Int'l Tax News

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Carbon Pricing an Underused Tool to Cut Emissions, OECD Report Says

Governments can use carbon pricing as a tool to reduce greenhouse gas emissions in a cost-effectiveway and transition to low-carbon economieswithout damaging long-term competitiveness, an OECD official said.

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Troubled waters - global transparency and controversy in uncertain times

  • By Contributed

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U.S. Senate's top tax lawmaker targets corporate offshore profits

The U.S. Senate's senior Democratic tax lawwriter says hewill rip up a root of corporate tax avoidance if his partywins Senate control in November, targeting trillions of dollars in tax-deferred profits being held abroad by U.S. companies.
For the Reuters story, gohere.
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The international profits of US multinationals belong in the United States, a senior tax official at an influential global economic think tank has said.

  • By Independent
Although declining to comment specifically on the Apple case, Pascal Saint-Amans, the director of tax policy at the Organisation for Economic Cooperation and Development (OECD), suggested the profits of large American technology and pharmaceutical firms should be taxed in the US.

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OECD official says EU Apple ruling not precedent for future tax cases

  • By WHTC
A multi-billion euro back tax bill handed to Apple by the European Commission should not be seen as a precedent for future tax cases as itwas based on state aid rather than tax law, the OECD official spearheading global tax reform said on Monday.
For thewHTC story, gohere.
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Irelands corporate tax not under threat, OECD tax chief says

Ireland's 12. 5 per cent corporate tax rate is not under threat from moves to reform the global tax system, the OECD's tax policy chief has said.
On a visit to Dublin, Pascal Saint-Amans said therewas no longer any questioning of the rates set by some countries.
For the Irish Times story, gohere.
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News Analysis: The Tech Mahindra Case -- Royalties Derived Through a PE

An Indian technical services firm's attempt to avoid Australian tax by relying on a clever, but ultimately unsuccessful, "loop" argument based on the business profits and royalties articles of the Australia-India income tax treaty may emerge as an important precedent on the holistic approach to interpreting tax treaties.

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Economic Analysis: Drug Giants Keep Effective Tax Rates Low

In economic analysis, Martin A. Sullivan looks at the tax profiles of nine large pharmaceutical companies and explainswhy their U.S. effective tax rates have been dropping over the last decade.

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News Analysis: Hope Springs Eternal for the CCCTB

In news analysis, Marie Sapirie examines how a proposal by the European Commission to consolidate a corporate group's profits and losseswould affect U.S. companies.

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A More Subjective Permanent Establishment Standard

Todd Izzo, Cassie McCormick and Maggie Reilly of Deloitte Tax examine the more subjective permanent establishment standard embodied in recent OECD base erosion and profit shifting guidance, aswell as implications for multinational groups. "Businesseswill need to react, and may need to alter their legal structure, information reporting systems, andwarehouse and logistic arrangements to address these important changes," the authorswrite.

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Panel Explores Role of Human Rights Considerations in Tax Policy

Tax professionals have certainly played a role in the shortcomings of the international tax system, but the degree towhich human rights should be considered in designing a more appropriate structure remains uncertain, according to a panel of law professors.

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First regional meeting of the Inclusive Framework on BEPS for Latin America and the Caribbean Montevideo (Uruguay), 21-23 September 2016

  • By OECD

57 delegates from 10 countries and 8 organisations gathered in Montevideo for the 1st regional meeting of the Inclusive Framework on Base Erosion and Profit shifting (BEPS) after its launch in Kyoto on 29 June-1st July 2016. This meetingwas the first of a new series of events thatwill offer participants from different regions in theworld the opportunity to feed their views and provide their input into the Inclusive Framework on BEPS.

