Int'l Tax News

Senior tax executives are expecting big changes to the global tax landscapeÔøΩand the enforcement outlookÔøΩas a result of the Organization for Economic Cooperation and Development's base erosion and profit shifting project, according to a new survey by EY LLP.
Many companies are already dealingwith legislation stemming from the BEPS process,while at the same time seeing a rise in tax audits related to BEPS areas, EY said in announcing the results Oct. 8.
For the DTR story, go here. (subscription required)

A top business lobby says itsworried that new international tax recommendations could put sensitive business information at risk.

The National Association of Manufacturers (NAM) said Thursday that the project from the Organization for Economic Cooperation and Developmentwould "impose substantial and unnecessary compliance costs on manufacturers."
For the Hill story, go here.

Development finance institutions are increasingly focusing on promoting responsible tax practices in their private sector investments, but there are limits towhat they can do to advance that agenda, according toworld Bank and Inter-American Development Bank officials.
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There is a global tax reset underway. Initiatives like the OECD/G20 Base Erosion and Profit Shifting (BEPS) projectwill fundamentally change the global tax landscape. Deloitte can help you navigate this new environment, delivering strategic insight and tax planning ideas.

For the Deloitte release, go here.

On 5 October 2015, the Organisation for Economic Co-operation and Development (OECD) released final reports on all 15 focus areas in its Action Plan on Base Erosion and Profit Shifting (BEPS). In an accompanying explanatory statement, the OECD described the next steps in itswork on BEPS, including additionalwork on technical matters and plans for monitoringwith respect to the implementation of the BEPS recommendations.
For the EY release go here.

On 5 October 2015, the Organisation for Economic Co-operation and Development (OECD) issued a final package of reports in connectionwith its Action Plan to address Base Erosion and Profit Shifting (BEPS), aswell as a plan for follow-upwork and a timetable for implementation. The OECD's BEPS Action Plan,whichwas launched in July of 2013 and endorsed by the G20, includes 15 key areas for identifying and curbing aggressive tax planning and practices and modernizing the international tax system. The OECD delivered interim reportswith respect to 7 of the 15 action items in September of 2014. Those 2014 reports have been consolidatedwith the remaining 2015 deliverables to produce a final set of recommendations for addressing BEPS.
For the KPMG NewsFlash, go here.

Australia's tax agencywill enter into discussionswith 80 multinational companies thatwould be "potentially affected" by a tax avoidance bill circulating in parliament,with hopes to persuade them to pay a greater share of taxes on profits generated in Australia.
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Temporary regulations to implement country-by-country reporting for 2016will be released by the end of the year, Michael McDonald, financial economist (business and international taxation), U.S. Treasury Office of Tax Analysis, said October 7.
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The Indian government's decision not to apply the minimum alternate tax (MAT) to foreign investors has translated into a positive Supreme Court decision for Castleton Investment.
For the ITR story, go here.

EU finance ministers yesterday reached political agreement in Council to amend the existing Directive 2011/16/EU on administrative cooperation in the field of taxation. The changeswill apply from January 2017.

For the ITR story, go here.

The Frenchman spearheading the OECD's unprecedented global crackdown on multinational tax rorts expects successwill result in lower rates of company tax, benefiting smaller firms.
The Organisation for Economic Cooperation and Development (OECD) finalised recommendations on Tuesday aimed at preventing an estimated US$100 billion to $240b of corporation tax earned by the likes of Google, Apple and Facebook slipping through tax departments' fingers each year.
For the New Zealand Business Day article, go here.

European Unionfinance ministers agreedon Tuesdayto force member states to share information about preferentialtaxdeals granted to multinational corporations.
Suchtaxdeals,which have angered ordinary citizens squeezed by years of austerity, cause friction among member states competingwith one another for jobs and investment. The deals also raise concerns that they may violateEuropean Unionrules, and that companies use them to unfairly avoid taxes.
For the New York Times story, go here.

Allison Christians considers the legal status of intergovernmental agreements andwhether they override, or merely interpret, the terms of existing tax treaties.
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The sweeping new plan from the Organization for Economic Cooperation and Development to crack down on corporate tax avoidance is entering a period of limbo inwashington, as corporate lobbyists game out theway the tiniest provisions of the 15 reports could affect them. The future of the plan -- in the United States and dozens of other countries that have tentatively agreed to its recommendations -- lies in its implementation, and the OECD remained coy Monday about the kind of "monitoring mechanism" itwill use to police implementation efforts.
For the Politico story, go here.

