Weekly Tax Matters
KPMG LLP (UK)
9 January 2015
contents
TAX POLICY
•
•
•
•
•
BEPS: Interest deductions and other
financial payments
BEPS: Revisions to Chapter I of the
Transfer Pricing Guidelines
BEPS: Making dispute resolution
mechanisms more effective
Tax enquires: closure rules
Devolved taxation update
CORPORATE TAX
•
•
FII GLO High Court decision
Project Blue – Upper Tribunal decision
INDIRECT TAX
•
•
Revenue and Customs Brief 49/14: VAT Prompt Payment Discounts
Schoenimport "Italmoda" Mariano Previti
(C-131/13) - CJEU Judgment
EMPLOYMENT TAX
•
•
•
PAYE – Real Time Information
Summary of responses published on draft
PAYE legislation
Expatriate employers: January 2015
composite payments
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
contents
INTERNATIONAL STORIES
•
International round up
OTHER NEWS IN BRIEF
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
TAX POLICY
BEPS: INTEREST DEDUCTIONS AND
OTHER FINANCIAL PAYMENTS
The OECD has released a discussion
draft on Action 4 (Interest deductions
and other financial payments) of the
BEPS Action Plan.
Margaret Stephens
 +44 (0)20 7311 6693

[email protected]
On 18 December 2014 the OECD released a discussion draft on Action 4 of the BEPS
Action Plan which focusses on rules to prevent base erosion and profit shifting using
interest and other financial payments economically equivalent to interest. The primary
concern appears to be that multinational groups may be able to claim total interest
deductions that significantly exceed their actual third-party interest expense – a
concern that led to the introduction in the UK of the worldwide debt cap (WWDC)
provisions.
The OECD have suggested three alternative frameworks for a general limitation on the
deductibility of interest expense:
1. A group allocation rule whereby an entity’s net interest expense would be
limited by reference to its allocable share of the group’s net interest expense,
either by allocating a worldwide group’s net third-party interest expense in
accordance with a measure of economic activity (such as earnings or asset
values), or based on a relevant financial ratio;
2. A fixed allocation rule whereby an entity would be entitled to deduct net interest
expense up to a specified proportion of its earnings, assets or equity; or
3. A combination of the above.
It is also suggested that targeted rules may be needed to address specific situations such as interest paid to connected parties, interest accrued on
excessive debt push-downs and interest used to fund or acquire tax-exempt or tax-deferred income-yielding assets. Various other specific issues
such as de minimis thresholds, issues for specific industries and the interaction with other BEPS action items are also discussed.
The proposals under consideration could potentially impact on all groups which claim interest relief and, depending on how these are taken forward,
could have some of the most far reaching implications of the BEPS project.
Comments have been requested by 6 February 2015. We expect a considerable amount of input from UK businesses who already have processes in
place to deal with the WWDC rules and will wish to minimise the administrative burden that could arise from the introduction of a completely different
set of rules to achieve the same objective. The approach taken by the UK Government will be critical in this regard.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
1
BEPS: REVISIONS TO CHAPTER I OF
THE TRANSFER PRICING
GUIDELINES
OECD draft guidance published
which focuses on transfer pricing
issues regarding risk, non-recognition
of
transactions
and
‘special
measures’.
Komal Dhall
On 19 December 2014, the OECD issued a public discussion draft for BEPS Actions 8,
9, and 10 (Assure that transfer pricing outcomes are in line with value creation).
The draft develops key themes of other BEPS publications, including placing a much
greater emphasis on allocating group profits to people functions. Several open
questions remain where the OECD is seeking input from taxpayers on important
issues. The changes will impact all sectors, but may have a disproportionate impact on
some (such as financial services).
Part I proposes revisions to Section D of Chapter I, with emphasis on contracts,
allocation of risk, and guidance on recharacterisation of transactions. Part II outlines
options for special measures for intangible assets, risk, and over-capitalisation.
Part I: Revision to Chapter I of the OECD Guidelines
There are broadly four key themes:
 [email protected]
• Less emphasis on intra group agreements: Identifying the commercial or financial
relations between parties is increasingly key. Contracts remain a starting point but
Richard S Murray
where contracts differ from the factual substance of the arrangement or transaction
in place, the actual conduct of the parties will take primacy over the contractual
 +44 (0)20 7694 8132
terms.
 [email protected]
• Risks should be allocated to jurisdictions based on control functions, not allocated
contractually: The draft contains detailed new guidance on risk analysis in transfer
pricing. Contractual allocation of risks is not likely to be seen as an arm’s length
arrangement without the ability to control those risks.
• Capital: As the location of equity capital is in the OECD’s view subject to manipulation by taxpayers intra group (unless subject to regulation),
rewards to capital must be considered alongside broader risk considerations and the commercial and financial relations between the parties.
• Non-recognition: The OECD’s guidance extends the previous scope of non-recognition, and introduces a concept of ‘fundamental economic
attributes’, which provides more detail on how to apply in practice the previously existing ‘commercial rationality’ test.
 +44 (0)20 7694 4498
Part II: Proposed ‘special measures’
• Despite the guidance updates proposed in Part I, the OECD recognises that certain residual risks may remain. Part II of the draft broadly outlines
five proposed ‘special measures’ to address specific BEPS risks related to hard-to-value intangibles and inappropriate returns for providing
capital.
Comments are requested by 6 February 2015.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
2
BEPS: MAKING DISPUTE
RESOLUTION MECHANISMS MORE
EFFECTIVE
The OECD has published proposals
under Action 14 of the BEPS project
to
make
dispute
resolution
mechanisms more effective.
Komal Dhall
 +44 (0)20 7694 4498

