Category: KPMG

Implementation of POEM rules may hit investments

The implementation of place of effective management (POEM) rules in the current scenario in India could not only hurt the nation’s outbound investments, but also discourage overseas multinational companies from setting up their regional hubs here, feel industry watchers. The draft guidelines for implementing POEM, which was released on December… – Continue reading

Budget 2016 may introduce BEPS to make tax evasion difficult for MNCs

MUMBAI: In what could lead to an increase in domestic tax liabilities of many Indian conglomerates and multinationals, the government is set to introduce a framework for Base Erosion and Profit Shifting (BEPS), a global agreement to check tax avoidance by multinationals, in the upcoming Budget. Industry sources expect the… – Continue reading

FSC calls for 22% company tax

The Financial Services Council has proposed a new tax package calling for company tax to be cut to 22% from its current 30%. The industry body also wants to see “lower, flatter, indexed” income tax rates. The FSC said its tax reform package is designed to “grow the economy and… – Continue reading

LCCI, KPMG Task Govt On VAT Increase

The Lagos Chamber of Commerce and Industry (LCCI) yesterday said there was a need to boost the nation’s internally generated revenue through higher consumption tax. The Director-General of LCCI, Mr Muda Yusuf, told newsmen in Lagos that emphasis on tax revenue generation should shift to consumption tax. He suggested that… – Continue reading

Ireland – the tax haven

‘We’re not a tax haven, we have never been involved in any kind of tax malpractice’ – Michael Noonan, Irish Minister for Finance 5th October 2015 ‘Nobody is using Ireland as a tax haven’ – Minister for Agriculture, Simon Conveney, The UN’s Philip Aston says, ‘When lists of tax havens… – Continue reading

India: Foreign branches outside India; development charges on long-term leases

The KPMG member firm in India has prepared reports concerning the following developments (read more at the hyperlinks provided below). Income attributable to taxpayer’s foreign branches not taxable in India: The Bombay High Court held that income attributable to a taxpayer’s foreign branches, permanent establishments (PEs) outside India, is not… – Continue reading

Gaming authority ‘convinced’ industry will withstand new EU tax laws

MGA executive chairperson Joseph Cuschieri warns organised crime within gaming industry ‘has never been this sophisticated’ Malta Gaming Authority’s executive chairman insisted that the gaming industry will continue to flourish on the island, even if proposed EU legislation to clamp down on tax avoidance goes through. “The threat [of a… – Continue reading

Grant Thornton manpower may touch 10,000 by 2020: Vishesh Chandiok

MUMBAI: When Grant Thornton recently appointed India leader Vishesh Chandiok on its global governance board, it reflected the country’s growing importance as a market for the London-headquartered professional services firm. At 41, Chandiok may be the youngest member of the board ever but points out that he doesn’t lack for… – Continue reading

Australia: Country-by-country reporting guidelines

The Australian Taxation Office (ATO) on 17 December 2015 released guidelines that address country-by-country reporting. The ATO release—Law Companion Guideline (LCG) 2015/3—discusses Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 that was enacted earlier this month and discusses, in particular, Schedule 4. Background Schedule 4 created Subdivision 815-E of… – Continue reading

EU: Draft “anti-BEPS” directive, addressing corporate tax planning and evasion

The Council of the European Union released details of a possible draft EU directive, addressing certain “anti-base erosion and profit shifting” (anti-BEPS) initiatives. The issues addressed concern certain international aspects of the proposal for an EU “common consolidated corporate tax base” (CCCTB), and reflect issues that are directly related to… – Continue reading

Mexico: Reminder of expanded transfer pricing disclosures for 2016

Provisions under new article 76A of Mexico’s tax law reflect certain items of the OECD’s base erosion and profit shifting (BEPS) project—in particular expanded transfer pricing disclosure requirements that will apply for the 2016 tax year. Background The Mexican government’s 2016 federal budget, presented 8 September 2015, included proposals for… – Continue reading

Germany: Tax treaty with Australia, other countries; stock-for-stock transactions

