Int'l Tax News

The European Commission has launched a state aid investigation into tax rulings granted to U.S. footwear giant Nike that approvedwhat may have been excessive royalty payments to group intellectual property holding companies.

The GOP corporate tax reform,which cut the U.S. rate to 21% from 35% and allowed businesses to repatriate overseas profits tax-free, has given U.S. drug makers more cash to invest. Now they're acquiring companies to advance innovation rather than engage in tax arbitrage as they did pre-reform.

Americans are used to debating the impact of tax policy on economic growth, so it might come as a surprise (or not) that the European Union is far behind the curve in this regard. New research helping Brussels fill that gap is a breath of fresh air. At issue is dynamic scoring, a method economists use to estimate how tax-policy changes affect economic growth, employment and revenue. Dynamic-scoring projections have featured prominently in U.S. debates for years. Yet EU economists cling to static scoring, a less realistic method that assumes tax policy has no bearing on broader economic incentives. This leads them to overstate lost revenue from tax cuts and overestimate the revenue gains from tax increases.

The Spanish goodwill cases could give the European Commission more room for maneuver in state aid investigations and could have consequences on pending and future fiscal state aid cases.

Hungary has traditionally maintained a very favorable corporate income tax environment for decades, making it a competitive option for international holding structures. Changes in the corporate tax environment in Hungary in 2019will provide further opportunities for international holding structures.

Google Inc. continued to reduce its taxes for another year by taking advantage of loophole structuresÔøΩthis time shifting $22.6 billion.

A U.K. finance bill amendment passed Tuesdaywould limit the government's ability to tweak tax legislation after Brexit, in a bid to discourage the government from leaving the European Unionwithout a transitional trade agreement. The amendment, approved by 303 votes to 296 in the House of Commons,would mean the government cannot make technical changes to maintain the effect of the tax code should the country leave the European Unionwithout a deal in two months' time unless lawmakers have given their express consent to a so-called no-deal Brexit.

Democrats in the coming yearwill be laying the groundwork to eventually roll back parts of President Trump's tax law. No Democratic lawmakers voted for the measure Trump signed in December 2017, criticizing the bill for providing large benefits towealthy individuals and corporations and for adding to the federal deficit.with Republicans controlling the Senate and thewhite House, Democrats are unlikely to be able to undo any significant portion of the law in the next two years.

This could be the year Congress tries to enact the mother of all taxes, a carbon taxÔøΩa levy on the use of oil, natural gas and coal. Everything that is fabricated, grown, operated or moved is made possible by hydrocarbons. That makes the carbon tax different from a mere consumption or excise tax. The latter is attached to purchasingÔøΩspend more, pay more. A carbon tax is a tax on existence, because all aspects of living require energy, and hydrocarbons provide 80% of America's energy, more for the rest of theworld. And hydrocarbons are used to create or build everything else that produces energy.

Isle of Man's parliament recently approved new corporate substance requirements in linewith the recommendations of the EU Code of Conduct Group on Business Taxation.

The Netherlands' decision to place the Cayman Islands on its tax haven blacklist has brought a backlash of criticism from the British overseas territory.

Although Amazon sympathizeswith governments impatient for an OECD solution to tax the digital economy sooner than 2020, a revenue-based digital taxwould unfairly hit companies like Amazonwith razor-thin margins, a company executive said.

On December 28, 2018, the Dutch Government published in the Official Gazette a list of 21 low-tax jurisdictions. Companies doing business in these territorieswill face new anti-avoidance measures, intended to tackle tax base erosion and profit shifting. Jurisdictions on the list have a corporate tax rate of less than nine percent.

In a December 31 letter to leaders of the Senate Finance Committee and Houseways and Means Committee, Miller & Chevalier Chtd. offered support for a Tax Cuts and Jobs Act technical correction in H.R. 88 thatwould clarify the application of the stock attribution rules under subpart F to reflect congressional intention, saying that such a correction doesn't raise due process concerns.

The Court of Justice of the European Union has published the reference for a French case (C-662/18) onwhether the EU merger directive (2009/133/EC) precludes the use of different bases of assessment and rate rules to tax capital gains from transfers of securities received in exchange and deferred capital gains.

It's the season for New Year's resolutions. Here's a suggestion for our friends in the EU: Canwe please stop itwith the tax haven blacklists? Ditto for gray lists and other variations on the theme.

Lethargic tax collections have prompted India's Central Board of Direct Taxes (CBDT) to instruct income tax officials to follow a multi-pronged approach to reach this fiscal year's $165 billion budget target.

