Int'l Tax News

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Give Us More Time on Debt-Equity Rules, Groups Ask Treasury

by Alison Bennett
Nearly two-dozen business and industry groups are asking the government to back down on the effective date for controversial earnings-stripping rules and offer months of additional time for commentsÔøΩa sign of the growing pressure on the Treasury Department to ease up on the regulations.
For the DTR story, go here. (subscription required)

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Tax Treaty Break From Inversions Rules Possible: Treasury

by Alison Bennett
Multinationals could get a break under controversial inversions rules if they don't get a better tax deal under the treaty in a new "third country" than they did in the jurisdiction they left, a Treasury Department official said.
For the DTR story, gohere. (subscription required)

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Debt-Equity Bifurcation Could Expand Beyond Related Parties

by Laura Davison
The Treasury Department could decide towrite rules allowing the government to break up debt contracts into debt and equity pieces for transactions that don't involve related parties, an official said.
For the DTR story, go here. (subscription required)

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European Green Party: U.S. Should Be On Tax Haven List

by Joe Kirwin
The U.S. should be listed as a tax haven if it doesn't take steps to expose beneficial owners of companies and if the OECD's common reporting standard isn't adopted, the European Green Party said.
For the DTR story, go here. (subscription required)

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Report Calls U.S. Multinationals' Tax Disadvantage Exaggerated

by Ryan Finley
The United States' comparatively high corporate tax rate and taxation ofworldwide income haven't made U.S. multinationals uncompetitive, and lowering the rate or adopting a territorial systemwon't fixwhat'swrongwith the current system, according to a reportwritten by economist Kimberly A. Clausing.
For the TNT story, go here. (subscription required)

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A new boost to transparency in international tax matters: 6 new countries sign agreement enabling automatic sharing of country-by-country reporting

  • By OECD
by OECD
As part of continuing efforts to boost transparency by multinational enterprises (MNEs), Canada, Iceland, India, Israel, New Zealand and the People's Republic of China signed today the Multilateral Competent Authority agreement for the automatic exchange of Country-by-Country reports ("CbC MCAA"), bringing the total number of signatories to 39 countries. The signing ceremony took place in Beijing, China.
For the OECD release, go here.

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The Necessary and Valuable Economic Role of Tax Havens

Simply stated,when politicians have toworry that jobs and investment can cross borders, they are less likely to impose higher tax rates and punitive levels of double taxation. Interestingly, even the statist bureaucrats at the Organization for Economic Cooperation and Development agreewith me,writing that tax havens "may hamper the application of progressive tax rates." They think that's a bad thing, of course, butwe both agree that tax competition means lower rates.

So Iwas very surprised to see some economists signed a letter saying that so-called tax havens "serve no useful economic purpose."

For the Cato article, gohere.

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If Everyone Is a Tax Haven, No One Is

by Alan Cole
The European Green Party today labeled the United States a tax haven, particularly singling out the states of Arkansas, Colorado, Delaware, Indiana, Iowa, Maryland, Michigan, Mississippi, Missouri, New York, Ohio, Oklahoma, Pennsylvania, and Virginia. That's a lot of states, places that most just consider ordinary areas inwhich to do business.
For the Cato article, gohere.

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PE changes increase risk of tax exposure in jurisdictions where a company has no legal entity

  • By International Tax Review

Multinational enterprises (MNEs) are facing new challenges arising from OECD's developments regarding the determination of a taxable presence in a foreign countrywhere the company operateswithout a legal entity.


For the ITR article, go here.

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Section 385 proposed regulations would vitiate internal cash management operations

  • By PwC

by PwC

On April 4, 2016, Treasury and the IRS proposed regulations under section 385. The Proposed Regulations appear to be intended to limit the effectiveness of certain tax planning techniques by recharacterizing certain related-party financings as equity, evenwhere the financing is in the form of straight debt instruments.

For the PwC Insight, gohere.

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U.S. Competent Authority statistics for 2015 reflect the global controversy environment and the growing need for relief from double taxation

  • By PwC

by PwC

The U.S. Competent Authority (USCA) office, on April 27, 2016, released statistics on cases addressed under the mutual agreement procedures (MAP) for calendar year 2015 (Report), including the number of MAP cases submitted, the number of cases closed, completion time, and pending cases.

The statistics show that APMA and U.S. treaty partners continue to provide taxpayerswith relief from double taxation in almost all allocation cases.
For the PwC Insight, gohere.

