Article Posted date
18 August 2023
Tax developments or tax-related items reported this week include the following.
Americas
- Canada: Many online marketplace facilitators must file their first annual information return for British Columbia provincial sales tax (PST) by 31 August 2023 (for the period from 1 July 2022 to 30 June 2023).
- Canada: The Department of Finance released new draft legislation for consultation that includes outstanding 2023 federal budget measures, technical amendments, and revised draft legislation for certain previously announced measures, including Pillar Two global minimum tax rules and a revised digital services tax (DST). KPMG reports provide details on excessive interest and financing expenses limitation (EIFEL) rules, and clean economy incentives
- Canada: The Canada Revenue Agency (CRA) provided guidance to insurance intermediaries on whether their supplies are tax-exempt for goods and services tax / harmonized sales tax purposes. Comments will be accepted until 31 October 2023.
- Canada: For the fourth quarter for 2023: (1) there is no change to the prescribed income tax interest rate for taxable benefits, overpaid taxes, and underpaid taxes from the rate for the third quarter of 2023; and (2) there is an increase to the prescribed interest quarterly rate that is used to determine the deemed interest income inclusion from a pertinent loan or indebtedness (PLOI).
- Dominican Republic: The Dominican tax authority (DGII) published a draft General Rule for public consultation on the appointment of withholding and collection agents for value added tax (VAT) and income tax.
- Brazil: The Brazilian Chamber of Deputies (lower house of parliament) on 6 July 2023 approved a constitutional amendment bill with the basic text of a tax reform involving federal, state, and municipal indirect taxes. If enacted, the reform will be introduced over a transitional period of seven years beginning in 2026.
Asia Pacific
- UAE: The Ministry of Finance published cabinet decisions outlining the (1) additional conditions to be met by qualifying investment funds in order to be exempt from corporate tax, and (2) administrative penalties for violations of the UAE corporate tax law.
- Bahrain: The economic substance (ES) filing window for entities carrying out any of the listed relevant entities for fiscal year 2022 will be open from 13 August 2023 to 13 September 2023.
- Australia: The government will be conducting a review of whether a carbon border adjustment mechanism (CBAM), or other carbon leakage policy options, are suitable for Australia.
- Philippines: The Bureau of Internal Revenue (BIR) introduced significant changes in the document requirements and procedures for VAT refund claim applications.
- Singapore: The Ministry of Finance (MOF) has released 33 proposed legislative amendments to the Income Tax Act 1947 for public consultation, including introduction of section 10L to tax gains from the sale or disposal of any immovable or movable property situated outside Singapore (collectively “foreign assets”) that are received in Singapore by businesses without economic substance in Singapore.
Europe
- Germany: The draft tax reform bill would introduce mandatory use of electronic invoices (e-invoicing) for supplies between domestic companies effective 1 January 2025. The bill also includes other VAT related provisions, including certain simplifying measures for small businesses.
- EU: The European Commission (EC) adopted the rules governing the implementation of the CBAM during its transitional phase, which starts on 1 October 2023 and runs until the end of 2025. KPMG professionals from the Global ESG Tax team prepared a report that discusses the new CBAM rules
- Denmark: Tax professionals in Denmark have observed a recent uptick in VAT audits initiated by the Danish Tax Agency (DTA) aimed at nonresident digital services providers.
- Denmark: Legislation introducing the computation of interest on corrections of VAT and excise duties for past periods became effective 1 July 2023.
- Poland: Legislation mandating e-invoicing beginning 1 July 2024 was published in the Polish Journal of Laws.
- Poland: Recent court decisions concern a tax on revenue from buildings; VAT treatment of a preliminary land sale contract; and tax on a social media barter contract.
- Switzerland: The tax exemptions for imported and Swiss-made electric vehicles (EVs) are expected to be repealed effective 1 January 2024. As a result, importers and manufacturers of EVs weighing no more than 1600 kg will be subject to the 4% automobile tax.
- Hungary: The government announced amendments to various extra profit surtaxes that concern petroleum products, pharmaceutical producers, and mining.
Read TaxNewsFlash-Europe
Transfer Pricing
- Australia: The Australian Taxation Office (ATO) is undertaking a targeted consultation with significant global entities and their advisors on the implementation of the OECD global anti-base erosion (GloBE) rules under Pillar Two in Australia, with a focus on potential administration issues.
- Canada: The Department of Finance released new draft legislation for consultation that includes outstanding 2023 federal budget measures, technical amendments, and revised draft legislation for certain previously announced measures, including Pillar Two global minimum tax rules.
- KPMG report: The accelerated competent authority procedure (ACAP) and its analogues allow for mutual agreement procedure (MAP) case resolutions to be rolled forward to subsequent years.
FATCA / IGA / CRS
- Saint Lucia: The Inland Revenue Department issued an updated version of the common reporting standard (CRS) guidelines that edits the “Sample CRS Compliance Questionnaire” subsection to note that accurate and comprehensive responses must be provided in the questionnaire, as these answers will shape future compliance and outreach efforts.
United States
- Notice 2023-57 announces the inflation adjustment factor and phase-out amount for the enhanced oil recovery credit for tax years beginning in the 2023 calendar year.
- Notice 2023-58 provides the applicable reference price for qualified natural gas production from qualified marginal wells during tax years beginning in calendar year 2023 for the purpose of determining the marginal well production credit under section 45I.
- Taxpayers in parts of Illinois and parts of Mississippi affected by severe storms now have additional time to file various individual and business tax returns and make tax payments.
- A report prepared by KPMG LLP tax professionals provides an overview of select proposals included in the Green Book that would affect the taxation of financial products.
- A series of reports prepared by KPMG LLP tax professionals examines the new corporate alternative minimum tax (CAMT)—a minimum tax based on financial statement income that is imposed on applicable corporations.
State and local tax
- The New Jersey Division of Taxation posted guidance on its website addressing the state’s new convenience of the employer rule, which is retroactively effective to January 1, 2023. Affected taxpayers must begin withholdings and/or making estimated payments for tax year 2023 as soon as possible and are required to have proper tax paid in by 15 April 2024.
- The New York Department of Taxation and Finance published comprehensive Article 9-A corporate franchise tax regulations in the New York State Register. In doing so, the Department has started the process under the state administrative procedure act of formally adopting these regulations, which have been in draft form for over a year.
- The South Carolina Administrative Law Court recently upheld the Department of Revenue’s assertion that a group of subsidiaries were required to file a combined return to properly reflect business activity in South Carolina.
Trade & Customs
- The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that a company headquartered in New Jersey has agreed to pay over $660,000 to settle its potential civil liability for three apparent violations of OFAC sanctions on Iran.
- The World Trade Organization (WTO) released a panel report recognizing that U.S. Section 232 actions on steel and aluminum are security measures, and that China illegally retaliated with tariffs.
The items described above are also reported as editions of TaxNewsFlash:
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