KPMG Week in Tax: 10 – 14 July 2023

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

• OECD: An outcome statement on BEPS 2.0 describes the progress made by 138 members of the OECD/G20 Inclusive Framework on base erosion and profit shifting (BEPS) on implementation of major reform of the international tax system.
• France: The government announced new transfer pricing measures to be included in the 2024 Draft Finance Bill aimed at strengthening the tax authorities’ ability to detect and fight tax erosion resulting from improper transfer pricing.
• Thailand: The Board of Investment (BOI) released guidance to Thai taxpayers identified as generally being within scope of the Pillar Two global minimum tax rules.
• EU: The European Commission (EC) published a report outlining the progress achieved by the OECD/G20 Inclusive Framework on BEPS in respect of Pillar One.
• Germany: The Federal Ministry of Finance published the ministerial draft bill to implement the OECD’s Pillar Two Model Rules as set out under the EU minimum tax directive.
• Gibraltar: The government issued the 2023 budget speech that includes tax proposals related to Pillar Two global minimum tax.
• Liechtenstein: The government launched a consultation on a draft bill to implement measures aligned with the EU public country-by-country (CbC) reporting directive.
• Netherlands: The Deputy Minister of Finance announced proposed amendments to the tax ruling policy as of the beginning of October 2023.
• UK: Companies within the UK are no longer required (beginning 26 July 2023) to make an annual CbC reporting notification stating which legal entity within the multinational enterprise (MNE) is the ultimate parent entity and will be filing the CbC report. 

Read TaxNewsFlash-Transfer Pricing

• Tanzania: The Finance Act, 2023—effective 1 July 2023—includes measures concerning income tax, excise duty (tax), service levy and advertisement fees, property rates, the gaming law, electronic money transfer levy, export levy, roads and fuels tolls, the mining law, the tax administration law, and value added tax (VAT).
• Mauritius: The Finance (Miscellaneous Provisions) Bill 2023—released for consultation—includes measures announced in the budget speech in June 2023. The legislation includes corporate income tax incentives, repeal of an incentive tax rate for applicable banks, and an extension of negative excise duty scheme.
  
• Nigeria: The Nigeria Customs Service Act, 2023, which repeals the Customs and Excise Management Act (CEMA) and other pieces of legislation relating to customs and excise tax, and provides the legal and institutional framework for the reform of the administration and management of customs and excise tax in Nigeria, was signed into law on 20 April 2023.
  
• Nigeria: The Federal Inland Revenue Service (FIRS) issued a notice that extends the deadline to 31 August 2023 for filing companies income tax returns and for paying the related tax liabilities for companies with returns falling due between 30 June and 31 August 2023 (inclusive).
  
• South Africa: Further information is required beginning 1 March 2023 for receipts issued under section 18A(2)(a)(vii) of the Income Tax Act No. 58 of 1962.
  
• Egypt: An income tax treaty with Oman was signed in May but is yet to be ratified by Egypt.
  

Read TaxNewsFlash-Africa

• Chile: The tax authority clarified that the supply of digital information by a foreign provider, through the subscription of electronic magazines that will be used in Chile, is subject to VAT, regardless of whether the content is educational or entertainment.
• Colombia: The Ministry of Finance on 30 June 2023 issued proposed regulations on the new significant economic presence rule enacted as part of tax reform in Colombia in 2022 (Law 2277 of 2022).
  
• Canada: The Department of Finance will extend relief of customs duties under the Customs Tariff and the Special Import Measures Act for goods that originate in Ukraine by an additional year, until 9 June 2024 (from 9 June 2023).
  
• Canada: The Canada Revenue Agency (CRA) issued guidance clarifying certain aspects of the new mandatory disclosure rules, including timing issues, certain hallmarks of reportable transactions, how the rules interact and other administrative concerns.
  
• Canada: Corporations and other organizations preparing financial reports need to be aware of certain 2023 Canadian income tax rate and other changes that may need to be reflected in interim financial statements.
  
• Canada: The Canada Border Services Agency (CBSA) released an updated list of 15 imported goods that will be targeted for potential audits. The updated list of audit priorities now includes freezers and other freezing equipment, as well as washers and dryers.
  
• Argentina: Law No. 6655 reduces the tax on gross income for different sectors. In particular, the rate applicable to the manufacturing sector is reduced from 1.5% to 1% for taxable events from 1 July 2023.
  
