Int'l Tax News

Authoritiesworldwide have increased scrutiny of tax-avoidance strategies in the past year, CFOs and finance directors of multinational clients told global tax consulting firm network Taxand.
For the CGMA magazine story, go here.

The OECD has updated the commentaries on the Model Tax Convention (Commentaries) seeking to clarify the concept of beneficial ownership in tax treaties. But, a Swiss Federal Supreme Supreme Court dispute, known as the 'Swiss swap' case, threatens to challenge the OECD's principles.
For the International Tax Review story, go here.

The OECD has released its revised proposals on the Permanent Establishment (PE) rules in Article 5 of the OECD Model Tax Treaty. The earlier OECD proposals,which set out alternative approaches to a number of significant PE issues, have been replaced by a set of definitive proposalswhich are largely focused on expanding the scope of the dependent agent rule (including narrowing the scope of the independent agent rule) and narrowing the scope of the specific activity PE exemptions.


For the PwC Tax Policy Bulletin, go here.

The European Commission's ambitious plans to improve the digital single market include changes to the VAT treatment of the cross-border supply of goods and services.
For the International Tax Review story, go here.

Australian Treasurer Joe Hockey used his annual Budget speech to announce the introduction of Australia's 'Netflix tax' on the cross-border supply of e-commerce goods and services.
For the International Tax Review story, go here.

Andrus Ansip, European Commission vice president for the digital single market, has committed to have a proposal in place for an EU-wide VAT threshold on business-to-consumer (B2C) e-services by the summer.
For the International Tax Review story, go here.

Although European politicians have complained that U.S.-based companies are taking advantage of loopholes in foreign countries' tax laws to reduce their liability, foreign companies operating in the U.S. also benefit by paying lower taxes than their American counterparts, according to a May 18 policy brief by the Progressive Policy Institute (PPI).

For the PPI policy brief, go here.

The Treasury Department on May 20 proposed sweeping changes to the model U.S. tax treaty, including limiting the availability of treaty benefits for taxpayers that benefit from special tax regimes and imposing full U.S.withholding tax rates on inverters.

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

The European Commissionwill study possible compromises on an 11-nation financial transactions tax plan, spokeswoman Vanessa Mock said.

Finance ministers narrowed the range of proposals on the table lastweek in Brussels,without settling on a final plan.

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

The Treasury Department's May 20 release, for public comment, of proposed changes to the U.S. Model Income Tax Convention are designed to have an impact on thework of the international project on base erosion and profit shifting, a Treasury official said.

For the BNA DTR story, go here. (Subscription required)

An international project to combat base erosion and profit shifting isn't likely to produce minimum standards for rules on controlled foreign corporations, according to the U.S. delegate to the Organization for Economic Cooperation and Development's Committee on Fiscal Affairs.

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

Policy makers should prepare for big shifts of companies' taxable profits and economic activity to source-taxation countries, spurred by possibly uncoordinated tax and transfer pricing rule changes growing out of the international action plan to combat base erosion and profit shifting (BEPS), a business practitioner said.

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The Organization for Economic Cooperation and Development is considering establishing a compliance framework that countries could share as theywork toward implementing the common reporting standard, an OECD adviser said.

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Calling it "the hot idea" right now in Congress, Thomas Barthold, Joint Committee on Taxation chief of staff, on May 18 highlighted the challenges facing the construction of any patent or innovation box.

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

Data gathered through country-by-country reporting under action 13 of the OECD's base erosion and profit-shifting project may be better than existing data butwon't be enough to give a full picture of the size and scope of BEPS, stakeholders said during a May 18 public consultation on action 11 of the project on improving BEPS analysis.

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

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

Chile's internal tax service, Servicio de Impuestos Internos, has clarifiedwhen loans to related companies outside of Chilewill be considered awithdrawal of profits and hence subject to income tax.

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

The Organization for Economic Cooperation and Development has chosen its proposed "option B" to rewrite the permanent establishment rules on commissionaire structures.

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

The OECD on May 15 revealed its preferred options on action 7 (preventing the artificial avoidance of permanent establishment status) in a revised discussion draft released as part of its base erosion and profit-shifting project.

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

Public comments are invited on a new discussion draftwhich includes proposals resulting from thework on Action 7 (Prevent the Artificial Avoidance of PE Status) of the Action Plan on Base Erosion and Profit Shifting (BEPS).
This new discussion draft reflects the proposals that resulted from thatwork and onwhich comments are now invited. Comments should be sent by 12 June 2015 at the latest (no extensionwill be granted) and should be sent by email to taxtreaties@oecd.org inword format (in order to facilitate their distribution to government officials). They should be addressed to Marlies de Ruiter, Head, Tax Treaties, Transfer Pricing and Financial Transactions Division, OECD/CTPA.
For the OECD release, go here.

