KPMG Week in Tax: 12 - 16 June 2023

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

• Norway: A public consultation paper containing new draft Norwegian legislation implementing a minimum tax. The intention of the legislation is to provide that an effective minimum tax rate of 15% is paid in all jurisdictions when a multinational enterprise (MNE) has legal entities and branches.
• Brazil: The president signed a law that enacts significant changes to the Brazilian transfer pricing system—shifting from Brazil’s historical, formula-based transfer pricing rules to an arm’s length standard consistent with the OECD Guidelines.
  
• Denmark: The Danish parliament passed a bill effectively introducing public country-by-country (CbC) reporting for certain companies and branches operating in Denmark.
  
• Kenya: Changes to the income tax corporation tax (IT2C) return include a form for the declaration of related-party transactions.
  
• Hong Kong: The minutes of the 2022 annual meeting between the Hong Kong Institute of Certified Public Accountants (HKICPA) and the Inland Revenue Department (IRD) were recently published. The minutes summarize the IRD’s views on various issues including the OECD’s base erosion and profit shifting (BEPS) 2.0 initiative.
  
• Canada: The Department of Finance has released a consultation paper and accompanying legislative proposals that include changes to the Canadian transfer pricing rules, including amendments to the transfer pricing adjustment rule and possible revisions to certain administrative practices.
  

Read TaxNewsFlash-Transfer Pricing

• British Virgin Islands: The tax authority issued revised updates regarding the reporting of U.S. taxpayer identification number (TIN) codes for FATCA purposes. The new update supersedes the previous announcement made on 12 May 2023.
• OECD: In its annual ministerial council meeting (MCM), the Council welcomed the newly introduced cryptoasset reporting framework (CARF) as an international standard, as well as the revised common reporting standard (CRS).
  
• Saint Vincent and the Grenadines: The automatic exchange of information (AEOI) portal will be available for submission of FATCA and CRS financial account data from 12 June 2023 through 31 July 2023.
  
• South Africa: The South Africa Revenue Service (SARS) announced the closure of its third-party data annual submissions for the 2023 filing season, which includes submissions for AEOI—related to the FATCA and CRS regimes.
  
• Italy: The tax authority issued an updated version of the instructions for the preparation and transmission of FATCA returns.
  
• UAE: The Ministry of Finance issued the FATCA and CRS system registration and data submission user guide, providing general guidance on registering and submitting through the Ministry of Finance FATCA/CRS system website.
  
• Liechtenstein: The tax authority updated its FATCA reporting technical guidance to reflect the use of revised U.S. TIN codes based on the issuance of Notice 2023-11 by the IRS and the use of a national TIN of a non-US entity with a U.S. substantial owner. 
  

Read TaxNewsFlash-FATCA / IGA / CRS

• Nigeria: The Tax Appeal Tribunal Lagos Zone held that the Federal Inland Revenue Service (FIRS) validly exercised its powers under the value added tax (VAT) law to appoint a non-resident supplier as an agent of collection of VAT from both the activities of the food vendors and drivers that use the company’s platform to provide services to customers.
• Kenya: Changes to the income tax corporation tax (IT2C) return include a form for the declaration of related-party transactions. 

Read TaxNewsFlash-Africa

• Chile: The minimum amount for which taxpayers must issue tax receipts was reduced from $180 to $1—effective 1 July 2023. Taxpayers thus must issue tax receipts for all transactions subject to or exempt from VAT, regardless of their amount.
• Canada: KPMG submitted comments in response to the Department of Finance’s public consultation on the legislative proposals to amend the general anti-avoidance rule (GAAR).
• Canada: The Department of Finance launched a consultation on Canada's clean economy to develop specific design details of new investment tax credits intended to encourage investment in clean energy.
  
• Canada: Bill C-47—which includes outstanding tax measures announced in the 2021, 2022, and 2023 federal budgets and 2022 federal economic update, along with previously announced technical amendments—passed third reading.
  

