Int'l Tax News

With the national debt above $40 trillion and the Social Security Trust Fund six years from insolvency, the author questions how far the United States should subsidize foreign governments through the foreign tax credit and argues that, absent a coherent bipartisan policy on the credit, the positions of both Democrats and Republicans leave the U.S. Treasury losing revenue to foreign governments. She points to a bill from Rep. Ron Estes, R-Kan., that would expand taxpayers’ ability to credit foreign taxes, and to the new section 901 regulations, which are not yet in effect.

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The OECD/G20 Inclusive Framework on BEPS held its 18th plenary meeting in Paris on October 28-30, 2026, with more than 410 delegates from 131 jurisdictions and observers from 12 international organizations, and welcomed Guatemala as its newest member; membership has grown from 82 to 148 over the past decade. Marking the Inclusive Framework’s 10th anniversary, members reflected on its achievements, shared implementation experience, and discussed the ongoing work program.

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The author rejects the argument of Raffaele Russo and his co-authors that digital services taxes are justified as a way to capture value created by users, contending that value creation is a vague concept that has never been a basis for taxation in any jurisdiction. He prefers the view of Peter A. Barnes and H. David Rosenbloom that, where consumers are a remote seller’s only connection to a jurisdiction, the seller’s sales there can properly bear a destination-based consumption tax.

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Treating pretax losses in the United States and pretax profits abroad as the apparent goal of U.S. pharmaceutical companies’ transfer pricing, the author examines whether seven of them (AbbVie, Amgen, Bristol-Myers Squibb, Eli Lilly, Gilead Sciences, Merck, and Pfizer) achieved that result, company by company and year by year, from 2007 to 2025. The conjectured mechanism is recording revenue and operating expenses in the United States and operating income abroad; under a weaker form of the hypothesis, U.S. pretax income need only be small relative to foreign pretax income.

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At its October 28-30 meeting in Paris, the OECD/G20 Inclusive Framework asked the OECD secretariat to prepare a plan by the end of 2026 to “swiftly advance the work” on taxing the digital economy, after members discussed “ambiguities and gaps” in how current rules apply to digital business models. Members agreed to continue discussions to reach a shared understanding of the challenges and to consider the merits and practicalities of coordinated solutions to prevent fragmentation of the international tax system. The Inclusive Framework shelved negotiations on Pillar One in 2025.

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The UK is forecasted to rake in £200 million ($267 million) more in taxes from multinationals than previously expected this year under the global minimum tax, new data shows.

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The UK confirmed it will implement the OECD’s agreement to carve out US-headquartered companies from key parts of the global minimum tax into law as part of its 2026 budget.

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The UK will introduce a new foreign tax credit mechanism to help mitigate double taxation of UK residents who are members of US limited liability companies and similar reverse hybrid entities.

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The European Court of Justice (ECJ) Oct. 22 issued an Advocate General opinion for Joined Case Nos. C‑287/25 and C‑289/25, on French tax rules for the deductibility of losses incurred by nonresident subsidiaries. The taxpayers, French parent companies, sought to deduct final losses incurred by nonresident subsidiaries that were no longer being utilized in their state of residence. The French tax authorities denied the deductions, claiming nonresident subsidiaries couldn’t participate in a French tax-integrated group. Upon request for a preliminary ruling, the Advocate General opined that Articles 49 and 54 of the Treaty on the Functioning of the European Union (TFEU): 1) don’t place parent companies with resident and nonresident subsidiaries in objectively comparable situations where France doesn’t tax the nonresident subsidiary’s profits under domestic law or double tax treaty; and 2) permit France to deny the offset of final losses of nonresident subsidiaries against the profits of a French tax group under its tax integration regime. [European Union, EU Legal Database, 10/22/26].

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Business groups are pushing back against a Netherlands proposal to accept more withholding taxes in treaties with developing countries, saying it would raise taxes for multinationals and dampen investment. The debate is reflected in submissions by the [U.S. Council for International Business (USCIB)], the [Information Technology Industry Council (ITI)], and the [National Foreign Trade Council (NFTC)], together with the Dutch Ministry of Finance's consultation document.

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The South Centre, an intergovernmental think tank of developing countries, has proposed that the UN framework convention on international tax cooperation give its signatories a mechanism to respond collectively to economic threats and coercive measures against countries that tax cross-border services.