[email protected]
Peter Steeds
 +44 (0)20 7311 3449

[email protected]
On 18 December 2014, the OECD released a public discussion draft under BEPS
Action Plan 14 that contains proposals to make dispute resolution mechanisms more
effective. This draft sets out how the resolution of double tax disputes through the
treaty based Mutual Agreement Procedure (MAP) can be improved to ensure that
double taxation is relieved providing certainty and predictability for businesses.
Recognising the increase in the number of disputes resulting from double taxation, the
draft seeks to identify obstacles that prevent resolving such disputes and recommends
measures to address these obstacles. It emphasises the need for political commitment
to improve the MAP process through adoption of specific measures intended to
address obstacles which currently inhibit access to the process and its effective
operation. It also proposes establishing monitoring mechanisms to check
implementation of the political commitment.
The draft sets out four guiding principles to make MAP a more effective dispute
resolution process:
•
•
•
•
Ensuring that treaty obligations are implemented in good faith;
Ensuring that administrative processes promote the prevention and resolution
of treaty related disputes;
Ensuring that taxpayers can access MAP when eligible; and
Ensuring that cases are resolved once they are in MAP.
In respect of each of these it considers the obstacles which currently impede its
application and suggests measures to address them.
The OECD recognises the need for further work in this area to provide practical and
impactful solutions to improve the process and acknowledges that a universal
consensus to adoption of mandatory binding arbitration is difficult to achieve. The draft
is a useful first step towards achieving a minimum standard and a cohesive political
commitment to ensuring an effective MAP process across jurisdictions. However it
provides limited guidance on how the measures could be implemented in practice and
how a political consensus can be achieved.
Comments are invited from the public to suggest any additional obstacles faced in
practice, specific issues identified in the draft and suggestions of making MAP work
better. Such comments are to be provided by 16 January 2015.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
3
TAX ENQUIRIES: CLOSURE RULES
A consultation document has been
published which aims to give HMRC
powers to seek early resolution of
one or more aspects of an enquiry.
Stephen Whitehead
 +44 (0)20 7311 2829