Read TaxNewsFlash-Americas

• Bahrain: The National Bureau for Revenue (NBR) announced that starting from 18 June 2023, all waterpipe tobacco “molasses” products in the local market must have digital stamps.
• Bahrain: The Shura Council unanimously approved the general State Budget for 2023-2024.
  
• Cambodia: Property owners in certain locations qualify for an exemption from immovable property tax until the end of 2023.
  
• Australia: The Australian Taxation Office (ATO) released an overview of key changes and new tax measures that tax professionals need to be aware of when preparing a client’s 2023 tax return.
  
• Australia: ATO guidance permits certain entities to issue a recipient created tax invoice for goods and services tax (GST) purposes when certain requirements are satisfied.
  
• Australia: The 2023 South Australia budget includes a proposal to repeal the stamp duty for first-time home buyers who purchase a new home valued up to $650,000, or vacant land valued up to $400,000 to build a new home.
  
• Australia: The 2023-2024 Queensland budget includes new details of the build to rent (BTR) concessions and exemptions.
  
• Malaysia: A monthly summary of tax developments includes discussions of income tax, stamp duty (tax), and indirect tax.
  
• Singapore: The High Court recently dismissed an appeal from the taxpayer, holding that a cement silo is a building and not a plant for capital allowance purposes. The decision affirms a previous decision from the Income Tax Board of Review.
  
• Saudi Arabia: The Zakat, Tax and Customs Authority (ZATCA) published proposed amendments to Zakat, income tax, excise tax, VAT, and real estate transaction tax laws and implementing regulations for public consultation purposes.
  
• Hong Kong: The IRD revisited its approach to issuing Hong Kong certificate of resident status (HK CoR). The process is now adjusted such that the IRD will base its decision of whether an HK CoR can be issued on the plain definition of “Resident of Hong Kong” stipulated in the relevant Hong Kong income tax treaty.
  
• Hong Kong: The minutes of the 2022 annual meeting between the HKICPA and the IRD were recently published. The minutes summarize the IRD’s views on various issues related to profits tax, salaries tax, stamp tax, double tax agreements, the OECD’s BEPS 2.0 initiative, and electronic tax filing (e-filing) that were discussed during the meeting.
  
• Pakistan: Tax proposals in the Finance Bill 2023 include the taxation on bonus shares, 0.6% withholding tax on withdrawals, sales tax on information technology (IT) services and continuation of supra-tax levies, as well as an increase in withholding tax rates.
  

Read TaxNewsFlash-Asia Pacific

• Denmark: A bill to expand the limited tax liability for individuals and companies within the Danish continental shelf/Exclusive Economic Zone (EEZ) was enacted on 1 June 2023 and will become effective on 1 July 2023.
• Netherlands: The Advocate General of the Court of Justice of the European Union (CJEU) issued opinions in two cases (with a combined appendix), upholding denial of the dividend withholding tax exemption based on application of the anti-abuse provision.
  
• Poland: The Court of Justice of the European Union (CJEU) held that Article 78(5)(1-2) of the Polish Tax Code, which provides that interest on overpaid tax is not due if the relevant refund claim is submitted more than 30 days after the alleged overpayment of tax, is incompatible with EU law.
  
• Poland: A number of amendments to the VAT law and certain other laws (containing the “slim VAT 3 package”) are designed to further simplify and accelerate VAT settlements, thus improving companies’ liquidity, and to reduce formalities for businesses in international trade.
  
• Poland: The Supreme Administrative Court issued decisions concerning revenue from business in a special economic zone and the deduction of VAT in cross-border transactions and residential leases.
  
• Cyprus: The deadline for filing an individual tax return (except self-employed with accounts) for the tax year 2022 and payment date of the due tax as per the return (self-assessment) is extended to 2 October 2023.
  
