Four weeks to 23 July 2021
Welcome to our latest update on recent developments in international and treasury tax of interest to multinationals operating in the UK.
HMRC “Legislation Day”
On 20 July 2021, the Government published draft legislation to be included in the next Finance Bill for consultation, most of which follows consultations earlier in the year. It also announced basis period reform for self employed and partnerships which has not previously been the subject of public consultation. See HMRC’s website here for links to all the materials. The key announcements, from an International Tax & Treasury perspective, were:
- Notification of uncertain tax treatment
- New qualifying asset holding company (QAHC) regime
- Amendments to the hybrid and other mismatches rules
Responding to the business impacts of COVID-19
Visit our global crisis centre webpage and our COVID-19 hub on TheSuite to continue to keep up to date with COVID related tax developments. Of particular relevance to multinational companies operating in the UK, navigate the global tax, legal and economic measures in response to COVID-19 by territory here. In relation to the UK:
- Business in Focus podcast series
- Hybrid working: your questions answered
In this special episode, hosted by Will Sturgeon, PwC UK’s Head of Content and Thought Leadership, our workforce experts Prasun Shah and Victoria Robinson answer your questions on hybrid working. Are you looking for practical advice to help you encourage your people to return to the office? Do you want to know how to manage capacity to avoid mid-week desk shortages? Or how to support your people’s wellbeing as you introduce hybrid working? Listen to this bonus episode to find out.
- Matt Margereson, Hotel Chocolat COO, on navigating uncertain times with confidence
In this episode, host Rowena Morris is joined in our virtual studio by Matt Margereson, Chief Operating Officer of Hotel Chocolat, and Richard Bailes, PwC UK’s National Leader of Governance, Risk and Compliance, to discuss the risks that are shaping UK organisations - and how leaders are looking at them differently. We also share practical advice to help you manage the business risks you’re currently facing, and help you plan for the future.
The UK patent box regime
The patent box regime allows qualifying companies to elect to apply a 10 per cent rate of corporation tax on its relevant IP profits, subject to any restriction imposed by the company’s nexus fraction.
- For an overview of the Patent Box regime, see this Guide for your information.
- With the UK corporation tax rate set to increase to 25% from 1 April 2023 the relief available on profits eligible for patent box will increase to 15% making this relief more valuable. This flyer highlights some of the common reasons companies might not have claimed in the past, and why these may not necessarily be limiting factors.
UK/Germany double tax treaty - new protocol ratified
The UK ratified the protocol to its double tax treaty with Germany on 26 May 2021, giving UK domestic effect to the protocol which was signed by the two countries on 12 January 2021.
Brexit & other international trade developments
The UK has left the EU and negotiations on the future trading relationship of the UK and the EU have concluded with a deal agreed. So what next for businesses as we enter this new trading world?
- UK Trade. The New Agenda. View our priorities through a trade lens
In our first report we set a four-point agenda for change; this report is the third in the series, and picks up on one of the action points: the need to view the UK’s strategic priorities through a trade lens.
Visit our Beyond Brexit webpage for the latest updates.
Transfer Pricing in 5 Minutes
A regular series of short videos highlighting key issues and developments in the transfer pricing field. The following episodes have been published since our last edition:
- Episode 5: Public Country-by-Country Reporting
This episode discusses the imminent introduction of Public Country-by-Country Reporting within the European Union and what it means for multinational groups.
- Episode 4: Transitioning from LIBOR
This episode discusses the challenges ahead from the disappearance of LIBOR as a published financing reference rate at the end of 2021.
- Episode 3: Changing Employment Patterns and Economically Significant Functions
This episode discusses the impact that increased flexibility of location for key decision makers can have on transfer pricing arrangements and how to go about addressing the issues involved.
Updated ATAD I and II implementation overview
PwC Netherlands has published an updated version of the ATAD I & II implementation overview (July 2021 version). This version serves as an update of the July 2020 version and includes information on national implementation of the ATAD I & II rules in Member States’ domestic laws as of 13 July 2021. Since the ATAD directives leave room for choices in implementation, the overview illustrates the choices each country has made. Read more in this PwC news item.
