KPMG’s Week in Tax: 14 - 18 November 2022
Recent tax developments from around the globe for the week of 14 - 18 November 2022
Recent tax developments from around the globe for the week of 14 - 18 November 2022
Tax developments or tax-related items reported this week include the following.
- Germany: An updated version of the ordinance on the application of the arm’s length principles in relation to the cross-border transfer of functions aims to adapt and restructure the existing regulations on the arm's length principle with the current measures under the OECD Transfer Pricing Guidelines.
- OECD: The latest annual corporate tax statistics report covers over 160 countries and jurisdictions and includes new aggregated country-by-country (CbC) reporting data on the activities of almost 7,000 multinational enterprises (MNEs).
- OECD: The Organisation for Economic Cooperation and Development (OECD) released comments received on the administration and tax certainty aspects of Amount A of Pillar One.
- United States: A KPMG report examines year-end tax discussion ideas for international tax and transfer pricing.
- Hungary: Draft legislation proposes amendments to the rules for advance pricing arrangements (APAs) and introduces public country-by-country (CbC) reporting.
- Montenegro: The Ministry of Finance published guidance regarding the transfer price determination methods and the contents of transfer pricing documentation under the more detailed transfer pricing rules introduced in January 2022.
- South Africa: The South African Revenue Service (SARS) plans to withdraw Practice Note 31, which allows a deduction for interest expense against related interest income, effective for tax years beginning on or after 1 March 2023.
- Argentina: The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) was approved by the permanent legislative Committee of Foreign Affairs of the Argentine Chamber of Deputies. In order to be enacted into law, the MLI needs to be approved by both the Argentina Chamber of Deputies and the Chamber of Senators.
- Canada: The Department of Finance has delayed implementation of proposed rules requiring the disclosure of certain information on each trustee, beneficiary, settlor and protector of trusts, subject to limited exceptions—to tax years ending after 30 December 2023 (from tax years ending after 30 December 2022).
- Canada: The deadline for taxpayers to make any “fairness relief” requests related to the 2012 tax year is 31 December 2022.
- Canada: The Manitoba budget bill received Royal Assent, and therefore makes permanent the small business venture capital tax credit and the community enterprise development tax credit, among other tax changes.
- Canada: A new law in Nova Scotia includes a measure to extend and expand the capital investment tax credit.
- Canada: A new law in Saskatchewan includes a measure to extend the province’s temporary small business income tax rate reduction by one year.
- Canada: Ontario’s fall economic update did not propose any changes to corporate or individual (personal) tax rates. However, the economic update includes proposals concerning the small business deduction, cultural media tax credits, and gas and fuel tax reductions.
- Mexico: The Baja California state congress published an amendment to various provisions of the state revenue law for fiscal year 2022 that includes tax increases to the remuneration of subordinate personal work and rights for the provision of public water services.
- Panama: The Plenary of the Supreme Court held that the benefits granted to foreigners holding a multinational company headquarters permanent staff visa ("SEM Visa") are not unconstitutional.
- India: The Madras High Court held that amounts collected as donations were in the nature of capitation fees and thus not eligible for the tax exemption available to a charitable trust.
- India: Recent indirect tax developments include court decisions, guidance, and other news.
- Bahrain: The National Bureau for Revenue (NBR) (1) updated the list of medicines subject to a zero rate of value added tax (VAT), and (2) invited large taxpayers in various sectors for focus group sessions to discuss e-invoicing implementation in Bahrain.
- UAE: The president issued a federal decree-law to amend tax procedures. The amended provisions will become effective from 1 March 2023.
- Cambodia: The General Department of Taxation (GDT) guidance that prescribes the official exchange rates to be used by VAT-registered taxpayers from 28 October 2022 onwards.
- Korea: A free trade agreement between Korea and Israel is scheduled to enter into force on 1 December 2022.
- Malaysia: The KPMG member firm in Malaysia prepared a monthly summary of tax developments that includes a discussion of income and indirect tax developments.
- UK: Announcements in the Chancellor’s autumn statement addressed corporate tax, income tax for individuals, employment income, self-employed income, capital gains tax, inheritance tax, windfall taxes, stamp taxes, and VAT and indirect taxes.
- Lithuania: An amendment to the law on VAT permits input VAT deduction for passenger (M1 category) electric cars of value up to €50,000 (including VAT).
- Austria: The Ministry of Finance issued draft guidelines that would amend the requirements to reclaim Austrian withholding tax on dividend distributions by non-resident shareholders.