Germany and Australia signed a new income tax treaty that follows, in some instances, the OECD Model Tax Convention, but not in other instances. For example, the treaty includes definitions for installation permanent establishments (PEs) and agency PEs, with the latter defined with a view to the OECD’s base erosion… – Continue reading

Sweden: “Hybrid rule” implications for dividend income, withholding tax

Changes to the tax law in Sweden reflect additions of anti-avoidance provisions to the EU Parent/Subsidiary Directive and are intended to bring Swedish tax law into compliance with the directive. The new anti-avoidance provisions will be effective 1 January 2016—which is also the timeframe for EU implementation of the directive’s… – Continue reading

UK: Diverted profits tax guidanc

HM Revenue & Customs (HMRC) updated its diverted profits tax guidance to clarify the tax authority’s interpretation of the legislation and proposed administrative practice. Highlights Some highlights from the revised guidance include: Both the “insufficient economic substance condition” and the “design test” in section 86 FA 2015 (avoidance of UK… – Continue reading

Italy: Decree removes Hong Kong from certain “black lists”

Italy has removed Hong Kong from two of three “black lists.” A ministerial decree in November 2015 removed Hong Kong from the black lists that apply with respect to: The Italian controlled foreign corporation (CFC) rules and the full taxation of inbound dividends Costs that arise in transactions between Italian… – Continue reading

Luxembourg: EC investigation of tax rulings, issued to US multinational

The European Commission today announced its decision to launch a “state aid” investigation into tax rulings granted by the tax authorities in Luxembourg to a company that is a member of a U.S.-based multinational taxpayer group. Background According to a February 2015 report, in 2008-2009, the group transferred its European… – Continue reading

Netherlands: CRS draft implementing decree

The Dutch Ministry of Finance published a draft decree for implementing the “common reporting standard” (CRS) and that includes the identification and reporting requirements contained in the CRS for reporting financial institutions. The CRS, developed by the OECD and largely based on FATCA, is a standard that governs the exchange… – Continue reading

‘Dark clouds on horizon’ for Malta’s financial services industry

KPMG, PN leader warn that proposals recently approved by European Parliament could threaten Malta’s booming financial services industry New European initiatives could threaten Malta’s sovereignty over its own fiscal affairs, KPMG partner Juanita Bencini warned. “There are dark clouds on the horizon and a closer European union may not necessarily… – Continue reading

Punters punting our tax pennies offshore

Australian punters will be thrilled to know that when they do their shirts gambling their post-tax dollars, those very same dollars, which become the pre-tax dollars of the British online betting giants, are funnelled off to places like Gibraltar, pre-tax. University of NSW accounting academic, Jeff Knapp, and Fairfax Media… – Continue reading

GLOBAL TAXPAYERS CAN EXPECT TO PAY MORE TAX IN THE YEARS AHEAD

Global taxpayers can expect to pay more tax in the years ahead. Many governments worldwide continue to update their tax legislation and expand their tax systems to repay debt and pay for increased social welfare, even as the memory of the last global financial crisis lingers. These are the conclusions… – Continue reading

SWITZERLAND: DUTCH GROUP REQUESTS FOR ASSISTANCE, AEOI

A recent Dutch group request for administrative assistance shows that even before the “automatic exchange of information” (AEoI) measure is effective in Switzerland in 2017, those with undeclared assets need to consider making a disclosure. The Swiss federal tax administration recently approved a Dutch group request for administrative assistance, and… – Continue reading

KPMG says Qatar companies need to be prepared for new global tax reporting

Participants listen to an expert during the seminar hosted by KPMG Qatar. KPMG in Qatar held a seminar recently to help chief financial officers and chief compliance officers from financial institutions understand the implications of Common Reporting Standard (CRS) and what they need to do to comply. The seminar comes… – Continue reading

ITALY: REVISED STANDARD; FOREIGN ENTITY NOT REQUIRED TO FILE RETURN

The Italian Supreme Court overturned decisions of lower courts to conclude that two renowned Italian fashion designers were not guilty of tax evasion. The designers, however, could still be subject to civil penalties of about €343.3 million. BACKGROUND The designers had set up Luxembourg companies, to which they had transferred… – Continue reading

