Int'l Tax News

The Tax Executives Institute has urged the IRS to eliminate the so-called 12-month presumption rule in proposed regulations (REG-104390-18) on global investment low-taxed income and has asserted that Treasury and the IRS lack the authority to create the broad antiabuse rule that is found in proposed regulation section 1.951A-2(c)(5). The group offers additional comments on other aspects of the proposed regs.

The United States' strengthened rules on aggregation and realistic alternatives and a growing international skepticism of one-sided transfer pricing methods have led some practitioners to question the future viability of the traditional arm's-length principle.

Large digital companieswill be taxed next year even if the EU can't reach agreement on a digital services tax (DST), Finance Minister Bruno Le Maire said.

Final regs on the transition tax have reached the Office of Management and Budget, potentially setting the stage for publication of the first major finalized guidance sprouting from the U.S. Tax Cuts and Jobs Act.

The British government should levy a tax on retailerswith online sales accounting for more than 20 percent of revenue to save traditional shopping districts, the billionaire boss of Sports Direct told lawmakers on Monday. Mike Ashley said the movewould be "a massive electric shock" for the sector, encouraging retailers to invest in physical stores.

Ireland collected even more corporate tax by the end of November than expectedwhen it flagged an anticipated one-off boost, pushing the state's tax take by 2.4 percent, or 1.2 billion euros (1.07 billion pounds), ahead of target for 2018.

Ireland's finance minister poured coldwater Tuesday on a new Franco-German proposal for a European tax on companies' digital revenues, saying it failed to address his concerns.

The OECD is considering an approach to taxing the digital economy similar to proposals in the 2017 U.S. tax overhaul, including giving countries more leverage to tax foreign entities that use valuable branding trademarks and copyrights to sell into their jurisdiction, a top Treasury official said Monday.

Nearly a year after the federal government rewrote the corporate tax code, big U.S. companies are still movingwarily. Much has changed: Smaller tax bills have boosted quarterly earnings. Stock buybacks are soaring, capital spending has risen, and hundreds of billions of dollars have flowed from foreign subsidiaries to their U.S. parent companies. But much remains in flux, too.

France's violent Yellow Vest protests are now about many domestic concerns, but it's no accident that the triggerwas a fuel-tax hike. Nothing reveals the disconnect between ordinary voters and an aloof political class more than carbon taxation.

The European Union's leading business lobby called for new economic analysis before EU member nations vote on a 3 percent digital services tax targeted at large internet companies such as Google Inc. and Facebook Inc.

Germany and France renewed their bid to unlock talks on a new European financial-transaction tax based on an existing French levy on stock trades.

Airbnb Inc. has stepped away from negotiationswith Mexico thatwould have required the home-sharingwebsite to collect income tax from its hosts and send the money to the government, according to a person familiarwith the talks.

Canada's business investment remains spotty, showingwhy Prime Minister Justin Trudeau introduced corporate tax breaks this month to ease the economy's dependence on indebted consumers. Spending on non-residential capital projects fell at a 7.1 percent annualized pace in the third quarter, the most in almost two years, Statistics Canada reported Nov. 30. The contribution to gross domestic product of C$191 billion ($143 billion) remains below a peak of C$230 billion set four years ago, veryweak compared to household consumption gains that have triggeredwarnings about record consumer debts.

The specter of chaos could prompt countries to collaborate on digital taxes, an OECD official suggests; companies now have a challenging time moving assets outside of the U.S.without paying tax; Treasury Department aims to release guidance on ordering of different types of previously taxed income in U.S. tax calculation; a Treasury official says companies arewanting to record Subpart F income to achieve a better tax result; and top congressional tax aides see next year's committee agendas driven by oversight of the tax overhaul and of how the tax system isworking overall.

