Int'l Tax News

China is the U.S.'s largest trading partner and theworld's second largest economy, so the largest tax reform in the U.S. since the 1980swill, of course, present both risk and opportunities for both countries.

President Trump said Monday that hewill propose a tax on imports as soon as thisweek in an effort to crack down onwhat he believes are unfair trade practices.

The Netherlands,which is one of the main gateways for American business to enter the EU market, faces tough tax competition from the US Tax Cuts and Jobs Act. But the US changes may have made things more difficult for the EU as awhole, negatively impacting the Dutch market.

A European Union action to combat hybrid mismatch structureswill take effect for some member nations in January 2022ÔøΩbut U.S. tax reform may have solved the problem already.

The Treasury Department is consideringwriting an exception to rules on the transfer of intangibles and acting on the earnings-stripping rules, an official told Bloomberg Tax. The government is considering a retroactive exception for corporate values known as "foreign goodwill" and "going concern" under the tax code Section 367 intangibles rules, according to a Treasury official.

Singaporewill pare back tax incentives covering intellectual property as part of a global fight against tax evasion, using new legislation to expand thewindow inwhich companies can qualify for other tax breaks.

U.S. tax reform is counteracting the higher costs that multinational companies are facing from the OECD's project to quash tax avoidance, according to an analysis of corporate filings by Bloomberg Tax.

Northern Irelandwon't cut its corporate tax rate to 12.5 percent until at least April 2019 because of the ongoing political failure to restore the region's devolved parliament. The delay of at least one year is a major blow to the U.K.'s smallest country's ambitions of attracting more foreign investorswith a corporate tax rate thatwould match neighboring Republic of Ireland.

The IRS hopes a groundbreaking OECD pilot program designed to limit cross-border disputeswill help identify transfer pricing issues that can be removed from the audit process, an IRS official said. A group of eight tax administrations and multinational companies headquartered in Australia, Canada, Italy, the Netherlands, Japan, Spain, the U.K., and the U.S. are participating in the International Compliance Assurance Program (ICAP).

The IRS is "grappling"with the new tax law's base erosion and anti-abuse tax (BEAT), and how to dealwith it in situationswhere double taxation may arise, especiallywhen companieswork toward negotiating advance pricing agreements.

Singapore may unveil an e-commerce tax in nextweek's budget, setting the tone for a region that's grapplingwith online retail's assault on brick-and-mortar vendors.

The Australian government has proposed legislation thatwould incorporate approved articles of the OECD's multilateral instrument into domestic law, including rules on treaty abuse, permanent establishment avoidance, and mandatory binding arbitration.

Nine large companies, alongwith a group of major business leaders, have endorsed a set of "responsible tax principles" covering such issues as compliance, transparency, and business structure. The seven principles, released in a February 9 report, address accountability and governance, relationshipswith tax authorities, seeking and accepting tax incentives, and supporting effective tax systems. They also give businesses a framework to make their tax practices more responsible and transparent.

The OECD has recently launched a new program – the International Compliance Assurance Programme – being spearhead by the Forum on Tax Administration that is aimed at providing assurance to multinationalswith regards to their transfer pricing (TP) affairs.

The Indian Central Board of Direct Taxes on February 7 announced that it entered into its first ever bilateral advance pricing agreementwith a US firm, in cooperationwith authorities in the US.
In total, during January 2018, the CBDT entered into five unilateral APAs and two bilateral APAs.

The Tax Cuts and Jobs Act (TCJA) is expected to reduce taxes for the country's 500 largest companies by between $75 billion and $100 billion in 2018, boosting their profitability by 8 percent. Nearly 300 companies have announced bonuses, raises, or boosts to 401(k) contributions.
At first glance, this isn't just good news, its great news. But after the bonus buzz fades,whatwill companies dowith their extra money?will they use it to make more capital investments in the US to boost productivity, and eventually,workers'wages?

In yet another round of country-by-country reporting guidance, the OECD has offered further details on specific issues, including the definition of total consolidated group revenue. The inclusive framework on base erosion and profit shifting,which brings together more than 100 developed and developing countries to implement the OECD/G-20 BEPS project package, released the updated guidance on February 8 to address two topics.

