KPMG’s Week in Tax: 29 August - 2 September 2022
Recent tax developments from around the globe for the week of 29 August - 2 September 2022
Recent tax developments from around the globe for the week of 29 August - 2 September 2022
Tax developments or tax-related items reported this week include the following.
- Mauritius: The Finance (Miscellaneous Provisions) Bill 2022 passed with minor amendments in Parliament and was signed by the president on 2 August 2022. The bill includes measures to align with the OECD’s BEPS 2.0 recommendations, measures relating to non-resident employers with employees working remotely from Mauritius, as well as the introduction of a new individual (personal) income tax rate of 12.5%.
- Canada: The government of Saskatchewan announced that it is extending its temporary small business tax rate reduction by one year to 1 July 2024 (from 1 July 2023). In addition, a one-time $500 payment to eligible individuals is introduced under the Saskatchewan affordability tax credit, and certain upcoming provincial sales tax (PST) changes are revised so that PST does not apply to certain entertainment and recreational activities.
- Philippines: The Bureau of Internal Revenue (BIR) issued guidance regarding lifting the suspension of field audit and operations.
- Sri Lanka: The Interim Budget 2022 includes a proposal to increase the rate of value added tax (VAT) on the import and/or supply of goods or supply of services to 15%—effective 1 September 2022.
- New Zealand: The “Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill” was introduced 30 August 2022. The bill includes new information reporting requirements for digital platform operators in the gig and sharing economy, the imposition of goods and services tax (GST) collection obligations on electronic marketplaces that facilitate accommodation and transportation services, and dual-resident company tax changes (largely in response to the Australian corporate tax residence test change).
- Vietnam: The KPMG member firm in Vietnam prepared a report regarding recent corporate income tax and VAT guidance.
- Vietnam: Recent developments include legislation and guidance concerning a new draft law on land and the new law on insurance business that will come into effect 1 January 2023.
- Hong Kong: The Secretary for Financial Services and the Treasury issued an open letter that provided an update on the implementation of Pillar Two in Hong Kong and indicated that the implementation has now been deferred to 2024 at the earliest.
- Slovenia: The parliament passed legislation temporarily reducing the VAT rate on the supply of electricity, natural gas, district heating and firewood to 9.5% (from 22%)—effective 1 September 2022 to 31 May 2023.
- Switzerland: Special agreements with France, Germany, Italy and Liechtenstein on the taxation of international workers were concluded to provide continuity in the way international employees are taxed, despite the circumstances of the coronavirus (COVID-19) pandemic.
- Malta: “Payment service providers” will face new record keeping and reporting obligations beginning 1 January 2024. The additional recording and reporting obligations will be introduced to counter VAT fraud associated with e-commerce.
- EU: The European Commission proposed that a carbon border adjustment mechanism be gradually implemented, during a three-year transitional phase commencing 1 January 2023.
- Poland: A draft bill amending certain corporate income tax provisions enacted as part of the “Polish Deal” was submitted on 25 August 2022 before the Lower House of the Polish Parliament for the first reading—which will take place during the seating on 2 September 2022. The amendments would become effective 1 January 2023.
- Poland: Legislation considered by the Council of Ministers would extend an excise tax (duty) exemption for plug-in electric vehicles and extend anti-inflation measures.
- Poland: The KPMG member firm in Poland prepared a report that includes summaries of recent tax developments, including a recent Supreme Administrative Court decision, relating to robotization.
- Bulgaria: Legislation for ratification by Bulgaria of the “Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting” (Multilateral Instrument or MLI) was promulgated in the official gazette.
- EU: The European Parliament published a report that considers the removal of taxation-based obstacles and distortions in the Single Market in order to encourage cross-border investment and concludes that EU Member States have found it much easier to agree on measures designed to curb international tax planning than on measures designed to reduce tax and administrative barriers in the Single Market.
- EU: An opinion on the taxation of cross-border teleworkers and their employers was recently adopted by the European Economic and Social Committee. The opinion suggests that EU Member States could agree via a Multilateral Instrument to only tax the employee when the number of working days of the employee in the relevant country exceeds 96 days per calendar year.