Historic global agreement to ensure fairer taxation of multinational enterprises
The European Commission has welcomed the historic global agreement recently endorsed by G20 Finance Ministers and Central Bank Governors (discussed below in OECD section below). See this press release.
European Green Deal: Commission proposes transformation of EU economy and society to meet climate ambitions
The European Commission has published a number of green taxation measures as part of a package called the ‘Fit for 55’ Package. This Fit for 55 Package intends to set the European Union on the path to a greenhouse gas emissions reduction of 55% by 2030 compared to 1990 levels and, ultimately, climate neutrality by 2050. It is a key component of the European Green Deal of 11 December 2019. Read more in this press release. Our PwC policy alert covers the key building blocks of the plan, including some further detail on the new emissions trading scheme, the carbon border adjustment mechanism and the revised energy taxation directive.
Slovenian Presidency to focus on digital and green reforms and future of Europe
MEPs discussed the planned activities of the Slovenian Presidency of the Council of the EU with Prime Minister Janez Janša and Commission President von der Leyen. Most MEPs welcomed the Slovenian presidency’s priorities, particularly the focus on recovery through the digital and green transition, economic growth and job creation as well as giving impetus and content to CoFoE discussions. Read more in this European Parliament press release.
CFE Tax Advisers Europe
CFE Tax Top 5 – Round-up of EU Tax Policy News
The latest edition looks at the following: 1) EU: Landmark Climate Policy Package; 2) Nike Loses Procedural Challenge to Commission’s State Aid Case; 3) EU Tax Policy Report – Semester 1; 4) OECD Paper on Sustainable Home Working; and 5) OECD Podcast on the Global Tax Deal. View previous editions here.
130 countries and jurisdictions join bold new framework for international tax reform
130 countries and jurisdictions have joined a new two-pillar plan to reform international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate. The two-pillar package – the outcome of negotiations coordinated by the OECD for much of the last decade - aims to ensure that large Multinational Enterprises (MNEs) pay tax where they operate and earn profits, while adding much-needed certainty and stability to the international tax system. A small group of the Inclusive Framework’s 139 members have not yet joined the Statement at this time. The remaining elements of the framework, including the implementation plan, will be finalised in October.
- Read more in this OECD press release and you can listen to this OECD podcast - Global digital tax deal: A multilateral solution to end corporate tax avoidance.
- Our PwC alert details the key design features of the Pillar One and Pillar Two proposals, as well as examining the technical elements of the plan and offering some observations on the overall package.
- This Tax Policy Alert covers the recent G20 meeting where the G20 endorsed the position reached by 132 of the 139 Inclusive Framework members to move forward with the two-Pillar approach and to begin work on the technical discussions in advance of the next OECD/IF and G20 meetings in October.
OECD aligns more closely with the EU on reporting obligations for digital platform operators
As reported in our last edition, the OECD recently issued a report entitled “Model Reporting Rules for Digital Platforms: International Exchange Framework and Optional Module for Sale of Goods”. The Report introduces an optional module to the model reporting rules for digital platform operators published by the OECD in July 2020, extending the scope of the model reporting rules to the sale of goods and the rental of transportation means. The reporting obligations have a wide scope covering many business models. Compliance with these new reporting rules requires a thorough analysis of their scope and how to implement compliance procedures. Read more in this PwC alert.
OECD Secretary-General Tax Report to G20 Finance Ministers and Central Bank Governors
This OECD report provides an overview of the latest developments in the OECD's international tax agenda, including the recent digital tax developments, as well as the tax policy aspects of climate change, and progress made in support to developing countries in building sustainable tax systems.
Tax Transparency in Latin America report - first edition published
Tax Transparency in Latin America 2021 is a key output of the Punta del Este Declaration, a Latin American initiative to tackle tax evasion, corruption and other financial crimes through transparency and exchange of information for tax purposes. The report analyses the magnitude of offshore tax evasion in relation to tax collection and explores the role of tax transparency and international tax co-operation in helping governments fight tax evasion and other illicit financial flows to generate much needed revenues in times of COVID-19 and beyond. Sixteen Latin American countries are covered.
