Int'l Tax News

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Tax-Advantaged Manufacturers Nearly Double Exports: IRS Data

by Laura Davison
Domestic corporations that export U.S. products nearly doubled the amount of goods sent overseas in a two-year period, according to Internal Revenue Service data.
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Domestic Partners Must Report Transfers to Foreign Corporations

by Herve M. Lewis, Sarah Staudenraus, & David F. Chan
In this article, the authors discuss how the requirement to report some transfers of property by the partnership to foreign corporations restswith the domestic partner or partners rather than the partnership.
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SAT issues new China transfer pricing compliance requirements

  • By PwC
by PwC
On June 29, 2016, China's State Administration of Taxation (SAT) issued the Public Notice Regarding Refining the Reporting of Related-Party Transactions and Administration of Transfer Pricing Documentation (SAT Public Notice [2016] No. 42, hereinafter referred to as "Public Notice 42"). Public Notice 42 provides new transfer pricing compliance requirements in China, including annual reporting forms for related-party transactions (RPT Forms), Country-by-Country (CbC) Reporting, and Transfer Pricing Documentation (TPD), all ofwhich are substantial changes to the existing rules.
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OECD releases discussion draft on approaches to address BEPS involving interest in the banking and insurance sectors

  • By OECD
by OECD
Interested parties are invited to provide comments on a discussion draftwhich dealswith approaches to address BEPS involving interest in the banking and insurance sectors under Action 4 (Interest deductions and other financial payments) of the BEPS Action Plan.
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A Way Forward on Corporate Tax Reform

by Alan D. Viard & Eric Toder
The U.S. corporate income tax is broken. Our tax rate is the highest in the developedworld, yetwe collect less corporate tax revenue as a share of gross domestic product than many of our trading partners. The tax both discourages firms from investing in the United States and enables multinationals to avoid tax by reporting profits in low-tax countries.
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Israel 1, OECD 0

  • By The Wall Street Journal
by Thewall Street Journal
Global tax hunters thought new OECD rules on corporate-tax "avoidance"would turn on a revenue spigot in high-tax countries. Not so fast. Instead, the new rules may encourage more competition to attract businesseswith lower tax rates, at least among theworld's smarter lawmakers. Look at Israel.
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Debt-Equity Challenges Must Get Associate Office Review

by Amy S. Elliott
In a sign that the IRS is preparing for finalization of the controversial debt or equity regulations, the agency posted July 25 a revised version of a chief counsel notice from June 30 making clear that any case in Exam or litigation raising an issue under section 385 must be coordinatedwith the Associate Chief Counsel offices.
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OECD R&D Suggestion Out-of-Date but More Start-Up Help Possible

by Nathan J. Richman
While a recent suggestion by the OECD on making the section 41 research credit refundable may not take account of recent expansions of the credit, other possible expansions still exist that could close the gap between the U.S. credit and the research incentives for start-ups offered by other countries, according to practitioners.
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Managing Global Tax Controversy: A Primer for the U.S. Multinational

by Nancy Chassman & Charles Nelson
Nancy Chassman and Charles Nelson offer guidance on the challenges that tax directors of U.S. multinational companies face in this age of vast information exchange among tax authorities across the globe.
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IRS Expands Scrutiny of Debt-Equity Cases Under Section 385

by Alison Bennett
The IRS iswidening the focus in its vigorous campaign to stop multinationals from using loans to strip income out of the U.S.ÔøΩan action that comes as the agencyworks to finalize rules thatwould treat some loans as equity rather than tax-favored debt under tax code Section 385.
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Tax-Disclosure Plan Would Reveal Reinvested Foreign Earnings

by Denise Lugo
U.S. multinationals and other firmswould need to disclose cash, cash equivalents and marketable securities held by foreign subsidiaries under a Financial Accounting Standards Board proposal to improve and add to requirements for income tax disclosures.
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Tax & Investment in the US

  • By PwC

PwC

by PWC
This quarter'sTax and Investment in the USaddresses:
· Proposed Section 385 Regulations: impact on US inbounds
· Proposed Section 385 Regulations: state tax impact
· IRS focus on 'foreign' travelers in the United States
· PwC's 2016 CFO Insourcing Survey
· why does global investment in the USA matter?
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Section 892: Form, Function, and Meaning, Part 3

Kimberly S. Blanchard examines the history and purpose of section 892 and recommends that the current regulations be replacedwith rules that focus on function rather than form.

