Other news in brief
A round up of other news this week.
A round up of other news this week.
On 4 February 2022 the OECD provided an update on the implementation of its two-pillar plan to address the tax challenges arising from digitalisation and globalisation of the economy. The OECD has since held a short consultation on Pillar One (specifically in relation to nexus and revenue sourcing) which closed on 18 February. A further public consultation document for Amount B under Pillar One is expected to be issued in mid-2022. Regarding Pillar Two, a public consultation on the Implementation Framework to facilitate the co-ordinated implementation of the global anti-base erosion rules is expected to be launched later in February. In its update, the OECD added that the draft model provision and commentary for the Subject to Tax Rule (STTR) are set to be released in March 2022 with a set of questions for input. This will be accompanied by a public discussion draft on the development of a multilateral instrument to facilitate the implementation of the STTR for comment. Register for our upcoming webinar on 9 March 2022 for the chance to consider a more detailed analysis of what these Pillar Two developments mean for multinational organisations and explore key considerations and actions for tax leaders.
HMRC are issuing ‘nudge’ letters to a number of UK subsidiaries of overseas headed groups which make cross border royalty payments to highlight to them that they are finding errors in cross border royalty payment calculations as part of compliance checks on other companies. HMRC are recommending to the companies they have contacted that they check they have correctly calculated any deductions for royalty payments shown on their corporation tax returns and file an amended return to correct any errors identified. If you receive such a letter please speak to your usual KPMG UK contact.
The review of the UK funds regime was first announced at Budget 2020 to consider reforms which hold the potential to enhance the UK’s attractiveness as a location for asset management and for funds in particular. The Government has now published a summary of responses to the call for input, as well as its response and proposals moving forward. The proposals include (i) making the taxations of funds simpler and more efficient, including in relation to the ‘genuine diversity of ownership’ requirement, real estate investment trusts and the tax efficiency of multi-asset authorised funds; (ii) expanding the range of investment products available in the UK; and (iii) exploring opportunities to support the wider funds environment. The Government (and the Financial Conduct Authority where applicable) will also publish a consultation on options to simplify the VAT treatment of fund management fees in the coming months and continue ongoing work to facilitate the rollout of the Long Term Asset Fund. As part of the review, the Government has already proceeded with a new tax regime for ‘Qualifying Asset Holding Companies’ to be introduced in Finance Act 2022. Further representations and engagement from industry on the UK funds regime are welcomed by the Government.
The Qualifying Asset Holding Company (QAHC) Regime is a new simplified holding company tax regime expected to be introduced in the UK with effect from 1 April 2022. It is targeted at certain institutional and fund investors who use QAHCs to facilitate the flow of capital, income and gains between investors and underlying investments. The regime provides a number of benefits where certain eligibility criteria are met. For further details of the regime and how KPMG can support you, refer to our QAHC regime flyer.
The UK and Scottish Governments have made an agreement to establish two new ‘Green Freeports’ in Scotland. Freeports are special areas within the UK’s borders where different economic regulations apply. These new Freeports are the first to be announced outside of England. The UK Government had previously committed to establishing at least one Freeport in each of Scotland, Wales and Northern Ireland. According to the agreement, the two Green Freeports to be built in Scotland will have net-zero targets and will have to make a pledge to reach net-zero by 2045. It is hoped the new sites will be operational by spring 2023.
Following the completion of the stages in the House of Commons, Finance (No.2) Bill 2021-22 (here referred to as Finance Bill 2022) is now making its way through the House of Lords. The first reading took place on 3 February 2022 and all remaining House of Lords stages are scheduled to take place on 22 February 2022. It should be noted that the House of Lords does not have the power to make any amendments to the Bill as it is a ‘money bill’ and therefore these stages are a formality only. Royal Assent will take place once the stages in the House of Lords have been completed, however no date had been published at the time of writing.
Whether scanning the news or scrolling social media, cryptocurrency will no doubt be mentioned. Soon, if not already, employees will be asking employers to have cryptocurrency in their reward packages. Register for our upcoming webinar, on 23 February, where we’ll review what a reward program needs to consider when taking on cryptocurrency from design and administration to compliance and messaging.
The joint development of a first-of-its-kind suite of artificial intelligence (AI) tax analysis tools for the UK has been launched by KPMG UK and Blue J, who are the leading provider of predictive analysis tools for tax positions in North America. The tool will enable KPMG’s tax team to use AI to predict tax scenario outcomes with 90 percent plus accuracy. Stuart Tait, Partner, Chief Technology Officer at KPMG UK commented “our tax teams are dedicated to providing the best service to our clients, which is why we are passionate about in investing in advanced technologies like those developed by Blue J to improve the speed and accuracy of our advice.”