KPMG Week in Tax: 16 – 20 October 2023

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

• Côte d'Ivoire: An explanatory note describes the value added tax (VAT) on digital services rules and announces the implementation of a new simplified VAT compliance mechanism for nonresident digital services providers to collect and remit 18% VAT on the sale of digital services to customers in Cote d’Ivoire.
• Nigeria: The Federal Inland Revenue Service (FIRS) released guidelines to provide clarity regarding the nature and extent of inquiries related to desk examinations, tax audits, tax investigation exercises, and other tax inquiry processes.
  
• Nigeria: The Tax Appeal Tribunal Lagos Zone held that deductions by the taxpayer for certain bad debts must be allowed, but its deductions for certain public relations expenses could be disallowed.
  

Read TaxNewsFlash-Africa

• Chile: The Chilean tax authority ruled that income arising from dividends or capital gains from the purchase and sale of shares or corporate rights was not subject to VAT.
• Mexico: A KPMG report discusses how Mexico’s published reference effective tax rates (RETRs) can help guide large taxpayers’ assessments of their tax results and transfer pricing.
  

Read TaxNewsFlash-Americas

• Australia: The House of Representatives referred the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 to the Senate Economics Legislation Committee for inquiry.
• Australia: The High Court of Australia held that Victoria’s zero and low emission vehicle (ZLEV) distance-based charge was invalid because it imposes an excise duty within the meaning of Section 90 of the Constitution, which is an exclusive power of the Commonwealth Parliament.
  
• Australia: The government of Western Australia announced a temporary extension to the two-year land tax exemptions provided to people constructing or refurbishing their home.
  
• Australia: Treasury released for consultation exposure draft parliamentary amendments to proposed legislation to amend Australia's interest limitation rules.
  
• Hong Kong: Draft legislation to expand the existing foreign-sourced income exemption (FSIE) regime to cover gains from disposal of assets was published in the official gazette on 13 October 2023, and on the same day, the Inland Revenue Department (IRD) updated its guidance on the FSIE regime.
  

Read TaxNewsFlash-Asia Pacific

• Belgium: The federal government reached an agreement on the budget for 2024, which includes proposals on real estate VAT changes, mandatory electronic invoicing (e-invoicing), and stricter CFC rules.
• Cyprus: The tax authority announced an extension of the deadline for filing an appeal for individual income taxes until 31 December 2023 for taxes issued in 2023.
  
• Cyprus: The deadline to file an individual tax return for the tax year 2022 and to pay the due tax as per the return was extended to 31 October 2023.
  
• Cyprus: The Cabinet of Ministers approved a number of direct and indirect tax measures.
  
• EU: The European Commission (EC) announced that EU Finance Ministers have adopted new tax transparency rules for all service providers facilitating transactions in cryptoassets for customers resident in the EU, as an update to the directive on administrative cooperation (DAC8).
  
• EU: The Council of the European Union updated the non-cooperative jurisdictions lists.
  
• France: The finance law for 2024 was published which includes tax-related measures affecting companies that had already been unveiled in the press over the previous few weeks.
  
• France: The French Congress received a proposed amendment to the 2024 finance law outlining a new timeline for the implementation of e-invoicing and electronic reporting (e-reporting) mandates in France.
  
•  Ireland: Finance (No.2) Bill 2023 was published which includes many of the measures concerning income tax, business tax, capital gains tax, and indirect taxes already announced by the Minister for Finance in his 2024 budget speech.
  
• Ireland: The Revenue Commissioners opened a public consultation on VAT modernization.
  
• Poland: The Supreme Administrative Court held that the tax authority was entitled to deny an individual ruling based on the existence of a justified suspicion that tax-avoidance was involved.
  
• Poland: The Supreme Administrative Court held that the costs of providing food, refreshments, and performances to individuals providing services to the company as part of their business activity, but not actually employed by the company, were not tax deductible.
  
• Poland: The Supreme Administrative Court held that a company that otherwise satisfied the conditions for treating an activity as research and development (R&D) could apply the reduced 5% corporate income tax rate to eligible income from qualified intellectual property (IP) rights even though the company was not the co-owner of the IP rights. 
  
• Poland: The Supreme Administrative Court held that revenue from exercised participation units allocated as part of remuneration for work may be qualified as revenue from employment relationship.
  
• Poland: The Regional Administrative Court in Wroclaw held that a sole proprietorship run by a Ukrainian citizen in Poland did not constitute a taxable permanent establishment.
  
• Sweden: The Ministry of Finance has proposed increasing the excise tax on gambling to 22% (from 18%) effective 1 July 2024.
  

