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Intangibles, Cloud Computing Guidance Key Government Priorities, Officials Say
Theworldwide growth of intangible income and potential for base erosion has made guidance on intangibles one of the government's highest priorities, two senior officialswith the IRS and Treasury Department said.
Another key focus is guidance on cloud computing as that, too, increases across awide swath of companies, they said, and comments from taxpayers are essential as that process goes forward.
For the BNA DTR story, go here. (subscription required)
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ABA Meeting: Mandatory Arbitration to Be in Next U.S. Model Treaty
Quyen Huynh, Treasury associate international tax counsel, said May 8 that the next U.S. model tax treatywill include a mandatory arbitration provision.
For the TNT story, go here. (Subscription required)
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ABA Meeting: BEPS Profit-Split Expansion Could Put Pressure on Dispute Resolution
An expanded use of profit splits at the conclusion of the OECD's base erosion and profit-shifting project could put pressure on dispute resolution mechanisms, according to J. David Varley, acting transfer pricing director, IRS Large Business and International Division.
For the TNT story, go here. (subscription required)
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ABA Meeting: Patent Box Support Tied to Competent Authority Access
Businesses' recent focus on the introduction of a patent (or innovation) box in the United States may be due to concerns about assertions of taxing jurisdiction over previously low-taxed income and an interest in access to U.S. competent authority assistance, said George Callas, majority chief tax counsel on the Houseways and Means Committee.
For the TNT story, go here. (Subscription required)
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U.S. Official Says U.K.'s Diverted Profits Tax Undercuts BEPS Work
A U.S. Treasury official sharply criticized the U.K.'s diverted profits tax, saying it undercuts the process of having nationswork together on the Organization for Economic Cooperation and Development's base erosion and profit shifting project.
For the BNA DTR story, go here. (subscription required)
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OECD Profit Shifting Project Seen Placing More Pressure on Advance Pricing Program
As the Organization for Economic Cooperation and Development's project to combat base erosion kicks into high gear, sowill taxpayer demand for assistance from the IRS, an agency official said.
For the BNA DTR story, go here. (subscription required)
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Stack: BEPS Project Unlikely to Produce Agreement on CFCs, Digital Economy
The international project to fight base erosion and profit shifting is unlikely to produce an agreement on controlled foreign corporation rules or specific measures to address the digital economy, a top U.S. tax official told Bloomberg BNA.
For the BNA DTR story, go here. (subscription required)
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The complete guide to understanding Indias biggest tax reform the GST
India's biggest indirect tax reform since 1947 looks like it has finally arrived – the Goods and Service Tax.
For the Scroll report, go here.
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Shome spells out importance of TARC's recommendations
Parthasarathi Shomewill become the first chairman of the International Tax Research and Analysis Foundation. The organisation,whichwill be based in Bangalore,will bring together professionals from thewhole of the tax market in India to produce commentary about the Indian tax system.
For the International Tax Review story, go here.
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IRS Chief Counsel advises that none of a taxpayer's CFC loans satisfy Notice 88-108 unless all do
The IRS Chief Counsel's Office issued CCA 201516064 on April 17, 2015, addressing the application of Notice 88-108where a controlled foreign corporation made loans back to its US parent over two quarter-ends, both ofwhichwere repaidwithin 30 days, but also made a third loanwhich caused the CFC to be a creditor of the US Parent for more than 59 days during the year.
For the PwC Insight, go here.
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International Tax Grows Up: The Tax Section at 75, Subpart F at 53, and the Foreign Tax Credit at 97
As the ABA Tax Section celebrates its 75th anniversary, the authorwas asked to reflect on the Section's contribution in the international tax arena and on how the
Section's international community has grown.
For the ABA Tax Lawyer article, go here.
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ABA Meeting: Camp Calls for Tax Reform to Halt Inversions, Boost Economy
Former Houseways and Means Committee Chair Dave Camp said May 7 that Congress should notwait until 2017 to completework on comprehensive tax reform lest the growing trend of corporate inversions boost the number of U.S. companies moving abroad.
For the TNT story, go here. (Subscription required)
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10Minutes on the OECD's BEPS project
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Italian international tax legislation includes major changes to APA rollbacks, taxation of branches and transactions with tax havens
A draft legislative decreewas approved by the Italian Government on 21 April 2015which includes a large number of tax changes, many ofwhich are particularly relevant for companieswith international operations.
For the PwC Insight, go here.