A senior Treasury official laid out elements of a new global tax planÔøΩcatalyzed by the 2017 U.S. tax overhaulÔøΩthat could forestall the Europe-U.S. standoff over the European digital tax proposal multinationals dread. The EU finance ministers are meeting Dec. 4 on the tax, and may vote to postpone any action until the OECD finds a digital tax solution all its members can agree on.

France and Germany have abandoned EU plans to impose awide-ranging digital tax on tech companies, in favour of a narrow levy on advertising sales thatwould be likely to exclude giants likeAmazon andApple.

Mike Ashley, the chief executive of Sports Direct, told MPs that they should impose a 20% tax on online sales in a bid to save bricks-and-mortar stores.

Houseways and Means Committee Chair Kevin Brady, R-Texas,welcomed the EU's abandonment of a proposal to tax digital services, stating that the "introduction of a new tax targeting cross-border digital serviceswould have singled out a key global industry dominated by American companies andwould have been a clear revenue grab."

The Court of Justice of the European Union has published the reference for a case (C-565/18) onwhether EU law precludes Italy from charging a tax on financial transactions that involve the trading of derivatives.

The Mauritius Revenue Authority recently released a statement of practice (SP 17/18) clarifying the rules under section 73A of the Income Tax Act regarding the place of effective management.

EU member states have not reached consensus on a proposal to tax the digital economy.

Guidance on the treatment of foreign partners' gains on a sale of a U.S. partnership is now awaiting approval of the Office of Management and Budget before publication.

H.R. 5145, the Close Tax Loopholes That Outsource American Jobs Act, introduced by Rep. Rosa L. DeLauro, D-Conn.,would repeal the Tax Cuts and Jobs Act's reduced tax rates on foreign-derived intangible income and global intangible low-taxed income.

The European Parliament's Committee on Economic and Monetary Affairs has voted by awide margin to adopt its reports on proposals for EU Council directives on the corporate taxation of a significant digital presence and a digital services tax.

Leaders of the G-20 countries pledged to continueworking toward finding a common approach to address the tax issues of the digital economy,with a status update in 2019 and a final report by 2020.

European efforts to tax the digital economy indicate a partiality for local interests that could violatewTO trade principles, according to a former U.S. official.

Despite the likelihood that the EU Councilwill reject a proposal to tax digital services on December 4, members of the European Parliament (MEPs) have voted in favor of recommendations to strengthen the proposed directive.

On the eve of the OECD's task force meeting on the digital economy, a senior U.S. Treasury officialwarned of grim potential consequences if the international community fails to reach an agreement on questions of allocation.

French and German finance ministerswill propose that the EU tax only advertising sales revenue, as opposed to the three revenue streamswithin the scope of the European Commission's digital services tax (DST) proposal.

The European Court of Justice has ruled in favor of three Belgian companies that had challenged the legality of France's decision to refuse a refund ofwithholding tax collected on dividends paid by a resident company to a loss-making non-resident company. Between 2008 and 2011, Belgian companies Sofina, Rebelco, and Sidro received dividends as shareholders in French companies, it said.

As industries beyond tech hurtle toward a digital future, chaos could ensue unless consensus is reached on taxing a radically reshaped global economy, panelists at a forum inwashington, D.C., agreed Thursday.

A deal may be close to being struck on a proposal for new international digital tax rules, according to a report released Friday by the Organization for Economic Cooperation and Development to the G-20. The OECD's Task Force on Digitalization is scheduled to deliver final recommendations to the G-20 on how to update tax rules to copewith the online and nonphysical economy in 2020,which once seemed a difficult task given the divergence of views among the organization's members.

Facebook and Google emphasised the importance of international consensus on changes to the international tax system to tax the digital economy and the scope of value creation during EU Parliament committee hearing.

Germany's environment minister says putting a price on carbon dioxide is "the right answer" to cut the country's emissions of greenhouse gases.