Pascal Saint-Amans has emphasised the urgency of fixing the flaws in the international tax system.
For the International Tax Review story, go here.

Omar Moerer and Benchi Klaver of Baker & McKenzie Amsterdam examine the draft guidance on preventing the artificial avoidance of permanent establishment status issued by the Organization for Economic Cooperation and Development in October 2014, aswell as other drafts issued under its project to combat base erosion, concluding that the authorized OECD approach at least provides some certainty about the amount to be allocated to a PE in the event one is triggered.
For the BNA Insight, go here. (subscription required)

Multinational tech companies have been "extremely aggressive" and "pushing the boundaries ofwhat is legal"when it comes to their tax affairs and should be more conservative in their tax planning, Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, said May 14.
For the TNT story, go here. (subscription required)

The Australian Government's 2015/16 Federal Budget released on 12 May contained several measures targeted at multinationals.

For the PwC Insight, go here.

Making Sense of Profit Shifting is the 2015 and inaugural edition of Tax Foundation Forum, an annual interview series that aims to advance and cultivate a more informed discussion of a tax policy topic.
With its focus on the profit shifting phenomenon, this year's edition of Tax Foundation Forum seeks to make sense of an issue that has significantly influenced the international tax debate aswell as the U.S. corporate tax reform debate.
For the Tax Foundation release, go here.

In a speech on Tuesday in New Hampshire, Chris Christie, New Jersey's governor and a possible presidential candidate, used a comparison to North Korea to attack the United States' system ofworldwide corporate taxation. The federal government subjects American companies to American taxes (at least in theory) on their entire global profits.
"As it stands now America is among a tiny handful of nations, including North Korea, that has a system that taxes profits twice," Mr. Christie said. "None of our largest trading partners do this. None of them. They all have a territorial system like the one I'm suggesting."
Mr. Christiewaswrong. In fact, two of our largest trading partners (Mexico and South Korea) also levyworldwide corporate income taxes. So do three other members of the Organization for Economic Cooperation and Development: Israel, Ireland and Chile.
For the New York Times story, go here.

Technology companies need to stop "extremely aggressive" tax planning, the man chargedwith reforming global tax rules has told the BBC.
Pascal Saint-Amans,who runs the OECD's Centre for Tax Policy, said that new standardswould require companies to pay more tax in the countrieswhere they sold goods or created revenues.
For the BBC News story, go here.

The Australian government in its 2015-16 budget announced itwill implement the Organization for Economic Cooperation and Development's guidance on documentation and country-by-country reporting under its action plan on base erosion and profit shifting.
For the BNA DTR story, go here. (subscription required)

Australia's federal budget, released May 12, provided generous tax breaks for relatively small companies,while singling out large global businesseswith double-strength penalties.
For the BNA DTR story, go here. (subscription required)

The Australian 2015-2016 federal budget contains a number of new measures designed to enhance the integrity of the Australian tax system. The measureswould counter tax avoidance by multinationals and introduce a goods and services tax (GST) on the importation of digital products and services into Australia.

For the PwC Insight, go here.

The Organization for Economic Cooperation and Development's proposed indicators for judging the effectiveness of measures designed to combat base erosion and profit shiftingwill be ineffective in estimating the scale of BEPS, according to an Oxford University professor.

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

A proposal under the international action plan on base erosion and profit shifting to strengthen controlled foreign corporation rules by treating most intellectual property income as passive fails to reflect how some business sectors use IP, practitioners said.

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

On 16 April 2015, interested partieswere invitedto comment on the discussion draft on Action 11 (Data Analysis) of the BEPS Action Plan. The OECD is grateful to the commentators for their input and is now publishing the comments received.
For the comments, go here.

The European Commission's ambitious plans to improve the digital single market include changes to the VAT treatment of the cross-border supply of goods and services.
For the International Tax Review story, go here.

