Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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Last Call: Businesses Have Until July 6 to Address R&E Deductions for Prior Years
A deadline alert for U.S. businesses regarding Research and Experimentation (R&E) deductions under IRC Section 174. Following the 2017 Tax Cuts and Jobs Act changes requiring capitalization and amortization of R&E expenditures from 2022 onward, the IRS has set July 6 as a critical deadline for businesses to file automatic accounting method changes (Form 3115) to address prior-year R&E deductions. Companies that miss this window risk losing the ability to correct their tax treatment for earlier years, potentially resulting in significant lost deductions and increased tax liability.
FTT rules on COVID-19 PPE relief, import VAT and equitable remission: 3V International [2026] UKFTT 815 (TC)
The First-tier Tribunal (FTT) has issued a ruling in 3V International [2026] UKFTT 815 (TC) concerning import VAT relief on COVID-19 PPE goods and the application of equitable remission. The case examined whether the taxpayer qualified for relief from import VAT on PPE imported during the pandemic and whether HMRC was obliged to apply equitable remission principles to reduce or waive the VAT liability. The tribunal's decision provides important guidance on the conditions and limits of COVID-related import VAT reliefs and the discretionary remission powers available to HMRC in exceptional circumstances.
Pa. Land Trust's Exemption Must Be Revisited, Court Rules
A Pennsylvania court has ruled that a land trust's property tax exemption must be reconsidered, sending the case back for further review. The decision scrutinizes whether the land trust meets the legal criteria for tax-exempt status under state law. Land trusts typically seek exemptions on the basis of charitable or conservation purposes, but courts must verify compliance with specific exemption requirements. This ruling highlights the ongoing legal scrutiny applied to property tax exemptions in Pennsylvania and may have implications for similar organizations seeking or maintaining exempt status in the state.
Hong Kong Tightens Bank Rules For Tax Info Exchanges
Hong Kong has introduced tightened regulations for banks regarding the exchange of tax information with foreign jurisdictions. The updated rules strengthen compliance obligations under international tax transparency frameworks, including the Common Reporting Standard (CRS). Financial institutions must now adhere to more rigorous procedures for collecting, verifying, and reporting account holder information to tax authorities. This move reinforces Hong Kong's commitment to global tax information exchange standards and combating tax evasion, while placing greater due diligence burdens on the banking sector to ensure accurate and timely reporting of financial account data.
Michigan Treasury Officials Grilled About Tax Error Affecting 27,000 Filers
Michigan Treasury officials faced legislative scrutiny over a tax processing error that affected approximately 27,000 tax filers in the state. Lawmakers questioned treasury representatives about the nature of the mistake, its causes, and the steps being taken to rectify the situation for impacted taxpayers. The incident raises concerns about administrative accuracy and oversight within Michigan's state tax system, potentially affecting refunds, assessments, or filings for thousands of residents. The grilling reflects broader accountability demands from legislators seeking transparency on how such errors occur and what safeguards will be implemented to prevent recurrence.
Check if a letter you’ve received from HMRC is genuine
HMRC guidance helping UK taxpayers verify whether a letter purportedly from HMRC is genuine. While primarily an administrative and anti-fraud resource, it has indirect tax relevance as fraudulent HMRC correspondence is commonly used in tax scams targeting individuals and businesses. The guidance lists legitimate HMRC contact details and explains what genuine letters look like. It helps taxpayers avoid responding to phishing attempts that may lead to financial loss or identity theft, which can intersect with tax compliance and reporting obligations.
FCC declares property tax regime ‘confiscatory’
The Federal Chamber of Commerce (FCC) has declared a property tax regime 'confiscatory,' signaling significant opposition to the current property tax structure. The characterization suggests the tax burden imposed on property owners is deemed excessive or punitive, potentially violating principles of fair taxation. This development indicates growing pushback from business and commerce stakeholders against the existing property tax framework, which could prompt legislative or regulatory review. The FCC's strong language reflects concerns about the economic impact on property owners and businesses, and may lead to calls for reform or legal challenges to the tax regime.
