Int'l Tax News

U.S. multinational corporations could see new restrictions on foreign tax credits under legislation being pushed by twoSenateDemocrats.

The United States has indeed reached a détentewith France over digital taxation and is pushing ahead at theOECDon a global solution to modernize the corporate tax system,TreasurySecretarySteven Mnuchinsaid. Speaking during a February 12Senate Finance Committeehearing,Mnuchinprovided confirmation ofnews in Januarythat the United States and France reached a settlement regarding the latter'sdigital services tax, on the sidelines oftheworld Economic Forumin Davos, Switzerland.

The Cayman Islandswill join Oman, Fiji, and Vanuatu on an EU blacklist of foreign tax havens, making it the first UK overseas territory to be named and shamed by Brussels for failing to crack down on tax abuse.

The tax and trade communities in the United States, Canada, and Mexicowill have towork closely together to successfully navigate the road ahead on taxation of the digital economy, a KPMG tax partner said.

Treasury's proposed rule for sourcing sales of digital content is unworkable and should be revised to allow taxpayers to source those sales to the billing location of the first unrelated purchasing entity, according to several industry groups.

Capitalism needs a revolution, and fair taxation of major digital companies could play a big role in restoring capitalist values, according to French Finance Minister Bruno Le Maire.

The U.K. Department for International Trade has announced the opening of a public consultation on the country's first independent global tariff policy in nearly 50 years. Commentswill be accepted through March 5.

Businesses have told the OECD that the use of consolidated data for country-by-country reporting under the base erosion and profit-shifting projectwould be more straightforward than aggregated data.

The OECD digital tax plan's minimum tax proposal departs from the base erosion and profit-shifting project's policy consensus, and its effect on tax revenue could be modest, according to a new report.

The OECD has suggested that an inordinately high ratio of royalties received relative to research performed is an indicator of profit shifting. It asked for comment, and business commentatorswere highly critical. Still, data on royalties received provide important if inconclusive evidence about international tax practices.

The removal of the dividend distribution tax (DDT) could encourage foreign companies to expand their operations in the country, although there is some nervousness around the proposed faceless appeals.

Washington and Brussels have stepped back from the Trans-Atlantic battle over corporate taxation butwill face tough decisions in the second half of 2020.

The profit reallocation proposal in the OECD's plan for a global tax overhaul is too complex andwouldn't go far enough in reforming current international tax rules, the Trade Union Advisory Council to the OECD said.

The OECD issued a statement (30-page document) lastweek on the status of the Inclusive Framework's efforts on tax challenges of digitalization. The author discusses the key takeaways from the document.

A German official said he is optimistic that nearly 140 countrieswill come to some conclusion this year on the OECD's global tax rewrite. But if talks fail to produce an agreement by December, countries considering plans for unilateral digital taxesÔøΩor ones that have paused collecting the tax, as France hasÔøΩwill likely move aheadwith those measures, said Christian Schleithoff, head of the financial division at the German embassy inwashington.

The European Commissionwants to bind the U.K. to strict state-aid and tax rules in the post-Brexit era, calling for the EU to be handed special rapid-response powers if it thinks Britain unfairly upends fair competition.

The authorsanalyze the new Italian digital services tax and explain their concerns over its relationshipwith the OECD Unified Approach.

The Houseways and Means Committee on Tuesday announced that it is set to hold a hearing nextweek titled "The Disappearing Corporate Income Tax," as Democrats have expressed concerns about the amount of taxes large companies are paying under President Trump's 2017 tax-cut law.

The rules for allocating profits among jurisdictionswhere multinationals operate are no longer fit for purpose, the head of the Organization for Economic Cooperation and Development's tax policy center said on Tuesday.

A group representing foreign-parented companies doing business in the U.S. has urged the U.S. Treasury Department to repealwhat remains of the Obama administration's earnings-stripping rules.