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EU Makes Play for Leverage Over E-Commerce
Why doesn't Europe have its own Google or Facebook?
Many European policy makers say the region's homegrown Internet companies haven't made the big leagues at least in part because of a patchwork of tax, copyright and e-commerce rules that have stunted their growth.
For thewall Street Journal story, go here.
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News Analysis: Did Treasury Cause Increase in Foreign Takeovers?
Popular opinion and high-profile domestic targets aside, it's not clear that Notice 2014-52, 2014-42 IRB 712 is responsible for increased foreign takeovers or even that foreign takeovers have increased.
For the TNT story, go here. (subscription required)
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Can a Shared Net Margin Method' Provide a Global Transfer Pricing Standard?
Michael Durst, former director of the IRS Advance Pricing Agreement Program, examineswhether a new transfer pricing method, suggested recently for use by developing countries, might be developed further to serve as an administratively streamlined transfer pricing method for countries of all levels of economic development.
For the BNA Insight, go here. (subscription required)
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Polish referral to ECG could affect insurance outsourcing VAT across EU
Poland has referred a case to the European Court of Justice (ECJ)which could dramatically impact insurance outsourcing activity across Europe.
For the International Tax Review story, go here.
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Peru modifies withholding tax for financial derivatives
The Peruvian tax authorities have changed the periodwithinwhich settlement must take place for income derived from financial derivatives to be considered sourced in Peru.
For the International Tax Review story, go here.
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AICPA Urges IRS to Address Foreign Credit Issues Surrounding Cloud Computing
The IRS needs to address the complex foreign tax credit issues surrounding cloud computing, the American Institute of CPAs said in a range of recommendations for the agency's 2015-2016 Priority Guidance Plan.
For the BNA DTR story, go here. (subscription required)
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Tax deductibility of recharges by non-resident companies in Nigeria under turnover assessment
For Nigerian tax purposes recharges can be defined as costs reimbursed by a non-resident company to its Nigerian affiliate in respect of services provided by the affiliate in execution of a joint contract in Nigeria. Generally, this amount includes a profit mark-up for the affiliate, and the non-resident company is allowed the amount as a deduction in its income tax returns.
For the International Tax Review story, go here.
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Shome leaves ministerial adviser role behind
Partho Shome's 30-year career as a tax official and adviser to Indian governments and multilateral organisations may be at an end for now, but hewill still take a keen interest in tax policy, as this exclusive interviewwith International Tax Review reveals.
For the International Tax Review story, go here.
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Lawmakers Embrace Patent Tax Breaks
Leading congressional taxwriters in both parties are getting behind a major new tax break for corporate innovation as part of their continuing quest to identifyways to make the U.S. business-friendlier.
For thewall Street Journal story, go here.
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Adviser Calls OECD Draft on CFCs Missed Opportunity to Address Profit Shifting
The Organization for Economic Cooperation and Development's recent discussion draft on strengthening rules on controlled foreign companies is a missed opportunity to address base erosion and profit shifting, according to an official from the OECD's Business and Industry Advisory Committee.
For the BNA DTR story, go here. (subscription required)
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Public comments received on discussion draft on Action 12 (Mandatory Disclosure Rules) of the BEPS Action Plan
On 31 March 2015, interested partieswere invitedto comment on the discussion draft on Action 12 (Mandatory Disclosure Rules) of the BEPS Action Plan. The OECD is grateful to the commentators for their input and now publishes the comments received.
For the comments, go here.
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Public comments received on discussion draft on Action 3 (Strengthening CFC Rules) of the BEPS Action Plan
On 3 April 2015, interested partieswere invitedto comment on the discussion draft on Action 3 (Strengthening CFC Rules) 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.
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Tax rulings:We need a common corporate tax base, says Commissioner Vestager
Why did the EU Commission take so long to launch investigations into member states' tax rulings? Is its strategy to go only after small countries, such as Belgium, the Netherlands, Luxembourg and Ireland?will the instruments available to it suffice? And if not,whatwould it take to do awaywith unfair tax competition? These questionswere raised by MEPs in Tuesday's Special Tax Rulings Committee debatewith competition Commissioner Margrethe Vestager.
For the European Parliament news release, go here.
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OECD's Mandatory Disclosure Draft Would Lead to Incompatible Rules, TEI Says
The Organization for Economic Cooperation and Development's discussion draft on mandatory disclosure rules, if adopted,will lead to "differing disclosure regimes across jurisdictions," a Tax Executives Institute Inc. official said.
