Int'l Tax News

The European Commission's finding that tax exemptions Luxembourg granted McDonald's Europe Franchisingwere legal shows there's a limit to the commission's strategy of addressing tax issues through state aid investigations, a practitioner told Tax Notes.

In this article, the authors look at how the OECD and the EU plan to address the challenges of taxing the digital economy. They caution against unilateral measures and temporary solutions, suggesting the EU's proposed approach may increase compliance burdens and threaten the delicate balance of international taxation.

The hedged shell company structure the Bank of Montreal used to make $1.4 billion in loans to U.S. subsidiaries did not violate the general antiavoidance rule, the Tax Court of Canada has found.

A formal proposal to overturn the rule of unanimity on tax matterswill be submitted to the EU Council before the end of the year, EU Tax Commissioner Pierre Moscovici said.

Practitioners are pulling no punches as they express their dismay over antiabuse rules ÔøΩ including a provision on reducing pro rata shares ÔøΩ in the proposed U.S. regs on global intangible low-taxed income.

Over six months have passed since the enactment of the TCJA, so it is now possible to reach some preliminary conclusions on its impact.

Eversheds Sutherland has thanked Treasury for meeting to discuss guidance on the new qualifying insurance corporation test for applying the insurance company exception to passive foreign investment company status, providing proposed regulatory language and addressing several issues raised in their meeting.

The American Chamber of Commerce in Japan has proposed solutions towhat the group says are unintended tax costs imposed by the overly broad scope of two provisions of the Tax Cuts and Jobs Act (P.L. 115-97) ÔøΩ the global intangibles low taxed income and transition tax rules.

The Public Sector Pension Investment Board has raised concerns that the aggregation rules for base erosion antiabuse tax purposes, as applied to large institutional investors that hold majority investments in numerous portfolio companies,will be unworkablewithout regulatory adjustments. The board suggested that otherwise unconnected portfolio companies ultimately owned by institutional investors not be aggregated for purposes of applying section 59A(e).

In comments on the application of the base erosion antiabuse tax computation, Treasurywas asked to issue regulations providing that section 59A is to be applied on an aggregate basiswhen the computation of the base erosion minimum tax amount in section 59A(b) is to be determined by treating all taxpayers forming part of the "applicable taxpayer" as one taxpayer.

The Tax Court held that the distribution a couple received from a controlled foreign corporationwas taxable as ordinary income because the CFCwasn't a qualified corporation under section 1(h)(11)(C)(i) and held that they received a constructive dividend from their CFC in Cypruswhen it canceled a debt owed by their S corporation. The court found that therewas a genuine dispute of material fact regardingwhether the Cyprus CFCwas a qualified corporation andwhether a distribution from itwas a qualified dividend.

Oxfam International issued a report September 18 that states theworld's largest pharmaceutical companies ÔøΩ including Pfizer, Johnson & Johnson, Abbott, and Merck & Co. ÔøΩ appear to be avoiding paying an estimated $3.8 billion in taxes annually to 16 countries.

In this article, the author discusses various policies in the Trump administration, including changes to U.S. foreign and international trade policy, tax transparency, entity transparency and beneficial ownership information, and economic sanctions.

Greek Prime Minister Alexis Tsipras recently announced several initiatives ÔøΩ including proposed tax cuts and social benefits ÔøΩ that the government plans to implement in the coming months.

Taxes on carbon and fossil fuels, alongwith the prices of tradable carbon emissions permits, are too low for governments to meet their climate targets, but momentum is picking up, according to the OECD.

The Netherlands' 15 percentwithholding tax on dividendswill be repealed, cutting revenue by ÔøΩ1.9 billion, according to the government's tax plan released September 18 alongwith the 2019 budget.

A distribution from a Hong Kong controlled foreign corporation to U.S. individual shareholderswho elected to be treated as a domestic corporationwasn't qualified dividend income entitled to preferential treatment, the U.S. Tax Court held.

Former IRS official Ron Dabrowski of KPMG interviewed Raymond Stahl, special counsel to the IRS associate chief counsel (international), about proposed GILTI rules and forthcoming guidance under the Tax Cuts and Jobs Act at the International Tax Institute luncheon in New York September 18. The IRS has issued proposed regulations on the repatriation transition tax (REG-104226-18) and global intangible low-taxed income (REG-104390-18). The government isworking to finalize these rules expeditiously.

Artificial intelligence is expected to bring a decisive shift in the taxworldwithin the next decade as more and more businesses and revenue agencies launch pilot projects to deploy the technology.

Ireland has collected ÔøΩ14.3bn in disputed back taxes and interest from Apple, more than two years after Brussels decided that the tech giant's sweetheart tax dealwith the country violated EU law.

Small shareholders of U.S. partnershipswith overseas interests could get smackedwith the 2017 tax overhaul's levy on global intangible low-taxed income, a development creating a slew of unexpected complexities, particularly for private equity funds. The IRS proposed GILTI tax regulations could also factor into some funds' decisions as theyweighwhether or not to incorporate.

Some European Union members may press Ireland to drop its opposition towide-ranging corporate tax reform in return for the bloc's backing on Brexit, according to the European official,who asked not to be identified because they aren't authorized to speak publicly on the matter.

Brazil's forthcoming tax overhaul could make it the latest country to trim its corporate tax rate in thewake of U.S. reforms.

