Int'l Tax News

The Australian tax authority is extending its rules for disclosure, of contestable tax positions to large and multinational companieswith annual turnovers of more than A$250 million ($184 million). Companies that meet the threshold must now complete and file their "Reportable Tax Position" (RTP) questionnairewith their 2018 tax return.

U.K. lawmakers have renewed criticisms of the government's planned reductions in the top corporate tax rate, adding to the scrutiny over Britain's public finances as it prepares to leave the European Union.

Germany is considering tightening legislation to hold the likes of Amazon.com Inc. and eBay Inc. accountable for lost taxes from foreign-partner vendors. The German Finance Ministrywants online retailers to be liable for unpaid value-added taxes by vendorswho aren't registeredwith German tax authorities.

The digital consulting arms of large accounting firms, including the Big Four, are reaping the benefits of tax reformwith increased demand for their services. Companies are looking to invest their tax savings in digital transformation consulting. For help, some companies are largely turning to the digital consulting divisions of the Big Four accounting firms.

U.S. companies are funneling extra money into their pension funds to take advantage of temporary tax savings, moves that are helping suppress yields on long-term Treasurys. S&P 500 companies are contributing to pension plans this year at a pace expected to nearly match 2017's level,which at $63 billionwas the most since 2003, according to Goldman Sachs Asset Management. Last year's contributionswere spurred in part by companies anticipating changes in the U.S. tax-code overhaul.

U.S. companies have brought home only a sliver of their more than $2 trillion in profits stashed overseas, a sign that this year's corporate spending spree on things like buybacks and new equipment is only just beginning.

The era of U.S. companies hoarding cash offshore may be coming to an end as a result of the new U.S. tax law, a development that raises concerns about corporate credit risk for more indebted companies down the line, according to S&P Global Ratings.

Multinational companies are trying to beat a new tax called the BEAT. The BEAT is the Base Erosion and Anti-Abuse Tax, a complex minimum tax meant to prevent theworld's biggest corporations from shifting profits from the U.S. to other countries. Turned from idea into law last year as part of the tax-code revamp, the BEAT is now frustrating corporate executives and spurring fresh tax-avoidance strategies.

The global intangible low-taxed income provision ÔøΩ new section 951A, combinedwith new section 250 ÔøΩ in the Tax Cuts and Jobs Act (P.L. 115-97) includes rules unlike any that have ever been part of the Internal Revenue Code. Tax advisers and regwriters have beenwrestlingwith concepts that eliminate deferral on any foreign earnings over a fixed return on tangible assets, separate GILTI taxes into their own basket, allow a GILTI deduction at the parent level, and net controlled foreign corporations that have positive tested incomewith those that have negative tested income. Many of those concepts can be traced to international tax reform proposals that have been discussed for over a decade. Review and analysis of the earlier proposals could help inform both advisers and regulationwriters.

The IRS plans to propose new regulations on "previously taxed income"ÔøΩmeant to prevent double taxation of controlled foreign corporations. The new tax law has heightened the need for new rules, an official said.

The U.K. government is still reviewing policy issues for imposing a new tax on the revenue of digital companies like Facebook Inc. and Google Inc., despite claims it had backtracked on original plans.

The U.K. government is considering new guidance for its "Google tax" to clarify that multinational businesses facing the punitive measurewon't be taxed twice on the same set of profits.

One of South America's biggest economic success story in recent years could call time on one of its most attractive assets: rock-bottom tax rates. Paraguay's outgoing finance minister, Lea Gimenez, is drafting a proposal to the transition team of elected president Mario Abdo Benitez to increase the federal tax burden.

India's tax department is aiming to shorten the time frame inwhich companies can bring money generated through inter-group pricing adjustments back into the country.

Chile is joining the throng of countries trying to ensure digital companies pay their fair share of tax. Finance Minister Felipe Larrain June 21 announced a tax on the revenue of foreign companies that provide digital services through platforms such as Netflix Inc., Spotify Technology, Airbnb Inc. and Uber Technologies Inc.

