Int'l Tax News

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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European Union lawmakers are calling on the OECD and the European Commission to evaluate the revised minimum tax deal, warning that the bloc must ensure its tax system remains competitive as it pursues international reforms.

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Nineteen EU countries are pushing back against a provision in a bill on regulating companies across the bloc that would limit their governments’ ability to tax corporate stock options as part of a bid to support startups.

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The European Commission’s dedicated strategy and legislative proposals for the EU’s outermost regions, published September 10, declined to grant requested Pillar 2 minimum tax carveouts for regional incentive hubs like the Canary Islands’ Economic and Tax Regime (REF) and the Madeira Free Zone. Despite lobbying from the Conference of Presidents of the Ultraperipheral Regions arguing that an unmitigated 15 percent minimum tax neutralizes state-aid-approved regional development incentives permitted under TFEU Article 349, Brussels restricted its direct regional tax initiatives to local indirect measures—proposing to extend and streamline France's dock dues (octroi de mer) regime through 2030 while reviewing the Canary Islands' specific import tax (AIEM).

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Ahead of the September 18 ECOFIN meeting in Dublin, an analytical commentary assesses the dim prospects for an EU-wide harmonized windfall profits tax on oil and gas companies, despite a formal push by six member states (Austria, Germany, Italy, Poland, Portugal, and Spain) amid energy market shocks. While proponents argue an EU-wide levy would equitably distribute risks and fund consumer energy bill relief, structural roadblocks—namely the Treaty on the Functioning of the European Union’s unanimity mandate for direct taxation and the historical failure of Energy Taxation Directive revisions—stand in the way. Moreover, with ExxonMobil’s pending EU General Court challenge questioning the legality of emergency qualified majority voting under TFEU Article 122 for the 2022 "solidarity contribution," Ireland’s pro-business council presidency and European Commission guidance (such as the tax-neutral AccelerateEU strategy) will likely reinforce that windfall profit taxation remains within the exclusive, albeit fragmented, discretion of individual member states.

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In an interview with Tax Notes, BusinessEurope Deputy Director for Taxation Mariella Caruana urged EU member states not to let domestic revenue protection derail the European Commission’s Tax Simplification Omnibus, arguing that retaining overbroad rules like interest deduction caps on genuine third-party debt undermines single-market competitiveness. Supporting proposed harmonized interest limitation caps, DAC6 reporting carveouts for Pillar 2 groups, and the removal of minimum shareholding thresholds for cross-border withholding tax exemptions, Caruana cautioned that allowing member states to reintroduce national divergences would dilute meaningful administrative relief into mere superficial statutory rewriting.

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This article examines a destination-based cash flow tax that would combine immediate expensing, revised treatment of interest, and a border adjustment. The authors argue that destination-based taxation could curtail multinational profit shifting by tying the tax base to goods and services consumed in the United States, making many cross-border transactions used to shift profits less relevant to tax liabilities. They also examine the treatment of imports and exports, comparisons with border-adjusted VAT systems, and potential WTO constraints on implementing a DBCFT.

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French Prime Minister Sebastien Lecornu said he would seek to reduce a tax on the profits of large companies that was introduced in 2025 as a one-off to help rein in the runaway budget deficit.

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A compromise proposal by the Irish EU Council presidency to defer the proposed DAC6 cross-border reporting carveout for Pillar 2 enterprises until 2031—pending a European Commission evaluation by late 2029—failed to resolve deep member state divisions during a September 4 working party meeting. While aimed at ensuring an evidence-based approach and aligning with the OECD side-by-side agreement by removing restrictive Commission caveats, the compromise raised concerns among several delegations regarding the narrow legislative window to repeal the carveout if deemed unsuitable, as well as the presidency’s proposed deletions of int

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The OECD’s Tax Policy Reforms 2026 report, published September 8, reveals that governments are increasingly enacting targeted corporate surtaxes and sector-specific levies—particularly on banks, extractive industries, gambling, and digital platforms—to fund mounting public expenditures such as defense. While overall statutory corporate tax rates held relatively steady across surveyed jurisdictions, base-narrowing tax incentives for R&D and strategic sectors outpaced base-broadening measures, alongside an expanding wave of digital platform VAT collection mandates and increased excise taxes on health-related goods.

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At a September 7 European Parliament FISC subcommittee hearing, former OECD tax chief and Bruegel fellow Pascal Saint-Amans cautioned that while EU anti-tax-avoidance rules need decluttering, the bloc must avoid swinging from hyper-regulation to backdoor tax cuts. Pointing to overbroad relief under the proposed Tax Simplification Omnibus—such as exempting "SMEs" with turnovers up to €400 million from CFC rules and repealing imported hybrid mismatch provisions—Saint-Amans warned that the EU risks severe revenue erosion, particularly if it ratifies the OECD side-by-side agreement while member states like Malta opt out of domestic top-up taxes, leaving room for U.S. multinationals to escape taxation.

