Int'l Tax News

by Lee A. Sheppard (Tax Analysts)

In news analysis, Lee A. Sheppard looks at the accounting rules that might affect how companies such as Apple dealwith the European Commission's state aid investigations.

For the story, go here. (subscription required)

U.S. officials are concerned that the trillions of dollars companies park overseas are doing more than just helping them skirt taxes. They'reworried the practice leaves investors in the dark.

Whenwalt Disney Co. investorswere trying to anticipate the company's performance in late 2012, the company told them to expect taxes to take a bigger bite out of earnings than the previous year.

For the story, go here. (subscription required)

Houseways and Means Committee member Lloyd Doggett, D-Texas, and Rep. Rosa L. DeLauro, D-Conn.,will continue their legislative effort to ban federal contracts from going to companies that invert, continuing last year's partially successful strategy of adding legislative riders to House spending bills.

For the story, go here. (subscription required)

Following the momentum generated by recent meetingswith the US, India now has the opportunity to significantly improve investor confidence.

For the story, go here.

Eight of the biggest U.S. technology companies added a combined $69 billion to their stockpiled offshore profits over the past year, even as some corporations in other industries felt pressure to bring cash back home.

For the story, go here.

International Tax News is designed to help multinational organisations keep upwith the constant flow of international tax developmentsworldwide. Among the topics featured in this month's edition are: The decision of the Dutch Court of Appeals regarding the deduction of cross-border forex result Changes in the Brazilian transfer pricing rules The US Internal Revenue Service's release of R&D credit regulations on internal use software China's public notice regarding certain corporate income tax matters on indirect transfer of properties by non-tax resident enterprises

To read this issue, go here.

Abhishek Shah, of Caterpillar in Asia, explainswhere he thinks the Indian Budget should have gone further on indirect tax.

For the story, go here.

Onwednesday morning, senators Marco Rubio and Mike Lee releasedtheir long-awaited plan to overhaul both the individual and corporate tax codes. Like traditional Republican plans, it consolidates tax brackets, lowers the top rate, and eliminates a host of deductions. Rubio and Lee have put forward a credible, conservative tax proposal that could lay the groundwork for comprehensive tax reform in the futureÔøΩwith one glaring flaw.

For the article, go here.

The Indian Budget 2015was the new government's first and focuses on growth and creating an enabling environment.

On the tax front, the government addressed concerns of multinational companies. This includes clarifying certain aspects of offshore share transfer taxation, deferring the implementation of general anti-avoidance rules to provide certainty and a non-adversarial environment, and announcing the intent to simplify the law and reduce the corporate tax rate to 25% over four years.

For the PwC Insight, go here.

Are multinational companies paying their fair share of taxes?while the European Commission launched a series of inquiries in all EU member states, the Parliament has set up its own special committee to investigate into tax rulings involving large international companies.we talked to committee chair Alain Lamassoure, a French member of the EPP group, to find out his views and expectations.

For the report, go here.

The smart money alwayswagers against tax reform, but 2015 may be the year that the sucker bet pays off, at least for business taxes. The driver could be the outdated corporate tax system: The current 35 percent rate is out of stepwithworld norms and holds back investment in the U.S.

For the blog post, go here.

by Laura Tyson (Project Syndicate)

Corporate tax reform has emerged as an area of potential bipartisan action in the United States Congress over the next few months. But fundamental questions about the right approach remain.

For the story, go here.

by Achim Pross (International Tax Review)

Achim Pross, head of the International Cooperation and Tax Administration division at the OECD, and architect of the new automatic exchange of information standard and the multilateral competent authority agreement, discusses the progress made in 2014 and looks at opportunities and challenges ahead.

For the story, go here.

by Vanessa Houlder (Financial Times)

George Osborne's flagship policy of cutting taxation on companies has cost nearly £8bn a year but further UK fiscal incentives are needed to stimulate investment and equity financing, an independent think-tank said on Thursday.

The Institute for Fiscal Studies defended corporation tax cuts against the charge that they amounted to a 'tax break for big business'. It said the burden of taxes ultimately fell on people rather than companies,with a "substantial share" falling onworkers. It said: "As such, lower corporate taxes may feed through into higherwages in the medium term."

For the story, go here.

Continuous budget cuts have forced the Internal Revenue Service to "re-engineer" its approach to international audits, including an experimentwith a centralized approach to issue identification, an agency official said.

For the story, go here. (subscription required)

by Amanda Athanasiou (Tax Analysts)

While Salix Pharmaceuticals Ltd. and Auxilium Pharmaceuticals Inc. have foundways around Notice 2014-52, 2014-42 IRB 712, the guidance hasn't failed to make re-domiciling more difficult, according to observers.