Read TaxNewsFlash-Europe

• Belgium: The Belgian Council of Ministers approved the preliminary draft law transposing the EU public country-by-country (CbC) reporting directive.
• France: The finance law for 2024 was published which includes proposed implementation of the Pillar Two global minimum tax and transfer pricing documentation changes.
  
• Ireland: Finance (No.2) Bill 2023 was published which includes proposed implementation of the Pillar Two global minimum tax.
  
• Mexico: A KPMG report discusses how Mexico’s published RETRs can help guide large taxpayers’ assessments of their tax results and transfer pricing.
  
• OECD: KPMG tax professionals prepared a report with initial analysis and observations of the new Multilateral Convention to Implement Amount A of Pillar One and the new Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule,
  
• Poland: The Ministry of Finance published new electronic templates for transfer pricing reporting on its website.
  
• UK: KPMG tax professionals in the UK prepared a report with further analysis of the proposed Pillar Two global minimum tax rules in the updated Finance Bill 2023 draft legislation.
  

Read TaxNewsFlash-Transfer Pricing

• Barbados: The Barbados Revenue Authority issued Guidance Note OGC No.05/2023 containing information about the process to deregister an entity from the BRA’s Automatic Exchange of Information (AEOI) web portal.

Read TaxNewsFlash-FATCA / IGA / CRS

• The U.S. Treasury Department and IRS released for publication in the Federal Register final regulations prescribing mortality tables to be used for most qualified retirement plans that are defined benefit pension plans, as well as proposed regulations that would update the requirements that a plan sponsor of a single-employer defined benefit plan must meet to obtain IRS approval to use mortality tables specific to the plan in calculating present value for minimum funding purposes (as a substitute for the generally applicable mortality tables).
• Notice 2023-73 specifies a mortality table for use in determining minimum present value under section 417(e)(3) of the Code and section 205(g)(3) of ERISA for distributions with annuity starting dates that occur during stability periods beginning in the 2024 calendar year.
  
• Notice 2023-70 announces the adjusted applicable dollar amount for determining the Patient-Centered Outcomes Research Trust Fund (PCORTF) fee for policy years and plan years ending on or after October 1, 2023, and before October 1, 2024.
  
• The IRS announced new compliance initiatives aimed at large corporations.
  
• The IRS Large Business & International (LB&I) division released a memorandum to all LB&I employees providing new guidance on LB&I compliance priorities.
  
• The IRS announced the details of a special withdrawal process to help those who filed an employee retention credit (ERC) claim, but have not yet received a refund, and are concerned about the claim’s accuracy.
  
• The government filed its brief with the U.S. Supreme Court in Moore v. United States—an appeal from a 2022 decision of the U.S. Court of Appeals for the Ninth Circuit upholding the constitutionality of the mandatory repatriation tax under section 965. 
  
• The IRS announced that as a result of severe winter storms, flooding, landslides, and mudslides over a period of several months in California last winter, most taxpayers in California will now have until November 16, 2023, to file various individual and business tax returns and make tax payments.
  
• The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a notice announcing that certain individuals and businesses affected by the terroristic action in the State of Israel that are required to file the “Report of Foreign Bank and Financial Accounts” (FBAR) have until October 7, 2024, to file for the 2022 calendar year.
  
• A series of KPMG reports discuss questions relating to Superfund excise tax compliance, relief provisions under Rev. Proc. 2013-30 for late S corporation elections, the IRS announcement of new large partnership audits, and voluntary and mandatory disclosure requirements and options.
  

State and local tax

• New Jersey: The state tax authority issued several new and revised technical bulletins that reflect recent law changes.
• Wisconsin: A circuit court affirmed a tax appeals commission decision holding that indirect materials such as computers and office supplies purchased to fulfill a taxpayer’s contracts with the federal government were exempt from sales tax because they were resold to the federal government. 
  

Read TaxNewsFlash-United States

• The U.S. Senate Finance Committee filed its report of the “United States-Taiwan Expedited Double-Tax Relief Act.”

Read TaxNewsFlash-Legislative Updates

• The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on 10 Hamas members, operatives, and financial facilitators in Gaza and elsewhere including Sudan, Türkiye, Algeria, and Qatar.
• The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce issued a release announcing a package of rules designed  to update export controls on advanced computing semiconductors and semiconductor manufacturing equipment, as well as items that support supercomputing applications and end-uses, to arms-embargoed countries, including China, and to place additional related entities in China on the “entity list.”
  
• The General Court of the Court of Justice of the European Union (CJEU) issued a judgment annulling an increase in customs duties on certain lighters from the United States.
  

Read TradeNewsFlash-Trade & Customs

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

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