Int'l Tax News
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Transfer Pricing: OECD Action Plan Raises Questions About Scope, Timing of Consensus on BEPS
by Deloresw. Gregory, Rick Mitchell & Kevin A. Bell (Bloomberg Daily Tax Report)
An action plan for dealingwith base erosion announced by the Organization for Economic Cooperation and Development July 19 has raised a number of questions among practitioners in the United States and abroadwho are concerned about assertions the plan mightgo beyond the arm's-length principle in a bid to fix international transfer pricing rules.
For the report, go here.
An action plan for dealingwith base erosion announced by the Organization for Economic Cooperation and Development July 19 has raised a number of questions among practitioners in the United States and abroadwho are concerned about assertions the plan mightgo beyond the arm's-length principle in a bid to fix international transfer pricing rules.
For the report, go here.
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The OECD's BEPS report: How did others react?
by Matthew Gilleard (ITR)
Now the dust from lastweek's G20 finance ministers meeting in Moscow is beginning to settle, the question is towhat extent the OECD's action plan for tackling base erosion and profit shifting (BEPS) marks a turning point in the history of international taxation, andwhether the timeframes outlined in the report are realistic.
For the story, go here.
Now the dust from lastweek's G20 finance ministers meeting in Moscow is beginning to settle, the question is towhat extent the OECD's action plan for tackling base erosion and profit shifting (BEPS) marks a turning point in the history of international taxation, andwhether the timeframes outlined in the report are realistic.
For the story, go here.
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Practitioners Air Concerns About OECD's BEPS Action Plan
by Kristen A. Parillo & Stephanie Soong Johnston
The OECD's newly released action plan to combat base erosion and profit shifting (BEPS) is ambitious but rifewith challenges for both multinationals and governments, practitioners at PricewaterhouseCoopers LLP and Ernst & Young LLP said July 23.
During separatewebcasts hosted by PwC and E&Y, practitioners from those firms' U.S. and international offices discussed the implications of the action plan for multinational enterprises and tax authorities. The OECD presented the plan,which identifies 15 actions it says should be undertaken by countries in a coordinated manner to address the sources of BEPS, to the G-20 finance ministers at their July 19-20 meeting in Moscow. In a communiqué released at the conclusion of the meeting, the finance ministers said they "fully endorse" the action plan.
For the story, go here. (Subscription required)
The OECD's newly released action plan to combat base erosion and profit shifting (BEPS) is ambitious but rifewith challenges for both multinationals and governments, practitioners at PricewaterhouseCoopers LLP and Ernst & Young LLP said July 23.
During separatewebcasts hosted by PwC and E&Y, practitioners from those firms' U.S. and international offices discussed the implications of the action plan for multinational enterprises and tax authorities. The OECD presented the plan,which identifies 15 actions it says should be undertaken by countries in a coordinated manner to address the sources of BEPS, to the G-20 finance ministers at their July 19-20 meeting in Moscow. In a communiqué released at the conclusion of the meeting, the finance ministers said they "fully endorse" the action plan.
For the story, go here. (Subscription required)
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Letter to U.S. Senators on Baucus-Hatch Tax Reform Plan
by Louis R. Chenevert, Chair, Tax & Fiscal Policy Cmte, Business Roundtable
Revenue-neutral tax reform that promotes economic growth and job creation can be accomplished by cutting the corporate tax rate to 25 percent, shifting to a territorial tax system, and reforming corporate tax expenditures, the Business Roundtable said in a July 22 letter to senators.
For the letter, go here.
Revenue-neutral tax reform that promotes economic growth and job creation can be accomplished by cutting the corporate tax rate to 25 percent, shifting to a territorial tax system, and reforming corporate tax expenditures, the Business Roundtable said in a July 22 letter to senators.
For the letter, go here.
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Tax Evasion: Practitioners: OECD's BEPS Action Plan Could Have Big Consequences for Multinationals
by Lydia Beyoud (Bloomberg, Daily Tax Report)
Multinational corporations mustwait until the Organization for Economic Cooperation and Development's issues country-specific recommendations on changes to domestic rules related to base erosion and profit shifting activities before they can fully evaluate how theywill be impacted by the BEPS action plan, a practitioner said July 23.
“Once the OECD recommendations have been made, itwill be for the individual countries to decidewhether,when, and how to implement the recommendations, Mat Mealey, leader of Ernst & Young's International Tax Services in the United Kingdom and Ireland, said during awebinar sponsored by E&Y.
For the story, go here. (Subscription required)
Multinational corporations mustwait until the Organization for Economic Cooperation and Development's issues country-specific recommendations on changes to domestic rules related to base erosion and profit shifting activities before they can fully evaluate how theywill be impacted by the BEPS action plan, a practitioner said July 23.
“Once the OECD recommendations have been made, itwill be for the individual countries to decidewhether,when, and how to implement the recommendations, Mat Mealey, leader of Ernst & Young's International Tax Services in the United Kingdom and Ireland, said during awebinar sponsored by E&Y.
For the story, go here. (Subscription required)
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Multinational Corporations: Changing Headquarters Landscape 2000-2012: Corporate Taxation and the Impact of Emerging Market Economies
by Thomas Kinrade and Tom Neubig (Bloomberg, Daily Tax Report)
The international business landscape, once dominated by multinational corporations from a few developed economies, is nowwell represented by corporations from both established and emerging economies.
In fact, as the gross domestic product levels of emerging markets have grown, so too has the number of companieswith headquarters in these countries. Over approximately the past decade, the share of theworld's largest companieswith headquarters in emerging markets has more than quintupled, from 4 percent in 2000 to 22 percent in 2012.
While the increase in company headquarters locations in emerging markets can be attributed in part to the growth of economies in those regions, the evidence suggests that, in today's competitive international business landscape, tax policy continues to play an important role.
For the report, go here. (Subscription required)
The international business landscape, once dominated by multinational corporations from a few developed economies, is nowwell represented by corporations from both established and emerging economies.
In fact, as the gross domestic product levels of emerging markets have grown, so too has the number of companieswith headquarters in these countries. Over approximately the past decade, the share of theworld's largest companieswith headquarters in emerging markets has more than quintupled, from 4 percent in 2000 to 22 percent in 2012.
While the increase in company headquarters locations in emerging markets can be attributed in part to the growth of economies in those regions, the evidence suggests that, in today's competitive international business landscape, tax policy continues to play an important role.
For the report, go here. (Subscription required)
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New OECD Report on Tax Avoidance Lags Behind Global Transparency Movement
by Tom Cardamone (GFI)
Global Financial Integrity on July 19 criticized the OECD action plan addressing base erosion and profit shifting, presented at the G-20 finance ministers' meeting in Moscow, saying that it does not "fully embrace" country-by-country reporting for multinationals and calling on the G-20 to endorse a disaggregated accounting standard.
For the GFI response, go here.
Global Financial Integrity on July 19 criticized the OECD action plan addressing base erosion and profit shifting, presented at the G-20 finance ministers' meeting in Moscow, saying that it does not "fully embrace" country-by-country reporting for multinationals and calling on the G-20 to endorse a disaggregated accounting standard.
For the GFI response, go here.
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Levin statement on OECDs offshore tax action plan
from Senator Carl Levin (D-Mich)website
An Organisation for Economic Cooperation and Development report on stopping offshore profit shifting indicates "growing global demand for reining in corporate offshore tax abuses," said Sen. Carl Levin, D-Mich., chair of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, in a July 19 statement.
