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This e-newsletter gives you an overview of international corporate tax developments being reported globally by KPMG member firms in the EMA and Africa regions between 1 August and 31 August 2013.

Austria Finland Nigeria South Africa
Belgium France Poland Spain
Botswana Germany Portugal Switzerland
Cyprus Italy Romania Ukraine
Czech Republic Lithuania Russia United Kingdom
Denmark Luxembourg Serbia  
European Union The Netherlands Slovakia  

For a full summary of global tax developments, visit kpmg.com/TaxNewsFlash.

To contact the Global International Corporate Tax Group email go-fmglobalict@kpmg.com.

  Tax area concerned Relevant date/case reference Description of measures and publication link
(Considerations in italic where necessary)
Austria
Administrative and case law Tax treaties VwGH 22.5.2013,2009/
13/0031  
The Austrian supreme administrative court issued a decision providing clarity concerning the taxation of remuneration paid by a hiring entity to international workers, and supporting the “economic employer approach” for purposes of determining which country could tax salary and wages paid to international workers.
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Belgium
Administrative and case law VAT Petroma Transports SA v. Etat Belge, C-271/12 (8 May 2013) The Court of Justice of the European Union (CJEU) concluded in a May 2013 judgment that an EU Member State can deny a VAT deduction for persons receiving services when an incomplete invoice is provided, even if the invoice is subsequently supplemented after the VAT recovery deduction is denied.
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Botswana
KPMG publications Various taxes 2013 The KPMG member firm in Botswana has produced a 2013 guide for entities investing in or conducting business in Botswana.
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Cyprus
Tax legislation adopted and regulatory update Corporate income tax 2013 The tax authority of Cyprus issued guidance with respect to the tax treatment of a loan write-off by a financial institution, for the benefit of the borrower.
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Investment funds 2013 Cyprus has taken steps to secure its position as a credible alternative investment fund jurisdiction by providing reasonable cost servicing structures and tax-effective systems for both funds and managers.
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Czech Republic
Proposed legislation Transfer pricing 2013 In an interview, the Director of the Income Tax Department (of the Methodology and Tax Administration section of the Czech General Financial Directorate) stated that the department will open a discussion as to whether to continue with a mandatory transfer pricing documentation approach in the future.
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FATCA August 2013 The Finance Ministry of the Czech Republic submitted a package of proposals for consideration by the Parliament. However, legislative consideration of several provisions has been postponed.
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Denmark
Tax legislation adopted and regulatory update Corporate income tax 2016 The Danish Parliament passed two bills that are part of the government's growth plan. Among the measures included in the legislation is a reduction of the corporate income tax rate to 22%, to be phased in over a three-year period.
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European Union
Tax legislation adopted and regulatory update Financial, extractive, and logging sectors 2016 An EU directive affects all EU listed and large private companies operating (directly or through controlled undertaking) in the extraction of minerals, oil and gas or in logging of primary forests—the directive requires disclosure of payments to governments (1) by type of payment and (2) by project.
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Administrative and case law Corporate income tax Argenta Spaarbank NV v. Belgische Staat, C-350/11 (4 July 2013) The CJEU issued a judgment in a case that may be seen as the latest in a line illustrating the tension that can arise between EU law and an EU Member State’s rights to tax profits arising within its jurisdiction.
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Finland
Administrative and case law Individual income tax 2007 Finland’s Supreme Administrative Court issued a decision concerning the income tax treatment of employee stock options with respect to employees with international work assignments.
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France
Tax legislation adopted and regulatory update Collective investment vehicles July 2013 The French tax administration in July 2013 released comments concerning the rules applicable for withholding tax on dividends distributed to undertakings for collective investments that are located in EU Member States, and concerning the transposition into French law of a related EU directive.
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Corporate income tax August 2013 The French tax authorities, following a public consultation of draft guidance, published final comments on the application of this new mechanism concerning the limitation on the deductibility of interest expenses.
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Administrative and case law VAT Société L’Air Liquide, no. 350588 (24 June 2013) A decision of France’s supreme administrative court sheds some light on the rules applicable to the recovery of VAT incurred with respect to shares acquisition costs.
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Transfer pricing Cour administrative d’appel de Lyon, Chambre 5, No. 11LY00678 (11 July 2013),  Cour administrative d’appel de Nantes, Chambre 1, No. 12NT0023
(25 July 2013)
Administrative courts of appeals in France recently issued decisions affirming transfer pricing adjustments. In one case, the court concluded the transfer pricing rules applied because the French taxpayer exercised direction and control over a Swiss entity (based on a finding that the Swiss entity was economically dependent on the French taxpayer). In the second case, the French taxpayer failed to establish a business purpose for selling its goods to foreign related entities at prices that were less than the prices at which the same goods were sold to unrelated third parties.