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t the International Fiscal Association congress on October 21, John Peterson of the OECD and Chetan Rao of the UN Department of Economic and Social Affairs said the two bodies have distinct mandates and complement each other’s tax work. Peterson said the OECD’s narrower mandate suits some tasks and not others, and that the OECD has managed overlap with the UN well, including by staying aligned on transfer pricing.

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The Organization for Economic Cooperation and Development will explore new alternatives to taxing the digital economy, moving away from a previously agreed framework, a top tax official said.

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A United Nations group decided on October 21, 2026, to expand the way countries can tax digital services using the multilateral body’s model tax treaty.

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EU countries are planning to coordinate the effective implementation of a key tool to deter tax havens from rolling back the global minimum tax framework.

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The OECD is taking stock of its tax convention to determine whether it needs to update guidance on the tax treatment of software payments.

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Saranee de Silva of the OECD’s transfer pricing unit said at the International Fiscal Association congress on October 19 that the OECD’s global mobility work is examining whether the physical relocation of a higher-value or risk-related function triggers a business restructuring, a question it has not yet addressed. She said jurisdictions have also proposed business restructuring as a topic for the working party’s review of the transfer pricing guidelines, which is not yet open to business, and that the discussion matters because the issue has received little attention since the BEPS project.

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Rebecca Burch, the US Treasury’s deputy assistant secretary for international tax affairs, said at the International Fiscal Association congress on October 19 that, despite the Australian Taxation Office’s stated openness to the mutual agreement procedure, Treasury hears growing concern that the office is avoiding that procedure and will apply its new ruling on software and intellectual property royalties aggressively, causing double taxation. The ruling, TR 2026/2, was issued on 4 September 2026, finalising a 2024 draft that had been held back while the High Court of Australia decided PepsiCo, in which it held in August 2025 that PepsiCo’s Australian entity was not liable for withholding tax on royalties said to be embedded in its bottling agreements.

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Budget pressure is driving governments to propose new taxes. In Europe, the Commission is considering a levy on all large companies that would reach US tech groups without naming them, Poland and Portugal have adopted energy windfall taxes, Hungary has proposed a wealth tax, and the United Kingdom is weighing a bank windfall tax. In the United States, states are considering wealth taxes and repealing data centre incentives, and the Treasury has warned that tax-motivated investment fund strategies may fail under existing anti-avoidance doctrines; China has begun taxing income from offshore trusts by administrative announcement. The author concludes that, whether or not these measures are enacted, they show governments everywhere searching for revenue.

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This report reviews jurisdictions’ implementation of the Country-by-Country Reporting minimum standard under BEPS Action 13. It assesses the domestic legal and administrative frameworks for multinational enterprise reporting, the international exchange of CbC reports between tax administrations, and the implementation of relevant safeguards. The compilation identifies progress and outstanding recommendations across participating jurisdictions, providing an overview of the operation of the CbCR framework.

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EU countries may levy withholding tax on dividends paid to a parent company in another EU country if the parent—even while carrying on genuine economic activity—participates in an abusive chain of transactions, the Court of Justice has ruled.

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The Commission’s proposed recast of the EU directive on administrative cooperation would exempt groups subject to the Pillar Two minimum tax from reporting cross-border tax arrangements under the DAC6 disclosure rules. A draft European Parliament report by MEP Francisco Assis, released on 15 October 2026, would remove that exemption and keep the reporting obligation. Assis argues that experience with the Pillar Two rules is still limited and that dropping the obligation now would deprive tax authorities of information they use to detect aggressive tax planning.

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This report provides an update on the OECD’s tax work since April 2026, with particular emphasis on the role of corporate income tax policy in supporting business dynamism and economic growth. It examines how corporate tax rates, compliance costs, loss-offset provisions, financing constraints, and competitive distortions affect business activity. The report also considers how corporate tax policy can contribute to a more dynamic and competitive business environment and identifies areas for further research.

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This report examines how corporate income tax policies influence business dynamism, investment, and economic growth. Drawing on ongoing OECD research, it analyzes the effects of corporate tax design, compliance costs, loss-relief provisions, financing constraints, and competitive distortions on business activity. The report also considers how corporate tax policies interact with broader structural factors affecting business growth and emphasizes the importance of a coherent policy framework.

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Multinationals continue to battle Indian tax authorities over the issue of whether their workers in India trigger a taxable presence.

