Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
Tax Head
Region
These 10 States Might Have a Tax Identity Theft Problem
A new analysis identifies ten U.S. states that may be particularly vulnerable to tax identity theft, a growing problem where fraudsters file false tax returns using stolen personal information to claim refunds. The report points to weaknesses in state-level identity verification systems and refund fraud detection mechanisms. Tax identity theft burdens legitimate taxpayers with delayed refunds and complex resolution processes. The findings underscore the need for stronger authentication protocols and inter-agency data sharing at the state level. This issue sits at the intersection of personal income tax administration and taxpayer protection, highlighting ongoing challenges for state revenue agencies.
Supreme Court lets stand IRS power to assess tax anytime for preparer fraud
The U.S. Supreme Court has declined to disturb a ruling upholding the IRS's authority to assess taxes at any time when preparer fraud is involved. The case reinforces that the standard statute of limitations on tax assessments does not apply where a tax return preparer engaged in fraudulent conduct. This decision has significant implications for taxpayers who relied on fraudulent preparers, as it removes the usual time-bar protection and exposes them to unlimited assessment periods. The ruling underscores the serious consequences of preparer fraud and reinforces IRS enforcement powers in cases involving misconduct by tax professionals.
International Exchange of Information Manual
HMRC's International Exchange of Information Manual covers the legal frameworks and procedures governing the automatic and on-request exchange of taxpayer information between the UK and other jurisdictions. This includes mechanisms such as FATCA, the Common Reporting Standard (CRS), and bilateral tax information exchange agreements (TIEAs). The manual is used by HMRC staff to handle cross-border information requests, supporting tax compliance and anti-avoidance efforts internationally. It is directly relevant to transfer pricing, tax controversy, and international tax enforcement activities.
Why Interest on Foreign Tax Arrears is Not Deductible: Canadian Tax Lawyer Explains Tax Court Decision in Bank of Montreal v. The King, Paragraph 18(1)(a)
A Canadian Tax Court decision in Bank of Montreal v. The King examined whether interest on foreign tax arrears is deductible under paragraph 18(1)(a) of Canada's Income Tax Act. The court ruled such interest is not deductible, as it fails the income-earning purpose test — the expense must be incurred for the purpose of earning income from a business or property. The case clarifies that interest payments on foreign tax obligations are considered on capital or non-income account, reinforcing important limitations on corporate deductions for Canadian taxpayers with cross-border operations and foreign tax liabilities.
Hyderabad Customs ramps up anti-smuggling drive, confiscates goods worth over Rs77m
Hyderabad Customs authorities have intensified their anti-smuggling operations, seizing contraband goods valued at over Rs77 million. The enforcement drive reflects Pakistan's customs administration efforts to curb illicit trade and protect legitimate revenue streams. Such operations are part of broader customs enforcement mechanisms aimed at preventing duty evasion and smuggling of prohibited or restricted goods across Pakistani borders. The confiscations underscore the Federal Board of Revenue's commitment to strengthening border controls and trade compliance, with significant implications for customs duty collection and the deterrence of illegal import/export activities within Pakistan's trade regulatory framework.
FBR freezes bank accounts over Rs23.23b tax dispute
Pakistan's Federal Board of Revenue (FBR) has frozen bank accounts linked to a Rs23.23 billion tax dispute, signaling aggressive enforcement action against non-compliant taxpayers. This measure represents a significant tax controversy development, with FBR exercising statutory powers to secure potential tax liabilities ahead of formal resolution. The account freezing action reflects Pakistan's intensifying efforts to recover outstanding tax dues and deter tax evasion. Such enforcement measures highlight the FBR's use of coercive collection tools and raise questions about taxpayer rights and dispute resolution mechanisms within Pakistan's tax administration framework.
How to Use Bagga Vet Pharma to Challenge Mechanical GST Orders
A practical litigation guide for taxpayers and professionals on how to use the Bagga Vet Pharma ruling to challenge mechanical or non-speaking GST orders in India. The article explains how tax authorities sometimes issue GST demand orders without proper application of mind or adequate reasoning, and how the Bagga Vet Pharma precedent can be invoked to get such orders quashed. It outlines procedural steps, relevant legal arguments, and key takeaways for practitioners dealing with arbitrary GST assessments and enforcement actions.
ITAT Quashes Reassessment as Section 151 Approval Was Not Obtained from Competent Authority
India's Income Tax Appellate Tribunal (ITAT) quashed a reassessment proceeding on the grounds that the required sanction under Section 151 of the Income Tax Act was not obtained from the competent authority. The case highlights the mandatory procedural requirement for obtaining prior approval before initiating reassessment, and the consequences of bypassing the correct sanctioning authority. The ruling reinforces taxpayer protections against improper reassessment and serves as an important precedent on jurisdictional compliance in Indian income tax enforcement.
Section 80P Deduction Allowed on Interest Income Attributable to Credit Society’s Business
An Indian tribunal has allowed a deduction under Section 80P of the Income Tax Act on interest income earned by a credit cooperative society, ruling that such income is attributable to the society's core business activities. Section 80P provides deductions for income of cooperative societies engaged in specified activities. The decision clarifies the scope of the deduction for interest income, distinguishing between income integral to cooperative business operations and passive investment income, offering relief to credit societies facing similar tax disputes.
Bangalore ITAT Upholds Section 11 Exemption Despite Alleged Capitation Fee Collections
The Bangalore bench of India's Income Tax Appellate Tribunal upheld the Section 11 income tax exemption for a charitable or educational institution despite tax department allegations that the entity collected capitation fees, which are illegal in India. The ITAT found insufficient evidence to substantiate the capitation fee claims and ruled that the institution's charitable status and tax exemption remained valid. The ruling is significant for educational trusts and institutions facing scrutiny over fee structures and their eligibility for tax-exempt status under Indian income tax law.