[email protected]
Kevin Elliott
 +44 (0)20 7311 2487

[email protected]
On 18 December 2014 a consultation document titled ‘Tax Enquiries: Closure Rules’
was published. This had been announced at the Autumn Statement and the stated aim
is “to enable HM Revenue and Customs (HMRC) to refer matters to the Tribunal with a
view to achieving early resolution of one or more aspects of an enquiry into a tax
return”.
The consultation document sets out a proposed new process for Income Tax (including
Class 2 and 4 National Insurance Contributions in certain circumstances), Capital
Gains Tax and Corporation Tax enquiries where a number of different issues are under
enquiry. The intention is to enable HMRC to achieve early resolution and closure of
one or more aspects of a tax enquiry, where it is not appropriate to close the whole tax
enquiry. In summary, the self-assessment enquiry process would remain the same up
to the point a joint referral of an issue to Tribunal could be considered. If a joint referral
cannot be made then HMRC would have a new option of ‘sole referral to Tribunal’. If
this option was followed then HMRC would issue a Tribunal referral notice which could
be appealed. Once the appeal on that particular matter is determined (there would be
other matters under enquiry that would continue) HMRC could issue a ‘Tribunal referral
closure notice’, against which there would be no right of appeal, with tax due within 30
days.
It is unfortunate that the proposals appear to be based on the assumption that delays
to the resolution of enquiries are always caused by the taxpayer. A more equitable
solution would be for a procedure to take individual issues to Tribunal which could be
applied for by either party to the dispute. Comments have been requested by 12
March 2015 and readers are encouraged to consider the implications of these
proposals and submit comments where appropriate.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
4
DEVOLVED TAXATION UPDATE
A round up of recent news and
publications on devolved taxation
around the UK.
Scott McCrorie
 +44 (0)131 527 6744

[email protected]
Scotland
HM Revenue & Customs (HMRC) have updated their technical note Clarifying the
Scope of the Scottish Rate of Income Tax. In summary, the version of this note
published in May 2012 proposed that Property Income Distributions from Real Estate
Investment Trusts and Property Authorised Investment Funds; certain annual
payments made subject to withholding at the basic rate of income tax; and relevant
payments out of interest in possession trusts and deceased estates, should remain
subject to the UK main rates of income tax in the hands of taxpayers who will be
subject to the Scottish Main rates from 6 April 2016.
However, due to complexities encountered when preparing to implement this policy,
the UK Government now proposes that these forms of income should, where
applicable, be subject to the Scottish main rates of income tax in recipients’ hands.
The updated technical note also includes draft legislation making consequential
amendments in anticipation of the introduction of the Scottish main rates on 6 April
2016, and requiring income tax paid at the Scottish main rates to be disclosed
separately in the end of year form P60. HMRC will consult with employers and
pension providers on these changes to the P60.
Wales
The Wales Bill has received Royal Assent as the Wales Act 2014. This Act provides for devolution to the National Assembly for Wales of power over
the taxation of transactions in land in Wales and disposals to landfill in Wales. These powers are currently expected to be effective from 1 April 2018.
The Wales Act 2014 also provides for the devolution of income tax rate setting power to the National Assembly for Wales subject to the outcome of a
referendum.
Northern Ireland
The Corporation Tax (Northern Ireland) Bill 2014-15 was introduced to Parliament on 8 January 2015. The Bill makes provision for and in connection
with the creation of a Northern Ireland rate of corporation tax.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
5
CORPORATE TAX
FII GLO HIGH COURT DECISION
A more detailed note has been
prepared on this case which
considers the legality of the pre July
2009 dividend taxation regime in the
UK.
Chris Morgan
 +44 (0)20 7694 1714

