Int'l Tax News

Senate Democrats onwednesday proposed repealing major pieces of thejust-passed tax law, in a plan thatwould raise taxes on corporations, estates and high-income households to pay for $1 trillion in new infrastructure spending. The proposalwould set the corporate tax rate at 25%, up from today's 21% but stillwell below the 35% thatwas in place until President Donald Trump signed the new tax law in December.

Multinational companies have made such extensive use of Ireland to funnel royalties ÔøΩ a commonway to shift profits and avoid tax ÔøΩ that these payments averaged 23 percent of the country's annual gross domestic product between 2010 and 2015, according to a European Commission report seen by the Financial Times.

In December 2017, Congress enacted the most sweeping set of tax changes in a generation, lowering statutory tax rates for individuals and businesses and altering the tax base. The law generated substantial debate on many issues, notably about its long-term impact on the capital-labor ratio, GDP perworker, realwages and, in the transition to the new steady state, economic growth. Prior to enactment of the tax law, one of the authors (Robert) joined a group of economists to argue that the corporate-tax part of the tax reformwould have substantially positive long-term effects in all of these dimensions. The other author (Jason)was a consistent critic of the law. Since enactment, the authors prepared this joint analysis of themacroeconomic consequences of the tax changes. The authorshave different interpretations of the results and their implications for public policyÔøΩwhich are discussed in separate concluding sections.

The recent changes to the U.S. tax lawwill increase economic growth modestly but not fast enough to pay for themselves, according to a new estimate from a pair of economists from different sides of the political spectrum. In otherwords, the additional government tax revenue generated by higher growthwon't be enough to offset the drop in revenuedue to tax cuts.

U.K.-listed companieswill pay $910 million in tax from a one-off U.S. levy on multinational corporations' overseas earnings, according to an analysis of corporate filings by Bloomberg Tax.

Dutch plans to implement an EU tax-avoidance directivewill spur higher tax bills for companies thatwere leftwith a large volume of debt following acquisitions by private equity groups, practitioners say.

The European Unionwill demand that the U.K. avoid "undercutting" member nations' tax rates after next year's Brexit, as part of any post-departure trade agreement between the EU and the U.K. The EUwill insist on terms to preventwhat it fearswould be unfair corporate taxation, including rates in the U.K. dependent territories.

The American Investment Council has urged Treasury to clarify the scope of the Tax Cuts and Jobs Act (P.L. 115-97),which repealed section 958(b)(4), saying that the legislative history of section 958 shows that Congress did not intend to expand the controlled foreign corporation rules to apply to foreign corporations thatwere not controlled by U.S. persons.

Pam Olson of PwC has asked Treasury to address two anomalies that have occurred in measuring the cash position under section 965's transition tax, the first ofwhich involves cash contributed or lent by the U.S. parent to its foreign subsidiaries in completing an acquisition and the second is Treasury's authority to promulgate regulations carrying out section 965's purpose.

Germany hopes to see some progress on a "Joint Corporate Taxwith France" by the end of 2018, said Chancellor Angela Merkel.U.S. corporate tax cuts have reinvigorated thework of Germany and France on a common corporation tax, Merkel said during herweekly video podcast March 3. A common corporation taxwould allow Germany and France to agree to a joint corporation assessment basis, she said.

Corporate tax managers are scrambling to keep their foreign related-party payments below the 3 percent BEAT threshold, as the discussion at IFA demonstrated. Some tax managers have even asked that all related-party payments be approved by the tax department. No onewants to be the personwho approved a payment that tipped the company into BEAT. C.N. "Sandy" Macfarlane of Chevron Corp. called the BEAT "draconian" and said hewould appoint an internal BEAT coordinator. David Lewis of Eli Lilly fretted about the possible state reaction to BEAT.

In its report on proposed directives on a common consolidated corporate tax base (CCCTB), the European Parliament has recommended a digital permanent establishment standard and an apportionment factor based on online platform users and personal data.

Growthwill be supported by 800 billion yuan of tax cuts for enterprises and individuals,while use of special purpose bondswill prioritize "supporting ongoing local projects to see them make steady progress," China'sFinance Ministry said.

The G-20 European finance ministers, alongwith the European Commission and Spain,will discuss an outline of the OECD's hotly anticipated interim report on taxing the digital economy during their March meeting in Argentina.

President Donald Trump and Republicans sold their $1.5 trillion tax cut as a boon forworkers, but it's becoming clear just two months after the bill passed that the truly bigwinnerswill be corporations and their shareholders, but perhaps not as big as people have been proclaiming recently.

Tax cuts and economic growth are spurring a spending spree by U.S. companies on deal making aswell asshare buybacks. Butwith some deals being done at big earnings multiples, companies and their investors may find theyhaven't spentwiselywhen the dust eventually settles.

China has no intention of joining the international tax cut race, head of the government's state council research office said on Monday, even as Beijing rolled out fresh tax cutsworth more than 800 billion yuan (91.6 billion pounds) for 2018.

French Finance Minister Bruno Le Maire has said that digital companieswill pay a special tax on their revenue in the range of two to six percent under plans being formulated by the European Commission.

German Chancellor Angela Merkel has suggested that Germany and Francewill soon press aheadwith plans to harmonize aspects of their corporate tax regimes.

EU finance ministers urged a fast global response to digital tax issues, in a letter to the Group of 20 nations. "A global response to the tax challenges raised by the digital economy remains urgently needed," ministers from Germany, France, Spain, Italy, the U.K. and the European Union said March 5 in thejoint letter to the Argentinian G-20 presidency.

A senior tax figure in New Zealand iswarning the country against following the international trend of lowering corporate tax rates.

Theworld's four largest accounting firms havewarned the U.K. Treasury against imposing a levy on the revenue of digital companies like Facebook Inc. and Google Inc. to make them pay "fair" taxes.

