Int'l Tax News

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Better Process Sought for Commentary on OECD Model Treaty

by Rick Mitchell
Thework to develop a multilateral treaty underwhich countries can quickly adopt recommendations from the OECD's international action plan to combat corporate tax avoidance should include an effort to modernize theway OECD commentary is developed, practitioners said.
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Debt-Equity Rules Generate Hottest Tax Talk in Years

by Laura Davison and Alison Bennett
Treasury's proposal to overhaul how intercompany debt is documented and characterized has drawn the most spirited reaction to tax regulations in recent memory, as some lawmakers and business groups try to pare down rules they saywould be detrimental.
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News Analysis: The Impact of Brexit on U.S. Tax Planning

by Marie Sapirie
In the long term, Brexit could have dramatic consequences for tax planning if the United Kingdom decides to diverge significantly from EU tax policies, but for now, U.S. multinationalswith subsidiaries in the United Kingdom may stickwith the status quo.
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Flurry of Debt-Equity Reg Comments at Deadline Despite Glitch

By Amy Elliott (Tax Notes)
The deadline for submitting comments on the proposed section 385 debt or equity regulations (REG-108060-15 2016 TNT 65-11: IRS Proposed Regulations) passed July 7 amid multiple reports that thosewhowaited until the last minute to submit comments or request to speak at the July 14 public hearing had to contendwith sporadic technical difficulties at regulations.gov.
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News Analysis: Brexit Creates Tax Uncertainties

by Mindy Herzfeld
The future of U.K. tax policy is one of many uncertainties that have emerged following U.K. voters' decision to exit the European Union. For now, it's unclearwhen or evenwhether the countrywill leave, let alone the terms of any breakup.
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BEPS Action 13: Be Prepared for an Era of Transfer Pricing Transparency in Indonesia

by Permana Adi Saputra
Permana Adi Saputra of PB Taxand looks at how the OECD/G-20 base erosion and profit shifting Action Planwill affect transfer pricing regulations and documentation requirements in Indonesia. "Indonesiawill need to incorporate the guidelines into domestic regulations in order to enforce the Action Plan," hewrites.
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Business seeks greater role in crafting multilateral instrument to implement BEPS tax measures

  • By MNE Tax
by MNE Tax (Multinational Tax & Transfer Pricing News)
The OECD on July 4 released 33 comment letters received in response to its discussion draft on the development of a multilateral instrument to implement the tax treaty provisions in the final OECD/G20 base erosion profit shifting (BEPS) plan reports.
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Plan to Curb Tax-Inversion Deals Could Go Too Far

by Gina Chon (New York Times)
There's a harmful flip side to the push against tax-inversion deals in the United States. The Treasury Department's latest plan to curb tax-motivated overseas mergers takes aim at inter-company loans. It is a good idea to curb this so-called earnings stripping. The proposed rule is broad, however, and could hurt normal funding practices.
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Stakeholders Call for MLI Text to Be Made Public

Business stakeholders and tax practitioners called for the text of the OECD's multilateral instrument (MLI) to be made public, saying that providing technical analysis of the MLIwas difficultwithout seeing the actual language used.
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Investment Likely to Plummet Under Debt-Equity Rules: Groups

Bloomberg

Investment by both U.S.-based and foreign-based multinational companieswould drop like a rock under the IRS's controversial rules to combat earnings stripping, two major business groups said.
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Germany Issues ministerial draft bill reflecting BEPS initiatives, EU Directive

  • By PwC

PwC

by PWC
On May 31, 2016, the German Federal Ministry of Finance published a ministerial draft bill intended to implement certain recommendations resulting from the OECD BEPS project and also the provisions of the European Union Mutual Assistance Directive.
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EC probes Belgian, French corporate tax exemptions (1)

Belgium and France are under scrutiny by the European Commission (EC) for offering corporate tax exemptions that distort competition.

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New Brazilian rules on ultimate beneficiary disclosure

  • By ITR

The Brazilian Internal Revenue Service (IRS) has issued Normative Instruction (NI) No. 1.634with the purpose of updating the main regulatory provisions regarding the Corporate Taxpayer Registry (CNPJ).

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EU Vat Action Plan: Heavier burden for businesses?

The European Commission's proposed VAT Action Plan is an ambitious attempt to reform the flailing regime. Joe Stanley-Smith picks through the details to look at the impact it could have on companies.