Tax Administration: Towards Sustainable Remote Working in a Post-COVID-19 Environment
The COVID-19 pandemic saw a significant shift among most tax administrations to remote working by many of their staff. As tax administrations consider the shape of the workplace post-pandemic, many are examining the options for some degree of continued remote working for employees on a longer-term basis. Such a shift needs careful consideration as it touches many aspects of an organisation, from information technology through to employment policy and organisational culture. This OECD note explores some of the key issues that tax administrations may wish to consider in designing remote working policies, processes and guidance to help ensure that longer-term remote working is sustainable for both the tax administration as a whole as well as individual employees.
Taxation of the digital economy
Keep track of the number of international initiatives that are underway to address the tax problems caused by digitalisation of our economy:
- 130 countries and jurisdictions join bold new framework for international tax reform
As reported above, 130 countries and jurisdictions have joined a new two-pillar plan to reform international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate. See our Tax Policy Alert and the other materials set out above.
- Digital tax byte
The latest edition from 21 July includes the G20 agreement/ Inclusive Framework Statement, postponement of details of an EU digital levy, confirmation of assent to Kenya's Finance Act 2021 and Canada's GST/HST draft legislation.
- OECD aligns more closely with the EU on reporting obligations for digital platform operators
As reported above, and in our last edition, the OECD recently issued a report entitled “Model Reporting Rules for Digital Platforms: International Exchange Framework and Optional Module for Sale of Goods”. Read more in this PwC alert.
Australia - Monthly tax update: July 2021
Welcome to the July edition of Australia's Monthly Tax Update, keeping you up to date on the latest Australian and international tax developments.
Australia seeks input on new patent box regime
The Australian Government has launched a consultation on the introduction of a new patent box regime, which will provide tax incentives for the development of new patents in the medical and biotechnology sectors. It is proposed that the patent box will apply to companies for income years commencing on or after 1 July 2022.
Sharing economy reporting regime for marketplaces coming soon
The Australian Treasury has released an exposure draft law for comment that seeks to give effect to the Federal Government’s announcement in its 2019-20 Mid-Year Economic and Fiscal Outlook that it would introduce a third-party reporting regime for the sharing economy. A Fact Sheet was also released and summarises the key aspects of the proposal. Read more in this PwC Tax Alert.
See here for latest updates.
Important update on payments to tax havens for assessment year 2021
Companies making direct or indirect payments to recipients established in so-called tax havens are required to report these payments where they exceed in total EUR100,000 during the taxable period. Recently, the Minister of Finance stated that “partially compliant” countries are also in scope of the reporting obligation for tax returns as from assessment year 2021. Read more in this PwC tax news item.
Update of the Belgian EBITDA rule provides opportunities for infrastructure and energy sector
The Belgian legislator recently published a Royal Decree containing some clarifications on the repair law of 20 December 2020 containing changes to the 30% EBITDA rule. One of the changes in this new legislation was the replacement of the notion of “public-private partnerships” with the term “long-term public infrastructure projects”. Groups with Belgian entities that are involved in “long-term public infrastructure projects” should carefully review the impact of this new Royal Decree. Read more in this PwC tax news item.
Tax Bites Podcasts
- The Fit for 55 package: (R)evolution in Green Taxation!
- Global minimum taxation – US vs EU what to expect?
- What does a future-proof tax reporting function look like?
Brazilian Federal Government proposes income tax reform
The Brazilian Federal Government recently announced the second phase of its proposed comprehensive tax reform which is in addition to the more than 20 tax bills that were already being intensively debated in the National Congress / Senate. The Government’s current proposal for corporate tax reform and/or reintroduction of a dividend withholding tax would significantly increase the Brazilian tax burden on many businesses, particularly on foreign investors. Read more in this PwC Tax Insights.
