Int'l Tax News

Eleven OECD countries moved August 5 to delete the stand-alone information exchange article from the draft U.N. framework convention, arguing it is too prescriptive for a high-level instrument and duplicates the OECD Global Forum, with Austria's Stefanie Gombotz citing concerns about constitutional requirements, data protection standards, and supranational law. African Union countries, Brazil, India, Indonesia, and others defended keeping the article while offering softening amendments — India's Bhaskar Goswami said it consolidates references that were previously scattered across the text and shouldn't be seen as a threat to existing commitments, while Zambia proposed developing criteria for foreseeable relevance and moving more specific prescriptions to a future protocol.

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European delegates pressed at the August 6 U.N. tax convention session for a tightly circumscribed mandate for the Conference of the States Parties under article 13, with Germany's Michael Braun warning it should not become a mechanism for expanding substantive obligations and Italy invoking the constitutional principle of legality in tax matters. Kenya, speaking for the Africa Group, wants the COP designated the supreme organ of the convention and its protocols, and split with European countries, Japan, and South Korea over decision-making, arguing for simple majority rather than consensus.

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Global North delegates warned during August 4-5 negotiations on the U.N. framework convention that proposed commitments on harmful tax practices and mutual administrative assistance would duplicate OECD and other international work. The Africa Group, Kenya, and Honduras countered that the talks arose precisely because existing mechanisms have proved neither effective nor inclusive, while Jamaica's Marlene Nembhard Parker cautioned that article 8 appears to shift monitoring from the OECD Forum on Harmful Tax Practices to individual states without a definition or accountability framework.

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Italy's Council of Ministers gave final approval August 4 to an omnibus decree incorporating the OECD's January 5 side-by-side package into Legislative Decree No. 209/2023, establishing the side-by-side, UPE, and qualified tax incentives safe harbors as elective regimes for fiscal years beginning on or after January 1, 2026, and making covered Italian constituent entities jointly and severally liable for the domestic minimum top-up tax. The decree also introduces a voluntary correction regime for taxpayers renewing the 2026-2027 biennial preventive agreement, extends the VAT deduction window, and rounds out the 2023 tax reform delegation, with separate decrees on the professional tax judiciary, fiscal federalism, and preliminary approval of Italy's VIDA implementation.

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Uessler examines whether the qualified domestic minimum top-up tax undermines the legitimacy of domestic tax decisions by materially conditioning states’ fiscal choices, and she argues that although the regime formally preserves fiscal sovereignty, it materially constrains the autonomy of some source states.

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EU member states and other OECD countries pressed at the August 3 opening of the fifth negotiating session for the U.N. framework convention to remain high-level and to state expressly that it won't affect parties' rights under existing bilateral, regional, or multilateral agreements absent consent, with Ireland's Matthew Coakley speaking for the bloc and Israel, Japan, Mexico, Norway, South Korea, and the United Kingdom largely agreeing. G77 countries led by the Africa Group and backed by China, India, and Russia defended the draft as written, arguing it tracks the terms of reference — though Belgium, Estonia, and Italy noted that EU states abstained from that vote. Convention talks conclude August 7, with the protocols taken up August 10.

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Article 5 of the draft U.N. tax convention lists multiple nexuses for allocating taxing rights — value creation, market location, revenue generation, and user or data location — without establishing any hierarchy or tiebreaker rules among them, the Czech Republic's Lukáš Hrdlička said at the August 3 negotiating session, a concern echoed by 18 other OECD countries warning of double taxation and an undue tilt toward source over residence taxation. India and African states including Algeria, Kenya, and Zambia faulted the same draft from the opposite direction for weakening the fair allocation commitment and dropping economic activities as a nexus, while civil society groups and the G24 pressed for unitary taxation with formulary apportionment.

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Gribinski examines whether the categories of the EU Artificial Intelligence Act can be used to allocate AI-generated income under international tax rules.