• EU: The ECOFIN Council approved a report that provides an overview of the progress achieved in the Council on a range of direct tax measures, including on the so-called “Unshell” Directive proposal and the most recent amendment to the Directive on Administrative Cooperation (DAC8).
• EU: The European Commission published a “first call for feedback” on the rules governing the implementation of the carbon border adjustment mechanism (CBAM) during its transitional phase, which starts on 1 October 2023 and runs until the end of 2025.
  
• Czech Republic: The CJEU held that the charging of electric vehicles and the provision of related services constitute a complex transaction consisting of a supply of goods.
  
• Czech Republic: In connection with the amendment to the “Construction Act,” an amendment to the VAT law changes the definition of family houses and apartment buildings, to have a broader definition from 1 July 2023. Accordingly, the General Financial Directorate (GFD) is updating its information on the application of the VAT law to real property.
  
• UK: The Upper Tribunal’s judgment rejected the taxpayer’s appeal against the First-tier Tribunal’s (FTT) conclusion that UK income tax should have been deducted from interest payments on debt financing provided to the group.
  
• UK: A new accruals basis election in the Spring Finance Bill would make it easier to claim double tax credits in the United States.
  
• UK: New measures to regulate umbrella companies and improve labour supply chain tax compliance are in prospect.
  
• UK: Treasury has issued a call for evidence on tax-advantaged save-as-you-earn and share incentive plan employee share plans.
  

Read TaxNewsFlash-Europe

• The U.S. Treasury Department and IRS released four guidance documents relating to direct pay and transferable tax credits available under the “Inflation Reduction Act of 2022” (IRA)) and the “The CHIPS and Science Act of 2022” (CHIPS Act).
• Notice 2023-45 and Notice 2023-47 update Notice 2023-29 that describes certain rules the IRS intends to include in forthcoming proposed regulations for determining what constitutes an energy community for the production and investment tax credits.
  
• Rev. Proc. 2023-24 provides an updated annual list of automatic accounting method changes.
  
• Tax regulatory actions issued by the IRS will not be subject to the Office of Information and Regulatory Affairs (OIRA) review process.
  
• The IRS publicly released a legal advice memorandum (from the Office of Chief Counsel) concerning the tax treatment of an employer-funded, fixed-indemnity insurance policy.

Read TaxNewsFlash-United States

State and local tax

• A KPMG report provides insights on how states approach conformity to federal tax laws and further analyzes how states may conform to key provisions of the IRA, including the corporate alternative minimum tax (CAMT), transferability of investment tax credits (ITCs) and production tax credits (PTCs), and related basis adjustments made to property qualifying for ITCs and/or PTCs.
• Connecticut: The state’s budget bill, which is currently pending signature, revives the 10% corporation business tax surcharge that expired at the end of 2022.
• Illinois: The governor signed Senate Bill 1963, which includes changes to the Illinois investment partnership test and new requirements for certain Illinois investment partnerships.
• Louisiana: House Bill 171 eliminated the 200 transactions sales and use tax economic nexus threshold.  Senate Bill 1, which has been sent to the governor, would reduce the franchise tax rate by 25% each year that sufficient revenues were deposited into the state Revenue Stabilization Trust Fund. House Bill 631, if signed, would repeal the corporate income tax throwout rule effective for tax years beginning on or after 1 January 2024.
• Mississippi: The Court of Appeals affirmed an earlier determination that a taxpayer was liable for uncollected sales tax on supplies and equipment sold to oilfield service companies that held Mississippi retail sales tax permits.
• Oklahoma: House Bill 1039, which became law without signature, repeals the state’s corporate franchise tax effective beginning with the 2024 tax year.

Legislative Updates

• The Ways and Means Committee of the U.S. House of Representatives reported out (approved) three tax-related bills—the “American Families and Jobs Act.” The votes were along party lines.

Read TaxNewsFlash-Legislative Updates

• 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 a Belarusian airline.
• BIS released a final rule amending the Export Administration Regulations (EAR) adding 43 entities under 50 entries to the entity list.
  

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