KPMG Week in Tax: 13 - 17 February 2023

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

• Kenya: Regulations provide additional guidance on the taxation of gains accruing to non-resident persons without a permanent establishment (PE) in Kenya from financial derivative contracts.
• OECD: A new toolkit is designed to assist African tax administrations with the effective collection of value added tax (VAT) revenues on e-commerce.
• Ghana: Individuals are required to use the “taxpayers portal” in filing their individual (personal) income tax returns. Therefore, the 2022 individual income tax returns due on or before 28 April 2023 must be filed online.

Read TaxNewsFlash-Africa

• Brazil: The Finance Minister announced measures that would introduce changes in the tax disputes resolution system.

Read TaxNewsFlash-Americas

• Hong Kong: The government issued a press release to announce that in light of the EU's updated guidance on the foreign sourced-income exemption (FSIE) regimes, it will further refine the current FSIE regime with regard to foreign-sourced capital gains.
• Qatar: It is anticipated that Qatar will announce a VAT law and executive regulation during 2023.
  
• India: The Central Board of Direct Taxes (CBDT) issued guidance to establish the centralized processing of equalization statement levy scheme 2023.
• India: The Karnataka High Court held that gift vouchers, cash-back vouchers and e-vouchers supplied by the taxpayer were not subject to goods and services tax (GST).
• India: The Gujarat High Court held that the taxpayer was entitled to a provisional refund of 90% of integrated GST because it provided all relevant information to the tax authority in a timely manner.
  
• India: The Supreme Court held that the dismissal by the Punjab and Haryana High Court of the taxpayer’s case challenging the tax authority’s jurisdiction to sua sponte reopen an assessment order, on the grounds that there was an alternative remedy available, was improper.
• Philippines: Draft legislation would impose a 12% VAT on the sale of digital services, such as the hosting of online auctions and platforms, subscription-based online services, and supplies of goods and online services.
• Sri Lanka: The Department of Inland Revenue issued guidance (1) to clarify the application of withholding tax / advance income tax; (2) regarding employment benefit valuation; and (3) on the quantification of non-cash benefits.
• Singapore: The budget for 2023 includes proposed tax measures—from enhanced tax deduction schemes to progressive property and vehicle taxes.
• Bahrain: The National Bureau for Revenue (NBR) issued a reminder about the new NBR digital stamp mobile application for smartphones, which enables users to scan the digital stamp QR code on tobacco products to make sure the product is authentic and the information displayed meets the prescribed standards.
• Malaysia: A monthly summary of tax developments includes income tax and indirect tax changes.

Read TaxNewsFlash-Asia Pacific

• Czech Republic: The Regional Court in Prague held that a company was entitled to deduct interest on a bank loan incurred for the purchase of shares in a related company with which it was to subsequently merge, rejecting the argument by the tax authority that the restructuring transaction was carried out for the sole purpose of obtaining a tax advantage and thus the deduction must be denied as an abuse of law.
• Czech Republic: The Regional Court in Brno held that a company failed to provide adequate documentation to support deductions for consulting services provided by its parent company (allegedly consisting of management and advisory services, negotiations, and reporting).
  
• Czech Republic: A “tax card” for provides a quick reference tool for the most common tax rates and amounts in the Czech Republic and covers the windfall profits tax.
• North Macedonia: The government submitted to the parliament the draft law on the temporary solidarity (windfall profits) tax on the fossil sector.
• Poland: A draft bill transposing Council Directive (EU) 2021/514 (DAC7) into Polish law—effective 1 May 2023—was published on the government’s website. Comments on the bill are due by 1 March 2023.
• Poland: The deadlines for submitting the 2022 corporate income tax-8 return and for paying the associated tax is extended by three months, until 30 June 2023.
• Poland: The president signed the law on family foundations. According to the information available on the government’s website, the law is to be published on 23 February 2023 at the latest and will become effective three months after promulgation. 
• EU: The Council of the European Union adopted conclusions on the list of non-cooperative jurisdictions (four added to “black list”, revisions to “grey list”).
• EU: New excise duty rules will make the taxation of alcohol, tobacco, and energy products fully paperless across the EU.