News that pharmaceutical company Perrigo could owe the Irish government over ÔøΩ1.63 billion in tax because of an alleged mischaracterization of income has landed the company in hotwaterwith at least one investor.

In this article, the author discusses the influence of the OECD inclusive framework on tax policy and its importance for multinational business in all sectors.

A Council of Ministers decision establishing a reduced corporate tax rate for Albanian software companieswas published in the official gazette December 13with immediate effect.

The House of Assembly of the British Virgin Islands recently approved legislation designed to assuage EU concerns about economic substance.

Chinese conglomerate HNA is selling its 3 percent Deutsche equity investment. So now Deutsche is looking to the Qatari investment funds for an increase in their nearly 10 percent equity investment. BlackRock owns 6 percent of the bank. Large shareholders have rights to acquire more shares if they're silly enough to throw good money after bad.

After over a decade of debate about international tax reform,we might have hoped our move to territorialitywould have been accompanied by a bit more rationality. The bookends of the Tax Cuts and Jobs Act ÔøΩ a lower corporate rate and elimination of the lockout of foreign profits ÔøΩ are simple, majestic policy masterstrokes. Unfortunately, they are debt-financed. And all the accompanying baggagewe must livewith ÔøΩ necessary to momentarily piece together a political and budget jigsaw puzzle 13 months ago ÔøΩ not only obfuscate and complicate, but in many cases obliterate, the potential economic benefits of the fundamental framework.

Chinawill cut banks' reserve requirement ratios (RRRs), taxes and fees, Premier Li Keqiang said on Friday, as theworld's second-largest economy shows further signs of cooling. The measureswill also included targeted RRR cuts aimed at supporting small and private companies, Liwas quoted as saying in a statement on thewebsite of the Chinese government.

The golden years of German tax revenues regularly exceeding expectations are ending, Finance Minister Olaf Scholz told newspaper Bild am Sonntag. Germany has enjoyed a surplus since 2014 as the European Union's largest economy has grown for nine years in a row, but growth is expected toweaken in 2019 as headwinds from trade frictions hamper exports.

Brazilian President Jair Bolsonaro's chief of staff said on Friday that therewould be no hike in a financial transaction tax, contradictingwhat the leader himself said earlier in the day.

Austria plans to introduce a national tax on digital revenue of large internet companies such as Facebook and Amazon, its chancellor said in a recent newspaper interview, adding the taxwould be modeled after one proposed in France.

The 2017 tax cut has received pretty bad press, and rightly so. Its proponents made big promises about soaring investment andwages, and also assured everyone that itwould pay for itself; none of that has happened. Yet coverage actually hasn't been negative enough. The story you mostly read runs something like this: The tax cut has caused corporations to bring some money home, but they've used it for stock buybacks rather than to raisewages, and the boost to growth has been modest. That doesn't sound great, but it's still better than the reality: No money has, in fact, been brought home, and the tax cut has probably reduced national income. Indeed, at least 90 percent of Americanswill end up poorer thanks to that cut.

Mexican President Andrés Manuel López Obrador issued an executive order on Monday lowering taxes in municipalities along the U.S.-Mexico border, Reuters reported. López Obrador argued that the movewould spur economic growth, make Mexican business more competitivewith U.S. counterparts across the border and encourage residents to live andwork in northern Mexico rather than migrate to the U.S.

Election years in Brussels are a sleepy time for European Union policy, as parliament campaigns and the commission becomes a lame-duck body, but Brexit, state aid and spillover from U.S. tax changes promise a busy 2019 for EU tax policy. A commission in office since 2014 seems unlikely to have much energy left for innovation, and new policies seem set to fall by thewayside as a new grouping of 27 senior officials prepares to take office in November. Butwith the bloc's tax laws made largely by national governments rather than EU institutions, and anti-subsidy powers exercised in a supposedly apoliticalway, tax policy may end up being the exception.

With the headline-grabbing issues out of theway, practitioners expect the Treasury in early 2019 to address loose ends of the largest overhaul to the U.S. tax code's international framework in a half-century, before it is fully implemented and operational. Companies that have kept their powder dry andwaited over the past yearwill likely begin to act, creating new international structures around the Tax Cuts and Jobs Act's rules and accelerating the repatriation of overseas income. After years of speculation, expertswill finally have some evidence aboutwhether the TCJA's complex international system of levers, roadblocks, carrots and stickswill achieve the results the U.S. Congress hoped for.

