Int'l Tax News

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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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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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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