KPMG Week in Tax: 31 July – 4 August 2023

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

• Croatia: Legislation to transpose the EU public country-by-country (CbC) reporting directive into domestic law was published in the official gazette.
• EU: The European Commission sent letters of formal notice to 14 member states that had not notified national measures transposing the EU public CbC reporting directive into domestic legislation.
  
• Ireland: The Department of Finance released a feedback statement regarding the implementation of the OECD’s Pillar Two Model Rules as set out under the EU minimum tax directive.
  
• Belgium: A KPMG report provides an overview of the advance pricing agreement (APA) system in Belgium.
  
• South Africa: National Treasury released draft legislation for a proposed APA program. Comments are due by 31 August 2023
  
• EU: A KPMG report summarizes where member states are in terms of implementing the new EU public CbC reporting directive into their domestic legislation.
  
•  A KPMG report discusses the latest consultation document on Amount B, which aims to reduce disputes around routine wholesale distribution issues and to promote tax certainty.
  
• A KPMG report examines how local tax authorities in Canada and Mexico are approaching the control of risk and development, enhancement, maintenance, protection, and exploitation (DEMPE) frameworks.
  

Read TaxNewsFlash-Transfer Pricing

• Germany: The federal central tax office (BZSt) released guidance (CRS Newsletter 03/2023) on the final state exchange list for 2023.

Read TaxNewsFlash-FATCA / IGA / CRS

• Kenya: The Finance Act—signed into law by the president in June—includes direct and indirect tax measures.
• Mauritius: The Finance (Miscellaneous Provisions) Bill 2023, which was previously released for consultation and included direct and indirect tax measures, has been voted with minor amendments in Parliament, and received Presidential assent.
  
• South Africa: Draft Taxation Laws Amendment Bill, 2023 would allow a limited deduction of expenses incurred by companies in the production of income, but when the company is not trading.
  
• South Africa: Following the Ministry of Finance's announcement to extend the section 11D research and development (R&D) incentive for another 10 years, the National Treasury released proposed amendments to section 11D. 
  
• South Africa: A proposal to temporarily extend the current renewable energy tax incentive would allow eligible taxpayers to claim a once-off deduction of 125% of the qualifying costs for renewable energy projects brought into use on or after 1 March 2023 but before 1 March 2025, with no threshold on generation capacity.
  
• Nigeria: A KPMG report provides an overview of Nigeria’s tax system and examining investment incentives available to companies and individuals in Nigeria.
  
• Africa: A monthly KPMG report includes updates on the Mauritian 2023 Finance Bill and the Tanzanian 2023 Finance Act.
  

Read TaxNewsFlash-Africa

• Bolivia: The tax authority issued guidance to extend the deadline for certain taxpayers to register and/or confirm fiscal documents in the “VAT sales and purchases registry” for the July 2023 fiscal period.
• Bolivia: The tax authority (Servicio de Impuestos Nacionales) issued guidance documents to announce that the mandatory online billing modality for the “fourth” and “fifth group of taxpayers” has been postponed.

Read TaxNewsFlash-Americas

• Hong Kong: The Inland Revenue Department (IRD) released changes and clarifications on the proposed (1) tax certainty scheme for onshore gains from disposal of equity interests, and (2) expanded foreign-sourced income exemption (FSIE) regime to cover foreign-sourced gains from disposal of assets.  
• UAE: The Ministry of Finance published a new executive regulation on tax procedures. The federal tax authority then published a tax procedures public clarification to clarify aspects related to implementation.
  
• Australia: The Department of the Treasury has registered a legislative amendment to support the improved implementation of the annual performance test for the superannuation industry and address issues raised in Treasury’s review of “Your Future, Your Super” laws.
  
• Australia: Superannuation regulatory and tax updates include the non-arm’s length expense rule, military superannuation benefits, and personal superannuation contributions.
  
• Australia: The Australian Taxation Office (ATO) released its Corporate Plan covering the period 2023-2024 to 2026-2027.
  
• Sri Lanka: Circular No SEC/2023/E/05 extends the due date for filing quarterly advance income tax statements to 31 August 2023 (for the quarter ended 30 June 2023).
  
• India: The government published a notification that implements changes to the goods and services tax (GST) online information database access and retrieval (OIDAR) rules in the Finance Act 2023, effective 1 October 2023.
  
• Cambodia: New guidance on the Implementation of the Law on Investment includes detailed, updated procedures on the registration of investment projects and a range of new investment incentives available to investors.
  
• Saudi Arabia: The Zakat, Tax and Customs Authority (ZATCA) announced the criteria for selecting the targeted taxpayers in the seventh wave for implementing the “integration phase” of electronic invoicing (e-invoicing).
  

