Int'l Tax News

The Biden administration has signaled itwill accept a 15 per cent global minimum tax on large multinational companies, in international talks aimed at increasing revenues from corporations that operate across borders.US officials have been meeting negotiators from countries taking part in OECD talks thisweek to discusswhat that minimum tax rate should be. The Biden administration had previously proposed 21 per cent, according to the US Treasury.

Biden's Made in America Tax Plan seeks to promote nascent green technologies via targeted tax incentives; encourage adoption of electric vehicles; support further deployment of alternative energy sources, such as solar andwind power; and endwhat it characterizes as long-entrenched subsidies for fossil fuels.

Where does the IMF see things heading? Increasingly toward destination-based taxation, although it believes it's too early for a destination-based cash flow tax or formulary apportionmentwith a sales factor. In the meantime, the institution believes thatwewill continue to see greater adoption of consumption taxes at the expense of corporate and labor taxes, because they achieve similar effects and are alreadywell used.

Members of the European Parliament (MEPs) and tax observers cast doubt onwhether the European Commission's reworked common consolidated corporate tax base proposal, expected in 2023, can become lawwithout qualified majority voting on tax matters.

The rejection in the Amazon judgment of the European Commission's arguments regarding the proper application of the transactional net margin method (TNMM) raises doubts about the viability ofwhat has become a recurring argument in state aid cases.

The European Commission must explain how a digital levywould alignwith an agreement on the pillars of the OECD tax reform project, and priority should be given to the latter, French sources said.

The United States has proposed a 15 percent rate as a starting point for OECD-led negotiations on a global minimum corporate tax regime as part of a sweeping plan to modernize the international tax system. According to a May 20 Treasury readout, "discussions on the global corporate minimum tax rate began in earnest" during two days of meetingswith the steering group of the OECD inclusive framework on base erosion and profit shifting.

The European Union presented plans for a new corporate taxation framework for the bloc thatwould go further than a global deal under negotiation to change rules on how much andwhere multinational firms should pay levies. The EU's supplementary measure -- dubbed Business in Europe: Framework for Income Taxation, or BEFIT --would create a single corporate tax rulebook and reallocate profits between member states.

British officials aren't convinced by President Joe Biden's plan for a global minimum business tax rate of 21%. Sunak is concerned that the ratemay be too high over the long term, even though the U.K. intends to raise its corporation tax to 25% in 2023 to repair public finances after the pandemic.Britainwants the U.S. and other nations to focus on measures to make big multinational companies -- especially digital giants like Amazon.com Inc. -- pay more of their tax in countrieswhere they operate.

Since April 8, 2021, the OECD/G20 Inclusive Framework on BEPS has been focused on a new set of proposals advanced by the U.S. to move the negotiations forward. The author looks at the changed landscape and discusses possible outcomes.

The European Commission's plan for a unified tax system across the EU may not sitwell alongside international plans for a global tax overhaul. Key questions the Commission,which is the EU's executive arm, must grapplewith as it designs the new system include how to treat companies that fall under both sets of rules, and how to change treaties between EU and non-EU countries.

The U.S. called for a global minimum corporate tax of at least 15%, less than the 21% rate it has proposed for the overseas earnings of U.S. businesses -- a level that some nations had arguedwas excessive. The contrast between the new proposal, released by the Treasury Department Thursday, and the higher rate the Biden administration is seeking to be applied to American companies underscores the difficulty of international talks being led by the Organization for Economic Cooperation and Development. Countries including Ireland have used low business taxes as a key economic development strategy. Negotiators are aiming for a deal this summer.

The European Commissionwill propose later this year a rule requiring large multinational companies to publish the rate of corporate tax they actually pay, according to plans it announced Tuesday. Countries in the European Union have headline corporate tax rates ranging from 9% to 30%, but few multinationals really pay those rates, as they legally reduce their bills through tax breaks designed to boost investment, or, more controversially, through profit shifting to achieve far lower effective tax rates.

Previous efforts to create a common European tax base have foundered, lacking unanimous support from member states. The Commission's new plan, called BEFITÔøΩBusiness in Europe: Framework for Income TaxationÔøΩwould replace proposals for a common European tax base that have been pending for years, known as the Common Consolidated Corporate Tax Base.

The U.S.will accept a global minimum corporate tax rate as low as 15% in international negotiations, below the 21% level it has been seeking for U.S.-based companies' foreign income. The move could make it easier to reach the multilateral agreement that Treasury Secretary Janet Yellen has been seeking, but an agreement at 15%would raise less revenue for governments. And, depending onwhere the U.S. sets its policies, a 15% minimum tax on companies headquartered outside the U.S. could give those businesses an advantage over those based in the U.S.

This Article discusses the impact of the GILTI-related foreign tax credit rules and the coordination of other new international provisionswith the existing foreign tax credit system. The Article argues that the GILTI-related foreign tax credit is more generous than accuracy (exact reduction of double taxation)would demand. The TCJA's coordination of other new ruleswith the foreign tax credit system also tends to be more taxpayer favorable than mere fairnesswould require,with some notable exceptions. The interaction of the foreign tax creditwith the new international tax provisions also creates some surprising effects and incentives.