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G20 ministers support plan to label countries that dont share tax information asnon-cooperative

  • By MNE Tax
by MNE Tax (Multinational Tax & Transfer Pricing New)
G20 finance ministers and central bank governors, during their July 23–24 meeting in Chengdu, China, approved a plan that sets out objective criteria to be used to label countries as "non-cooperative" for tax transparency purposes. The G20 officials also mandated that the
OECD continue itswork on issues of tax certainty and inclusiveness.
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International community continues movement towards greater tax transparency (1)

byPascal Saint-Amans (OECD)
The Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) published today 10 new peer review reports demonstrating continuing progress toward implementation of the international standard for exchange of information on request.
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Italy: Advance ruling for new investments in light of the recent clarifications provided by tax authorities

International Tax Review

by Michele Vannucci & Aurelio Massimiano
Circular No. 25/E, issued by the Italian tax authorities, has provided further clarifications on the advance ruling on new investments introduced by Legislative Decree No. 147 provided on September 14 2015, confirming its remarkable appeal for Italian and foreign investors.
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Lessons from Brexit About the Credibility of Experts and Evidence

by Robert McClelland (Tax Policy Center)
Economists and other experts overwhelmingly believed the United Kingdom had much to lose by voting to support Brexit and leaving the European Union.why then, did a majority of UK voters choose to do so anyway? One reason may be that many citizens no longer trust experts, including economists. Some argue that a similar distrust is reflected in the US and other advanced countries.
Why have experts lost the public's confidence?
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Why a financial transactions tax would work, expert says

by Michelle Fox (CNBC)
A smartly designed financial transactions tax could go a longway toward helping reduce income inequality andwon't negatively impact the markets, according to Andy Green, managing director of economic policy at the Center for American Progress.
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G-20 Officials Warn Against Public Country-by-Country Reporting

by Stephanie Soong Johnston (Tax Notes)
Consistent implementation of the recommendations in the OECD's base erosion and profit-shifting project is a key element for reducing tax uncertainty,which is a major impediment to investment, said G-20 finance ministers,who alsowarned that public country-by-country (CbC) reportingwould undermine efforts to promote certainty.
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To Curb Profit Shifting, States Eye Transfer Pricing Training

Bloomberg

by Jennifer McLoughlin
Against the backdrop of the Internal Revenue Service crackdown on profit shifting overseas, states are amplifying efforts to target a field of sophisticated intercompany transactions that hide taxable income.
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Transaction Reducing Tax for All Parties Was Equity, Not Debt

Bloomberg

by Erin McManus
The purported installment sale of a U.S. geothermal business by a foreign company to a U.S. buyerwas an equity investment and not a debt transaction (Am. Metallurgical Coal Co. v. Commissioner, T.C., No. 21198-12, T.C. Memo. 2016-139, 7/25/16).
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How to Kraft (or Not Kraft) Debt-Equity Regulations

by Deborah L. Paul (Tax Notes)
Deborah L. Paul examines Treasury and the IRS's decision to target debt dividends in the proposed section 385 regulationswhile leaving in place the tax law's general acceptance of related-party debt.
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G-20 Leaders Call for Certainty, Fairness in Tax Policy

Bloomberg

by John Butcher
Adopting new taxation systems to dealwith the global marketplace could disrupt growth and exacerbate inequality, finance heads at the Group of 20 countries' meeting in Chengdu, China, said in advocating greater tax certainty.
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Debt-Equity Rules Could Be Easier to Strike With Pending Bill

Bloomberg

by Laura Davison
Multinational corporations looking for another avenue to make the Treasury Department's debt-equity regulations disappear might be in luck. But be prepared; this could be a long shot.
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Survey: Brexit readiness barometer

Brexit has bolstered uncertainty in the tax system andwhile the UK's relationshipwith the EU is evolving, understanding and planning for your business's next steps during this ambiguity is vital.

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Norway: Foreign shareholders face 10-year withholding tax reassessments after Supreme Court ruling

Until recently, itwas unclearwhether the Norwegian tax authority (NTA) could reassess thewithholding tax liabilities of foreign shareholders as far back as two or 10 yearswhen the distributing company had disclosed incorrect or insufficient information.

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Board accountability: A new era

  • By ITR

Efforts to improve tax transparency in the post-BEPS environment have shifted the tax accountability of corporations to their boards of directors. Keith Brockman considers the implications of these changes.

