KPMG’s Week in Tax: 22 - 26 August 2022
Recent tax developments from around the globe for the week of 22 - 26 August 2022
Recent tax developments from around the globe for the week of 22 - 26 August 2022
Tax developments or tax-related items reported this week include the following.
- Canada: Draft legislation would require the disclosure of certain information on each trustee, beneficiary, settlor and protector of trusts, subject to limited exceptions—effective for tax years ending after 30 December 2022.
- Mexico: Penalties and sanctions will not apply until 31 December 2022 when electronic invoices with a consignment note complement are issued without complying with all applicable requirements.
- Bahrain: The National Bureau for Revenue released infographics on its social media channels on the correct way to display the value added tax (VAT) registration certificate and the issuance of compliant simplified tax invoices.
- Australia: The Federal Court held that it had jurisdiction to hear disputes in respect of notional goods and services tax (GST) paid by federal, state and territory government entities. As a result, entities paying notional GST have the same rights of appeal in the courts against the Commissioner’s decisions as other taxpayers.
- Australia: A proposal to implement a sharing or “gig” economy reporting regime has been reintroduced to Parliament. The proposed reporting regime would require operators of an electronic distribution platform to provide information on certain transactions made through the platform to the Australian Taxation Office (ATO).
- Australia: Treasury announced that it will prioritize “token mapping” work in 2022, which will help determine how cryptoassets and related services should be regulated.
- Philippines: A KPMG report examines a 2021 Supreme Court decision that a memorandum of assignment, referral memorandum, or equivalent document, is not sufficient to grant Bureau of Internal Revenue (BIR) officer(s) authority to conduct an investigation, and a new or amended Letter of Authority (LOA) must be issued.
- India: The Central Board of Direct Taxes (CBDT) issued guidance regarding filing of Form 67 by individuals seeking to claim a credit for foreign tax paid outside India on income also taxed in India.
- Luxembourg: Tax authorities have started assessing fixed penalties in the amount of €10,000 each to taxpayers who have not fulfilled their reporting obligations relating to the real estate levy.
- Germany: The law providing for a retroactive reduction of the interest rate for interest on back taxes and refunds to 0.15% per month (thus 1.8% per year) for interest periods from 1 January 2019 was promulgated in the Federal Law Gazette on 21 July 2022, and thus is effective 22 July 2022.
- Germany: The Federal Ministry of Finance (BMF) extended the simplification procedure for non-resident tax liability arising from transfers of rights in cases where the right is merely entered into a German public register, for consideration received before 1 July 2023.
- Germany: The BMF published the draft bill of the 2022 Annual Tax Act that includes tax-related amendments concerning “register cases,” depreciation for residential buildings, and VAT recording and reporting.
- Germany: The BMF provided guidance on withholding taxes on cross-border payments for software development to reflect amendments to the German copyright law that became effective 7 June 2021.
- Germany: The Federal Tax Court (BFH) held that the premises of a real property management company can be a permanent establishment of the contracting company, even if the contracting company has no power of disposal over the premises, if the contracting company uses the premises to conduct its own business operations.
- EU: A KPMG report provides an overview on the implementation of the five measures included in the Anti-Tax Avoidance Directive (ATAD I) Council Directive (EU) 2016/1164 and the Anti-Tax Avoidance Directive (ATAD II) Council Directive (EU) 2017/952, into the domestic laws of the various EU Member States.
- Poland: The Regional Administrative Court in Poznań held that expenses incurred by a company for a third party’s insurance of its accountants and managers are not deductible by the company because such costs relate to entities other than the company itself.
- Poland: The Supreme Administrative Court held that a bank applying for an individual ruling potentially involving a cross-border transaction was not required to provide information with respect to foreign entities from which it borrowed funds because the bank did not possess such information for objectively justifiable reasons. However, even though the tax authority must issue the individual ruling, it can exclude from the scope of such ruling any consequences of the cross-border transaction if it actually occurs.
