Int'l Tax News

U.S. Treasury Secretary Janet Yellenwill press European Union officials in Brussels to reconsider their plan to propose a digital levy after securing the Group of Twenty's endorsement for the principles of a global corporate-tax agreement. Yellen is in Brussels following the gathering of G-20 finance ministers and central bankers in Venice,which concludedwith the group's call to finishwork on the global plan's details by October.

Bigger countries are using negotiations on global corporation tax reform to increase their own tax revenue at the expense of smaller nations, Ireland's deputy prime minister said. "This isn't just about tax justice and big companies paying their fair share," Leo Varadkar told reporters in Dublin. "This is also about big countries trying to get a bigger share of the pie."

On July 1, 2021, the OECD-led Inclusive Framework on BEPS announced that 130 countries had agreed on revised outlines of a two-pillar plan calling in part for a reallocation of taxing rights regarding certain large multinational businesses. The author discusses the proposed reallocation in light of the U.S. Trade Representative's recent reports on digital services taxes.

An influential EU panel has suggested using a mechanism designed to combat harmful tax practices to push EU member states into accepting a global minimum tax rate. Over 130 countries have agreed on a global minimum tax rate of "at least 15%" but four EU countriesÔøΩCyprus, Estonia, Hungary, and IrelandÔøΩhave not signed up to the agreement,whichwas negotiated through the Organization for Economic Cooperation and Development.

When the U.S. secured international backing for a global minimum corporate tax, it marked an early victory for Treasury Secretary Janet Yellen as the country's top financial diplomat and paved theway for a key plank of President Biden's domestic agenda. People involved in the negotiations credit Ms. Yellenwith reviving yearslong talks to clamp down on tax avoidance by multinational firms. The breakthrough potentially set the stage for the most sweeping change in international taxation in a century.

The European Union's digital chiefwill meet U.S. Treasury Secretary Janet Yellen as the EU delayed plans for a digital levy after a potential global tax breakthrough. Margrethe Vestager, the EU's executive vice-president for digital issues, is now due to propose a new EU tax on technology companies' revenues on July 20, aweek later than planned, according to a document seen by Bloomberg News.

In a meetingwith Mary Ng, Canada's trade minister, U.S. Trade Representative Katherine Tai urged Canada to abandon its proposed unilateral digital-service tax.

The European Union's plan to propose a new digital-services tax is unlikely to undermine global talks aimed at eliminating such levies, according to the head of the international group spearheading the discussions. "I know for a fact that the European Union is very conscious of the importance of this deal on international tax reform," Mathias Cormann, secretary-general of the Organization for Economic Cooperation and Development, said in a Bloomberg Television interview.

William Horobin and Maria Tadeo

French Finance Minister Bruno Le Maire said he is confident the Group of 20 economieswill back a deal on international tax, even as his country pushes for a higher minimum corporate rate. The G-20 meeting in Venice is poised to give its backing to a deal signed by 131 countries for a minimum corporate levy of "at least 15%," and new rules for dividing up the tax revenues from theworld's largest companies -- particularly U.S. tech giants.

"I hope and look forward to Ireland joining this consensus sowe can have a fairer system," Spanish Economy Minister Nadia Calvino says in interview during G20 in Venice, Italy.

Top officials from the U.S., Germany and France each expressed confidence that a proposed global tax deal can overcome political obstacles inwashington andwithin the European Union in time for it to be finalized in October. "There's morework to be done, but I'm really hopeful thatwith the growing consensuswe're on a path to a tax regime thatwill be fair for all of our citizens," U.S. Treasury Secretary Janet Yellen told reporters on the sidelines of a Group of 20 meeting of finance ministers and central bankers in Venice.

Global leaders on Saturday agreed to move aheadwithwhatwould be the most significant overhaul of the international tax system in decades,with finance ministers from theworld's 20 largest economies backing a proposal thatwould crack down on tax havens and impose new levies on large, profitable multinational companies.

Ireland stands to lose up to a quarter of its corporate tax haul, and at the G20 meeting itwill push for terms thatwould allow it and other small countries to make up for the loss.

Theworld's largest economieswill thisweekend pile pressure on to holdout nationswhich are refusing to sign up to a global tax reform deal thatwould impose a minimum levy on multinational corporations.

Brussels is set to delay plans for its controversial digital levy until the autumn in an effort to boost the prospects of a global corporate tax reform deal.

G20 finance ministers have collectively endorsed carbon pricing for the first time, describing the once contentious idea as one of "awide set of tools" to tackle climate change.

The top House Republican taxwriter remains unconvinced that a global tax reform deal reachedwithin the OECD frameworkwill roll back digital services taxes, especially because the EU plans on introducing a digital levy anyway.

Congresswon't support an OECD tax reform deal unless it protects the U.S. economy, including through the instant repeal of digital services taxes, top Republican taxwriterswarned Treasury ahead of a key G-20 meeting.

The five major pre-Brexit EU countrieswith digital services taxes have seen their trade competitiveness in digital services plummet over the years,which could explainwhy they decided to adopt those taxes, economists said.