The Australian tax authority has given companies a steer onwhen itwon't apply anti-tax avoidance laws, direction meant to help companies prepare for a new set of rules aimed at aggressive tax planning.

Tax authorities auditing global companies are entitled to consider after-the-fact outcomes as evidence of the appropriateness of before-the-fact intercompany pricing arrangements involving intangibles, the OECD said in controversial guidance.

Russian lawmakers have introduced bills to zero out the country's dividend tax for certain companies in designated regions. The standard tax rate is 15 percent for dividends paid to a non-resident. A bill, introduced June 15, creates two "special administrative districts"where international holding companies can benefit from a preferential tax regime.

U.S. Treasury Department officials are forming an international tax enforcement groupwith counterparts from the U.K., Australia, Canada, and the Netherlands to focus on criminal schemes using cyber or virtual currency to evade taxes.

Fiat Chrysler Automobiles NV and Luxembourg headed to the European Union courts in the first round of a battle pitting the likes of Apple Inc. against EU regulatorswho singled them out during a crackdown on controversial tax deals for multinationals.

The European Commission says itwants to fight tax avoidance among large companies, but its motives amount to a power grab, a former OECD official said.

Federal and provincial governments in Canada aren't yetwilling to give up the revenue needed to make the tax cuts manufacturers seek, tax policy observers said.

Rio de Janeiro has become the first Brazilian state to approve tax planning legislation. Under the Rio law,whenever a tax agent feels a specific company tax planning procedure is designed to delay, reduce or eliminate tax payments, the companywill receive a notice to present its defensewithin 30 days.

The Australian tax authority has laid out a tougher stance onwhen foreign companies can be treated as Australian residents for tax purposes. The Australian Tax Office's view, issued in a June 21 ruling, is that if a foreign company is centrally managed and controlled in Australia, it is effectively carrying on business in Australia.

The European Union is on course to hand dozens of U.K.-based companies a pre-Brexit tax bombshell, according to people familiarwith a state-aid probe that could lead to bills exceeding 1 billion pounds ($1.3 billion).

US companies repatriating profits drained more dollars from global markets in the first quarter of the year than did the Federal Reserve's actions to shrink its balance sheet, according to data that suggests embattled emerging markets cannot simply blame the Fed for their plight.

The European Union's expected approval thisweek of a measure to curb tax fraud is now in doubt due to countries' demands to restore a separate tax break for the trading bloc's financial sector.

Taiwan's finance ministry has encouraged multinational corporationswith operations there to apply for bilateral or unilateral advance pricing agreementswith Taiwan's tax authority to help boost tax certainty.

FTSE 100 companies are monitoring the U.K. government's Brexit discussionswith the European Union to identify extra tax costs, highlighting the uncertainty businesses face on the issue.

An Irish House panel is pushing to restrict companies' ability to reduce upcoming tax payments by applying operating losses to future profits. There is currently no limit on how far forward companies can peg the losses to reduce future corporate tax bills.

FTSE 100 companies are signaling knock-on effects of the OECD's tax policy reform for global businesses, underlining how much the international tax landscape has shifted for large corporations.

The European Union should consider abandoning the 750 million-euro threshold itwould use to apply a new tax on digital companies, according to a document from EU presidency holder Bulgaria obtained by Bloomberg Tax.

The battle over the Australia's plan to phase in a company tax rate of 25 percent by the 2026-2027 tax yearwill be decidedwhen the Senate votes on it nextweek. The debate is an example of how challenging it is for countries to reach agreement on sweeping tax changesÔøΩand pressure to do so has been building since the U.S. cut its corporate rate.

This authors study the effect of corporate tax policy on foreign investment and cash holdings using a dynamic model calibrated to confidential data on the foreign operations of US multinationals. Prior to the 2017 Tax Cut and Jobs Act, the US tax code encouraged excess foreign investment by depressing the opportunity cost of capital. The switch to a territorial system following the reform reduces the optimal level of foreign investment by 9.7% for the average US multinational, despite lowering the tax rate on foreign earnings. The decline in investment is larger for goods producers and firmswith less severe agency conflicts.

