Int'l Tax News

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 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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The author argues that the OECD Transfer Pricing Guidelines give no clear guidance on which group entity controls a risk once agentic AI has fully replaced the employees who managed it. He finds none of three allocations satisfactory, to the entity that employed those staff, to the entity that built the AI, or to the AI itself, and he suggests that control may pass to managers who oversee the risk indirectly. He also finds the guidelines unclear on whether the change is a business restructuring that requires arm’s length compensation.

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The authors propose that each large artificial intelligence (AI) foundation model receive a tax situs by registration, following the law of the flag, with the residual return on the model’s weights divided among the jurisdictions that supply its compute, its control, and its users. Existing approaches reach the hyperscalers and the deployers but stop short of the model owners, such as OpenAI and Anthropic, with whom the residual stays. The authors argue that nexus, sourcing, and pricing rules each fail because the weights have no usable location, so the model owner can book the residual wherever it chooses.

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The European Commission warned Ireland and Hungary to end what it alleges is discriminatory tax treatment of other EU and European Economic Area countries’ bonds.

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The European Commission is considering removing American Samoa, Guam, and the US Virgin Islands from the EU’s list of tax havens, according to three people familiar with the discussions. The territories have been on the EU’s blacklist for more than eight years. During that time, the US has worked with the territories to remove them from the list, but recent talks indicate that a breakthrough on tax transparency is close.

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The European Commission said on October 1, 2026, it can’t yet determine whether the global minimum tax is fit for purpose, because corporate data collection is in its early days.

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The European Commission warned five EU countries Thursday that their penalties aren’t stringent enough for multinational companies and wealthy individuals who fail to meet their obligations to disclose tax information to authorities.

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The eleventh edition of the full OECD Model Tax Convention is a key reference used by OECD members and non-members for negotiating, applying, and interpreting bilateral income and capital tax treaties. The Model addresses tax-related barriers to cross-border trade and investment, tax evasion and avoidance, and international double taxation. This edition contains the Model as it read on November 18, 2025, including its Articles, Commentaries, non-member economies’ positions, the Recommendation of the OECD Council, historical notes, and background reports.

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This report provides practical guidance for implementing the EU Carbon Border Adjustment Mechanism in Romania and other EU Member States, focusing on operational arrangements, customs administration, governance, and coordination among competent authorities. CBAM applies a carbon price to selected imported goods corresponding to that faced by domestic producers under the EU Emissions Trading System, with the aim of mitigating carbon leakage. The report examines implementation challenges arising during the definitive period that began on January 1, 2026, including annual reporting, third-party verification, CBAM certificates, customs integration, risk management, and measures to prevent circumvention.

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The UK tax authority will launch investigations into multinational companies that fail to engage with its transfer pricing compliance facility, as it steps up efforts to crack down on profit diversion.

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Switzerland’s upper house backed an immigration tax on companies hiring foreign workers, a controversial proposal in a country where many multinationals say they need to have easy access to international talent.

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The European Commission is shutting American businesses out of major perks in its pro-business tax legislation because of concern they could use the provisions to get out of paying taxes, according to confidential documents obtained by Bloomberg.

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The US and China detailed a plan to cut tariffs on about $30 billion of imports from each country, taking a step toward fulfilling a key outcome of the September 25, 2026, summit between Donald Trump and Xi Jinping.

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Rapid technological development and willingness to deploy capital at staggering scale are essential ingredients for success in the modern global economy. The European Union and its 27 member states are therefore disadvantaged by their excessive regulation, market fragmentation, and business culture of risk aversion.

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Global mobility frequently appears as a potential area of concern for transfer pricing professionals. For example, executives may be told to avoid signing contracts in foreign jurisdictions because doing so might create a permanent establishment, or PE. The global dispersion of senior management may also prompt questions about how a group’s transfer pricing policies should be structured, particularly in an age when less weight is given by some tax administrations to capital allocation and asset ownership.

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The Australian Taxation Office has shifted gears in its approach to royalties. After several years of developing a comprehensive position on how its royalty rules apply to intangibles in the context of modern business models — a position that has attracted criticism — Tax Ruling 2026/2 and draft Practical Compliance Guideline 2026/D4 provide a platform for the ATO to intensify its review of cross-border arrangements involving intangibles.

