Int'l Tax News

The United Kingdom will maintain its digital services tax until pillar 1 of the two-pillar plan to reform global corporate tax rules is implemented, according to Paul Tang, a Dutch member of the European Parliament.

Reuven S. Avi-Yonah examines the intersection between the UTPR and tax credits recently enacted by the Inflation Reduction Act and the CHIPS Act.

Mindy Herzfeld considers the implications of the Fifth Circuit’s holding in a recent nondelegation doctrine decision for the constitutional validity of the corporate alternative minimum tax.

The United States has proposed extending a digital services tax moratorium under the OECD’s pillar 1 framework, and while some countries are open to the idea, others are keeping their cards close to their chests.

The United Kingdom is seeking public input on draft guidance on the administration, chargeability, and scope of the taxes introduced by the country’s pillar 2 legislation.

Swiss voters overwhelmingly supported a global move to establish a minimum tax on corporate profits, with the world’s largest offshore center feeling the pressure to help crack down on tax avoidance by the biggest international companies.

New Jersey's SB 3737 would enlarge the state's GILTI exclusion from 50% to 95%, in line with neighboring states. The change could cost the state $122.8 million per year, but supporters maintain it would make New Jersey more competitive.

A new tax proposal from House Republicans would allow companies to temporarily disregard stricter standards for taking advantage of the foreign tax credit. GOP lawmakers argue the proposal would shorten US companies' supply chains, boost their competitiveness, and prevent double taxation.

Developing countries want a UN forum to discuss global tax cooperation because they feel the OECD hasn't addressed their concerns. The UN secretary general is working on a report that could lead to the creation of an intergovernmental tax-cooperation body.

The House Ways and Means Committee unanimously approved a bill to approve a trade pact with Taiwan. The bill could lead to a tax agreement between the two countries to eliminate double taxation and promote investment.

The European Court of Justice's advocate general sided with the General Court in its decision to overturn the European Commission's ruling that Amazon received illegal state aid from Luxembourg. The advocate general found that the Commission incorrectly applied the arm's length principle and failed to identify the framework for normal taxation in Luxembourg.

The European Commission recommends that EU countries review their tax systems to encourage social economy enterprises, which prioritize community or environmental causes. The Commission suggests offering tax breaks for donations and retained profits and reducing the tax compliance burden.

The OECD held an information sharing meeting to help developing countries implement the global minimum tax rules. The meeting brought together early movers on the deal to discuss change management and the necessary steps to implement a minimum tax.

ATAD 3 is a pending EU tax rule intended to crack down on the misuse of EU holding companies. The rule will take effect as early as 2024, and companies that are out of compliance could face penalties.

The UK tax office released a draft proposal for how it will implement its version of the global minimum tax framework. The proposal includes details on which groups and entities will be subject to the minimum tax, as well as how the tax will be administered.

Brazil adopted new transfer pricing rules in line with global norms, which will make it more likely that US multinationals operating there will be able to receive foreign tax credits. The rules become mandatory in 2024, but companies can choose to apply them in 2023.

U.S.-based multinational companies will start paying higher taxes in foreign countries next year under a global minimum-tax agreement. The following year, the deal will cause U.S. companies to lose domestic tax breaks. In 2026, U.S. taxes on companies’ foreign income will rise because of long-delayed provisions of the 2017 tax law. Despite U.S. officials negotiating in 2021 for a way to limit corporate tax avoidance, Congress is deadlocked over what to do and this will ignite consequences for American companies.

The Biden administration is setting the stage for large companies to start buying clean-energy tax credits, kick-starting a new market at the core of last year’s climate law.

The inclusive framework on base erosion and profit shifting is staying positive about finalizing a multilateral convention to implement part of the OECD’s two-pillar global tax plan, but challenging discussions remain, the group’s co-chair said.

The Mexican government is offering tax breaks to companies that invest in 10 new development zones in the southeast of the country. The tax breaks include a three-year exemption from corporate income tax with a 50% reduction for an additional three years.

The Treasury Department plans to release additional guidance on transfers of intellectual property into and out of the United States. The guidance will address questions that were not addressed in proposed rules issued in May.

Some EU policymakers believe wealth taxes could provide new sources of revenue, while others argue they would be difficult to implement and enforce. Supporters claim skepticism about wealth taxes is due to shortcomings of the few currently in place and have proposed fixes.

Approval of a trade pact with Taiwan has laid the foundation for a tax deal between the two countries, according to House and Senate tax writers. Taiwan is not recognized by the US as a sovereign nation, so it can’t sign treaties, but lawmakers believe significant treaty-like benefits could be provided through the tax code.

A nonprofit law firm and a UK businessman have filed a legal challenge against the UK tax authority, arguing that private equity managers should be taxed at a higher rate. The challenge seeks to end the practice of taxing carried interest as a capital gain at 28% instead of income at above a 40% rate.