Brazilian Supreme Court rules ‘Total Output ICMS’ to be excluded from ‘PIS and COFINS’ tax base
The Court’s latest ruling confirms the methodology for calculating the PIS and COFINS tax credit claims - reaffirming that the claimable amounts correspond to the total output ICMS included in sales invoices. The conclusion of this judgment ends one of the largest tax litigation cases in Brazilian history, which has important implications for businesses and markets. The ramifications and credit monetisation options should be analysed on a taxpayer-by-taxpayer basis. Read more in this PwC Tax Insights.
Quebec mandatory disclosure requirements ─ approaching deadline for reporting “specified transactions”
Amendments made to the Taxation Act by Bill 42 expanded Quebec’s mandatory disclosure rules for aggressive tax planning to include a requirement to disclose certain transactions (referred to as "specified transactions") The list of specified transactions could grow over time. Read more in this PwC Tax Insights.
China (excluding Hong Kong)
China adopts the Hainan Free Trade Port Law
China’s top legislature passed the Hainan Free Trade Port Law (“FTP Law”) on 10 June 2021, which took effect immediately upon its issuance. The adoption and enactment of the FTP Law demonstrates a key move to convert the policies and incentives provided in the Hainan Master Plan (announced in June 2020) into effective and mandatory law and to transform Hainan into a globally influential high-level free trade port. Read more in this PwC Tax Flash.
UK/Germany double tax treaty - new protocol ratified
As noted above, the UK ratified the protocol to its double tax treaty with Germany on 26 May 2021, giving UK domestic effect to the protocol which was signed by the two countries on 12 January 2021.
Update: German IP nexus rules - circular on simplified WHT & CGT procedures
On 11 February 2021 the Ministry of Finance issued a circular to simplify withholding tax (WHT) and capital gains tax (CGT) procedures in certain treaty cases and outlined the preconditions for and exceptions from participation in a simplified WHT procedure in royalty cases. The simplified procedure is subject to specific preconditions and applies to taxable events realised up to and including 30 September 2021. Royalties paid after 30 September 2021 will be subject to the regular WHT rules. Read more in this PwC Newsflash.
Extension of the deadline for filing tax returns
On 25 June 2021 the Bundesrat approved the extension of the filing deadline for the 2020 tax return by three months (until the end of October 2021). This extension applies both to tax returns prepared by tax advisors and to taxpayers who prepare their tax returns themselves. The special filing deadlines for taxpayers with income from agriculture and forestry will also be extended by three months. Read more in this PwC Germany tax blog.
Release of “2021 Administrative Principles” on transfer pricing matters
The German Federal Ministry of Finance has published its position on transfer pricing principles (specifically the correction of income pursuant to section 1 of the External Tax Relations Act - the income adjustment clause) in its latest administrative principles regarding transfer pricing. This PwC Newsalert provides key points for the real estate sector.
Hong Kong sets out response to International Tax Reform plans
Hong Kong's Secretary for Financial Services and the Treasury has set out how the territory intends to respond to the OECD's proposed new international tax framework (namely the impact of proposals for a new global minimum corporate tax rate of 15%) on Hong Kong and its international competitiveness. See this Government press release.
Ireland launches public consultation on the OECD's tax plans
The Irish Government is asking for interested parties to submit comments on its response to the OECD's proposals for a new global minimum corporate tax rate for large multinational companies and new rules for how tax revenue from the digitalised economy is shared among countries. The consultation closes on 10 September 2021.
Public consultation on Ireland's Tax Treaty Policy
The Irish Department of Finance recently ran a public consultation on Ireland's Tax Treaty Policy where interested stakeholders were invited to submit their views on specific tax treaty policy questions by 7 May 2021. See here for PwC Ireland’s submission.
Pre-budget submission 2022 - Private businesses and SMEs
For the first time since the pandemic’s onset, Irish private and SME businesses are looking forward with a sense of confidence and hope at what lies ahead. A real threat to the prevailing sentiment would be to see businesses failing just before they have the chance to prosper. Our 2022 Pre-Budget submission, developed in conjunction with the Family Business Network, focuses on key tax initiatives to support home-grown Irish business.
