Int'l Tax News

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Earnings-Stripping Foreign Issuer Exception: Not This Year

The Treasury Departmentwill leave further consideration of the foreign issuer exception under final earnings-stripping rules to the incoming administration, International Tax Counsel Danielle Rolfes said.

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Treasury Sets High Bar for Ability to Repay in Debt-Equity Regs

One of the four documentation requirements in the final section 385 debt-equity regs (T.D. 9790 2016 TNT 199-5: IRS Final Regulations) is that the documentation establish that the issuer's financial position supports a reasonable expectation of its ability to repay the debt. How much debt does a taxpayer need thewherewithal to repay? According to Treasury, possibly all of it.

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What Apple Teaches About How Not to Reform Corporate Taxes

In this article, Kalman uses the recent Apple tax ruling by the European Commission to identify problemswith proposals for a territorial tax system in the United States. He argues that policymakers should instead focus on ending deferral, requiring public country-by-country reporting, and adopting provisions of the Stop Tax Haven Abuse Act.

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News Analysis: U.S. Treasury Doubles Down on Inbound Planning

By carving out debt of foreign issuers from the final section 385 regulations, Treasury effectively mooted a lot of the criticism of its proposed regulations. However, by keeping the funding rulewithout relaxing it in any meaningfulway, the government made sure the final rules strongly targeted inbound planning activities of foreign multinationals.

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Luxembourg Government proposes to formalize transfer pricing legislation

  • By PwC
The Luxembourg Government on October 12, 2016, presented a Bill (no.7050) to the Luxembourg Parliament outlining the Government's 2017 budgetary measures. One article in the Bill sets out new transfer pricing provisions, augmenting the basic arm's-length rule in force since January 1, 2015 that ÔøΩ formally adopted the OECD standard into Luxembourg law. T

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Thailand offers generous incentives for headquarters, foreign trading companies, and treasury centers

  • By PwC
Thailand has long offered tax and other incentives to companieswith a regional operating headquarters in Thailand, but it has been difficult to meet ROH regime requirements, making the incentives uncompetitivewith those offered by other Southeast Asian countries.
Thailand therefore recently revamped its incentive regimes, creating a new international headquarters company regime,with add-on benefits for treasury centers (TCs), and an international trading center (ITC) regime.

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Intel Court Boost Gives Hope to U.S. Tech Giants Battling EU

Intel Corp.'s fight to overturn a record 1.06 billion-euro ($1.17 billion) European Union antitrust fine received a boost from an adviser to the bloc's top court in a case that could have ramifications for a growing list of tax disputes and other cases involving U.S. tech giants from Google to Apple Inc.

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Some Practitioners Want More Rationale for Debt-Equity Regs

While the final section 385 debt-equity regs (T.D. 9790 2016 TNT 199-5: IRS Final Regulations)were significantly limited in scope from the proposed, the architecture of the recast ruleswas largely preserved,which has angered some tax practitionerswho are dissatisfied by the offered policy rationale for the second and third prongs of the general and funding rules.

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Oct '16Funds Escape Debt-Equity Regulation NetFor Now

Treasury's package of final and temporary regulations (T.D. 9790) under section 385 does not currently apply to debt issued by investment partnership funds, but best practices indicate that investment funds should complywith the new documentation rules as much as possible, according to an October 20 release by Akin Gump Strauss Hauer & Feld LLP.

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CCCTB Proposal Already Gathering Reactions Ahead of Official Release

The European Commission is scheduled to release its new draft proposal for a common consolidated corporate tax base (CCCTB) on October 26, but an unauthorized version of the proposal,whichwould provide one mandatory set of rules for calculating taxes owed by companieswith more than ÔøΩ750 million in annual turnover, is already making the rounds.

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Ireland's corporate tax code can only get better, says finance minister

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Whether Clinton or Trump, Multinationals Set to Win Election

Regardless ofwhich candidatewins the U.S. presidential election, domestic companies that stash the most profits overseaswill be the victors, according to Goldman Sachs Group Inc.

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Don't Assume You're Out of Debt-Equity Rules: EY

U.S. companies aren't out of thewoods despite a range of exceptions under the government's new earnings-stripping rules, Ernst & Young LLP practitioners said.

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Foreign Issuer Exemption Not Set in Stone: Treasury

There is no guarantee a highly praised exception for foreign issuers in final earnings-stripping rules (T.D. 9790)will stay the same, a Treasury Department official cautioned.

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Officials Discuss Reserved Subjects in Final Debt-Equity Regs

Officials explained the thinking behind several aspects of the section 385 debt-equity rules thatwere reserved in the final and temporary regs (T.D. 9790 2016 TNT 199-5: IRS Final Regulations) pending study, including the rules' application to debt of foreign issuers, the affirmative use rule, expanded group treatment of brother-sister groups, and the bifurcation rules.

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Chinese APA Procedure Changes Prompted by BEPS Project, Government Says

by Ryan Finley (Tax Notes)

New guidance issued by the State Administration of Taxation (SAT) amending the procedures for China's advance pricing agreement programwas necessary not only to improve the program's effectiveness but to follow through on China's commitments to adhere to the standards set out on exchange of rulings by the action 5 report of the OECD's base erosion and profit-shifting project.

