Int'l Tax News

A rule to equalize the tax treatment of debt and equitywill be proposed this year in the EU, the bloc's executive arm said Friday. The rule,whichwill be outlined in a broader business taxation plan to be published May 18,will be "designed to mitigate the debt-equity bias in corporate taxation," the European Commission said in an emailed statement.

Lobbying groups representing the biggest U.S. Internet-based companies called on the U.S. to negotiate for the removal of digital-service taxes charged by nations ranging from the U.K. to India,with at least one endorsing retaliatory tariffs.

The European Parliament April 29 passed Legislative Resolution, endorsing a draft proposal to introduce a digital tax. The draft proposal includes 6 main measures.

U.S. President Joe Biden's proposal to set a minimum global corporation tax at 21% is gaining momentum,with the official running international talks on the matter saying that an agreement could settle near that rate. The Biden administration's plan has turbocharged negotiations at the Organization for Economic Cooperation and Development on how to overhaul rules on how much tax companies pay, andwhere. The U.S. suggestion,while subject to negotiations in Congress,would be significantly higher than the 12.5% previously discussed in the talks.

Mindy Herzfeld examines Treasury's recent proposal for simplifying the OECD's complex pillar 1 blueprint, arguing that Treasury fails to mention that Congress is unlikely to enact the suggested changes.

Marty Sullivan argues that the Biden administration should consider disallowing expenses allocable to the exempt portion of foreign income as part of its legislative proposal to overhaul the GILTI rules.

After several days of violent protests over Colombian tax reform proposals, President Iván Duque said the planwill be revised to avoid broadening VAT rules and subjecting anyonewho is currently exempt to income tax.

A potential agreement on a public country-by-country reporting proposalwould obligate multinationals to disclose details of their economic activity in each EU country, plus countries belonging on the so-called EU gray list.

Representatives of the European Parliament and EU member states are aiming for an agreement by early June, according to several sources involved in the talks.

A potential agreement on a public country-by-country reporting proposalwould obligate multinationals to disclose details of their economic activity in each EU country, plus countries belonging on the so-called EU gray list.

Representatives of the European Parliament and EU member states are aiming for an agreement by early June, according to several sources involved in the talks.

The Justice Department is countering plaintiffs' motion that a court reconsider their Regulatory Flexibility Act (RFA) challenge to the transition tax regs in no uncertain terms, arguing it "lacks merit" and merely restates rejected arguments. The government filed its response to plaintiffs' motion for reconsideration and for leave to amend complaint in the U.S. District Court for the District of Columbia in Silver v. Internal Revenue Service on May 4.

The Biden administration's ideas to simplify pillar 1 of a two-pillar global tax reform plan bring a new dynamic to negotiations, raising the prospects for a multilateral agreement by October, the OECD's tax chief said.

Faler summarizes Biden's tax proposals and explainswhy theywill be difficult to enact andwill only be the starting point in negotiations.

Canada's finance minister has called the US proposal for a global minimum corporate levy a "breakthrough moment" in deadlocked international tax talks, in the latest sign of the growing momentum behind a deal on taxation of large tech groups.

Richard Murphy, longstanding member of NGO Tax Justice, argues that Biden's corporate tax proposals open up the possibility of significant new international tax reform..

When developing their climate policies, countries should avoid strong unilateral approaches and consider awide range of different measures instead of focusing only on carbon border adjustments, an OECD tax official said.

The finance ministers of France and Germany have signaled that theywould not oppose a U.S.-backed global minimum corporate tax rate of 21 percent if multilateral tax reform negotiations land on that rate.

The U.N. has published an updated edition of its transfer pricing manual for developing countries,which includes a significantly revised section on profit splits and new guidance on financial transactions and procurement hubs. The third edition of the U.N. transfer pricing manual, released April 27, generally retains the structure of the second edition and preserves most of the same text. However, it also includes new or revised guidance on profit splits, financial transactions, and centralized procurement structures and a new country-specific section on Kenya.

The U.N. Tax Committee has decided against including software payments in the U.N. model treaty's definition of royalties butwill note in the updated treaty commentary that some of its members support doing so. The committee on April 28 approved changes to the commentary on article 12 of the U.N. model tax convention, including a new paragraph reflecting final text for a new article 12B,which allows for the taxation of automated digital services. The text says that article 12B may cover downloads of software and some other types of digital content.

Although more negotiations are needed because of the reluctancy of some member states, the Biden administration has put global tax reform discussions on the right track, the EU's tax commissioner said.

Part of the funding for President Biden's $1.8 trillion American Families Plan hinges on a beefed-up reporting requirement for banks designed to identify unreported income. The proposalwould require banks to report annual account inflows and outflows to the Internal Revenue Service. The requirementwould also extend to peer-to-peer payment services such as Venmo butwouldn't require individuals and businesses to report any additional information to the government, according to people familiarwith the plan. Financial institutions already must report interest, dividend and investment income, and the IRS can get bank information during audits.