For the story, go here. (subscription required)

India aims to cut the corporate tax rate by 5 percentage points over the next four years, replace thewealth taxwith a surcharge on thewealthy and introduce measures to combat tax evasion. Presenting the Finance Ministry's 2015 budget planto parliament Feb. 28, Minister Arun Jaitley said the governmentwants to reduce the corporate tax rate from 30 percent to 25 percent.

For the story, go here. (Subscription required)

by Eric J. Lyman (Bureau of Nationa Affairs)

An ongoing tax investigation into the Italian activities of California-based Internet giant Google Inc. is just "one of many" against multinational online companies, Italian prosecutors told Bloomberg BNA.

Prosecutors are looking intowhether Google broke tax laws in Italy by illegally classifying income earned in the country as income in Ireland or other low-tax jurisdictions. Prosecutors have reportedly obtained internal Google documents to help make their case.

For the story, go here. (subscription required)

Intense media focus and political controversy surrounding international tax structures hasn't changed the substance of tax planning, several corporate tax directors saidÔøΩbut it has changed how they approach it.

For the story, go here. (subscription required)

For the story, go here. (subscription required)

Treasury is still evaluatingwhether the U.K. government's proposed diverted profits taxwould be creditable under section 901 andwhether the taxwould be a candidate for additional guidance under the section 909 foreign tax credit splitter rules, according to Jason Yen, attorney-adviser, Treasury Office of International Tax Counsel.

For the story, go here. (subscription required)

by Kevin A. Bell (Bureau of National Affairs)

Three U.S. government officials have said the Organization for Economic Cooperation and Development is likely to adopt a "combination test" to determine the deductibility of interest on related-party debt involving group-wide interest allocation.

For the story, go here. (subscription required)

Regulations to implement the anti-inversions Notice 2014-52 remain a top priority even as the Internal Revenue Service must take a "tiered" approach to guidance in the face of budget cuts, officials said.

For the story, go here. (subscription required)

The U.S. isworking on a revision to its model tax treaty and plans to release it in draft form to obtain public commentary, a Treasury Department official said.

Danielle Rolfes, international tax counselwith Treasury, saidwork on an international project to combat base erosion and profit shifting (BEPS) has caused the U.S. "to spend a lot of time looking at our tax treaties and how they are functioning."

For the story, go here. (subscription required)

The Treasury Department isn't sayingwhen guidance on covered asset acquisitions under tax code Section 901(m)will be released.

For the story, go here. (subscription required)

The administration's budget proposal for a minimum tax on foreign earnings serves as "a sort of compromise, split-the-baby approach" to taxing those earnings in away thatwould protect the U.S. tax base, Treasury International Tax Counsel Danielle Rolfes said.

For the story, go here. (subscription required)

Treasurywould prefer to develop the text of a model limitation on benefits provision rather than simply describing the general elements of a model LOB under action 6 of the OECD's base erosion and profit-shifting project, Quyen Huynh, Treasury associate international tax counsel, said February 26.

For the story, go here. (subscription required)

Robert Stack, Treasury deputy assistant secretary (international tax affairs), addressed base erosion and profit shifting and energetically advocated the rights of U.S. multinationals to fair administration of the rules at the International Fiscal Association USA annual conference inwashington February 26.

For the story, go here. (subscription required)

The U.S. is committed to a limitation-on-benefits test to prevent treaty shopping, despite expectations that few countries participating in an international project to combat base erosionwill adopt such a test, a Treasury official said.

For the story, go here. (subscription required)

A top Treasury Department official said the U.S. is presenting a "bold, radical, proposal" on controlled foreign corporations to the countries participating in the international project to combat base erosion and profit shifting.

Robert Stack, deputy assistant secretary for international tax policy at Treasury, said Feb. 26 the U.S. is making a proposal on BEPS Action 3 toworking Party No. 11 of the Organization for Economic Cooperation and Development, that is similar to the Obama administration's minimum tax budget proposal. BEPS Action 3 tasks the OECDwith strengthening the rules on CFCs.

For the story, go here. (subscription required)

by John Herzfeld (Bureau of National Affairs)

U.S. policy makers should take a fresh look at international tax treaties to make sure their provisions stillwork in the national interest and aren't misused in unintendedways, a Treasury Department official said.

For the story, go here. (subscription required)

An animated Danielle Rolfes, Treasury international tax counsel, regaled the tax attorneys attending the New York State Bar Association Tax Section annual meeting in New York February 24 on issues involving U.S. treaty policy, saying itwas necessary to look beyond section 7874 and Notice 2014-52, 2014-42 IRB 712, to address the inversion problem.

For the story, go here. (subscription required)

In news analysis, Lee A. Sheppard reports on a February 24 discussion at the New York State Bar Association Tax Section meeting on the U.S. role in shaping the OECD base erosion and profit-shifting initiative.

For the story, go here. (subscription required)

As the OECD's base erosion and profit-shifting project moves forward, IRS officials on February 24 voiced concerns about the implementation of country-by-country reporting.