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In a September 4 letter to the European Commission, Spain proposed introducing a European climate resilience levy on oil and gas profits as a new EU own resource for the 2028–2034 multiannual financial framework, seeking dedicated funding to anticipate and absorb mounting climate shocks. Backed by Executive Vice President Teresa Ribera and coordinated alongside calls from six member states to establish an EU-wide windfall tax framework, Madrid's initiative lands amid contentious budget negotiations—where the Carbon Border Adjustment Mechanism and an e-waste levy currently command broader consensus than corporate turnover, gambling, or digital levies, while a fiscally conservative bloc of six nations pushes for multi-billion-euro spending cuts.

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The OECD’s pending new rules to shore up leaks in the global minimum tax are sparking concerns among tax pros about yet another layer of complexity to an already-complicated framework.

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During a September 3 working meeting on the Tax Simplification Omnibus, EU member states strongly questioned proposed amendments to the Anti-Tax Avoidance Directive’s interest limitation rule, challenging a nonderogation clause that would bar countries from retaining more restrictive domestic caps below the harmonized 30 percent EBITDA ceiling or €3 million threshold. Citing fiscal erosion and legal redundancy under TFEU Article 288, delegates also scrutinized mandatory exclusions for third-party debt and automatic inflation indexation, while the European Commission confirmed that proposed updates to the ATAD general antiabuse rule are intended to encompass Pillar 2 top-up and withholding taxes without adopting an exhaustive list.

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The OECD on September 8 published its report on tax policy reforms and trends during the 2025 calendar year across 92 partner jurisdictions, finding that many countries had implemented progressive personal income tax measures for raising revenue while also working to support low- and middle-income households; that VAT changes primarily revolved around digitalization reforms; that property taxation remained one of the less frequent tax reforms but that many countries targeted revenue mobilization through recurrent immovable property taxes; and that health.

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France saw a significant decline in unresolved international double-taxation dispute cases in 2025, according to official statistics.

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The New Zealand Inland Revenue Sept. 2 opened a consultation on Exposure Draft No. PUB00266, to replace Interpretation Guideline No. IG0007 on the income taxation of payments to nonresident software suppliers. Topics covered include: 1) the exclusion from nonresident contractors’ withholding tax (NRCT) for the provision of Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS), but not insofar as the service involves personnel located in New Zealand who aren’t excluded under a DTA and the 92-day rule concerning schedular payments; 2) expanded discussion of market intermediaries, which includes their general role as resellers in cloud computing transactions; 3) the expanded classification of software transactions to include supplies of cloud computing services, including the SaaS, PaaS, and IaaS service models; and 4) expansion of the development or modification services classification to include additional services arising in cloud computing. Comments are due Oct. 31. [New Zealand, Inland Revenue, 09/02/26].

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Hong Kong and Slovenia signed a comprehensive agreement for the avoidance of double taxation, bringing Hong Kong’s treaty network to 60 agreements. The CDTA allocates taxing rights between the two jurisdictions and provides foreign tax credit relief for Hong Kong residents taxed in Slovenia. It also reduces Slovenia’s withholding tax on dividends paid to Hong Kong residents to a maximum of 10 percent and on interest and royalties to 5 percent, subject to the agreement entering into force after both sides complete their ratification procedures.

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The European Commission insisted in written feedback to member states that a strict safeguard must accompany the proposed ATAD Controlled Foreign Company (CFC) carveout under the Tax Simplification Omnibus to prevent jurisdictions from backsliding on Qualified Domestic Minimum Top-Up Tax (QDMTT) commitments. Defending the condition against pushback from U.S. multinationals under the OECD side-by-side framework, the Commission clarified that EU intermediate holding companies of U.S. groups will be denied the CFC exemption unless their low-taxed foreign subsidiaries are subject to an uncompromised QDMTT free of offsetting financial benefits, ensuring low-taxed profits do not escape both regimes.

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At least 18 jurisdictions—predominantly European nations alongside states such as Singapore and Switzerland—are urging the United Nations to incorporate optionality and reservation mechanisms into the draft protocol on taxing cross-border services income. Submitting feedback following August intergovernmental negotiations, dissenting governments warned that the text’s strict prohibition on reservations, combined with mandatory gross-basis withholding and unresolved nexus rules, creates severe bilateral treaty conflicts and legal uncertainty that could preclude broader participation.

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Barnes and Rosenbloom explain the nexus between digital services taxes and consumption taxes, urging tax professionals to take a more constructive approach in applying consumption taxes to digital services.