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Effective Carbon Rates

  • By OECD

To tackle climate change, CO2 emissions need to be cut. Pricing carbon is one of the most effective and lowest-costways of inducing such cuts. This report presents the first full analysis of the use of carbon pricing on energy in 41 OECD and G20 economies, covering 80% of global energy use and of CO2 emissions. The analysis takes a comprehensive view of carbon prices, including specific taxes on energy use, carbon taxes and tradable emission permit prices. It shows the entire distribution of effective carbon rates by country and the composition of effective carbon rates by six economic sectorswithin each country. Carbon prices are seen to be often very low, but some countries price significant shares of their carbon emissions. The 'carbon pricing gap', a synthetic indicator showing the extent towhich effective carbon rates fall short of pricing emissions at EUR 30 per tonne, the low-end estimate of the cost of carbon used in this study, sheds light on potentialways of strengthening carbon pricing.

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International Corporate Tax Law… Enters a Period of Unprecedented Change

  • By Bloomberg
We are entering into a period of unprecedented change and increasing complexity in international tax law. Multinationalswill need to monitor the tax position in each country and each bilateral tax treatywith extreme care.

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Exclusive: Thailand considering tougher tax collection rules for internet, tech firms

Thailand is studying plans to toughen tax collection rules for internet and technology firms like Alphabet Inc's Google, the head of the Revenue Department told Reuters, as the tax affairs of these firms comes under growing scrutiny in Southeast Asia.

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News Analysis: Coordination or Competition? a BEPS Score Card

Mindy Herzfeld reviews the broad criticisms of the OECD's base erosion and profit-shifting project and suggests that tax policymakers should considerwhether the project's original goals can be accomplished in a more effective, less disruptive manner.

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Switzerland Proposes to Exempt Intragroup Interest From Withholding

In an effort to encourage Swiss multinationals to perform group financing and cash pooling activities locally, Switzerland's Federal Council has proposed exempting interest on intercompany balances from its 35 percentwithholding tax.
For thewWTD story, gohere. (subscription required)
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South Africa publishes revised tax Bill for comments

South Africa's National Treasury has revised its earlier proposals concerning interest-free loans to trusts and restricted equity shares (for employee share schemes), and amended provisions for several tax incentives.

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Tax havens: The Brazilian listing procedure and the recent list adjustment

  • By ITR

Jurisdictionswith nil, low, favourable and benefitted tax rules have played an important role in shaping today's globalised environment, providing efficient structures and even permitting abusive and shamed transactions. To face this scenario, countries have imposed burdensome taxation for transactions involving tax havens, among other initiatives.

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Egypt introduces VAT regime

Egypt has published the VAT Act, replacing the general sales tax (GST)with a VAT regime. Among a host of new rules, the law introduces new compliance provisions for non-residents that provide goods and services to Egyptian businesses or individuals.

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Experts See Brexit's Reporting Effects Beyond Currency Swings

Great Britain's voluntary, still-pending exit from the European UnionÔøΩBrexitÔøΩhas causedwell-known swings in the value of the British pound, but it also has implications in accounting for derivatives and risk-reducing hedges, cash-flow forecasts, employee pensions and deferred taxes, PricewaterhouseCoopers accountants say.
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Future Inversions Will Be Mergers of Adults,' Attorney Says

Inversions are growing up.
Instead of a large U.S. company swallowing a smaller foreign company and moving overseas, each corporation gets a say in how the deal proceeds, a tax attorney said.
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IRS Working on Country-by-Country Reporting Form

Work is underway on the form and instructions for the country-by-country voluntary reporting regimen set up in response to the OECD's broad international taxation project, an IRS official said.

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Saint-Amans to EU: Stick to Current Transfer Pricing Standard

The European Commission shouldn't try to create its own transfer pricing standards in investigatingwhether companies received favorable tax treatment from governments in the European Union, the OECD's top tax official said.

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OECD finalizing BEPS multilateral instrument, concerned about EU state aid tax probes

Officials are putting the finishing touches on the multilateral instrument (MLI) to implement the OECD/G20 base erosion profit shifting (BEPS) measures, keeping it on track to be finalized this fall, senior OECD officials said September 22.
For the MNE Tax story, gohere.
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What Europe's tax grab from Apple should teach Sen. Warren

Public confidence in big business ranks below every major institution in the United States except Congress, according to Gallup. So it comes as little surprise thatwhen the European Commission ruled recently that Apple had struckwhat the commission characterized as an unfair tax dealwith Ireland and should have to pay back $14.5 billion, manywere quick to view the case as typically craven trickery by an unscrupulous multinational.