• Mexico: The Technical Council of the Mexican Social Security Institute (IMSS) published guidance establishing the actions that will be considered improper tax practices in the field of social security.
  

Read TaxNewsFlash-Americas

• India: The Delhi Bench of the Income-tax Appellate Tribunal held amounts paid by the taxpayer, an Indian company, to its UK holding company on account of seconded employees were not taxable as "fees for technical services” because the taxpayer was the legal and economic employer of the employees.
• Saudi Arabia: New guidelines on tax rulings provide taxpayers with more clarity on the process of requesting a tax ruling, as well as the criteria that the Zakat, Tax and Customs Authority (ZATCA) will consider when issuing a ruling.
  
• Vietnam: The General Department of Customs (GDC) has proposed to repeal all regulations relating to the “on-the-spot” export and import procedures that have been commonly used and play an important part in the processing trade models and manufacturing ecosystem of many Vietnamese manufacturers and foreign principal traders.
  
• Philippines: The Bureau of Internal Revenue (BIR) issued a Revenue Memorandum Order (RMO) and Revenue Memorandum Circulars (RMCs) concerning direct and indirect taxes, including VAT, creditable withholding tax, and foreign-sourced dividends.
  
• Singapore: The Inland Revenue Authority of Singapore (IRAS) updated its e-Tax Guide on the total asset method for interest adjustment.
  
• Australia: Treasury released for consultation an exposure draft bill that seeks to implement the 2023-2024 budget measure “amending the tax law to reduce compliance costs for general insurers.” The consultation period closes 21 July 2023.
  
•  Australia: The Administrative Appeals Tribunal held that the taxpayer’s yogurt product was subject to goods and services tax (GST) because it was properly characterized as food that is a combination of one or more foods, at least one of which is specifically subject to GST.
  
•  Australia: Recent tax developments concern the digital games tax offset (DGTO), compensation scheme of last resort (CSLR), and registrable superannuation entities (RSEs).
• Oman: An income tax treaty with Egypt was signed in May but is yet to be ratified by Egypt.
  
• Malaysia: A monthly summary of tax developments includes discussions of income tax, stamp duty (tax), and indirect tax.
  

Read TaxNewsFlash-Asia Pacific

• Gibraltar: The 2023 budget includes tax proposals concerning individuals and companies. Other measures include green tax incentives and stamp taxes.
• EU: The European Parliament's Committee on Economic and Monetary Affairs (ECON) held a public exchange of views with the Commissioner for Economy concerning the “SAFE” proposal, Pillar One, and unanimity in tax matters.
  
• Ireland: The government published a proposed bill for the introduction of a solidarity contribution on windfall gains made in 2022 and 2023 by the fossil fuel production and refining sector as a result of the invasion of Ukraine.
  
• Italy: The first-level tax court of Pescara held that the imposition of Italian withholding tax between 2009 and 2012 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) was discriminatory and breached EU law. The court thus found that the Luxembourg SICAV was entitled to a full refund of such withholding tax.
  
• Latvia: The government published amendments to its domestic list of non-cooperative jurisdictions.
  
• Malta: The Commissioner for Revenue issued clarifications on the Maltese reporting framework for platform operators (DAC7). The guidance provides clarifications on the scope provisions, key terms, and due diligence procedures.
  
• Netherlands: The Deputy Minister of Finance announced proposed amendments to the tax ruling policy as of the beginning of October 2023.
  
• Poland: Proposed tax-related bills concern (1) the prevention of administrative and legal barriers, (2) reducing irregularities in trade in certain goods and streamlining functioning of the National Revenue Administration, and (3) amendments to the Polish tax law.
  
• Poland: The Ministry of Finance announced the launch in the first quarter of 2024 of a new mobile application facilitating real-time issue and reception of e-invoices, as part of the National e-Invoicing System (KSeF).
  
• Poland: The Ministry of Finance published for consultation two schemas for digital platform operators—DPI-FR (sales information declaration) and DPI-IS (performance information declaration)—as part of the implementation of new reporting obligations for digital platform operators under EU Directive 2021/514 (DAC7). Comments are due by 10 July 2023.
  