Carrie Brandon Elliot reviews the new proposed regs in reg. section 1.367(d)-1(f) that allow the termination of contingent payments under section 367(d) when intangible property is repatriated.

Nana Ama Sarfo describes the African Tax Administration Forum's suggested approach to QDMTTs and their potential importance for African countries.

As countries implement global minimum tax rules, it might be time to consider changing or eliminating potentially duplicative anti-tax-avoidance measures, like controlled foreign corporation rules, an OECD deputy tax chief said.

President Biden and British Prime Minister Rishi Sunak announced plans to reach a deal on critical minerals that will allow U.K. auto manufacturers to at least partially qualify for the clean vehicle tax credit included in the Inflation Reduction Act.

Speaking on June 7 at a Texas Federal Tax Institute conference, Tracy Villecco of the IRS Office of Associate Chief Counsel (International) said the government is open to hearing comments on a fact pattern “where the withholding payment on a service payment is in respect to services performed within that source jurisdiction, similar to the single-country exception for royalties.”

Leaders from OECD member countries pledged to help developing countries implement the two-pillar plan to modernize corporate tax rules while calling on the OECD to aid those countries in introducing country-by-country reporting rules.

The Norwegian Ministry of Finance has presented for consultation a proposal that would implement global minimum tax rules in line with pillar 2 of the OECD’s two-pillar plan to modernize corporate tax rules.

European Commissioner for Competition Margrethe Vestager said that taxing bad behavior is more efficient than rewarding good behavior for achieving clean energy goals, but sometimes subsidies are necessary to support innovation.

Mindy Herzfeld explores how tax incentives might evolve in response to the OECD two-pillar deal.

The African Union is seeking ways to protect its member countries’ tax bases, including adopting domestic minimum top-up taxes and formulating a common position to help shape the U.N. debate on international tax cooperation.

Three corporate groups accounted for about one-third of Ireland’s total corporate tax revenue, with contributions amounting to EUR 5.2 billion in 2021, according to Ireland’s fiscal watchdog.

The International Accounting Standards Board is seeking input on proposed temporary accounting relief for deferred taxes for small and medium-size enterprises in response to OECD-brokered pillar 2 global minimum tax rules.

Japan plans to use tax incentives to stimulate investment in its semiconductor industry, as well as biotechnology, storage batteries, and data centers. The move is part of Prime Minister Fumio Kishida's "new capitalism" agenda.

The Dutch government has presented to parliament a bill that would implement global minimum taxation as required under pillar 2 of the OECD’s two-pillar deal to modernize corporate tax rules.

A U.S.-Chile tax agreement was approved by the Senate Foreign Relations Committee, advancing it to a full Senate vote. The treaty with one of the world’s largest lithium producers, which was negotiated in 2010, is considered important for the U.S. manufacture of semiconductor chips.

The New York State Bar Association Tax Section has submitted a report to the U.S. Treasury Department and the IRS regarding foreign tax credit considerations related to the OECD’s pillar 2 model rules, discussing considerations raised by pillar 2 taxes under the current IRS section 901, section 904, and section 960 rules; raising policy considerations for granting a credit for those taxes; and recommending related guidance.

Benjamin Angel, director of direct taxation at the European Commission’s Directorate-General for Taxation and Customs Union, said that the removal of a proposal to address tax avoidance enablers from the European Commission’s agenda should not be overinterpreted.

Stellantis could receive C$19 billion in subsidies from the Canadian government for a new electric vehicle battery plant. Canada is competing with the US to attract production of battery cells after President Biden signed the IRA.

Mindy Herzfeld examines how actions taken by countries in South America and the Caribbean, and the treaties that bind them, could undermine the OECD two-pillar deal’s promise of international tax stability.

A law aimed at shell companies is stalled due to disagreements between EU member states. Some want it to require sanctions against tax-avoiding shell structures while others want it to be downgraded to an "exchange of information" system.

Vietnam is considering compensating foreign investors for higher levies set to take effect next year under the global tax deal.

The EU is planning a directive for Pillar One similar to what was adopted for Pillar Two, and the framework is expected to be in place by July. An EU official said the move will catalyze a “political mass” for adoption of Pillar One at the international level.

Zimbabwe is introducing a 1% tax on all foreign payments made in the country to help the government stabilize the economy and raise revenue to pay for foreign-currency denominated debt.

Switzerland is seeking input on a proposal to minimize the administrative burden for multinational enterprises with business units across multiple Swiss cantons under a new supplementary tax regime aligned with OECD global minimum tax rules.

The European Commission said in its country-by-country economic recommendations that aggressive tax planning in Luxembourg and Malta is still of concern, particularly regarding withholding taxes on outbound dividend, interest, and royalty payments.

The IASB has published final amendments to a key standard providing temporary relief from deferred tax accounting in response to worldwide adoption of OECD-brokered global minimum tax rules.