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Are U.S. Anti-Tax Inversion Rules Unconstitutional?

That's the question a group of attorneys representing multinational corporations recently raised at a Treasury Department hearing on the proposed changes to U.S. tax law.
For the Forbes article, gohere.
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Inversions Will Continue Until Lawmakers Fix Americas Competitiveness Problem

America has the highest corporate tax rate in the developedworld.we do not possess "one of the highest" corporate rates. Our corporate rate is number one.
America is also one of the few countrieswith aworldwide taxation system rather than a territorial system.

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Public comments received on the discussion draft on Branch Mismatch Structures under Action 2 of the BEPS action plan

  • By OECD

On 22 August 2016, interested partieswere invited to provide comments on a discussion draft (French version available here) on Branch Mismatch Structures under Action 2 (Neutralising the Effects of Hybrids Mismatch Arrangements) of the BEPS Action Plan. The OECD is grateful to the commentators for their input and now publishes the comments received.

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Selecting Transfer Pricing Comparables After Medtronic

In this article, the authors look at the recent Tax Court opinion in Medtronic, highlighting the perils of selecting thewrong comparables and using thewrong functional analysis.
For the Tax Notes viewpoint, gohere. (subscription required)
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Vestager, Predecessor Reject Apple State Aid Decision Criticism

The European Commission's competition commissioner, Margrethe Vestager, on September 21 defended the commission's recent decision ordering Ireland to recover over ÔøΩ13 billion in illegal state aid from Apple Inc., a move that has been sharply criticized by both the Irish and U.S. governments.

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The EU Anti-Tax-Avoidance Directive

Sandy Bhogal discusses the EU anti-tax-avoidance directive and theways inwhich it overlapswith the recommendations in the OECD's base erosion and profit-shifting project.

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OECD members stopped raising taxes in 2015

Governments stopped raising taxes in an effort to narrow budget deficits in 2015 and switched to targeted tax cuts designed to support economic growth, the Organization for Economic Cooperation and Development said Thursday.

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What India Needs To Fix Before Implementing Its Mighty Tax Reform

With the euphoria of the GST (India's biggest tax reform post independence) mellowing down, attention has switched to implementation. Naturally, such a complex change is not going to be easy to implement and carries economic and political downsides if not properly executed. The Indian governmentwants to apply the tax by April 2017 (India's financial year runs from April to March) to ensure the positive effects are felt before the general elections in 2019.
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Vestager Gets Vindictive

  • By Wall Street Journal
Whenwewrote last month that Margrethe Vestagerwas turning the European Union into "a banana republic on high-speed rail" for imposing retroactive tax hikes, evenwe didn't appreciate the lengths towhich the EU's antitrust czarwould go to prove the point.
For thewall Street Journal article, gohere.
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EUs Vestager Sees Clash of Understanding With U.S. Over Apple

Margrethe Vestager, the European Union competition chief, said therewas a "clash of understanding"with the U.S. Treasury over her order for Apple Inc. to pay as much as 13 billion euros ($14.5 billion) in back taxes.

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Apple tax bill just the tip of a $2.4 trillion iceberg

There's a pot of untaxed, corporate profit gold sitting offshore, and the European Union plans to press forwhat it considers its fair share.
The official leading that effort, EU's antitrust commissioner, Margrethe Vestager,was inwashington thisweek to dealwith the blow back from her recent decision to slap Applewith a $14.5 billion tax bill.

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Thoughts on Treasury's White Paper on EU State Aid

In this article, the author provides context and clarity regarding concerns raised in the U.S. Treasury Department'swhite paper on the European Commission's state aid investigations.

