Int'l Tax News

The European Unionwill propose a digital tax on tech companies at the end of the year if nations fail to get a multilateral dealwithin the OECD, EU Commissioner Thierry Breton said Friday in an interview on BFM Business.

The OECD's digital tax overhaul carries "potentially adverse implications" for developing countries,warned a new report from a panel convened by the United Nations. The time frame of the negotiations has been dictated by richer countries, and may be too fast for developing countries,which have fewer resources to devote to the process, the interim report said Thursday. Nearly 140 countries are negotiating a global tax overhaul at the Organization for Economic Cooperation and Development to address concerns about how tech giants and other multinationals are taxed.

The European Commission plans to propose streamlining systemswithin the European Union for claiming relief from double taxation of dividends. Proposals,whichwould be published by the end of 2022,would seek to improve on the current situation of "divergent, burdensome, lengthy and fraud-prone refund procedures for taxwithheld in cases of cross-border investment," the commission, the EU's executive, said in an action plan published Thursday.

Apple Inc.'s victory over a record back-tax order faces a challenge at the European Union's top court as Competition Commissioner Margrethe Vestager seeks to rescue her crackdown on allegedly unfair fiscal deals doled out to multinational companies. The EU's General Court "made a number of errors of law"when it sidedwith Apple in its ruling in July, the European Commission said in a statement on Friday announcing that itwould appeal to the EU Court of Justice.

Finance executives at major U.S. companies expect corporate tax rates to rise following the presidential election in NovemberÔøΩno matterwhowins.

Apple Inc.'s July court triumph over a massive European Union back- tax order is forcing antitrust chief Margrethe Vestager to make a tough choice: Challenge a ruling that faulted the EU investigation or accept judges' criticisms and re-examine a case started more than six years ago.

U.S. multinationals'wish to be excluded from an OECD-led effort to set a global minimum tax rate could comewith new administrative burdens. The nearly 140 countries negotiating a global tax overhaul at the Organization for Economic Cooperation and Development are consideringwhether to allow U.S. companies a pass on global minimum tax rules, because they're already subject to a similar regime in the U.S.

An officialwith theEuropean Commission's Directorate-General forTaxation and Customs Union(DGTAXUD) said observers shouldn't assume a new U.S. administrationwill be more flexible regarding international negotiations on digital taxation.

The GermanEU Councilpresidencywill support a decision on public country-by-country reporting and says a majority of member states appear to support it.

Mindy Herzfeld describes proposals from Democratic presidential candidate Joe Biden to encourage companies to move jobs back to the United States and discourage moving jobs offshore.

Ubersupports the OECD-ledwork on a potential global corporate tax overhaul for the digital age and continues to hope for multilateral agreement on that proposal, the company's tax chief said.

The EU "will spare no effort to reach agreement" on digital taxation in theOECD/G-20inclusive framework, but itwill take unilateral measures if necessary,European CommissionPresidentUrsula von der Leyensaid.

Brazilwill need to align its transfer pricing system more closelywith the arm's-length standard if itwants to implement a proposed global approach to tax the digital economy, a topOECDofficial said.

The Netherlands is canceling its top corporate tax rate cut and plans to offer other relief measures, including employment and investment tax credits,while introducing a carbon tax, according to the government's 2021 tax plan.

The head of theOECD Centre for Tax Policy and Administrationfears that negotiations on pillar 1 of the multilateral solution to taxing the digital economywill take too long and countrieswill move unilaterally.

As part of a broader response to the COVID-19 pandemic's economic fallout, the U.K. government is reportedly considering giving companies a full tax break in a bid to boost investment in plant and machinery.

Most EU member states don'twant to rush a digital tax because the U.S. stance might change after the presidential election, sources said after a meeting of theEconomic and Financial Affairs CouncilSeptember 12.

New Zealand'sLabour Partymade headlines recently in announcing plans to increase taxes for high earners, but the party also said itwill move quickly to implement a digital servicestax ifOECDnegotiations fail.

A new tax penalty for corporations intended to curb overseas manufacturing has been added to the campaign platform of Democratic presidential candidateJoe Biden.

The United States is obstructingOECD-led negotiations on a global corporate tax overhaul proposal, so theEUshould prepare its own digital taxation plan now in case talks fail, a top French minister reportedly said.

Multinational companieswarn that the proposed consolidated net operating loss regulationswould undermine the policies for limiting the use of losses incurred by corporations that are residents in the United States and a foreign jurisdiction.

Mindy Herzfeld sheds light on Treasury's interpretation of the international tax provisions of the Tax Cuts and Jobs Act, often inways not supported by legislative history or other proposals that led to the act's creation and passage.

