Int'l Tax News

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 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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The United Nations should centralize more power in a future global tax agreement’s top decision-making body and make it easier for countries to trigger taxing rights over business activity under the deal, a think tank closely tied to developing countries said.

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This article analyzes what it identifies as the first reported Italian judicial decision on the Digital Services Tax, in which the First Instance Tax Court of Milan considered whether an online retailer’s consignment sales involved a taxable “multilateral digital interface.” The court held that the revenues fell outside the DST because customers interacted only with the retailer, which acted as a principal rather than an intermediary, and not with suppliers or other users through the website. The article discusses the ruling’s implications for multinational groups operating hybrid direct-sales and marketplace models, including revenue segmentation, contractual structuring, transfer pricing, and potential refund claims.

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U.K. Prime Minister Andy Burnham refused to rule out tax increases in the upcoming October 28 budget, acknowledging during a visit to Ukraine that the government faces a challenging fiscal landscape driven by public and defense spending commitments. While defending recent tax cuts on energy and business rates as fully funded, Burnham emphasized a cautious fiscal approach amid rising inflation and ruled out calling a general election this year.

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The OECD advised Peru in an August 25 tax policy review to rethink the design of its proposed private special economic zones (ZEEPs) by shifting from generous corporate income tax holidays to broader expenditure-based incentives. The organization warned that the 15 percent global minimum tax framework could render ZEEP income exemptions ineffective for large multinationals—shifting tax revenues to foreign jurisdictions via top-up taxes—and urged Peru to adopt targeted eligibility criteria, investment tax credits, and a potential qualified domestic minimum top-up tax to safeguard its domestic tax base.

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An Irish top court ruling empowering government officials to make appeals hearings public would potentially force multinationals to unveil sensitive tax information.

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Poland has joined Austria, Germany, Italy, Portugal, and Spain in urging the EU Council presidency to prioritize discussions on an EU-wide windfall tax targeting excess oil industry profits during the upcoming September ECOFIN meeting in Dublin. The joint push comes as domestic Polish windfall legislation faces constitutional hurdles, alongside separate German resistance to draft EU provisions restricting relative electricity tax rates.

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Herzfeld analyzes the sharp divide between developing nations and OECD members following negotiations on the draft U.N. Framework Convention on International Tax Cooperation, arguing that the emerging convention fundamentally rejects the status quo international tax architecture. She asserts that the growing conflict exposes deep flaws in the OECD-G20 inclusive framework's claim to universal representation, suggesting the OECD should abandon the pretense of global consensus and refocus directly on its member states' core priorities.

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The German Ministry of Finance urged the government to establish an AI monitoring system as an early warning mechanism for fiscal policy, warning in an August 20 report that artificial intelligence adoption could shift value creation abroad and alter the distribution of tax bases. The report cautions that reliance on foreign frontier models could erode domestic wage and social security tax revenues, recommending ongoing tax system reviews and exploring direct citizen participation in capital gains to ensure long-term fiscal stability.

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The Australian Senate passed legislation on August 20 enacting a news bargaining incentive that levies a 2.5 percent tax on digital advertising revenues of major social media and search companies that fail to pay domestic media for content. The measure passed unanimously alongside a companion distribution framework following revisions that raised the tax rate, shortened the reference period, and increased the minimum required news agreements to eight, drawing sharp pushback from U.S. tech trade groups urging trade action.

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The UK said it’s open to discussing the Trump administration’s concerns on its digital services tax, describing the levy on tech companies as an interim measure until a global solution is in place.

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Technical glitches in filing global minimum tax returns and inconsistent implementation are likely to increase administrative headaches and penalty risks for businesses when tax authorities begin sharing the returns and opening audits.

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Tax administrations in several key jurisdictions reported that the inaugural global minimum tax filing season went relatively smoothly despite complex reporting rules and first-year technical hurdles, according to revenue officials reflecting on the June 30 deadline. While agencies relied on early portal rollouts, advance testing environments, and penalty grace periods to facilitate compliance, authorities are now evaluating practical feedback to refine IT validation, data exchange, and taxpayer support systems before the next pillar 2 cycle.

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As the Treasury Department prepares proposed regulations to modify its controversial 2022 foreign tax credit regime, tax practitioners and legal scholars are questioning whether the government will repair the prescriptive rules or substantially unwind them in favor of the prior "predominant character" standard. The project, flagged on Treasury's recent regulatory agenda, forces officials to weigh competing deregulatory priorities and evolving pillar 2 guidance against taxpayers' reliance on multiyear temporary relief under Notice 2023-80.

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The Swedish government proposed draft legislation on August 13 introducing an enhanced R&D tax incentive that would allow companies to deduct up to 200 percent of qualifying researcher salary and payroll costs to boost domestic competitiveness and investment. The proposal favors a direct tax deduction over a refundable credit to ensure relief targets profitable companies with viable projects, with the mea

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Romania enacted Law No. 162/2026 to establish a temporary windfall tax and crisis regime from August 7 through October 31 on exceptional revenues earned by domestic crude oil producers and refiners when benchmark prices exceed set thresholds. The measure imposes a 60 percent tax on qualifying crude oil sales and progressive rates on processed energy products, alongside mandatory arm’s-length transfer pricing rules and anti-avoidance authority to recharacterize restructured supply transactions.

