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UN Set to Work Out Details of Tax Treaty Amid Deep Divisions
A special committee of countries charged with creating draft terms for a global tax treaty on tax cooperation will start hashing out key details of the proposals’ shape and contents in the coming weeks, including how countries will eventually make decisions and what priority issues it will pursue.
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OECD Pillar 1 Tax Reform Negotiations at a Stalemate
Some jurisdictions are at loggerheads over transfer pricing simplification measures under pillar 1 of the OECD’s two-pillar global tax reform plan, dimming prospects of finalizing a deal in June, Italian Finance Minister Giancarlo Giorgetti said.
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Vietnam Pillar 2 Revenue to Be Funneled Into New FDI Incentives
Martin A. Sullivan explores developments in Vietnam’s plans for implementing pillar 2 and creating an investment support fund and incentives to drive foreign direct investment.
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OECD Calls on G7 for Further Work on Pillar 2 Dispute Resolution
Countries should keep working on approaches for resolving disputes related to global minimum tax rules and consider the legal basis for those mechanisms, such as a multilateral convention, the OECD told G7 ministers.
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Global Minimum Tax Incentive Rules Threaten US R&D Investment
Unfavorable treatment of the highly lucrative US R&D credit under the global minimum tax is threatening to expose American companies to higher taxes and prompting some to rethink new investments in the US.
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Yellen Says US Isn’t Ready to Sign Pending Global Tax Agreement
Treasury Secretary Janet Yellen said the US won’t sign an agreement to finalize a still-pending global tax deal until India and China agree to key unresolved issues. Yellen told reports, “India, in particular, has been a holdout and China has not really engaged very much in these negotiations at all.”
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Nations Can Fight, But There’s No Flight From Global Minimum Tax
While more than 140 countries have signed on to the global minimum tax agreement known as Pillar Two, these efforts don’t always have the backing of domestic legislative bodies, some of which have done little to adopt laws that would make Pillar Two effective.
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Aligning GILTI With Pillar Two Is a Task the US Shouldn’t Delay
One of the biggest questions about the global minimum tax agreement known as Pillar Two has been how different countries would implement it locally. In the US, Congress must consider the future of the domestic minimum tax on which Pillar Two is based—the Global Intangible Low Taxed Income regime, commonly known as GILTI—before the transition period to adopt the 15% tax ends in 2026.
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Divisions Persist Over Global Tax Deal’s Transfer Pricing Rules
Agreement on a few key issues under Amount B of the global tax rules has been elusive so far—such as which countries’ choice to use Amount B would be respected under the rules, which transfer pricing transactions would fall in scope, and whether the simplified rules should be optional or mandatory.
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Belgium and Italy Update Their Global Minimum Tax Rules
Italy has amended its global minimum tax law to include temporary key safe harbor provisions to simplify the application of the tax rules, while Belgium companies can now register for the tax.
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EU Warns Spain, Other Countries On Tax Law Infringements
The European Commission referred Spain to the EU Court of Justice Thursday for breaching rules on taxation in company mergers. The commission also said Germany, Hungary, Poland and Romania were infringing EU law by not sharing with other EU tax administrations data on earnings from trading via online platforms.
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EU Warns Countries On Delay in Implementing Global Tax
The European Commission is threatening to refer six countries—Poland, Portugal, Spain, Cyprus, Latvia and Lithuania—to the top European court unless they provide details of their implementation of the global minimum tax within two months.
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OECD Must Not Allow Pillar One to Erode the Arm’s-Length Standard
To preserve tax fairness that underlies voluntary tax compliance, the OECD should leave room for facts-and-circumstances exceptions to part of its global tax treaty.
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Global Minimum Tax Sets up New Hurdles for Companies
The global minimum tax is turning out to be a huge compliance hurdle for many multinationals, especially those with subsidiaries spread out in hundreds of cities across the globe. In order to pay their global minimum tax bill in a timely manner, large companies need to build new systems to synthesize thousands of pieces of new data and track the differences between countries’ local laws applying the levy.
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Global Tax Disputes Loom Large Without Strong Resolution Tool
The design of the global minimum tax is making large multinational companies vulnerable to disputes with countries all over the world—and halfway into 2024, there’s no tool to resolve them due to the differences in adoption of the global tax rules across jurisdictions.