For the release, go here.
An Organisation for Economic Cooperation and Development report on stopping offshore profit shifting indicates "growing global demand for reining in corporate offshore tax abuses," said Sen. Carl Levin, D-Mich., chair of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, in a July 19 statement.
For the release, go here.
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OECD Action Plan on Base Erosion and Profit Shifting Draws Mixed Reactions
by Stephanie Soong Johnston & David D. Stewart (Tax Analysts, Tax Notes)
The OECD's highly anticipated action plan on base erosion and profit shifting (BEPS), presented to G-20 finance ministers in Moscow on July 19, received mostly positive reactions from governments, tax practitioners, and business groups but drew sharp criticism from advocacy groups that said the plan failed to address corporate transparency and excluded developing countries.
The action plan identifies 15 specific actions that the OECDwill accomplish by December 2015 in order to give international governments the tools needed to clamp down on corporate tax avoidance, a growing global concern. Actions include examining and addressing the challenges of taxing the digital economy; neutralizing the effects of hybrid mismatch arrangements; curbing treaty abuse; bolstering controlled foreign corporation rules; reevaluating transfer pricing documentation; and requiring taxpayers to disclose any aggressive tax planning strategies they may be using.
International governments, on thewhole,welcomed the OECD's efforts. The U.K. pledged its full support,with Chancellor of the Exchequer George Osborne announcing that HM Treasury, alongwith France and Germany,will provide $400,000 to the OECD to facilitate the action plan's progress.
For the article, go here. (Subscription required)
The OECD's highly anticipated action plan on base erosion and profit shifting (BEPS), presented to G-20 finance ministers in Moscow on July 19, received mostly positive reactions from governments, tax practitioners, and business groups but drew sharp criticism from advocacy groups that said the plan failed to address corporate transparency and excluded developing countries.
The action plan identifies 15 specific actions that the OECDwill accomplish by December 2015 in order to give international governments the tools needed to clamp down on corporate tax avoidance, a growing global concern. Actions include examining and addressing the challenges of taxing the digital economy; neutralizing the effects of hybrid mismatch arrangements; curbing treaty abuse; bolstering controlled foreign corporation rules; reevaluating transfer pricing documentation; and requiring taxpayers to disclose any aggressive tax planning strategies they may be using.
International governments, on thewhole,welcomed the OECD's efforts. The U.K. pledged its full support,with Chancellor of the Exchequer George Osborne announcing that HM Treasury, alongwith France and Germany,will provide $400,000 to the OECD to facilitate the action plan's progress.
For the article, go here. (Subscription required)
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News Analysis: OECD BEPS Action Plan: Trying to Save the System
by Lee A. Sheppard (Tax Analysts, Tax Notes)
The OECD Centre for Tax Policy and Administration released its action plan to dealwith base erosion and profit shifting (BEPS) lastweek. As predicted, it is a multifaceted attempt to shore up the current international consensus of separate company accounting and transfer pricing.
Around here, your correspondent has never had much good to say about the current system,which is moribund and doesn't deliver a fair share of business income tax revenue to affected countries. But the action plan is a good-faith effort to save the current system, andwith it, the OECD's reputation.
For the article, go here. (Subscription required)
The OECD Centre for Tax Policy and Administration released its action plan to dealwith base erosion and profit shifting (BEPS) lastweek. As predicted, it is a multifaceted attempt to shore up the current international consensus of separate company accounting and transfer pricing.
Around here, your correspondent has never had much good to say about the current system,which is moribund and doesn't deliver a fair share of business income tax revenue to affected countries. But the action plan is a good-faith effort to save the current system, andwith it, the OECD's reputation.
For the article, go here. (Subscription required)
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Treasury Official Addresses Foreign Currency/Subpart F Questions
by Lee A Sheppard (Tax Analysts, Tax Notes)
Danielle Rolfes, Treasury's international tax counsel, came to New York to discuss section 988 questions at the International Tax Institute on July 18.with herwere Chip Harter of PricewaterhouseCoopers LLP, Yaron Z. Reich of Cleary Gottlieb Steen & Hamilton LLP, and Michael Farber of Davis Polk &wardwell LLP.
Multinationals' principal risk exposure that requires hedging is foreign currency exposure. The tax rules are not terribly accommodating to their usual practices, as Harter has frequently explained. The IRS is auditing foreign currency issues.
The crux of the problem is that financial accounting permits all sorts of hedges, including balance sheet hedges and hedges of shareholdings, that multinationalswant to be treated as hedges, or at least offsetting items, for tax purposes so they don't have to book tax liabilities.
For the article, go here. (Subscription required.)
Danielle Rolfes, Treasury's international tax counsel, came to New York to discuss section 988 questions at the International Tax Institute on July 18.with herwere Chip Harter of PricewaterhouseCoopers LLP, Yaron Z. Reich of Cleary Gottlieb Steen & Hamilton LLP, and Michael Farber of Davis Polk &wardwell LLP.
Multinationals' principal risk exposure that requires hedging is foreign currency exposure. The tax rules are not terribly accommodating to their usual practices, as Harter has frequently explained. The IRS is auditing foreign currency issues.
The crux of the problem is that financial accounting permits all sorts of hedges, including balance sheet hedges and hedges of shareholdings, that multinationalswant to be treated as hedges, or at least offsetting items, for tax purposes so they don't have to book tax liabilities.
For the article, go here. (Subscription required.)
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News Analysis: A Modest Proposal for Country-by-Country Reporting
by Martin A. Sullivan (Tax Analysts, Tax Notes)
In news analysis, Martin A. Sullivan makes the case for some public disclosure of country-by-country reporting data.
For the article, go here. (Subscription required.)
In news analysis, Martin A. Sullivan makes the case for some public disclosure of country-by-country reporting data.
For the article, go here. (Subscription required.)
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Economic Analysis: Behind the GAO's 12.6 Percent Effective Corporate Rate
by Martin A. Sullivan (Tax Analysts, Tax Notes)
There are as manyways to calculate an effective tax rate as there areways to order coffee at Starbucks. Sowhen you hear reports about an effective tax rate, it can mean a lot of different things. Small changes inwhat may seem obscure details make a big difference. And because effective tax rates arewidely used as summary statistics for tax burdens, details can have important implications for the direction of tax policy.
On July 1 the Government Accountability Office made a lot of headlineswhen it released a study reporting that the average effective corporate tax rate in 2010was only 12.6 percent.
Although it is common knowledge that many U.S. multinationals have used tax planning to substantially reduce their tax bills, the GAO figure is surprisingly low. Other studies typically report average rates in the mid-20s.
Sowhat explains the difference between the GAO's 12.6 percent rate and other studies' rates?
For the article, go here. (Subscription required)
There are as manyways to calculate an effective tax rate as there areways to order coffee at Starbucks. Sowhen you hear reports about an effective tax rate, it can mean a lot of different things. Small changes inwhat may seem obscure details make a big difference. And because effective tax rates arewidely used as summary statistics for tax burdens, details can have important implications for the direction of tax policy.
On July 1 the Government Accountability Office made a lot of headlineswhen it released a study reporting that the average effective corporate tax rate in 2010was only 12.6 percent.
Although it is common knowledge that many U.S. multinationals have used tax planning to substantially reduce their tax bills, the GAO figure is surprisingly low. Other studies typically report average rates in the mid-20s.