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Countries that provide limited tax relief to loss-making companies risk stifling entrepreneurial risk-taking and the creation of new businesses, the Organization for Economic Cooperation and Development said.

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The author argues that AI in transfer pricing enforcement is creating an ‘AI divide’ between developed and developing countries, because the administrations that most need AI to offset scarce expertise are the least equipped to deploy it, and the available tools are rarely designed for, trained on, or governed by developing-country conditions. Using Peru’s tax and customs authority, SUNAT, as the main example, the article proposes a governance framework for AI in transfer pricing suited to those conditions.

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On 8 October 2026 the Supreme Court of Korea dismissed the National Tax Service’s appeal without stating reasons, leaving in place lower-court rulings that set aside a KRW 154 billion corporate and local income tax assessment on Google Korea. The tax service had treated KRW 975.1 billion of 2016–2018 advertising revenue that Google Korea wired to Google Asia Pacific in Singapore as royalty income, but the courts found the payments were not for the use of information or know-how. Netflix and Meta also won similar disputes with the tax service earlier in 2026.

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The author, writing against California’s Proposition 40, argues that its 5 per cent tax on residents with assets above $1 billion is economically damaging and rests on a premise that private wealth is an illegitimate diversion from the state. The author traces the measure to French economists, Emmanuel Saez (credited as a co-author), Gabriel Zucman, and Thomas Piketty, and links it to France’s fiscal troubles and to the failure of France’s own wealth tax, which French President Macron scrapped in 2018. Wealth-tax advocates blame the French tax’s failure on its exemptions for business assets and on wealthy taxpayers moving abroad, and that Proposition 40 therefore taxes business ownership and tries to stop Californians from escaping the tax by leaving the state. The author sees the same aim behind the OECD’s BEPS project: to impose European levels of taxation everywhere, so that the United States no longer offers capital a refuge. 

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This article discusses proposed revisions to the OECD Model Reporting Rules for Digital Platforms, which establish a common framework for collecting, reporting, and exchanging information about income earned by platform sellers. The proposed changes include removing the transaction-count threshold and increasing the reporting threshold for low-value sellers from EUR 2,000 to EUR 3,000, clarifying platform and operator definitions, reducing duplicate reporting, and improving identification of the persons ultimately receiving platform income. The revisions aim to strengthen international tax transparency while reducing unnecessary compliance burdens.

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The author argues that Indonesia’s 2025 global minimum tax regulation, PMK 136/2024, which introduced the income inclusion rule, a domestic minimum top-up tax, the undertaxed profits rule, and a set of safe harbours, has been overtaken by the side-by-side package agreed in January 2026. That package added a permanent simplified ETR safe harbour, extended the transitional country-by-country reporting safe harbour, and gave special treatment to qualifying substance-based tax incentives. The author contends that Indonesia’s task is to shape its domestic policy so that incentives tied to real economic activity keep their value while the regime stays aligned with the evolving rules.

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Chapter 3 of the IMF’s October 2026 World Economic Outlook examines how multinational corporations, intangible assets, and the globalization of production have changed the cross-border effects of corporate income tax policies. The IMF finds that stronger anti-avoidance rules have weakened incentives for multinational profit shifting, while real investment has become more sensitive to differences in corporate tax rates across jurisdictions. Debt-financed corporate tax cuts can generate negative spillovers abroad in the short term, while longer-term spillovers may become positive through cross-border knowledge transfers; lower corporate tax revenues can also constrain domestic public investment, particularly in emerging market and developing economies.

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The BRICS bloc, including all countries and partner countries, is increasingly strategizing international tax coordination and cooperation. In multilateral tax fora, BRICS countries have taken leadership roles within both OECD and U.N. negotiations. BRICS tax authorities have announced that they’ve established two new working groups — one on international taxation and transfer pricing, the other on revenue statistics. India will lead both working groups. 

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In response to an article by Peter A. Barnes and H. David Rosenbloom (Tax Notes Int’l, Sept. 7, 2026, p. 1591.), the authors argue that DSTs represent a sui generis category: levies designed to capture value that is extracted from a jurisdiction through the systematic collection, exploitation, and monetization of users’ data and contributions. They are neither an income tax on the supplier nor a consumption tax on the consumer.