French spirits maker Pernod Ricard SA expects a limited impact from the new U.S. tax law, according to the company's finance chief. The new law "won't have a significant impact" on Pernod's group tax rate, Chief Financial Officer Gilles Bogaert said Friday in an interviewwith CFO Journal. "The gains are entirely offset by the broadening of the tax base," Mr. Bogaert said.

A new global tax apportionment system backed up by minimum rates is needed to stop a corporate tax rate "race to the bottom" in thewake of the U.S. corporate tax reform, a report from a tax reform lobby group has said. The Independent Commission for Reform of International Corporate Tax is calling for a new "unitary" approach to corporate taxation, saying this is needed because the arm's length principle and transfer pricing rules have failed and the OECD's Base Erosion and Profit Shifting (BEPS) reforms are inadequate.

The increasingly aggressive pursuit by Germany of common European tax treatments is polarizing economists, attorneys and politicians,who either see the move as courageous or completely off-base.

Australia's long-awaited draft guidelines on applying the diverted profits tax law targeting multinational companies is being criticized for potentially creating an uncertain environment for large companies, tax adviser, and auditors.

China's State Administration of Taxation (SAT) has released a public notice providing new beneficial ownership rules to determine foreign taxpayers' eligibility for treaty benefits on Chinese-source dividends, interest income, and royalty income. Public Notice [2018] 9 (Public Notice 9, dated February 3) grants treaty benefits in cases inwhich there is no abuse of treaty intent and result, and adopts the results of action 6 of the OECD's base erosion and profit-shifting project to enhance the certainty of eligibility for treaty benefits and to more effectively prevent treaty abuse.

Ireland's tax system, anchored by its 12.5 percent corporate tax rate, is a key factor in its strategy to keepwinning in the digitized "new, new economy," Finance Minister Paschal Donohoe said.

The Australian Taxation Office (ATO) has released draft guidelines on diverted profits tax (DPT) risk assessment, including guidance and examples onwhether an arrangementwill have sufficient economic substance to be exempt from the tax.

The two political parties seeking to form Germany's next governmentwant big companies to pay more tax, according to a coalition agreementwhose text singled out U.S. tech giants by name."We support fair taxation of large companies, in particular Internet concerns like Google, Apple, Facebook and Amazon," according to a brief passage in their 177-page coalition pact published onwednesday.

Allstate Corp. Chief Executive Officer Tomwilson said the insurer's $506 millionwindfall from the U.S. tax overhaulwill be used to invest in growth. "Firstwe're going to put more money into marketing, secondwe're going to expand distribution in the Allstate agencies and some of our other businesses,"wilson saidwednesday in an interview discussing fourth-quarter results.

The OECD released a list of approaches that 25 countries applyÔøΩor intend to applyÔøΩto multinational companies' global tax reporting. Companies and governmentswill be able to use the compilation of approaches to determinewhether a country requires a global tax report to be filed in a specific situation, the Organization for Economic Cooperation said in its document published Feb. 8.

Australia's government has appealed to lawmakers to back its flagship economic plan to cut corporate taxes as it seeks to respond to falls in US and UK company tax rates. Canberrawants to progressively cut corporate taxes from 30 per cent to 25 per cent by 2025 for all companies, in a bid to boost growth and compete for investment.

More EU member states are starting to express that they share Ireland's concerns about the EU's plans to tax the digital economy,which are now expected to come out in March. Irish Finance Minister Paschal Donohoe in a February 6 interviewwith Reuters said that based on his discussionswith EU colleagues since an informal meeting of the Economic and Financial Affairs Council in September 2017, a growing number of countries are starting to share Ireland's concerns about the taxation of the digital economy.

After encountering stiff resistance from brokerage firms, the South Korean government has suspended a proposed regulation setting a lower threshold forwithholding tax on share sales by foreigner investors.

Israel's government could help sustain a rebound in the Tel Aviv Stock Exchange by reducing red tape and aligning taxes on capital gainswith taxes on other investments like real estate, the head of the exchange told foreign reporters.

German tax legislation imposing stricter tax treatment for dividend income from subsidiaries in a foreign country, compared to those in Germany, violates European Union free movement of capital laws, the EU's highest court said.

The total value of global merger and acquisition deals involving U.S. targets reached $154.4 billion in January, the strongest start for any year since 2000, according to Bloomberg data compiled by Bloomberg Law. The recently enacted tax overhaul,whichwent into effect Jan. 1, is among the factors expected to drive more deal activity this year, practitioners said.