Sowhat explains the difference between the GAO's 12.6 percent rate and other studies' rates?
For the article, go here. (Subscription required)
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California State Bar Member and CPA Suggest Clarifying Foreign Tax Credit Rules
by Jenna (Shih) Anderson & Po Han Chen (Tax Analysts, Tax Notes)
Treasury should issue issue clarifying guidance under §¬ß 901(a), 275(a)(4), and 905(c) such that a taxpayer may take a current year deduction (for additional foreign taxes paid that "relate-back" to a deduction year) in a year inwhich the taxpayer has otherwise elected the foreign tax credit, Jenna (Shih) Anderson of the State Bar of California and CPA Po Han Chen recommended in a report. Alternatively, they recommend that the Treasury issue guidance that provides an exception to the relation-back doctrinewhen the taxes "relate-back" to a deduction year.
For the report, go here. (Subscription required.)
Treasury should issue issue clarifying guidance under §¬ß 901(a), 275(a)(4), and 905(c) such that a taxpayer may take a current year deduction (for additional foreign taxes paid that "relate-back" to a deduction year) in a year inwhich the taxpayer has otherwise elected the foreign tax credit, Jenna (Shih) Anderson of the State Bar of California and CPA Po Han Chen recommended in a report. Alternatively, they recommend that the Treasury issue guidance that provides an exception to the relation-back doctrinewhen the taxes "relate-back" to a deduction year.
For the report, go here. (Subscription required.)
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The myth of Corporate America's offshore cash
by Jeanne Sahadi (Yahoo! Finance)
It's a common argument in the debate over corporate taxes: If the top tax rateweren't so high, U.S. multinational companieswould happily bring home the money they have parked offshore.
And doing sowould lead to greater investment in the U.S. economy.
But it's a myth that all the money is "trapped" abroad, said tax expert Edward Kleinbard. And it's not clear just how much of a spur itwould be to the economy if itwere repatriated.
For the story, go here.
It's a common argument in the debate over corporate taxes: If the top tax rateweren't so high, U.S. multinational companieswould happily bring home the money they have parked offshore.
And doing sowould lead to greater investment in the U.S. economy.
But it's a myth that all the money is "trapped" abroad, said tax expert Edward Kleinbard. And it's not clear just how much of a spur itwould be to the economy if itwere repatriated.
For the story, go here.
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French MP releases business tax simplification plan
by Matthew Gilleard (ITR)
The French Ministry of Finance has released a tax simplification plan, authored by politician Thierry Mandon,which could see interaction and cooperation between taxpayers and tax authorities reach new levels.
For the story, go here. (Registration required)
The French Ministry of Finance has released a tax simplification plan, authored by politician Thierry Mandon,which could see interaction and cooperation between taxpayers and tax authorities reach new levels.
For the story, go here. (Registration required)
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Why India is at a critical stage in tax policy development - India Tax Forum 2013
by Ralph Cunningham (ITR)
The Indian economy grew by 5% in 2012. Outstanding by anyone's standards, except China's, but not enough if the countrywants to create prosperity for all of its more than 1 billion citizens.
For the story, go here. (Registration required)
The Indian economy grew by 5% in 2012. Outstanding by anyone's standards, except China's, but not enough if the countrywants to create prosperity for all of its more than 1 billion citizens.
For the story, go here. (Registration required)
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US tax reform road-show up and running; Baucus says 25% rate unlikely
by Matthew Gilleard (ITR)
Dave Camp and Max Baucus, the chairmen of the US two tax-writing committees, have kicked off their bipartisan tax reform road-show (The Simpler Taxes For America Tour) in Minnesota,with Baucus conceding that getting the corporate tax rate down to 25% is a bit of a stretch.
For the story, go here. (Registration required)
Dave Camp and Max Baucus, the chairmen of the US two tax-writing committees, have kicked off their bipartisan tax reform road-show (The Simpler Taxes For America Tour) in Minnesota,with Baucus conceding that getting the corporate tax rate down to 25% is a bit of a stretch.
For the story, go here. (Registration required)
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Slaughter & Rees Report - The Remarks Chairman Bernanke Dreams of Delivering
by Matthew Slaughter & Matthew Rees (Slaughter & Rees Repoort)
In remarks at his June 19 press conference, U.S. Federal Reserve Chairman Ben Bernanke discussed underwhat conditions the Fed's current policy expansion ofquantitative easing might slow and even end. In the days since, global asset markets have swung dramatically.we imagine that many, perhaps even the Chairman himself, dream of a stronger, more-stable future.
For the report, go here.
In remarks at his June 19 press conference, U.S. Federal Reserve Chairman Ben Bernanke discussed underwhat conditions the Fed's current policy expansion ofquantitative easing might slow and even end. In the days since, global asset markets have swung dramatically.we imagine that many, perhaps even the Chairman himself, dream of a stronger, more-stable future.
For the report, go here.
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Can a Piece of Paper Earn Billions?
by Charles I. Kingson (Tax Analysts, Tax Notes Today)
Charles I. Kingson is an adjunct professor at New York University School of Law.
In this article, Kingson explainswhy transfer pricing enforcement iswanting and suggests that stopping the hemorrhage of income to tax havens could be accomplished by repealing section 1297(d).
For the article, go here. (Subscription required)
Charles I. Kingson is an adjunct professor at New York University School of Law.
In this article, Kingson explainswhy transfer pricing enforcement iswanting and suggests that stopping the hemorrhage of income to tax havens could be accomplished by repealing section 1297(d).
For the article, go here. (Subscription required)
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Tax reform can aid multinationals, cut deficit
by
Imagine a librarywhere many books have been borrowed and are long overdue. There is a case for an amnesty to get the books back and move on. There is a case for saying that rules are rules and fines must be paid. But theworst strategy is to keep indicating that an amnesty may come soonwithout ever introducing it. And this is roughlywherewe are in our corporate tax debate.
No one is satisfiedwith the U.S. corporate tax system. Some argue the main problem is that,while corporate profits are extraordinarily high relative to gross domestic product, tax collections are relatively low. Many very successful companies pay little or nothing in taxes at a timewhen the budget deficit is a major concern, hundreds of thousands of defenseworkers are being furloughed and lotteries are being held to determinewhich children Head Start can no longer afford to help.
But others say the main problem is that the United States has a higher corporate tax rate than any other major country and, unlike other countries, imposes severe taxes on income earned outside its borders. This, they argue, unfairly burdens companies engaged in international competition and discourages the repatriation of profits earned abroad. The resulting patterns of investment are also said to benefit foreignworkers at the expense of their U.S. counterparts.
For the article, go here.
Imagine a librarywhere many books have been borrowed and are long overdue. There is a case for an amnesty to get the books back and move on. There is a case for saying that rules are rules and fines must be paid. But theworst strategy is to keep indicating that an amnesty may come soonwithout ever introducing it. And this is roughlywherewe are in our corporate tax debate.
No one is satisfiedwith the U.S. corporate tax system. Some argue the main problem is that,while corporate profits are extraordinarily high relative to gross domestic product, tax collections are relatively low. Many very successful companies pay little or nothing in taxes at a timewhen the budget deficit is a major concern, hundreds of thousands of defenseworkers are being furloughed and lotteries are being held to determinewhich children Head Start can no longer afford to help.