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This report examines the interaction between tax measures and investor–state dispute settlement (ISDS), drawing on research identifying more than 130 tax-related ISDS cases. It finds that tax treaty dispute-settlement mechanisms and investment treaty tax carve-outs have often failed to prevent investors from challenging tax measures through arbitration. The report proposes strengthening protections for tax policy space, establishing procedural safeguards under the UN tax convention’s dispute-resolution protocol, and creating mechanisms to coordinate the treatment of tax disputes under existing investment treaties.

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Poland's Ministry of Digital Affairs published draft bill UD385 on July 31, proposing a 3 percent tax from January 1, 2027, on revenues from targeted advertising, intermediation interfaces, and the sale of user data, applying to groups with at least €1 billion in global revenue and more than PLN 25 million in covered Polish revenues. The government projects PLN 31.7 billion (about $8.5 billion) over the next decade. Liability would be reduced by Polish corporate income tax, qualifying R&D costs, and fixed asset expenditures, and the government maintains that as a revenue-based tax it falls outside the scope of double tax treaties.

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Carvalho examines the American A.I. Sovereign Wealth Fund Act, arguing that equity-based taxation could provide public oversight of artificial intelligence companies while raising significant constitutional, governance, and international coordination challenges.

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This analysis examines the proposed “taxes covered” provision in the zero-draft protocol on the taxation of cross-border services under the UN Framework Convention on International Tax Cooperation. The draft would grant source countries new taxing rights over cross-border services, including automated digital services, through expanded nexus rules based on consumer, performance, and user location. The authors argue that the protocol should extend beyond traditional income taxes to cover digital services taxes, equalization taxes, excise taxes, and other measures with similar economic effects, and compare this approach with the treatment of covered taxes under Pillar Two and the removal of digital services tax measures under Pillar One.

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French authorities regard an EU-wide digital services tax as one of the most credible options for a new own resource, according to a July 9 report by Jean-Marie Mizzon, the Senate Finance Committee's special rapporteur on the 2028-2034 EU budget, who urged France to press for a levy modeled on its 2019 national DST — possibly with a broader base or higher rate — while acknowledging it could provoke trade tensions with Washington. Mizzon opposes CORE over its turnover base, arbitrary thresholds, and methodology, and rejects the European Parliament's gambling and cryptoasset levies, warning that France's annual contribution would rise by an estimated €8 billion absent new own resources.

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Negotiations for a United Nations tax agreement that resume on August 3, 2026, in New York could set a new high-water mark for a decades-long effort to rewire the global system of bilateral tax treaties.

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This announcement reports on a regional meeting in Georgetown, Guyana, attended by 29 officials from 15 Caribbean jurisdictions to discuss tax and development priorities. The dialogue covered the Global Minimum Tax and tax incentives, taxation of the tourism sector, tax-administration modernization, and international tax-transparency standards. Participants emphasized regional cooperation, domestic resource mobilization, and capacity building as tools for implementing international tax standards and responding to the Caribbean’s economic, climate-related, and sustainable-development challenges.

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Working Party 6 is running a parallel project under article 25 of the OECD model tax convention to preserve MAP access when countries use domestic law to enforce the benefits test and disallow intercompany services deductions, Manuel de los Santos of the OECD Centre for Tax Policy and Administration said July 30 at the NABE transfer pricing symposium — a problem the Chapter VII revisions themselves can't fix because the guidelines don't address deductibility. He said the OECD hasn't yet struck the right balance on the discussion paper's proposed list of contemporaneous evidence, which drew stakeholder objections, and that no one on the working party wants the "reasonably expected" benefit standard to invite hindsight evaluation.

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The European Commission may need to revisit its treatment of tax incentives under the EU Foreign Subsidies Regulation, according to a July 28 study for the Directorate-General of Competition reviewing enforcement in acquisitions notified between October 2023 and June 2025. It found the commission often declined to rule explicitly on whether tax measures were foreign subsidies and lacked information to complete its three-step specificity analysis, and suggests relaxing the specificity conditions since sector-specific tax breaks confer a benefit almost by definition.

