Int'l Tax News

Australia's Finance Minister has said that company tax cuts are now "even more urgent" and that itwould be "absolutely reckless and irresponsible" for the opposition to continue to block reform legislation.

Indiawill trial a new system thatwill enable goods to be sent to other Indian stateswithout border checks under the country's new goods and services tax (GST) regime from February 2018.

One potential boost for the U.S. currency could come if corporations bring home cash held overseas. Under the Republican tax plan, U.S. corporationswill pay a one-timetaxof up to 15.5% on the profits they have stockpiled abroad,which could boost demand for the dollar as companies buy the currency to meet the levy and return assets to the U.S.

The U.K. government haswon a court bid to claim up to 1.2 billion pounds ($1.6 billion) in taxes linked to the collapse of Lehman Brothers Holdings Inc. in 2008, leaving the bank's creditors in line for a smaller slice of its remaining funds than they'd expected.

Singaporewill not tax funds that are coming in from foreign countries, in some cases, even if those countries do not first levy a dividend tax on the funds, according to a notice on the city-state's tax agency.

The Australian Tax Office released two key guidance documents Dec. 18 on laws affecting multinational companies and their cross-border transactions.

Amazon.com Inc.will pay 100 million euros ($118 million) to the Italian tax authorities for the period of 2011-2015 in a settlement that closes the fiscal probe by the country's tax police. Amazon confirmed in a separate statement that it reached an agreement and its local branch now has all revenues, expenses and taxes accounted for in Italy.

The IRS has requested comments on Form 8858, "Information Return of U.S. Personswith Respect to Foreign Disregarded Entities," and its related Schedule M; comments are due by February 20, 2018.

The OECD has issued peer review reports that evaluate how Austria, France, Germany, Italy, Liechtenstein, Luxembourg, and Sweden are implementing minimum standards on resolving tax treaty-related disputes in accordancewith action 14 of the base erosion and profit-shifting project. The OECD peer reviewswere available atgoo.gl/HbV3QN as of December 15, 2017.

EU member nations and the European Parliamentwill use the second phase of Brexit negotiations, due to begin in 2018, to ensure the U.K. adheres to tax policies that don't distort single market competition. At the same time, member nations and Parliament are expected to exert Brexit pressure to regulate Gibraltar and crack down on U.K. overseas territories and crown dependencies, according to EU officials.

U.K. government officials are "aware" some multinational companies are struggling to use a recently launched e-portal as they submit their first global tax reports.

Italy's lower house has approved an amendment to the government's 2018 budget bill that establishes a 3 percent tax on some internet transactions, down from the initial 6 percent.

U.S. multinationals need immediate guidance on how to treat the offshore cash theywill have to bring back under a pending tax reform measureÔøΩand how to address a sweeping set of complex issues, according to practitioners.

The Internal Revenue Service proposed new tax rules for foreign currency gains and losses, covering such issues as accounting methods and exclusions. Taxpayerswould be able to use the mark-to-market method of accounting for these gains and losses under the new rules, released Dec. 18.

Despite the increasing possibility that the United Stateswill slash its corporate tax rates and concern that itwould be followed by copycat moves by other countries hoping to remain competitive, Hong Kong's financial secretary said December 10 that the government of Hong Kong has no plans to follow suit.

Brussels has launched a probe into the Ikea brand's tax arrangements as the EUwidens the net in its four-year crackdown on aggressivecorporate tax avoidance.

The final version of the Republican tax planwould end some of the tax advantages companieswith operations in Puerto Rico have long enjoyed, potentially delivering an economic blow to the territory still reeling from Hurricane Maria and a record setting bankruptcy, according to an expertwho reviewed the plan Dec. 15.

The OECDwill "establish a clear sense of direction" for its policy on the taxation of the digitized economy in its April report to the Group of 20 finance ministers, an official said on Dec. 15.