Irish Finance Minister publishes two Feedback Statements
The Minister for Finance recently launched two Feedback Statements.
- Feedback Statement on ATAD interest limitation ratio
The Anti-Tax Avoidance Directive (ATAD) requires Member States to introduce an interest limitation rule. The closing date for submissions is 16 August 2021.
- Feedback Statement on Anti-Reverse Hybrid Rule
The Department of Finance first launched a public consultation on the implementation of the anti-hybrid rules (and the interest limitation rule) on 14 November 2018. It was a common request that the Department consult with stakeholders at a later date regarding reverse hybrid mismatches to enable taxpayers to understand how that rule will operate from 1 January 2022. The Department is therefore publishing this Feedback Statement in response to the public consultation of 2018 and to set out possible approaches to some of the technical aspects of the anti-reverse hybrid rule. The consultation period closes on 3 August 2021.
Fighting international tax fraud
The Italian Revenue Agency (“IRA”) and Italian Tax Police (“ITP”) recently jointly issued a regulation which enables the competent Offices (ie Analysis and Strategy Unit against international tax fraud, on the one hand, and Special Departments of the ITP, on the other hand) to request, inter alia, banking and financial intermediaries to provide evidence of transactions with foreign countries, even with reference to masses of taxpayers. Read more in this PwC Italy tax blog.
SRD II: amendments to the Regulation on Related Party Transactions in force from 1 July 2021
On 1 July, an amendment to the Regulation on Related Party Transactions came into force in order to transpose into Italian law the changes enacted by the (EU) Directive 2017/828 (the “Shareholder Rights Directive II” or “SRD II”) on the encouragement of long-term shareholder engagement. Read more in this PwC Italy tax blog.
Korean Tax Update - July 2021
Topics covered in this issue: 1) 130 Countries Agree on a Digital Tax Framework at the Plenary Meeting of the OECD Inclusive Framework on BEPS; 2) Korean Economic Policy and Strategy for the Second Half of 2021; 3) Government’s Second Supplementary Budget Proposal for 2021; 4) NTS Becomes an Associate Member of IOTA; and 5) Rulings update.
MIDA Guideline on Incentive for Intellectual Property Development
The Malaysian Investment Development Authority has recently published a Guideline on the Incentive for Intellectual Property Development dated 1 January 2020 on its website. The Guideline is issued following the Budget 2020 announcement, where 100% income tax exemption will be given on qualifying intellectual property income for a period of up to 10 years. Read more in this PwC Alert.
Automatic Exchange of Information for Digital Platform Operators ("DAC7") - an introduction & the impact on Middle East’ businesses
DAC7 enters into force in the EU on 1 January 2023. Middle East businesses have less than 18 months to assess whether they are impacted by it and, if so, to ensure implementation of the requirements is performed to enable capture, processing and reporting of data. In the coming year, the UK intends to implement the OECD’s Mandatory Disclosure Rules (the “MDR”) to replace DAC6 and transition from EU to international rules. Businesses bringing together sellers and buyers through digital platforms should take note of the DAC7 implications. This will allow an early identification of the DAC7 impact of such and the potential modifications it may represent for their ongoing business. Read more in this PwC news alert.
Oman suspends ‘local filing’ of Country by Country Report (CbCR)
On 7 July 2021, the Oman Tax Authority announced suspension of the ‘local filing’ requirement under the existing Country by Country Report (CbCR) legislation (Ministerial Decision 79 of 2020). Accordingly, the Omani resident entities of Multinational Groups headquartered outside Oman will not be required to submit the CbCR in Oman in any situation until further notice. However, the other CbCR notification requirements will continue to apply. Read more in this PwC news alert.
Due diligence for Withholding Tax – “alerts” sent to taxpayers
Even though the Ministry of Finance postponed entry into force of the new withholding tax (WHT) collection mechanism until the end of 2021, tax offices are already taking steps to warn entities making payments abroad of the need to exercise due diligence in verifying the conditions for the exemption or application of the preferential WHT rate. Read more in this PwC Insight.