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Report by the Platform for Collaboration on Tax to the G20: Enhancing the Effectiveness of External Support in Building Tax Capacity in Developing Countries

  • By OECD

G20 Finance Ministers, in their communique of February 2016, called upon the IMF, OECD, UN andworld Bank Group to "recommend mechanisms to help ensure effective implementation of technical assistance programmes, and recommend how countries can contribute funding for tax projects and direct technical assistance, and report backwith recommendations" at their July meeting. The four organisations,working jointly as the members of the new Platform for Collaboration on Tax – drawing on their individual experiences in delivering technical advice and their interactionswith other providers of technical assistance, development partners, and especially country governments – developed a series of recommendations and enabling actions in response to this request. The recommendations in this report further benefitted from a public request for feedback on draft recommendationswhich attracted responses from governments, businesses, civil society and individuals.

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Becoming a Tax Haven Is Harder Than It Looks

by David Kocieniewski
As Britain plans itsway out of the European Union, politicians have been looking forways for the country to maintain its dominance as a center for global capital. One idea: turning the post-Brexit U.K. into a tax haven.
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News Analysis: Regulation Redux: The Debt-Equity Regs in 1980 and Today

by Marie Sapirie
In news analysis, Marie Sapirie compares the process and the motivation behind Treasury proposing debt-equity regulations recently and in 1980.
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News Analysis: Brexit and Cross-Border M&A

by Amanda Athansiou
While numerous U.S. and European companies representing myriad industries have established domiciles in the U.K. over the past several years, drawn by compelling tax considerations among other attractions, like an educatedworkforce, developed legal system, and English-speaking population, Brexit has already begun to leave its mark on mergers and acquisitions activity.
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CIT Group Wins Interest Income Case in Canada Tax Court

The Canada Revenue Agency's aggressive pursuit in taxing CIT Group Securities (Canada) Inc. on interest income earned by its affiliates in Barbadoswill discourage some from legitimate tax planning even though the Tax Court of Canada ruled in the company's favor, attorneys told Bloomberg BNA.
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Post-Brexit U.K. as Tax Haven? May Be Harder Than It Looks

by David Kocieniewski
As Britain plans itsway out of the European Union, politicians have been looking forways for the country to maintain its dominance as a center for global capital. One idea: turning the post-Brexit U.K. into a tax haven.
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Ex-Official: OECD Unlikely to Examine Capital Allocation

by Alex M. Parker
A former OECD official said he's "not hopeful" the organizationwill tacklewhether capital allocations can be used to avoid taxes in the coming years.
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News Analysis: BEPS Alternatives -- Evaluating Other Reform Proposals

by Mindy Herzfeld
The OECD's base erosion and profit-shifting project attempted to limit multinationals' cross-border tax planning by recommending new rules thatwould provide governmentswith more effective tools. It did not attempt to address the problemswith the international tax system that gave rise to those practices in the first place.
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Debt-Equity Reg Treatment Inconsistent, Professor Says

by Samuel Thompson Jr.
Samuel Thompson Jr. disagreeswith remarks of Pam Olson at a debt-equity reg hearing, arguing the proposed stock interest regs are inconsistent in how they are applied.
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G20 calls for tax policy overhaul

  • By The Sydney Morning Harold
by The Sydney Morning Harold
Group of 20 finance ministers say taxation policies should be improvedworldwide to reflect globalisation and promote socially balanced, sustainable economic growth.
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G20 countries face calls for action to boost growth

  • By The Daily Mail
by The Daily Mail
Theworld's leading economies must do more to boost slowing global growth, the International Monetary Fund andwashington urged as G20 finance ministers gathered Saturday,with Britain's vote to leave the European Union threatening more disruption.
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Schaeuble Is Putting Financial Transaction Tax on Global Agenda

German Finance Ministerwolfgang Schaeuble said on Saturday he's putting efforts to tax financial transactions on the global agenda after attempts in Europe have stalled, even if resultswill only materialize after "years."
Speaking to reporters in Chengdu, China, on the sidelines of a meeting of Group of 20 finance chiefs, Schaeuble cited G-20 progress in efforts to curb tax avoidance, through the Base Erosion and Profit Shifting initiative, as encouragement for his plan.
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Companies Urged to Plan for Anti-Hybrid Mismatch Rules

by John Herzfeld
Companies must plan in the second half of 2016 for the prospect of national implementation of recommended steps to block a fairly common tax and treasury planning structure, the moderator of a panel of international tax practitioners said.
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South Africa releases draft tax law amendments