In this article, the authors argue that the high revenue triggers in proposed digital taxes ÔøΩ including the recent Franco-German proposal for a digital advertising tax ÔøΩ may violate state aid law and prohibitions on nationality discrimination in the Treaty on the Functioning of the European Union.

The Argentine government has issued a decree implementing provisions of 2017 tax reform legislation thatwill subject income from financial instruments to tax at rates between 5 percent and 15 percent.

In thewaning days of its EU presidency, the Austrian government said itwill introduce a domestic version of the digital services tax (DST) that itwas unable to persuade EU member states to pass.

The U.K. tax administration has updated its diverted profits tax (DPT) guidance to provide further detail on assessment procedures and alignwith post-2015 legislative developments, including stricter royaltywithholding antiavoidance legislation enacted in 2016.

Having failed to broker a deal on a digital tax during its European Union presidency, Austria said on Saturday it planned to introduce its own levy on tech companies including Facebook and Amazonwhile the blocworks on its plan.

Each of the Crown Dependencies – Jersey, Guernsey, and the Isle of Man – have tabled legislation thatwill introduce new substance requirements for tax-resident firms engaged in certain industries from January 1, 2019. These proposalswill require companies that are tax resident in Jersey, Guernsey, or the Isle of Man, and are engaged in key activities identified by the EU, to demonstrate that they meet minimum substance requirements as part of their annual tax return to access the territories' tax regimes.

When principles meet economics, principles lose. That is the lesson coming from three prominent setbacks to policies intended to target climate change. These sobering results remind us how little people arewilling to pay for professed principles ... and ominously how much government is required in order to make them do so.

Rules designed to make it tougher for European Union companies to shift profits to low-tax jurisdictions go into force at the beginning of 2019, the European Commission said Sunday. In a press release, the 28-member bloc said the new rules are based on global standards set up on base erosion and profit shifting in 2015 by the Organization for Economic Cooperation and Development. The rules are intended to keep profits from escaping the EU to placeswhere they could go untaxed, the release said.

Never mind every lesson of history: The left's command-and-control program to remake global energy is not politically realistic; anything enactedwould quickly devolve into corrupt rent-seeking (see Germany). And even if it could be passed, its planwould consign billions to a poverty thatwould leave theworld less green. Meanwhile, conservatives have begun to notice a thing or two. A carbon tax is better than many of the taxeswe have,which punishwork, saving and investment. Had a carbon tax been on the table during the Bush and Trump tax-cut debates, those cuts could have been deeper and (importantly) made permanent for budget-scoring purposes.

While the long-term effects remain to be seen, the evidence so far does not suggest the sustained investment and productivity growth boosts that Republicans and supply-side economists predicted. Many economists, including those at the Federal Reserve, are cutting their growth forecasts for 2019, in part because of thewaning effect of the tax cuts.

The decision of Belgium's prime minister to resign after three years in power means a temporary "stay of execution" for several unpopular tax measures affecting large multinationals.

The 3.83 billion-rupee ($55 million) fine imposed on Hindustan Unilever Ltd. by India's National Anti-profiteering Authority is "a narrow interpretation of the law and does not take into accountwell-established industry practice," the company said in an emailed statement.

Part 2 of this series looks at the new Principal Purpose Test. Is the new Principal Purpose Test a game changer for treaty shopping in relation to holding, financing and royalty structures?

Digital companies are bracing for India's introduction of tax guidelines thatwill make the country one of theworld's toughest for online businesses.

Facebook, Google and other U.S. technology giantswould pay a 3 percent digital-revenue tax in Italy if the government approves a levy that the Chamber of Deputies is set to consider Dec. 28.

The German Federal Parliament and the German Federal Council recently passed a tax bill. The 2018 tax bill covers a broad range of amendments to the German tax law.what should multinational corporations be considering now that the German 2018 Tax Bill has passed?

Transfer pricing cases add detail as to how the international transfer pricing conventions can be applied, and sometimes suggest fundamental issueswhich merit consideration in future iterations of those conventions. The purpose of this article is to summarise some key transfer pricing cases of 2018 and to draw some general conclusions from them.

Infrastructure and middle-class tax relief are two tax items on next year's agenda that could get enough bipartisan support to move under a divided Congress. The issues could gain momentum because they center onworking AmericansÔøΩa goal for Democratswhowill control the HouseÔøΩand alignwith President Donald Trump's stated objectivesÔøΩa boon for Republicanswhowill control the Senate.

Theworld's biggest companieswill find it harder in 2019 to set up some business structures that let them achieve the lowest tax rates, after a novel new multilateral treaty goes into effect.