KPMG’s Week in Tax: 7 - 11 November 2022

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

• Nigeria: The Federal Inland Revenue Service (FIRS) appointed value added tax (VAT) collection agents that are responsible for withholding VAT on all taxable supplies made by their vendors and remitting those amounts to the FIRS in the currency of transaction.  

Read TaxNewsFlash-Africa

• Canada: Pension contribution limits will increase for 2023, including for registered pension plans, registered retirement savings plans, deferred profit sharing plans, and Canada Pension Plans.
• Canada: The prescribed interest rates for income tax and for pertinent loan or indebtedness (PLOI) purposes will increase for the first quarter of 2023.
• Canada: Bill C-32 includes certain outstanding measures announced in the 2022 and 2021 federal budgets.
• Canada: New Brunswick is reducing its individual (personal) income tax rates as well as accelerating its plan to reduce certain property tax rates.
• Canada: Saskatchewan's Bill 89 includes a measure to extend the province’s temporary small business income tax rate reduction by one year.
• Mexico: The tax administration published a list of the 162 foreign providers of digital services that are registered for tax purposes in Mexico as of 31 October 2022. The digital services tax rules introduced VAT obligations regarding digital services provided through an online platform.
• Mexico: The tax administration announced an extension regarding the issuance of electronic payroll receipts using the version 4.0 of electronic invoices (CFDI 4.0). 

Read TaxNewsFlash-Americas

• India: The Supreme Court held that a taxpayer claiming tax exemption under the “general public utility” (GPU) category for charitable institutions cannot undertake any trade, commerce, or business, or provide service in relation thereto for any consideration, unless such activities are conducted in the course of achieving the object of the GPU and the aggregate receipts from such activities do not exceed 20% of the taxpayer’s total receipts.
• Kuwait: A KPMG report provides a general overview of the tax policies in Kuwait.
• Philippines: The Bureau of Internal Revenue informed eBIRForms users/filers on the revised contents of the eBIRForms email notification to taxpayers.

Read TaxNewsFlash-Asia Pacific

• EU: The ECOFIN Council agreed on a revision of the Code of Conduct for Business Taxation.
• OECD: An agreement will allow 22 jurisdictions to automatically exchange information collected by operators of digital platforms with respect to transactions and income realized by platform sellers in the sharing and gig economy and from the sale of goods through such platforms.
• Poland: New draft legislation on family foundations introduces a new taxation model, a separate register of family foundations, rules for protecting personal data processed by family foundations and principles of “legitim” liability.
• Poland: The Supreme Administrative held that in the case of cashback discounts on reverse charge sales of mobile phones, the output tax by the discount-granting entity cannot be reduced because tax on account of sales has not been paid. 
• Poland: The Regional Administrative Court in Warsaw that the taxable base cannot be reduced only because a correcting invoice was issued—because although a correcting invoice confirms reduction of the taxable base, it does not cause it.
• Poland: Draft legislation guidelines relating to the law on reporting obligations for digital platform operators was added to the list of legislative work and policies of the Council of Ministers.
• Poland: Proposed amendments to the provisions relating to the sugar fee are expected to become effective 1 July 2023.
• Belgium: The Constitutional Court struck down the retroactive application to 2016 of the single annual tax on credit institutions, which may enable credit institutions to claim a refund for the single annual tax paid for 2016. 
• Czech Republic: The Supreme Administrative Court (SAC) held that a CZK 50,000 penalty was not legitimately imposed on an entity that incorrectly filed a value added tax (VAT) ledger statement for a previous taxable period.
• Czech Republic: The Lower House of Parliament approved the introduction of a tax on extraordinary profits (“windfall profits tax”) on certain taxpayers in the fossil fuel and energy sectors and for banks—effective for 2023 to 2025.
• Germany: The Federal Fiscal Court held that a taxpayer could carry back losses recognized on settling an option to offset income earned with respect to the same option in an earlier year, and thereby reduce the associated tax liability in the earlier year.
• Sweden: Tax proposals in the 2023 budget include cross-border payment reporting and an extension of the diesel excise tax reduction, among others.
• Netherlands: The Supreme Court held that a property qualifies as “essentially a new building” for VAT purposes when refurbishment results in a previously non-existent property, which is mainly achieved by an extensive alteration in the building’s structural construction. 
• Netherlands: The Deputy Minister of Finance sent a letter to the Lower House of Parliament promising to institute a “class-action-plus” procedure under which non-litigants will not be required to request to join the class action relating to the restoration of rights under “Box 3” (the wealth tax regime). 