But others say the main problem is that the United States has a higher corporate tax rate than any other major country and, unlike other countries, imposes severe taxes on income earned outside its borders. This, they argue, unfairly burdens companies engaged in international competition and discourages the repatriation of profits earned abroad. The resulting patterns of investment are also said to benefit foreignworkers at the expense of their U.S. counterparts.
For the article, go here.
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European Union: BEPS Project Needs to Consider EU Law Prohibitions, Official Says
by Kevin A. Bell (Bloomberg BNA Daily Tax Report)
As the Organization for Economic Cooperation and Development's base erosion and profit shifting project advances, policy makers should take into account restrictions under European Union law that limit the ability of the 28 EU members to change their domestic tax laws, a European Commission official said July 2.
Philip Kermode, director of the Directorate-General for Taxation and Customs Union, said that although the EU is fully committed to the objectives of the BEPS project, there isthe necessity to avoid solutions, at least for European Union countries, thatwould be actually contrary to our [EU] treaties, and thereforewhich could not possibly applywithin the EU.
For the story, go here. (Subscription required)
As the Organization for Economic Cooperation and Development's base erosion and profit shifting project advances, policy makers should take into account restrictions under European Union law that limit the ability of the 28 EU members to change their domestic tax laws, a European Commission official said July 2.
Philip Kermode, director of the Directorate-General for Taxation and Customs Union, said that although the EU is fully committed to the objectives of the BEPS project, there isthe necessity to avoid solutions, at least for European Union countries, thatwould be actually contrary to our [EU] treaties, and thereforewhich could not possibly applywithin the EU.
For the story, go here. (Subscription required)
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Subpart F Supply Chain Distribution Structures Outside the Scope of Subpart F
by Lowell D. Yoder (Bloomberg BNA Daily Tax Report)
Income derived by a controlled foreign corporation (CFC) of a U.S. corporation from the purchase and sale of products generally is not subject to U.S. taxation; however, such income is subject to current U.S. taxation underSubpart F if the income fallswithin the definition of foreign base company sales income (FBCSI).
Sales income derived in many foreign supply chain distribution structures is not FBCSI. Generally, the FBCSI rules do not applywhere a CFC purchases property from an unrelated person and sells the property to an unrelated person. For this purpose, purchases from or sales to disregarded entities are not considered as related-party transactions, and paying service fees to related persons for purchasing or selling assistance does not trigger the application of the FBCSI rules.
For the article, go here. (Subscription required)
Income derived by a controlled foreign corporation (CFC) of a U.S. corporation from the purchase and sale of products generally is not subject to U.S. taxation; however, such income is subject to current U.S. taxation underSubpart F if the income fallswithin the definition of foreign base company sales income (FBCSI).
Sales income derived in many foreign supply chain distribution structures is not FBCSI. Generally, the FBCSI rules do not applywhere a CFC purchases property from an unrelated person and sells the property to an unrelated person. For this purpose, purchases from or sales to disregarded entities are not considered as related-party transactions, and paying service fees to related persons for purchasing or selling assistance does not trigger the application of the FBCSI rules.
For the article, go here. (Subscription required)
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Reflections on PPL and Its Implications for Cash Flow Taxes
by Charles E. McLure, Jr. (Tax Analysts, Tax Notes)
Charles E. McLure Jr. is a senior fellow, emeritus, at the Hoover Institution at Stanford University. As Treasury deputy assistant secretary from 1983 to 1985, he had primary responsibility for developing Treasury's proposals to President Reagan that underlay the Tax Reform Act of 1986. Hewas the principal author of the amicus brief filed by Rosanne Altshuler et al. on behalf of PPL Corp. in its recent case before the Supreme Court. George Zodrow provided useful comments on an earlier version of this article.
On May 20 the Supreme Court held unanimously that thewindfall tax imposed on the excess profits of privatized U.K. companieswas eligible for the foreign tax credit, rejecting the IRS position that creditability should be governed by the form of the tax rather than its economic substance.
For the article, go here. (Subscription required)
Charles E. McLure Jr. is a senior fellow, emeritus, at the Hoover Institution at Stanford University. As Treasury deputy assistant secretary from 1983 to 1985, he had primary responsibility for developing Treasury's proposals to President Reagan that underlay the Tax Reform Act of 1986. Hewas the principal author of the amicus brief filed by Rosanne Altshuler et al. on behalf of PPL Corp. in its recent case before the Supreme Court. George Zodrow provided useful comments on an earlier version of this article.
On May 20 the Supreme Court held unanimously that thewindfall tax imposed on the excess profits of privatized U.K. companieswas eligible for the foreign tax credit, rejecting the IRS position that creditability should be governed by the form of the tax rather than its economic substance.
For the article, go here. (Subscription required)
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Corporate Taxes Approach to Taxing Foreign Income Remains Elusive as Baucus, Camp Launch Reform Tour
by Marc Heller (Bloomberg/Daily Tax Report)
As the chairmen of the congressional tax-writing committees travel together to tout their effort to revamp the U.S. tax system, one key element of the corporate tax code—how to tax multinational corporations—still has them on roads that do not quite meet.
For the article, go here. (Subscription required)
As the chairmen of the congressional tax-writing committees travel together to tout their effort to revamp the U.S. tax system, one key element of the corporate tax code—how to tax multinational corporations—still has them on roads that do not quite meet.
For the article, go here. (Subscription required)
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Economic Analysis: Pfizer's Tax Picture Dominated by U.S. Losses, Repatriation
by Marty Sullivan (Tax Analysts, Tax Notes)
Like its drug business, Pfizer's tax situation is a jumble of events and trends that eludes easy interpretation. Look, for example, at its effective tax rate, shown in Figure 1. It is a roller coaster ride of ups and downs that on its own provides little information aboutwhere the company's tax burden has been orwhere it is going. Is Pfizer a high-tax or low-tax company?
For the article, go here. (Subscription required.)
Like its drug business, Pfizer's tax situation is a jumble of events and trends that eludes easy interpretation. Look, for example, at its effective tax rate, shown in Figure 1. It is a roller coaster ride of ups and downs that on its own provides little information aboutwhere the company's tax burden has been orwhere it is going. Is Pfizer a high-tax or low-tax company?
For the article, go here. (Subscription required.)
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Sainbury's CEO: Tax is a moral issue and business must be proactive
by Matthew Gilleard, ITR
Justin King, Sainsbury's CEO, has said that tax is a moral issue and that companies should be prepared to explain and defend their tax arrangements.
For the story, go here. (Registration required.)
Justin King, Sainsbury's CEO, has said that tax is a moral issue and that companies should be prepared to explain and defend their tax arrangements.
For the story, go here. (Registration required.)
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Firms Paid 12.6% Tax Rate in 2010 .
A governmentwatchdog agency found that large, profitable U.S. companies on average paid U.S. federal income tax equaling 12.6% of theirworld-wide income in 2010.
But some analysts questioned the findings by the Government Accountability Office, saying they likely understate effective tax rates in someways.
"This is truly an apples-to-oranges comparison," said Peter Merrill,who heads the national economics and statistics group at PricewaterhouseCoopers LLP, and oftenworkswith big firms.
For the story, go here.
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Outbound F Reorganization Triggers Intangible Property Gain
by Robertwillens (Tax Analysts, Tax Notes)
Robertwillens is the president of Robertwillens LLC, New York, and an adjunct professor of finance at Columbia University Graduate School of Business.