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Jury Is Out on OECD Transfer Pricing Guideline Changes

Michael McDonald, Treasury economist and chair of OECDworking Party 6, said it's still unclearwhether key transfer pricing goals set out by the OECD's base erosion and profit-shifting plan have been accomplished by changes in the OECD transfer pricing guidelines thus far, including the OECD Council's approval of incorporating BEPS amendments into the guidelines, announced in June.

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Cyprus issues guidance on notional interest deduction

  • By PwC
Since 2015, Cyprus tax law has provided for a tax deduction on new corporate equity through the notional interest deduction (NID) regime, in an effort to further align the tax treatment of equity and debt financing.
In July 2016, the Cyprus tax authorities (CTA) issued Circular 2016/10 (the Circular) to further clarify the definition of relevant terms and provide guidance on the NID's practical application.

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European Commission opens formal State aid investigation into Luxembourg's tax treatment of GDF Suez (now Engie)

  • By PwC

On September 19, 2016 the European Commission (EC) announced, in a press release, a formal State aid investigation into tax rulings granted by the Luxembourg tax authorities to GDF Suez group (now Engie). The ECwill investigate the treatment of certain financing transactions between four Luxembourg group subsidiaries. The press release describes the reasonswhy the EC believes that the tax treatment applied to those transactions could represent State aid.

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Brady Statement After Meeting with Commissioner Vestager

  • By Committee on Ways and Means
The European Commission's decisions regarding state aid cases harm U.S. companies andworkers, and House Republicans are determined to reform the tax code to ensure "a level playing field" for U.S. businesses in international markets, Houseways and Means Committee Chair Kevin Brady, R-Texas, said in a September 20 release.

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EU tax official fails to win over GOP on Apple tax decision

Congressional Republicans are not satisfiedwith the European Commission's explanation for its decision to require Apple to pay $14.5 billion in back taxes to Ireland.

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European commission plans to overhaul how companies report profits

The European commissionwill launch a further crackdown on tax avoidance by reviving a long-stalled plan to overhaul how companies report their profits, according to Europe's most senior tax policy official.

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Dutch Cabinet Hints at Lower Corporate Tax Rate in Coming Years

The Dutch deputy finance minister hinted that the countrywouldwork to further cut the corporate tax rate in the coming years, a bid to keep pacewith neighboring countries looking to attract foreign businesses after the Brexit vote.

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Tax Policy Reforms in the OECD 2016

  • By OECD
This is the first edition of "Tax Policy Reforms in the OECD". This annual series of reports aims to track and compare tax policy developments over time across OECD countries. This year's edition focuses on the tax reforms thatwere introduced in 2015 and identifies the most significant tax policy reforms aswell as common tax policy trends across groups of countries.
For the OECD report, gohere.
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Luxembourg remains in the spotlight for EC state aid investigations

Luxembourg's tax treatment of another large multinational has been called into question by the European Commission as it looks at the tax rulings between the EU nation and a French company.

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Mexico implements new transfer pricing rules for Advanced Pricing Agreements

  • By PwC
The Mexican government recently enacted a new regulation enabling the Mexican Tax Authorities to perform on-site visits to carry out their own functional analysis as a part of the Advanced Pricing Agreement (APA) process.
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U.S. Debt-Equity Regulations Problematic for BEPS Action 2

In this article, Tiegerman argues that if the proposed regulations under section 385 are finalized, multinational companies in cross-border lending arrange-mentswill face greater risk of double taxation and higher costs in tax controversies because hybrid instruments (and the resulting mismatches) may be created by operation of lawwhen no hybrid arrangementwas intended by the parties.

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Supply Chain Complexities Creating Tax Tension for Companies

Companiesworldwide are rethinking their supply chains to dealwith impending changes in global tax rules and are finding that they need to explain more to tax authorities than ever before.
Robert Tsang, indirect tax leader at Deloitte in Singapore, noted during a panel discussion at a tax conference in Hong Kong that supply chains are "much, much more complex" than theywere 25 years ago and that explaining them to government authorities can be daunting.

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