EGC T-184/25 (Veronsaajien oikeudenvalvontayksikkö) – Judgment – Original lender’s outsourced credit management to assignee is not VAT exempt
The EU General Court ruled in case T-184/25 (Veronsaajien oikeudenvalvontayksikkö) that outsourced credit management services performed by a loan assignee on behalf of the original lender do not qualify for VAT exemption. The judgment clarifies the boundaries of the VAT exemption for financial services, specifically addressing credit management activities when conducted by a third party in an outsourced arrangement. The case has significant implications for financial institutions structuring loan portfolio assignments and outsourcing arrangements, particularly regarding the VAT treatment of credit servicing functions in Finland and across the EU.
Bowling and the Refusal to Apply the 10% Reduced VAT Rate
This article discusses a dispute over whether bowling qualifies for a reduced 10% VAT rate, with tax authorities refusing to apply the lower rate to bowling activities. The case examines the classification of bowling as a sporting or leisure activity under VAT rules and whether it meets the criteria for reduced-rate treatment. The analysis explores the legal and administrative reasoning behind the refusal, relevant case law, and the broader implications for leisure and sports businesses seeking to benefit from reduced VAT rates across applicable jurisdictions.
Justification of Subcontractor Status for the VAT Reverse Charge on Construction Subcontracting
This article addresses the requirements for justifying subcontractor status in the context of the VAT reverse charge mechanism applicable to construction subcontracting. It examines what documentation and evidence businesses must provide to demonstrate that a supplier qualifies as a subcontractor, thereby triggering the reverse charge and shifting VAT liability to the recipient. The piece covers relevant administrative and judicial guidance, common compliance pitfalls, and the consequences of incorrectly applying or failing to apply the reverse charge in construction sector transactions.
Court – Evidence Justifying Involvement in a VAT Fraud Circuit
A court ruling examines the evidentiary standards required to establish a taxpayer's involvement in a VAT fraud circuit. The case addresses what constitutes sufficient evidence to implicate a business in carousel or missing trader fraud schemes, where VAT is charged but not remitted to tax authorities. The judgment is significant for businesses seeking to demonstrate good faith and due diligence in their supply chains, as well as for tax authorities pursuing VAT fraud recovery. The ruling clarifies the burden of proof and the type of documentary or circumstantial evidence courts will accept when determining complicity or negligence in VAT fraud arrangements.
The European Court of Human Rights has upheld the weaponisation of privacy to restrict tax authorities’ access to banking data
The European Court of Human Rights (ECHR) has ruled in favor of using privacy rights to limit tax authorities' access to banking data, a decision criticized by tax justice advocates as enabling tax evasion and financial secrecy. The ruling is seen as a significant setback for efforts to improve tax transparency and cross-border information exchange. Critics argue the decision effectively weaponizes human rights law to shield wealthy individuals and entities from legitimate tax enforcement, undermining automatic exchange of financial information frameworks and the broader global push for tax authority access to beneficial ownership and banking records.
Early Review of Tax Affairs Essential for Compliance
An early review of tax affairs is highlighted as essential for compliance in South Africa, with the South African Institute of Tax Professionals (SAIT) emphasizing proactive engagement with tax obligations. The article underscores the importance of taxpayers reviewing their financial and tax positions ahead of deadlines to avoid penalties and interest from SARS. Timely compliance reduces audit risk and ensures accurate reporting. The guidance is particularly relevant for individuals and businesses navigating complex tax rules, encouraging them to work with qualified tax practitioners to identify exposures and rectify discrepancies before SARS intervenes.