GlaxoSmithKline PLC's profitwill climb as a result of the lower corporate tax rate in the U.S., the company's single most important market, according to finance chief Simon Dingemans. The British drug maker derives close to 40% of its sales from the U.S. and expects to pay a smaller share of its profits to the U.S. government now that the corporate tax rate is 21%, down from 35% previously.

By: Kyle Pomerleau

The new tax code is projected to improve the United States' current ranking from 30th among the 35 Organisation for Economic Co-operation and Development (OECD) countries to 25th, an improvement of five places.

EU member nations are considering making bloc-wide research and development tax deductions optional, or eliminating them altogether, as part of changes to the pending Common Corporate Tax Base (CCTB).

Archer Daniels Midland reported sharply higher profits in the fourth quarter, as the benefits of US tax reform overcameweaker operating performance at the global grain merchant and processor.

Offshore tax evasion, international money laundering, and aggressive international tax planning significantly reduce government revenues. Governments struggle to enforce their tax laws to constrain these actions, and they are inhibited by a lack of information concerning international capital flows. The main international policy response to these developments has been to promote global financial transparency through heightened cross-border exchanges of tax information. The Article examines elements of optimal cross-border tax information exchange laws and policies by focusing on three key challenges: information quality, taxpayer privacy, and enforcement.

Hong Kong on February 2, 2018, ratified an Ordinance to enable the territory to soon join the OECD's Multilateral Convention on Mutual Administrative Assistance in Tax Matters and thereby more simply and more broadly agree to exchange tax informationwith other countries' tax authorities.

The Swiss Federal Council has agreed on the outline of the new tax reform package thatwill be presented to Parliament next month.
The Council said that it agreed on the parameters for the dispatch on tax proposal 17 (TP17) on January 31. The Federal Department of Finance has been instructed to prepare the dispatch by the end of March. Togetherwith the dispatch, the FDFwill also prepare an estimate of the financial implications of TP17 for the confederation and the cantons.

Japan's Cabinet recently approved tax reform bills,which have now been introduced into the country's parliament for debate.
The bills propose to cut the corporate tax rate to 25 percent for companieswho increase employeewages by three percent. A further reduction to 20 percentwill be possible for companies investing in improving their productivity or engaging in digitalization. The tax relief starts in the next fiscal year, beginning in April, andwill last for three years only.

While the drop in the corporate tax rate to 21 percent decreases rate differentialswith other countries, thereby reducing income-shifting incentives, other territorial aspects of the U.S. tax reform still encourage investment abroad, economists say.

Scores of companies, including some of the country's biggest employers, are handing out bonuses, announcingwith a flourish that they are sharing thewindfall from corporate tax cutswith theirworkers. A look at the fine print, though, shows that some of the largess is not nearly as large as company news releases suggest. Some retailers have tied the size of bonuses to tenure, so that only employeeswho have beenwith the company for 20 years or morewill receive the $1,000 maximum thatwas highlighted in their announcements.

President Donald Trump's corporate tax cuts are already having a big impact. The main takeaway at the halfway point of earnings season is that corporations are going to make more money -- lots more -- as their statutory tax rate gets axed to 21 percent from 35 percent. Corporate chiefs already are making plans for thewindfall,with some detailing specific investments in infrastructure or technology alongwith their one-time charges and benefits.

The U.S. tax overhaul may bring trillions of dollars in accumulated profits back home from overseas financial centers, butwill likely deliver a smaller boost to U.S. investment by foreign businesses, according to an analysis by the United Nations.

Chief executives, financiers and business leaders are thinking through how US tax reforms might affectwhere they put their business.

South Korea has scrapped a tax revision aimed at levying capital gains tax on awider range of foreign-based buyers after foreign investors expressed concerns over huge logistical challenges to implement the proposal.

The European Parliament Feb. 8will launch an investigative committee to probe several high-priority issues, including the recent Paradise Papers leak and value-added tax fraud. The committeewill also review the methodology of the European Union's tax haven blacklisting process and the Organization for Economic Cooperation and Development's base erosion and profit-shifting reforms.

Brazilian companies and business groups are stepping up their challenges of a controversial law that's added a newweapon to the revenue service's tax collection arsenal.

The lower U.S. corporate tax rate and theweaker dollar are spurring Novo Nordisk A/S to invest and acquire assets in the country, according to the company's finance chief.