Canadawould make C$7.9 billion ($6.4 billion) more in revenues if it imposed a 15% tax on excess profits made by large corporations during the coronavirus pandemic, a Parliamentary office said in a report Tuesday. The Office of the Parliamentary Budget Officer analysis comes on the heels of new government proposals to raise taxes on firms.

France and Germany have given their backing to the U.S. proposal for a 21% minimum tax on multinational companies, adding momentum to efforts to overhaul global rules despite reluctance from some smaller European countries. The plan by President Joe Biden's administration earlier this month transformed global negotiations after years of being bogged down. It also carries a significantly higher levy on companies than the 12.5% minimum tax previously discussed.

France and Germany have given their backing to the U.S. proposal for a 21% minimum tax on multinational companies, adding momentum to efforts to overhaul global rules despite reluctance from some smaller European countries. The plan by President Joe Biden's administration earlier this month transformed global negotiations after years of being bogged down. It also carries a significantly higher levy on companies than the 12.5% minimum tax previously discussed.

Japan is prepared to back President Joe Biden's plan for overhauling the taxation of multinational companies as long as there is agreement on a global corporate minimum tax. Thewhite House has proposed reshaping a global plan so that about 100 of theworld's biggest companies pay more taxes in the countrieswhere they sell their goods and services. Japanese tax experts say the minimum corporate taxwould boost government revenue at a timewhen Tokyo is concerned about its national debt. And Biden's backing provides political cover for Prime Minister Yoshihide SugaÔøΩas does the fact that analysts expect few Japanese companies to number among that top 100.

The European Union should have a bloc-wide digital tax ready to go by the end of 2021, European Parliament lawmakers said in a resolution adopted Thursday. The EU tax should move forward regardless ofwhat happens in the OECD's global negotiations on taxing revenues from digital business, the resolution said. The parliament voted 549 to 70,with 75 abstentions, for the resolution.

Opposition in the EU to a high corporate minimum tax rate could be a deciding factor in the OECD-led negotiations on a global tax overhaul. After the Biden administration proposed that the U.S. apply a 21% global minimum rateÔøΩsparking speculation that itwould push for a high rate in the multilateral talks, tooÔøΩseveral European Union countries said theywouldn't agree to such a high number. Ireland, the Czech Republic, and Hungary have voiced concerns about a higher minimum effective tax rate. Any one of these countries could use its veto power and derail the minimum tax plan in the EU.

Countries need more details before they can decidewhether to back a U.S. proposal to shape international talks on digital taxation, a European Union official said Thursday. The Biden administration has proposed away around a major roadblock in the OECD-led negotiationsÔøΩan inability to agree onwhich companies should be subject to the rules. The U.S. plan calls for usingwhat thewhite House says are simple, objective criteria to determinewhich corporations are affected. It comes at a critical moment as 139 countriesÔøΩincluding the majority of EU membersÔøΩtry to reach agreement on a deal this summer.

GILTI may need a new name if Democrats get theirway. Democrats are aiming to expand GILTI so that it hits all of multinational corporations' foreign profits ÔøΩ intangible and otherwise.

Theywant to transform the Global Intangible Low-Taxed Income tax into something broader than just a levy on so-called intangible income. That's the money companies earn from things like patents and other types of intellectual property they often stash in overseas tax havens.

The EU is planning a measure to increase tax transparency in its further delayed communication on business taxation for the 21st century, according to a top EU tax official.

Senate Democrats' international tax framework contemplates partial relief from several Tax Cuts and Jobs Act taxpayer-unfavorable provisions, butwithout details, it's unclear how much those changeswill lessen the sting of tougher proposals.

The government filed a supplemental brief in a U.S. district court arguing for the dismissal of a U.S. citizen and his Israeli law firm's challenge of the global intangible low-taxed income tax law's validity, arguing that the plaintiffs lack standing for the same reasons as the court cited in a related case on the validity of the section 965 transition tax.

At an April 22 debate hosted by the Institute for Fiscal Studies and the Chartered Institute of Taxation, Helen Miller, head of tax at the Institute for Fiscal Studies, critiqued the UK's planned increase in the main rate of U.K. corporation tax from 19 percent to 25 percent.

Although proposals to raise the U.S. corporate tax rate to 28 percent have grabbed more general media headlines, some multinational tax executives appear more concernedwith potential changes to the global intangible low-taxed income provision.

Speaking at a meeting hosted by the Irish Finance Ministry on April 21, Irish Finance Minister Paschal Donohoe emphasized that Ireland supported an OECD-led international agreement, itwould not budge from its 12.5 percent rate.

Nana Ama Sarfo considerswhat adoption of a 21 percent minimum tax rate, as proposed by President Biden,would mean for developing countries.