For the story, go here. (subscription required)

Martin Lobel argues for a return to a genuinely conservative position inwhich the market picks thewinners in business; the elimination of all business tax subsidies; and an economic structure that allocates capital efficiently, instead of one that lets thewealthy and powerful influence policies that are destructive to middle-income Americans.

For the viewpoint, go here. (subscription required)

Practitioners and taxpayer representatives blasted recent investigations by the European Commission intowhether some tax arrangements violate European Union laws against state aid for companies, claiming that the enforcement of the rules could prove to be baffling.

For the story, go here. (subscription required)

In news analysis, Mindy Herzfeld discusses the challenges the OECDwill face getting the United States and other countries to implement country-by-country reporting.

For the story, go here. (subscription required)

With the Indian Budget fast-approaching, Subhankar Sinha, senior vice president, head of tax for the South Asia region at Siemens, looks at the tax measures that could be used to incentivise the government's 'Make in India' campaign.

For the story, go here.

by Abi Briggs and Jon Tilson (Internationa Tax Review)

Abi Briggs and Jon Tilson of Deloitte analyse recent developments regarding indirect taxation of the digital economy, taking into account OECD discussions and unilateral actions being proposed.

For the story, go here.

Achim Pross, head of the International Cooperation and Tax Administration division at the OECD, and architect of the new automatic exchange of information standard and the multilateral competent authority agreement (MCAA) discusses the progress made in 2014 and looks at opportunities and challenges ahead.

For the story, go here.

by Ciaran McEvoy (Investors.com)

The Treasury Department's crackdown on tax inversions last year has slowed but not stopped the movement of U.S. headquarters abroad as American businesses try to reduce tax bills and foreign firms seek to grow.

Indeed,with U.S. companies now virtually barred from relocating overseas in order to trim taxes, the Obama administration's new rules may have turned corporate America into awell-stocked pond of bait for foreign sharks.

For the story, go here.

This article develops a framework for the study of the unique effects of corporate inversions (meaning, a change in corporate-residence for tax purposes) in the jurisdictions fromwhich corporations invert ("home jurisdictions"). Currently, empirical literature on corporate inversions overstates its policy implications. It is frequently argued that in response to an uncompetitive tax environment, corporations may relocate their headquarters for tax purposes,which, in turn, may result in the loss of positive economic attributes in the home jurisdiction (such as capital expenditures, R&D activity, and high-quality jobs). The association of tax-residence relocationwith the dislocation of meaningful economic attributes, however, is not empirically supported and is theoretically tenuous. The article uses case studies to fill this gap.

For the article, go here.

by Mike Godfrey (Tax News)

A repatriation holidaywould have a minimal economic impact andwould be thewrongway to pay for the Highway Trust Fund or any other project, according to a new report by the Heritage Foundation.

For the story, go here.

The Treasury Department needs a new position - deputy undersecretary forwhac-a-Mole. Maybe thatwould allow the agency to figure out someway to stop American companies from inverting. That's the process underwhich companies get to stay in the United States and benefit from everything our society has to offer, but technically become subsidiaries of foreign companies,which lets them pay a lot less U.S. income tax that they otherwisewould.

For the story, go here.

.

A strangely popular proposalwould give companies a temporary tax holiday, letting corporations bring back their money on paper, or "repatriate" it at an extremely low tax rate, thereby encouraging more corporate tax dodging in the future. The most ridiculous part? Some Members of Congresswant to use this tax break that costs money to "pay for" badly needed infrastructure investments. How does that even make sense?

For the story, go here.

As many as two dozen jurisdictions that have failed to fully implement the international standard for tax information exchange on request could feel increased pressure to do so from theworld's biggest economies in 2015, the head of the OECD's tax transparency body said.

For the story, go here. (subscription required)

A goal of tax reform is to make the U.S. tax code more neutral and to encourage economic growth. One step toward this goal is the elimination of the double tax on corporate income. Short of a complete overhaul of the tax code, integration of the corporate and individual income tax code is an option to eliminate double taxation.

For the report, go here.

In a February 20 letter to US Senate Majority Leader Mitch McConnell (R – Kentucky), the National Foreign Trade Council and other leading business organizations urged action on pending bilateral double taxation agreements (DTAs) and protocols.

For the story, go here.

Seychelles has become the 85th jurisdiction to sign a multilateral tax convention intended to ramp up tax transparency around theworld, the Organization for Economic Cooperation and Development accounced.

For the story, go here. (subscription required)

Acknowledging disappointment from the business community over the OECD's base erosion and profit-shifting projectwork pertaining to dispute resolution in its action 14 draft, specifically mandatory binding arbitration, a Treasury official urged patience as the United States convinces more countries of the benefits of its style of arbitration.
For the story, go here. (subscription required)