For the BNA DTR story, go here. (subscription required)
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Where in the World Are Foreign U.S. Corporate Profits? It's a Relatively Short List
The $1.22 trillion in foreign profit from U.S. multinationals is in good companyÔøΩnearly two-thirds of it is parked in a handful of countries, according to data analyzed by the Congressional Research Service.
Seven of the top 10 countries are considered "tax havens," according to a CRS report that looked at 2012 data.
For the BNA DTR story, go here. (subscription required)
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BEPS -- Basically, Everyone on a Profit Split?
Mike Gaffney argues that the OECD discussion drafts on permanent establishment status and transfer pricingwill likely lead to increased uncertainty and more double taxation disputes in the short term, especially if tax authorities are allowed to depart from the arm's-length principle.
For the Tax Notes article, go here. (subscription required)
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Global tax reform will lead to economic growth at home
Japan recently announced that itwill be lowering its corporate tax ratewith further planned cuts over the next five years.while other countries are actively improving their corporate tax code, the United States seems stuck in the discussion phase. Much talk has focused on our burdensome and complex domestic corporate tax code, but Congresswould be remiss to gloss over the same problems that existwithin our international tax system.
For thewashington Examiner article, go here.
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BEPS Project Will Lead Boardrooms To Scrutinize Tax Planning, Stack Predicts
One significant consequence of the international project to combat base erosion and profit shifting (BEPS) is that the boards of multinational companieswill spend more timeweighing the risks of engaging in international tax planning, a U.S. Treasury official said.
For the BNA DTR story, go here. (subscription required)
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News Analysis: Unregulated Investment Funds vs. BEPS
In news analysis, Lee A. Sheppard discusses how unregulated investment funds are attempting to escape the treaty benefits crackdown contemplated in the OECD base erosion and profit-shifting project.
For the Tax Notes article, go here. (Subscription required)
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IRS to Issue Rules Addressing Abusive CFC Loans to Foreign Partnerships
The IRS has nearly completed regulations intended to halt certain tax-avoiding loans by controlled foreign corporations to foreign partnerships, a senior agency official said.
Jason T. Smyczek, Internal Revenue Service senior technical reviewer, Branch 4, associate chief counsel (International), called the long-awaited Section 956 guidance project a "high priority" for the government. Smyczek said April 30 that the regulationswould be released "very soon."
For the BNA DTR story, go here. (subscription required)
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The New Morality in Tax Strategies
In recent years, corporate tax strategies have become the focus of some high-profile public debates. Last year, for example, tax inversion deals received scorching criticism from regulators and lawmakers. One prominent critic ÔøΩ President Barack Obama ÔøΩ likely helped spur the Treasury Department to issue rules discouraging such maneuvers.
In the long shadow of a financial crisis that ushered in the phrase "too big to fail," the public has become more attuned to ÔøΩ if not downright suspicious of ÔøΩ corporate motivations for tax strategies.
For the CFO Magazine story, go here.
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International Tax News - Edition 27
International Tax News is designed to help multinational organizations keep upwith the constant flow of tax developmentsworldwide. Among the topics featured in this month's edition are:
The proposed amendments to the Brazilian tax legislation regardingwithholding tax on dividend payments
The UK Finance Act of 2015
The OECD BEPS proposals regarding controlled foreign companies
Swiss Corporate Tax Reform III
For the latest issue of International Tax News, go here.
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Australia releases exposure draft legislation amending the tax consolidation rules, possibly retroactive
The Australian government on April 28, 2015, released exposure draft legislation that reflects amendments to the Australian tax consolidation regime first announced in the 2013-2014 and 2014-2015 Federal Budgets. The proposed new rules are aimed at restoring integrity to the consolidation regime. Most significantly, the ruleswould remove perceived 'double benefits' or 'double detriments'when an Australian target or subsidiary joins a tax consolidated group.
For the PwC Insight, go here.
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Base erosion and profit shifting (BEPS) proposals address intangibles cost contribution arrangements
Multinational enterprises involved in the development and use of intangibles under cost contribution arrangements (CCAs) should note the 29 April 2015 discussion draft proposals under Action 8 of the Base Erosion and Profit Shifting (BEPS) Action Plan. The discussion draft proposes fundamental modifications to Chapter VIII of the OECD Transfer Pricing Guidelines.
For the PwC Tax Policy Bulletin, go here.