Developing countries havewon the backing of a U.N. committee to include language in their treaties aimed at helping them tax big tech companies. The language, known as Article 12B,would update the United Nations model treaty and give developing countries a new framework for deciding how to tax cross-border digital revenuewhen they negotiate double tax agreements. The U.N. Committee of Tax Experts adopted article 12B on Tuesday after dissenting countries decided to forgo a vote, said Rajat Bansal, a member of the committee and chair of the tax subcommittee that drafted the article. The U.N. didn't immediately return a request for comment.

The Organization for Economic Cooperation and Development isworking to find consensus among nearly 140 countries on a two-pillar plan to address concerns that multinationalsÔøΩespecially tech giantsÔøΩaren't paying enough in taxes. If governments don't reach a deal, more countrieswill likely turn to unilateral measures to capture digital revenues from tech giants like Amazon.com Inc. and Facebook Inc. In early April, the U.S. proposed simplifying the plan's first pillar on profit reallocation rules to only capture about 100 of the most largest and most profitable multinationals. The second pillar of the plan is a global minimum tax.

Tax executives from multinational companies are bracing for a potential increase in the corporate tax rate, though they're optimistic itwon't be raised all theway to 28% as President Joe Biden has proposed. Biden's planned increase to 28%, from the current 21% rate, has faced resistance from corporate America and Republicans. And not all Democrats are on boardwith it.

Technology giants led by Apple Inc. and Microsoft Corp. disclosed more than $100 billion in profit outside the U.S. in their last fiscal years, making them prime targets of President Joe Biden's proposals to boost taxes on earnings stashed overseas. The tax proposals, unveiled this month to help foot the bill for massive infrastructure plans, target common tactics used by U.S. multinationals such as stashing income-generating assets in low-tax offshore jurisdictions. The tech industry is particularly adept at shifting profits to tax-friendly locales because its main assets -- software code, patents and other intellectual property -- are relatively easy to move around compared to factories and other physical assets.

Europe's low-tax nations have responded positively to the Biden administration's plans for a radical reform of global corporate taxation, even though theywill lose out ÔøΩ but signalled thatwashington can expect a fight over much of the detail.

Martin Sullivan provides three policy justifications ÔøΩ contrary to theOECDand consistentwith the Biden administration'sintentions ÔøΩ for repealing QBAI. He then offers a simple alternative to the QBAI approach for exempting routine returns as a possible compromise between theOECDand administration positions.

Mindy Herzfeld analyzes the different proposals to change the taxation of foreign earnings in the international tax rules, specifically the Biden administration's proposal for imposing GILTI on a country-by-country basis.

Now that the Biden administration has proposedways to revitalize global tax reform negotiations, chances are high that countrieswill be able to agree on a commonway forward, the EU's tax commissioner said.

A proposal for public country-by-country reporting is tied up in interinstitutional negotiations,where the European Parliament and EU Council have differing views on the scope of the proposal, according to an EP committee chair.

The OECD reported improvement in all eight jurisdictions covered in its latest peer reviews on implementation of the inclusive framework's dispute resolution minimum standards, but it said some countries have made more progress than others.

The EU is planning a measure to increase tax transparency in its further delayed communication on business taxation for the 21st century, according to a top EU tax official. Benjamin Angel, director of direct taxation at the European Commission's Directorate General for Taxation and Customs Union, said the commissionwelcomes the progress in discussions between the European Parliament and the EU Council on a public country-by-country reporting proposal and hopes to build on that momentum by adding another initiative to increase tax transparency.

President Biden's tax plan proposes to extend tax credits for renewable energywhile ending tax benefits for fossil fuels. Oil-and-gas lobbyists could soon find themselves in the awkward position of denying that any special treatment for those companies exists,while digging in their heels to protect that treatment. Andwhile the impact on actual hydrocarbon production could be limited, such a movewould mark the end of an era for an industry that has held much influence over the past century. The U.S. Treasury said lastweek the tax planwould "end long-entrenched subsidies to fossil fuels,"which it estimateswould increase government tax receipts by more than $35 billion over the next 10 years.

Executives at American companies are bracing for higher taxes following the unveiling of President Biden's $2.3 trillion infrastructure plan,which is proposing to raise the corporate tax rate to 28% from 21%, and increase taxes on companies' foreign earnings. The proposed tax changeswould overhaul or replace much of the international tax structure that camewith the 2017 Tax Cuts and Jobs Act. Companies are alsoweighing potential implications of the global minimum tax for multinational corporations that Treasury Secretary Janet Yellen floated earlier this month.

President Joe Biden's desire for a 21% global minimum corporate tax risks further complicating global tax reform discussions, some European Union lawmakers said Tuesday.Nearly 140 countries are deep in discussions facilitated by the Organization for Economic Cooperation and Development to change international tax rules to better reflectwhere value is created and reduce opportunities for legal tax avoidance.

President Biden recently introduced a $2.7 trillion spending package designed to be partially offset by an array of corporate tax increases. Those tax changes are justified by the assertion that the U.S. corporate tax burden is less than the OECD average. Authors of the article counter that the figure is misleading and show how the proposed packagewould bring the U.S. corporate tax burden above the OECD average.