- Belgium: The Parliament approved a new law that includes amendments to the VAT statute of limitations, retention period and applicable interest rates—effective 1 January 2023.
- Denmark: Guidance provides clarifications on the application of the DAC7 reporting requirements as implemented into Danish law. The guidance provides general information about the reporting framework under DAC7 and an overview of the registration, notification, and reporting requirements for Danish, EU, and non-EU reporting platform operators.
- EU: The deadline for the feedback and consultation period on the European Commission’s call for evidence in relation to its new initiative on the new common corporate tax system in the EU (BEFIT) was extended to 26 January 2023.
- Poland: Draft legislation would reduce the taxable base for certain financial institutions by the value of bonds guaranteed by the State Treasury.
- Poland: The Minister of Finance issued a decree extending the types of payments that may be made using tax micro-accounts (e.g., fees for providing information to court bailiffs, fees for an extract from/certificate of the Register of Treasury Pledges, and, starting from 1 January 2023, a raft of payments related to tax on extraction of certain minerals).
- Hungary: The Ministry of Finance submitted draft legislation introducing amendments related to corporate income tax, advertisement tax, local business tax, real estate transfer tax, individual (personal) income tax, and VAT.
- Netherlands: The Dutch Supreme Court issued an opinion in a case concerning the VAT recovery right of a bank that sought to determine its VAT recovery right on its mixed costs on the basis of a financial analysis of the profit and loss (P&L) per product. The Supreme Court held that an actual use method must be based on objectively and accurately ascertainable data, on the basis of which the actual use of mixed costs can be objectively and accurately established.
- Italy: The First Degree Court of Rome held in two recent cases that intermediate holding companies in private equity structures served a genuine, non-tax purpose and could not be considered as mere conduit entities because their use does not bring any tax benefit.
- Spain: The government proposed amendments to draft legislation submitted to Parliament in July 2022 proposing a temporary windfall profit tax on credit entities and credit financial establishments.
- A KPMG report provides preliminary observations regarding the potential tax legislative agenda in the next Congress and what tax issues might be considered this year during the “lame duck” session of the current Congress.
- Rev. Proc. 2022-39 prescribes special procedures for certain eligible Large Business and International (LB&I) taxpayers, who are subject to regular annual examinations (i.e., at least four of the taxpayer’s income tax returns for the five tax years preceding the tax year at issue are (or were) under examination), to file a qualified amended return shortly after the opening of an IRS examination.
- Notice 2022-59 announces the adjusted applicable dollar amount for determining the Patient-Centered Outcomes Research Trust Fund (PCORTF) fee for policy years and plan years ending on or after 1 October 2022 and before 1 October 2023. The amount of the PCORTF fee is $3.00.
- Taxpayers in Illinois affected by a July 2022 severe storm and flooding occurring now have until 15 February 2023 to file various individual and business tax returns and make tax payments.
- A KPMG report examines year-end tax discussion ideas for international tax and transfer pricing.
- KPMG tax professionals submitted comments on the September 2022 proposed regulations relating to the IRS Independent Office of Appeals’ resolution of federal tax controversies without litigation.
State and local tax
- Georgia: The Tax Tribunal held that a ride sharing company was required to collect sales tax on a “safe rides fee or booking fee” that was imposed on certain trips facilitated through the company’s app.
- Wisconsin: The state tax authority released guidance on the taxation of non-fungible tokens (NFTs) explaining that the sale or purchase of an NFT may be taxable if the underlying product, good, or service is taxable in the state.
- Multistate: Voters in certain states weighed in on election day on certain income tax related ballot measures.
- Colorado: Voters approved (1) a measure that reduces the state’s current 4.55% corporate and individual (personal) income tax rate to 4.40% retroactive to tax years commencing on or after January 1, 2022, and (2) Proposition FF raising additional taxes to support school meal programs by limiting certain individual income tax deductions.
- Massachusetts: Voters approved a constitutional amendment that increases the state’s flat individual income tax rate from 5% to 9% on income above $1 million—effective for tax years beginning on or after 1 January 2023.
- The U.S. Treasury Department and IRS released correcting amendments to January 2021 final regulations relating to application of the domestic production activities deduction under section 199A for specified agricultural or horticultural cooperatives.
Trade & Customs
- U.S. Customs and Border Protection (CBP) and the Department of Homeland Security released a final rule with technical corrections to the rules of origin for certain goods imported into United States.
- The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) issued a Russia-related general license—Civil aviation safety—and added, removed, and made changes to the list of specially designated nationals (SDN list).
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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