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.

Media projections depict that robotics, process automation, and artificial intelligence threaten humanworkforce sustainability. Two oft cited studies forecast that technological innovation could jeopardize more than one third of the U.S.workforce. Nevertheless, the author concludesthat Congress should not impose a robot tax. This Article is the first to conduct a significant literature review of the current proposals to tax robots, ultimately taking a contrarian view. It examines mankind's historical connection to labor amid fears of automation substitution and proposes that implementing fear based tax policy based on job displacement projections is unsound

Amazon.com Inc. haswon the latest stage in a legal battlewith the EU overwhether itwas given 250 million euros ($303 million) of illegal subsidies by the Luxembourg authorities through a tax ruling.Wednesday's judgmentÔøΩissued by the European Union's second-highest courtÔøΩis another loss for the European Commission's years-long effort to clamp down on past transfer pricing practicesÔøΩhow companies value intercompany transfersÔøΩ multinational companies have used in Europe.

US president Joe Biden's plan to reform global corporate taxationwill do little to help the countries most in need of more tax revenues, say developing economieswhich are lobbying for greater power over multinationals.

EU judges have overturned a European Commission order to Amazon to pay back ÔøΩ250m in taxes to Luxembourg, in a further blow to Brussels' efforts to curb sweetheart national tax deals.

Rishi Sunak is holding back support for Joe Biden's plans for a 21 per cent minimum global business tax rate, as Britain pushes the US to ensure any agreement includes a fairer system for taxing digital technology giants.

The chancellor,who chairs the G7 finance ministers, said hewould consider a global minimum levy only as part of a broader package,with Treasury officials fearing Biden is intent on compelling tech firms to pay tax "in Californiawhen it ought to be paid in the UK".

After 10 years of on and off discussions, a much-debated U.N. Tax Committee proposal on treating software payments as royalties is still unresolved. But some of the U.N.'s recent treaty modifications, combinedwith a spate of global litigation, could give the issue a much-needed nudge toward resolution.

The United States should hold off on tariffs on Indian imports, including shrimp and jewelry, in response to India's digital tax, especially amid the economic devastation caused by the COVID-19 pandemic, stakeholders said. Manab Majumdar of the Federation of Indian Chambers of Commerce and Industry said May 10 that proposed U.S. tariffs on 40 products from India in retaliation against India's equalization levywould be "inimical to the vibrant trade relations" between both countries, citing "formidable challenges" arising from the coronavirus crisis.

The time may be right for countries to consider adopting or reforming inheritance tax policies to help shore up government revenues and better addresswealth inequalities in their post pandemic economies, a new OECD report says. The report, published May 11, examines and compares inheritance, estate, and gift taxes across the 37 OECD countries; considers their designs; evaluates the need for inheritance taxation; and outlines reform options that governments may consider adopting to improve their regimes.

African tax administratorswant further changes to part of the OECD's global tax reform plan, including the allocation of total ÔøΩ instead of residual ÔøΩ multinational profits to market jurisdictions to be taxed under proposed new rules. The African Tax Administration Forum (ATAF) announced in a May 12 statement that it had sent a proposal to the OECD inclusive framework on base erosion and profit shifting thatwould simplify pillar 1 of the two-pillar plan that its members are negotiating.

The EU General Court has annulled the European Commission's 2017 ruling that advance pricing agreements approved by Luxembourg granted Amazon ÔøΩ250 million in state aid, holding that the commission's transfer pricing analysiswas fundamentally flawed. In its May 12 judgment in Luxembourg v. Commission, Cases T-816/17 and T-318/18, the General Court held that the commission's 2017 ruling on an APA granted to Amazon group members in 2003 and renewed in 2011was based on a flawed transfer pricing analysis. According to the commission, the APAs' generous terms conferred ÔøΩ250 million in selective state aid that Luxembourgwas required to recover from Amazon.

Ireland should continue building on its nontax advantages to mitigate the effect of potential global corporate tax reforms on the Irish corporate tax base, according to a new IMF report. In its staff concluding statement of the 2021 Article IV mission to Ireland, published May 12, the IMF said that Irelandwas in a good position for an economic recovery in 2021, thanks to strong multinational enterprise growth during 2020.

The Biden administration's proposed reforms of the global intangible low-taxed income provisions retain the 20 percent foreign tax credit "haircut" that exists under current law, according to a top Treasury official. The administration's GILTI proposals build on the current structure, including that haircut, Kimberly Clausing, Treasury deputy assistant secretary for tax analysis, said May 13.

After 23 years of existence, the European Union body chargedwith calling out harmful tax competition is planning a more transparent policy approach. The EU's Code of Conduct Group, formed in December 1997,wants to alignwith the ever-increasing transparency compliance rules for multinational taxpayers. The code represents a political commitment by EU member countries to review and amend tax measures representing harmful tax competition, and to refrain from adopting such measures. It also promotes a similar commitment by non-EU jurisdictions.