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Tax was conspicuously absent from the speeches delivered last week by European Commission President Ursula von der Leyen and Canadian Prime Minister Mark Carney.

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Companies should be exempted from parts of the the EU’s anti-profit-shifting tax regime if they are already subject to a domestic minimum tax, a trade group argued Wednesday.

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Businesses are urging Ireland to expand research and development tax credits to activities carried out by subsidiaries of multinationals in other countries.

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The EU and the Philippines have reached an initial free-trade agreement, with key parameters approved at the political level and expected to be translated into legal text before a full agreement is completed in the coming months. Reuters reports that the agreement would eliminate more than 94% of tariffs on both sides, benefiting EU industrial exports including machinery, appliances and transport equipment, as well as agricultural and food exports including meat, dairy products and spirits.

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German Finance Minister Lars Klingbeil called on the European Commission to present proposals by October for a windfall tax on oil companies benefiting from higher fuel prices.

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Artificial intelligence tax policy is likely to develop at a quicker pace than other policy areas amid public concern about the technology’s effect on labor and wealth, a top OpenAI tax official said Friday.

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The European Commission defended its plans to streamline the EU’s tax code that could cost member state governments about €3 billion ($3.4 billion) in annual corporate tax revenue as necessary to remove barriers to cross-border investment.

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Comments compiled from 18 EU member states reveal sharp divisions over the European Commission’s proposed Anti-Tax Avoidance Directive (ATAD) amendments in the Tax Simplification Omnibus, which would carve out Pillar 2 multinationals from controlled foreign corporation (CFC) rules unless parented in a side-by-side safe harbor jurisdiction without a non-refunded QDMTT. While delegations including Luxembourg, Croatia, and Romania welcomed the carveout as a pragmatic move to eliminate regulatory overlap, Italy, Poland, and Portugal warned that an outright exemption creates aggressive avoidance loopholes, advocating instead for crediting QDMTT payments against CFC liability. Concerns were further compounded by warnings from Croatia and Portugal against exempting SMEs based purely on size, questions from Austria and the U.S. Council for International Business regarding potential discrimination against U.S.-parented groups under the side-by-side framework, and calls for clarity on how expanding the ATAD general antiabuse rule to cover Pillar 2 liabilities interacts with ongoing OECD integrity talks.

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In his 2026 policy address to the Legislative Council, Hong Kong Chief Executive John Lee announced that the government will introduce legislation later this year to slash corporate profits tax to a concessionary 5 percent for qualifying enterprises in finance, advanced manufacturing, innovation and technology, research and development, and regional headquarters. Alongside plans to halve the corporate tax rate to 8.25 percent for physical commodity and gold traders to accelerate Hong Kong's commodities hub ambitions, Lee also rolled out targeted family relief—raising the child tax allowance to HKD 160,000 for second and subsequent children while granting a HKD 20,000 stamp duty waiver on home purchases for families with newborns.

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Since the resolution initiating negotiations on the UN Framework Convention on International Tax Cooperation (the Convention) was approved in December 2024, the recurring question has been: What impact will this framework have on how businesses operating across borders are taxed?

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In a Q&A prepared for the September 17 meeting of the EU Council’s working party on tax questions, the European Commission defended a controversial provision in the draft Directive on Administrative Cooperation (DAC) recast requiring member states to share complete, unredacted Country-by-Country (DAC4) reports with national statistical institutes without member state discretion. Pushing back against member state criticisms that the measure is disproportionate and infringes on confidentiality, the Commission asserted that statistical secrecy regulations permit full data sharing to improve globalization metrics and macroeconomic analysis. It also defended broader transparency initiatives—including giving tax authorities access to the upcoming anti-money-laundering (AML) single access point to trace beneficial ownership of real estate under DAC1 and granting access to national pension registries—insisting that targeted enforcement enhancements do not contradict the bloc's tax simplification agenda.

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According to budget documents released September 15 alongside the 2027 budget, the Netherlands expects to collect €60 million in Pillar 2 top-up taxes by the close of the 2024 tax filing period, aligning closely with original projections of €55 million from its qualified domestic minimum top-up tax (QDMTT) and €9 million from the income inclusion and undertaxed profits rules. The accompanying 2027 tax plan also incorporates draft legislation implementing the OECD’s side-by-side package, estimating that its safe harbors will result in annual revenue shortfalls of €73 million from reduced profit reshoring and €35 million from substance-based incentive protections—a combined €108 million drag that the Netherlands Bureau for Economic Policy Analysis (CPB) cautioned remains subject to high uncertainty given unpredictable corporate behavior and uneven global minimum tax adoption.