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Business Reps Neutral on OECD Arbitration Style

by Stephanie Soong Johnston
The business sector doesn't have a preference for one kind of arbitration style in the optional provision on mutual agreement procedure (MAP) arbitration in the OECD's multilateral instrument (MLI), but it's important to have something thatworks for the countries inwhich businesses are involved, representatives said.
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Democrats to Treasury: Ignore Lobbyists in Debt-Equity Fight

by Laura Davison
Ten House Democrats urged Treasury Secretary Jacob Lew to not slow down or change course on a final version of controversial debt-equity rules.
"We urge you not to yield to the intense lobbying against these regulations, directed at both Treasury and the Congress, by multinational business and its trade associations," they said in a July 7 letter about the proposed rules (REG-108060-15).
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Lew to Taxwriters: Treasury Will Review Debt-Equity Reg Comments

by Stephen K. Cooper, Kat Lucero, & Dylan F. Moroses
The Treasury Departmentwill give a "hard look" at the many comments and concerns on the controversial section 385 debt or equity regulations before it finalizes them, Secretary Jacob Lew told reporters July 7 after meetingwith Senate Finance Committee members and staff.
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U.S. Corporate Income Tax Reform and its Spillovers

This paper examines the main distortions of the U.S. corporate income tax (CIT), focusing on its international aspects, and proposes a set of reforms to alleviate them. A bold reform to replace the CITwith a corporate-level rent tax could induce efficiency-enhancing reform of the international tax system. Since fundamental reform is politically difficult, this paper also proposes an incremental reform thatwould reduce tax expenditures, reduce the CIT rate to 25-28 percent, and impose a minimum rent tax on foreign earnings. Finally, this paper analyzes empirically the likely impact of the incremental on corporate revenues outside the U.S.

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Chamber Addresses Treasury's Debt-Equity Debacle

by Caroline L. Harris and J.D. Foster (U.S. Chamber of Commerce)
The U.S. Chamber of Commerce onwednesday submitted comments to the U.S. Department of Treasury regarding the newly proposed Section 385 regulations. The comments submitted by the Chamber are unique in that they specifically reflect the greatest, most immediate concerns of Chamber members. These comments do not purport to address every issue, but they are unique in capturing a consensus of major concerns of the U.S. business community.
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GOP Senators: Treasury rules could erode tax base

by Naomi Jagoda
A group of Republicans on the Senate Finance Committee said that proposed Treasury Department rules aimed at curbing offshore tax deals "threaten to further exacerbate our current economicwoes."
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Policy Options to Address Profit Shifting: Carrots or Sticks?

by Jane G. Gravelle
Policymakers have discussed reducing the shifting of corporate multinational corporations' profits into low-tax jurisdictions through carrots (incentives such as rate reductions) and sticks (such as a minimum tax on foreign-source income). This article indicates that lowering the corporate tax rate or adopting a patent box is unlikely to affect profit shifting but that restrictions such as minimum taxes or interest allocation rules could be successful.
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Treasury to Address Cash Pooling in Final Debt-Equity Rules

by Laura Davison & Kaustuv Basu
Treasury officials told lawmakers that they expect to ease the restrictions on cash-pooling transactions in the final version of the controversial debt-equity regulations, a senior Houseways and Means Committee member said.
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Transfer Pricing Deals to Get Special Scrutiny After Inversions

by Alison Bennett
Transfer pricing deals are among post-inversion transactions IRS agents should be closely scrutinizing, the agency said in a newly posted audit guide.
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State Groups Target Treasury's Debt-Equity Rules

by Ryan Tuck
Two prominent state groups haveweighed in on the Treasury Department's divisive debt-equity rules, saying a deadline extension on the comment period is crucial.
In a July 6 letter, the Council On State Taxation sought to identify "some additional state tax concerns and potentially onerous state tax compliance burdens" thatwould result from the proposed rules. According to COST, the new rules "would introduce significant new complexity and uncertainty to the state and local taxation of multistate and multinational businesses."
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EU Nations Turned Blind Eye to LuxLeaks Tax Rulings: Report

by Joe Kirwin
European Union nationswerewell aware that Luxembourg and other countries provided favorable tax rulings during the past decade but opted not to confront them in the interest of protecting their own harmful tax breaks for multinational companies.
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OECD Criticized for Not Issuing Draft Multilateral Instrument

