Int'l Tax News

The authors offer reasons to favor a higher rate and describe reforms that could help ease the adoption of efficient, higher taxes on corporate returns. They suggest that, at minimum, proponents of lower corporate tax rates present an incomplete picture and that the "lower corporate tax rates" conclusion is a non-obvious one.

The EU may try to harmonize corporate tax collection under a single set of rules if OECD-led talks to rewrite global tax rules fail, the bloc's tax commissioner said.

The OECD recently released a "blacklist" of industries thatwould be subject to a tax on global profit due to market intangibles, the author looks at the blacklist model, the U.S. reaction, opportunities for companies on the "whitelist," and theworkstreams to address controversial areas.

The U.S. ambassador to Poland called unilateral plans to levy digital taxes on large tech companies "self-destructive" in an op-ed piece published March 1 by Rzeczpospolita, a major Polish daily.

Lisa De Simone and Marcel Olbert investigate the effects of mandatory private Country-by-Country disclosure to tax authorities on economic activity.They find evidence that firms affected by the disclosure mandate reduce ownership in tax haven subsidiaries relative to unaffected firms and increase their organizational transparency. They also observe that affected firms increasingly allocate revenue, employment, total assets, and, correspondingly, tax payments to subsidiaries in low-tax European countries.De Simone and Olbert concludethat mandatory CbC disclosure curbs the most aggressive tax planning achieved through tax haven operations but also affects the allocation of multinationals' real economic activities.

Michael Overesch and Hubertuswolff analyze the effect of mandatory financial transparency on corporate tax avoidance. Their findings indicate that multinational banks increased their tax expense relative to other banks unaffected by the Country-by-Country Reporting mandate. Moreover, the authors found a stronger response by banks thatwere particularly exposed to the new transparency due to significant activities in tax havens. Overesch andwolff conclude that their results suggest that Country-by-Country Reporting can serve as an additional instrument for policymakers to curb corporate tax avoidance.

Juan Carlos Suárez Serratostudied a policy that limited profit shifting by US multinationals and shows it raised the tax cost of domestic investment. His research indicates that firms affected by the policy responded by reducing investment and domestic employment. Further, firm-level responseswere amplified to local labor markets through the established networks of profit-shifting firms; more exposed local labor markets experienced declines in employment, income, and home values and saw increases in government transfers. The author concludes that policy proposals that limit profit shifting should consider effects on economic activity in addition to tax revenue.

The OECD's second round of a pilot risk assessment programwon't accept more companies, for now, an IRS official said. The organization may, however, try to grow the program gradually in the future, Jennifer Best, director of the treaty and transfer pricing operations at the IRS's Large Business and International Division, said Thursday.

A handful of EU countries haven't made enough progress over the last year in tackling tax avoidance strategies used by multinational companies, the European Commission said in a package of annual reports.

Governments are increasingly relying on machine learning and data analytics to analyze troves of data as they seek to detect tax evasion, respond to taxpayers' questions and make themselves more efficient.

EU antitrust and tech chief Margrethe Vestager defended European nations' plans to impose their own digital services taxes on large tech firms.

The U.K. tax authority must complywith a 2019 EU decision on state aid even if EU rules stop applyingwhen the Brexit transition period ends, the EU's competition czar said.

The author discusses a new collaborative initiativebetween tax enforcement bodies in the U.K., U.S., Australia, Canada, and the Netherlands, known as the"Joint Chiefs of Global Tax Enforcement" (J5).

The IRSwill stickwith an 18.9% offshore tax rate as the threshold for multinational companies looking to opt-out of a tax on a new category of foreign income, an agency official said.

Spain said itwill impose a digital-services tax on major tech firms such as Alphabet and Facebook, as part of its goal to tackle the country's deficit and encourage companies to pay taxeswhere they generate benefits.

China's trillion-dollar Belt and Road initiative to build infrastructure connecting Asia, Africa, and Europe has generated plenty of headlines, but its tax arm remains little known. Companies and policymakers alike need to pay closer attention. The project could end up affecting how multinationals pay tax and resolve disputes around the globe.

The author discusses the European Union's plan for reducing carbon emissions from its factories and to prevent the rest of theworld fromwiping out those reductions and killing lots of European jobs at the same time.

Turkey has until the end of the year to complywith European Union demands on tax transparency, or else risk being added to a list of countries that could face financial sanctions, according to Austrian Finance Minister Gernot Bluemel. The rules include bilateral agreements to automatically exchange bank informationwith EU members,which include Cyprus.

In light of the OECD's preliminary analysis, the author discusses the issue of double taxation under the proposed Pillar Two rules.

The EU proposal includes measures thatwould expand existing information exchange and create new information disclosure rules.

The OECD intends to reach a consensus on the Inclusive Framework by the end of 2020. In light of that goal, the author examines the Framework's concepts, disparate interpretations, andwhat needs to be done to achieve a consensus.