  • By PwC
by PwC
The South African National Treasury has released, for public comment, drafts of the 2016 Taxation Laws Amendment Bill (TLAB) and the 2016 Tax Administration Laws Amendment Bill (TALAB). These amendmentswould enact the 2016 Budget Review tax proposals. Comments are due by August 8, 2016.
The draft TLAB includes substantive changes to the tax laws. The proposed amendments could affect multinational companies doing business in South Africa.
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News Analysis: The Celtic Tiger's Last Roar?

by Ajay Gupta
Even as Ireland announced a staggering rate of growth in its 2015 GDP, handily beating estimates, its own finance ministry acknowledged that much of that growth reflected tax-driven corporate relocations, rather than real economic activity. Indeed, if Brexit leads to a taxwar to attract inbound investment, Ireland,which broke away from the United Kingdom nearly a century ago, couldwell end up following it out of the European Union.
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OECD Transfer Pricing Documentation Now Targets Multinationals

by Robert Feinschreiber &
The OECD, in promulgating action 13 2015wTD 193-30: Consultation Documents and Responses of its base erosion and profit-shifting project, replaced the Chapter V transfer pricing documentation guidelines in October 2015. This replacement rule shifted the onus of the documentation requirements to the multinational enterprise. The new documentation requirements diverge sharply from the OECD's 1995 neutrality approach between the tax administration and the MNE. This change in transfer pricing documentation ruleswill create tension between tax return preparers operating on a fixed-fee basis and their multinational clients.
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OECD seeks comments on new permanent establishment profit attribution guidance

  • By PwC
After the finalisation of Base Erosion and Profit Shifting (BEPS) Action 7 concerning the Permanent Establishment (PE) threshold, the OECD undertook to examinewhether its 2010 rules on attribution of profits to PEs, or the Authorized OECD Approach (AOA), require updating. The OECD issued a Public Discussion Draft (the paper) on 4 July 2016 soliciting comments by 5 September 2016, to be followed by a public consultation on 11-12 October 2016.
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U.S. Foreign Direct Investment, Irish GDP Both Surge in 2015

by Amanda Athansiou
Coincidence?
The U.S. Department of Commerce's Bureau of Economic Analysis (BEA) reported a 68 percent jump in new U.S. foreign direct investment (FDI) -- including from inversion transactions -- between 2014 and 2015 and named Ireland as the largest source country. Meanwhile, Ireland's GDP increased by 26.3 percent in 2015, dwarfing previous estimates.
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Economic Analysis: Border Adjustments Key to GOP Blueprint's Cash Flow Tax

by Martin A. Sullivan
Whowould have guessed that this campaign seasonwould raise deep and intellectually challenging questions about the future of corporate taxation? The meaty part of the debate is not between Democrats or Republicans but among Republicans.
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EU and global tax implications of UK public vote to leave the EU

  • By PwC
by PwC
In a 23 June 2016 referendum, the UK public voted to leave the EU. The implications depend to a substantial extent on the agreed exit terms, aswell as the negotiationswith other countries.
There are many misconceptions about how the referendum vote impacts taxes, but it causes no major direct legislative tax changes. However, the market volatility thatwe've seen post-vote could have tax impacts. In addition, tax policy changes may, in time, result fromwhat transpires. This bulletin briefly covers some areas of uncertainty and signposts to further materialswithout analysing the myriad scenarioswhich could play out.
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Narendra Modis Tax Overhaul Taxes India

by Raymond Zhong
A long-delayed revamp of India's messy tax system, envisaged as one of the country's farthest-reaching economic overhauls in decades, has another shot at becoming realitywhen Parliament reconvenes Monday.
But the tax plans have undergone so many changes and dilutions as they havewound through the political system that it could be many years before Asia's third-largest economy enjoys some of the advantages -- if they materialize at all.
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Obama to address tax evasion, money laundering at G-20, aide says

by Harvard Zhang
President Barack Obama is expected to address a growing sense of protectionism inworld markets by promoting stronger measures to dealwith global tax evasion and money laundering at a meeting ofworld leaders, awhite House aide saidwednesday.
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IRS to Agents: Scrutinize Foreign Currency Derivatives

by Alison Bennett
The IRS is cracking down on thosewho try to use financial derivatives to dodge taxes in deals involving foreign currency.
In guidelines issued July 21, the agency told its examiners to look closely at debt instruments, payables, receivables, forward contracts, futures contracts, options and similar instruments.
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