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EU Commission seeks to plug national tax loopholes for big companies

Large companies in every European Union countrywill have to pay their taxes on a common set of revenues and reductions under an EU draft law seen by Reuters and aimed at curbing tax avoidance.

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Colombian Government Proposes Broad Tax Overhaul to Congress

Colombia's government submitted a broad tax-overhaul proposal to Congress that raises taxes on ordinary Colombians and cracks down on evasion in a bid to fill a budget shortfall created by lower oil prices.

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G20/OECD BEPS Project advances tax certainty agenda with the launch of global review of MAP programmes

  • By OECD
Today the OECD released key documents, approved by the Inclusive Framework on BEPS, thatwill form the basis of the Mutual Agreement Procedure (MAP) peer review and monitoring process under Action 14 of the BEPS Action Plan.

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Treasury Still Studying Rules Left Out of Final Debt-Equity Regs

Although the final section 385 regulations jettisoned thewidely criticized bifurcation rule contained in the proposed regulations and adopted an exemption for foreign issuers, Treasury and the IRS intend to continue studying the possible impact those rules may have and may reintroduce them in future regulations, according to Raymond Stahl, special counsel, IRS Office of Associate Chief Counsel (International).

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IRS Rules on Overseas Transfers Due by Year's End

Two sets of tax rules intended to stem the tide of overseas transfers from U.S. companies are due to be completed by the end of 2016, an IRS attorney said.

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Any Changes to Foreign Issuer Exception Prospective: Treasury

Taxpayersworried about the fate of the much-welcomed "foreign to foreign" exception under new final earnings-stripping rules may glean some comfort from a Treasury officialwho clarified that any new guidance on areaswhere the government "reserved" under the regulationswill be prospective.

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Compliance Concerns Fueled Mechanical Spinoff, Debt-Equity Regs

The tax bar is struggling to come to termswith the mechanical rules -- including per se provisionswith bright-line thresholds -- in the new section 355 spinoff device regulations and section 385 debt-equity regulations,which a government official indicated are a necessary and appropriateway to police the respective statutes.

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Mexican Tax Authority Visits May Follow Pricing Agreements

Taxpayers using advance pricing agreements in Mexico to avoid any transfer pricing disputes should prepare for a personal visit from the tax authorities as a new rule goes into effect.

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OECD Seeks Business Input on Tax Certainty

The OECD has launched a survey aimed at business sector stakeholders seeking their experienceswith and opinions about tax certainty, a key element of the incoming German G-20 presidency's tax agenda.

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U.S. Tax Review

In this article, the author discusses recent U.S. international tax developments, including the OECD's recent discussion draft on branch mismatch structures and the European Commission's findings regarding Apple and state aid from Ireland.

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U.S. targets corporate tax-reduction strategy with new regulation

The Obama administration, in its latest bid to prevent American companies from minimizing U.S. taxes by rebasing abroad, issued final rules on Thursday to combat a key tax-reduction technique known as earnings stripping.
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Treasury Tries Again To Keep American Firms' Taxes In U.S.

The U.S. Treasury Department issued rules Thursday aimed at stemming the practice of "tax inversions." This is the practicewhere a company moves its legal home abroad in order to avoid or minimize U.S. taxes.

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Companies Hurt by Treasury Crackdown Win Exemptions

After the Treasury Department announced new rules in April restricting companies from using certain tax-reduction strategies, the protests rang out loudly. Business lobbying groups, executives, tax experts and lawmakers argued that theywent too far.
On Thursday, the Treasury announced exemptions and amendments to the rules after hearing concerns from the business community.

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Treasury finalizes an important rule to block tax avoidance

The Obama administrationwent to Congress to implement some common-sense ideas to block inversions butwere metwith ÔøΩ surprise! ÔøΩ gridlock. The majority over there likes to talk about tax reform, but it's all just talk. They don't reallywant to take anything that you or Iwould recognize as constructive action.
So the administration undertook to dowhat they could themselves, and on Thursday, they released the final version of an important new rule to block the mother's milk of corporate inverters: earnings stripping.

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Section 385 final regulations: Initial reactions

  • By KPMG
The Treasury Department and IRS late yesterday released final and temporary section 385 regulations (hereinafter the "Final 385 Regulations") addressing the treatment of related party debt for U.S. tax purposes. These regulations had been proposed on April 4, 2016 (the "Proposed 385 Regulations").
The final rules offer significant relief for U.S. multinational groups, and offer some, but less significant, relief for foreign multinational groups.

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Compliance Burdens Still Loom as Debt-Equity Rules Narrow

The Treasury Department's final debt-equity regulations include a number of exceptions, but many companiesÔøΩparticularly foreign multinationalsÔøΩwill still have to complywith the rules.
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Worries Continue on Final Earnings-Stripping Rules

Do Treasury's final earnings-stripping regulations strike the right balance between catching abuses and addressing the concerns of U.S. companies?
Tax practitioners said that goal is closer, but companies still have quite a bit toworry about.

