KPMG Week in Tax: 30 January - 3 February 2023

Recent tax developments from around the globe for the week of 30 January - 3 February 2023

Recent tax developments from around the globe for the week of 30 January - 3 February 2023

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

Africa

  • Nigeria: The Lagos Division of the Federal High Court held that the Economic and Financial Crimes Commission does not have the legal and statutory right to assess or enforce the collection of taxes on behalf of the federal government of Nigeria. The court also affirmed that the Federal Inland Revenue Service is the only body empowered and vested with the statutory duty to assess, collect, and enforce company tax in Nigeria.
  • Ghana: The 2023 budget statement, which was passed by Parliament and published in the gazette, includes tax amendments with respect to value added tax (VAT) and the electronic transfer levy (“e-levy”).
  • Ghana: The Finance Minister inaugurated into office the new 11-member Independent Tax Appeals Board (ITAB).
  • Africa: The KPMG member firm in the Netherlands summarized January 2023 tax developments.

Read TaxNewsFlash-Africa

Americas

  • Argentina: In order to mitigate the formation and/or accumulation of freely available balances in favor of the taxpayer, the taxpayer may oppose the certificate of exclusion or income exemption, in the framework of the income tax collection regime, applicable to definitive export operations for consumption.
  • Bolivia: The tax authority extended deadlines for implementing the online billing modality and the submission and payment of Form 510.
  • Costa Rica: An updated "Catalog of Goods and Services for Tax and National Accounts Use” (CABYS) reflects continuous revisions of the catalog and the entry into force of the new “basic tax basket for the comprehensive welfare of families.”
  • Colombia: The Directorate of National Taxes and Customs (DIAN) is advancing controls on activities related to compliance with the exchange regime regarding import and export of goods and services.

Read TaxNewsFlash-Americas

Asia Pacific

  • India: The 2023-2024 budget includes direct and indirect tax proposals, specifically regarding goods and services tax (GST).
  • Australia: The Australian Taxation Office (ATO) updated the excise tax (duty) rates for fuel and petroleum products and fuel tax credit rates beginning 1 February 2023.

Read TaxNewsFlash-Asia Pacific

Europe

  • Denmark: The Supreme Court issued decisions on beneficial ownership for purposes of withholding on dividends.
  • Estonia: The Supreme Court held that a taxpayer was not jointly and severally liable for tax liabilities (VAT, income tax and social tax) of a company accruing during a period when the taxpayer was a member of the company’s board.
  • EU:  The EC published its work program for the period from 25 January 2023 until 28 June 2023.
  • EU: The EC launched a public consultation on a draft implementing regulation to establish the criteria for determining whether the information automatically exchanged under an agreement between the tax authorities of EU member states and a non-EU country is equivalent to that specified in Council Directive (EU) 2021/514 (DAC7).
  • EU: The European Parliament approved the report on the directive providing rules to prevent the misuse of shell entities for tax purposes (“Unshell Directive”).
  • Germany: The 2022 Annual Tax Act includes measures relating to digitalization, procedural simplification, legal certainty and tax equality, as well as implementation of the coalition agreement and adaption to EU law, CJEU case law, and judgements of the German Federal Fiscal Court.
  • Germany: The CJEU in December 2022 held that the German regulations on fiscal entities for VAT purposes are compatible with EU law. However, it is still unclear in particular whether transactions within a VAT group (intra-group sales) will be subject to VAT moving ahead.
  • Germany: The German Federal Ministry of Finance (BMF) provided information on the status of Germany’s income tax treaties.
  • Germany: The Lower Tax Court of Cologne held (file ref. 6 K 2661/18) that the taxpayer satisfied the “motive test” under the German controlled foreign corporation (CFC) rules.
  • Germany: The Tax Court of Niedersachsen issued a decision concerning the application of the EU Parent-Subsidiary Directive when the ultimate parent entity of a German tax group is a tax transparent partnership held by individuals.
  • Lithuania: A temporary solidarity contribution (“windfall tax”) on the fossil sector is applicable for fiscal year 2023.
  • Netherlands: Draft legislation would introduce a temporary 90% tax on the windfall profits of inframarginal electricity producers.
  • Netherlands: The interest on tax due payable on corporate income tax and withholding tax assessments will increase to 10.5% (from 8%) as of 1 March 2023.
  • Poland: Mandatory electronic invoicing (e-invoicing) has been postponed until 1 July 2024 (from 1 January 2024).
  • Poland: The lower house of the Polish Parliament (Sejm) passed the law on family foundations and the “legal shield” legislation. The government passed the latest revision of the bill amending the VAT law and certain other laws (commonly referred to as the “VAT 3 package”).
  • Poland: The Supreme Administrative Court issued decisions concerning (1) the date upon which a taxpayer must recognize income with respect to overpaid real estate tax to be credited against future tax liabilities, and (2) income as a result of overdue social security contributions paid by the company for which the taxpayer performed services as an independent contractor.
  • Romania: A CJEU Advocate General (AG) opinion concerns Romanian withholding tax on remuneration paid by a resident service recipient to a non-resident service provider.
  • Serbia: The network of income tax treaties has increased to 64 with the treaty with Morocco.
  • Serbia: The tax administration informed taxpayers that beginning 20 December 2022, a request for deferral of tax payment, as well as a request for transfer between tax accounts after delivery of a warning (within a period of five days indicated in the warning), will not interrupt the collection procedure as per the warning.
  • Slovakia: The KPMG member firm in Slovakia prepared reports summarizing recent tax developments, as well as new analytical evidence of employees' data and changes in wage allowances.
  • Spain: The Court of Justice of the European Union (CJEU) annulled in part a decision of the European Commission (EC) finding that the “Spanish tax lease system” constituted illegal state aid on the grounds that the EC’s decision erroneously identified the recipients of the aid.
  • Spain: The government launched a public consultation seeking public comments on a draft decree that would establish criteria to determine jurisdictions that are considered to be non-cooperative or to have harmful tax regimes.
  • Sweden: Proposals for a modernized value added tax (VAT) law include changes concerning exemptions from VAT on internal services.
  • Sweden: The government has requested a study of the “3:12 rules” that limit the ability of closely-held or family-owned companies to pay preferentially-taxed dividends, instead of higher-taxed employment income, to its owners.