Read TaxNewsFlash-Europe

• Luxembourg: The Court of Justice of the European Union (CJEU) issued a judgment that the General Court of the EU was wrong to confirm an illegal State aid analysis by the European Commission (EC), involving application of the arm’s length principle to integrated companies in Luxembourg, that failed to take into account the specific rules implementing that principle in Luxembourg.

Read TaxNewsFlash-Transfer Pricing

• OECD: An agreement will allow 15 jurisdictions to automatically exchange information collected from intermediaries that have identified arrangements to circumvent the common reporting standard (CRS) and structures that disguise the beneficial owners of assets held offshore with the jurisdiction of tax residence of the concerned taxpayers.
• OECD: The “Peer Review of the Automatic Exchange of Financial Account Information 2022” includes the first peer reviews with effectiveness ratings for the 99 countries and jurisdictions that committed to starting automatic exchange of information (AEOI) in 2017 or 2018.

Read TaxNewsFlash-FATCA / IGA / CRS

• Announcement 2022-23 announces new credit amounts for calendar year 2022 for the renewable electricity production credit under section 45 in the case of any qualified facility placed in service after 31 December 2021.  
• The White House issued a release announcing that President Biden intends to nominate Daniel Werfel to serve as the next IRS Commissioner.
• A KPMG report outlines five things taxpayers need to know about the Corporate Alternative Minimum Tax (CAMT), as well as answers to “frequently asked questions” (FAQs) to help taxpayers understand how the CAMT may affect them.
• The U.S. Tax Court held that Notice 2017-10—which provides that syndicated conservation easement transactions described in section 2 of the notice (and substantially similar transactions) are listed transactions for purposes of sections 6111 and 6112 and Treas. Reg. § 1.6011-4(b)(2)—is a legislative rule, improperly issued by the IRS without notice and comment as required under the Administrative Procedure Act (APA). The Tax Court thus set aside Notice 2017-10 and held that penalties under section 6662A could not be imposed on the taxpayer.
  
• Rev. Proc 2022-40 announces that the IRS will now allow 403(b) retirement plans, which are used by certain public schools, churches and charities, to use the same individually designed retirement plan determination letter program currently used by qualified retirement plans.

In case you missed it…

• The U.S. Treasury Department and IRS on November 4, 2022, released the 2022-2023 Priority Guidance Plan that identifies guidance projects that Treasury and the IRS intend to work on as priorities during the 12-month period from 1 July 2022, through 30 June 2023.

State and local tax

• Missouri: The Supreme Court affirmed an Administrative Hearing Commission decision that a sporting club’s monthly membership dues were subject to sales tax.
• Oregon: The governing bodies of Multnomah County and the tri-county Metro area, whose business income taxes are administered by the City of Portland Revenue Division, approved ordinances adopting market-based sourcing. As such, all three local business income taxes will utilize the market-based sourcing rule effective for tax years beginning on or after January 1, 2023.
• Wisconsin: The Tax Appeals Commission concluded that a taxpayer was not entitled to a refund of corporate income tax related to a manufacturing credit claimed on an amended return.
• Multiple states: There is an update in the litigation pending at the U.S. Supreme Court over the escheatment rules applicable to official checks. The special master’s reversal of an earlier recommendation after the oral arguments is unusual and creates additional uncertainty for all parties involved in this litigation. 

Read TaxNewsFlash-United States

• The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) issued Russia-related general licenses and “frequently asked question.”
• The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce released an order renewing the temporary denial of export privileges of an Iranian airline and other parties.
• BIS issued an administrative charging letter against an electronics trading company and its owner, alleging violations of the Export Administration Regulations (EAR) related to exports of U.S. telecommunications equipment and related commodities to Syria and Iran.

Read TradeNewsFlash-Trade & Customs

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)