Australia's treasury department released draft legislation proposing to extend the country's goods and services tax (GST) to digital products and services supplied from offshore entities.
"[I]t is unfair that overseas based businesses selling services into Australia may not charge GSTwhen local businesses have to charge GST," Treasurer Joe Hockey told parliamentwhile delivering the government's annual budget proposals.
For the BNA DTR story, go here. (subscription required)

Countries need more time towrite consensus rules on controlled foreign corporations, member of the OECD's Business and Industry Advisory Committee said.
William Morris, chairman of the advisory committee's tax group and director of global tax policy for General Electric, said May 12 that it is clear from the OECD's recent discussion draft on strengthening CFC rules "that there is not a level of consensus,whichwill not enable you to put out meaningful recommendations in any period of time."
For the BNA DTR story, go here. (subscription required)

The corporate community is increasingly sounding thewarning to Congress: Europe is coming after us on taxes.

With tax reform talks stumbling inwashington, the fear for corporate titans is that other countries are already implementing a global set of recommendations meant to crack down on offshore tax avoidance.

For the Hill story, go here.

Ken Brewer argues that language in the Court of Federal Claims' Intersport opinion supports awidely held misconception that reg. section 1.482-1(a)(3) prohibits taxpayers from filing any late or amended returns to claim reductions in taxable income resulting from related-party transactions.
For the Tax Notes report, go here. (subscription required)

Gabe B. Gartner argues that until the treatment of tax basis in outbound transfers of intangible property is clarified by regulations or other guidance, taxpayers shouldn't assume that their tax basis is irrecoverable.
For the Tax Notes viewpoint, go here. (subscription required)

Tax reform should ensure competitive rates for all businesses, extend full business expensing, end double taxation by combining the corporate and individual systems, allow deferral of taxes on all saved income, and shift to a territorial system, the Tax Foundation said in an April 15 letter to the Senate Finance Committee's businessworking group.
For the letter, go here.

During a May 11 public consultation on action 12 of the OECD's base erosion and profit-shifting project regarding the design of mandatory disclosure regimes, business representativeswarned that imposing excessive tax compliance obligations on multinationalswill negate the benefits of enhanced transparency.
For the TNT story, go here. (subscription required)

An OECD analysis of 79 multinational companies regarding their ratio of net interest expense to earnings before interest, taxes, depreciation and amortization (EBITDA) is persuasive, a Treasury Department official said.

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

Business delegates told an Organization for Economic Cooperation and Development consultation that, in many cases, itwould be impracticable for subsidiaries to complywith the organization's recent discussion draft on mandatory disclosure rules, if countries choose to adopt such rules.

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

Indonesiawill gradually cut its corporate tax rate to discourage companies from booking profits in lower-tax countries such as Singapore, President Jokowidodo's top aide said.

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A Liberal government in Canada may need to "adjust" its corporate tax rate if the U.S. reduces levies on companies, the party's leader said.
Liberal Leader Justin Trudeau,whose party polls show is the biggest threat to Prime Minister Stephen Harper's Conservatives heading into this year's election,was asked in a television interview May 11 if hewould rule out any increase to Canada's corporate tax rate.
For the BNA DTR story, go here. (subscription required)

Australiawill introduce legislation targeting 30 multinationals suspected of diverting billions in profits out of the country, Treasurer Joe Hockey said.
In a May 11 news release announcing the proposed legislation, Hockey also said the scope of Australia's goods and services tax (GST) regimewould be extended to apply to offshore suppliers of digital goods and services.
For the BNA DTR story, go here. (subscription required)

Australian Treasurer Joe Hockey has said the governmentwill introduce a new tax crackdown against 30 multinational corporations.

Without identifying the targets, Mr Hockey said the big corporationswere "diverting profits earned in Australia away from Australia to no-tax or low-tax jurisdictions".

For the BBC story, go here.

Just five US companies are hoarding nearly half a trillion dollars as the country's tax code and a tepid global economy deter businesses from spending their overseas cash piles.
For the Financial Times story, go here.

The government plans to soon issue eagerly awaited rules on loans to foreign partnerships by controlled foreign corporations under tax code Section 956, Treasury Department attorney-adviser Brian Jenn said.
For the BNA DTR story, go here. (subscription required)

Implementing a patent box has become an "almost primary" topic of the tax debates on Capitol HillÔøΩa shift in focus that happened almost overnight, according to the chief tax counsel of the U.S. Houseways and Means Committee.
"It seemed to me that in January or February of 2015, a substantial portion of the business communitywoke up one morning, and despite the goals" of a 25 percent corporate tax rate and an exemption system, "decided that a patent box or an innovation boxwas one of their top priorities," said George Callas, aways and Means stafferwhoworked under former Chairman Dave Camp (R-Mich.) to craft a tax reform proposal, and remainedwith the committee after Rep. Paul D. Ryan (R-Wis.) took over the chair earlier this year.
For the BNA DTR story, go here. (subscription required)