Int'l Tax News

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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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News Analysis: Looking Past the Election to Real Tax Reform

No matterwhowins the election on November 8, the changes coming to the United States in 2017 may offer a chance to enact real tax reform. The parties have been laying the groundwork for that reform over the past year.

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EU's Moscovici Lays Out Broad Agenda to Curtail Tax Avoidance and Evasion

The head of the EU commission for taxation laid out awide-ranging agenda for his agency October 14, promising to announcewithin twoweeks a proposal to implement the common consolidated corporate tax base (CCCTB) aswell as plans for mandatory arbitration of intra-EU tax disputes and a reform of existing rules to combat cross-border VAT fraud.

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Recent global developments in general anti-avoidance rules

  • By PwC

General anti-avoidance rules (GAARs) continue to play a pivotal role in tax regimes around theworld as a safeguard intended to thwart incidents of tax avoidance.while differing in various aspects, the tax laws of many countries have adopted generally similar principles to empower revenue authorities to deny taxpayers the benefits sought for arrangements deemed to have an impermissible tax-related purpose.

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New Section 385 regulations significantly limit scope

  • By PwC

US Treasury and the IRS yesterday released final and temporary Section 385 regulations,which addresswhether certain instruments between related parties are treated as debt or equity.

The regulationswere announced in a press conference by Treasury Secretary Jack Lew,who stated that "we sought comments to help narrow the rule and avoid unintended consequences."

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Nigeria's insurance industry shoulders unfair tax burden, say advisers

  • By Contributed

The insurance industry in Nigeria is fighting to reduce an unfair and overburdening tax liability. Adebayo-Begun Oluwatomisin, senior adviser at KPMG Nigeria highlights the big issues affecting the sector, fromwhat is being done to address these challenges towhich countries provide a tax structure that supports it.

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Cash pool issues still abound under Treasurys final debt-equity tax regs

Multinational companies are still subject to burdensome cash pooling requirements under significant changes in international tax rules that aim to tackle a tax avoidance practice called earnings stripping, tax experts told The Hill Extra.

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Business, GOP Lawmakers Skeptical of Treasurys Debt Deduction Rules

by Tara Jeffries (Morning Consult)
Despite some concessions in the Treasury Department tax rules finalized Thursday, business groups and Republican lawmakers are stillwary of them. The new rules aim to prevent some types of corporate inversions by limiting a strategy that allows companies to deduct debt interest on payments to affiliated companies based overseas.

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Doing business in the United States

  • By PwC
by PwC
Global business leaders rate the United States as their most important market for overseas investment and growth.
While there are many attractions to the US market that drive this positive view, doing business in the US can be challenging given its complex system of federal, state, and local levels of taxation.
Our guide shares PwC's extensive experience in regard to US operations of global businesses to help you gain a broad understanding of the basic tax implications of business operations in the United States, aswell as offers helpful observations into the tax consequences.
For the guide, gohere.
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Final Debt-Equity Rules May Be Out Soon: Former Official

Controversial earnings-stripping rules could be made final very soon after a brief review by the Office of Management and Budget, according to a former assistant secretary of tax policy at the Treasury Department.

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IRS, Chamber Start Court Duel Over Anti-Inversion Rules

The IRS says the U.S. Chamber of Commerce doesn't have a case against anti-inversion regulations. The Chamber says it shouldwin its case as a matter of law (Chamber of Commerce of U.S. v. IRS,w.D. Tex., No. 1:16-cv-00944, motions filed 10/11/16).
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Ethical Dimensions of International Tax Planning

Tax lawyers Rafael Bellaver and Pedro Henrique Chaves Araujo consider international efforts to curb base erosion and profit shifting by multinationals, alongwith the concept of a corporation paying its "fair share" of taxes.

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OECD Draft Guidance on Profit Splits Said to Still Need Work

The OECD should reinforce its guidance on profit splits to make clearer that a lack of comparables doesn't mandate use of the profit split method as the most appropriate transfer pricing method, a practitioner said.

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Vexation Over Draft Profit-Split Guidance on Risk, Integration

Although the restrictive approach set out in the OECD's recent discussion draft on profit splits has attenuated fears that the profit-split methodwill become the default transfer pricing method, practitioners remain concerned about the complicated interplay between the draft's guidance on risk sharing, functional integration, and the role of value chain analysis.

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Practitioners Comment on OECD's Revised Guidance on Profit Splits

Profit splits should be used onlywhen both parties to a transaction are making non-routine contributions, according to practitioners.