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Sidhu examines the tax treatment of data centers as critical physical infrastructure for the digital economy, and she proposes a system that separates public law pricing from transfer pricing and a method for determining when routine returns, local market adjustments, or profit splits are warranted.

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The European Parliament voted 464–50 on September 15 to approve its negotiating mandate expanding the Carbon Border Adjustment Mechanism (CBAM) to downstream steel- and aluminum-intensive products by 2028, setting up a sharp clash with member states over market flexibility and anti-circumvention rules. While Tax and Climate Commissioner Wopke Hoekstra urged lawmakers and the EU Council to finalize negotiations before year-end, Parliament excised the controversial Article 27a emergency suspension clause—labeled by rapporteur Mohammed Chahim as a veiled subsidy for carbon-intensive foreign fertilizers—in favor of redirecting carbon border revenues directly to harmed internal market sectors, while simultaneously demanding enhanced enforcement against distance-selling platforms and artificial supply chain restructuring.

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Ahead of an October 5 Antici group meeting, European Commission Q&A documents reveal growing resistance from Spain and Greece over the Tax Simplification Omnibus (TSO), with Madrid warning that abolishing minimum shareholding thresholds under the parent-subsidiary and interest and royalties directives imperils national tax bases and conflicts with third-country double taxation treaties. In response to Spain’s concerns that proposed defensive measures—requiring member states to either withhold tax or deny deductions on interest and royalty payments to zero-tax jurisdictions unless subject to Pillar 2 or an un-refunded QDMTT—could violate treaty non-discrimination clauses or upend taxing right allocations, the Commission asserted that offering states an elective mechanism between withholding or non-deduction preserves treaty flexibility, while confirming that broad anti-avoidance wording intentionally blocks U.S. multinationals benefiting from the side-by-side safe harbor from claiming the carveout.

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In its annual World Trade Report , the World Trade Organization warned on September 15 that the multilateral trading system stands at a "critical juncture," cautioning that geopolitical fragmentation into rival U.S.- and China-centric blocs could shrink global GDP by 5.1 percent and exports by 18.6 percent by 2050. While artificial intelligence infrastructure investments and trade in enabling goods have buoyed trade volumes in 2025 and 2026, non-discriminatory trade has slipped from 80 percent to 72 percent of global goods commerce amid sweeping tariff hikes, industrial subsidies, and national security interventions. Economists modeled an even starker 6.9 percent global output contraction under an uncoordinated patchwork of bilateral free trade agreements, emphasizing that the cost of failing to overhaul multilateral rules could reach 10 percent of global GDP, with least-developed economies bearing the brunt.

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The OECD Inclusive Framework released a revised GloBE Information Return (GIR) template and accompanying administrative guidance on September 11, formally operationalizing the January side-by-side package for fiscal years beginning on or after December 31, 2025. In addition to streamlining reporting by allowing multinationals to elect safe harbors that effectively shield U.S.-parented groups from the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR), the companion guidance officially excludes "explicitly conditional taxes" from qualifying as covered taxes under Pillar 2—blocking jurisdictions from deploying targeted soak-up levies against entities excluded from side-by-side relief to undercut foreign minimum tax collections.

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During a September 10 meeting of the Council’s company law working party, approximately 19 EU member states pushed back against the inclusion of Article 79 in the proposed "28th regime" (EU Inc.) regulation, resisting the insertion of a direct tax provision into a non-tax file subject to qualified majority voting despite efforts by the Irish EU Council presidency to limit talks to technical drafting. While France and Renew Europe MEP Pascal Canfin defended the deferred stock option taxation scheme as the vital centerpiece needed to prevent EU Inc. from becoming an empty shell, dissenting delegations countered that the Commission’s own emphasis on the provision’s indispensability undermines its legal justification as a merely "ancillary" measure, echoing member states' successful pushback against similar tax clauses in the pan-European personal pension product dossier.

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Carvalho examines a recent note published by the International Tax Observatory and its implications for the relationship between pillar 2 and controlled foreign corporation rules in the EU.

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