Int'l Tax News

The US and France have said theywant industrialised countries to reach a deal on global tax reform this year to ensure that tech companies pay reasonable levels of corporation tax in the countrieswhere they operate.

The OECD should look at the risks companies assume and the losses they incur as it searches for solutions to the global tax debate on the digital economy, a PepsiCo Inc. executive said Feb. 28.

Jersey, Guernsey and the Isle of Man face a financial transparency crackdown, after Conservative MPs ambushed prime minister Theresa May to demand an end to secret company ownership. The three crown dependencies are exempt from EU rules requiring countries to publish registers of the real owners of companies. Transparency campaigners argue that the lack of disclosure has aided large-scale money-laundering. In a letter to supportive MPs, Mr Mitchell and Dame Margaret accuse the crown dependencies of acting "as secret tax havens facilitating economic crime, tax and avoidance and tax evasion", and cite the Panama Papers as evidence.

A European court ruling could mean taxpayerswith investments involving "beneficial ownership" structures could facewithholding taxes because the structures are deemed tax abusive.

Francewill unveil its plan to tax digital companies during nextweek's cabinet meeting, French Finance Minister Bruno Le Maire said March 1.

Multinational companies seeking advanced intercompany pricing agreementswith the IRS may need to fill out a new government Excel toolwith their financial data for special cases, the Internal Revenue Service said.

Five European Union countries stand accused of blocking rules thatwould allow company employees to report illegal activities involving tax avoidance and aggressive tax planning to the media or other external groups.

Robertwillens discusses Eaton Corp.'s failed attempt to argue that three controlled foreign corporations,whichwere upper-tier partners in a U.S. partnership,weren't subject to the same requirements for calculating earnings and profits as domestic corporations.

Part 2 of this two-part Insight continues a review of the tax reforms introduced in Luxembourg,with a focus on how they address the anti-hybrid mismatch rules, exit taxation, and other anti-BEPS measures.

Canada's government is generating unexpectedwindfalls in revenue that could give Prime Minister Justin Trudeau more fiscal leeway than it expected going into an election year.

Part 1 of this two-part Insight looks at the impact of the new Luxembourg tax measures relating to deductibility of interest payments, the general anti-abuse rule and controlled foreign companies.

Digital multinationalswith users in Indiawill have towait at least two more months to learnwhether theywill be on the hook for the 40 percent tax rate that is already applied to foreign brick-and-mortar companies in the country.

Companieswould spend substantial time and money complyingwith an IRS proposal capping the amount of interest payments they canwrite off their tax bills, the American Institute of CPAs said.

European Taxation Commissioner Pierre Moscovici urged nations to support a proposal to scrap the unanimous-vote requirement for approving tax policy, saying it is blocking progress on key measures.

Romania proposed tightening the rules thatwould tax digital advertising revenues large companies earn in the European Union, as EU officials continue negotiating to try to find a version of the law all member states agree on.

US economists led by former US Federal Reserve chair Janet Yellen are uniting in record numbers to back the idea of a carbon tax as the most effective and immediateway of tackling climate change.

American companies in Belgiumwant the next federal government to further lower the country's corporate income tax rate to below 20 percent.

Nigeria and Addax Petroleum's local unit have agreed to settle a dispute over allegations of an unpaid $3 billion in taxes, lawyer representing the company said.

The U.K. government said itwill provide a 47 million-pound ($60 million) aid package for developing countries to help them improve their tax systems and fight tax evasion.

Paraguaywill overhaul its tax system and update corporate laws to boost economic growth and remain the fastest-growing economy in South America. President Mario Abdo Benitez's governmentwill submit bills as soon as next month that may lift tax collection by as much as 2 percentage points of gross domestic product, Finance Minister Benigno Lopez said.

The arm's-length standardworkswell for global companies' internal businesses and should remain the bedrock of international taxation, even though it might be under siege by the OECD, Procter & Gamble Co.'s top tax executive said.

Part 3 of this Insight continues a review of the different forms of digital services tax being introduced as interim measures in a growing number of jurisdictions until a global solution is reached.

Several legislative projectswith impact on the tax laws are currently under discussion in the Swiss Parliament or have already been decided and are expected to enter into force between 2020 and 2022. These include the introduction of the Financial Services Act and the Financial Institutions Act, the elimination of the so-called marriage penalty for direct federal tax purposes, or the regulation regarding tax deductibility of financial sanctions. Howwill the tax reform affect Swiss and foreign groupswith subsidiaries and branches in Switzerland andwhat aspects need to be considered?

Glencore Plc. has revealed it is in a $680 million disputewith the U.K. tax office over audits for the 2008-2017 tax years. The mining giant,which noted the dispute in its Jan. 20 preliminary annual report, said the audit includes tax assessments for inter-company transactions, or transfer pricing.

The Netherlands may become the next European country to charge aheadwith a digital tax proposal of its own, following the example of France and Spain, two Dutch lawmakers hinted Feb. 20.

Internet retailers such as Amazon.com Inc., Asos Plc and Boohoo Group Plc should pay higher U.K. taxes to help save ailing shopping districts that are losing revenue to e-commerce, according to a government report.