Mindy Herzfeld looks at options for adjusting the much-maligned global intangible low-taxed income regime to further President Biden's plan to use corporate tax policy to improve fairness and equity in U.S. society.

The European Commission has launched a public consultation on a proposal for a directive thatwould mitigate tax-induced debt-equity bias by offering a tax allowance for companies that pursue equity financing.

French Finance Minister Bruno Le Maire said July 6 that the EU's digital levy proposal is not "directed against the United States,"which fears that an EU tax could threaten progress at the OECD level.

Treasury is in talkswith Congress's top Democratic taxwriters about including global minimum tax provisions in a partisan reconciliation package thatwould align the United States' domestic prioritieswith its OECD inclusive framework goals.

The finance ministers of theworld's twenty largest economies have reached political agreement on a two-pillar global tax reform plan, calling on a small group of holdout countries to join in on the deal.

Shakespeare said a rose by any other namewould smell as sweet, but multinational companies aren't likely to draw the same conclusion about a claim that the EU's proposed digital levy is not a tax.

Theworld's largest economies agreed Thursday to sweeping changes to the global tax system. They still have a lot ofwork to do on how to make that agreementwork in practice, and itwon't be operational until at least 2023.

An effort to push the most sweeping changes to the global tax system in a century gained significant momentum on Thursdaywhen 130 nations agreed to a blueprint inwhich multinational corporationswould pay an appropriate share of taxwherever they operate.

UK due to secure exemption for City of London banks from regulations brokered at OECD.

Historic agreement by 130 countrieswill introduce minimum rate and new jurisdictional powers.

Theworld's leading economies have signed up to a plan to force multinational companies to pay a global minimum corporate tax rate of at least 15 per cent following intense negotiations in Paris at the OECD.

The agreement reached by 130 countries has left fertile ground for new and clever techniques to circumvent the rules.

Benjamin M.willis argues that the Biden administration need not engage in the race to the bottom to ensure America's corporations remain the most competitive in theworld.

In news analysis, Lee A. Sheppard examines the treaty issues raised by the SHIELD and GLOBE minimum tax proposals from the Biden administration and the OECD.

France stands to raise ÔøΩ900 million annually under pillar 1 of a two-pillar global tax reform plan that countries are discussing through the OECD framework, taking into account Amazon's profitable cloud segment, new research shows.

In awin for the U.S., governments from 130 countries have agreed to rewrite the rules for how countries tax corporate income. That is a big step forward for a complex project that has been years in the making andwould take years to implement. Here are some questions and answers about the deal.

A new corporate tax agreement between 130 nations is quite an achievement, but the deal is far from done. The continued resistance of Ireland in particular could scuttle the accord. 130 countries agreed to an overhaul of global corporate tax rules involving a minimum rate of 15% and changes towhere companieswill pay some of their taxes. The processwas started by the Organization for Economic Cooperation and Development in 2013 and progress has been fitful. Holdouts from the deal include Hungary, Estonia, Nigeria, Kenya, Peru and Sri Lanka, aswell as Ireland.

Big tech companies said Thursday's breakthrough in negotiations over a global tax overhaulwas a step toward avoiding a patchwork of overlapping national taxes, but executives and trade bodies said they still need to see those tax regimes disappear before calling the deal awin. The U.S. secured international backing for a global minimum rate of tax as part of awider overhaul of the rules for taxing international companies. Officials from 130 countries that met virtually agreed to the broad outlines of the overhaul. Itwould be the most sweeping change in international taxation in a century.

The U.S. haswon international backing for a global minimum rate of tax as part of awider overhaul of the rules for taxing international companies, a major step toward securing a final agreement on a key element of the Biden administration's domestic plans for revenue raising and spending. Officials from 130 countries that met virtually agreed to the broad outlines ofwhatwould be the most sweeping change in international taxation in a century. Among themwere all of the Group of 20 major economies, including China and India,which previously had reservations about the proposed overhaul.

Irelandwill need to prepare for revenue loss because of international tax reforms being negotiated at the OECD, government officialswarned. The tax changes being debated "will have implications for corporate tax receipts,"warned Finance Minister Paschal Donohoe at Ireland's National Economic Dialogue on the budget. "These challenges are all clear andwe know in advance about them,which makes it imperative thatwe put in place the steps, year by year, to address them."

Lobbying from Britain during negotiations at the OECD has led to an exemption for financial services in new global tax rules, according to the Financial Times, citing people familiarwith the matter.

More than 100 countries have reached a deal to revamp global tax rules, setting up one of the biggest overhauls of how multinational companies are taxed in years and upending decades of laws and treaties. The deal, announced by the OECD after years of negotiations, follows a Group of Seven-endorsed plan last month that called for setting at least a 15% minimum tax rate and crafting new rules to target theworld's largest and most profitable multinationals. The Organization for Economic Cooperation and Development-brokered dealÔøΩwhich 130 of the 139 countries involved in talks signed on toÔøΩoffers more details on how those companies, including high-revenue but low-margin firms like Amazon.com Inc.,will be captured.