The OECD model tax convention's beneficial owner definition has no direct relevance for interpreting the same term under the EU interest and royalties directive, according to an opinion by Advocate General Juliane Kokott.

Technological advances and digitization of the traditionalways of doing business have fundamentally changed theway businesses carry out their global activities and are posing new challenges to the international tax framework ÔøΩ a system devised almost a century ago, based on criteria that rely primarily on physical presence.

The European Parliamentary Research Service has issued an in-depth analysis on taxing value created by the collaborative economy, emphasizing the importance of maintaining a level playing field between collaborative economy platforms and traditional incumbent operators.

Tax and mergers and acquisitions specialists haveweighed in, andwhile many expect the new tax law to affect company valuations and M&A strategy, the groups differ on how much influence new rules are expected to have.

First Solar Inc. isweighing an expansion of its manufacturing footprint in the U.S. as a result of the recent tax overhaul, according to Chief Financial Officer Alexander Bradley. The solar-panel maker is booking a one-time charge of $408 million linked to the tax legislation, Mr. Bradley said. The chargewas connected to the company's previously untaxed foreign earnings and the reassessment of deferred tax assets.

U.S. companies arebuying back their shares at an aggressive pace, stirring debates inwashington and onwall Street about how savings fromcorporate tax cutsare being used andwho benefits most. Share buybacks announced by large U.S. companies have exceeded $200 billion in the past three months, more than double the prior year.

Wolters Kluwer N.V. is on the hunt for acquisitions in the U.S. following the federal tax overhaul, according to the company's finance chief, Kevin B. Entricken. The drop in the U.S. corporate tax rate to 21% from 35% is making investments in the country more attractive, Mr. Entricken said. This "is good for a company like us," he said.

Multinational companies that supply electronic and online services to South African consumers may be required to register for value-added tax by Oct. 1, in linewith plans to collect tax revenue from them.

European Union member states have narrowed differences to regulate tax intermediaries but remain stuck on the terms for mandatory reporting arrangements involving tax deductible cross-border payments, especially as they concern corporate tax rates.

Belgium's Constitutional Court has struck down a levy on dividend distributions affecting large companies after finding it incompatiblewith both Belgium's constitution and European Union law. The March 1 judgmentwill benefit companies in cross-border situationswith pending disputes, practitioners say.

The OECD and Brazil on February 28, 2018, launched a joint project to examine the similarities and gaps between the Brazilian and OECD approaches to valuing cross-border transactions between associated firms for tax purposes.

The International Monetary Fund's (IMF) top official said Thursday that a set of U.S. tax cuts signed into law byPresident Trumpin Decemberwould likely boost economic growth and trade, butwarned of soaring budget deficits and of an"overheating impact" on the economy.

Beijing has announced major changes to tax abuse provisions thatwill make it harder for companies to treaty shop, butwill broaden the number of firms that can benefit from tax treaties.

Large companies need to get used to the Australian government publicly disclosing their financial data, according to the senior commissioner of the country's tax authority.

In this article, the authors attempt to solve the policy puzzle behind the global intangible low-taxed income rules in the Tax Cuts and Jobs Act.

The proposed EU tax on digital companies might exclude streaming services like Netflix and Spotify, according to a confidential document from the European Commission. According to the document, seen by Tax Analysts, the tax proposal due to be unveiled March 21will target services that consist of "the valorization of user data by means of making available advertisement space (e.g. Facebook, Google AdWords, Twitter, Instagram, 'free' Spotify), or the sale of such user data." Itwill also target companies that make digital platforms and marketplaces or intermediation services available ÔøΩ for example, Airbnb and Uber. "The business model of such marketplaces heavily relies on the participation of end users in the platform," the document states.

U.S. bank profits dropped3.5 percent in the fourth quarter of 2017, in part due to one-time changes to the tax code, the Federal Deposit Insurance Corporation (FDIC)reported Tuesday.

The Australian Tax Office has updated and added to its list of the guidance on international tax matters it intends to release this year.

Awidelywatched proxy for business investment fell for the second straight month in January, a hint that business spending didn't take off in the immediatewake of landmark tax legislation passed last year that lowered corporate tax rates and created new incentives for investment.

The Netherlands is fighting back against its reputation as a tax havenwith reforms to make it more difficult for companies to set up in the countrywithout a real business presence. The tax proposals,whichwill need to be backed by the Dutch parliament, are part of a bid to clean up the Netherlands' image and attract genuine investment, rather than "shell" or "letterbox" companies.

A $2.4bn benefit from US tax reform helped Altice USA swing to profit in the fourth quarter as the US's fourth-largest cable operator prepares to spin off from its European parent company, Patrick Drahi's Altice NV. "Tax reform is going to have a positive impact on us specifically from a cash flow savings standpoint," said Dexter Goei, chief executive.

The Polish finance ministrywants to introduce an exit tax for corporations and individuals starting from 2019. The proposal,which transposes the EU's Anti-Tax Avoidance Directive (ATAD) into Polish law, is also expected to target tax avoidance through cross-border hybrid instruments, tax practitioners said.

A committee of the European Parliament has approved bywide margins proposals to implement both a common corporate tax base (CCTB) and a common consolidated corporate tax base (CCCTB).

In this article, the author considers China's new Environmental Tax Law and the country's fast-developing carbon emissions trading system, comparing these measureswith past attempts to use taxes to protect the environment and also examining the general efficacy of market-based instruments for limiting pollution and protecting the environment in China and across the globe.

The Israeli tax authority has decided that virtual currencies, such as Bitcoin, should be treated as a form of "property," rather than as foreign currency.

The Polish Government has approved plans to effectively extend the scope of Poland's Special Economic Zones (SEZ) regime nationwide.