SPAIN: COMMON REPORTING STANDARD (CRS) EFFECTIVE JANUARY 2016

Guidance published in the Spanish official gazette on 17 November 2015, establishes the requirements: (1) to identify the tax residence of persons holding or controlling certain financial accounts; and (2) to report that information within the context of mutual assistance. Accordingly, Royal Decree 1021/2015 transposes into Spanish domestic law the… – Continue reading

KPMG releases new global tax survey; economic and social pressures expected to impact global tax system

Taxpayers in Romania and throughout the world can expect to pay more tax in the years ahead as governments expand their tax systems to repay debt and pay for increased social welfare, and international efforts to update tax legislation for the 21st century take hold. These are the conclusions of… – Continue reading

Finance Ministry to clean-up trade transfer pricing norms to make doing business easy

NEW DELHI: India proposes a major clean-up of decade-and-a-halfold rules that govern the prices of imports by related parties – such as arms of multinationals from their parent – in an attempt to reduce delays and disputes and make it easier to do business. The finance ministry is not just… – Continue reading

LUXEMBOURG: STATUS OF RATIFICATION OF PROTOCOL WITH FRANCE

A pending Protocol, that would amend the income tax treaty between Luxembourg and France, may not be effective until 2017. RATIFICATION PENDING The Luxembourg Parliament passed a bill to ratify the fourth Protocol to the income tax treaty (1958) between Luxembourg and France. However, it currently appears that the ratification… – Continue reading

New PE Language for BEPS Scales Back Earlier Drafts

Through tweaks to the Model Tax Convention, the OECD believes its work on profit shifting will stem elaborate structures, such as commissionaire arrangements, used by large multinationals to avoid the creation of a permanent establishment. The Organization for Economic Cooperation and Development, however, responded to concerns from taxpayers by narrowing… – Continue reading

Country-by-Country Plan May Be Project’s Greatest Legacy

The OECD’s final report on Action 13 under the base erosion and profit shifting project—which calls for countries to adopt a country-by-country reporting template, master file and local file—has the potential to be one of its “greatest legacies.” Marlies de Ruiter, head of the Organization for Economic Cooperation and Development’s… – Continue reading

KPMG REPORT: INITIAL IMPRESSIONS OF NOTICE 2015-79 ON INVERSIONS

Notice 2015-79—released November 19, 2015, by the Treasury Department and IRS—announces their intention to issue regulations relating to inversion transactions and post-inversion restructuring transactions. Notice 2015-79 provides for rules that: Limit the ability of domestic companies to effect an inversion Limit the advantages of certain post-inversion restructuring transactions Clarify certain… – Continue reading

INDONESIA: AEOI GUIDANCE, PROCEDURES FOR EXCHANGE OF TAX INFORMATION

The Ministry of Finance issued a regulation with guidance concerning the procedures for the exchange of financial information with other jurisdictions and countries. The “automatic exchange of information” (AEOI) process will allow for the exchange of data to verify and confirm compliance with tax obligations, including information from financial institutions…. – Continue reading

Stricter norms likely for transfer pricing

MUMBAI: India’s forthcoming budget may draw from some of the recommendations, especially in the realm of transfer pricing, contained in the final package of ‘Base Erosion and Profit Shifting’ (BEPS) measures, rolled out in October. Certain anti-abuse measures, such as thin capitalization, which for tax purposes disallows interest payments beyond… – Continue reading

KPMG leader visit highlights BEPS initiative

Latest developments under the Base Erosion and Profit Shifting (BEPS) initiative of the Organisation for Economic Co-operation and Development (OECD) was one of the key points of a recent four-day visit by KPMG’s global leader for Transfer Pricing Services Sean Foley to Vietnam. He shared the issue with Vietnam’s General… – Continue reading