by Penny Sukhraj
The OECD is set to face criticism at a July 7 public meeting in Paris over its lack of transparency in developing the multilateral instrument,which signatories to the project on combating tax base erosion and profit shifting are expected to adopt to implement the project's recommendations.
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More Law Professors Urge Ninth Circuit to Overturn Altera'A second group of law professors is calling on the U.S. Court of Appeals for the Ninth Circuit to uphold federal cost-sharing regulations str

by Doloresw. Gregory
A second group of law professors is calling on the U.S. Court of Appeals for the Ninth Circuit to uphold federal cost-sharing regulations struck down by the U.S. Tax Court last summer (Altera Corp. v. Commissioner, 9th Cir., No. 16-70496, amicus brief 7/5/16).
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Treasury Plans for Debt-Equity Regs Remain Vague, Taxwriters Say

by Kat Lucero, Dylan F. Moroses & Amy S. Elliott
After a July 6 meetingwith some Treasury officials to discuss controversial debt-equity proposed rules, some taxwriters remained unsatisfied that the Treasury Departmentwill move to accommodate congressional and stakeholder concerns about section 385.
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EP Supports CCCTB, Tax on Profits Leaving EU, Ownership Register

by J.P. Finet
The European Parliament voted overwhelmingly to adopt the conclusions and recommendations made by its special committee on tax rulings (TAXE II) in a report that calls for a common consolidated corporate tax base (CCCTB), a register of beneficial ownership, awithholding tax on profits leaving the EU, a tax haven blacklist, andwhistleblower protections.
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IRS issues final county-by-counry reporting rules, addresses volunatry reporting for 'gap year,' along with a few points of clarification

  • By PwC
by PwC
The IRS on June 29, 2016, issued final regulations requiring annual country-by-country (CbC) reporting for US-parented multinational enterprise (MNE) groups. The information collection requirements in these regulations are to be satisfied by submitting a new reporting form, Form 8975, Country-by-Country Report,with the taxpayer's income tax return. Form 8975 calls for information on a country-by-country basis related to the MNE group's income and taxes paid, togetherwith several other data items.
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Argentine Congress passes tax bill with amnesty provisions and other significant tax changes

  • By PwC
by PwC
Argentina's Senate on June 29, 2016, approved a tax billwith special incentives for Argentine taxpayers to report previously unreported assets. The bill also includes modifications to various tax provisions. It is expected that the billwill be signed into law and published in the coming days.
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Brazil now requires information reporting for 'ultimate beneficial owners'

  • By PwC
The Brazilian tax authorities (RFB) on May 5, 2016, issued Normative Instruction (NI) No. 1,634/2016. This NI overhauls the guidancewith respect to information reporting in the Brazilian Corporate Taxpayers Registry (CNPJ).
Among other changes, the NI requires the disclosure of informationwith respect to 'ultimate beneficial owners.' Such owners include individuals and certain entities that, directly or indirectly, hold, control, or 'significantly influence' an entity, aswell as individuals and certain entities onwhose behalf a transaction is undertaken.
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The federal government says U.S. corporations will spend a combined $13 million annually complying with proposed tax rules on internal corporate debt. But an industry trade group estimates that could

The federal government says U.S. corporationswill spend a combined $13 million annually complyingwith proposed tax rules on internal corporate debt. But an industry trade group estimates that could be the cost for just one company.
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Is Corporate Integration a Good Idea?

by Alan D. Viard
In this installment of the Star Forum, expertsweigh in on the following question:Senate Finance Committee Chair Orrin G. Hatch, R-Utah, has announced that he is drafting a proposal in favor of corporate integration. Do you think that corporate integration is a good idea?what factors should Hatch consider as he is drafting his proposal?
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Finance Republicans Urge Treasury to Delay Debt-Equity Regs

by Kat Lucero
Ahead of a critical meetingwith Treasury officials, seven Senate Republican taxwriters urged Secretary Jacob Lew to delay controversial proposed rules thatwould recharacterize debt as equity to curb inversions, rules Treasury has said it plans to finalize quickly.
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LB&I International Practice Service Concept Unit