New verdict of the Supreme Administrative Court on the rules of allocating the cost of interest on a loan incurred for purpose of share purchase
The recently issued verdict of the Supreme Administrative Court deals with the allocation of interest costs on a loan incurred for the purpose of financing a purchase of shares to the correct income baskets (capital or operational) in a situation where the aim of the purchase of shares was to extend / support the business activities of the taxpayer (and not for the purpose of resale of shares). Read more in this PwC News alert.
Amendments to corporate income tax, VAT, personal income tax and other taxes
Lawmakers have introduced several targeted amendments. The relevant draft law is pending approval by the Russian President. This PwC Tax Flash discusses the details.
Collection of tax arrears through the courts: deadlines matter
The Russian Supreme Court has clarified how to calculate deadlines in order to determine whether the tax authorities have lawfully collected tax arrears through the courts. Read more in this PwC Tax Flash.
Tax Synopsis - June 2021
This edition includes: 1) Tax credits in respect of foreign taxes on income and taxable capital gains from sources outside South Africa: the “comparative inclusion limitation” in section 6quat of the Income Tax Act, 1962; 2) The exchange of currency & apportionment of input tax; 3) The doubtful debt allowance regime: an opportunity to claim an increased allowance; and 4) SARS Watch.
The Spanish Tax Agency must prove that there are no valid economic grounds to deny the dividend exemption
The Spanish National High Court has rejected the obligation of the taxpayer to prove the existence of valid economic motives when the Spanish Tax Agency has not carried out a minimum evidential investigation to justify the application of the anti-abuse provision. Read more in this PwC Alert.
Sparks to ignite new business growth in Switzerland: SIX Swiss Exchange to launch a new segment for SMEs
In a very welcome development, the SIX Swiss Exchange is about to launch a new segment called Sparks dedicated to small and medium-sized enterprises (SMEs). Thanks to increased interest and investment in smaller businesses, a growing number of SMEs in Switzerland are ready to take the next step by going public. The new Sparks segment will enable them to do precisely this, giving them all the advantages of stock exchange listing and the added benefits of efficient access to capital, enhanced visibility, stronger peer groups and best execution for their investors. Read more in this PwC Insights.
Taiwan Tax Update - June 2021
This edition covers: 1) Extended period for submission of application to defer tax payments or pay taxes due in installments to 30 June 2022 for taxpayers impacted by COVID-19; and 2) Local tax authorities will assess House Tax, Amusement Tax and Vehicle License Tax liability or exemption due to compulsory closure of leisure/entertainment facilities, exhibition/competition venues, and educational institutions, etc. in compliance with COVID-19 restrictions and guidelines.
Declaration of Ultimate Beneficial Ownership now required in Turkey
A new compliance requirement is now imposed on companies doing business in Turkey, calling for declaration of the ultimate beneficial ownership (UBO) information to the tax office. Tax Procedural Communiqué No.529, published in the Official Gazette on 13 July 2021, sets out the rules for determining who falls under the definition of an UBO and includes explanations of the content and timeframe of the declaration. Read more in this PwC Tax Bulletin.
Treasury ‘Green Book’
As we have reported previously, the US Treasury released the much-anticipated 'General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals' ('Green Book') on 28 May. It serves as a guidepost for the Administration’s proposed tax legislation, describing current law, proposed law, the Administration’s policy rationale for the proposals, and revenue projections.
- Treasury ‘Green Book’ release marks start of US tax policy process affecting Inbounds
Foreign companies investing and operating in the United States will want to carefully review the Green Book, which contains important new details regarding tax proposals that would make sweeping changes to the US international tax rules enacted as part of the 2017 tax reform law (Tax Cuts and Jobs Act, or TCJA). This Tax Insights looks at the key international tax proposals affecting inbound companies.
- Tax accounting considerations of the Treasury “Green Book”
Among other considerations, these proposals represent changes to existing corporate tax regimes, and have important implications from both an income and non-income tax accounting perspective. Read more in this PwC Tax Insights.