A taxpayer's attempt to transfer intangible property to a foreign affiliate in a manner that obviated the need to report deemed royalty income,was rejected by the IRS Office of Chief Counsel. Based primarily on its understanding of the policy objectives underlying section 367(d), the IRS found that deemed royalty income could not be averted.
For the article, go here. (Subscription required)
Robertwillens is the president of Robertwillens LLC, New York, and an adjunct professor of finance at Columbia University Graduate School of Business.
A taxpayer's attempt to transfer intangible property to a foreign affiliate in a manner that obviated the need to report deemed royalty income,was rejected by the IRS Office of Chief Counsel. Based primarily on its understanding of the policy objectives underlying section 367(d), the IRS found that deemed royalty income could not be averted.
For the article, go here. (Subscription required)
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Corporate Income Tax: Effective Tax Rates Can Differ Significantly from the Statutory Rate
from GAOwebsite
Large,profitable U.S. corporations paid an average effective federal tax rate of just 12.6 percent in 2010, according to a Government Accountability Office report released July 1 by a pair of senior Democratic and Republican senators.
The report indicates the rates being paid by large corporations arewell less than the U.S. statutory corporate rate of up to 35 percent.
For the report, go here.
Large,profitable U.S. corporations paid an average effective federal tax rate of just 12.6 percent in 2010, according to a Government Accountability Office report released July 1 by a pair of senior Democratic and Republican senators.
The report indicates the rates being paid by large corporations arewell less than the U.S. statutory corporate rate of up to 35 percent.
For the report, go here.
Posted on
International Tax News: July 2013
from PwCwebsite
International Tax News is designed to help multinational organizations keep upwith the constant flow of international tax developments worldwide. Among the topics featured in this month's edition are:
**Amendments to Egypt's income tax law
**Corporate tax reform in Switzerland
**China's SAT provides guidance on offshore indirect equity transfers
**Canada's growing TIEA network
For the July issue, go here.
International Tax News is designed to help multinational organizations keep upwith the constant flow of international tax developments worldwide. Among the topics featured in this month's edition are:
**Amendments to Egypt's income tax law
**Corporate tax reform in Switzerland
**China's SAT provides guidance on offshore indirect equity transfers
**Canada's growing TIEA network
For the July issue, go here.
Posted on
PKN Alert/ TCDR Alert: OECD base erosion and profit shifting project - update on transfer pricing issues
by Aamer Rafig (PwC London)
The Organisation for Economic Co-operation and Development (OECD), on February 12, 2013, issued its initial report regarding Base Erosion and Profit-Shifting (BEPS). Since its release, there have been several discussions between the OECDworking group, representatives from different tax authorities and the business. The BEPS report and the subsequent discussion has created speculation as towhere the key area of focus could land.
For the article, go here.
The Organisation for Economic Co-operation and Development (OECD), on February 12, 2013, issued its initial report regarding Base Erosion and Profit-Shifting (BEPS). Since its release, there have been several discussions between the OECDworking group, representatives from different tax authorities and the business. The BEPS report and the subsequent discussion has created speculation as towhere the key area of focus could land.
For the article, go here.
Posted on
News Analysis: The End of International Tax Planning?
by Marie Sapirie (Tax Analysts, Tax Notes Today)
The sky isn't falling for international tax planning, but there are gray clouds on the horizon.
The Lough Erne Declaration that the G-8 leaders issued on June 18 is not a declaration ofwar on tax planning, but it does signal a broad recognition that profit shifting is a problem that countries need to solve legislatively. Recent hearings in the United States and United Kingdom have indicated that cash-strapped governments are starting to comprehendwhat international tax planning is all about and to formulate ideas about how to curtail it. The G-8's position on automatic information exchange also is a key change for international tax practitioners.
At the American Bar Association U.S.-Latin America Tax Planning Strategies conference on June 14, Patricia Brown, director of the University of Miami School of Law's graduate program in taxation, spoke to international lawyers about governments and said that "it looks like they're finally getting it." Until now, changes to tax rules have not really altered the fundamentals of international tax practice because legislators and taxpayers have not been speaking a common language, she said. Because lawmakers don't understand practitioners, "they ask thewrong questions andwrite thewrong rules," Brown said. But that dynamic may be changing.
For the article, go here. (Subscription required)
The sky isn't falling for international tax planning, but there are gray clouds on the horizon.
The Lough Erne Declaration that the G-8 leaders issued on June 18 is not a declaration ofwar on tax planning, but it does signal a broad recognition that profit shifting is a problem that countries need to solve legislatively. Recent hearings in the United States and United Kingdom have indicated that cash-strapped governments are starting to comprehendwhat international tax planning is all about and to formulate ideas about how to curtail it. The G-8's position on automatic information exchange also is a key change for international tax practitioners.
At the American Bar Association U.S.-Latin America Tax Planning Strategies conference on June 14, Patricia Brown, director of the University of Miami School of Law's graduate program in taxation, spoke to international lawyers about governments and said that "it looks like they're finally getting it." Until now, changes to tax rules have not really altered the fundamentals of international tax practice because legislators and taxpayers have not been speaking a common language, she said. Because lawmakers don't understand practitioners, "they ask thewrong questions andwrite thewrong rules," Brown said. But that dynamic may be changing.
For the article, go here. (Subscription required)
Posted on
Hints About the OECD BEPS Action Plan
by Lee A. Sheppard (Tax Analysts, Tax Notes Today)
Officials from members of the OECD and observer countries met in Paris theweek of June 24 to agree to an action plan to implement the OECD base erosion and profit-shifting (BEPS) report (http://www.oecd.org/tax/beps.htm). The action plan is expected to be released around July 15, in time for the meeting of the G-20 finance ministers.
For the story, go here. (Subscription required)
Officials from members of the OECD and observer countries met in Paris theweek of June 24 to agree to an action plan to implement the OECD base erosion and profit-shifting (BEPS) report (http://www.oecd.org/tax/beps.htm). The action plan is expected to be released around July 15, in time for the meeting of the G-20 finance ministers.
For the story, go here. (Subscription required)
Posted on
News Analysis: The Brave New World of the Dependent Agent PE
by Lee A. Sheppard (Tax Analysts, Tax Notes)
In news analysis, Lee A. Sheppard reports on a discussion at a June 14 conference sponsored by the Vienna University of Economics and Business on the dependent agent permanent establishment concept of the model treaty and how it could be modernized.
For the article, go here. (Subscription required.)
In news analysis, Lee A. Sheppard reports on a discussion at a June 14 conference sponsored by the Vienna University of Economics and Business on the dependent agent permanent establishment concept of the model treaty and how it could be modernized.
For the article, go here. (Subscription required.)
Posted on
Digital Permanent Establishment (Digital PE): A Road Ahead forE-commerce Taxation
by Sagarwagh (Academia.edu)
With nations all over theworld raising concerns over tax avoidance duewidespread e-commerce transactions, it is essential to analyze the shortcomings in the existing law and find practical solutions to plug the issue of revenue leakage.
Any domestic tax statute gets the teeth to impose tax on the people (taxpayers) by the virtue ofcharging section in the tax statute. The primary requirement to be fulfilled by a contracting state for putting a particular transaction to taxwhether domestic or cross-border is to define the incidence and scope of charging section in its domestic tax law. This means that, the contracting state should provide for express provisions in its domestic tax statue in respect taxation system it has adopted (i.e. Incidence of tax / jurisdiction to tax–territorial orworldwide residence taxation).