AUSTRALIA: NEW TREATY WITH GERMANY REFLECTS BEPS RECOMMENDATIONS

The new tax treaty signed between Australia and Germany on 12 November 2015 is the first tax treaty Australia has signed that comprehensively incorporates the proposals in the OECD base erosion and profit shifting (BEPS) final recommendations. Some notable BEPS-related changes in the new Australia and Germany treaty include: The… – Continue reading

KUWAIT – BUSINESS PROFITS TAX, PE DETERMINATIONS AND FOREIGN INVESTMENT INCENTIVES

KPMG in Kuwait discusses plans to implement a tax on business profits, changes to the Kuwait tax authority’s (KTA) approach to deemed permanent establishments, and Kuwait’s shift away from tax holidays toward tax credits to attract foreign direct investment. TAXATION OF COMMERCIAL PROFITS Based on recent local media reports1, KPMG… – Continue reading

NETHERLANDS: ADVANCE TAX RULINGS; CHANGES POSSIBLE BEFORE APRIL 2016

A Ministry of Finance decree published on 11 November 2015 provides follow-up guidance concerning advanced tax rulings issued by the Dutch tax administration. BACKGROUND Adopted in July 2014, an amendment to the EU Parent-Subsidiary Directive addresses mismatches resulting from hybrid financing, and involves the inclusion of an anti-hybrid provision. Under… – Continue reading

KPMG Tasks Firms on Tax Compliance

KPMG Professional Services has stressed the need for companies operating in Nigeria to always pay their tax as required by law in order to improve business performance and create shareholder value. The professional services firm made this call at a press conference to announce the launch of its survey report… – Continue reading

After Outcry, Ireland Adjusts Its Corporate Tax Draw

CORK, Ireland — As lord mayor of this quiet seaside city in southern Ireland, Chris O’Leary seems to have a situation most other local politicians can only dream about. Blue-chip international companies like Apple, Dell and IBM have all set up shop in and around this city, filling newly built… – Continue reading

LUXEMBOURG: “DAC 2” LEGISLATION INTRODUCED; CRS-LIKE REGIME

A bill submitted to the Luxembourg Parliament in November 2015 would transpose, into Luxembourg domestic law, an EU directive amending a 2011 directive for administrative cooperation and concerning the exchange of information on request. The directive (2011/16/EU) as amended, is referred to as “DAC 2” (the updated “directive on administrative… – Continue reading

UK: CHANGES TO INTEREST DEDUCTIBILITY RULES, IMPLICATIONS FOR TRANSFER PRICING

Following the October 2015 release of the OECD’s base erosion and profit shifting (BEPS) deliverables, some consultations in the UK have already been opened—including one on the UK’s rules concerning the deductibility of corporate interest expense and how this treatment would be affected by BEPS Action 4 (which seeks to… – Continue reading

Transparency is best tonic for multinational tax avoidance

‘Special purpose’ approach by accountants hides corporate secrets Amid the maelstrom over the GST, the Senate last night passed what may be the most useful piece of legislation yet to combat multinational tax avoidance. The new law was not carried by the government, whose track record on tackling big tax… – Continue reading

Integrating Operations and Tax Planning Into a Procurement Operating Model

As procurement organizations evolve, they commonly adopt a different procurement operating model (POMs) at different stages of their development. A global KPMG survey of chief procurement officers (CPOs) found that 83% of organizations changed their POM within the last 5 years and just over half of them over the previous… – Continue reading

BELGIUM: REPORTING NO LONGER REQUIRED, PAYMENTS TO LUXEMBOURG, CYPRUS, SEYCHELLES

Payments made to Luxembourg, Cyprus, and the Seychelles during the current tax period are no longer required to be reported, according to the findings of a 29-30 October 2015 meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The conclusion of the October 2015 meeting… – Continue reading

New transfer pricing rules to be less taxing

The declining trend in the income tax department’s estimates of alleged income suppression by multinational companies would get buttressed, thanks to the new set of transfer pricing (TP) rules issued earlier this week. Currently, transfer pricing adjustments become necessary when the transaction price with related parties abroad reported by a… – Continue reading