New Zealand's Taxworking Group has proposed the introduction of a capital gains tax, a contentious issue that could play a major role in the 2020 general election.

The European Commission suffered a defeat on Thursday in its drive to tackle illegal tax deals for multinationals after an EU court annulled its state aid decision against a Belgian tax schemeworth about ÔøΩ700m.

Do verbal confirmations have any binding effect on the Luxembourg tax authorities? A recent judgment provides the answer. The Luxembourg Administrative Tribunal, in a decision of December 13, 2018, ruled on the potential binding effect of verbal comments of the Luxembourg tax authorities regarding the tax qualification (as equity vs. debt) of equity tainted loans ("ETL"s) granted by a Luxembourg corporate taxpayer to its Luxembourg subsidiaries.

Spain's plan to impose a 3 percent digital tax on companies such as Facebook Inc. and Amazon Inc. is on hold until after the country holds a general election April 28.

The OECD's Forum on Harmful Tax Practices iswaiting for the U.S. Treasury Department to release proposed rules for a new tax deduction that encourages exports before it can begin a formal assessment, a Treasury official said.

The Treasury Department is aiming for spring or "very, very early summer" to issue final regulations on a new category of foreign income created under the 2017 tax overhaul, a Treasury official said.

The OECD solution to rewriting global tax rules for the modern economywill likely involve allocating more taxing rights to market jurisdictions, a Treasury official said

Countries that signed up for the OECD's super tax treaty in 2018 have changed their tax treaty networks and are on the road to eliminating abusive provisions, the OECD's first-ever peer review of tax agreements said Feb. 14.

European Union antitrust chief Margrethe Vestager's crusade against unfair tax breaks suffered a setback as Belgiumwon a bid to overturn an order to recoup about 800 million euros ($900 million) from 35 companies, including Anheuser-Busch InBev NV.

The OECD is rethinking the rules that determine how much tax multinational companies should pay andwhere they should pay it as the organizationworks to reform global tax rules for the increasingly digital modern economy.

The cost of Sweden's plan to raise taxes on fossil fuels and certain chemicals, seen by some as away to finance planned income tax cuts,will probably fall to consumers, attorneys and industry representatives told Bloomberg Environment Feb. 13.

Canada's constitution doesn't allow the federal government to create a uniform carbon tax across the country, lawyers for Saskatchewan argued in a Regina courtroom Feb. 13.

Spain's ruling left-wing coalition government failed to gain cross-party support for its budget,which included a proposal to impose a 3 percent tax on digital companies.

Italy has recently been very active in trying to introduce rules to tax digital companies. Initially, the 2018 Budget Law included a provision aimed at applying aweb tax on digital transactions. However, no implementation ruleswere approved in order to start collecting the tax. There may have been many reasons behind Italy's decision to postpone implementation and collection of theweb tax. The main onewas certainly the desire to coordinatewith the possible outcome of the discussions of the OECD and the EU,whichwould hopefully have arrived at a common and harmonized solution.

Singapore's so-called "Netflix tax" is still nearly a year out, but e-retail, streaming, and other digital companies should start trial runs and ready their technology now, tax advisers say. Once the goods and services tax expands on Jan. 1, 2020, Singaporewill start applying it to almost all cross-border services, from video subscriptions to call-center outsourcing.

S. 779, the Stop Tax Haven Abuse Act, introduced by Senate Finance Committee member Sheldonwhitehouse, D-R.I.,would modify various tax provisions to deter offshore tax evasion and remove incentives for corporations to use tax havens.

Bermuda's Parliament recently passed the Financial Services Tax Amendment Act 2019, increasing the tax rates for banks and domestic insurers effective April 1 and May 1, respectively.

New rules for documentation requirements under proposed regs for the foreign-derived intangible income provisionwill require some companies to reassess how they manage their business.

Although practitioners and nongovernmental organizations differ sharply on the need for an internationally coordinated anti-base-erosion regime as proposed by the OECD, they agree that reducing complexitywill be critical to ensuring its relative success.

A Houseways and Means Committee Republican intends to reintroduce legislation this spring exempting U.S. nationals living abroad from being taxed on their foreign-source income.

In this article, the author examines recent changes to international tax dispute mechanisms, including the mutual agreement procedure and arbitration, from the perspective of the EU and the OECD. He comments on similarities and differences in the European and international frameworks in an era of increasing globalization.

Despite varying opinions about minimum taxation to tackle the tax challenges of the digital economy, countries may start adopting U.S.-style minimum taxeswithout OECD-level coordination,which could affect business, an academicwarned.

Under conventional economic thinking, a government that spends more than it collects has two unpleasant choices: borrow or raise taxes. An alternative view, Modern Monetary Theory, is more accommodating of deficit spending. MMT is taking hold among U.S. politicianswhosewish lists include guaranteeing everyone a job, fixing infrastructure, making higher education loan-free and ensuring everyone has access to health care. The invigorated progressivewing of the U.S. Democratic Party is using MMT to push back against decades of fiscal hawks saying the nation can't afford large-scale social projects such as the recently proposed Green New Deal.