Int'l Tax News

The biggest US tech companies have not promised any specific new investments or jobs in the US in thewake of the country's recent tax overhaul, despite being the biggest beneficiaries of legislation designed to unlock hundreds of billions of dollars of offshore cash.

Growth in video and internet subscribers lifted fourth-quarter revenue at Charter Communications, the US's second-largest cable operator,which also reported a big profit boost from US tax cuts.

The European Union is looking atways to prevent Britain using low taxes, state subsidies or lower environmental and labour standards to gain a competitive edge over the EU after Brexit, EU diplomats said.

The Spanish tax administration's priorities for 2018 include enforcement of the OECD's updated transfer pricing standards and the detection of possible permanent establishments by nonresident entities, according to the government's annual tax plan.

India's Budget 2018 proposes a digital permanent establishment rule that, absent an applicable treaty,would deem a taxable presence in India if a firm has a significant economic presence, regardless of its physical presence.

The Netherlandswill seek to resume discussions towards double taxation avoidance treatieswith several countries in 2018, including the United States, the Government has said.
The Dutch Governmentwill attempt to begin tax treaty talkswith at least seven countries this year, including Australia, Colombia, Costa Rica, Ecuador, Morocco, Austria, and Portugal, according to an update on the Dutch tax treaty negotiation program, issued by the Ministry of Finance on January 26.

One month after the US slashed its corporate tax rate to 21 percent, 287 companies have announcedwage hikes or plans to expand their investments in the US, according to Americans for Tax Reform.

A taxwar could begin between theworld's two biggest economies after China said itwill allow foreign investors to claim a refund for direct investment made in 2018. Can taxpayers expect further perks in 2018 in reaction to the US tax reform?

India's 2018 Budget included proposals to expand the scope of the concessionary rate of corporate income tax, an increase to the tax levied in addition to corporate income tax by one percent, and changes to capital gains tax rules.

Tech giants beware:with a series of rulings, Chile is joining the countries seeking away to tax online services like cab-hailing, streaming and online advertising.

Amazon reported record quarterly profits due to a $789m benefit from the new US tax law, and reiterated its pledge to hire more USworkers as it took advantage of the drop in the corporate tax rate.

Indian businesses are "disappointed" by a corporate tax rate reduction for small and medium sized companies and a new long-term capital gains tax on listed equities included in the country's 2018 budget.

Multinational businesses are split overwhether they should publish their global tax reports amid fears that the publicwill misunderstand them.

The European Union moved a step closer to requiring the 28 countries in the bloc establish public registries that list the beneficial owners of companies, in a Jan. 29 vote at the Parliament's Committee for Economic and Monetary Affairs.

Under the new U.S. tax law, the drug company must pay a tax of $15 billion over the next eight years on its overseas earnings. Yet executives described the impact from the tax changes overall as positive, startingwith Pfizer's effective tax rate dropping 6 percentage points to 17%. The company said it plans to buy back $5 billion in shares this year and invest $5 billion in manufacturing and other capital projects in the U.S. over the next five years.

Pfizer issued a bullish profit forecast for 2018 as it said its tax ratewould fall from 23 percent to 17 percent as a result of President Donald Trump's reforms. Pfizer's effective tax rate on adjusted income is expected to be approximately 17 percent in 2018, significantly lower than the approximately 23 percent thatwe previously anticipated for full-year 2017, prior to the enactment of tax reform.

Continued uncertainty over negotiationswith the U.K. and the terms of a possiblewithdrawal agreement prompted the European Commission to set out the key customs and VAT implications of Brexit. Separately, tax professionals expressed concern over the powers thatwould be granted to U.K. government ministers under the Taxation (Cross-Border Trade) Bill.

India's Finance Ministry is set to release its annual budget on Feb. 1ÔøΩa highly anticipated plan that practitioners saywill be influenced by the nascent Goods and Services Tax regime, recently implemented changes to the U.S. tax code, and an upcoming national election.

The U.K. Treasury has denied creating loopholes in the Brexit tax bill thatwill create the legal framework for the country's cross-border trade system once it leaves the European Union.

Ireland's business-friendly tax regime has drawn legions of multinational companies to the country, boosting tax revenues and prompting political attacks from Donald Trump and Europe. Now concern is growing that Dublin has become too dependent on such taxes, leaving it vulnerable to financial shock.

HomebuilderDR Hortonsaw its profit slide in its fiscal first quarter on account of recent changes to US tax laws, but managed to deliver revenue above market expectations.

Tax reform and strong aircraft deliveries helpedBoeingbeatwall Street's expectations for its fourth-quarter earnings, as the company predicted higher aircraft deliveries in 2018 and stronger profits.

AT&T beatwall Street's expectations for profit and revenue in the fourth quarter as it added morewireless customers than anticipated. Net incomewas boosted by the US tax overhaul, jumping to $19bn, or $3.08 a share, from $2.4bn, or 39 cents a share, a year ago. The impact of tax reform and regulatory rationalisationwill be substantial and positive for the US economy and AT&T, according to AT&T's chief executive.

Businesseswaiting for Indian Prime Minister Narendra Modi to follow through on a pledge to cut corporate taxes may need towait a bit longer. In his last full budget before 2019 elections, Modi is facing a revenue squeeze that may make it difficult to deliver on a promise to lower the basic corporate tax rate over time to 25 percent from 30 percent. It's a catch-22 situation for the premier,who is also trying to lure foreign investors at a timewhen the U.S., U.K. and other countries are lowering business taxes.

An EU-wide tax on digital businesses' advertising revenues is gaining traction inside the European Commission, after the commission faced difficulties finding a proper legal basis to tax their turnover as France had suggested. On March 28, the commissionwill present two legislative proposals to ensure proper taxation on internet giants' activities in the EU.