[email protected]
Stephen Whitehead
 +44 (0)20 7311 2829

As mentioned in the last edition of Weekly Tax Matters, on 18 December 2014 the
High Court published its decision in The Test Claimants in the FII Group Litigation v
HM Revenue and Customs [2014] EWHC 4302 (Ch). A more detailed note
summarising the key points from this lengthy decision has now been produced.
It is important to note that the final step – actual quantification of the test claims – has
still to be taken by agreement between the parties or, if necessary, further submissions
to the court. There will then almost certainly by an appeal by HMRC and possibly also
cross-appeals by the claimants. It may therefore be some time before the final
outcome of this case is known. However taxpayers who have claims in progress may
wish to consider their position in the light of this latest judgment and, in particular,
whether there is any further information they would need to obtain in order to defend
and quantify their claims on the basis of the principles it applies.
A hearing on consequential issues arising from the judgment including potentially
permission to appeal is expected in the near future.
[email protected]
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6
PROJECT BLUE – UPPER TRIBUNAL
DECISION
The Upper Tribunal has published an
important decision on the application
of the SDLT anti-avoidance rule in FA
2003 s75A.
Sean Randall
 +44 (0)20 7694 4318

[email protected]
Simon Yeo
Readers involved in real estate transactions may be interested in the Upper Tribunal’s
(UT’s) decision in Project Blue Ltd v Revenue And Customs [2014] UKUT 564 (TCC),
released in December 2014. The case concerns the application of the stamp duty land
tax (SDLT) general anti-avoidance rule (FA 2003 s75A) and related provisions to the
purchase of Chelsea Barracks in 2007. The decision was eagerly anticipated but those
hoping that it would illuminate clearly the scope and application of s75A will be
disappointed.
To give effect to Shari’a-compliant financing, Project Blue Ltd (PBL) purchased the
land for £959 million and immediately sub-sold it to a bank for £1.25 billion. PBL did not
pay SDLT due to sub-sale relief and alternative property finance relief. HMRC argued
that £50 million of tax was payable (4 percent of £1.25 billion) under s75A. The Firsttier Tribunal (FTT) dismissed PBL’s appeal. It held that s75A, whilst an anti-avoidance
provision, contains no requirement that the taxpayer should have a tax avoidance
motive; but account must be taken of its purpose when construing it. So read, the
person liable under s75A must be a person who has avoided SDLT.
 +44 (0)20 7311 6581

[email protected]
The UT dismissed PBL’s appeal. It held that s75A did apply but that the amount of the
taxable consideration was £959 million, not £1.25 billion. The two judges disagreed on
the last point and the presiding judge used his casting vote.
Although unlikely to be the ultimate decision in the case, it is significant. Unlike the
FTT, the UT clearly ruled out any motive test. One judge said that the provision is not
capable of purposive interpretation. Another considered that the omission of a motive
test was deliberate, as the provision itself defined ‘avoidance’.
Both judges encountered difficulties applying the provision to the facts, finding that
there were numerous alternative permutations, which produced different results as to
who pays the tax and on what amount. They acknowledged this was unsatisfactory
and criticised the drafting. This case clearly illustrates the need to take specialist
advice.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
7
INDIRECT TAX
REVENUE AND CUSTOMS BRIEF
49/14: VAT - PROMPT PAYMENT
DISCOUNTS
HMRC have released a Brief on the
forthcoming changes to the VAT
treatment and invoicing of Prompt
Payment Discounts.
HM Revenue & Customs (HMRC) have released the anticipated Brief on Prompt
Payment Discounts (PPD), along with a sample invoice. As well as giving background
information the Brief provides revised legislation in Section 4. Section 5 goes on to
provide guidance for both suppliers and customers.
For suppliers, the guidance states that taxpayers must choose whether they want to
issue credit notes when a PPD is taken up. If not then they must issue invoices with
the additional information:
•
Steve Powell
 +44 (0)20 7311 2746