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Profit shifting and U.S. corporate tax policy reform

byKimberly A. Clausing
Corporate tax reform should focus on base erosion over competitiveness and could include small reform provisions such as stronger earnings stripping rules and an exit tax to reduce inversions alongwith broader return consolidation and apportionment measures, Kimberly A. Clausing of thewashington Center for Equitable Growth said in a May report.
For the report, go here.

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U.S. companies are saving $100 billion a year by shifting profits overseas, report says

by Renae Merle
U.S. multinational companies are saving $100 billion a year by shifting profits overseas to lower theirtaxbills, according to a study releasedTuesdaythat concluded that corporatetax-dodging is a bigger problem than previously estimated.
For thewashington Post story, gohere.

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The New U.S. Model Treaty Is Out!

by James J. Tobin
Iwas excited by the release of the new U.S. Model Treaty (the Model). It brings to mind one of my favorite scenes from the old movie "The Jerk"where Steve Martin is running down the street exclaiming "the new phone books are out, the new phone books are out." Unfortunately, after reading the Model and recognizing the difficulty the United States has in ratifying treaties or protocols in the first place, I'm not convinced the new Modelwill have much more effect than the new phone books Steve Martinwas so excited about.
For the Premier International Tax Library article, gohere.

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Is Tax Playing A Role In Weak Corporate Earnings?

First-quarter corporate earnings season is drawing to a close on a sour note. Quarterly profits are down 7.1% from a year ago, according to the Thomson Reuters TRI +% consensus estimate. There are a lot of reasons for this: a shaky global economy, persistently slow GDP growth in the U.S. and China, and the free-fall in crude oil prices, to name a few.

But there's also a new culprit that's emerging as a particularly challenging earnings headwind for multinational corporations: tax.

For the Forbes article, gohere.

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BEPS Brings on Information Overload, IRS Official

by Doloresw. Gregory
Increased government access to taxpayer data creates more opportunity to track down tax cheats, but the speed of the information flow threatens to swamp tax authoritieswith more data than they can process, an IRS official said.
For the DTR story, gohere. (subscription required)

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Expanded Group Definition in Debt/Equity Regs May Be Narrowed

by Amy S. Elliott & Lee A. Sheppard
The expanded group definition in the contentious proposed section 385 regulations may be narrowed, government officials hinted at the May 7 Corporate Tax Committee session of the American Bar Association Section of Taxation meeting inwashington.
For the TNT story, gohere. (subscription required)

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Pain of Earnings-Stripping Rules Might Ease: Treasury

by Alison Bennett
The bite of controversial earnings-stripping rules may be less painfulwhen the guidance is finalized, Treasury officials indicated at the May meeting of the American Bar Association Section of Taxation.
For the DTR story, gohere. (subscription required)

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American Business Competitiveness Act: Good Steps Toward Business Tax Reform

by Curtis S. Dubay & David R. Burton
The U.S. has the highest corporate tax rate in the developedworld. Houseways and
Means Committee Member Representative Devin Nunes (R–CA) has introduced new legislation for business tax reform, called the American Business Competitiveness Act (H.R. 4377). Two Heritage Foundation tax policy analysts explain how the legislationworksÔøΩand how it could be changed towork even better.
For the Heritage report, gohere.

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Obama's Wall Is Bad Too

by Alex Brill
The Obamawall is very real. It has stopped pending business transactions dead in their tracks, created costs and uncertainties at every Fortune 500 company in America, and moved the tax policy debate in thewrong direction.
For the US News article, go here.

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Tax Writers Continue Examining Tax Reform Proposals as Administration and Regulators Focus on International Issues - See more at: http://www.natlawreview.com/article/tax-writers-continue examining tax

by Brandon C. Roman & Stephanie L. Shaker
While it is presently unclear the extent towhich details from Representative Boustany's international tax reform proposalwill be included in the "blueprint," it is clear that he has put forth significant effort to prepare his measure and likely has his detailed proposal at the ready, should that level of detail ultimately be appropriate to include in the broader tax reform proposal.
For the National Review article, go here.

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PE changes increase risk of tax exposure in jurisdictions where a company has no legal entity (1)

  • By ITR

Multinational enterprises (MNEs) are facing new challenges arising from OECD's developments regarding the determination of a taxable presence in a foreign countrywhere the company operateswithout a legal entity.


For the ITR story, go here.

