KPMG Week in Tax: 21 – 25 August 2023

• Mauritius: A new income tax treaty with Hong Kong entered into force in June 2023.
• Tunisia: The OECD announced that Tunisia in July 2023 deposited its instrument of ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI will become effective on 1 November 2023 for Tunisia.

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• Bermuda: A KPMG report discusses the potential U.S. tax implications of the proposed Bermuda corporate income tax.
• Bolivia: The tax authority announced the delayed implementation of online invoicing modalities for the fourth, fifth, and sixth group of taxpayers.
  
• Canada: Draft legislation (released 4 August 2023) includes significant proposed changes to the alternative minimum tax (AMT).
  
• Canada: Draft legislation (released 4 August 2023) includes proposed changes to new digital services tax (DST). Large businesses may be subject to the DST effective 1 January 2024, on certain online revenues earned beginning 1 January 2022, if the OECD’s Pillar One approach to international tax reform has not yet become effective.
  
• Brazil: Changes in the accounting and tax treatment of losses incurred in receiving credits from financial institutions include the concept of “expected credit losses.”

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• Hong Kong: A new income tax treaty with Mauritius entered into force in June 2023.
• Philippines: The House of Representatives approved the third and final reading of a bill that includes direct and indirect tax incentives for natural gas projects.
  
• Cambodia: The General Department of Taxation (GDT) informed all enterprises in the non-alcoholic beverage industry that produce and supply locally in Cambodia of new specific tax rates on energy drinks and non-alcoholic beverages.
  
• India: Legislation includes a uniform goods and services tax (GST) rate of 28% on the full-face value of bets placed / chips purchased in casinos, horse racing, and online gaming.
  
• India: The Central Board of Direct Taxes (CBDT) issued new guidance regarding the taxation of proceeds from life insurance policies.
  
• Australia: The New South Wales (NSW) government announced that it will pause payroll tax audits for general practitioners and their practices for 12 months to allow for ongoing consultation with the Royal Australian College of General Practitioners and Australian Medical Association.
  
• Australia: The Australian Taxation Office (ATO) in September 2023 will be writing to large public and private companies that meet the corporate tax transparency threshold for the income year 2021-2022, to help gather tax information for publishing in the report of entity tax information.
  
• Australia: Treasury has opened a consultation on an exposure draft bill that would introduce a cap on the use of deductions to offset assessable income for the petroleum resource rent tax (PRRT). The draft bill would partially implement PRRT related measures announced in the 2023-2024 budget.
  
• Saudi Arabia: The eighth wave for implementing the “integration phase” of e-invoicing included all taxpayers with revenues subject to value added tax (VAT) exceeding SAR40 million during 2021 or 2022. VAT-registered taxpayers meeting the criteria need to integrate their e-invoicing solutions starting from 1 March 2024.
  

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• Poland: The Lower House of the Polish Parliament passed amendments to the individual (personal) income tax law and the corporate income tax law that included a reduction of the depreciation period for buildings and non-building structures from 40 to 5 or 10 years respectively, depending on the unemployment rate for the district they are situated.
• Poland: Recent tax-related court decisions concern tax deductible costs and income from intellectual property and credit default swaps.

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• Bermuda: A KPMG report discusses the potential U.S. tax implications of the proposed Bermuda corporate income tax.
• Israel: Tax Circular 1/2023 clarifies the relevance and procedures for competent authority, mutual agreement, and bilateral advance pricing agreement (APA) requests.
• Korea: Proposed amendments to Korea’s transfer pricing and Pillar Two rules would be generally effective for fiscal years beginning 1 January 2024.