In this lecture, Michael Graetz contends that the new tax law is unstable. This is hardly surprising because itwas rushed through Congress in record timewith only Republican votes and no ability for public comments on its changes. The new rules create significant new differences in tax burdens based onwhat kind of business is conducted,where goods and services are bought and sold,whether individualworkers are employees or independent contractors, andwhere people live. Finally, although itwas estimated to be a $1.5 trillion tax cut over ten years, it's actual cost is likely to be double that amount, producing unsustainable annual deficits and an unacceptable level of public debt. Footnotes have been omitted here. This article is forthcoming in the Yale Law Journal Forum.

The new US income tax deduction for "foreign-derived intangible income" effectively lowers the corporate tax rate ÔøΩ from 21% to around 13% ÔøΩ on export-generated income attributable to intangible assets. This paper considers the new provision both in relation to international trade and tax agreements and as a matter of national policy. It argues that FDII is not clearly in violation of international agreements ÔøΩ as has been claimed ÔøΩ but is difficult to justify from a national policy perspective.

Donald Trump's new tariffs on $50 billion of Chinese imports have run into stiff opposition from US business leaders, a change in mood for boardrooms that hadwelcomed the president's cuts to taxes and regulations and had largely shrugged off his protectionist rhetoric.

Theresa May had promised tax cuts for both businesses and high earners in last year's election manifesto, but both pledges could be rolled back after Mr. Hammond, the chancellor,was told by Mrs. May that "nothing is off the table" to fund her plan to boost health spending by an average of 3.4 percent over the next five years.

Exactly howwell is the tax cutworking? U.S. economic activity is on a solid trajectory this year, and overall growth is on track for a strong second quarter after a modest slowdown in the early months of 2018. But it remains unclear how much credit goes to the tax law. Both critics and supporters say itwill take months or years to draw conclusions on the law's effect. Meanwhile, here are a dozen gauges that help reveal howwell the changes are aiding businesses,workers and the broader economy.

Latin America is one of the most complex and tax controversy-ridden areas for multinationals, practitioners in the region said.

America's yawning budget deficit could trigger an upsurge of inflation and interest rates that shakes financial markets, according to a report by the International Monetary Fund.while the Trump administration has predicted tax cutswill deliver a long-term boost to the economy's growth potential, the IMF differed, saying potential growthwill return to its long-term trend of 1.75 percent as soon as 2021.

FTSE 100 companies are talking more about their international tax affairs in conference callswith investors and analysts, underlining the growing importance of the issue for global businesses.

Latin American countries, especially Mexico, are rapidly adopting electronic systems to collect tax information from multinational businesses operating in the region, corporate tax directors said.

The Australian Tax Officewants multinational companies to provide details in their 2018 tax filings of tax planning that exploits different tax rules between jurisdictions.

To project the long-term economic impact of the corporate tax cut, this issue brief presents the results of a dynamic model similar in nature to the macroeconomic models used by the Congressional Budget Office and Joint Committee on Taxation. The model shows a modest decline inwealth inequality due to the corporate tax cuts in the TCJA.while totalwealth remains highly concentrated in the top quintile, there is a small shift toward each of the bottom four quintiles.wages, household consumption, and corporate investment experience a modest increase,while total output remains unchanged.

In this article, the authors discuss similarities and differences in the U.S. and European approaches to taxing digital commerce.

Troublesome consequences of concern to both Treasury and corporate taxpayers could arise if the business interest deduction limitation affects a corporation's global intangible low-taxed income.

The EU must use every means available to police its own members on aggressive tax planning or risk losing credibility, according to Valère Moutarlier, head of direct taxation and tax cooperation at the European Commission.

This essay analyzes how U.S. state tax laws should treat the repatriation income generated by the 2017 federal tax legislation.

In this article, the author argues that the recentwork of the OECD and its Inclusive Framework project involving preferential tax regimes is misguided. He highlights the nexus approach to patent box regimes and the legitimization of offshore financial centers as particularly toxic developments that ultimately run counter to the expressed goals of the OECD's recentwork.