KPMG Week in Tax: 24 – 28 April 2023

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

• Africa: A summary of recent tax developments includes model legislation published by the African Tax Administration Forum (ATAF) to implement BEPS 2.0 (Pillar Two), and updates on the 2023 tax measures in Namibia and Uganda.
• Nigeria: The Federal Inland Revenue Service (FIRS) extended the value added tax (VAT) filing deadline for March 2023 VAT returns to 30 April 2023.
  
• Nigeria: FIRS updated the features for VAT filing and payment on the TaxPro-Max (TPM) online platform.
  
• Nigeria: The Lagos Internal Revenue Service (LIRS) issued a notice providing guidelines to taxpayers resident in Lagos State on the process of generating the new electronic tax clearance certificate (eTCC) through its end-to-end tax administration (eTax) platform.
  
• Uganda: The tax authority issued a notice providing that the application process for withholding tax and VAT exemption for the financial year 2023/2024 will begin on 20 April 2023 and end on 20 June 2023.
  
• Ghana: Three tax bills—originally presented by the Minister of Finance in the 2023 budget, approved by the Parliament, and then notified in the gazette—(1) widen the scope of the existing National Fiscal Stabilisation Levy; (2) introduce a withholding tax on the realization of assets and liabilities and on winnings from lottery, and revises income tax rates for resident individuals and the treatment of foreign exchange losses and motor vehicle benefits-in-kind; and (3) increases the excise duty for cigarettes and tobacco products, wine, malt drinks and spirits, and introduces an excise duty on sweetened beverages and electronic cigarettes.
  

Read TaxNewsFlash-Africa

• Bolivia: The tax administration issued guidance that extends through 31 May 2023 the deadline for filing certain reports and statements relating to corporate income tax for the tax period ending 31 December 2022.
• Canada: Expanded mandatory disclosure rules generally would require individuals, corporations, trusts and partnerships to promptly disclose certain “reportable transactions” and “notifiable transactions” to the Canada Revenue Agency, among other new obligations. The rules would apply to transactions entered into on or after the date the legislation to enact these changes receives Royal Assent, which is expected soon.
• Canada: Bill C-47—which includes outstanding tax measures previously announced in the 2021, 2022, and 2023 federal budgets and 2022 federal economic update, along with certain other technical amendments—received first reading. The bill includes the expanded mandatory disclosure rules and new reporting requirements for digital platform operators, among other business, individual, and indirect tax measures.
• Costa Rica: A report summarizing recent tax developments includes information regarding the annual information return for dormant legal entities, attracting film investment and investment outside the greater metropolitan area, and tax residency.
• Colombia: The government issued Decree 442, which updates the electronic invoicing (e-invoicing) regulations.

Read TaxNewsFlash-Americas

• Japan: The tax reform proposals for 2023—passed by the National Diet—include corporate and international tax measures.
• Japan: The tax reform proposals for 2023 include a reduction in the exemption threshold of effective tax rate for full-inclusion rules applied to the specified controlled foreign company (CFC) under the CFC regime to 27% (from 30%).
  
• Philippines: The Fiscal Incentives Review Board (FIRB) issued guidance to clarify the supplemental guidelines on the registration with the Board of Investments of registered business enterprises in the information technology-business process management (IT-BPM) sector.
  
• Philippines: The Department of Finance (DOF) and the Department of Trade and Industry (DTI) issued guidelines to implement sections 305, 306, 307, and 308 of the National Internal Revenue Code of 1997 for cooperatives registered with the Cooperative Development Authority (CDA).
  
• India: The West Bengal government has introduced a new dispute settlement scheme under which all disputed taxes (including interest, penalties, and late fees) pending before any authority as of 10 February 2023 will be settled if application is made by 31 May 2023.
  
• India: A tribunal held that the 15% rate of dividend distribution tax on dividends paid by an Indian company to non-resident shareholders may not be reduced under an applicable income tax treaty because the tax is a tax on the profit of the company, not on the shareholders.
  