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• Canada: The Canada Revenue Agency (CRA) issued updated guidance under the FATCA and the common reporting standard (CRS) regimes.
• Barbados: The Barbados Revenue Authority (BRA) further extended the FATCA and CRS filing deadline to 8 September 2023.
• Saint Vincent and the Grenadines: The Inland Revenue Department (IRD) further extended the FATCA and CRS filing deadline to 25 August 2023.
• United States: The IRS published an update to 2023 Form 1042-S instructions providing additional instructions related to Form 1042-S reporting requirements under sections 1446(a) and (f) concerning publicly traded partnerships.
• United States: The IRS updated a “frequently asked question” (FAQ), extending penalty relief for the 2022, 2023, and 2024 calendar years in situations when a withholding agent withholds and reports on Forms 1042 and 1042-S by September 15 of the applicable year.
• United States: A KPMG report reviews the developments that led to the emergence of the qualified intermediary (QI) program and the creation of the QI agreement.  

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• Rev. Rul. 2023-17 provides the rates of interest with regard to tax underpayments and tax overpayments for the calendar quarter beginning October 1, 2023. The rates of interest will increase for the fourth calendar quarter of 2023.
• Notice 2023-62 provides guidance—including the announcement of an administrative transition period—with respect to section 603 of Division T of the SECURE Act 2.0, which provides that the new Roth catch-up contribution rule applies to an employee who participates in a 401(k), 403(b) or governmental 457(b) plan and whose prior-year Social Security wages exceeded $145,000. 
• The U.S. Treasury Department and IRS released proposed regulations regarding information reporting under sections 6045 and 6050W, the determination of amount realized under section 1001 and basis under section 1012, and backup withholding under section 3406, for certain digital asset sales and exchanges.
• The U.S. Treasury Department and IRS released the fourth quarter update to the 2022-2023 Priority Guidance Plan—used each year to identify and prioritize tax issues to be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance.
• Rev. Proc. 2023-29 provides the applicable percentage table used to calculate an individual’s premium tax credit under section 36B for tax years beginning in calendar year 2024. The revenue procedure also provides the indexing adjustment for the required contribution percentage used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under section 36B for plan years beginning in calendar year 2024. 
• There is no change to the quarterly list of countries that require (or may require) participation in, or cooperation with, an international boycott.
• Taxpayers in Maui and Hawaii counties affected by wildfires now have until 15 February 2024 to file various individual and business tax returns and to make tax payments.
• A KPMG report discusses the potential U.S. tax implications of the proposed Bermuda corporate income tax.
• A KPMG report reviews the developments that led to the emergence of the qualified intermediary (QI) program and the creation of the QI agreement.  

State and local tax

• The Pennsylvania Department of Revenue announced that it has revised the lookback period for corporate income taxpayers participating in the state’s voluntary disclosure agreement (VDA) program. The lookback period for corporation taxes was reduced to three years (from five years) plus the current year, which is consistent with the lookback period that applies to other tax types. The change will apply to VDAs entered into on or after 1 August 2023 or later.
• The Tennessee Department of Revenue ruled that a taxpayer’s staff augmentation and payment processing services were not subject to sales and use tax because even though customers accessed the taxpayer’s services through an app, which could be considered a taxable sale of computer software, the true object of the taxpayer’s services was connecting businesses and workers for the purpose of arranging short term employment, which was not a taxable service.

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• The Bureau of Industry and Security (BIS) released a proposed rule that revises the process for requesting exclusions from the duties and quantitative limitations on imports of aluminum and steel discussed in previous BIS interim final rules implementing the exclusion process authorized by the president under Section 232 of the Trade Expansion Act of 1962.
• BIS released a final rule amending the Export Administration Regulations (EAR) by removing 35 persons from the unverified list (UVL).
• The Canada Border Services Agency (CBSA) announced that CBSA Assessment and Revenue Management (CARM) Release 2 is not expected to become the official system of record for imported goods into Canada until May 2024. 
• The Korean Supreme Court held that the value at the time of importation from a bonded area was the customs value in the bonded area transaction under Article 30 of the Customs Act, which is contrary to the existing position of the Korea Customs Service and prior holdings of the Korea Tax Appeals Tribunal.

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

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