The American Institute of CPAs has urged Treasury and the IRS to amend frequently asked questions on the section 965 transition tax to allow taxpayers to request a refund or application to their 2018 estimated tax liability of the amount of their 2017 estimated tax payments that exceeds their 2017 regular income tax liability, exclusive of the tax amount calculated under section 965.

One advocacy group reiterated its call for Treasury and the IRS to reverse transition tax guidance that denies taxpayers a choice on how to apply their 2017 estimated tax overpayments.

The EU has a little problem regarding its tax harmonization efforts. But then, that's nothing new.

This article presents the second part of a two-part articlewhich considers the implications of the new permanent establishment definition and the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS.

Chilean President Sebastian Pinera has shared his plan to reform corporate tax in a bid to raise the gains of bringing cash back to the country. Contrary to global trends, President Pinera has not made the case for cutting the headline corporate tax rate. Rather, the conservative leader has argued for bringing down the effective rate for taxpayers from more than 44% to 35%without cutting headline rates.

U.S. companies have moved cautiously in repatriating stockpiled overseas profits in response to last year's tax-law change, despite the Trump administration's assertions that trillions of dollarswould return home quickly and supercharge the domestic economy.

Francewill abolish a tax imposed on the capital gains of top earners and entrepreneurswho leave France and sell their assetswith a more-targeted levy designed to deter tax optimisation, a finance ministry spokesman said on Saturday.

A central plank of the TCJAwas to improve the incentives to innovate and invest, and to make U.S.-based multinationals more internationally tax-competitive. A key part of this effortwas to move toward a more territorial-based corporation tax,with minimum taxes like that on GILTI to ensure compliance. Now, however, those intentions are being violated as companieswithout intangible-related income are being swept up in the GILTI tax, and they are being taxed at rates above the new 21 percent statutory corporate rate.

The articleexploreswhen transfer prices are the most informative to calculating reasonable royalty damage awards in patent cases and how transfer prices are devoid of some of the distortions that plague existing patent licenses between unrelated parties.

The ability of states to quickly cash in on a June U.S. Supreme Court ruling that lifted restrictions on their ability to tax all internet saleswould be restrained under federal legislation announced on Friday. U.S. Rep. Jim Sensenbrenner said the bill he introduced thisweekwill clarify interstate sales tax collection requirements, prevent states from imposing sales tax collections on retailers before Jan. 1, and bar retroactive taxation.

Thousands of Costa Ricans kept up a fourth day of marches and awide publicworkers strike on Thursday to protest a proposed fiscal reform,whichwould convert the country's 13% sales tax to a value added tax.

The digitalization of the economy raises tax challengeswhich the OECD is trying to resolvewith a measure that changes of the definition of permanent establishment. The amendment's objective is to provide existing tax treatieswith sufficiently broad definitions to embrace the digital economy,which is currently not the case as recently illustrated by two decisions of the French courts. This article discusses the two most recent decisions by French courts andwhether there is a need for further definition of permanent establishment.

The IRS proposed regulations this past Thursday thatwould soften the blow of a new levy targeting companies that book income in low-tax countries. One of the measureswould allow large multinationals to consolidate the tax at one time for all of their entities aswell as provide guidance on how to calculate the Gilti tax.

On Sep. 12, the Czech government's executive branch approved a uniform local accommodation taxwith the aim to introduce a single tax thatwould apply to all providers of short-term accommodationwithout regard forwhere the accommodation is orwho provides it. This proposed tax is the latest measure the Czech government has introduced as it adjusts its taxation of the sharing economy.

Global intangible low-taxed income and other types of foreign income inclusions qualify for purposes of a real estate investment trust's income qualification test, but some foreign exchange gains don't.

The IRS has issued proposed regulations (REG-104390-18) implementing provisions of the Tax Cuts and Jobs Act (P.L. 115-97) that require U.S. shareholders to include global intangible low-taxed income generated by controlled foreign corporations in their gross income.

Proposed regs on global intangible low-taxed income focus on computational issueswhile leaving significant questions on expense allocation for another time.

HM Revenue & Customs defended its efforts to raise awareness of Making Tax Digital (MTD) for VAT after a leading accountancy bodywarned that many businesses remain unaware of the program.

The OECD has updated its country-by-country reporting guidance to allow jurisdictions the choice ofwhether to require that dividends be included in pretax profit and provide for consistency across items for minority interest entities.

The OECD has released the first of three sets of comments received on its consultation regarding transfer pricing aspects of financial transactions that addresses issues such as treasury function, intragroup loans, hedging, and captive insurance.

As interest in India's advance pricing agreement program grows and its application backlog expands, the number of signed agreements has dropped and the time to completion has stretched to record levels.

The United States' adoption of the Tax Cuts and Jobs Act has made the case for an EU-wide common consolidated corporate tax base (CCCTB) stronger and more urgent, according to a European Commission official.

By Ryan Finley

The proposed regulations on global intangible low-taxed income could lead to taxable phantom income because of their approach to calculating tested income and loss and the disallowance of net operating loss and capital loss carryovers.

Proposed regs on global intangible low-taxed income may have just been released, but consternation over an antiabuse provisionwithin the guidance has been swift to develop among practitioners.

The Tax Cuts and Jobs Act changed the tax consequences of the receipt and payment of some types of fixed or determinable annual or periodic income, including dividends, interest, rents, and royalties.