- Biden tax and infrastructure proposals could impact power and utilities companies
President Biden has proposed extensive infrastructure and other spending initiatives, including tax incentives for clean energy and domestic manufacturing, as well as corporate and individual tax increase proposals designed to offset the costs of his spending proposals. Read more in this PwC Tax Insights.
IRS issues guidance on adjustments for CSAs with reverse claw-back provisions for stock-based compensation
The IRS recently released a legal advice memorandum issued by Associate Chief Counsel (International) (the "CCM"). The CCM provides non-taxpayer-specific legal advice regarding the potential timing and amount of adjustments arising from transfer pricing examinations of stock-based compensation (SBC) costs involving taxpayers' cost-sharing agreements (CSAs) that included so-called "reverse claw-back" provisions which are assumed to have been triggered by a final decision in the Altera litigation. Read more in this PwC Tax Insights.
Accounting Methods Spotlight Q2 2021
This quarter's Accounting Methods Spotlight discusses important IRS guidance and other developments.
Second quarter 2021 US state and local tax developments
This publication highlights significant US state tax developments published during April-June 2021.
California elective pass-through entity tax bill awaits governor’s signature
California is one step closer to joining the growing number of states adopting pass-through entity (PTE) tax legislation in response to the 2017 federal tax reform legislation. For federal income tax purposes, the 2017 tax reform limited individuals’ itemized deduction to $10,000 for their separately stated state and local income, sales, and property taxes (SALT). Read more in this PwC Tax Insights.
Colorado enacts digital tax, ‘tax haven,’ and pass-through entity tax measures
Legislation recently enacted in Colorado subjects sales of digital goods and mainframe computer access to sales and use tax, requires ‘tax haven’ corporation inclusion and ‘Finnigan apportionment’ for corporate income tax purposes, provides a passthrough entity tax as a federal ‘SALT cap’ workaround, and adopts limitations on individual itemized deductions, among other provisions. Read more in this PwC Tax Insights.
Kansas and Missouri enact remote seller and marketplace facilitator collection requirements
Kansas and Missouri have enacted legislation requiring remote sellers and marketplace facilitators to collect and remit sales and use taxes when they exceed $100,000 of sales to customers in-state. Kansas’ requirement is effective 1 July 2021; Missouri’s requirement is effective 1 January 2023. Read more in this PwC Tax Insights.
Michigan Appeals Court exempts advertising materials mailed out-of-state from use tax
A long-standing tax dispute has existed in Michigan regarding what constitutes a taxable ‘use’ of direct mail shipped from outside the state. The state has often asserted that the act of directing mailings into the state or the ability to recall an item from the US Postal Service (USPS) would constitute sufficient ‘control’ over the mailings to create a use tax consequence. The Michigan Court of Appeals recently affirmed that a corporation did not have ‘sufficient retention of control’ of advertising materials printed out-of-state and delivered by a third party vendor to Michigan customers to constitute ‘use’ of such materials in-state. Read more in this PwC Tax Insights.
Ohio state budget bill
The fiscal year 2022-23 budget bill (H.B. 110) was enacted on 30 June and includes several tax credit and incentive changes that create new programs and enhance existing programs including:
- Ohio modifies existing and enacts new tax incentive programs
Changes to the state’s Job Creation Tax Credit (JCTC) allow work-from-home employees to qualify for the credit. Taxpayers that qualify for “megaprojects” may receive enhanced Commercial Activity Tax (CAT), JCTC, and other tax benefits. H.B. 110 also provides Brownfield and redevelopment grants and new or improved incentive offerings for certain key industries affected by COVID. Read more in this PwC Tax Insights.
- Ohio enacts tax changes, including repeal of sales tax on employment services
The state’s budget bill makes several tax changes, including: 1) repealing the sales and use tax on employment services and employment placement services, applicable 1 October 2021; 2) extending temporary employee withholding relief to 31 December 2021; 3) creating and modifying several state tax credits; 4) reducing the personal income tax rate; and 5) changing the method of calculating the Commercial Activity Tax (CAT) minimum tax. Read more in this PwC Tax Insights.