In case of cross–border transactions, especially the ones inwhich the income arises in contracting state to resident of other contracting state, the domestic tax laws of the contracting state define the degree up towhich the contracting state seeks to levy charge of tax on resident ofother contracting state. The provisions of this nature can be termed scope provisions.
This research paperwill first analyze the existing legal provisions in relation to e-commerce taxation and need of Digital Permanent Establishment (Digital PE), and then suggest proposedlegal framework both in municipal (domestic) laws of countries and treaties to subject e-commerce transaction to taxation in source jurisdictions through constitution of Digital PE.
For the paper, go here.
With nations all over theworld raising concerns over tax avoidance duewidespread e-commerce transactions, it is essential to analyze the shortcomings in the existing law and find practical solutions to plug the issue of revenue leakage.
Any domestic tax statute gets the teeth to impose tax on the people (taxpayers) by the virtue ofcharging section in the tax statute. The primary requirement to be fulfilled by a contracting state for putting a particular transaction to taxwhether domestic or cross-border is to define the incidence and scope of charging section in its domestic tax law. This means that, the contracting state should provide for express provisions in its domestic tax statue in respect taxation system it has adopted (i.e. Incidence of tax / jurisdiction to tax–territorial orworldwide residence taxation).
In case of cross–border transactions, especially the ones inwhich the income arises in contracting state to resident of other contracting state, the domestic tax laws of the contracting state define the degree up towhich the contracting state seeks to levy charge of tax on resident ofother contracting state. The provisions of this nature can be termed scope provisions.
This research paperwill first analyze the existing legal provisions in relation to e-commerce taxation and need of Digital Permanent Establishment (Digital PE), and then suggest proposedlegal framework both in municipal (domestic) laws of countries and treaties to subject e-commerce transaction to taxation in source jurisdictions through constitution of Digital PE.
For the paper, go here.
Posted on
Cross-Border Taxation: OECD Draft Aims to Clarify Tax Treatment Of Employment-Termination Payments
by Rick Mitchell (Bloomberg, Daily Tax Report)
The Organization for Economic Cooperation and Development June 25 released a discussion draft aimed at clarifying the tax treaty treatment of various cross-border payments made following the termination of employment.
The organization said commentary for the OECD Model Tax Convention on Income and Capital currently has limited guidance on such payments, and deals exclusivelywith the extent towhich they constitutepensions or other similar remuneration.
For the story, go here. (Subscription required)
The Organization for Economic Cooperation and Development June 25 released a discussion draft aimed at clarifying the tax treaty treatment of various cross-border payments made following the termination of employment.
The organization said commentary for the OECD Model Tax Convention on Income and Capital currently has limited guidance on such payments, and deals exclusivelywith the extent towhich they constitutepensions or other similar remuneration.
For the story, go here. (Subscription required)
Posted on
Delaney's Delusion -- Latest Proposed Tax Amnesty for Repatriated Offshore Profits Would Create Infrastructure Bank Run by Corporate Tax Dodgers
by Citizens for Tax Justice (website)
Congressman John Delaney, a Democrat from Maryland, has proposed to allow American corporations to bring a limited amount of offshore profits back to the U.S. (torepatriate these profits)without paying the U.S. corporate tax thatwould normally be due. This type of tax amnesty for repatriated offshore profits is euphemistically called arepatriation holiday by its supporters. The Congressional Research Service has found that a similar proposal enacted in 2004 provided no benefit for the economy and that many of the corporations that participated actually reduced employment.
For the report, go here.
Congressman John Delaney, a Democrat from Maryland, has proposed to allow American corporations to bring a limited amount of offshore profits back to the U.S. (torepatriate these profits)without paying the U.S. corporate tax thatwould normally be due. This type of tax amnesty for repatriated offshore profits is euphemistically called arepatriation holiday by its supporters. The Congressional Research Service has found that a similar proposal enacted in 2004 provided no benefit for the economy and that many of the corporations that participated actually reduced employment.
For the report, go here.
Posted on
Country-by-Country Tax Information Should Be Confidential, Treasury Officials Say
by David D. Stewart (Tax Analysts, Tax Notes Today)
With both the G-8 and the OECD's base erosion and profit shifting (BEPS) project examining expanded country-by-country reporting by multinationals, Treasury officials say the tax information should not be made available to the public.
While transparency is an important issue, it must "be set in an appropriate context," Brian Jenn, attorney-adviser in the Treasury Office of International Tax Counsel, said at a June 25 District of Columbia Bar Association Taxation Section international tax luncheon.
For the story, go here. (Subscription required)
With both the G-8 and the OECD's base erosion and profit shifting (BEPS) project examining expanded country-by-country reporting by multinationals, Treasury officials say the tax information should not be made available to the public.
While transparency is an important issue, it must "be set in an appropriate context," Brian Jenn, attorney-adviser in the Treasury Office of International Tax Counsel, said at a June 25 District of Columbia Bar Association Taxation Section international tax luncheon.
For the story, go here. (Subscription required)
Posted on
Through a Latte, Darkly: Starbucks' Window into Stateless Income Tax Planning
by Edward D. Kleinbard (Social Science Research Network)
This paper uses Starbucks Corporation, the premier roaster, marketer and retailer of specialty coffee in theworld, as an example of stateless income tax planning in action.Stateless income comprises income derived for tax purposes by a multinational group from business activities in a country other than the domicile of the group's ultimate parent company, butwhich is subject to tax only in a jurisdiction that is neither the source of the factors of production throughwhich the incomewas derived, nor the domicile of the group's parent company.
The paper reviews both Starbucks recent U.K. tax controversy (including a parliamentary inquiry),which revolved around the intersection of its consistent unprofitability in the United Kingdomwith large deductible intragroup payments to Dutch, Swiss and U.S. affiliates, and its more recent submission to the U.S. Houseways and Means Committee. The paper draws from this review two lessons.
First, if Starbucks can organize itself as a successful stateless income generator, any multinational firm can.
Second, The Starbucks story in particular, its U.K. experience demonstrates the fundamental opacity of international tax planning, inwhich neither investors in a public firm nor the tax authorities in any particular jurisdiction have a clear picture ofwhat the firm is up to.
For the paper, go here.
This paper uses Starbucks Corporation, the premier roaster, marketer and retailer of specialty coffee in theworld, as an example of stateless income tax planning in action.Stateless income comprises income derived for tax purposes by a multinational group from business activities in a country other than the domicile of the group's ultimate parent company, butwhich is subject to tax only in a jurisdiction that is neither the source of the factors of production throughwhich the incomewas derived, nor the domicile of the group's parent company.
The paper reviews both Starbucks recent U.K. tax controversy (including a parliamentary inquiry),which revolved around the intersection of its consistent unprofitability in the United Kingdomwith large deductible intragroup payments to Dutch, Swiss and U.S. affiliates, and its more recent submission to the U.S. Houseways and Means Committee. The paper draws from this review two lessons.
First, if Starbucks can organize itself as a successful stateless income generator, any multinational firm can.
Second, The Starbucks story in particular, its U.K. experience demonstrates the fundamental opacity of international tax planning, inwhich neither investors in a public firm nor the tax authorities in any particular jurisdiction have a clear picture ofwhat the firm is up to.
For the paper, go here.
Posted on
Keep It Simple, Stupid: The Key to Tax Reform
by Martin Lobel (Tax Analysts, Tax Notes Today)
Martin Lobel, a partner at Lobel Novins & Lamont LLP and chair of Tax Analysts' board of directors, argues that the United States must strengthen and simplify the tax code to provide a broad tax base before carving out new loopholes to "reform" the code.