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Chamber of Commerce, IRS Face Off in Inversion Rule Challenge

Opposing motions have been filed in the case of Chamber of Commerce of the United States of America et al. v. IRS et al. (No. 1:16-cv-00944), inwhich the plaintiffs have challenged the validity of the so-called multiple domestic entity acquisition rule 2016wTD 65-28: IRS Temporary Regulations. The plaintiffs asked a U.S. district court to set aside the rulewhile the government moved to dismiss their complaint for lack of subject matter jurisdiction.

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New Hybrid Mismatch Rules Will Raise Issues for CJEU, Practitioner Says

The hybrid mismatch rules included in the anti-tax-avoidance directive adopted by the EU Council in Julywill present the Court of Justice of the European Unionwith novel issues that it has not previously addressed, according to Simonwhitehead of Joseph Hage Aaronson LLP.

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Multilateral instrument to implement BEPS treaty-related recommendations almost final

  • By PwC
The OECD has been developing a Multilateral Instrument (MLI) that could amend bilateral treaties to swiftly implement the tax treaty measures developed in the course of the G20/ OECD BEPS Action Plan (the BEPS Action Plan). Recently the OECD announced that in the past months it made significant progresswith respect to the MLI and that the main text of the MLI has been agreed in principle.

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Germany proposes amendments to NOL forfeiture rules

  • By PwC
The German government has published a draft bill (the Bill) thatwould amend the German net operating loss (NOL) forfeiture rules.
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More Permanent Establishments Expected Under OECD Draft

"Ambiguity" in the OECD's new standard for defining permanent establishments has created a risk that a company's profits could be taxed multiple times, as many jurisdictions target the same income stream, a top business tax official said.

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Commentators Spar Over OECD's PE Profit Attribution Rules

The OECD's recent discussion draft on attribution of profit to a permanent establishment has sparked renewed debate over the merits of the authorized OECD approach (AOA) and the role it should play in the ongoing base erosion and profit-shifting project implementation process.

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Practitioners Ask OECD for Guidance on Dependent Agent PEs

Some practitioners and country representatives at an OECDworking Party 6 public consultation on transfer pricing matters in Paris on October 11 said theywould like more guidance from the OECD on the role of model treaty articles 7 and 9 of the OECD model treaty on the attribution of profits to dependent agent permanent establishments (DAPEs).

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Partnerships and the Proposed Debt-Equity Regulations

In this article, Kaufman examines the treatment of partnerships under the proposed section 385 regulations and explores the regulations' application to funds and alternative investment vehicle structures.

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Treasury issues rules cracking down on offshore tax deals

by Naomi Jagoda
The Treasury Department on Thursday announced final regulations aimed at curbing offshore tax deals.
The final rules,whichwould treat certain interparty debt as equity, come after business groups and lawmakers from both sides of the aisle expressed concerns about the rules initially proposed in April.
The rules take aim at a tax-avoidance strategy known as "earnings stripping."
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Fact Sheet: Treasury Issues Final Earnings Stripping Regulations

  • By US Department of Treasury
by US Department of Treasury
On April 4, Treasury issued proposed regulations to address earnings stripping by strengthening the tax rules distinguishing between debt and equity. After extensive engagementwith businesses, tax experts, the public, and lawmakers, todaywe are announcing the final regulations.
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Unilateral 'anti-avoidance' action as a precursor to the BEPS recommendations - UK and Australian perspectives

  • By PwC
by PwC
The OECD's Base Erosion and Profit Shifting (BEPS) project has been an ambitious and near-unprecedented undertaking to examine the coherence, substance, and transparency of the international tax system. Since the projectwas initiated, the OECD has sought stakeholder consultation to garner support for a consensus-based series of recommendations to accomplish a consistent and coordinated implementation of the ultimate reform package proposed.
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Debt-Equity Reg Package Includes Broad Carveouts

by Amy S. Elliott & Lee A. Sheppard
The Treasury Department on October 13 issued final and temporary section 385 debt-equity regulations, removing the bifurcation rule thatwas in the proposed regs but largely preserving the remaining rules,with exemptions for cash pools, short-term loans, foreign-to-foreign transactions, regulated financial entities, and passthroughs, and providing documentation relief for debt issued by U.S. corporations.
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Earnings-Stripping Rules Ease Impact on Day-to-Day Business

by Alison Bennett
The Obama administration's long-awaited final earnings-stripping regulations offer exceptions for cash pooling and transactions between foreign subsidiaries of U.S. multinationalsÔøΩfeatures many taxpayers have eagerly sought.
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Administration Rushed to Finalize Rules, Republicans Charge

by Kaustuv Basu & Laura Davison
A number of Republican lawmakerswere unhappy about how quickly the Obama administration approved final earnings-stripping regulations, and said theywould review the rules carefully.
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