Texas Economic Development Ch. 313 program to sunset 31 December 2022
The Texas Chapter 313 value limitation program is a powerful economic development tool that allows a school district to agree temporarily to reduce ad valorem taxes on an eligible project’s investment for a period of 10 years. Although the Texas House approved recent legislation to extend the program, the legislation failed in the Texas Senate. As a result, the program is set to expire on 31 December 2022. Taxpayers considering major projects in Texas should act soon in seeking time to secure the substantial benefits afforded by the Chapter 313 program. Read more in this PwC Tax Insights.
Subscribe for US tax alerts
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Webcasts & podcasts:
- Tax Readiness: Crypto Market Insights 2021 - Latest trends
Register here to join us for this webcast on Thursday 12 August 2021 at 7pm, where our Trust and Consulting panel will examine corporate strategies, operational effects, regulatory restrictions, risk factors, accounting implications, and future policy changes.
- Cross-border tax talks
- EU Update: State Aid, CBCR and Tax in the 21st Century
In this episode from 21 July, Doug McHoney (PwC's US International Tax Services (ITS) Leader) holds another post-vaccine session live at the Westminster Studios with Maarten Maaskant (PwC’s Foreign Tax Desk Leader) to discuss the latest happenings in the European Union (EU) from a legislative, administrative, and judicial perspective.
- Post Covid-19 globalization: Dead, dying, or here to stay?
In this episode from 1 July, Doug McHoney (PwC's US International Tax Services (ITS) Leader) sits down virtually with Dr. Alexis Crow (PwC's Global Leader of Geopolitical Investing Practice) to discuss the state of globalization, and more specifically, whether we have seen the end of globalization.
- EU Update: State Aid, CBCR and Tax in the 21st Century
Previous episodes in this fabulous series of podcasts can be found here, as well as on Spotify, YouTube and other streaming services.
- Tap into Tax podcast
This PwC podcast series combines perspectives from our tax technical specialists and our professionals focusing on the evolving tax function for a holistic look at tax. This episode was released on 26 July:
Previous episodes in this series are available here, as well as on Spotify and other streaming services.
A number of previous webcasts are available for replay in our US tax reform hub here, including:
- Tax Readiness: Are uniform corporate tax rules finally on the horizon?
Watch this replay from Tuesday 20 July 2021, where we provided an update on the recent OECD and G-20 negotiations to help those in Tax, Treasury, Operations and the C-Suite navigate this complicated landscape.
- Tax Function of the Future: R&D Innovation and Cloud
Register here for the replay of this webcast, held on Wednesday 16 June 2021, where we explored why quantifying the bottom line tax impact of cloud computing while serving as a strategic partner for cloud efforts, such as R&D and ERP, are both critical tasks for Tax.
- Q2 financial reporting considerations
Watch this replay from Wednesday 23 June 2021, where our panel of Tax Accounting Services (TAS) specialists took a deep dive into relevant tax accounting matters and recent tax developments.
- Tax Readiness: Key state tax legislation and trends - What you need to know to navigate change
This webcast, held on Tuesday 8 June 2021, focused on key state legislation impacting corporate, passthrough entity, individual, and indirect taxes. Register here to watch the replay.
- Tax Readiness: Treasury's Green Book is back, adding detail to President Biden's tax proposals
Register here to watch the relay of our webcast, held on 3 June 2021, in which our PwC panel walked through the Treasury's 'Green Book,' which adds details to President Biden's FY22 Budget proposals, and informs Congress.
For regular updates on this topic, check out our US tax reform hub on The Suite here.
New transfer pricing regulations released on APAs
The Ministry of Finance recently issued Circular 45/2021/TT-BTC, setting out new rules on Advance Pricing Agreements in Vietnam. Circular 45 takes effect from 3 August, and replaces the existing APA Circular 201 issued in 2013. This PwC NewsBrief outlines some of the key points.