Int'l Tax News

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.

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.