An 18-month global pilot program designed to prevent cross-border tax disputesÔøΩinwhich the U.S. is participatingÔøΩwill be "a game changer" for tax administration audits of multinational enterprises, according to OECD's tax chief.

Chile could be facing its fifth tax reform in less than a decade after billionaire businessman Sebastian Pinerawon an overwhelming victory in the final round of voting in the country's presidential elections on Dec. 17.

Congress is abandoning the separate limitation on deductibility of interest for multinationals in its tax reform bill, just one of the international developments from a conference committee report that includes a substantial endorsement of several Senate provisions related to anti-base-erosion and mobile income.

Japan's ruling parties have approved a tax reform package for fiscal 2018 that includes a corporate tax break for companies that increasewages, in a bid to stimulate greater economic productivity.The Liberal Democratic Party and Komeito, its junior coalition partner, released the much-anticipated tax reform package December 14, shortly after Japan's Cabinet approved a broader economic policy package December 8,which included a corporate tax proposal tied to productivity.

The Tax Court, granting the Coca-Cola Co. partial summary judgment in a transfer pricing disputewith the IRS, held that the companywas entitled to claim foreign tax credits for taxes paid to Mexico by a Mexican licensee, finding that the taxeswere compulsory levies and creditable under section 901.The IRS made adjustments under section 482 to Coca-Cola's returns for the 2007-2009 tax years. According to the IRS, Coca-Cola's Mexican licensee, a branch of a Coca-Cola subsidiary and member of Coca-Cola's affiliated group, paid royalties to Coca-Cola thatwere not calculated at arm's length. As a result, the IRS determined that the Mexican licensee claimed insufficient deductions for royalties and overpaid taxes to Mexico. The IRS further determined that the overpaymentswere not compulsory andwere not taxes under section 901, making Coca-Cola ineligible to claim foreign tax credits for the overpayments on its federal tax return.

The EU court has rejected the US government's request to join Apple's appeal of Brussels' order that it pay ÔøΩ13 billion in back taxes.

Luxembourg has appealed against an EU decision to make Amazon pay ÔøΩ250m more tax in Europe, making it the latest member state to push back against the Brussels' crackdown on avoidance by big multinational companies.

The anticipated changes to New Zealand's tax regime for cross-border relationships and transactions are fast becoming a reality. All New Zealand businesses that operate overseas, and all business groups based overseas that operate in New Zealand, are likely to be affected in someway by the new rules.It is critical for all businesses operating in New Zealand to consider carefully the potential cumulative effect that the proposed ruleswould have, and to do this as soon as possible given the short lead time.

US value added of US MNCs grew faster than value added in their foreign affiliates over the 2014-2015 and the 2009-2014 periods, reversing the trend for the prior 15 years.

This paper considers the effects of US Tax Reform on Europe,with a focus on Germany, from perspective of tax competition, FDI, and possible responses.

Wall Street is fighting to limit the scope of a provision meant to discourage companies from sending money overseas to avoidtaxes. The Senate's tax bill adds a special tax on overseas bank transactions, including repo and intercompany payments. Foreign banks, too, say thetaxprovisionwill make their U.S. operations more expensive and reduce their ability to lend in the U.S.

An executive order directing federal agencies to eliminate two regulations for every new one they issue could complicate the IRS's task of implementing tax reform legislation, practitioners said.

Donald Trump says U.S. tax cutswill fuel a growth miracle. As the Federal Reserve gave its first formal response to the Republican reforms onwednesday, itwas clear the central bank foresees a far more modest impact.

The Netherlands' dividendwithholding tax is a millstone around the neck of the mostly foreign investorswho prop up the country's major corporations, chief executives from Shell and Unilever have told lawmakers. The corporate executives pointed to the lack of domestic capital as a key reasonwhy the country's 15 percent tax on dividend distributions is a major burden on resident multinational corporations.

The U.K.will reconsider the case for making multinational companies' global tax reports public, a decision thatwould make the country the first to take the step. In its Dec. 14 departmental report for 2018, the U.K.'s tax authoritysaiditwill review international rules for the global tax reports and "consider the case" for making them publicly available.