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In its June 24 decision in 3 K 2419/25, published September 25, the Tax Court of Cologne dismissed the taxpayer’s petition against the return filing requirements under Germany's Minimum Tax Act as premature, ruling that the taxpayer did not have standing to challenge its obligations under the act before it submitted a return. The court sidestepped the taxpayer’s arguments that the EU directive underlying the country's pillar 2 regime is invalid.

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In an analytical chapter from its forthcoming World Economic Outlook report, the IMF found that a global increase in antiavoidance rules has changed tax competition to focus less on profits and more on real investments and productive activity. Tax competition has also moved away from simply cutting corporate income tax headline rates.

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The subject-to-tax rule, adopted in model form by the OECD and the United Nations after the BEPS project, lets a source state tax certain intragroup payments that a treaty assigns to the residence state when the payee’s state taxes them below 9 per cent or an agreed minimum rate. The article asks whether five of Ghana’s 14 tax treaties, concluded long before the model rules, already contain a comparable rule, focusing on article 23 of the Denmark-Ghana treaty and on what the model rules mean for Ghana’s treaty network.

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The Dutch have collected €449 million ($502 million) this year from returns related to the global minimum tax.

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The European Union has removed Panama and Vietnam from its list of countries with harmful tax practices.

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The UK should develop targeted tax relief for entrepreneurs who successfully build a high-value business, but only if it is paired with broader capital gains tax reform, a think tank has suggested.

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The European Commission is considering a levy on big US companies which would secure more income from tech firms such as Apple, Meta and Google, the Financial Times reports, citing six unidentified officials with knowledge of the discussions.

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European Parliament lawmakers have called on the OECD and European Commission to evaluate the revised global minimum tax arrangement after US companies were exempted from certain provisions of the levy.

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The OECD is assessing requests from Brazil and Colombia, the only two jurisdictions to apply for recognition under the side-by-side package. OECD official John Peterson said Brazil has ‘quite a strong case’ because it has a QDMTT and broad CFC rules, while Colombia’s eligibility depends on whether multinationals there reach a 15 per cent effective rate overall; the inclusive framework has set no deadline for a decision.

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The author argues that Pillar Two is producing a ‘K-shaped’ outcome: jurisdictions that stayed out, mainly the United States and China, sit on the upper arm, while adopters, chiefly EU member states, pay implementation and enforcement costs for revenue well short of projections. Ironically, the main winners are the low-tax hubs that collect top-up tax through QDMTTs, the very jurisdictions the regime was designed to penalize. Her conclusion is that a ‘global’ minimum tax that is not global will neither deliver the promised revenue nor answer the larger threat to European competitiveness.

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Driessen argues that Pillar Two and the Internal Revenue Code as they stood at the end of the Biden administration served the fiscal and trade sovereignty of the United States better than the side-by-side agreement does. He contends that critics of the Biden negotiators define sovereignty too narrowly and are ‘too reverential’ towards a tax legacy that the 2017 Tax Cuts and Jobs Act had already made ‘mostly moot’ for Pillar Two. He treats foreign tax credit blending as informal tax sparing and argues that Congress met its own 2017 revenue needs by scoring the Act’s international provisions on the assumption that foreign governments would not respond.

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In a rebuttal to a recent article by Peter A. Barnes and H. David Rosenbloom, Khetan counters their claim that a digital services tax is a consumption tax by another name, citing India as a test case. Khetan argues that India’s equalization levy was built as a substitute for income tax and operated alongside a VAT on digital supplies, challenging the claim that when India imposed equalisation levies it was imposing a consumption tax.

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European Parliament estimates show that a 5 per cent EU digital services tax extended to streaming, cloud hosting, and data processing could raise about €25 billion a year for the EU budget, against the Commission’s estimate of €5 billion for a 3 per cent tax on the narrower base of its 2018 proposal. The Parliament also revises upwards the Commission’s estimates for an online gambling levy, to €2.9 billion a year, and for a capital gains tax on cryptoassets, to €3 billion a year.

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Argentina’s Revenue and Customs Control Agency has replaced much of its 2020 transfer pricing regime with General Resolution 5903/2026, which draws on the OECD guidelines and generally applies to fiscal years beginning on or after 1 October 2026. Foreign affiliates may now serve as tested parties in limited cases, qualifying low-value services may be priced at a 5 per cent mark-up without a comparability analysis, and taxpayer-initiated downward adjustments are barred outside mutual agreement procedures. Documentation thresholds rise substantially and will be indexed to inflation from 2028.

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