The views expressed herein are solely the author's and do not necessarily reflect the views of Tax Analysts.
For the viewpoint, go here. (Subscription required.)
Martin Lobel, a partner at Lobel Novins & Lamont LLP and chair of Tax Analysts' board of directors, argues that the United States must strengthen and simplify the tax code to provide a broad tax base before carving out new loopholes to "reform" the code.
The views expressed herein are solely the author's and do not necessarily reflect the views of Tax Analysts.
For the viewpoint, go here. (Subscription required.)
Posted on
A Closer Look at the New Competent Authority Council
by Marie Sapirie (Tax Analysts, Tax Notes Today)
Competent authorities in the 43 OECD Forum on Tax Administration (FTA) member stateswill soon have a new avenue to discuss issues before they encounter them in the context of a mutual agreement procedure (MAP). The new forumwill be an exercise in intergovernmental cooperation that could make the process of resolving MAP disputes more efficient.
The FTA MAP forumwill be organized under the auspices of the FTA. Michael Danilack, deputy commissioner (international), IRS Large Business and International Division, recently emphasized the importance of the FTA as a multilateral body and the plans for increased coordination of tax administration among its members. The forumwill be open to all the members of the FTA,which includes countries that are not OECD members, said Jonathan Leigh Pemberton of the OECD Centre for Tax Policy and Administration.
For the story, go here. (Subscription required.)
Competent authorities in the 43 OECD Forum on Tax Administration (FTA) member stateswill soon have a new avenue to discuss issues before they encounter them in the context of a mutual agreement procedure (MAP). The new forumwill be an exercise in intergovernmental cooperation that could make the process of resolving MAP disputes more efficient.
The FTA MAP forumwill be organized under the auspices of the FTA. Michael Danilack, deputy commissioner (international), IRS Large Business and International Division, recently emphasized the importance of the FTA as a multilateral body and the plans for increased coordination of tax administration among its members. The forumwill be open to all the members of the FTA,which includes countries that are not OECD members, said Jonathan Leigh Pemberton of the OECD Centre for Tax Policy and Administration.
For the story, go here. (Subscription required.)
Posted on
Economic Analysis: New Corporate Coalition Accepts That Reform Won't Be Painless
by Martin A. Sullivan (Tax Analysts, Tax Notes Today)
Therewas a time not long agowhen corporate America hoped it could have it all. Itwould lobby for a corporate rate cut and a territorial system and let somebody elseworry about footing the bill. Andwhy shouldn't business think thatway? After all, President Georgew. Bush pushed through huge individual tax rate cuts in 2001 and capital gains and dividend rate cuts in 2003without paying for them.
But then a series of events transformed the prospect of revenue-losing corporate tax reform from difficult to near impossible. It beganwith the financial crisis that plunged the economy into a deep recession and triggered skyrocketing deficits.
On June 4 a group of 42 U.S. corporations formed the Alliance for Competitive Taxation (ACT). This group has fully embraced the new realistic approach to corporate tax reform. According to itswebsite: "After studying this for over two years, our members understand that to fully pay for a more competitive tax system requires sacrificing specific tax breaks they currently benefit from and tough rules to protect the U.S. tax base."
For the article, go here. (Subscription required)
Therewas a time not long agowhen corporate America hoped it could have it all. Itwould lobby for a corporate rate cut and a territorial system and let somebody elseworry about footing the bill. Andwhy shouldn't business think thatway? After all, President Georgew. Bush pushed through huge individual tax rate cuts in 2001 and capital gains and dividend rate cuts in 2003without paying for them.
But then a series of events transformed the prospect of revenue-losing corporate tax reform from difficult to near impossible. It beganwith the financial crisis that plunged the economy into a deep recession and triggered skyrocketing deficits.
On June 4 a group of 42 U.S. corporations formed the Alliance for Competitive Taxation (ACT). This group has fully embraced the new realistic approach to corporate tax reform. According to itswebsite: "After studying this for over two years, our members understand that to fully pay for a more competitive tax system requires sacrificing specific tax breaks they currently benefit from and tough rules to protect the U.S. tax base."
For the article, go here. (Subscription required)
Posted on
Economic Analysis: The 3-Way Tug of War for Intangible Profits
by Martin A. Sullivan (Tax Analysts, Tax Notes Today)
Let's keep it simple. There are basically three approaches to taxing intangible profits. They can be taxedwhere intangibles are developed,where products are sold, orwhere the costs of intangible development are funded.
Because the three approaches havewidely different implications for the distribution of corporate tax revenue among governments and for theworldwide effective tax rates paid by corporations, international tax reform cannot really proceed until tough choices are made. At the Houseways and Means Committee hearing on June 13, all three approaches received a lot of attention. Unfortunately for thosewho like to be optimistic about the prospects for tax reform, the hearing clarified that sharp differences of opinion remain on the critical issue ofwhere intangible income should be subject to tax.
For the article, go here. (Subscription required.)
Let's keep it simple. There are basically three approaches to taxing intangible profits. They can be taxedwhere intangibles are developed,where products are sold, orwhere the costs of intangible development are funded.
Because the three approaches havewidely different implications for the distribution of corporate tax revenue among governments and for theworldwide effective tax rates paid by corporations, international tax reform cannot really proceed until tough choices are made. At the Houseways and Means Committee hearing on June 13, all three approaches received a lot of attention. Unfortunately for thosewho like to be optimistic about the prospects for tax reform, the hearing clarified that sharp differences of opinion remain on the critical issue ofwhere intangible income should be subject to tax.
For the article, go here. (Subscription required.)
Posted on
News Analysis: Hazards of Debt Push-Downs
By Lee A. Sheppard (Tax Analysts, Tax Notes Today)
What are American multinationals really good at? Tax avoidance --that's obvious. Getting ordinary people to upload personal information for sale to advertisers -- check. Overpaying their top executives -- check.
But there's another dubious skill that they're internationally known for: buying and selling companies. Sometimes they argue against tax measures on the ground that some mythical European competitor might beat them to an acquisition.
On June 20 the International Tax Institute explored the tax obstacles to loading target companieswith acquisition debt towash out their locally taxable income -- a time-honored acquisition technique. Although the United States has interest deduction restrictions that are honored in the breach, European governments are exercised about debt push-down and are adopting measures to restrict interest deductions.
For the article, go here. (Subscription required)
What are American multinationals really good at? Tax avoidance --that's obvious. Getting ordinary people to upload personal information for sale to advertisers -- check. Overpaying their top executives -- check.
But there's another dubious skill that they're internationally known for: buying and selling companies. Sometimes they argue against tax measures on the ground that some mythical European competitor might beat them to an acquisition.
On June 20 the International Tax Institute explored the tax obstacles to loading target companieswith acquisition debt towash out their locally taxable income -- a time-honored acquisition technique. Although the United States has interest deduction restrictions that are honored in the breach, European governments are exercised about debt push-down and are adopting measures to restrict interest deductions.
For the article, go here. (Subscription required)
Posted on
Cadbury: The great tax fudge
By Jonathan Ford, Sally Gainsbury and Vanessa Houlder (Financial Times)
Itwas a deal that provoked visceral reactions in Britain. Even before Kraft completed its contentious £11.5bn purchase of Cadbury three years ago, politicianswerewarning the US group against trying to make afast buck out of the UK confectioner.
