Tax developments or tax-related items reported this week include the following.
Americas
- Colombia: A report summarizes the corporate, commercial, customs, and foreign exchange obligations for 2023 for legal entities with presence in Colombia.
- Canada: The 2023 provincial budgets in Alberta and British Columbia do not propose any changes to the corporate or individual (personal) tax rates.
- Bermuda: The 2023-2024 budget includes various changes with respect to payroll, customs, and indirect taxes.
Asia Pacific
- UAE: The tax authority has published a clarification on the amendments to Emirates’ reporting regarding e-commerce supplies by qualifying registrants.
- Bahrain: The expansion of the digital stamps scheme to additional tobacco products including electronically heated tobacco products, jirak, and chopped or pressed tobacco will come into effect on 14 May 2023.
- Saudi Arabia: A tax alert on the refund of Saudi Arabian value added tax (VAT) to non-residents who do not have a presence in the country but incurred VAT in relation to their economic activity explains the eligibility and process of refund for non-residents and provides some detail on the set of requirements for the refund to be processed.
- Malaysia: The Minister of Finance “re-tabled” the 2023 budget, which includes various indirect and income tax proposals. One proposal would introduce a new tax in 2023 on luxury goods. It was also proposed that the voluntary disclosure and amnesty programme for indirect tax that ended on 30 September 2022 be re-introduced for the period 1 June 2023 to 31 May 2024.
Europe
- Austria: A KPMG report summarizes recent direct and indirect tax developments.
- Germany: Recent decisions of the German Federal Tax Court (BFH) concern (1) creditable foreign withholding tax, (2) real estate transfer tax, and (3) profit transfer agreement.
- Germany: The Court of Justice of the European Union (CJEU) held that the basis for assessment VAT was not reduced as a result of related irrecoverable debts.
- Hungary: The tax authority has made its XSD-scheme plans for the electronic value added tax (e-VAT) machine-to-machine (M2M) connection, and the application programming interface (API) documentation of the M2M process for VAT returns, available on the GitHub development platform.
- Italy: The second-level tax court of Abruzzo held that the imposition of Italian withholding tax on dividends paid to a Luxembourg UCITS (Undertakings for Collective Investment in Transferable Securities) in the form of a SICAV (Société d'investissement à Capital Variable) is discriminatory and breaches EU law.
- Montenegro: The government released the draft law on solidarity contribution (windfall profits tax) for public consultation. Comments on the draft law are invited through 20 March 2023.
- Netherlands: The government launched an internet consultation on a draft bill to abolish the property transfer tax concurrence exemption for share transactions. Comments on the draft bill are due 27 March 2023.
- Poland: The Minister of Finance issued General Ruling no. DD5.8203.7.2022, regarding the obligation under Article 27(1e) of the Corporate Income Tax Act and Article 45(3f) of the Personal Income Tax Act to disclose direct and indirect interests in a real estate company which clarified that the disclosure obligation applies not only to Polish tax residents, but also to non-Polish tax residents.
- Poland: The Supreme Administrative Court held that a tax remitter paying for cross-border intangible services must exercise due diligence under Article 26(1) of the CIT Act, when verifying the conditions for the application of a tax rate other than that specified in Article 21(1) or Article 22(1) of the CIT Act or for an exemption, or conditions for the non-collection of a tax, arising from special provisions or double taxation conventions.
- Poland: The CJEU issued a judgment with respect to a question referred by the Supreme Administrative Court related to the scope of application of Article 6 of the VAT Act, which excludes taxation of a supply of an undertaking or an organized part thereof.
- Poland: The Supreme Administrative Court held that the provisions of Section III, Chapter 11a of the Polish Tax Code (information on tax arrangements) are substantive in nature and as such can be the object of a tax ruling.
- Romania: The KPMG member firm in Romania prepared a “tax guide” for 2023.
- Serbia: A request for a VAT refund to foreign taxpayers for 2022 must be submitted by 30 June 2023 at the latest.
- Serbia: Changes to the taxation of individual income are effective 1 January 2023.
- Serbia: The Minister of Finance adopted two amendments to the rulebook on VAT with the primary purpose of harmonizing with the fiscalization and e-invoicing regulations.
- UK: The government announced details of “The Windsor Framework,” which has been agreed in principle by the UK and EU, and seeks to address issues for trade and VAT under the Northern Ireland Protocol.
- UK: A KPMG report looks at some specific issues related to employment tax reporting and summarizes key year-end tasks and deadlines.
- UK: The “Spring Budget” is expected on 15 March 2023.
- UK: The Chartered Institute of Taxation (CIOT) has called for the tax treatment of employee benefits-in-kind to be simplified, such that the tax position is determined by the benefit itself rather than whether the employer incurs the cost directly or reimburses the employee. A KPMG report looks at what employers need to consider so that their obligations are met.
