Int'l Tax News

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Opinion Backs EU Commission in Crucial State Aid' Tax Cases

Bloomberg

by Joe Kirwin
The European Union's high-profile state aid tax cases involving companies such as Apple, Amazon and Starbucks received a boostwhen the EU's top legal adviser insisted the tax breaks are "selective" and therefore illegal, even if they are available to other companies.
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OECD: Countries' Risks Should Dictate Approach to Interest

Bloomberg

by Ricky Mitchell
The OECD is seeking comments on a new discussion draft addressing an outstanding question from the international project to fight corporate tax avoidance: how to treat interest in the banking and insurance sectors.
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EU harmonises VAT rules on vouchers

On June 27 2016, the European Union Council adopted the Voucher Directive,which is aimed at clarifying and harmonising the relevant VAT rules. The directivewill apply from January 1 2019.

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With U.K. Out, Renewed Push for Common EU Tax Base

by Alex M. Parker
The U.K.'s surprising vote to disconnectwith the European Union has given some hope that the body's 15-year project to harmonize its tax rules and implement a formulary tax systemwill get a shot in the arm.
It still has a longway to go.
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Economic Analysis: Conservatives Challenging Long-Standing Tax Orthodoxy

by Martin A. Sullivan
In economic analysis, Martin A. Sullivan looks at how conservative tax policy is evolving in the United States and United Kingdom in response to rising economic populism.
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U.S. Tax Review (1) (1)

by James P. Fuller
In this article, the author discusses recent U.S. international tax developments, including the IRS's final regulations requiring CbC reporting, ECOFIN's agreement on the EU anti-tax avoidance directive, Brexit, and the OECD's recent discussion draft on profit splits.
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Ireland clarifies VAT exemption for fund management

by Joe Stanley-Smith
Companies receive clarity on the Irish VAT treatment for the management of special investment funds following the ECJ judgment in GfBk.
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News Analysis: Change in Chengdu: The G-20's New Tax Pillar

by Stephanie Soong Johnston
Transformation and the pursuit of successwere the underlying themes during the high-level G-20 tax policy symposium in Chengdu, China, as finance ministers and treasury officials discussedways inwhich they can use and have used tax policy to promote more inclusive, innovation-driven growth, aswell as greater tax certainty.
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OECD and EU to Align Listing Criteria, Tax Chief Says

by Stephanie Soong Johnston
The OECD and the European Commission are meeting regularly andworking closely together to ensure their respective criteria for identifying and listing noncooperative jurisdictions are not contradictory, the OECD's tax chief said.
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News Analysis: Your Summer Reading: Subpart F Treatment of Inbound Loans

by Lee A. Sheppard
In news analysis, Lee A. Sheppard analyzes a recent discussion of section 956 issues involving inbound loans.
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Financial Transactions Tax Idea Creates Buzz Among Democrats

by Kaustuv Basu & Aaron E. Lorenzo
A confluence of factors in this presidential election cycle is focusing attention on a financial transactions tax andwhat it can achieve.
And it goes beyond the Bernie effect.
Although presidential candidate Bernie Sanders has talked about a broad FTT, there is also a need for new funding sources to get to a revenue-neutral tax overhaulwhile there is tentative movement on such a tax in the European Union.
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Status Changes of Corporations Owning PFIC Shares

by Kimberly S. Blanchard
Kimberly S. Blanchard ofweil, Gotshal & Manges looks at issues raised by the IRS's proposed changes to the "next day rule" and related consolidated return regulationswhere a target corporation owns shares in a passive foreign investment company.
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News Analysis: Will the OECD's 'Pragmatic Fudge' Save Transfer Pricing?

by Mindy Herzfeld
The July 19-21 transfer pricing symposium organized by the National Association for Business Economics (NABE) left the impression that the changes to the OECD transfer pricing guidelines as part of the base erosion and profit-shifting project have not solved the problems theywere intended to, but instead left the field in a state of confusion.
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Tax fraud: 75% of Europeans want EU to do more to fight it