Read TaxNewsFlash-Asia Pacific

• Italy: The Supreme Court issued judgments dealing with the beneficial ownership concept in the context of interest payments.
• Luxembourg: The European Commission (EC) referred Luxembourg to the Court of Justice of the European Union (CJEU) for failing to correctly transpose the interest limitation rules under the EU Anti-Tax Avoidance Directive 2016/1164 (ATAD).
  
• Hungary: The EC announced that a letter of formal notice had been sent to Hungary requesting the alignment of domestic tax rules with ATAD.
  
• EU: The EC decided to send a reasoned opinion to several member states that had failed to notify the national measures transposing DAC7 into domestic legislation.
  
• Poland: The Minister of Finance issued a response to a parliamentary regarding the inclusion of prior year losses in calculating the solidarity levy on wealthy individuals.
  
• Germany: Draft guidance on application of the Foreign Transactions Tax Act (FTTA) concerns the taxation of controlled foreign corporations (CFCs).
  
• Germany: Draft guidance on the prohibition of the deduction of expenses in the case of tax mismatches due to hybrid mismatch arrangements explains tax mismatches rules in section 4k (1) to (5) ITA and the resulting prohibitions on deducting operating expenses.
  
• Germany: A ministerial draft tax reform bill aims to increase growth opportunities for the economy, to enable investment and innovation in new technologies, and to strengthen the competitiveness of Germany as a business location.
  
• Bulgaria: The National Assembly adopted amendments to the beneficial owners registry law that are generally effective 14 July 2023.
  
• Poland: The president signed into law the Act of 26 May 2023 amending the Act on Municipal Self-Government, the Act of Social Forms of Housing Promotion, the Act on Real Estate Trading and Management, the Capital Duty Act and certain other acts.
  
• Poland: A government bill amending certain acts due to development of e-administration was submitted before the Sejm.
  
• Poland: Supreme Administrative Court decisions concern recordkeeping for IP Box relief, cash as a tax-deductible cost, residential property used in business, and the taxation of agricultural prizes.

Read TaxNewsFlash-Europe

• Proposed regulations contain proposed amendments to regulations applicable to affiliated groups of corporations that file consolidated federal income tax returns.
• Proposed regulations identify monetized installment sale transactions and substantially similar transactions as listed transactions, a type of reportable transaction.
  
• Proposed regulations implement the nonquantitative treatment limitation (NQTL) comparative analyses requirements under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), as amended by the Consolidated Appropriations Act, 2021.
  
• Notice 2023-59 announces forthcoming proposed regulations addressing the requirements for home energy audits with respect to the energy efficient home improvement credit under section 25C, as amended by the “Inflation Reduction Act.”
  
• A KPMG report discusses draft corporate alternative minimum tax (CAMT) forms, and the data and computational results they require.
  
• A KPMG report examines common questions about treaty claims on the Forms W-8BEN and BEN-E.
• Rev. Rul. 2023-14 provides that if a cash-method taxpayer stakes cryptocurrency native to a proof-of-stake blockchain and receives additional units of cryptocurrency as rewards when validation occurs, the fair market value of the rewards received is included in the taxpayer's gross income in the tax year in which the taxpayer gains dominion and control over the rewards.
  

State and local tax

• California: The Office of Tax Appeals (OTA) concluded that the Department of Tax and Fee Administration’s (CDTFA) application of differing audit methods to determine unreported sales was not rational or reasonable. 
• New Jersey: Assembly Bill 4694 is intended to alleviate the tax burdens imposed on New Jersey residents who are assigned to work locations outside of the state
• Oklahoma: The Tax Commission reminded taxpayers that the 2023 tax year is the last year that franchise tax returns will need to be filed.
• Texas: Senate Bill 3 increases the franchise (margin) tax exemption from $1.0 million to $2.47 million effective for reports originally due on and after 1 January 2024.

Read TaxNewsFlash-United States

• U.S. Customs and Border Protection (CBP) issued guidance concerning the movement of detained cargo for storage.
• The EU Council adopted further targeted restrictive measures resulting from Russia’s invasion of Ukraine and in response to Belarus’ involvement.
  
• The U.S. Senate passed H.R. 4004—the United States-Taiwan Initiative on 21st-Century Trade First Agreement Implementation Act—and it has been sent to the White House for action by the president.
  
• The Forced Labor Enforcement Task Force published an updated Uyghur Forced Labor Prevention Act (UFLPA) strategy to prevent the importation of goods mined, produced, or manufactured with forced labor in China.
  
• The EU and New Zealand announced their intention to explore the relaunch of negotiations for a free trade agreement (FTA).
  
• The Cambodian government introduced tariff rate changes on a variety of goods including vehicles, vehicle parts, electronical equipment, and industrial, agricultural, mineral, and metal related goods.
  
• The Korea Customs Service issued an administrative notice amending the “Notice of Customs Valuation Operation” to improve the procedure for calculating the “comparable ratio” when determining the customs value applying “Method 4” pursuant to Article 33 of the Customs Act and to specify the cases in which “Method 4” cannot be applied.
  

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