[email protected]
Karen Killington


•
the terms of the PPD (PPD terms must include, but need not be limited to, the
time by which the discounted price must be made); and
a statement that the customer can only recover as input tax the VAT paid to the
supplier.
+44 (0)20 7694 4685
[email protected]
The Brief goes on to provide further guidance which also suggests that where suppliers
elect not to issue credit notes, reference should be made along the lines of ‘no credit
note will be issued’.
For customers the Brief sets out how, if the invoice received sets out the PPD and
states no credit note will be issued, they must adjust the VAT when payment is made.
The Brief suggests that the customer should ‘retain a document that shows the date
and amount of payment (e.g. a bank statement)’. If the supplier’s invoice does not
make reference to the fact that a credit note will not be issued, then VAT must be
adjusted when the credit note is received. The new rules apply from 1 April 2015.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
8
SCHOENIMPORT
"ITALMODA"
MARIANO PREVITI (C-131/13) - CJEU
JUDGMENT
The CJEU has released its Judgment
in this case concerning the VAT
treatment of intra community supply
of goods involved in fraud.
Steve Powell
 +44 (0)20 7311 2746

[email protected]
Karen Killington


+44 (0)20 7694 4685
[email protected]
This Dutch reference involved three cases concerning the intra community supply of
goods, where the goods were, or allegedly were, involved in fraud that the taxpayers
knew or should have known about. The Court of Justice of the European Union
(CJEU), however, agreed with the European Commission (EC) that the questions in
relation to two of the cases were inadmissible. The CJEU reached this conclusion on
the basis that the questions were premised on the basis that the goods had been
involved in fraud. However, it was clear from the orders submitted that this had not
been established and therefore the questions were hypothetical. The CJEU therefore
did not answer the questions in Turbu.com (C-163/13) and Turbu.com Mobile Phones
(C-164/13).
The remaining case, Schoenimport "Italmoda" Mariano Previti (C-131/13) (Italmoda),
traded in shoes but also traded in computer hardware. Purchases were made locally
(and VAT deducted) and acquisitions were made from Germany. However, the goods
acquired from Germany were not declared as either an intra-Community acquisition or
as an intra-community supply when sold to customers in Italy.
The CJEU noted that EU law cannot be relied upon for abusive and fraudulent ends
and this also applies to the exemption for intra community supplies. This was contrary
to the view of the EC that this exclusion cannot apply to a corrective mechanism
designed to ensure the neutrality of VAT in the cases of intra-community supplies (para
47).
In concluding (para 49), the CJEU responded that in respect of intra community
supplies, where the person knew, or should have known about a supply being
connected with fraud, the Sixth Directive must be interpreted as meaning that it is for
the national authorities and courts to refuse a taxable person ‘rights to a deduction, to
an exemption or to a VAT refund’. This applied regardless of whether the fraud took
place in another Member State or the taxpayer met the deduction or exemption
formalities laid down by a Member State.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
9
EMPLOYMENT TAX
PAYE - REAL TIME INFORMATION
Steve Wade discusses RTI following
the announcement of a review at the
Autumn
Statement
and
the
publication of a TIIN.
Steve Wade
 +44 (0)20 7311 2220

[email protected]
In a recent article in Tax Journal 1 Steve Wade, a director in KPMG in the UK’s
Employment Taxes team, discusses the review of Real Time Information (RTI)
announced in the Autumn Statement and suggests a number of improvements,
including the harmonisation of a number of the current easements, changes to the
Earlier Year Update process and a review of the on or before filing requirement. The
article also requested that the review cover HM Revenue & Customs’ (HMRC) cost
estimate of RTI.
Subsequently a revised cost estimate has been published in a Tax and Information and
Impact Note. (TIIN) which states: “Savings for the changes to the joiners and leavers
processes (P45 and P46, though the P45 will still be provided to departing employees)
and the end of year reconciliation process (P35, P14 and P38A, though employers will
still need to provide a P60 to each employee) are estimated at approximately £322.5m
per year”. The TIIN also states that “Secondary legislation will amend the PAYE
Regulations referred to above, as from 6 March 2015, to remove the requirement for
employers to complete the End of Year checklist when making their final Full Payment
Submission (FPS) for the tax year from 2014-15 onwards.”
Our view remains that HMRC have still overestimated the savings and underestimated
the cost of RTI and that the potential benefits of RTI are not being achieved due to
inefficiencies in HMRC’s back end systems and processes.
The Administration Burdens Advisory Board (ABAB) has written to the Financial
Secretary David Gauke MP to set out their concerns regarding RTI in more detail. The
ABAB letter also endorses the OTS recommendation and the need to look at the on or
before reporting requirement.
1
First published in Tax Journal on 19 December 2014. Reproduced with permission.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
10
SUMMARY OF RESPONSES
PUBLISHED ON DRAFT PAYE
LEGISLATION
HMRC have published the summary
of
responses
on
draft
PAYE
legislation
around
maintaining
customer service levels in peak
periods.
Steve Wade
 +44 (0)20 7311 2220