Indian business groups called for the U.S. not to move forwardwith tariffs on imported products like gold jewelry and frozen shrimp in response to India's digital tax. "Such a tax on 40 items imported into the U.S. from India have negative consequences and impact on both economies," Manab Majumdar, from the Federation of Indian Chambers of Commerce and Industry, said during a U.S. Trade Representative hearing on Monday. The U.S. is considering a retaliatory tariff of up to 25% on India, over the country's 2% tax on digital services provided by non-residents.

Hungary plans to slash the tax on cryptocurrency earnings by 50% from next year in an effort to encourage investors to declare income from trading digital tokens such as Bitcoin. The government said itwill lower the rate on such earnings to 15% from 30.5% starting in 2022,whichwould bring it in linewith capital gains levies on stocks. The impetus appears to be fears among officials that investors are shielding crypto gains from authorities because of the higher tax rate.

Amazon struck a new blow to European Union efforts towring more tax from big tech companieswhen the bloc's second-highest court sidedwith the company over a $300 million tax bill. The EU court onwednesday annulled a 2017 decision from the European Commission, the EU's top antitrust authority, that had ordered Amazon to pay 250 million euros in taxes to Luxembourg, the latest of several big EU tax decisions to be overturned.

Joe Biden intends to increase taxes on corporate profits andwill probably succeed. He may not get the rate all theway from 21 per to a planned 28 per cent, but some increase is likely.whowill bear the heavier tax burden: companies, employees or shareholders? Robert Armstrong provides an analysis of the response to this question.

President Biden is seeking about $2 trillion in higher taxes on companies over 15 years to pay for his infrastructure plan. But corporations are just entities composed of people, so if corporate taxes go up,who ultimately pays?

The Biden administration says it's trying to spur investment in AmericaÔøΩwhile proposing to remove a four-year-old tax break thatwas intended to do exactly that.

The U.K. could accept a higher global minimum tax, but only if U.S. lawmakers pass a Biden proposal to double the country's minimum tax, a top U.K. Treasury official said.

An EU-wide digital tax plan to be published in Junewill be carefully calibrated so itwon't disrupt global talks on corporate taxation, the EU's top economy official said.Hewas referring to negotiations in the Organization for Economic Cooperation and Development on proposals to tax companieswhere they earn revenue rather thanwhere they declare their profit.

A rule to equalize the tax treatment of debt and equitywill be proposed this year in the EU, the bloc's executive arm said Friday. The rule,whichwill be outlined in a broader business taxation plan to be published May 18,will be "designed to mitigate the debt-equity bias in corporate taxation," the European Commission said in an emailed statement.

Lobbying groups representing the biggest U.S. Internet-based companies called on the U.S. to negotiate for the removal of digital-service taxes charged by nations ranging from the U.K. to India,with at least one endorsing retaliatory tariffs.

The European Parliament April 29 passed Legislative Resolution, endorsing a draft proposal to introduce a digital tax. The draft proposal includes 6 main measures.

U.S. President Joe Biden's proposal to set a minimum global corporation tax at 21% is gaining momentum,with the official running international talks on the matter saying that an agreement could settle near that rate. The Biden administration's plan has turbocharged negotiations at the Organization for Economic Cooperation and Development on how to overhaul rules on how much tax companies pay, andwhere. The U.S. suggestion,while subject to negotiations in Congress,would be significantly higher than the 12.5% previously discussed in the talks.

Mindy Herzfeld examines Treasury's recent proposal for simplifying the OECD's complex pillar 1 blueprint, arguing that Treasury fails to mention that Congress is unlikely to enact the suggested changes.

Marty Sullivan argues that the Biden administration should consider disallowing expenses allocable to the exempt portion of foreign income as part of its legislative proposal to overhaul the GILTI rules.

After several days of violent protests over Colombian tax reform proposals, President Iván Duque said the planwill be revised to avoid broadening VAT rules and subjecting anyonewho is currently exempt to income tax.

A potential agreement on a public country-by-country reporting proposalwould obligate multinationals to disclose details of their economic activity in each EU country, plus countries belonging on the so-called EU gray list.

Representatives of the European Parliament and EU member states are aiming for an agreement by early June, according to several sources involved in the talks.

A potential agreement on a public country-by-country reporting proposalwould obligate multinationals to disclose details of their economic activity in each EU country, plus countries belonging on the so-called EU gray list.

Representatives of the European Parliament and EU member states are aiming for an agreement by early June, according to several sources involved in the talks.

The Justice Department is countering plaintiffs' motion that a court reconsider their Regulatory Flexibility Act (RFA) challenge to the transition tax regs in no uncertain terms, arguing it "lacks merit" and merely restates rejected arguments. The government filed its response to plaintiffs' motion for reconsideration and for leave to amend complaint in the U.S. District Court for the District of Columbia in Silver v. Internal Revenue Service on May 4.

The Biden administration's ideas to simplify pillar 1 of a two-pillar global tax reform plan bring a new dynamic to negotiations, raising the prospects for a multilateral agreement by October, the OECD's tax chief said.

Faler summarizes Biden's tax proposals and explainswhy theywill be difficult to enact andwill only be the starting point in negotiations.