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An 835-page European Commission study warns that Europe's cloud and AI infrastructure could fall short of rapidly growing demand, emphasizing that predictable national fiscal incentives play a vital role in accelerating data center investments and reducing strategic dependence on foreign providers. While highlighting how targeted tax exemptions and electricity relief drive digital infrastructure expansion across member states, the study rejects EU-wide tax credit harmonization in favor of closer national monitoring to complement the proposed Cloud and AI Development Act.

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Rawal demonstrates how in-kind consideration is an important part of the provision of digital services and explains how it should be taxed.

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Saeed argues that Ghana’s tax system inadequately captures income from nonresident digital businesses and proposes a tailored significant economic presence regime that could also serve as a model for other developing countries.

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WSJ's Editorial Board argues that Congressional Republicans should seize an opening to index the capital gains tax to inflation, contending that taxing unadjusted nominal gains unfairly inflates effective tax rates on middle-class investors and homeowners. Pointing to updated calculations by Arthur Laffer, the piece asserts that allowing taxpayers to step up their basis for inflation would eliminate the hidden tax penalty created by recent price surges and stimulate broader economic growth.

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The Italian Supreme Court is playing a big role in shaping the country’s intragroup pricing practices, pushing more rigorous economic analysis and better documentation as a steady stream of transfer pricing disputes reaches its docket, tax professionals say.

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Reports on a White House analysis estimating that goods, largely from China, are transshipped through third countries to evade U.S. import duties, resulting in approximately $19–26 billion in lost annual tariff revenue. The report also describes U.S. Customs and Border Protection’s deployment of AI tools to detect suspected transshipment by analyzing cargo markings, packaging patterns, and X-ray images.

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Negotiators clashed over whether a draft U.N. tax convention protocol should supersede existing dispute mechanisms or preserve them during August 12-13 talks in New York. While OECD members and several allied jurisdictions advocated for protecting established bilateral procedures, the Africa Group pushed for the protocol to override existing pacts to resolve structural power imbalances; delegates also voiced divergent stances on mandatory arbitration and investor-state dispute settlement despite widespread backing for the mutual agreement procedure.

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The Australian government introduced legislation on August 13 to establish a new bargaining incentive that would impose a 2.5 percent tax on digital advertising revenue for major social media and search platforms that fail to strike commercial content deals with local news outlets. While revised provisions require tech giants to sign agreements with at least eight local publishers to offset liability, U.S. tech trade groups criticized the measure as a discriminatory levy that distorts digital trade and warrants U.S. government opposition.

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The Trump administration can continue to collect tariffs on low-dollar imports after a US trade court rejected a challenge to the president’s policies.

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The European Commission does not share the characterization of its Carbon Border Adjustment Mechanism as a tariff, spokesperson Louise Bogey says at a daily press briefing in Brussels, responding to a question about an FT op-ed from US Ambassador to the EU Andrew Puzder.

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Polish government is conducting “a very complex and sensitive analysis” of a planned digital tax, examining both the details of the levy and its potential impact on relations with the US, Prime Minister Donald Tusk says at press conference in Warsaw.

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Global North and Global South countries clashed over whether cross-border services income should be taxed on a gross or net basis during August 10-11 negotiating sessions on a draft U.N. tax convention protocol. While developed jurisdictions and business groups warned that gross-basis taxation disregards business expenses and distorts cross-border trade, developing countries favored gross taxation for administrative ease while seeking clarity on how to operationalize optional net-basis rules without creating discrimination.

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The OECD should tweak its proposed changes to the rules on how digital platforms in the sharing and gig economy share information with tax authorities, a business group said August 12, 2026.

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The OECD spent the last decade selling its Pillar Two minimum tax on the promise it would bring in significant new revenue. Its latest figures estimate the 15% global tax raised between 79 billion and 109 billion euros ($91.2 billion to $125.8 billion) in 2024. That’s about a third of what the organization projected in 2023, a number that shrinks with every publication.

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European and allied countries pushed for optionality and reservations in a draft U.N. protocol on cross-border services income during August 10-11 negotiating sessions, expressing deep disappointment over the removal of physical presence nexus requirements and the reliance on gross-basis taxation. Meanwhile, delegates from both developed and developing jurisdictions raised concerns about potential double taxation, seeking clarity on how the protocol’s subject-to-tax rule and broader provisions will interact with existing bilateral tax treaties.

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Microsoft Corp.’s current federal tax expense fell year-over-year from $14.1 billion to $2.5 billion even as its revenue surged, offering a case study of how the artificial intelligence infrastructure boom is being financed (partly) through accelerated deductions embedded in the massive 2025 tax law.

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Countries disagreed on August 11, 2026, over the nature of digital services taxes and whether they should be included in a United Nations agreement to tax income from certain services.

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Uses U.S. International Trade Commission (USITC) and U.S. Customs and Border Protection (CBP) data to estimate effective tariff rates and customs revenue. The analysis reports a 7.1% average effective tariff rate as of June 2026, highlights increased use of USMCA tariff exemptions, and compares effective tariff rates across major trading partners and product categories.

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OECD and several non-OECD countries pushed to remove provisions from the draft U.N. tax framework convention requiring parties to align and potentially renegotiate existing tax agreements, citing administrative burdens and economic risks during August 7 committee discussions. Conversely, India, Mauritius, and the Africa Group argued that retaining and strengthening mandatory treaty alignment is essential to rectify global tax inequities and give the convention true legal force.

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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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The American Energy Independence and Tax Fairness Act would help “put American energy development on an even playing field with energy development that’s happening in the Middle East or anywhere else,” in part by encouraging oil and gas companies to invest domestically, Sen. Martin Heinrich, D-N.M., said in an August 7 release.

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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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