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Goulder examines the deteriorating state of U.S. trade relations following the July 24 expiration of section 122 tariffs, arguing that the administration's replacement measures — section 301 tariffs on some 80 countries, an unprecedented invocation of Smoot-Hawley's section 338 against $20 billion in Canadian goods, and politically tinged tariffs on Brazil — cast the United States, not its trading partners, as the primary offender against the USMCA.

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Public country-by-country reporting data will be of limited use in gauging the effects of the global minimum tax side-by-side package because top-up tax isn't reported separately and the financial account data underlying CbC reporting differs from the GLOBE tax base, Manal Corwin of the OECD Centre for Tax Policy and Administration said July 29 during a Tax Foundation webinar. She also noted the two regimes run on different timelines, with OECD corporate tax statistics la

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Canada intends to eliminate the base contribution requirement on foreign streaming services and replace it with government funding, the attorney general's office told the Federal Court of Appeal in a July 17 letter made public July 28, responding to a suit by the Motion Picture Association — Canada. The move goes beyond the June 3 directive that the CRTC review its May 21 decision raising contributions to 15 percent of annual revenue, scrapping the 5 percent base contribution imposed under the Online Streaming Act as well — which Michael Geist of the University of Ottawa says leaves the entire framework built since 2024 dead, with taxpayers covering the costs.

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The authors examine how data centers are reshaping international taxation by tying an increasing share of corporate value creation to immobile infrastructure. They consider the implications for taxing rights, sourcing, and future corporate tax reform.

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Hong Kong's government opened a consultation July 27 on tiered tax incentives for corporate treasury centers under the action plan it announced June 9, proposing to let CTCs defer deductions for interest paid to related foreign companies until the recipient becomes taxable, to widen the range of corporations eligible for interest deductions, and to clarify the substantial activity requirement and intragroup financing benchmark. A second tier would add a preapproval mechanism granting further benefits over a five-year validity period. Comments are due September 4, with administrative clarifications expected later this year and legislative amendments in the first half of 2027.

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The Disclosure of Tax Havens and Offshoring Act, reintroduced on July 16, would direct the Securities and Exchange Commission to require large multinational issuers to disclose country-by-country financial and tax information. If enacted, the bill would impose substantial compliance burdens and increase reputational and business risks for multinationals.

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New public tax transparency directives risk having a “negative effect” on policy, the OECD’s top tax official said, but reducing disparities in their implementation could improve their usability.

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For some U.S. brands seeking a location for their factories, the economic logic is once again pointing to China.

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Herzfeld examines Siemens and Keysight, two recent cases in which courts invalidated regulations on extraordinary dispositions and the global intangible low-taxed income regime in light of Loper Bright.

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Digital services and digital advertising taxes in Austria, France, Italy, Spain, and the United Kingdom raised roughly $3.6 billion in 2025 — a record and a 20 percent jump over 2024 — according to a July 23 CCIA report urging the Trump administration to act under section 301. Trump announced a section 301 investigation against the EU on July 24 after threatening 100 percent tariffs in June, but member states are pressing ahead: Poland's DST bill nears the formal legislative process, Belgium's program contemplates one by 2027, and the European Parliament is pushing an EU-wide DST as a budget own resource, with an Irish presidency compromise text due in October.

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The European Economic and Social Committee endorsed the tax provisions of the EU's proposed 28th regime in an opinion transmitted to the council July 24, welcoming a common nondiscriminatory framework for stock option schemes and the deferral of taxation until the shares are sold. But the advisory body warned that the regulation's article 114 legal basis creates uncertainty for founders and investors — echoing the council's legal service, which cautioned in June that the CJEU could annul the measure unless article 50 is used — while the Irish presidency's July 18 compromise text left the basis untouched.