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Germany
Tax legislation adopted and regulatory update VAT   1 September 2013 August 30: Recent developments concerning VAT from Germany’s finance ministry and federal tax court  include:
Extension of the reverse charge procedure to supplies of gas and electricity – effective 1 September 2013
The right to deduct VAT on supplies of goods and services regarding certain pension funds and temporary agency workers
Identification of the intermediary acquiring goods in an allocation of intra-community supply in a chain transaction
Tax on payments to offset reductions in value caused by damage to leased vehicles
A partnership as a group subsidiary
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Administrative and case law Corporate income tax FG Baden-Württemberg, 6 K 3390/11(6 November 2012) A lower tax court in Germany rejected a taxpayer’s claim that the German earnings stripping rules are unconstitutional.
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Italy
Tax legislation adopted and regulatory update Exit tax 12 August 2013 Italy’s Ministry of Economy and Finance issued a decree containing regulations to implement the revised (2012) Italian “exit tax” regime for companies that transfer their tax residence from Italy to another EU Member State.
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Lithuania
Tax legislation adopted and regulatory update Real estate tax January 2014 Lithuanian real estate tax law has been amended to provide an exemption from real estate tax for an entity’s real property when the entity is involved in agricultural activities.
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Luxembourg
Tax legislation adopted and regulatory update Corporate income tax 2011-2013 Luxembourg tax authorities issued an August 2013 circular to address certain issues concerning the minimum corporate income tax.
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The Netherlands
Proposed legislation Vehicle tax 2014 The tax authorities of the Netherlands are focusing attention on the motor vehicle tax liabilities of owners of cars with foreign license plates.
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Administrative and case law VAT PPG Holdings BV, C-26/12 (18 July 2013) The CJEU issued a judgment finding that companies can recover the VAT charged on costs incurred in connection with their own pension funds.
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Other Individual income tax 1 January 2012 The Dutch Supreme Court has requested that the CJEU clarify whether a Dutch provision allowing 30% tax relief only for employees who reside more than 150 kilometers from the Dutch border during two-thirds of the 24-month period preceding the start of their employment or secondment in the Netherlands is consistent with (or is in violation of) EU law.
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Nigeria
Tax legislation adopted and regulatory update Corporate income tax/ tax compliance 2013 Nigeria’s tax authority in a 2013 newspaper article focused on the requirements for companies to file returns and settle their income tax obligations, and the rules for making tax remittances in installments.
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Administrative and case law Transfer pricing August 2013 Nigeria’s Tax Appeal Tribunal issued two decisions holding against two non-resident taxpayers with respect to whether their taxable turnover in Nigeria could be determined by excluding amounts that they paid to Nigerian subsidiaries engaged to support local execution of their contracts (i.e., payments known as “recharges”).
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Poland
Tax legislation adopted and regulatory update SEZ 2026 New regulations in Poland, published 23 July 2013, extend the special economic zone regime until the end of 2026. Thus, the related exemption from corporate income tax is also extended for eligible companies operating under the SEZ regime.
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Proposed legislation Corporate income tax 1 January 2014 A legislative package currently pending in Poland would revise the thin capitalization rules, and would make changes to the tax system for “partnerships limited by shares” and for limited partnerships.
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Portugal
Treaties DTT June-July 2013 Portugal has expanded its network of income tax treaties in signing income tax treaties with Cyprus and Peru, and Protocols to existing income tax treaties with Singapore and Switzerland.
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Romania
Tax legislation adopted and regulatory update VAT 1 September 2013 A reduced 9% rate of VAT applies for the supply of bread and bakery products including flour and wheat.
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Russia
Tax legislation adopted and regulatory update Tax compliance 28 June 2013 Changes to Russian tax law include:
Measures clarifying “interaction” between the tax authorities and banks with respect to bank accounts information, and establishing information to be supplied to the tax authorities when bank accounts are opened, closed, or subject to deposit changes
Rules for electronic submissions of tax documents
Provisions for the collection of tax from subsidiaries and parent companies
Procedures for verifying tax calculations and other tax audit guidance
Measures concerning VAT invoices
Requirements for new information to be provided by financial, insurance, investment fund management companies
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Serbia
Tax legislation adopted and regulatory update Corporate income tax/ tax compliance July 2013 Guidance in a “rulebook” concerning withholding tax on amounts paid to Serbian resident and non-resident legal entities with respect to supplies of “secondary raw materials” was published in the official gazette in July 2013.
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Tax compliance July 2013 Amendments to the “rulebook” on two tax returns that legal entities and entrepreneurs file with respect to payments made to individuals were published in Serbia’s official gazette in July 2013.
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KPMG publications Tax treaties 2013 The KPMG member firm in Serbia has prepared a report that provides, in table format, an overview of the withholding tax rates for dividends, interest, and royalties under the 50 income tax treaties within Serbia’s treaty network.
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Slovakia
Tax legislation adopted and regulatory update Transfer pricing 2013 Transfer pricing in Slovakia is no longer just a theoretical concept. Taxpayers must regularly provide evidence to support their relevant related-party transactions, are required to maintain documentation, and increasingly must demonstrate compliance with the ALP for tax audits.