• Estonia: The Parliament adopted amendments to the income tax law; VAT law; alcohol, tobacco, fuel and electricity excise duty law; and gambling tax law.
  
• Hungary: The Parliament passed a draft tax law amendment that includes proposed direct and indirect tax changes.
  
• UK: The Court of Appeal determined that the UK-Canada income tax treaty did not permit the UK to exercise taxing rights over oil-related profits.
• UK: The Spring Finance Bill includes energy profits levy (EPL) and electricity generator levy (EGL) updates and the announcement of a fiscal review.

Read TaxNewsFlash-Europe

• Barbados: The deadline to file FATCA and common reporting standard (CRS) reports has been extended until 2 August 2023. The automatic exchange of information (AEOI) web portal will remain open until the new deadline.
• Panama: The tax authority established a list of reportable jurisdictions with which Panama must automatically exchange financial accounts information for tax purposes (for calendar year 2021) under the CRS regime.
  

Read TaxNewsFlash-FATCA / IGA / CRS

• Nigeria: The Nigeria Customs Service Act, 2023, which repeals the Customs and Excise Management Act (CEMA) and other pieces of legislation relating to customs and excise tax, and provides the legal and institutional framework for the reform of the administration and management of customs and excise tax in Nigeria, was signed into law on 20 April 2023.
• United States: A KPMG report considers what the “Inflation Reduction Act of 2022” and “Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022” (CHIPS Act) could mean for U.S. importers.
  
• Vietnam: The General Department of Customs (GDC) has proposed to repeal all regulations relating to the “on-the-spot” export and import procedures that have been commonly used and play an important part in the processing trade models and manufacturing ecosystem of many Vietnamese manufacturers and foreign principal traders.
  
• Canada: The Department of Finance will extend relief of customs duties under the Customs Tariff and the Special Import Measures Act for goods that originate in Ukraine by an additional year, until 9 June 2024 (from 9 June 2023).
  
• Canada: The CBSA released an updated list of 15 imported goods that will be targeted for potential audits. The updated list of audit priorities now includes freezers and other freezing equipment, as well as washers and dryers.
  
•  EU-New Zealand: Representatives of the EU and New Zealand signed a free trade agreement. Text of the agreement will now be sent to the European Parliament for its consent.
  

Read TradeNewsFlash-Trade & Customs

• Final regulations permit consolidated groups that acquire new members that were members of another consolidated group to elect in a year subsequent to the year of acquisition to waive all or part of the pre-acquisition portion of the carryback period under section 172 for certain losses attributable to the acquired members when there is a retroactive statutory extension of the net operating loss (NOL) carryback period.
• A petition has been filed requesting that methyl ethyl ketoxime be added to the list of taxable substances under section 4672(a).
  
• Notice 2023-54 provides transition relief for plan administrators, payors, plan participants, individual retirement account and annuities (IRA) owners, and beneficiaries in connection with the change in the required beginning date for required minimum distributions (RMDs). The notice also provides guidance related to certain specified RMDs for 2023 and announces that final regulations that Treasury and the IRS intend to issue related to RMDs will apply for purposes of determining RMDs for calendar years beginning no earlier than 2024.
  
• An IRS practice unit discusses the mark-to-market (MTM) rules under section 877A, which imposes an “exit tax” through a MTM tax regime on the worldwide assets of a “covered expatriate” (CE).
  
• Taxpayers anywhere in Vermont affected by flooding now have until 15 November 2023 to file various individual and business tax returns and make tax payments.
  
• Assembly Bill 5323, which makes significant revisions to New Jersey’s Corporation Business Tax (CBT) laws, including further refinements to the state’s combined reporting provisions, was signed into law.
  
• KPMG reports this week cover:
  
  • State conformity to the federal treatment of section 174 research and experimentation (R&E) costs
    
  • Tax credits for sustainable aviation fuel
  • Real estate investment trusts (REITs) and the new corporate alternative minimum tax (AMT)

Read TaxNewsFlash-United States
 

Legislative Updates

• The chairmen and ranking members of the tax-writing committees of the U.S. Congress released a discussion draft of legislation to provide relief from double-taxation for workers and businesses engaged in U.S.-Taiwan cross-border investment.

Read TaxNewsFlash-Legislative Updates

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

• Indirect Tax
• Taxation of the Digitalized Economy
• Tax Dispute Resolution