Tax developments or tax-related items reported this week include the following.
- OECD: KPMG LLP reports provide impressions and insights on the following OECD guidance items—
- OECD’s revised “Unified Approach” to tax challenges of digitalization
- OECD transfer pricing (final) guidance on financial transactions
- OECD: A webcast concerns the OECD/G20 Inclusive Framework on base erosion and profit shifting (BEPS) relating to the tax challenges arising from the digitalisation of the economy.
- Czech Republic: A KPMG report concerns transfer pricing issues identified in financial statement reviews.
- UK: New regulations in the UK implement the EU Arbitration Directive and are expected to help with effective resolution of double tax disputes.
- KPMG report: A practical guide summarizing several important recent developments in the transfer pricing world.
Read TaxNewsFlash-Transfer Pricing
- Canada: Taxpayers that produce eligible screen-based productions in Alberta may apply for a film tax credit.
- Costa Rica: Recent guidance addresses or adjusts the limitation imposed on deductible expenses related to transactions with related parties that are residents of “non-cooperative jurisdictions” as well as certain expenses not recorded in electronic invoices.
- China: In response to the coronavirus outbreak, government agencies jointly issued tax guidance that set out preferential measures to support enterprises and citizens as businesses address issues arising from the health situation.
- Japan: The 2020 tax reform proposals of the ruling governing coalition include proposed revisions to the consolidated tax return filing system—specifically, proposals to revise the consolidated tax return filing system and to shift to a new “Japanese group relief system.”
- Australia: The Board of Taxation opened a consultation concerning potential reforms to the corporate tax residency rules, and the consultation paper considers adopting a sole-incorporation test.
- Australia: A bill that is pending Royal Assent intends to address the practice of “phoenixing”—in general, a practice that involves the deliberate transfer of assets from a distressed company to another company (the “phoenix”) to avoid paying liabilities.
- Kazakhstan: Amendments to the tax law, effective beginning 1 January 2020, include certain tax administrative and procedural measures such as the statute of limitations on assessments.
- Oman: The authorities have started evaluating foreign investments for approval in setting up 100% foreign-owned companies in Oman under the new foreign investment law.
Read TaxNewsFlash-Asia Pacific
- Czech Republic: Updates concerning value added tax (VAT) in the Czech Republic include the status of the VAT “quick fixes” regime and implementation of rules for VAT on fuel cards.
- Portugal: The European Commission (EC) referred Portugal to the Court of Justice of the European Union (CJEU) for the registration taxation of used cars.
- New legislation in Washington State modifies and simplifies the Washington business and occupation (B&O) tax “workforce education” surcharge (that became effective 1 January 2020).
- A notice of proposed rulemaking provides guidance for employers concerning the amount of federal income tax to withhold from employee wages. The regulations proposed changes to existing regulations, and in general would update those regulations to conform to the changes made by the 2017 tax law (Pub. L. No. 115-97) and other legislation enacted since the regulations were last revised.
- OMB’s Office of Information and Regulatory Affairs (OIRA) received for review proposed regulations concerning the limitation on the deduction of business interest under section 163(j).
- Rev. Rul. 2020-05 updates previously provided guidance with respect to adjustments to the basis of life insurance contracts in order to account for the changes made to section 1016(a) by the 2017 tax law.
- The IRS released a “practice unit” titled: Interest capitalization for self-constructed assets. The practice unit reflects changes made by the 2017 tax law.
- The Trump Administration released its fiscal year (FY) 2021 budget proposal providing tax proposals in the administration’s recommendations to Congress for spending and taxation for the fiscal year that begins on 1 October 2020.
- Legislation enacted in Georgia and guidance released by the tax authorities in Nebraska, North Carolina, and West Virginia concern sales tax obligations for remote sales and transactions involving marketplace facilitators.
- In Florida, Kansas, Missouri, Mississippi, and Tennessee bills have been introduced to adopt sales and use tax economic nexus and/or marketplace facilitator provisions.
- In Arizona, a bill was introduced that would establish an e-commerce compliance office to assist Arizona taxpayers in complying with taxes levied by other jurisdictions.
- An Arizona appellate court rejected a taxpayer’s argument that exemptions applicable to mining machinery and equipment extended to dyed diesel fuel used to power equipment used in mining or processing.
- The Colorado Department of Revenue issued a private letter ruling regarding the sales and use tax obligations of a vehicle-sharing or peer-to-peer car sharing business as a platform operator.
- The Louisiana Department of Revenue issued guidance addressing the state’s new elective passthrough entity tax (S corporations or entities taxed as partnerships for federal income tax purposes can elect to be taxed as if the entity had filed a federal income tax return as a C corporation).
- A Massachusetts court affirmed an appellate tax board decision that a taxpayer’s remotely accessed software products were taxable sales of prewritten computer software.
Read TaxNewsFlash-United States
- The House Ways and Means Committee approved two bills relating to the tax treatment of: (1) certain investors with respect to specified medical care providers; and (2) “surprise” medical bills.
Read TaxNewsFlash-Legislative Updates
FATCA / IGA / CRS
- United States: The IRS updated a list of “frequently asked questions” (FAQs) and then removed one of the FAQs as guidance for qualified intermediary / withholding foreign partnership / withholding foreign trust (QI/WP/WT) entities that may have FATCA reporting requirements.
Read TaxNewsFlash-FATCA / IGA / CRS
- Czech Republic: Updates concerning VAT in the Czech Republic include the status of the VAT “quick fixes” regime and implementation of rules for VAT on fuel cards.
- Portugal: The European Commission (EC) referred Portugal to the CJEU for the registration taxation of used cars.
- United States: Legislation or guidance in Georgia, Nebraska, North Carolina, and West Virginia concerns sales tax obligations for remote sales and transactions involving marketplace facilitators. Proposals in Florida, Kansas, Missouri, Mississippi, and Tennessee would adopt sales and use tax economic nexus and/or marketplace facilitator provisions. In Arizona, a bill was introduced that would establish an e-commerce compliance office to assist Arizona taxpayers in complying with taxes levied by other jurisdictions.
- United States: The Colorado Department of Revenue issued a private letter ruling concerning the tax obligations of a vehicle-sharing or peer-to-peer car sharing business as a platform operator.
- United States: A Massachusetts court affirmed an appellate tax board decision that a taxpayer’s remotely accessed software products were taxable sales of prewritten computer software.
Read TaxNewsFlash-Indirect Tax
Trade & Customs
- Australia: A free trade agreement between Australia and Peru entered into force on 11 February 2020.
- UK: Beginning 1 January 2021, it appears that regardless of what trade deal may be reached between the UK and the EU, customs declarations will be required at the UK EU border (that is, the border of the remaining 27 EU Member States).
- Canada: The Canada Border Services Agency issued a release to clarify proof-of-report requirements for exporters and carriers.
- United States: A notice from the Office of the U.S. Trade Representative (USTR) announces a determination to grant additional exclusions and makes amendments to certain notes in the Harmonized Tariff Schedule of the United States (HTSUS) from the $34 billion action as part of the action in the Section 301 investigation of China.
- United States: The U.S. Court of Appeals for the Federal Circuit concluded that a U.S. governmental department erred in its interpretation of U.S. laws that bar federal agencies from purchasing products of certain foreign countries and that also require agencies to purchase “U.S.-made end products” before end products from foreign countries.
- United States: A notice issued by the USTR updates the list of countries designated as developing or least-developed under U.S. countervailing duty laws.
Read TaxNewsFlash-Trade & Customs