Israeli finance officials are closely following the progress of the U.S. tax reform bill, as practitionerswarn that the loss of Israel's tax advantage could reduce its attraction for high-tech startups.

The IRS on December 13 announced that France and the United States have signed a joint statement providing for the spontaneous exchange of country-by-country reports for fiscal years beginning in 2016.

A taxbill to counter tax avoidanceby multinational companieswas introduced into New Zealand's Parliament.The government also released its commentary on the bill, prepared by Stuart Nash, New Zealand's Minister of Revenue.

The US Senate voted 51 to 49 to pass an historic tax reform bill on December 2 that is expected to impact Mexico from both a tax and economic perspective.

European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici speaks to International Tax Review about the EU's blacklist of tax havens, the struggle to tackle tax avoidance and how to tax the digital economy.

The French Parliament has passed the 2018 finance bill,which includes a controversial 5 to 10 percent surtax on large corporations thatwas added to cover the financial shortfall createdwhen the Constitutional Council declared France's tax on dividend distributions unconstitutional. The Senate passed the bill by a vote of 128 to 122 on December 12. The National Assembly passed the bill earlier in the day by a vote of 323 to 163,with 32 abstentions.

Republicans struck a deal on a sweeping tax overhaulwednesday, including steep corporate and individual rate cuts, and hope to have legislation on President Donald Trump's desk by nextweek.The agreement includes a 37 percent top tax rate for individuals, Senate Majoritywhip John Cornyn (R-Texas) said, lower than either the House or Senate called for earlier. The corporate tax ratewould be 21 percent, higher than the 20 percent in each chamber's separate legislation, andwould start in 2018 instead of being delayed until 2019 as the Senate proposed.

The European Union has issued a code of conduct onwithholding tax to provide member stateswith guidance on reducing costs and simplifying procedures for cross-border investors.

The OECD has opened a consultation on mandatory disclosure rules intended to target promoters and service providers involved in the design, marketing, or implementation of common reporting standard avoidance arrangements or offshore structures; interested parties should submit comments by January 15, 2018.

The OECD has issued a public discussion draft on possible approaches to address arrangements designed to circumvent the common reporting standard and the use of offshore structures to conceal actual beneficial ownership.

One major feature of the tax bills moving through Congress at the end of 2017, aswell as the proposals of all major Republican presidential candidates in recent years, is a provision thatwould create a territorial tax system for the United States. Both territorial andworldwide systems for taxing income of multinational companies are difficult to implement because the concepts of income source and corporate residence onwhich the systems are based have become less economically meaningful.

Aparna Mathur and Cody Kallen of the American Enterprise Institute analyzewhat effect the proposed business tax legislation may have on investment, gross domestic product, andwages. The authors conclude that their model predicts modest but non-negligible growth impacts from the business tax reform.

Some investors are betting governments around theworldwill find away to start taxing meat production as they aim to improve public health and hit emissions targets set in the Paris Climate Agreement.

As House and Senate Lawmakers continue hashing out differences between their tax overhaul bills, the prospect lingers that they could push the new corporate tax rate to 22%. Even though both chambers passed bills thatwould have cut the rate to 20%, pressure is growing to find money for a variety of interests.

Facebook has become one of the first large technology companies to shake up its tax structure and book less of its revenue in Ireland, as multinationals come under pressure to pay tax in the countrieswhere they operate. Next year, advertisements soldwill be booked as revenue in the 25 countries across theworld rather than at its international headquarters in Ireland.

France's tax authority published a note aimed at easing "transitional" compliance problems for French subsidiaries of multinationals from countries that have lagged France in adopting international guidelines on country-by-country reporting of corporate tax data.

Guidance for U.S. multinational companies required to bring back overseas cash "is probably at the top of our list" if a current version of the tax reform legislation moving through Congress becomes law, an IRS official said.