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Two importers asked the U.S. Court of International Trade on July 24 to block the section 301 tariffs the USTR announced a day earlier, arguing in Burlap and Barrel Inc. v. Greer that a targeted, country- and practice-specific remedial authority cannot support 10 percent to 12.5 percent duties on 60 trading partners covering 99.4 percent of U.S. imports. The complaint — filed by the Liberty Justice Center, which litigated the IEEPA challenge in V.O.S. Selections — contends the USTR set rates tracking the invalidated IEEPA program and assembled economy-specific findings afterward, pointing to Bessent's statements on preserving tariff revenue as evidence the action is a replacement for the section 122 tariffs that expired July 24.

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Even before the rise of artificial intelligence, the case for raising the corporate tax rate was compelling. Now, it’s overwhelming.

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President Donald Trump threatened new tariffs on products from the European Union in retaliation to the bloc’s $1 billion (€890 million) fine of Alphabet Inc.’s Google.

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The July 21 U.N. framework convention draft softens earlier commitments on harmful tax practices, high-net-worth individual taxation, and fair allocation of taxing rights, replacing binding language to "develop and implement measures" with softer cooperation and information-sharing commitments, apparently in response to OECD countries' demands. The draft, to be discussed alongside two protocols at the August 3-13 New York negotiating session, preserves signatories' ability to renegotiate existing tax treaties where necessary while clarifying the convention won't automatically override prior bilateral or multilateral agreements.

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Squire Patton Boggs' Jefferson VanderWolk, in a July 20 letter to the editor, argues declining OECD pillar 2 revenue estimates—from $150 billion in 2021 to just $91-155 billion now—raise doubts about whether the regime justifies its steep compliance and administrative costs, especially since many in-scope companies' compliance spending exceeds their actual top-up tax liability. VanderWolk contends the side-by-side package has let U.S. multinationals largely escape pillar 2, undercutting the original stated goal of ensuring digital giants "pay their fair share," and suggests countries might be better served pursuing pro-growth, lower-tax policies instead.

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EU countries will urge negotiators at the United Nations to use consensus-based decision-making for developing its tax treaty and ensure it won’t replace existing international tax agreements, especially those brokered at the OECD.

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The OECD's July 21 Corporate Tax Statistics report found average statutory corporate tax rates across inclusive framework jurisdictions held steady at 21.2 percent, matching 2025 and signaling an end to the decades-long global race-to-the-bottom trend, with 113 jurisdictions now at lower headline rates than in 2000. The report flagged a slight uptick in indicators suggestive of profit-shifting mismatches—more pronounced in investment hubs—while corporate tax revenues as a share of GDP dipped slightly from 2022 but remained above pre-pandemic and pre-2008 crisis levels.

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Poland's DST bill will soon enter formal legislative process after weeks of consultations, Deputy Digital Affairs Minister Dariusz Standerski said July 19, with the government projecting roughly PLN 1.7 billion ($448 million) in first-year revenue, rising to PLN 3 billion in later years. Despite U.S. retaliation threats and President Nawrocki's anti-tax campaign pledge, Standerski framed the levy as targeting undertaxed digital business models broadly—not just U.S. firms—while offering relief mechanisms letting companies offset DST liability against corporate income tax already paid, plus investment and R&D credits.

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Shaheen questions the legal basis for elements of the 2022 foreign tax credit regulations, supporting the reconsideration of the regs by Treasury and the IRS.

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A major cryptocurrency trade group is asking an Illinois court to block the nation’s first state tax on digital asset transactions, describing it as discriminatory, unconstitutional, and prohibited under federal law.

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The OECD is planning a framework that would reduce the number of corporate audits. But this hardly turns a blind eye to potential misbehavior. Instead, it recognizes a new approach between governments and large multinational enterprises based on greater transparency and mutual respect.