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Focus on Global Tax Developments Critical In Changing Landscape, EY Practitioner Says
All companies need to be thinking about taxes globally as international commerce expands around theworld, an EY LLP practitioner told Bloomberg BNA.
For the BNA story, go here. (subscription required)
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OECD Cost Contribution Arrangements Draft Emphasizes Value
The OECD April 29 issued its latest draft under action 8 (on aligning transfer pricing outcomeswith value creation related to intangibles) of the base erosion and profit-shifting project, proposing revisions to the OECD transfer pricing guidelines on cost contribution arrangements that support the use of value contributed over the costs incurred.
For the TNT story, go here. (subscription required)
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Detailed guidance on the tax rate disparity test of the branch rule: AM 2015 - 002
In AM 2015-002 the IRS recently provided the most detailed guidance to date regarding the application of the 'tax rate disparity test' under the 'branch rule' of the foreign base company sales income (FBCSI) provisions.
For the PwC Insight, go here.
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BEPS Action 8 : Revisions to Chapter VIII of the Transfer Pricing Guidelines on Cost Contribution Arrangements (CCAs)
The OECD BEPS discussion draft under Action 8 on Cost Contribution Arrangements has now been published.
Action 8 ("Assure that transfer pricing outcomes are in linewith value creation: Intangibles") requires the development of "rules to prevent BEPS by moving intangibles among group members" and involves updating the guidance on cost contribution arrangements. The discussion draft sets out a proposed revision to Chapter VIII of the Transfer Pricing Guidelines and is intended to align the guidance in that chapterwith the other elements of Action 8 already addressed in the Guidance on Transfer Pricing Aspects of Intangibles released in September 2014.
For the discussion draft, go here.
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DPT: Counterbalancing the UK's 'open for business' agenda?
The introduction of the UK's diverted profits tax (DPT) on April 1 2015 has dismayed tax practitioners and their multinational clients. Rushed through parliament, it has been roundly criticised for its breadth and complexity, for the speedwithwhich it has been introduced, for the lack of public consultation and parliamentary scrutiny, and for pre-empting the multilateral response to tax avoidance of the G20/OECD BEPS Project.
For the International Tax Review story, go here.
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Swedish interest deductibility: Unilateral action proposed
While Sweden may be seen as effectively preventing base erosion through limiting interest deductions, the effects on businesses and investments must be carefully scrutinised before being considered in other countries, argue Hussein Abdali and Tord Fredriksson of Grant Thornton.
For the International Tax Review story, go here.
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Malaysia uses tax incentives to challenge Singapore for company HQs
Malaysia has released detailed guidelines on four new tax incentives revealed in its 2015 Budget, the most attractive ofwhich aims to encourage companies to establish headquarters in Malaysiawith a 0% - 10% corporate tax rate for 10 years.
For the International Tax Review story, go here.
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Australia and UK want to go "further and faster" than the OECD on diverted profits action
The UK diverted profits tax (DPT) – dubbed the Google tax – has been in effect for almost a month, and Australia is looking at similar action to be included in its May 12 Budget speech, after signalling a desire to move "further and faster" than the OECD-led BEPS project. If other jurisdictions follow suit, this could drastically dilute the impact of multilateral efforts.
For the International Tax Review story, go here.
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Canada to Better Align With OECD Work on BEPS, Annual Budget Suggests
The Canadian government's latest budget suggests implementation of the Organization for Economic Cooperation and Development's project on base erosion and profit sharingwill balance the need to crack down on tax evasionwith ensuring the competitiveness of Canada's tax system, according to tax lawyers.
For the BNA DTR story, go here. (subscription required)
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Incremental U.S. Reform Wins Capital Neutrality Contest
Patrick Driessen argues that stylized capital neutrality testingwith a two-dimensional twist favors a less drastic approach to the treatment of foreign income than offered in recent tax reform proposals.
For the Tax Notes viewpoint, go here. (subscription required)
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Countries and Companies Square Off Over International Tax
While a host of topics ÔøΩ from the necessity and the proposed scope of corporate tax reform, to corporate rate reduction and corporate inversions ÔøΩ are of major concern to those engaged in international tax, the overriding issue is BEPS and its Action Plan agenda.
For the Accounting Today story, go here.
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Panel Examines Companies' Strategies For Marketing International Compliance
You can buy "fair trade" coffee andwork in an environmentally certified office building.
One day,will you be able to invest in companies that proclaim themselves good international taxpayers?
For the BNA DTR story, go here. (subscription required)