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US Companies Move Behind American Shield to Delay Global Tax
US multinational companies are engaging in what essentially amounts to a political game of chicken, dissolving their overseas holding companies and reshoring ownership of their subsidiaries to delay paying the new 15% global minimum tax—perhaps indefinitely.
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We are a step closer to taxing the super-rich
What once seemed like an impossibility, a global billionaire’s tax is now being considered by G20 finance ministers.
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Activists Caution New Zealand on Digital Tax Bill Reinstatement
New Zealand’s coalition government should scrap the previous government’s bill for a digital services tax because the DST could lead the country’s trading partners to respond with retaliatory tariffs, an activist group has warned.
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The EU Left Suggests a €100 Billion Windfall Tax on Monopolies
A new study by the European Left estimates that a permanent tax on excessive profitability of near-monopolies would raise between €81 billion and €107 billion.
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Lawmakers Launch Effort to Overturn Biden’s EV Tax Credit Rules
A bipartisan group of lawmakers in the House and Senate introduced a measure to overturn the Biden administration’s rules implementing the EV tax credit, which they argue are too lenient on China.
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Kenya Calls for Repealing and Replacing Digital Services Tax
Kenya has proposed withdrawing its digital services tax and replacing it with a significant economic presence tax after President William Ruto said the government would review the DST and align it with OECD tax reforms.
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Can GLOBE Rule’s Pillar 2 Dispute Resolution Deliver Legal Certainty?
The International Tax and Investment Center describes some potential GLOBE rule disputes and analyzes some proposals for a dispute resolution mechanism, focusing on how the tax treaty mutual agreement procedure in article 25 of the OECD model tax convention can best be used.
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The Case for Targeted Location Incentives
Reuven S. Avi-Yonah examines the use of tax incentives to encourage location-specific investment and offers a new approach that he says will be more successful.
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Australia Seeks New Penalty on Companies Avoiding Royalty Taxes
Australia plans to introduce a new tax penalty for big companies that try to avoid taxes on royalties in its latest move to crack down on multinationals that it says aren’t paying their fair share.
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EU Ministers Agree on Withholding Tax Rule, Stumble on VAT
European Union finance ministers agreed in principle to a law intended to speed up cross-border withholding tax refund procedures and that will require EU countries to replace current tax refund systems for cross-border dividend and interest payments with improved, simpler procedures.
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Biden administration to increase tariffs on Chinese electric cars to 100 percent
The Biden administration will increase tariffs from 25 percent to 100 percent on Chinese EV imports to offset Chinese export practices, which they argued “favor Chinese automakers at the expense of U.S. and other foreign automakers and autoworkers and are leading to a massive surge of unfairly underpriced Chinese vehicles into foreign markets.”
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Will Singapore’s Refundable Investment Credit Trigger Pillar 2 Tax?
Martin A. Sullivan scrutinizes the no-benefit requirement under pillar 2 of the OECD’s base erosion project, highlighting the tension between incentives and taxation in light of Singapore’s planned implementation of two components of pillar 2.
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Seeking Cover: A Path to Challenge Digital Services Taxes in Ireland
Tomás Bailey, Colm Brussels, and Rachel O’Sullivan explain how Irish taxpayers can use the EU tax dispute resolution directive to challenge the tax treaty compatibility of EU member states’ digital services taxes.
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N Ireland should cut corporate tax to boost growth, says business lobby
Northern Ireland should slash its corporate tax rate from 25% in line with the Republic of Ireland’s 12.5% rate for small firms and 15% for large companies, to drive growth in the cash-strapped region.
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Can Investment Treaties Defeat Pillar 2?
Reuven S. Avi-Yonah casts doubt on whether bilateral investment treaties offer investors a viable shield from pillar 2’s qualified domestic minimum top-up tax, in response to a recent Tax Notes article.
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China Mulls Dividend Tax Waiver on Hong Kong Stocks Connect
Regulators including the China Securities Regulatory Commission and the State Taxation Administration are reviewing a plan submitted by Hong Kong to waive the 20% tax on dividends from Hong Kong stocks bought via Stock Connect.
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Norway Risks Outflow of Startups Dismayed by Harsher Exit Tax
The Norwegian government in March announced its latest step to close tax loopholes for wealthy expatriates by setting a deadline for the payment of an exit tax on unrealized changes in the value of their assets, or their transfer. That plan follows increases in wealth and dividend taxes since 2022 that have prompted dozens of the country’s richest to relocate, mainly to Switzerland.