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No More Hiding in U.S. Disregarded Entities Under IRS Rules

by Alison Bennett & Chris Marr
The Treasury Departmentwants towrite an exception in final earnings-stripping regulations for cash-pooling arrangements that involve routine, daily "sweeps" of cash,while cracking down on long-term financing arrangements that look like problematic loans, Treasury International Tax Counsel Danielle Rolfes said.
For the DTR story, go here. (subscription required)

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Patent Box Meeting OECD Rules Likely OK for U.S Model Treaty

by Alex M. Parker
A patent or innovation box that passes new OECD standardswill also likely be acceptable under the new U.S. model tax treaty, according to a Department of Treasury official.
For the DTR story, gohere. (subscription required)

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Final Country-by-Country Rules May Address Territories

by Alex M. Parker
Final U.S. regulations implementing the OECD's country-by-country reporting scheme likelywill address how to consider quasi-independent territories such as Puerto Rico, a Treasury Department official said.
For the DTR story, go here. (subscription required)

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Debt-Equity Regs May Change Current Law

bywilliam R. Davis & Lee A. Sheppard
Government officialswho participated in the drafting of the proposed regulations undersection 385were challenged May 6 by practitioners on the degree towhich the new rules might change current law.
For the TNT story, go here. (subscription required)

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U.S. Model Treaty Emphasizes Antiavoidance Measures

by Alexander Lewis
The IRS has become aware of U.S. tax treaties' role in international tax avoidance schemes, and the most recent U.S. model treaty includes several changes designed to curb that abuse, according to Danielle Rolfes, Treasury international tax counsel.
For the TNT story, go here. (subscription required)

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News Analysis: A New Protectionism in U.S. Tax Policy?

by Mindy Herzfeld
Mindy Herzfeld examines the recent push in the U.S. to increase the tax burden on foreign multinationals, and explainswhy those multinationals and other advocates for increased foreign direct investment in the U.S.will not go downwithout a fight.
For the TNI article, go here. (subscription required)

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U.S. Tax Review (1) (4)

by James P. Fuller
In this article, James P. Fuller discusses section 385 and 7874 regulations, advance pricing agreements, and theCheri LaRuecase.
For the TNI article, go here. (subscription required)

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How foreign tax changes affect U.S. businesses and the prospects for tax reform

  • By Brookings Institution

by Brookings Institution

Changes in the taxation of business income by our major trading partners are creating shockwaves in the United States. On Tuesday, May 3, the Urban-Brookings Tax Policy Center examined the implications of theseworldwide changes for tax reform in the U.S. The symposium is named for Donald C. Lubick,who served in senior tax policy positions in the government for over four decades, and honors his extraordinary record of public service on behalf of better tax policy.

For the video of the conference, gohere.

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Profit Shifting Under Pressure

  • By Credit Suisse

Multinationals are facing a tougher tax environment, and it's coming atthem from a number of different angles.

For the Credit Suisse release, go here.

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States May Follow Treasury's Lead on Debt-Equity Rules

by Alex M. Parker
Now that the Treasury Department has issued new regulations strengthening rules on the classification of intercompany debt and equity, states may soon follow, a Multistate Tax Commission official said.
For the DTR story, gohere. (subscription required)

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Related-Party Debt Rules Could Clarify Partnership Lending

by Laura Davison
Government officials are debatingwhether debt issued by a partnership to a consolidated groupwould be subject to the substantiation requirements in proposed rules on related-party debt, an IRS representative said.
For the DTR story, go here. (subscription required)

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300 economists urge leaders to reject tax havens

by Danika Kirka
Hundreds of economists urgedworld leaders Monday to end the era of tax havens, arguing they only benefit rich individuals and multinational corporations and serve to increase inequality.
For the Seattle Times story, go here.

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Economic Analysis: For Economy's Sake, Time for Tax Reform Compromise

If Republicans reallywant business tax reform, they need to get out of their bubble and face the political reality. In the short term, they should consider drafting small-scale tax reform legislation that Clinton can sign. But it isn't just Republicanswho need a new mind-set. If Democrats reallywant to help Americanworkers, they need to get out of their own bubble and face the economic reality.