  • By IRS
by IRS
The IRS made available its international practice unit that provides an overview ofwhether a corporate inversion is subject to section 7874, the three qualifying tests, the distinction between the tax consequences of an 80 percent and a 60 percent inversion if section 7874 applies, and potential tax issues that may artificially reduce U.S. tax.
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Comparables Argument in Altera' Flawed, Law Professors Say

by Doloresw. Gregory
Treasury should shut down its cost-sharing regime altogether if stock-based compensation can't be included in the pool of costs shared by parties to such deals, six tax professors argued in a brief filed in Altera Corp.'s transfer pricing disputewith the IRS (Altera Corp. v. Commissioner, 9th Cir., Nos. 16-70496, 16-170497, amicus brief 7/1/16).
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MEPs call for tax haven blacklist, patent box rules, CCCTB and more

  • By European Parliament News

Parliament's recommendations for making corporate taxation fairer and clearerwere voted onwednesday. MEPs call for an EU register of beneficial owners of companies, a tax havens blacklist, sanctions against non-cooperative tax jurisdictions, action against abuse of "patent box" regimes, a code of conduct for banks and tax advisors, tax good governance rules in EU trade agreements, a common consolidated corporate tax base (CCCTB) and awithholding tax on profits leaving the EU.

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Crackdown on tax loopholes announced by European commission

by Jennifer Rankin
The EU executive has announced a further clampdown on offshore tax avoidance and shell companies in response to the Panama Papers.
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Swiss IP Structures Attractive to U.S. Tax Directors

by Kevin A. Bell
Switzerland, a sophisticated, mountainous nation of 8 million already attractive to U.S. tax directors seeking a European jurisdiction for their group intellectual property, is likely to maintain its competitive position in the post-BEPSworld.

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Republicans Raise Heat on Treasury's Debt-Equity Rules

by Kaustuv Basu
Seven Republican members of the Senate Finance Committee piled more pressure on the Treasury Departmentwith a letter asking it to slow down controversial debt-equity rules.
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OECD Discussion Draft Narrows Scope for Profit Splits

by Ryan Finley
Under the OECD's new draft guidance on the profit-split method, use of profit splitswould be confined to situations inwhich the parties share in the "economically significant risks," and theywould not be appropriate for entitieswith a level of operational integration typical for associated enterprises.
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EU Starbucks' Ruling: A New View of Arm's-Length Principle

by Alex M. Parker
A European Commission ruling against Starbucks and the Netherlands isn't intended to replace the tax administrations of European Union countries, but tax practitioners say that appears to bewhat the commission is doing.
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Why Does Subchapter C Address Foreign Corps?

by Jasper L. Cummings Jr.
In this article, Cummings discusses section 367 and asks Treasury: Just because a regulation is permitted under section 367, is it necessary or appropriate under that statute?
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India amends application date of General Anti-Avoidance Rule

International Tax Review

by Amelia Schwanke

Investors in India have been given room to breathe as the Central Board of Direct Taxes (CBDT) amends the effective date of the General Anti-Avoidance Rule (GAAR).

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Taxing vocabulary: a glossary of fiscal terms

  • By European Parliament News

Paying taxes can be complicated, but so can the vocabulary that goeswith it. Tax avoidance is legal, but tax evasion isn't and justwhat exactly is base erosion? As the Parliament's second special committee is having its final recommendations debated and voted on during thisweek's plenary,we take a closer look at the jargon. Read on for an explanation of the terms used.

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Tax Haven Route Won't Work for Post-Brexit UK, OECD Says

  • By Reuters

The United Kingdom is unlikely to try to lure international investment by becoming a tax haven after it leaves the European Union, according to an internal memo prepared by the body responsible for the drafting international tax rules.

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New Brazilian rules on ultimate benefiti

International Tax Review

The Brazilian Internal Revenue Service (IRS) has issued Normative Instruction (NI) No. 1.634with the purpose of updating the main regulatory provisions regarding the Corporate Taxpayer Registry (CNPJ).

To read more go here

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The Platform for Collaboration on Tax releases discussion draft on effective capacity building on tax matters 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 TA providers, development partners, and especially country governments – have developed a series of recommendations and enabling actions in response to this request,which are laid out in this discussion draft.

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First meeting of the new inclusive framework to tackle Base Erosion and Profit Shifting marks a new era in international tax co-operation

  • By OECD

Representatives of more than 80 countries and jurisdictions have gathered in Kyoto, Japan to push forward ongoing efforts to update international tax rules for the 21st century, the latest step in the OECD/G20 Project to tackle Base Erosion and Profit Shifting (BEPS).

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