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EU Examining Ways to Improve Tax Information Exchange Process
The European Commission is evaluating the effectiveness of reporting rules that govern collection of information relevant for cross-border taxation and the exchange of that information between EU tax authorities.
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Groups Seek Disclosure Protection for Australian Tax Reporting
Financial services industry groups are calling on the Australian government to be more discerning with the tax information from funds that is made public following it’s country-by-country proposal released in February.
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Governments slap taxes on EVs as $110bn fuel duty shortfall looms
Global policymakers, including the UK, New Zealand, Israel and US states, are imposing new taxes on electric vehicles as the shift away from combustion engines threatens to leave a $110bn hole in government revenues owing to a drop in receipts from fuel duties.
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Protecting the U.S. Tax Base: Roundtripping and IP Sales
Mindy Herzfeld explains the uneven effect of the Tax Cuts and Jobs Act’s carrot-and-stick approach to encouraging U.S. multinationals to bring valuable intellectual property back to the United States.
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Firms Likely to Set Up PEs in Countries With Digital Taxes
Companies in scope of digital services taxes will probably have more permanent establishments in jurisdictions with DSTs if OECD pillar 1 rules are enacted, according to a Joint Committee on Taxation economist.
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European Countries Differ on Treaty Application for Remote Work
EU member states are at odds over how to coordinate the application of double taxation agreements to accommodate the tax complexities of cross-border telework.
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Treasury Looks to Cut Out Foreign Supply Chains With EV Credits
Manufacturers have two years to move their critical mineral supply chains away from foreign entities of concern if they want to qualify for the new clean vehicle tax credits, Treasury announced in final regulations.
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Tax and Non-Tax-Related Challenges of Pillar 2 for Non-Advanced Economies
Błażej Kuźniacki and Edwin Visser explain the difficulties for non-advanced economies trying to attract foreign direct investment while also adhering to new pillar 2 rules, and offer suggestions for new international approaches that could help create a more level playing field for all economies.
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Corporate Loss Deduction Hangs in Balance Under Global Tax Deal
US multinational companies may lose the ability to deduct up to hundreds of millions of dollars’ worth of losses incurred from their income starting this year under the new global minimum tax.
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Canadian Digital Tax May Cost U.S. Firms $2 Billion Annually
Canada’s digital services tax might cause U.S. companies to lose up to $2.3 billion annually, and if the United States doesn’t push back, the “global contagion” of DSTs will spread, a tech industry group said.
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Let’s Play Fair: Reconsidering the U.S. Corporate Tax System
Roy Clemons argues that the United States should replace its quasi-territorial tax system and proposes a framework that taxes domestic and multinational corporations at the same statutory tax rate on a country-by-country basis.
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Withdrawing Cost-Sharing Regulations Would Achieve Little
Ryan Finley explains why withdrawing the cost-sharing regulations wouldn’t further the policy goals of cost-sharing critics.
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Pillar 1: Seeking Justifications That Aren’t There
Robert Goulder comments on a recent Congressional Research Service report on pillar 1 and digital services taxes.
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Startling Results From Recent Country-by-Country Reports
Martin A. Sullivan examines newly released IRS data that reveal surprising shifts in where U.S. multinationals book profits and losses, with some of the usual suspects absent and Gibraltar topping the tax haven list.
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Honda Eyes New Canadian Tax Credits for C $15 Billion Investment
Honda is the latest automaker to announce a multibillion-dollar investment in Canada, bolstered by new investment tax credits introduced by the federal government to support the green transition.
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Amount A Impact Analysis on U.S. Corporate Tax Revenue — A 2024 Update
Vladimir Starkov and Alexis Jin explain their study on the effect of amount A on U.S. corporate income tax revenue.
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EU Calls on UN to Avoid Duplicating Global Tax Discussions
A future United Nations Framework Convention on International Tax Cooperation should help countries reform their domestic tax systems and avoid duplicating work on international tax reform, the European Union said ahead of UN tax discussions in New York.
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UN Committee Begins Drafting Global Tax-Cooperation Plan
The committee is considering topics such as how the UN framework will approach taxing multinational companies and wealthy individuals, digital taxation, taxation of cross-border transactions, combating tax-related illicit financial flows, and using tax to address environmental challenges.