Social media giant Facebook does not intend to pass along the costs of the U.K. digital services tax to its U.K advertising customers, at least for now, a company spokesperson said.

If a new draft article to tax digital services is added to the U.N. model tax convention, it's likely itwill then be included in several existing and future tax treaties, an Indian official said.

Facebook's French subsidiary has agreed to pay over ÔøΩ100 million in back taxes to French tax authorities after an audit found the company had not paid the correct amount of taxes for nearly a decade.

HM Treasuryhas denied a U.K. media report that the U.K. government is considering abolishing the digital services tax, partly because of U.K.-U.S. trade concerns as both countries continue negotiating a deal.

In economic analysis, Martin A. Sullivan says that new data show little change in profit shifting by multinational corporations since enactment of the Tax Cuts and Jobs Act, but that it's still early.

TheIRSandTreasuryhave released final regs on thedividends received deduction(DRD), refusing to blink in the face of charges from taxpayers and practitioners that the rules go beyond their authority.

Mindy Herzfeld examineswhether, in finalizing regulations implementing the subpart F high-tax exception to items of income thatwould otherwise be tested income taxable as global intangible low-taxed income, Treasury exceeded its statutory authority, subverted congressional intent, and provided a giveaway to corporate taxpayers.

Nana Ama Sarfo looks at the U.N.'s new digital services treaty proposal, how it serves the interests of developing countries, and how it diverges from the OECD's approach.

A Dutch bill thatwould impose a conditional exit tax on reorganizations like company transfers and mergers may face legal troubles and have unintended consequences for the business climate.

MasterCardwon't have to pay an equalization levy in India because it already has a permanent establishment there, but its liability may change depending on the outcome of its appeal in a separate court case.

The speaker of Brazil'sChamber of Deputiesvoiced opposition to the government's plans for a "digital" tax on financial transactions because of its potential similarity to a lapsed financial transactions tax thatwaswidely criticized.

AnOECDdraft report on its global anti-base-erosion (GLOBE) proposal charts out significant design progress but has yet to address how itwill coexistwith the U.S. global intangible low-taxed income provision.

In this article, the authors consider four options for taxing the digital economy ÔøΩ tariffs on electronic commerce, VAT, the corporate income tax, and digital services taxes. They examine the potential effects of trade laws on each and propose a solution thatwould allow countries to select a tax that is suited to their needs.

In this article, the author argues for the development of a new corporate tax thatwould limit the power and regulate the behavior of our largest corporations,which are monopolies or quasi-monopolies that dominate their fields and drive competitors out of business.

Robert Goulder examines Brazil's efforts to replace their fragmented consumption tax structurewith a simplified federal VAT.

A proposed Dutch exit tax on expatriating entities is throwing awrench in the latest attempt byAnglo-Dutch consumer products companyUnileverto simplify its dual-entity structure.

Vendors onAmazon'sU.K. sitewill have to pay an extra 2 percent in seller fees because of the controversial U.K. digital services tax, following similar increases in France and Italy.

Mindy Herzfeld discusses digital economy taxation reformwithin the context of antitrust, trade, and class tensions.

Agroup ofU.N.Tax Committee members from developing countries have proposed an approach to taxing digital services income that differs significantly from theOECD's pillar 1 proposal, including in its scope and allocation methods.

Workwill proceed on the development of a new multilateral convention thatwould implement pillar 1 of a proposed global tax overhaul, according to a draft report from theOECD.

TheOECD's draft blueprint report on pillar 1 of its international corporate tax reform project reflects significant technical progress on revised nexus and profit allocation rules, but also acknowledges that important questions remain unresolved.

Vendors onAmazon'sU.K. sitewill have to pay an extra 2 percent in seller fees because of the controversial U.K. digital services tax, following similar increases in France and Italy.

An international consortium of tax officials negotiating a new global taxing systemwill considerwhether to remove prescription drugs from the scope of taxation, aswell as an expanded list of exemptions.

The Netherlands is expanding its dividendwithholding tax (WHT) regime by adding an exit tax on companies such as Unilever that reorganize and move profit reserves to countries that do not impose Dutch dividendwHT.

TheOECDand Brazilian tax administration have opened a consultation on the adoption of safe harbors in Brazil's transfer pricing regime, part of an effort to gradually align the country's unorthodox systemwith international norms.

In news analysis, Lee A. Sheppard analyzes the recently released final regulations on global intangible low-taxed income, pointing out that they could pave theway for a per-country foreign tax credit limit for GILTI.

Mindy Herzfeld outlines new rules released by the U.S. Treasury as part of the final section 250 regulations.

Spain's Chamber of Deputieshas approved and sent to theSenatelegislation to enact a digital services tax and a financial transactions tax.