Painted as a cost-crunching manufacturer ofplastic cheese, the US conglomeratewas seen as a threat not only to Cadbury's unique British heritage but also to its tax contributions.
Theworst fears of critics appeared to be realised just months after the dealwhen it emerged that the new owner (renamed Mondelez following a 2011 demerger)would reorganise Cadbury inways that ensured it paid little or no tax in Britain.
Kraft planned to shift Cadbury's management and purchasing activities offshore to its European headquarters in low-tax Switzerland, leaving the UK operation as little more than a shell, ladenwith £8bn of debt.
Newspapers claimed that £60m of annual tax paymentswould be lost and politicianswere incensed.The publicwill say that this is just tax avoidance and the publicwill be right, said Lindsay Hoyle, the deputy speaker of the House of Commons.
But the truth is that HM Revenue & Customs had little to lose from the deal. As a Financial Times review of Cadbury's tax affairs has discovered, the chocolate maker paid an average of £6.4m a year in current UK tax on its operations in the decade before the takeover.
For the story, go here.
Itwas a deal that provoked visceral reactions in Britain. Even before Kraft completed its contentious £11.5bn purchase of Cadbury three years ago, politicianswerewarning the US group against trying to make afast buck out of the UK confectioner.
Painted as a cost-crunching manufacturer ofplastic cheese, the US conglomeratewas seen as a threat not only to Cadbury's unique British heritage but also to its tax contributions.
Theworst fears of critics appeared to be realised just months after the dealwhen it emerged that the new owner (renamed Mondelez following a 2011 demerger)would reorganise Cadbury inways that ensured it paid little or no tax in Britain.
Kraft planned to shift Cadbury's management and purchasing activities offshore to its European headquarters in low-tax Switzerland, leaving the UK operation as little more than a shell, ladenwith £8bn of debt.
Newspapers claimed that £60m of annual tax paymentswould be lost and politicianswere incensed.The publicwill say that this is just tax avoidance and the publicwill be right, said Lindsay Hoyle, the deputy speaker of the House of Commons.
But the truth is that HM Revenue & Customs had little to lose from the deal. As a Financial Times review of Cadbury's tax affairs has discovered, the chocolate maker paid an average of £6.4m a year in current UK tax on its operations in the decade before the takeover.
For the story, go here.
Posted on
Pre-takeover Cadburys aggressive tax avoidance exposed
by Sally Gainsbury, Jonathan Ford and Vanessa Houlder (Financial Times)
Cadbury, the British confectionery makerwhich became a cause célèbre for tax justice campaigners after itwas acquired by US food group Kraft in 2010, engaged in aggressive tax avoidance schemes before the takeover thatwere designed to slash its UK tax bill by more than a third.
A Financial Times investigation into the tax affairs of the company established in 1824 by Quakers and famous for its philanthropic ethos has uncovered tax avoidance schemes former senior executives admitwerehighly aggressive.
The reality of Cadbury's tax affairs contrastswith the claim of campaigners and politicians that Kraft's takeoverwould cut its UK tax payments by £60m a year.
In fact, in the decade before the takeover, Cadbury paid an average of £6.4m a year in current tax on its ongoing UK operations, despite annual British profits of £100m and turnover of more than £1bn.
For the story, go here.
Cadbury, the British confectionery makerwhich became a cause célèbre for tax justice campaigners after itwas acquired by US food group Kraft in 2010, engaged in aggressive tax avoidance schemes before the takeover thatwere designed to slash its UK tax bill by more than a third.
A Financial Times investigation into the tax affairs of the company established in 1824 by Quakers and famous for its philanthropic ethos has uncovered tax avoidance schemes former senior executives admitwerehighly aggressive.
The reality of Cadbury's tax affairs contrastswith the claim of campaigners and politicians that Kraft's takeoverwould cut its UK tax payments by £60m a year.
In fact, in the decade before the takeover, Cadbury paid an average of £6.4m a year in current tax on its ongoing UK operations, despite annual British profits of £100m and turnover of more than £1bn.
For the story, go here.
Posted on
G-8 tax call wont be answered quickly on Hill
by Kelsey Snell and Lauren French (Politico)
Lawmakers from both parties are almost universally singing the praises of a new international plan to crack down on global tax evaders but thatwont translate into legislative action any time soon.
Principles unveiled Tuesday at the Group of Eight meeting in Northern Ireland called on tax authorities in theworld's leading economies to automatically share informationwith other countries to fight tax evasion. The agreement also said countries should change rules that allow companies to legally shift profits to low-tax jurisdictions to avoid paying taxes.
The deal essentially amounts to strong suggestions aboutways to make companies more transparent and governments more accountable for their tax policies. The Obama administration already has mechanisms in place to follow through butwill need buy-in from Congress on some proposals.
For the story, go here.
Lawmakers from both parties are almost universally singing the praises of a new international plan to crack down on global tax evaders but thatwont translate into legislative action any time soon.
Principles unveiled Tuesday at the Group of Eight meeting in Northern Ireland called on tax authorities in theworld's leading economies to automatically share informationwith other countries to fight tax evasion. The agreement also said countries should change rules that allow companies to legally shift profits to low-tax jurisdictions to avoid paying taxes.
The deal essentially amounts to strong suggestions aboutways to make companies more transparent and governments more accountable for their tax policies. The Obama administration already has mechanisms in place to follow through butwill need buy-in from Congress on some proposals.
For the story, go here.
Posted on
Tax Legislation: Lawmakers Aim to Lighten Taxes On Foreign Investors in Real Estate Trusts
by Marc Heller (Bloomberg)
Federal lawmakers are rekindling an effort to ease taxes on foreignerswho invest in real estate in the United States.
Two dozen senators, led by Sens. Robert Menendez (D-N.J.) and Mike Enzi (R-Wyo.), introduced legislation June 18 to allow more foreign investors in real estate investment trusts to avoid taxation, raising from 5 percent to 10 percent the share of a publicly-held company a foreign investor may ownwithout triggering a tax through the Foreign Investment in Real Property Tax Act (FIRPTA).
For the article, go here. (Subscription required)
Federal lawmakers are rekindling an effort to ease taxes on foreignerswho invest in real estate in the United States.
Two dozen senators, led by Sens. Robert Menendez (D-N.J.) and Mike Enzi (R-Wyo.), introduced legislation June 18 to allow more foreign investors in real estate investment trusts to avoid taxation, raising from 5 percent to 10 percent the share of a publicly-held company a foreign investor may ownwithout triggering a tax through the Foreign Investment in Real Property Tax Act (FIRPTA).
For the article, go here. (Subscription required)
Posted on
3M Could Succeed in Legal Challenge of Transfer Pricing Regulation, Practitioner Says
By Kristen A. Parillo (Tax Analysts; Tax Notes Today)
If the Tax Court follows recent Supreme Court case law on regulatory deference, technology company 3M Co. could succeed in its legal challenge of a 1994 Treasury regulation that permits the IRS to make a transfer pricing reallocationwithout regard to foreign legal restrictions, a practitioner said June 14.
For the story, go here. (subscription required.)
If the Tax Court follows recent Supreme Court case law on regulatory deference, technology company 3M Co. could succeed in its legal challenge of a 1994 Treasury regulation that permits the IRS to make a transfer pricing reallocationwithout regard to foreign legal restrictions, a practitioner said June 14.
For the story, go here. (subscription required.)
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