Trust Tax Compliance Under Increased SARS Scrutiny
SARS has intensified scrutiny of trust tax compliance in South Africa, signaling a crackdown on trusts used for tax planning or income splitting. The South African Institute of Tax Professionals (SAIT) notes that SARS is closely examining trust structures, beneficial ownership disclosures, and whether distributions are correctly taxed in the hands of beneficiaries. Trustees and tax practitioners are urged to ensure accurate reporting of trust income, capital gains, and loans. Non-compliance risks include penalties, interest, and potential reclassification of trust transactions. The increased focus reflects broader SARS efforts to close tax gaps through targeted enforcement.
Tax Deduction Claims Under Scrutiny as SARS Tightens Compliance
SARS is tightening compliance around tax deduction claims in South Africa, increasing scrutiny of expenses claimed by individuals and businesses. The South African Institute of Tax Professionals (SAIT) warns that deductions lacking proper substantiation, such as home office expenses, travel allowances, and business costs, are under heightened review. Taxpayers must ensure claims are supported by accurate records and meet legislative requirements. SARS is leveraging data matching and third-party information to identify discrepancies. Non-compliant deductions face disallowance, penalties, and interest. Practitioners are advised to guide clients on maintaining documentation and submitting defensible, accurate returns.
VAT Headaches: Overcharged VAT When Invoices Apply a Higher VAT Rate Than Legally Required
This article examines the VAT compliance issue of overcharged VAT, where invoices apply a higher VAT rate than legally required. It explores the legal implications for both suppliers and customers, including whether the incorrectly charged VAT must still be remitted to tax authorities, the customer's right to deduct input VAT, and the mechanisms available to correct such errors. The piece highlights the tension between VAT invoice obligations and the principle that VAT should reflect the correct legal rate, offering practical guidance for businesses dealing with over-invoiced VAT situations.
Italy Tax Court Clarifies VAT Deductions in Fraudulent Transactions
Italy's Tax Court has issued a clarification regarding VAT deduction rights in cases involving fraudulent transactions. The ruling addresses the circumstances under which taxpayers may or may not claim VAT deductions when transactions are tainted by fraud, providing important guidance for businesses navigating complex supply chains. The decision aligns with EU VAT principles requiring taxpayers to exercise due diligence in verifying the legitimacy of their transactions. This ruling has significant implications for Italian businesses, particularly those operating in sectors prone to VAT carousel fraud, and underscores the importance of robust compliance and supplier verification procedures.
VAT Grouping and Fixed Establishments: Barclays Appeal Dismissed
A UK tribunal has dismissed Barclays' appeal in a case concerning VAT grouping and fixed establishments. The case examined whether certain entities or branches within the Barclays group could be treated as fixed establishments for VAT grouping purposes, with significant implications for how intra-group services are treated for VAT. The dismissal upholds HMRC's position and adds to the body of case law on the intersection of VAT grouping rules and fixed establishment principles, a legally complex area with major financial services sector implications.
District Court Refuses to Shake Up SALT Cap
A U.S. district court has declined to strike down the $10,000 state and local tax (SALT) deduction cap introduced by the 2017 Tax Cuts and Jobs Act. The court rejected the legal challenge, upholding the federal limitation on SALT deductions that has been controversial particularly for taxpayers in high-tax states such as New York, New Jersey, and California. The ruling maintains the status quo for millions of individual filers who have faced higher federal tax bills since the cap was enacted. The decision represents another failed attempt to overturn the cap through litigation rather than congressional action.
About a quarter of callers to two IRS lines got poor service, TIGTA says
A Treasury Inspector General for Tax Administration (TIGTA) report found that approximately 25% of callers to two IRS telephone service lines received inadequate service. The findings highlight ongoing concerns about IRS taxpayer service quality, with auditors identifying issues such as incorrect information provided to callers and failure to follow proper procedures. The report underscores persistent challenges in IRS customer service operations, which have been a subject of congressional scrutiny and reform efforts. TIGTA's oversight role involves monitoring IRS performance and recommending improvements to ensure taxpayers receive accurate and timely assistance when contacting the agency.
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