The Biden administration and global allies scored a major victory in their push for a more balanced international corporate tax system, but still face multiple significant obstacles to completing an ambitious plan that has been years in the making. The boost came during a round of talks hosted by the Organization for Economic Cooperation and Development,where 130 countries and jurisdictions backed a plan to set a minimum corporate tax rate and establish a new regime for sharing the taxes imposed on the profits of multinational firms.

The preferential tax policies China offers to some multinational businesses could be at risk under new global rules to set a minimum corporate tax, according to a legal adviser to the Ministry of Finance. The tax planwill have an overall "positive impact" on China by improving the sustainability of fiscal revenues and providing a fair international business environment, said Shi Zhengwen, vice-president of the China Association for Fiscal and Tax Law. However, Chinawill need to adjust some of its tax policies to complywith the rules, he said.

The OECD-brokered deal to overhaul global tax ruleswas a major step forward in the years-long effort to find international agreementÔøΩbut the clock is still ticking. Negotiators are targeting October to settle more details of the planwith the goal of putting new rules in place in countries around theworld in 2023. To get there, they'll have to spend the next few months not only getting the nine countries that aren't backing the plan on board but also grapplingwith details on how the two-pillar planwill function. Questions remain overwhich jurisdictionswill give up the profits that are reallocated, how an at least 15% minimum global tax ratewill treat certain existing tax incentives, andwhich domestic digital taxeswill be rolled back under a deal.

Multinational corporations,watch out. Most of theworld's nationsÔøΩ130 countries and jurisdictions to be exactÔøΩfinally endorsed a global tax overhaul that has been in the making for years. The agreement, led by the OECD,would force corporations to pay at least 15% in taxes for their offshore profitsÔøΩawin for President Joe Bidenwhose administration pitched the idea. The OECD-led deal also includes a measure thatwould reallocate profits from large companies like Facebook Inc. and Alphabet Inc.'s Google to countries based onwhere their users are. Congresswill need to take action at home to build on the global agreement, Biden said. But that could be thorny as Republicans oppose raising corporate tax rates and Democrats hold razor-thin majorities.

The European Union's digital chiefwill meet U.S. Treasury Secretary Janet Yellen nextweek as the EU delayed plans for a digital levy after a potential global tax breakthrough. Margrethe Vestager, the EU's executive vice-president for digital issues, is now due to propose a new EU tax on technology companies' revenues on July 20, aweek later than planned, according to a document seen by Bloomberg News.

This project startedwith a clue and a hunch. The clue: The OECD's Economic Impact Assessment (EIA) mentions that its estimates for automated digital services (ADS) use U.S. Bureau of Economic Analysis (BEA) data on the information sector. The hunch: BEA data might provide fine-grained estimates of the impacts of Pillar One Amount A at the country and industry levels for ADS and consumer-facing businesses (CFB). The hunchwas correct. To the best of my knowledge, this article is the first to provide public estimates of the impacts of Amount A at the individual country and industry levels, from a single-country perspective. Corporate income tax (CIT) base gains and losses, by country and industry, are provided for both jurisdictionswith MOFAs (majority-owned foreign affiliateswith U.S. parents) and MOUSAs (U.S. majority-owned affiliateswith foreign parents). Estimates using 2018 preliminary BEA data are provided for ADS, four CFB industries (pharma, retail trade, transportation, andwholesale trade), and all industries. The key results are: (1) From the U.S. perspective, Pillar One Amount A is primarily a U.S.-Europe story since MOFAs in Europe and European MOUSAs in the United States dominate foreign affiliate sales and profits for ADS, CFB, and all industries. (2) Europe in its role as host to MOFAs and the United States as host to European MOUSAswould, for most industries, be tax-relieving jurisdictions expected to give up CIT base under Amount A. Comparing the relative sizes of U.S. and European CIT base changes across industries suggests that Europewould lose relative to United States.

The G20/OECD Inclusive Framework is currently deliberating an effective international minimum tax as Pillar Two of itswork on the tax challenges arising from digitalization. Political agreement on the so-called Global Anti-Base Erosion Proposal (GloBE) is sought for summer 2021 and prospects currently look good, in particular due to its full endorsement by the Biden administration. This paper outlines the developments leading up to the October 2020 Blueprint on GloBE and provides an assessment of its policy rationale and of certain objections raised in public hearings and in literature. Moreover, the paper critically analyses some of GloBE's key design features; it also shortly addresses its compatibilitywith tax treaty law and simplification measures.

Poland is in favor of a global minimum corporate-tax rate as long as it doesn't impede its ability to lure foreign investors by offering tax relief, Finance Minister Tadeusz Koscinski said. Alongwith Ireland and Hungary, Poland has been seen as a potential European holdout in the minimum tax plan backed by the G-7 group of theworld's richest countries. Koscinski saidwarsawwould support a deal once there's clarity on carve-outs, or exceptions towhere the new regime must be applied.with per-capita economic output at about three-quarters of the European Union average, Poland's government has prioritized catching upwith itswestern peers in the next decade. It plans to do so in part by continuing to offer special terms, including tax breaks, for companies relocating to the east European nation.