The cash holdings of US companies fell nearly 10% in the first half of this year, signaling a turning point in the historic financial reserves they amassed in past two decades. Corporate America's cash mountain peaked at close to $2tn at the end of last year, according to rating agency Moody's. Some 70% of the money had piled up offshore, as companies hoarded their overseas profits rather than face tax charges by bringing them home and spending the money on things like acquisitions and stock buybacks.

The tax reforms that have transformed corporate America's earnings this year have not resulted in a similar step-change in dividend payments, according to new research showing that payouts by US companies are growing at a slower pace than the global average.

Tax legislation in the European Unionwould require a majority vote, not unanimous approval, for passage under a plan to be offered by Commissioner for Economic and Financial Affairs Pierre Moscovici. In Nov. 27 testimony before the European Parliament Tax Committee, Moscovici told the panel that the EU has "touched the limits" in legislative gridlock over tax laws because of the requirement for unanimous approval of tax legislation.

Isle of Man, Jersey and Guernsey have signed an agreement to keep their current customs arrangementswith the U.K. after Brexit, giving clarity to businesses based in the crown dependencies. Thiswould mean that no customs dutywill be applied to goods moving to and from the crown dependencies and U.K. after Brexit and They also agreed to impose the same external tariff on external trade.

The European Commission's proposal for an EUwide tax on financial transactions has generated much public and political discussion since itwas first published on September 28, 2011. This article discusses the proposal for the introduction of a financial transactions tax both in the EU and U.K. and the possibility of its enactment.

The chances of a digital tax on large internet companies like Facebook and Alphabet Inc.'s Google vanished Nov. 28when Ireland, Sweden, Denmark and Finland refused to agree to impose the temporary 3 percent levy.

U.S. companieswon some concessions from the Internal Revenue Service following proposed regulations thatwould soften the blow of a new foreign tax -- but the rules didn't go as far as the business community had hoped.

The Australian Taxation Office (ATO) has issued a new draft risk assessment guideline that rates inbound distributors' transfer pricing compliance risk based on the ratio of earnings before interest and taxes (EBIT) to sales.

Tentative plans to revamp the transfer pricing ruleswith a new intangible property definitionwould add nothing new to the Tax Cuts and Jobs Act (P.L. 115-97), according to a top Treasury official.

Treasury and the Office of Management and Budget continue to sit downwith concerned taxpayers as the proposed regs for the base erosion and antiabuse tax await final approval.

G-20 leaders must unite to keep political momentum going at the highest level so that countries stand a good chance of agreement on a long-term approach to taxing the digital economy, the OECD's chief said.

Spainwill be the next European country to introduce the Financial Transaction Tax (FTT),which is estimated to raise ÔøΩ8.45 billion ($9.57 billion) in 2019, according to the Government's forecasts. The main objective of the FTT,which many refer to as the Tobin tax, is to introduce the tax system into the financial sector and to increase the tax collection of the States. In this case, however, it also responds to the need to justify the budget plan presented by Madrid in Brussels last October,where the Spanish Government proposed a deficit reduction of 0.4% for next year instead of the 0.65% suggested by the European Commission.

Business groups are praising the new tax package from Houseways and Means Committee Chairman Kevin Brady (R-Texas) for including technical corrections to the 2017 tax-cut law. The bill Brady released Monday includes five provisions that aim to correct areas of the 2017 tax lawwhere therewere unintended consequences. Two technical corrections in Brady's billwould address priorities of the retail industry. Another provision in Brady's billwould help businesses receive tax refunds.

A Facebook tax official denied the company had sought special tax treatment in Europe and a Google executive committed to ending structures in Bermuda as European Union lawmakers sought Tuesday to probe suspected aggressive tax planningwithin the bloc. At a hearing held in Brussels, a tax executive from luxury clothing firm Kering also said the company's decision to use a Swiss structurewas "strategic" rather than tax-motivated. This is after statistics suggesting the company's employees in Switzerlandwere 115 times more productive than other staff raised eyebrows among lawmakers.