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Debt-Equity Rules Still Skirt State Tax Conundrum

The Treasury Department's narrowed earnings-stripping regulations may have softened the impact on taxpayers, but didn't eliminate uncertainty regarding the state-side impact.

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BRICS Countries Affirm Support for BEPS Project Implementation

The leaders of the BRICS countrieswelcomed the progress already made on the "effective andwidespread" adoption of internationally agreed standards, especially implementation of standards set out in the OECD's base erosion and profit-shifting project "with due regard to the national realities of the countries."

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OECD Considers Plan B for Profit Attribution Guidance

The OECD is reviewing alternative plans on guidance for attribution of profits to permanent establishments amid "fundamental" differences of opinionwithin its transfer pricingworking party.

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BRICS: tax policies should enhance growth, address BEPS

  • By MNE Tax
BRICS leaders, following their summit held October 15–16, called for tax policies that promote inclusive growth and expressed support for the implementation of the OECD/G20 base erosion profit shifting (BEPS) plan combating multinational corporation tax avoidance.

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We Can Fix Corporate Taxes

Our corporate tax code ÔøΩ the subject of my column this morning ÔøΩ is a mess.
It has the highest official rate of any advanced economy,which forces companies to devote time and effort to avoid paying that official rate. And it has so many loopholes that many companies end up paying relatively little, creating unfairness across industries and deprivingwashington of important revenue.
Sowhat can be done?

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OECD launches business survey on tax certainty to support G20 tax agenda

  • By OECD

The OECD received a strong endorsement from both the G20 Leaders and Finance Ministers towork on solutions to support certainty in the tax systemwith the aim to promote investment, trade and balanced growth.

As part of awider project, the OECD launches a Business Survey to invite businesses and other stakeholders to contribute their views on tax certainty.

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European Commission state aid investigations: A timeline of events

The European Commission continues to investigate multinationals that it believes have received an unfair tax advantage and iswilling to challenge its position in court. International Tax Review looks at the latest developments andwhere it all started for some of the EC's biggest investigations on tax rulings between EU member states and MNES.

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Multinationals and the EC engulfed in state aid disputes

The European Commission's long-awaited state aid decision on tax rulings issued by Ireland to US-multinational Apple has created a political typhoon. It has invited an unprecedented response from all involved parties,with some hailing the decision as a victory and others criticising the tax charge as excessive or even unwarranted. Anjana Haines and Amelia Schwanke report on the recent developments.

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The driving force of Margrethe Vestager

Margrethe Vestager is known for taking items out of her friends' shopping baskets if she feels they are making thewrong decision. The EU Competition Commissioner is not short of opinionswhen it comes to theworld's most powerful companies either – routinely provoking disagreementswith major corporations since becoming commissioner in 2014. Lena Angvik takes a look at the lady behind the state aid investigations.

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Swiss Corporate Tax Reform III - Impact on Financial Statements (US GAAP and IFRS)

  • By PwC
On 28 June 2016, Switzerland published the federal corporate tax reform III package (CTR III) thatwould abolish the existing cantonal privileged tax regimes andwould allow cantons to introduce new internationally accepted tax measures (e.g., patent box, notional interest deduction). CTR IIIwill be subject to a public referendum in early 2017, and if accepted by the referendum,would likely become effective 1 January 2019.

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Final Debt-Equity Rules Ease Impact on U.S. Multinationals

U.S. multinationals can generally breathe a sigh of relief over the final version of controversial earnings-stripping rules, tax practitioners said.

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Voluminous Preamble Won't Stop Court Challenge to Debt Rules

Reams of paper filledwith detailed technical responses to commentswon't stop court challenges to the government's new earnings-stripping rules.
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New Take on Cash Pooling, Partnerships in Debt-Equity Rules

Corporations engaging in short-term intercompany lending, partnerships and consolidated groups are likely to take a close look at the latest iteration of the Treasury Department's earnings-stripping regulations.

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APAs Can Shield Maquiladora Industry from Double Tax: IRS

U.S. companieswith factories in Mexicowon't face double taxation if they enter a unilateral advance pricing agreement, the IRS said.

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Earnings-Stripping Rules Ease Deadlines on Intercompany Debt

New IRS earnings-stripping regulations significantly ease previously announced deadlines for companies to provide documentation on possible intercompany debt.

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Major Debt-Equity Reg Changes and More Reaction

What's a CFO to do? The day after Treasury issued the final and temporary debt-equity regulations (T.D. 9790 2016 TNT 199-5: IRS Final Regulations), the SEC's floating net asset value regulations for prime money market fundswent into effect. Sowhile the tax rules make it easier to lend money around a groupwith no untoward tax effects, the SEC rules mean those daily cash sweeps can't just be parked in money market funds.

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News Analysis: Banks Win Relief From Final Debt-Equity Rules

In news analysis, Lee A. Sheppard discusses how the debt-equity regulations under section 385 might affect the financial industry.

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