- Poland: The Minister of Finance published an amended decree on customs and tax offices responsible for exports, imports, and transit of strategic goods. Under the new decree, the customs post in Puławy* was removed from the list of customs and tax offices that can handle exports, imports and transit of goods of strategic significance.
- UK: HM Revenue & Customs (HMRC) issued guidance on errors in coronavirus job retention scheme (CJRS) calculations.
- UK: The deadline to register trusts with a UK tax liability on the Trust Registration Service (TRS) and provide specific information to HMRC is 1 September 2022.
- Nigeria: As a reminder, the deadline is 31 August 2022 for filing income tax returns and for paying the related tax liabilities by companies with returns originally due for filing by 30 June 2022.
- United States: The U.S. Court of Appeals for the Sixth Circuit affirmed in part and reversed in part a decision of the U.S. Tax Court involving a dispute stemming from the cancellation of two advance pricing agreements (APAs) by the IRS, and in so doing sided with the taxpayer on all issues presented.
- OECD: Comments were released that the OECD received on its Progress Report on Amount A of Pillar One.
FATCA / IGA / CRS
- Finland: Updated “frequently asked questions” (FAQs) concerning the FATCA and common reporting standard (CRS) regimes address obligations of care, the fulfillment of due diligence obligations, and fulfilling reporting obligations.
- Ireland: The Irish Revenue Commissioners issued an updated reporting entity registration form for Irish FATCA and CRS purposes.
- Vietnam: A set of “frequently asked questions” (FAQs) for FATCA address questions related to various FATCA compliance issues for 2021-2022.
- The U.S. Tax Court rejected an IRS contention that a partnership and its lender had effectively formed a joint venture that in turn was itself a partnership for federal income tax purposes, and further held that the partnership’s payment of over $1 million made to the lender was deductible as interest under section 163.
- The U.S. Court of Appeals for the Second Circuit affirmed an opinion of the U.S. Tax Court that the written supervisory approval requirement under section 6751(b)(1) does not apply with regard to the section 72(t) exaction on early distributions from a qualified retirement plan because the amount under section 72(t) is a “tax” and not a “penalty,” “addition to tax” or “additional amount.”
- Notice 2022-36 provides relief for certain taxpayers from certain failure to file penalties and certain international information return (IIR) penalties with respect to tax returns for tax years 2019 and 2020 that are filed on or before 30 September 2022.
- Notice 2022-37 announced an additional two-year extension for taxpayers to comply with the final regulations with respect to dividend equivalents under sections 871(m), 1441, 1461, and 1473.
- Final regulations related to the requirements addressing “surprise” billing for medical treatment or services finalize interim final rules issued in July 2021 and October 2021.
- A KPMG report highlights how the engineering and construction (E&C) industry will be affected by the final foreign tax credit (FTC) regulations in several seemingly unintended ways.
- A KPMG report examines Form 1099-K and state reporting issues.
- Notice 2022-36 provides relief from certain failure to file penalties with respect to tax returns for tax years 2019 and 2020 that are filed on or before 30 September 2022, including Form 1120-C, U.S. Income Tax Return for Cooperative Associations.
- Notice 2022-36 provides relief from certain failure to file penalties with respect to tax returns for tax years 2019 and 2020 that are filed on or before 30 September 2022, including Forms 990-PF and 990-T. Notice 2022-36 does not include in its relief provisions mention of section 6652 penalties for a failure to file Form 990 or Form 990-EZ. The notice also does not specifically mention relief from section 6651 penalties for failure to file Form 4720.
Trade & Customs
- The Bureau of Industry and Security (BIS) of the U.S. Commerce Department released a final rule amending the Export Administration Regulations (EAR) by adding seven entities to the entity list under the destination of the “People’s Republic of China.”
The items described above are also reported as editions of TaxNewsFlash:
- Indirect Tax
- Taxation of the Digitalized Economy
- Tax Dispute Resolution
- Tax Developments Relating to Coronavirus (COVID-19)
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