care Act (ACA). The court held that, following passage of the U.S. tax law, the “individual mandate provision” in the ACA is unconstitutional and the remaining provisions of the ACA are inseverable and are, therefore, invalid.
- More U.S. states and cities—California, Wisconsin, the District of Columbia, and Philadelphia—responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).
- An administrative ruling in Chicago, Illinois, addresses the tax collection obligations of “facilitators.” The taxes at issue included the city’s amusement tax, hotel tax, lease tax, and parking tax, and the ruling offered several examples of activities for which facilitators may be required to collect the tax.
- The Missouri Administrative Hearing Commission concluded that items used to administer medicines (including needles, filters, syringes, catheters, and cannulas) were not “materials” used in compounding, and that the taxpayer did not owe use tax on these items that were involved in preparing and administering drugs to patients.
Read TaxNewsFlash-United States
- Czech Republic: A legislative amendment to the VAT law received a second reading in the Chamber of Deputies, and if enacted, the measures could be made effective during 2019.
- Australia: The ATO issued two new guidance products targeting contentious areas of GST compliance within the retail banking sector.
- Poland: Tax technical explanations concern the circumstances when a commercial real estate sale transaction is to be classified as a sale of an enterprise or an organized part of an enterprise and thus a transaction that is not subject to VAT.
- Costa Rica: The new tax reform law includes modifies the prior sales tax system and the transfer to a new VAT regime.
- United States: More states and cities—California, Wisconsin, the District of Columbia, and Philadelphia—responded to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).
- United States: A ruling in Chicago concerns the liability of “facilitators” for the city’s amusement tax, hotel tax, lease tax, and parking tax, and the ruling offered several examples of activities for which facilitators may be required to collect the tax.
- United States: The Missouri Administrative Hearing Commission concluded that items used to administer medicines (including needles, filters, syringes, catheters, and cannulas) were not “materials” used in compounding, and were not subject to use tax.
Read TaxNewsFlash-Indirect Tax