Read TaxNewsFlash-Europe

• OECD: The Organisation for Economic Cooperation and Development (OECD) released comments received on its public consultation documents on implementation under Pillar Two relating to the Global Anti-base Erosion (GloBE) Information Return and Tax Certainty for the GloBE Rules.
• UK: HM Revenue & Customs (HMRC) released annual transfer pricing and diverted profits tax (DPT) for the year ended 31 March 2022 (FY22). The statistics provide insights into how HMRC is addressing transfer pricing compliance risks both domestically and internationally.
• Sweden: The government proposed that EU Directive 2021/2201 requiring qualifying multinational enterprises doing business in the EU to publicly disclose certain information on a country-by-country (CbC) basis be implemented in Swedish law.
• A KPMG report discusses implications for U.S. multinationals of a provisional measure that would introduce significant changes to the Brazilian transfer pricing system

Read TaxNewsFlash-Transfer Pricing

• Armenia: The OECD announced that Armenia has committed to implement the international standard for automatic exchange of financial account information (AEOI) in tax matters by 2025.
  
• Ireland: KPMG reports provide summaries of the reporting requirements in Ireland under the FATCA and common reporting standard (CRS) regimes.
• United States: The renewal link for all qualified intermediaries (QIs) to renew their QI agreements is now available in the activity center of the home page on the Qualified Intermediary Application and Account Management System (QAAMS).

Read TaxNewsFlash-FATCA / IGA / CRS

• Notice 2023-20 provides interim guidance intended to help avoid substantial unintended adverse consequences to the insurance industry from the application of the new corporate alternative minimum tax (CAMT).
• The IRS announced changes to the bridge phase of the Compliance Assurance Process (CAP) program.
  
• The IRS provided details clarifying the federal tax status involving special payments made by 21 states in 2022.
• Notice 2023-17 establishes the program under section 48(e) to allocate environmental justice solar and wind capacity limitation with respect to certain solar and wind facilities placed in service in connection with low-income communities.
• The U.S. Treasury Department and IRS provided guidance following the enactment of the “Inflation Reduction Act” (IRA) to establish a program to allocate credits for qualified investments in eligible qualifying advanced energy projects. Notice 2023-18 establishes the section 48C(e) program to allocate $10 billion in credits ($4 billion of which may only be allocated to projects located in certain energy communities census tracts) and provides initial program guidance. 
• OMB’s Office of Information and Regulatory Affairs (OIRA) received for review from the U.S. Treasury Department proposed regulations concerning the Superfund chemical tax and Superfund imported substance tax.
• Rev. Rul. 2023-4 provides the rates of interest with regard to tax underpayments and tax overpayments for the calendar quarter beginning 1 April 2023. The rates of interest will remain the same for the second calendar quarter of 2023.

State and local tax

• Minnesota: House File 580 would require a retailer who makes a retail delivery to add to the price a $0.40 retail delivery fee effective 1 January 2024.
• Missouri: The Missouri Administrative Hearing Commission recently concluded that a taxpayer was not prohibited from claiming a resale exemption for purchases of information technology (IT) equipment because the equipment was ultimately purchased for resale.
• Multistate:  Proposed bills in Arizona, Georgia, Minnesota, and Mississippi would clarify or revise how those states tax digital products and services, and software.

Read TaxNewsFlash-United States

• U.S. Customs and Border Protection (CBP) announced that it is (1) modifying the Section 321 data pilot by adding optional data elements that may be submitted by any participant; (2) expanding the Section 321 data pilot to accept applications for additional participants in this test from all parties that meet the eligibility requirements; and (3) extending the Section 321 data pilot through August 2025.

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