While the base erosion and profit-shifting project's action 5 is intended to address harmful tax practices in all preferential tax regimes, the OECD's 2015 action 5 final report and 2017 progress report both contain sections dedicated solely to preferential tax regimes related to intellectual property.

Among the biggest problemswith U.S. corporate tax rules before the enactment of the Tax Cuts and Jobs Act (TCJA, P.L. 115-97)was that different industries hadwidely disparate tax rates built on the types of income-producing assets companies invested in,where their earningswere generated, and how much leverage the industry encouraged.

In the long table accompanying this article,we model the effects of these and other major new provisions of the TCJA and seewhatwe can learn about the new law's overall impact on the balance between foreign and domestic investment. In particular,we calculate an effective tax rate on a $10 million investment in a new factory under four scenarios: (1) in the United States under old law; (2) in the United States under the TCJA; (3) outside the United States under old law; and (4) outside the United States under the TCJA. If the excess of (1) over (3) is less than the excess of (2) over (4), this suggests the TCJA has reduced the tax incentive to invest abroad.

The U.K. government has come under attack for the tough appeals system behind its "Google tax" that has targeted multinational businesses across the globe.

European Union member nations have tentatively agreed on the scope of pending legislation to regulate tax intermediaries and clamp down on cross-border avoidance schemes, including the key definition of an intermediary.

The Brazilian unit of pharmaceutical giant Johnson & Johnson has registered a precedent-setting court victory that saved it from a 150 percent fine on unpaid taxes.

While the Tax Cuts and Jobs Act provides an exception from the base erosion and antiabuse tax (BEAT) for the services cost method, failure to meet that exception may cost taxpayers more than expected.Itai Grinberg, a former Treasury officialwho now teaches at Georgetown University Law Center, questioned government panelists January 25 aboutwhether a markup for serviceswould require that the entire payment be included under the BEAT, or simply the markup amount.

Diageo Plc, the maker of Johnniewalkerwhisky, haswarned that the European Union's state aid probe into a U.K. government tax scheme may cost it as much as 250 million pounds ($356.4 million).

South Korea's plan to change the tax regime for foreign investors could throttle the flow of overseas money that has fueled the stock market's record highs, index providers and financial-sector lobbyistswarned.

US industrial conglomerate Honeywell raised its 2018 earnings outlook on Friday, saying it expects to benefit from a lower effective tax rate in thewake of the recently enacted tax reforms.

AbbVieInc. said Friday the new U.S. tax overhaulwill slash its effective tax rate to 9% for 2018 and yield savings the drugmaker said itwould use to return cash to shareholders and boost employee compensation.

U.S. Treasury Secretary Steven Mnuchin has agreed to address any potential "unintended consequences" the new U.S. tax reform law might have on European Union companies, including competitive disadvantages and revenue losses from new base erosion measures.

Opponents of the new corporate tax cutswere right. Many companies didn't pay the full rate before the law passedÔøΩso theywon't see splashy reductions in 2018, according to their own estimates.

Multinationals that have invested in Argentina need to be aware of the recent comprehensive tax reforms,which includes a reduction in corporate income tax and the introduction of awithholding tax on dividends paid abroad.

China has committed to expand value-added tax reforms this year inwhat experts believe could be a positive sign for foreign companies operating here.

Eight multinational companieswill present their global tax positions to a group of tax administrations, including the IRS, as participants in a groundbreaking OECD pilot program designed to limit cross-border disputes.

Over the past few years, policymakers have argued that everything from Apple's Irish tax deal to patent boxes to the LuxLeaks tax rulings represent "harmful tax competition." Despite the ubiquity of this term, however, there is no internationally accepted definition of so-called harmful tax competition. This Article uses the anti-tax-competition measures proposed and implemented over the last twenty years to reverse-engineerwhat policymakers believe to constitute harmful tax competition

As Ireland has long been a prime destination for US investment, the US tax reform has raised questions for the Irish tax model and how itwill stand its own following the Tax Cuts and Jobs Actwas passed. Companies like Facebook and Apple have recently overhauled their tax arrangements, and Ireland faces several other external threats to its tax system.

Justweeks after the federal government adopted the biggest tax overhaul in three decades, the effects are rippling through corner offices and boardrooms,with companies large and small dusting off once-shelved plans, re-evaluating existing projects and exploring new investment in factories and equipment.

Southwest Airlines' profits more than tripled during the fourth quarter as it reaped the benefit of a large exceptional gain as a result of US tax reforms.

US defence groupNorthrop Grummanon Thursday delivered upbeat guidance from a lower tax rate, higher-than-expected quarterly sales and raised its quarterly dividend.

Caterpillar reported a loss for the fourth quarter as it booked a $2.4 billion charge related to changes to the U.S. tax code. Earnings excluding the tax charges and other items topped analysts' expectations. Another U.S. manufacturer,3MCo., said fourth-quarter sales increased 9%. 3M's net income, though, fell 55% as the company recorded expenses of $762 million to complywith provisions in the new federal tax code. 3M raised its 2018 profit forecast on the expectation of lower U.S. income taxes.

A further six countries have signed the BEPS multilateral instrument, enabling them to swiftly amend their double tax treaties to incorporate the recommendations put forward by the OECD as part of its base erosion and profit shifting Action Plan.

The European Commission plans to propose this spring a new tax framework for the digital economy thatwould be compatiblewith the proposed common consolidated corporate tax base.

A much-anticipated decision on the fate of the section 385 debt-equity regulations,which are designed to prevent interest stripping and inversions, is expected soon. The Tax Cuts and Jobs Act (P.L. 115-97) includes anti-interest-stripping and anti-base-erosion measures, but the question remainswhether those provisionswill obviate the need for distribution rules under reg. section 1.385-3.