[email protected]
In draft PAYE legislation, published last July, HM Revenue & Customs (HMRC)
proposed the option of not informing the employee at the time when a revised PAYE
coding notice is issued to the employer, but to allow a period of up to 30 days in which
to inform the employee.
As discussed in Weekly Tax Matters last year this could increase payroll department
workloads and increase the volume of calls to HMRC as both employees and payroll
departments contact them around unexplained changes in net pay.
In the responses, others have raised similar points on the increased burden on
employers. HMRC have listened to the representations and confirmed that they are
now postponing plans for a 30 day delay before issuing a revised coding notice to an
employee.
Further to the consultation, secondary legislation has been introduced removing the
need for a coding notice to be issued where the employee has no tax to pay in respect
of any PAYE income.
Currently when HMRC notifies an employer of a new tax code, the employee will also
be notified in writing. Receipt of these notices, particularly in circumstances where the
employee has no tax liability, can cause concern for employees.
HMRC hope that the removal of the requirement to issue these notices will both reduce
uncertainty for employees and the number of calls to HMRC where employees are
contacting them for clarification on the meaning of the notices. However HMRC may
not always correctly identify taxpayers who have no liability for example when the
taxpayer has sources of income outside the scope of PAYE. Additionally HMRC are
not utilising RTI earnings data efficiently. Under the existing legislation the notices are
currently required to be issued in writing. The new measures, which come into force
on 29 January 2014, also provide for a tax coding notice to be issued electronically.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
11
EXPATRIATE EMPLOYERS: JANUARY
2015 COMPOSITE PAYMENTS
HMRC
have
confirmed
the
arrangements for employers due to
make payments under composite
payment arrangements.
Steve Wade
 +44 (0)20 7311 2220