- UK: The CJEU released an opinion holding that a VAT regulation that presumes a taxable person taking part in the electronic supply of services through a telecommunications network (e.g., online interface or portal) to be the provider of those services, and thus liable to pay VAT on the supply of such services, is valid.
Read TaxNewsFlash-Europe
Global
- A report prepared by KPMG International offers a snapshot of the domestic tax rules governing family business transfers and provides a detailed analysis of the outcomes of two case studies in which the shares in a family business are transferred on the owner’s death (inheritance) and in which the transfer happens during the owner’s lifetime (gifting).
Transfer Pricing
- Brazil: Following publication of Provisional Measure No. 1,152, which would adopt OECD-aligned transfer pricing rules, the Brazilian tax authorities published a first Normative Instruction providing guidance on the new rules. The instruction addresses (1) the optional adoption of the OECD-aligned transfer pricing rules, (2) transfer pricing adjustments, and (3) royalties.
Trade & Customs
- Three U.S. government agencies issued a “tri-seal” compliance note on cracking down on third-party intermediaries used to evade Russia-related sanctions and export controls.
- The Office of the U.S. Trade Representative (USTR) delivered President Biden’s 2023 trade agenda and 2022 annual report to Congress.
- The U.S. Office of Foreign Assets Control (OFAC) announced that an India-registered tobacco company has agreed to pay $332,500 to settle its potential civil liability for five apparent violations of the North Korea sanctions regulations.
- A KPMG report discusses how a recent U.S. Trade Court decision arguably challenges precedent concerning the U.S. Customs and Border Protection’s (CBP’s) “substantial transformation” standard for determining the country of origin of imported goods, and may spur companies who have considered altering supply chains or manufacturing operations in order to obtain different “origin” outcomes for tariff purposes to reassess their analysis or seek reconsideration of past CBP origin determinations.
- The Bureau of Industry and Security (BIS) of the U.S. Commerce Department released a final rule amending the Export Administration Regulations (EAR).
- BIS issued an order imposing an administrative penalty of over $2.77 million on a U.S. 3D printing company to resolve allegations of 19 EAR violations.
- The Ministry of Commerce of China, together with the Ministry of Science and Technology and other authorities issued a notice on soliciting public comments on the revision of “the List of Technologies Prohibited and Restricted from Export of PRC,” with a view to revising the list.
United States
- The staff of the Joint Committee on Taxation (JCT) released a document with general background on the tax provisions related to residential housing in advance of a public hearing scheduled for 7 March 2023. Read TaxNewsFlash
- The U.S. Senate Finance Committee voted to advance the nomination of Daniel Werfel to be the new Commissioner of Internal Revenue. The vote clears the way for advice and consent by the full Senate, but it is not clear when a vote will be scheduled.
- The U.S. Supreme Court held that the penalty for violating the “Report of Foreign Bank and Financial Accounts” (FBAR) rules to report a qualifying account applies on a per-report basis, and not on a per-account basis.
- Notice 2023-21 provides relief with respect to lookback periods for claims for credit or refund for returns with due dates postponed by Notice 2020-23 or Notice 2021-21.
- A KPMG report on the new Corporate Alternative Minimum Tax (CAMT) was updated to reflect the guidance in Notice 2023-7 and Notice 2023-20.
State and local tax
- Mississippi: There are two bills pending in Mississippi that would in essence decouple from the Tax Cuts and Jobs Act’s changes to IRC section 174 by allowing taxpayer to immediately deduct research and experimental (R&E) expenditures. In addition, the bills would allow 100% bonus depreciation for qualified property or qualified improvement property placed in service during the tax year, notwithstanding any changes to federal law related to cost recovery beginning on 1 January 2023, or some other date.
- Pennsylvania: The Pennsylvania Supreme Court on February 22, 2023, upheld a “benefits-received” interpretation of the income-producing activity test for sourcing receipts from sales of services. Read TaxNewsFlash
- Washington State: The litigation over the constitutionality of Washington State’s capital gains excise tax is currently pending before the Washington State Supreme Court, but a stay granted to the Department of Revenue allows the agency to administer the tax pending the outcome of the appeal.
- Multistate: A number of fixed date conformity states (i.e., Arizona, Idaho, South Dakota, Virginia, and West Virginia) have advanced their conformity to the Code or have legislation pending signature that would do so.
Exempt Organizations
- The U.S. Treasury Department and IRS last week released final regulations amending the rules for filing electronically certain information and tax returns filed by tax-exempt organizations.
Cooperatives
- Those with income from a farming or fishing business needed to file and pay their entire tax due by 1 March 2023 if they did not make estimated tax payments.
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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