- OECD: The Global Forum published eight new peer review reports on transparency and exchange of information on requests for the Cook Islands, Ecuador, Finland, Pakistan, Poland, Portugal, Saint Maarten and Sweden.
- Finland: The Ministry of Finance recently published information on the reporting of mandatory disclosure (DAC6) arrangements in Finland, based on the experiences of tax experts, lawyers, reporting companies and interest groups.
- Slovenia: The Ministry of Finance recently launched a public consultation on a draft law to transpose the Council Directive (EU) 2021/514 (DAC7) into domestic law.
- Switzerland: The Swiss Federal Council recently launched a public consultation on the draft ordinance to implement the OECD’s Pillar Two Model Rules providing for a global minimum tax.
- Denmark: Danish companies are reminded of the fast-approaching deadline of 6 September 2022 for submitting transfer pricing documentation.
- Mexico: Taxpayers in Mexico who carry out derivative financial transactions with related parties must have a transfer pricing study that documents that the prices are consistent with those that would be agreed to by independent third parties in comparable operations under similar circumstances.
- Poland: A draft bill amending corporate income tax provisions enacted as part of the “Polish Deal” was submitted on 25 August 2022 before the Lower House of the Polish Parliament for the first reading—which will take place during the seating on 2 September 2022. Among the changes under the draft bill is a measure to repeal a requirement to follow the arm’s length principle and satisfy the documentation obligation for indirect tax haven transactions.
FATCA / IGA / CRS
- Japan: The tax agency published an updated version of “frequently asked questions” (FAQs) under the common reporting standard (CRS) regime.
- The IRS Large Business and International (LB&I) division publicly released a “practice unit” entitled IRC 958 Rules for Determining Stock Ownership.
State and local tax
- California: The Franchise Tax Board (FTB) notified taxpayers that approximately 3,000 pass-through entity (PTE) elective tax payments made with 2022 Form FTB 3893, Pass-Through Entity Tax (PTET) Payment Voucher, were incorrectly applied to tax year 2021 rather than 2022. Consequently, the FTB erroneously issued refunds. Taxpayers who received an erroneous refund need to resubmit the 2022 PTE elective tax payment as soon as possible. Once received, the 2022 election will be secured with same effective date as the original 2022 PTE elective tax payment. If a taxpayer does not resubmit the 2022 PTE elective tax payment, the FTB implied that the payment will not be considered timely, and the election will not be valid.
- California: Assembly Bill 2280, which authorizes the California Controller to establish an unclaimed property voluntary compliance program, was enrolled and presented to the governor for signature.
- District of Columbia: An administrative law judge (ALJ) addressed how a financial institution member of a combined group should compute its payroll factor in the tax years after the District moved to single-sales factor apportionment for general corporations.
- Michigan: The tax tribunal held that Wayfair did not change its original conclusion that a corporate taxpayer did not have nexus with the City of Detroit. The tribunal further held that any taxation resulting from the application of a new post-Wayfair nexus standard to economic activity occurring prior to the adoption of the new standard would not pass constitutional muster.
- Minnesota: The state tax authority issued guidance on the taxation of non-fungible tokens (NFTs). The guidance provides that NFTs are subject to sales and use tax when the underlying product is taxable in Minnesota.
- Oregon: The Oregon Tax Court addressed whether an out-of-state manufacturer, marketer, and distributor of cigarettes and certain other tobacco products was protected from Oregon taxation under Pub. L. No. 86-272. The court concluded that the taxpayer’s wholesalers were engaging in certain activities on its behalf that exceeded solicitation for orders and were not de minimis.
- Texas: A Texas appellate court rejected a taxpayer’s position that receipts from holding certain securities should be treated as proceeds from the sale of inventory—and thus not included in the sales factor—when the taxpayer used the commodity hedges to manage the cost of the raw materials used to manufacture the food products it ultimately sold.
The items described above are also reported as editions of TaxNewsFlash:
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