Taxing issues

France reduces tax on dividend distributions

France has reduced the exemption for dividend distributions paid by subsidiaries to 99 percent, which will take effect on those paid from January 1, 2016.
The exemption will have a positive impact on French groups with EU affiliates because they are now subject to a 1 percent taxation, rather than the 5 percent they were taxed at previously.

However, this change may have negative effects on the structuring of private equity transactions because it will increase the amount of tax paid on each company.

KPMG appoints UK tax head

KPMG appointed private equity specialist Michelle Quest head of tax, pensions and legal services in the UK.

Quest joined the accounting firm in 1997 and became a tax partner in 2003. She worked in a number of senior roles in the UK including head of private equity tax, head of mergers and acquisitions, and head of people. In her most recent role, she provided tax and other advisory services to private equity firms and privately owned businesses.
She succeeds Karen Briggs, who took over the role in January last year and will now lead KPMG’s solutions practice in the UK.

FASB releases new lease accounting standard

The Financial Accounting Standards Board issued its long-awaited lease accounting standard, which requires companies to recognize their leases on their balance sheets.
The update, intended to improve financial reporting about leasing transactions, affects all public and private companies that lease assets such as real estate, airplanes and manufacturing equipment.

The new rule aims to give prospective investors a more accurate picture of a company’s health.

For public companies, the new standards go into effect in 2019. For private firms, the standard is effective 2020.

Accordion to provide accounting advice to CFOs

Financial consulting firm Accordion Partners launched a financial accounting and advisory services practice to provide support to chief financial officers of private equity-backed companies and mid-market corporations.

The new team is led by Rich Medor, who joins the firm as managing director and head of financial accounting and advisory services from media company Viacom, and will focus on providing operational accounting, performance improvement and technical accounting services to CFOs.

India to tax capital gains on buybacks

The country’s tax department said the amount received on buyback of shares between April 1, 2000 and May 31, 2013 will be taxed as capital gains and not dividend in the hands of the recipient. In addition, no fresh notice for assessment, re-assessment or non-deduction of tax at source is required on buyback of shares issued before June 1, 2013 and covered under relevant sections of the Income Tax Act 1961.

This decisions are part of a wider initiative to reduce litigation and ease the burden of compliance. The Central Board of Direct Taxes has made a number of recent decisions to clarify the applicability of various provisions of the Income Tax Act.