Any EU-U.K. trade deal should "uphold the common high standards" in such areas as state aid and tax to curb unfair trade and competition distortions, according to a draft EU negotiation mandate.Michel Barnier, head of the European Commission's task force for relationswith the United Kingdom, presented the outline for opening trade talkswith the United Kingdom on February 3, after the country officiallywithdrew from the bloc January 31.

Tax and trade officials say the OECD may be unable to achieve consensus by the end of the year on its plan for addressing the digital economy unless countries become more open to compromise.

Some U.K. tax policy measures, such as cutting the corporate tax rate and introducing a regional corporation tax system, could give the United Kingdom a boost after Brexit, a new report says.
According to research from A&M Taxand and Capital Economics, published February 4, the U.K. government has several options at its disposal to ensure U.K. competitiveness and economic growth, now that it is no longer a member of the EU.

In this article, the authors consider the economics of digital businesses and the value of user contribution, including through active engagement and the provision of data, to those entities. After considering several options, they propose a framework for estimating the taxable value that users in market countries bring to digital platforms based elsewhere.

The base erosion and antiabuse tax provisions added by the Tax Cuts and Jobs Act have several ambiguities that require an inquiry into the original intent of the BEAT. This article seeks to aid courts, scholars, regulating authorities, and legal professionals looking to understand this international tax provision and the concept of base erosion, by examining multiple factors such as its structure, legislative history, international tax principles, and the BEAT's similarities to recent international tax trends ÔøΩ like the OECD's global anti-base erosion proposal (pillar 2) or the digital services minimum taxes around the globe.

Lee A. Sheppard looks at the consequences of the United Kingdom's exit from the European Union, focusing on how the transition periodwillwork.

Mindy Herzfeld examines comments the OECD received on its pillar 2 global minimum tax, noting thatdespite the array of commentators, the requests tended to focus on an exemption from the tax.

Martin A. Sullivan agreeswithwei Cui'swork on international tax that, among other things, hasstriking implications for digital service taxes.

Treasury Secretary Steven Mnuchinwarned the United Kingdom and Italy that theywill face tariffs if they move forwardwith digital tax plans, Thewall Street Journal reported Tuesday.

French Finance Minister Bruno Le Maire on Friday rejected a controversial U.S. plan to structure a proposed new international tax as a safe harbor, towhich companies could opt in or out

The Organization for Economic Cooperation and Development's head of tax recently hit back at criticism that current international tax reform effortswill increase the complexity of the global tax system, saying the current rules are anything but simple.

Europe should extend its proposed tax on financial transactions to include the currency market, a "privileged playground" that trades more than $5 trillion every day, to make financial institutions pay their share of the tax, a consumer group said Tuesday.

U.S. Treasury Secretary Steven Mnuchin has threatened tariffs on U.K. imports if Britain doesn't back down on its pledge to enact a digital services tax starting in April, following a recent simmer in trade tensions between the U.S. and France.

French Finance Minister Bruno Le Maire onwednesday blasted a U.S. proposal to implement a new global tax as an optional safe harbor, claiming it is not "credible" as a starting point in international negotiations on taxing the digital economy.

The Australian Taxation Office onwednesday said it's reviewing international business arrangements to determinewhether they are made at arm's length and don't mischaracterize activities connectedwith intangible assets.

Publication of the oil company Shell's global tax information could provide an example for other businesses to follow as the call for corporate transparency reaches a crescendo,with mounting pressure from investors and the recent launch of public reporting standards.

A multiparty group of European Parliament members has told U.S. lawmakers it's time to shed the arms-length principle, long used as the standard for allocating income among members of multinational businesses, and move to a form of unitary taxation.

Tax authorities competing against each other over taxing rights means taxpayers are dealingwith more scrutiny over their transfer pricing (TP) arrangements because no onewants to accept defeat.

A new international standard on how to tax the digital economywill leave taxpayers and their advisors battling more asymmetrical tax laws around theworld, according to lawyers speaking at a conference.