Several nongovernmental organizations blasted the OECD's action plan on base erosion and profit shifting, claiming the organization's two-year effort to overhaul the international tax system excluded developing countries and failed to truly root out systemic problems.
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Multinational companies doing cross-border business in the European Unionwill face unprecedented scrutiny of their tax and transfer pricing agreementswith EU-member states after finance ministers backed legislation requiring mandatory exchange of the accords.
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More than 7 in 10 Fortune 500 companies have stashed profits in a tax haven, according to a new study from two liberal groups.

Citizens for Tax Justice and the U.S. PIRG Education Fund found that at least 358 large U.S. multinationals have more than 7,600 subsidiaries in tax havens,with Bermuda and the Cayman Islands the most popular destinations.
For the Hill story, go here.

Responding to the release of the OECD's final base erosion and profit-shifting project reports, practitioners highlighted the prospect of increased taxpayer uncertaintywhile nongovernmental organizations lamented the OECD's failure to make more fundamental reforms.
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The European Commission haswelcomed the unanimous agreement by EU Member States on the automatic exchange of information on cross-border tax rulings and the adoption of the OECD's international tax reform package.
For the EC release, go here.

New rules aimed at cracking down on tax avoidance by multinationalswere published on Monday by the Paris-based Organisation for Economic Co-operation and Development. More than 60 countrieswere involved in drawing up the new rule bookwhich is being billed as "the first substantial ÔøΩ and overdue ÔøΩ renovation of the international tax standards in almost a century".

For the Financial Times story, go here.

Imagine two companies that sell the same product across the globe and directly compete against one another. Further imagine that both companies earn the same gross profit. However, the first company is located on the U.S. side of the U.S.-Canadian border; the second company is located on the Canadian side. Thanks to the corporate tax system in the U.S., this is all the advantage the Canadian company requires.
For the Forbes story, go here.

It's more than three years since public fury over the meagre amounts of UK corporation tax being paid by large global companies such as Starbucks, Google and Amazon to the Treasury first erupted. And now the global response to tax avoidance by multinational firms seems to be taking shape.
For the Independent story, go here.

A monumental proposal for global tax reformwill be presented at the G20 Finance Ministers meeting in Lima, Peru, later thisweek. That'swhen the Organization for Economic Cooperation and Development (OECD)will present its final Base Erosion and Profit Shifting (BEPS) Project guidelines, a set of tax reform proposals designed to clamp down on tax avoidance among multinational corporations.
For the Forbes story, go here.

Withwealthycountries around theworlddesperate to reel in billions of dollars in unreported corporate tax receipts, the EU is rushing to finishnegotiations onhow toshare tax information for the first time in order tocombat evasion.
For the Politico story, go here.

The OECD's Tax Package, released in Paris today,will not stop corporate tax dodgers cheating poor countries out of billions of dollars of tax revenues, says Oxfam. The Base Erosion and Profit Shifting (BEPS) Action Plan outlines 15 measures aimed at tackling aggressive tax avoidance by multinational companies.
For the Oxfam story, go here.

Top Republican lawmakers are uneasywith new international plans to curb corporate tax avoidance, but they may not have many options to prevent the crackdown.
Rep. Paul Ryan, chairman of the tax-writing Houseways and Means Committee,warned Monday that the rules introduced earlier in the day by the Organization for Economic Cooperation and Development "will only increase the pressure for American businesses to move overseas" and "could put huge new burdens on American job creators."
For thewashington Examiner story, go here.

Multinational companies are girding for new rules designed to force them to pay greater corporate income taxes in more countrieswhere they operate, setting up potential clashes between Silicon Valley giants and European governments angling fortaxrevenue.
TheOrganization for Economic Co-operation and Developmenton Mondayissued recommendations aimed at stopping large companies in many industries from avoiding paying hundreds of billions of dollars in taxes every year through baroque structures that are legal, but have come under increasing political pressure, particularly in Europe.
For thewall Street Journal story, go here.

The OECD's final report on the transfer pricing items under its project to combat base erosion and profit shifting (BEPS),which follows two years of arduous negotiations, reflects a compromise,with country delegates toworking Party No. 6walking back some of the more radical provisions in the discussion drafts.

For the DTR story, go here. (subscription required)

European Union reaction to the OECD's finalwork on its action plan on base erosion and profit shifting ranged from enthusiasticwelcome to scathing criticism, combinedwithwary optimism, indifference andwarnings against the EU implementing the measures if the U.S. doesn't.

