KPMG’s Week in Tax: 7 - 11 March 2022

Recent tax developments from around the globe for the week of 7 - 11 March 2022

Recent tax developments from around the globe for the week of 7 - 11 March 2022

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

Americas

  • Bermuda: The 2022-2023 budget did not include any tax increases, and there were no significant changes in duties or fees in other areas. Tax measures did include proposed changes to payroll taxes, tax relief, and taxes regarding land valuation.

Read TaxNewsFlash-Americas

Asia Pacific

  • Philippines: The Bureau of Internal Revenue issued guidance on the suspension of the income tax incentives granted to registered business enterprises for violating the work-from-home threshold. The guidance is effective until 31 March 2022.
  • India: The Rajasthan High Court held that a taxpayer was allowed to claim a business loss flowing from a permanent diminution in the value of an investment made in the equity shares in a subsidiary located in the United States.
  • Australia: The lack of uniformity in stamp tax (duty) rules have given rise to potential traps for those owning property.
  • New Zealand: A parliamentary committee has recommended changes to pending legislation concerning interest limitations, goods and services tax (GST) measures, and foreign exchange rules.
  • Pakistan: The “Income Tax (Amendment) Ordinance, 2022—including tax amnesty when investments are made from previously undeclared assets (similar to a tax amnesty program)— has been approved by the Cabinet and will be enacted when signed by the president.

Read TaxNewsFlash-Asia Pacific

Europe

  • Ireland: Legislation is intended to provide a “legislative footing” to a number of amendments to various COVID-19 business and employer support measures.
  • UK: The Court of Justice of the European Union (CJEU) issued its judgment holding that the UK failed to fulfil its obligations in relation to customs control and the availability of “EU own resources” by failing to adopt the measures necessary to combat fraud with regards to undervalued imports of textiles and footwear from China.
  • Poland: The Polish Supreme Administrative Court held that in situations when the surplus of debt financing costs in taxable activities does not exceed PLN 3 million in a tax year, the taxpayer has the right to include the total debt financing amount into tax-deductible costs. And if the surplus exceeds PLN 3 million, then the cap on the excess of the debt financing costs need to be set as a total of PLN 3 million and 30% of tax earnings before interests, tax, depreciation and amortization (EBITDA).
  • Poland: Tax relief measures—including reduced VAT rates—are being provided or are proposed in an effort to provide relief for those affected by the conflict in Ukraine.
  • Czech Republic: Possible tax legislative measures in the four-year legislative cycle that just began could include work on a new accounting law, VAT registration, and transposition into Czech law of various EU directives.

Read TaxNewsFlash-Europe

Transfer Pricing

  • OECD: The Organisation for Economic Cooperation and Development (OECD) released comments received on the draft rules for tax base determinations under Pillar One Amount A. 
  • Thailand: The Revenue Department revised the transfer pricing disclosure form and provided additional explanations along with a set of “questions and answers” (Q&A) and updates on the notification process for country-by-country (CbC) reporting.  

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • Singapore: An updated user guide provides clarification on populating a foreign tax identification number (TIN) for an entity account holder that is not a U.S. person.

Read TaxNewsFlash-FATCA / IGA / CRS

Trade & Customs

  • The European Commission announced an agreement among EU Member States to adopt further sanctions on Russia and Belarus in view of the situation in Ukraine and in response to Belarus' involvement.
  • President Biden signed an executive order that bans (1) imports of Russian oil, liquefied natural gas, and coal; and (2) new U.S. investment in Russia’s energy sector.
  • The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) issued a new Russia-related general license, and new and updated FAQs.
  • U.S. Customs and Border Protection (CBP) issued a release announcing that the U.S. Food and Drug Administration (FDA) has developed a 90-day pilot program that is intended to maximize entry review staff at the periods of highest volume drug entries.  The “nationalized drug entry review pilot” program will run from 13 March 2022 through 13 June 2022.
  • The government of Colombia partially modified the customs tariff for the importation of products that affect the household consumption basket.

Read TradeNewsFlash-Trade & Customs

United States

  • The staff of the Joint Committee on Taxation (JCT) released a report—the “Bluebook”—explaining all tax legislation enacted in the 116th Congress and providing explanations of more than 200 tax provisions across eight different laws.

Read TaxNewsFlash-Legislative Updates
 

  • For tax year 2021 reporting, partnerships retain the option to choose whether to report under the traditional lag method or adopt the modified partnership reporting method as set forth in the proposed regulations (the “Proposed Reg Method”). The IRS has stated informally that the Proposed Reg Method will remain optional until the regulations are finalized, and the Form 1042 instructions make it clear that the decision is optional for all partnerships for the 2021 tax year. 

State and local tax

  • California: Assembly Bill 2280, which would authorize the California Controller to establish a voluntary compliance program, has been introduced in the legislature.  Under the bill, the Controller would be required to waive interest on past due unclaimed property for businesses that participate in and complete the requirements of the program.
  • Iowa: A comprehensive tax relief bill was enacted that includes a methodology for future corporate rate reductions. Specifically, Iowa’s top two corporate income tax rates will be reduced if the amount of corporate income taxes collected by the state exceeds a base amount of $700 million.
  • Texas: A state appeals court concluded that a law firm was purchasing taxable data processing services when it purchased loan packages from vendors. Although the process of setting up the unique loan package for the taxpayer’s clients involved the application of legal knowledge by the vendor’s employees, the taxpayer carefully constructed the terms of its contracts so that it was not purchasing legal services.
  • Washington State: A state superior court judge held that the state’s new capital gains excise tax was actually a tax on income and also a tax on property that violated certain provisions of the state Constitution.

Read TaxNewsFlash-United States

The items described above are also reported as editions of TaxNewsFlash:

 

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