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The European Commission (EC) Aug. 28 posted online State Aid Case Decision No. SA. 122392, approving amendments to Ireland’s digital games tax credit regime. The decision includes measures to: 1) extend eligible expenditure to post-release digital content developed within three years of game’s initial release; 2) require the original game to have qualified for the credit and have been publicly released, and post-release content to maintain cultural themes and meet certification requirements; 3) maintain the 32 percent credit on the lowest of eligible expenditure, 80 percent of qualifying expenditure, or 25 million euros (US$29.1 million) per project; 4) increase the estimated annual budget to 13.8 million euros (US$16 million) for 2027-2031, with a total budget of 78.9 million euros (US$91.5 million); and 5) apply the amendments through Dec. 31, 2031. The EC found the regime compatible with the internal market under the Treaty on the Functioning of the European Union (TFEU). [European Union, European Commission, 08/28/26].

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The European Commission defended its proposals to exempt large multinational groups from parts of the EU’s tax avoidance rules, arguing to skeptical EU countries that the requirements duplicate the bloc’s global minimum tax regime and can lead to double taxation.

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A senior EU official promised to defend the European Commission’s proposal to end withholding taxes on intra-EU transactions despite opposition from some of the bloc’s countries.

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Major economies and key negotiators of a United Nations global tax agreement want significant changes to the deal’s latest drafts, including more flexibility for signatories, more precise rules and clearer boundaries with existing treaties.

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Minjbadam proposes a consumption or sin tax on social media user time to help taxpayers disengage from those platforms.

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The OECD on September 11 published a guiding standard template for the global anti-base-erosion information return based on the latest updates agreed by the inclusive framework on base erosion and profit shifting, with the goal of allowing tax administrations to efficiently conduct the appropriate risk assessments and liability evaluations under the GLOBE rules.

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Feedback on the draft U.N. protocol for taxing cross-border services income reveals a sharp divide between developing nations and the business community over treaty modification and gross-basis taxation. In August 26 comments, the South Centre urged the adoption of a multilateral fast-track instrument to swiftly override existing bilateral treaties, while the National Foreign Trade Council warned that gross-basis withholding without physical presence nexus threatens double taxation and disrupts settled treaty networks.

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The Milan First-Instance Tax Court ruled in Judgment No. 292/2026 that Italy’s 3 percent digital services tax does not apply to direct consignment sales where an e-commerce platform acts as a buy-sell retailer rather than an intermediary facilitating user interaction, ordering a €1.04 million refund to an unnamed fashion retailer. Marking the country's first judicial decision on the DST's e-commerce scope, the court held that because customers dealt exclusively with the platform and bore no multilateral interaction with suppliers, the statutory prerequisite of user-to-user networking was absent.

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The International Centre for Tax and Development submitted comments regarding the U.N.'s draft protocol on the taxation of cross-border services income, recommending that the protocol include an anti-treaty-shopping rule; a definition for consumer and one for services; a revamped profit calculation method for multinational enterprise groups; more explicit allocation of taxing rights in the nexus rules; and the consideration of more generously calculated foreign tax credits.

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A proposal to simplify Canadian transfer pricing documentation for small companies and transactions wouldn’t broaden compliance or offer easier reporting burdens, tax practitioners said.

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Think tank Bruegel released an August 27 policy brief co-authored by Pascal Saint-Amans arguing that successful anti-profit-shifting reforms have created a tax policy trilemma among sovereignty, revenue, and investment neutrality within the EU single market. The authors urge Brussels to leverage pillar 2’s common tax base calculations to build a harmonized corporate tax regime for large multinationals or, alternatively, pursue targeted coordination through binding limits on national tax incentives, reduced withholding taxes, and an external corporate tax border.

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Sternberg argues against adopting a value-added tax in the United States, warning that introducing a broad-based consumption tax would not replace existing income taxes but rather layer on top of them to fuel European-style government spending growth. Highlighting compliance burdens on small businesses and Europe’s ongoing fiscal struggles despite robust VAT regimes, the analysis contends that Washington's deficit stems from undisciplined spending rather than a revenue shortage.

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A discussion paper from the Institute for Public Policy Research urges the U.K. to rebalance its tax system by shifting the fiscal burden away from younger workers toward property and accumulated wealth, while establishing new mechanisms to tax artificial intelligence. Authored by Oxford Professor Ben Ansell, the report proposes replacing council tax and stamp duty with a 0.65 percent proportional property tax, aligning capital gains and income tax rates, extending National Insurance to pensioners, and introducing progressive consumption and AI taxes to tackle aging demographics and technological displacement.

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The EU Council on September 17 made public a document containing comments by several member jurisdictions on various proposed measures under its tax simplification omnibus relating to the minimum shareholding threshold for withholding tax exemption claims; payments leaving the EU; safeguards; research and development; controlled foreign corporation rules under the OECD's pillar 2 standard; and more.

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The Ireland government’s expenditure on its research and development tax credit rose to €1.26 billion ($1.47 billion) in 2024 as more claimants took advantage of corporation tax relief. Foregone revenue from the country’s most popular corporation tax credit rose nearly 30% on the 2023 figure of €976 million, according to figures released Wednesday by the Department of Finance.

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