Read TaxNewsFlash-Europe

Transfer Pricing

  • OECD: KPMG tax professionals submitted comments on the OECD’s public consultation documents on implementation under Pillar Two.
  • OECD:  The OECD/G20 Inclusive Framework on BEPS released administrative guidance for implementation of the Pillar Two global minimum tax rules.
  • OECD: A manual published by the OECD concerns the handling of mutual agreement procedures (MAPs) and advance pricing arrangements (APAs).
  • OECD: Comments received on the OECD’s public consultation document Pillar One - Amount B were released.
  • Estonia: All members of a multinational enterprise group that are tax residents of Estonia must inform the Estonian Tax and Customs Board within six months of the end of a financial year of the reporting entity for their group’s country-by-country (CbC) report (which is generally the group’s parent entity), as well as of the reporting entity’s tax residency. Thus, if the financial year of a group ended on 31 December 2022, the Estonian member of the group must notify the Tax and Customs Board by 30 June 2023.
  • Estonia: Transfer pricing documentation with relevant comparables to prove arm’s length pricing must be submitted to the tax authority within 60 days upon request.

Read TaxNewsFlash-Transfer Pricing

FATCA / IGA / CRS

  • United States: The IRS updated “frequently asked questions” (FAQs) on the qualified intermediary (QI), withholding foreign partnership (WP), and withholding foreign trust (WT) FAQs website, under the heading “Certifications and Periodic Reviews.”
  • Malta: Automatic exchange of information (AEOI) implementing guidelines were updated to reflect changes to section 14.1 (relief for reporting on certain pre-existing accounts that are U.S. reportable accounts) and appendices 1 (non-EU reportable jurisdictions) and 2 (participating jurisdictions).
  • Australia: The Australian Taxation Office (ATO) issued updates regarding U.S. tax identification number (TIN) reporting requirements for FATCA purposes for calendar year 2023.

Read TaxNewsFlash-FATCA / IGA / CRS

United States

  • Notice 2023-16 modifies the definitions of certain vehicle classifications for the new, previously owned and qualified commercial clean vehicle credits under section 30D, as amended by the “Inflation Reduction Act of 2022” (IRA).
  • Notice 2023-13 establishes the Service Industry Tip Compliance Agreement (SITCA) program.
  • Proposed regulations would rescind the “moral exemption rule” to required coverage of certain contraceptive services under the “Patient Protection and Affordable Care Act.”
  •  KPMG reports published this week address:
    • Accounting for the new global anti-base erosion (GloBE) rules
    • Tax provisions under the SECURE Act 2.0
    • Federal Energy Regulatory Commission (FERC) orders allowing public utility to defer sales tax through the use of a procurement subsidiary
    • Proposed regulations providing rules for determining whether a real estate investment trust (REIT) is a domestically controlled REIT for purposes of section 897
    • U.S. federal tax developments for 2022 (as reported in TaxNewsFlash)
       

State and local tax

  •  The Illinois Independent Tax Tribunal held that an amended return was timely filed based on its finding that the taxpayer had “presented unrebutted evidence of timely mailing that was reasonable and credible in the context of the highly unusual circumstances surrounding business and governmental operations during the height of the COVID-19 pandemic.” 
  • The Texas Comptroller Tax Policy Division published a policy letter confirming that a taxpayer may not amend a franchise tax report for an out-of-statute period to create a research and development (R&D) credit carryforward for use in an open report year.
  • Maryland House Bill 46 would adopt mandatory unitary combined reporting effective for tax years beginning after 31 December 2024.
  • Pennsylvania Senate Bill 161 would adopt water’s-edge combined reporting for tax years beginning after 31 December 2023.
  • There are bills pending in Hawaii, Oregon, and New Hampshire that would adopt a worldwide combined reporting methodology.

Read TaxNewsFlash-United States

Trade & Customs

  • U.S. Customs and Border Protection (CBP) issued announced that, with forced labor concerns addressed, certain palm oil and derivative products made wholly or in part by a Malaysian company will now be allowed into the United States.
  • CBP issued a release outlining its 2022 efforts to enhance trade and strengthen the supply trade.
  • The Office of the United States Trade Representative (USTR) is seeking public comments on whether to further extend COVID-19-related product exclusions in the China Section 301 investigation. The exclusions, covering 81 medical-care products, were initially granted in December 2020, and are scheduled to expire on 28 February 2023. An interim, 75-day extension of the COVID-19-related product exclusions will allow for consideration of public comments.

Read TradeNewsFlash-Trade & Customs

The items described above are also reported as editions of TaxNewsFlash:

 

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