For the Tax Notes article, gohere. (subscription required)

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U.S. Taking Cautious Approach to Adoption of New PE Standard

by Ryan Finley
Before agreeing to incorporate the OECD's revised definition of permanent establishment into bilateral tax treaties, Treasury officialswant to be confident that countrieswill attribute profit to a PE in a consistent manner, according to Brian Jenn, attorney-adviser, Treasury Office of International Tax Counsel.
For the TNT story, go here. (subscription required)

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IRS Related-Party Debt Rules to Increase States' Focus on Transfer Pricing

by Amy Hamilton
The IRS's newly proposed related-party debt reclassification ruleswill likely pique -- rather than diminish -- state tax authorities' interest in transfer pricing reviews, practitioners said May 6.
For the STT story, go here. (subscription required)

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No 'Legitimate Expectations' in Excess Profit State Aid Case, Commission Says

For thewWTD story, go here. (subscription required)

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U.S. Inversion Rules Expected to Affect Canadian Companies

by Peter Menyasz
New U.S. regulations designed to prevent companies from shifting profits offshore, particularly through inversion transactions, may unintentionally capture Canadian companies, an international tax practitioner said.
For the DTR story, gohere. (subscription required)

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Belgian Minister: EU Demand for Tax Repayments Stupid

by Ianwishart & Aoifewhite
Belgiumwill "fight tooth and nail" to avoid clawing back some 700 million euros ($803 million) in tax breaks from multinational companies that European Union regulators ruled illegal earlier this year, the country's finance minister said.
For the DTR story, go here. (subscription required)

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PE changes increase risk of tax exposure in jurisdictions where a company has no legal entity (2)

  • By International Tax Review

Multinational enterprises (MNEs) are facing new challenges arising from OECD's developments regarding the determination of a taxable presence in a foreign countrywhere the company operateswithout a legal entity.

For the ITR story go here

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New IRS Intangibles Rules Called Radical Policy Departure

For the DTR story, go here Subscription Required

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Companies Need to Step Into Global Tax Debate: U.S. Official

by Kevin A. Bell
U.S. multinational corporations must become more involved and proactive in the debate and formulation of new international tax rules, said U.S. Deputy Assistant Treasury Secretary for International Tax Affairs Robert Stack.
For the DTR story, gohere. (subscription required)

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Stack Says Tax Reform Agenda Should Address International Issues

by Ryan Finley
Any tax reform agenda advanced by the U.S. business community that doesn't address the causes of instability in the international tax systemwould be a Pyrrhic victory, according to Robert Stack, Treasury deputy assistant secretary (international tax affairs).
For the TNT story, go here. (subscription required)

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EU Mulling Fair Taxpayer' Label, Better Dispute Resolution

by Joe Kirwin
The European Commissionwill propose legislation to help resolve cross-border tax disputes and is considering a "fair taxpayer" label for companies and a European tax identification number, alongwith tax breaks for research and development, in upcoming Common Consolidated Corporate Tax Base (CCCTB) legislation, according to the commission.
For the DTR story, gohere. (subscription required)

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Delete Expenditures in Reshaping Tax Code: Harvard Professor

by Aaron E. Lorenzo
Get rid of tax expenditures as part of reshaping the U.S. tax code and focus on lowering tax rates, Harvard University professor Dale Jorgenson said.
Doing sowould help lay the groundwork for improving business investment conditions, he said on a conference call hosted by the American Council for Capital Formation on May 3.
For the DTR story, go here. (subscription required)

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Introduction to Capital Formation 101

by Dr. Pinar Cebiwilber
The complex U.S. business tax structure and high taxes on capital gains and dividends are slowing investment growth, but growing support for corporate tax reform and for a shift to a "consumed-income tax system" are positive signs for the future of the economy, Pinar Çebiwilber of the American Council for Capital Formation said in a May report.
For the ACCF report, go here.

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Tax authorities adapt to rise of e-commerce

As tax authorities around theworld start to examine how e-commence sales affect their revenue from indirect tax it is important for taxpayers to knowwhat measures are being enforced.


For the ITR story, go here.

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The Intersection of EU State Aid and U.S. Tax Deferral: A Spectacle of Fireworks, Smoke, and Mirrors

  • By Florida Tax Review

The Advance Pricing Agreements or transfer pricing rulings granted to U.S. multinationals by Ireland, the Netherlands, and Luxembourgwere principally designed to achieve U.S. tax deferral and not EU tax avoidance. Adverse BEPS effectswithin the European Unionwould be immaterial in comparison to the deferral of U.S. tax on residual IP related profits, andwould have occurred primarily in countries other than those chargedwith the granting of unlawful State aid. The significant tax policy implications for both Europe and the United States resulting from the State aid decisions by the EU Commission are explored here in detail.

To read more go here

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Gabon corporate tax amendments enacted

  • By PwC

by PwC

The Gabonese Republic has enacted the Finance Act 2016,which amends certain provisions of the Gabonese Republic Tax Code.

This Insight discusses the main changes resulting from enactment of the Finance Act 2016 that could affect multinational companies doing business in Gabon.

For the PwC Insight, gohere.

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