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Proposed legislation Corporate income tax 2013 Pending amendments to the income tax law in Slovakia include changes concerning:
The definition of “related parties”
The definition of a taxpayer from a "non-contractual state"
The value of a company car
The definition of income of non-residents that is considered to be Slovak-sourced
Taxation of income from transfer of movable assets, shares, and titles registered in Slovakia
The definition of a permanent establishment
The exclusion of unrealized foreign exchange differences from the tax base
The inclusion of unpaid liabilities into the tax base
The filing of an application for approval of a transfer pricing method
Tax deductibility of costs of transportation of employees arranged by the employer
The value of promotional items that will be tax deductible
Tax non-deductible costs
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VAT 2013 A draft amendment to the Slovak VAT rules would require VAT-registered businesses to submit to the tax authorities a "VAT ledger statement", to provide details of invoices issued and received for a particular VAT period.
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South Africa
Tax legislation adopted and regulatory update Corporate income tax/ Tax compliance 2013 South Africa’s government has changed the administrative rules that previously created a challenging environment for non-residents to meet their tax liabilities in South Africa. In terms of these new rules, non-resident companies now only need to register with the South African Revenue Service as a taxpayer “if they carry on a trade through a permanent establishment in South Africa” or “if they derive a capital gain from a source within South Africa.”
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REIT 1 April 2013 Real estate investment trust (REIT) tax rules were introduced for the first time in South Africa for years of assessment commencing on or after 1 April 2013.
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Corporate income tax 1 January 2013 South Africa’s Taxation Laws Amendment Act, 2012, includes provisions that revise the tax treatment of debt reduction transactions (i.e., transactions whereby the value of an outstanding debt is reduced for less than full consideration) entered on or after 1 January 2013.
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Mineral and petroleum industry 2013 South Africa’s recently released Taxation Laws Amendment Act includes changes that would amend certain provisions of the Mineral and Petroleum Royalty Act, 2008 (Royalty Act).
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Proposed legislation Taxation of employees 2013-2015 Proposals in South Africa concerning the tax rules with respect to certain employee provisions, if enacted, would:
Impose tax on dividends paid on unvested shares as remuneration to the employee, not as exempt dividends
Repeal the deduction for premiums paid to income protection policies (but proceeds such as disability annuity would be exempt from tax
Allow charitable donations in excess of 10% of taxable income to be carried forward to future years, and not “lost” as non-deductible items
Treat employer contributions to all pension funds as a taxable fringe benefit
Provide new fringe benefit valuation rules for employer contributions to defined benefit retirement plans
Extend mandatory retirement annuity requirements to Provident Funds, effective 1 March 2015
Extend fringe benefit concession treatment for transfers of low cost housing to employees.
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Hedge funds July 2013 A proposed legislative change (released for comments in early July 2013) would include hedge funds under South Africa’s tax regime applicable for collective investments (other than collective investments in properties).
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R&D 4 July 2013 Proposals in South Africa concerning R&D tax incentives would appear to limit qualifying criteria while, at the same time, providing a “special dispensation” for selective industry sectors.
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Spain
Proposed legislation Corporate income tax 2013-2015 Pending corporate income tax legislation in Spain, if enacted, would:
Establish certain environmental protection-related tax measures
Adopt certain tax and financial measures to support entrepreneurs with their foreign expansion efforts
Repeal deductions of portfolio impairment
Modify R&D tax benefits (i.e., the tax credit and patent box regime)
Further extend to 2014 and 2015 certain transition measures that otherwise would expire at the end of 2013
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VAT 2013 The government of Spain in July 2013 published a draft of a Royal Decree that, once approved, would change certain VAT provisions.
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Switzerland
Proposed legislation Corporate income tax  2013 In the face of increasing international pressure, Swiss federal and cantonal governments are currently considering provisions to reshape Swiss tax law.
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Treaties FTA July 2013 Representatives of the governments of Switzerland and China in July 2013 signed a free trade agreement—making Switzerland the first country in continental Europe to enter in such an agreement with China.
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Ukraine
Tax legislation adopted and regulatory update Transfer pricing 1 September 2013 Ukraine's transfer pricing law has an effective date of 1 September 2013.
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Corporate income tax 1 September 2013 New law in Ukraine provides relief from the rules for advance payments of corporate income tax for business entities that implement certain investment projects in 2013.
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United Kingdom
Tax legislation adopted and regulatory update FATCA 1 September 2013 Regulations to implement and bring FATCA into force in the UK were issued.
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30 June 2014 HM Revenue & Customs published guidance notes that reflect the six-month deferral of the commencement of FATCA until 30 June 2014.
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Proposed legislation Corporate income tax/ pension arrangements August 2013 HM Revenue & Customs published an updated version of draft guidance on tax relief for employers who use asset-backed pension contribution arrangements.
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Administrative and case law Capital gains tax Ridpath v. HMRC, TC/2012/07297
(12 February 2013)
A UK court dismissed a taxpayer’s appeal of an assessment for capital gains tax for gain realized on the disposal of two properties because the taxpayer failed to provide evidence substantiating his claims for an increased basis for improvements made to the properties.
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