• India: The government has introduced a one-time amnesty program to address the non-compliance of export obligations by advance authorization (AA) and export promotion capital goods (EPCG) authorization holders.
  
• Korea: The Tax Tribunal upheld a penalty imposed by the customs authority even though the taxpayer voluntarily amended its customs value on its import declaration to reflect an annual transfer-pricing based post-compensating adjustment paid to its affiliates.
  
• Thailand: The Thai Cabinet approved three draft Royal Decrees to extend the tax measures to support human resource development for targeted industries and the relocation of production bases under the “Thailand Plus Package.” The tax incentives originally applied from 1 January 2021 through 31 December 2022 but would be extended to 31 December 2025.
  
• Thailand: The Director-General of the Revenue Department provided guidance on the VAT exemption granted to promote data center businesses that became effective 9 November 2022. 

Read TaxNewsFlash-Asia Pacific

• Malta: The 2023 budget implementation law was enacted, including amendments to the Income Tax Act, the Income Tax Management Act, and the VAT Act.
• Spain: The Lower House passed a bill implementing several European Union directives, including the central electronic system of payment information (CESOP), effective 1 January 2024.
• Cyprus - Netherlands: The Upper House of the Dutch Parliament on 18 April 2023 approved the income tax treaty between Cyprus and the Netherlands. The ratification process will be finalised upon the exchange of notification letters. The treaty is anticipated to be effective from 1 January 2024.
• Cyprus: The tax authority announced that the deadline for submitting VAT returns for the period from 1 December 2022 to 28 February 2023, has been extended to 10 May 2023.
• Estonia: The Supreme Court held that, following a cross-border merger of companies, the date on which payments from equity subject to tax must be calculated and a balance sheet drawn up is the date the merged company is deleted from the commercial register, and not the merger balance sheet date.
• Germany: The Court of Justice of the European Union (CJEU) held that the German tax treatment of revenues derived by non-resident closed-end real estate funds, with exclusively foreign investors, from immovable property located in Germany was contrary to the free movement of capital.
  
• Germany: The Federal Ministry of Finance (BMF) released a discussion draft of proposed changes to the taxation of partnerships in order to conform with the partnership modernization law that is scheduled to become effective 1 January 2024.
  
• Germany: The BMF published draft legislation that would change the taxation of employee share ownership in order to facilitate such ownership—effective from 2024.
• Germany: The German Federal Tax Court (BFH) held that the expenses incurred by a manufacturing company for the rental of a trade fair stand were not subject to trade tax.
• Germany: The Ministry of Finance issued a discussion document for consultation on a proposal to implement an e-invoicing mandate for business-to-business (B2B) transactions effective 2025. Comments are due by 8 May 2023.
• Slovakia: An Amendment to the Income Tax Act restoring the tax exemption for income on corporate bonds paid by Slovak tax residents to nonresidents was approved by the Parliament and published in the Collection of Laws.
• France: The Ministry of Economy and Finances announced the implementation of an e-invoicing and digital reporting pilot program that will run between January and June 2024.
• EU: The European Parliament adopted rules for the new carbon border adjustment mechanism (CBAM), which is scheduled to begin its transition phase on 1 October 2023.
• EU: The European Commission (EC) discussed in Working Paper 1061 of the EU VAT Committee the possibility for a lessee of imported goods to deduct the VAT paid upon the importation of those goods, when the lessee is designated as liable for the payment of such VAT.

Read TaxNewsFlash-Europe

• Japan: The tax reform proposals for 2023—passed by the National Diet—include the global anti-base erosion (GloBE) income inclusion rule and CFC regime.
• India: The Supreme Court—reversing a batch of High Court decisions—held that the determination of arm’s length prices involves both questions of law and fact, and whether the Tribunal followed the relevant transfer pricing rules and guidelines is subject to review.
  
• Korea: The Tax Tribunal that the tax authority is entitled to re-assess the arm’s length interest rate on a related-party loan when the loan bore an interest rate (8%) seemingly higher than the conventional rate and the taxpayer failed to provide evidence of its arm’s length nature.