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Through tweaks to the Model Tax Convention, the OECD believes itswork on profit shiftingwill stem elaborate structures, such as commissionaire arrangements, used by large multinationals to avoid the creation of a permanent establishment.

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Countries may be able to unilaterally protect their tax bases from hybrid mismatch arrangementswithout creating opportunities for double taxation under model language finalized by the Organization for Economic Cooperation and Development.

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The findings of a probe into Apple Inc.'s tax affairs in Irelandwon't hurt the country, according to Finance Minister Michael Noonan,who vowed to go to court to fight any negative ruling from European Unionwatchdogs.
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The OECD's final recommendations on harmful tax practices, covered in Action 5 of its action plan on base erosion and profit shifting (BEPS), set forth a patent box regime that even GermanyÔøΩlong opposed to the favorable tax regimesÔøΩmight consider adopting, a spokesman for the country's finance ministry told Bloomberg BNA.
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The OECD's final report on Action 13 under the base erosion and profit shifting projectÔøΩwhich calls for countries to adopt a country-by-country reporting template, master file and local fileÔøΩhas the potential to be one of its "greatest legacies."

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Twenty nations have committed to provide mandatory binding arbitration in their bilateral tax treaties as away to guarantee that treaty-related disputes are resolvedwithin a specified time frame, according to new standards under Action 14 of the OECD's project to prevent base erosion and profit shifting.
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The OECD's recommendations for addressing profit shifting and tax base erosion are only likely to increase pressure on U.S. businesses to move overseas, Houseways and Means Committee Chairman Paul D. Ryan (R-Wis.) said.
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The OECD has released its final package of measures to tackle base erosion and profit shifting (BEPS), representing the most ambitious effort in history to harmonize tax laws across national boundaries.
A major achievement of the two-year projectÔøΩundertaken by the Organization for Economic Cooperation and Development on the authority of the Group of 20 countriesÔøΩis revised transfer pricing guidance that replaces guidelines from "pre-history," according to the OECD's top tax official.
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The architects of a sweeping set of recommendations to battle offshore tax avoidance insist their projectwon't allow foreign countries to simply grab cash from U.S. companies.

The business community isn't convinced.

For The Hill story, go here.

In implementing the final OECD base erosion and profit-shifting project measures, the United States should follow the arm's-length principle, allow tax competition among national governments, and provide more clarity on how tax lawwill be applied, the Information Technology and Innovation Foundation said in October 5 comments.
For the ITIF comments, go here.

The OECD's base erosion and profit-shifting plan "is not a substitute for good tax policy," the Organization for International Investment said October 5 in response to the release of final BEPS measures, adding that further limits on interest deductibilitywould decrease GDP, reduce investment in the United States, and lead to fewer U.S. jobs.
For the OFII release, go here.

Lee A. Sheppard outlines the final action 15 report of the OECD's base erosion and profit-shifting project on developing a multilateral instrument to implement treaty-related BEPS measures,which she says amounted to literally stapling a new cover over their 2014 report.
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The final report on action 14 (improving dispute resolution mechanisms) of the OECD's base erosion and profit-shifting project includes changes to the OECD model tax treaty and commentary to increase the effectiveness of the mutual agreement procedure in resolving treaty-related disputes.
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The OECD's final base erosion and profit-shifting project action 13 report on transfer pricing documentation and country-by-country reporting closely mirrors the September 2014 report, but adds the implementation guidance, model legislation, and model competent authority agreements.
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The OECD's final report on transfer pricing under actions 8, 9, and 10 of its base erosion and profit-shifting project contains significant revisions regarding risk and recharacterization, commodity transactions, intangibles, cost contribution arrangements, and low-value-adding services.
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Ajay Gupta reviews the OECD's final report on action 7, noting thatworking Party 1 concedes further ground to business in its final recommendations for amending article 5 of the model treaty to crack down on the use of commissionnaire arrangements to circumvent permanent establishment provisions.
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The final report on action 6 of the OECD's base erosion and profit-shifting project -- underwhich itwas taskedwith developing model treaty provisions and recommendations to prevent the granting of treaty benefits in inappropriate circumstances -- sets out a broad new vision of the role of tax treaties.
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Lee A. Sheppard outlines the final action 4 report of the OECD's base erosion and profit-shifting project,which she says does not differ dramatically from the discussion draft, and concludes the report lacks strong, simple solutions.
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The OECD's final report on strengthening controlled foreign corporation rules under action 3 of the base erosion and profit-shifting project is largely a discussion of alternative approaches; none of the alternatives are intended to serve as minimum standards and all are expressly optional.
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