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Investors and tax-advocacy groups have long suspected that companies use “tax havens” to cut their tax bills — parking profits in or shifting profits to countries with low tax rates or no taxes at all. Now they’re getting some evidence of who might be doing it, and where.

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The OECD convened more than 50 officials from finance ministries and tax administrations across the Asia-Pacific region to discuss implementation of Amount B. The roundtable addressed its potential benefits and implementation challenges, impact-assessment tools, and technical assistance aimed at improving tax certainty and reducing administrative and compliance burdens, particularly for low-capacity jurisdictions.

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A July 17 IMF working paper found destination-based VAT is the "most coherent and least distortionary" way to tax cross-border digital services, capable of raising up to 12 percent of tax revenue in advanced economies versus less than 0.1 percent from DSTs. The paper examined alternatives like nexus rules, U.N. treaty provisions, and withholding taxes, concluding that without deeper multilateral reform, countries will keep layering "imperfect adaptations" onto the existing system.

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A U.N. draft protocol published July 20 would bring automated digital services—including online advertising, social media, search engines, and online gaming—into scope of source-based taxation, allowing states to levy gross-basis taxes on income paid to residents of other signatory states. The draft, alongside a companion protocol on dispute resolution, will be discussed at the next U.N. negotiating session in New York August 3-14, as delegates work toward finalizing a framework convention and early protocols by late 2027; it would also explicitly cover existing DSTs and equalization taxes with similar economic effect.

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The IMF on July 17 published a working paper on the taxation of cross-border services and the various tax instruments that international governments utilize, finding that governments that rely on destination-based taxation better approach issues that come from digital services trade.

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The U.N. has released its latest draft of the framework convention on international tax cooperation, including new measures that establish a fair allocation of taxing rights across participating jurisdictions to reduce double taxation risks; prevent tax avoidance and evasion activities from high-net-worth individuals; focus on tax-related illicit financial flows; promote mutual administrative assistance; support the effective prevention and resolution of taxpayer disputes; and establish information exchange procedures.

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Karan Bhatia, Google's global head of government affairs and a former deputy USTR, argued in a July WSJ op-ed that the Trump administration's digital trade agreements with countries like Indonesia, Cambodia, and Malaysia are building the foundation of a modernized global trading system for the AI era, addressing 146 digital barriers across 43 jurisdictions identified by the USTR, including discriminatory digital taxes and data localization rules. Bhatia urged the administration to enforce existing commitments and expand the roughly 20 countries that have accepted core digital trade principles into a unified framework rather than a fragmented patchwork of bilateral deals.

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Hoor explores the European Commission’s proposed tax omnibus directive, arguing that it will undermine tax sovereignty within the EU and that member states should reject it.

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On a frigid Thursday last December, 50 finance and technology experts shuffled into the International Monetary Fund’s Washington, DC, headquarters with a dire mission: to war-game how artificial intelligence might upend the global economy.

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The United Kingdom HM Revenue and Customs July 13 issued a policy paper on proposed finance bill measures to implement the OECD side-by-side package and updated administrative guidance to the Pillar 2 Global Anti-Base Erosion (GloBE) Model Rules, for purposes of the multinational top-up tax (MTT) and domestic top-up tax (DTT) for multinational enterprise (MNE) and large domestic groups with annual global revenues exceeding 750 million euros (US$858.8 million). The proposal includes measures to: 1) introduce side-by-side, ultimate parent entity (UPE), substance-based tax incentive, and simplified effective tax rate (ETR) safe harbors; 2) extend the transitional safe harbor election to accounting periods beginning on or before Dec. 31, 2027, and ending on or before June 30, 2029, effective for accounting periods beginning on or after Dec. 31, 2023; and 3) amend rules for discontinued operations, companies in distress, the election to treat certain top-up amounts as zero, and DTT determinations for group members. [United Kingdom, Government Portal, 07/13/26] .

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