Read TaxNewsFlash-Transfer Pricing

• Saint Kitts and Nevis: The tax authority issued guidelines including instructions for completing the automatic exchange of information (AEOI) compliance form.
• Barbados: The AEOI portal will open for 2022 submissions on 1 May 2023. The portal will be available until 31 July 2023 to facilitate FATCA and common reporting standard (CRS) filings.
• Singapore: A new digital service in the myTax Portal that allows reporting Singapore financial institutions to view the status of their FATCA and CRS returns submitted by authorized users. The Inland Revenue Authority of Singapore published a user guide that details the step-by-step process to view the FATCA/CRS return status.
• Peru: The customs and tax administration issued updates to the CRS reporting deadlines for the 2023 reporting year.
• Thailand: The Thai Cabinet released the Royal Act for the Exchange of Information B.E. 2566 as an interim measure, which sets out the general framework for AEOI, including the details of reporting person(s), reportable information, and the reporting timeline.
• Uruguay: The tax authority issued updates for financial institutions regarding the submission of CRS reports.

Read TaxNewsFlash-FATCA / IGA / CRS

• IRS Commissioner Daniel Werfel testified before the House Ways and Means Committee at a hearing on accountability and transparency at the IRS.
• The U.S. House of Representatives passed H.R. 2811 (the “Limit, Save, Grow Act Of 2023”), the Republican plan to increase the debt limit. The bill would repeal most of the energy-related tax credits enacted under the “Inflation Reduction Act of 2022” (IRA). The bill would also rescind most of the additional funding for the IRS provided in the IRA, among other things.

Read TaxNewsFlash-Legislative Updates
 

• A KPMG report discusses reporting deficiencies that the IRS is seeking to correct, upcoming reporting changes, and proposed improvements under the $80 billion budget allocated to the IRS by the IRA.
• Taxpayers in Oklahoma affected by April severe storms, straight-line winds, and tornadoes now have until 31 August 2023 to file various individual and business tax returns and make tax payments.
   

State and local tax

• A report of U.S. state and local tax developments concerning technology-related tax issues, for the first quarter of 2023, provides updates in table format and covers topics such as access to telecommunication services, web-based services, software, and streaming services.
• Colorado: The Department of Revenue revised its guidance on the effect of the CARES Act on corporate and individual taxpayers.
  
• Missouri: The state Supreme Court recently affirmed an administrative hearing commission determination holding that a telecommunications service provider qualified for the sales and use tax manufacturing exemption.
• Virginia: Legislation was signed into law providing that for tax years beginning on or after 1 January 2023, the Commonwealth will conform to the Code on a rolling basis, with certain exceptions.

Read TaxNewsFlash-United States

• U.S. Customs and Border Protection (CBP) modified import restrictions issued in a withhold release order (WRO) against a group of companies in Malaysia that produced disposable gloves, in response to one company’s successful demonstration that their products are no longer produced in whole or in part with forced labor.
• The Office of the U.S. Trade Representative (USTR) released its annual “special 301 report” on the adequacy and effectiveness of the U.S. trading partner countries’ protection and enforcement of intellectual property (IP) rights.
  
• The U.S. Department of State released an interim final rule amending the International Traffic in Arms Regulations (ITAR) to remove from the U.S. Munitions List (USML) Category XI certain high-energy storage capacitors.
  
• The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that a tobacco and cigarette manufacturer headquartered in London, England has agreed to pay over $508 million to settle its potential civil liability for apparent violations of OFAC’s sanctions against North Korea and weapons of mass destruction proliferators.
  
• The European Parliament adopted rules for the new CBAM, which is scheduled to begin its transition phase on 1 October 2023.
  
• The Indian government has introduced a one-time amnesty program to address the non-compliance of export obligations by advance authorization (AA) and export promotion capital goods (EPCG) authorization holders.
  
• The Tax Tribunal in Korea upheld a penalty imposed by the customs authority even though the taxpayer voluntarily amended its customs value on its import declaration to reflect an annual transfer-pricing based post-compensating adjustment paid to its affiliates.

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