[email protected]
Composite payment arrangements allow those employers paying tax on behalf of
expatriate employees to make a single payment, rather than a separate payment for
each employee. Employers due to make a payment this month under a composite
payment arrangement should note the following key points:
•
•
•
Payments are due by 31 January;
The composite payments spreadsheet (detailing how the payment should be
allocated) should be sent to HM Revenue & Customs (HMRC) at least five days
before making payment;
There has been no change to the spreadsheets and references used for the
January 2014 payments: employers should, therefore, use the same templates
and references they used to make last year’s payment. If these are not
available, employers are advised to contact the relevant Accounts Office
([email protected] for payments to Accounts Office
Cumbernauld, or [email protected] where payments are
due to be made to Accounts Office Shipley).
If you have any questions relating to your composite payment arrangement (or do not
currently have an arrangement in place but would like to consider one), please get in
touch with your usual Tax & Pensions contact.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
12
INTERNATIONAL
STORIES
INTERNATIONAL ROUND UP
This week: Canadian tax changes for
2014 financial statements; Columbian
tax reform; changes to favourable tax
regime rules in Brazil; Japanese tax
reform; Indian tax case on service
permanent establishments; new rules
for foreign nationals on short term
work
assignments
in
China;
Luxembourg 2015 budget and ATA
guidance; Portuguese FATCA update;
Netherlands issues policy statement
on fiscal unity; Companies Act 2014
enters into law in Ireland; and new
transfer
pricing
guidelines
in
Singapore and Australia.
Every week, KPMG member firms around the world publish updates on developments
in their country. In Weekly Tax Matters we’ll highlight a selection that may be of interest
to our readers.
Americas
Canada – Those involved in preparing financial reports for corporations or other
organisations should consider certain 2014 income tax changes for year-end
financial statements.
Columbia – Recent tax reform measures include a new wealth tax.
Brazil – The tax rules surrounding ‘favourable tax regimes’ have been amended.
More TaxNewsFlash – Americas can be found here.
Asia Pacific
Japan – The ruling coalition government has agreed the outline of a package of tax
reform measures for 2015.
India – A tax court has ruled that employees of a US company assigned to an Indian company to provide support services constitutes a service
permanent establishment.
China – New rules are in place for foreign nationals in China for short term work assignments.
More TaxNewsFlash – Asia Pacific can be found here.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
13
Europe
Luxembourg – The 2015 budget was passed on 18 December 2014 and guidance on the advance tax agreement (ATA) procedure was published
on 29 December 2014.
Portugal – The 2015 budget contains a number of measures on the US Foreign Account Tax Compliance Act (FATCA).
The Netherlands - A new policy statement has been announced on fiscal unity.
Ireland - The Companies Act 2014 has been signed into law, consolidating primary and secondary corporate legislation.
More TaxNewsFlash – Europe can be found here.
Transfer Pricing
Singapore – The tax authorities have released new transfer pricing guidelines.
Australia – Administrative guidance on transfer pricing documentation and record keeping has been published.
More TaxNewsFlash – Transfer Pricing can be found here.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
14
OTHER NEWS IN BRIEF
OTHER NEWS IN BRIEF
This week: PAC announces enquiry
into tax reliefs; NICs Bill completes
Report Stage in House of Lords; UKCanada double tax convention
update; half a million businesses sign
up for HMRC online tax account;
FA2009 provisions for SDRT penalty
regime reform now operative; worst
excuses for late tax returns published
by HMRC; January’s edition of the
Weekly Tax Matters consultation
tracker;
2015’s
expected
developments in employment taxes;
business traveller compliance web
seminar; and slow retail sales growth
predicted by the KPMG/Ipsos Retail
Think Tank.
The Public Accounts Committee has announced an enquiry into the effective
management of tax reliefs.
The National Insurance Contributions Bill 2014/15 has completed its Report Stage in
the House of Lords. It is scheduled for Third reading on 21 January.
The Protocol and Interpretative Protocol to the 1978 Double Tax Convention between
the UK and Canada, signed in London on 21 July 2014, entered into force on 18
December 2014.
More than half a million businesses have signed up for HM Revenue & Customs’
(HMRC’s) new online tax account ‘Your Tax Account’.
The provisions in the Finance Act 2009 for the reform of the SDRT penalty regime are
now operative with effect from 1 January 2015. This relates to penalties for failures to
make returns and to make payments on time and also to late payment and repayment
interest. HMRC’s Compliance Handbook has been amended to reflect the updated
position.
HMRC have published a list of this year’s worst excuses for late filing of Self
Assessment tax returns.
January’s edition of the Weekly Tax Matters consultation tracker can be found here.
KPMG in the UK’s Employers' Club have highlighted a number of items which are likely to remain high on the Employment Tax agenda in the UK over
the coming 12 months.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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Next week, Stephen Curtis and Neil Taylor from KPMG in the UK’s Employment Taxes team will be hosting a web seminar on business traveller
compliance. This will include a demo of KPMG's business traveller compliance tool – KPMG LINK Business Traveller. Click here to register – please
note that the seminar is on Tuesday 13 January at 10am and advance registration is recommended.
Retail sales are predicted to grow by two percent at most in 2015 as consumer confidence remains fragile, warns the KPMG in the UK/Ipsos Retail
Think Tank.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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