  • By European News Parliament
byEuropean News Parliament
Only death and taxes are certain in life - as the cliché goes - but that doesn't mean you have to like either. In the case of taxes, it's madeworse by not everyone paying their fair share. According to the latest Eurobarometer survey commissioned by the European Parliament, 75% of all Europeans believe the EU should do more to fight tax fraud.
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OECD Looks at BEPS Effect on Interest in Banking, Insurance

by Alexander Lewis
The OECD on July 28 issued a discussion draft regarding potential approaches -- including the application of modified fixed ratio and group ratio rules under action 4 of the base erosion and profit-shifting project --to address the potential impact of BEPS on interest in the banking and insurance sectors.
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A financial transaction tax would help ensure Wall Street works for Main Street

by Josh Bivens & Hunter Blair
What this report finds: Awell-designed financial transaction tax (FTT)ÔøΩa small levy placed on the sale of stocks, bonds, derivatives, and other investmentsÔøΩwould be an efficient and progressiveway to generate tax revenues.
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Officials: CbC Regs Nonspecific Because of Local Filing Concerns

by Ryan Finley
The decision not to provide more detailed and explicit guidance in the final country-by-country (CbC) reporting regulationswas based on a desire to give flexibility to taxpayers and avoid the risk that unintended inconsistencieswith OECD standardswould expose U.S. multinationals to local filing, according to Treasury and IRS officials.
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OECD seeks comments on use of a group ratio to determine limit on interest deductibility

  • By PwC
by PwC
A company may be able to deduct more of its debt finance costs if discussion draft proposals published for comment 11 July 2016, by the Organisation for Economic Co-operation and Development (OECD) are finalised and adopted by the company's residence territory.
The discussion draft considers debt finance costs in light of the company'sworldwide group position.
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Foreign Investment in U.S. Growing, Taxes Modest: IRS Data

by Allyson Versprille
The rest of theworld is investing substantially in the U.S. but the taxes being collected are minimal, a fact that might change as Congress debates several tax overhaul proposals, an analyst told Bloomberg BNA in response to newly released IRS data.
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IRS to Allow Voluntary Reporting of Global Tax, Profit

An IRS official said the agency is continuing itswork on a mechanism to allow voluntary filings of country-by-country reports for companies required to complywith both the U.S. rules and those in a foreign countrywith an earlier effective date.
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Uruguay moves toward CbC reporting, Master File documentation, and the availability of bilateral and multilateral APAs

  • By PwC
by PwC
The Uruguay Government has submitted to Congress a tax bill including adoption of the OECD's recommendations for Country-by-Country (CbC) reporting and the Master File for transfer pricing documentation, following the scope of information to be provided under the Base Erosion and Profit Shifting (BEPS) Action 13 final report.
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Brisal ECJ case examiners Portuguese withholding tax on interest payments

International Tax Review

by Tiago Cassiano Neves

Tiago Cassiano Neves of Garrigues, Taxand Portugal, examine the effect the Brisal case has on applying Portuguesewithholding tax to interest payments. @

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Austria told to amend tax rules

International Tax Review

by Anjana Haines

Non-resident taxpayers operating in Austria may benefit from tax changes the country must make to complywith EU rules. @

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UK expedites EU corporate tax race to the bottom

The OECDwill unveil its tax blacklist in 2017, but loopholes in the criteria could allow the US, Germany and Switzerland escape sanctions.

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International community continues movement towards greater tax transparency

  • By 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. The reports allocated ratings for compliancewith the individual elements of the international standard, aswell as an overall rating for each of the eight jurisdiction undergoing a Phase 2 review.

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Bringing International Tax Policy Into the 21st Century

by Michael J. Graetz
Michael J. Graetz delivered these remarks at the Tax Policy Center's "A Corporate Tax for the 21st Century" conference on July 14 inwashington. These remarks are substantially taken from his April 2015 Ross Parsons Lecture at the University of Sydney Law School.
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UK expedites EU corporate tax race to the bottom (1)

Businesses must assess their next moves after the UK's Brexit vote triggered plans in the UK to cut the corporation tax rate,which may have started a race to the bottom on rates among European countries.

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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.
To read more go here

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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.
To read more go here

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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?
To read more go here

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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.
To read more go here

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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.
To read more go here

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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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