ITAT Quashes Reassessment as Section 151 Approval Was Granted by Wrong Authority
India's Income Tax Appellate Tribunal quashed a reassessment order after finding that the mandatory sanction under Section 151 of the Income Tax Act was granted by the wrong authority. The ruling underscores the strict procedural requirements governing reassessment proceedings, emphasising that approval must come from the specifically designated competent authority. This decision builds on similar jurisprudence protecting taxpayers from procedurally defective reassessments and serves as a key precedent for challenging reassessment notices where sanctioning authority requirements have not been properly followed.
ITAT Rejects Section 56(2)(viib) Addition as Shares Were Issued to Holding Company
The Income Tax Appellate Tribunal (ITAT) rejected a tax addition made under Section 56(2)(viib) of the Indian Income Tax Act, which targets share issuances above fair market value. The tribunal held that the provision does not apply when shares are issued to a holding company, as the relationship between a subsidiary and its holding company falls outside the scope of the angel tax provision. This ruling clarifies the exemption boundary for intra-group share issuances within corporate structures, providing relief for companies receiving investment from parent entities.
ITAT Deletes Section 56(2)(viib) Addition as Shares Were Allotted to Existing Shareholders
The Income Tax Appellate Tribunal (ITAT) deleted a Section 56(2)(viib) addition — the Indian angel tax provision targeting share issuances above fair market value — on the grounds that shares were allotted to existing shareholders rather than new investors. The tribunal found that allotments to existing shareholders do not attract the angel tax provisions, as the legislative intent targets fresh external capital infusions. This decision reinforces the principle that rights issues or similar allotments to current shareholders remain outside the ambit of Section 56(2)(viib).
SC Dismisses Revenue Appeal as ESOP Allotment Expense Is Allowable
The Supreme Court of India dismissed a revenue department appeal, upholding that expenses related to Employee Stock Option Plan (ESOP) share allotments are allowable deductions for corporate taxpayers. The court affirmed lower tribunal findings that ESOP costs represent genuine business expenditure incurred to retain and incentivise employees, and cannot be disallowed on the basis that shares are allotted rather than cash paid. The ruling provides significant precedent for companies claiming ESOP-related deductions under the Indian Income Tax Act.
Delhi HC Rejects ESOP Disallowance as Share Allotment Reflects Commercial Reality
The Delhi High Court rejected the tax authorities' disallowance of ESOP-related expenses, ruling that share allotments under employee stock option plans reflect commercial reality and constitute valid business expenditure. The court held that denying deductions for ESOP costs ignores the genuine economic cost borne by employers to compensate and retain staff. The judgment reinforces the deductibility of ESOP expenses for Indian corporates and aligns with the Supreme Court's broader stance on the allowability of share-based compensation costs.
Telangana HC Sets Aside GST Registration Suspension as SCN Was Cryptic
The Telangana High Court set aside a GST registration suspension order, finding that the Show Cause Notice (SCN) issued by tax authorities was cryptic and lacked sufficient detail for the taxpayer to mount an adequate defence. The court held that vague or insufficiently particularised SCNs violate principles of natural justice, rendering subsequent suspension orders invalid. The ruling underscores the procedural obligations of GST authorities in India when initiating enforcement actions against registered taxpayers, reinforcing due process requirements under the GST framework.
Tax Law Center: How Congress Should Quickly Block the President’s Get-out-of-Tax-Free Card
The Tax Law Center analyzes how Congress could act to block presidential use of executive power to grant tax exemptions or pardons effectively functioning as tax relief. The article examines the legal and legislative mechanisms available to prevent what the authors characterize as an improper executive workaround of tax obligations. It focuses on the constitutional and statutory boundaries of presidential authority in the tax context and urges swift congressional action to close potential loopholes that could allow individuals to escape tax liability through executive action.
Non-Resident Tax Status Requires Careful Planning
This article addresses the tax planning considerations required for South Africans seeking non-resident tax status. It likely covers the criteria SARS uses to determine tax residency, the steps individuals must take to formally cease South African tax residency, and the implications for ongoing tax obligations. Careful planning is essential to avoid unintended tax liabilities, particularly around exit taxes, foreign income, and compliance with SARS requirements. The article underscores that non-resident status is not automatic and requires deliberate structuring and documentation to be recognised by South African tax authorities.
Non-Resident Claims Face Increased SARS Scrutiny
This article reports on increased scrutiny by SARS (South African Revenue Service) of non-resident tax claims. As more South Africans emigrate or work abroad, SARS has intensified its examination of individuals claiming non-resident status to ensure compliance with residency rules. The article likely covers audit triggers, documentation requirements, and the risks of incorrectly claiming non-resident status. It serves as a warning to taxpayers and advisers that SARS is actively challenging questionable claims, with potential penalties and back-taxes for those who fail to meet the legal criteria for non-residency.
Guidance: Compliance checks: Corresponding with HMRC email — CC/FS72 DSC1
HMRC has published guidance (CC/FS72 DSC1) outlining the procedures and expectations for taxpayers and their representatives when corresponding with HMRC via email during compliance checks. The guidance covers consent requirements, security considerations, and the risks associated with email communication in a tax compliance context. It forms part of HMRC's broader compliance checks factsheet series, helping taxpayers understand their rights and obligations when engaging digitally with the UK tax authority during investigations or audits.
Get the Friday Digest
Every Friday, a curated summary of the week's tax news delivered to your inbox. Choose what you want to hear about — no noise, no spam, unsubscribe anytime.
Tax heads you care about(select all that apply)
Regions you care about(select all that apply)
Your email is never shared or sold. You can unsubscribe at any time. Built in compliance with GDPR.