2013
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News Analysis: Repatriation: Don't Try This at Home
by Lee A. Sheppard (Tax Analysts, Tax Notes Today)
The dirty little secret about multinationals'whinges about reducing residual taxation on repatriation of lightly taxed foreign earnings is that they do findways to repatriate tax free.
But after the Barnes Groupmemorandum decision, hokey repatriation strategies seem more difficult to sustain. Repatriationwas the subject of a panel at the July 30 meeting of the IFA USA Branch New York chapter.
Barnes Groupwas awell-chosen case on the government's part. All kinds of yuck factor evidencewas in court. The accounting firm that planned the dealwas compensatedwith a success fee of a percentage of the amount of tax saved. Therewas a draft opinion letterwith an assumed business purpose. The two tax haven vehicles formed for the transaction had no employees or earnings and ran flat. The judge accused the taxpayer of failing to follow its form.
For the article, go here. (Subscription required)
The dirty little secret about multinationals'whinges about reducing residual taxation on repatriation of lightly taxed foreign earnings is that they do findways to repatriate tax free.
But after the Barnes Groupmemorandum decision, hokey repatriation strategies seem more difficult to sustain. Repatriationwas the subject of a panel at the July 30 meeting of the IFA USA Branch New York chapter.
Barnes Groupwas awell-chosen case on the government's part. All kinds of yuck factor evidencewas in court. The accounting firm that planned the dealwas compensatedwith a success fee of a percentage of the amount of tax saved. Therewas a draft opinion letterwith an assumed business purpose. The two tax haven vehicles formed for the transaction had no employees or earnings and ran flat. The judge accused the taxpayer of failing to follow its form.
For the article, go here. (Subscription required)
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Employment Taxes: Multinationals Seek Tax Strategies to Grow Global Workforce, Offset Compliance Burdens
by Lydia Beyoud (Bloomberg BNA)
As multinational corporations increasingly seek to employ a mobile, globalworkforce to support their businesses across developed and developing markets, many companies are encountering a host of difficult tax compliance issues as governmentsworldwide become more tax-savvy, practitioners told BNA.
“There are a host of employer responsibilities and obligations, primarily, but not exclusively, on the tax side that can be daunting to organizations, Gardiner Hempel of Deloitte Tax LLP told BNA July 29. Permanent relocation of employees from their home country to another has been a growing trend, said Hempel, a partner in Deloitte's Global Employee Services practice.
For the article, go here. (Subscription required)
As multinational corporations increasingly seek to employ a mobile, globalworkforce to support their businesses across developed and developing markets, many companies are encountering a host of difficult tax compliance issues as governmentsworldwide become more tax-savvy, practitioners told BNA.
“There are a host of employer responsibilities and obligations, primarily, but not exclusively, on the tax side that can be daunting to organizations, Gardiner Hempel of Deloitte Tax LLP told BNA July 29. Permanent relocation of employees from their home country to another has been a growing trend, said Hempel, a partner in Deloitte's Global Employee Services practice.
For the article, go here. (Subscription required)
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BEPS Project Not Intended to Eviscerate Arm's-Length Principle, OECD Official Says
by Matthew R. Madara & Randall Jackson (Tax Analysts, Tax Notes Today)
The OECD Committee on Fiscal Affairs' base erosion and profit-shifting (BEPS) projectwasn't intended to remove the arm's-length principle from transfer pricing, as the committee recognizes the principle provides a basis for clarity and certainty, according to an OECD official.
The arm's-length principleworks directlywithin a system of legal personality that domestic tax systems depend on to administer tax systems, Michael McDonald, financial economist, Treasury Office of International Tax Counsel, said on August 1 during the 2013 National Association for Business Economics transfer pricing seminar in Arlington, Va.
For the story, go here. (Subscription required)
The OECD Committee on Fiscal Affairs' base erosion and profit-shifting (BEPS) projectwasn't intended to remove the arm's-length principle from transfer pricing, as the committee recognizes the principle provides a basis for clarity and certainty, according to an OECD official.
The arm's-length principleworks directlywithin a system of legal personality that domestic tax systems depend on to administer tax systems, Michael McDonald, financial economist, Treasury Office of International Tax Counsel, said on August 1 during the 2013 National Association for Business Economics transfer pricing seminar in Arlington, Va.
For the story, go here. (Subscription required)
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New Study: 82 of Top 100 Companies Used Tax Havens in 2012
by U.S. PIRG
The "vast majority" of large companies are avoiding U.S. taxes by using offshore tax havens,with $90 billion in taxes uncollected every year, according to a July 31 report from U.S. PIRG, a federation of state public interest research groups.
For the report, go here.
The "vast majority" of large companies are avoiding U.S. taxes by using offshore tax havens,with $90 billion in taxes uncollected every year, according to a July 31 report from U.S. PIRG, a federation of state public interest research groups.
For the report, go here.
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News Analysis: Does Revised OECD Intangibles Guidance Signal a Shift?
by Jaime Arora, Lee A. Sheppard, and Matthew R. Madara (Tax Analysts, Tax Notes Today)
In its revised discussion draft on transfer pricing aspects of intangibles and itswhite paper on transfer pricing documentation released on July 30, the OECD Centre for Tax Policy and Administration made good on its objective in the action plan on base erosion and profit shifting (BEPS) to make it easier for tax administrators to look beyond the form of taxpayers' intragroup contracts in the difficult area of transfers of valuable intangibles.
The revised draft may even signal a move away from the arm's-length standard toward formulary apportionment, David Ernick of PricewaterhouseCoopers LLP told Tax Analysts, adding that the changes to the transfer pricing rules could be the most significant in a lifetime. However, recent statements by OECD officials indicate that the arm's-length standard remains the foundation of theirwork.
For the story, go here. (Subscription required)
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Transfer Pricing: OECD Releases Revised Intangibles Draft, Along With White Paper on Documentation
Article by Kevin A. Bell (Bloomberg)
The Organization for Economic Cooperation and Development July 30 released its revised discussion draft on intangibles,which includes extensive changes from the earlier June 2012 draft, and awhite paper on transfer pricing documentation.
According to OECD, revisions to Section Badopt a more transactional approachwhile preserving a clear focus on the importance of functions performed, assets used, and risks assumed.
For the story, go here. (Subscription required)
For the discussion draft, go here.
For thewhite Paper, go here.
The Organization for Economic Cooperation and Development July 30 released its revised discussion draft on intangibles,which includes extensive changes from the earlier June 2012 draft, and awhite paper on transfer pricing documentation.
According to OECD, revisions to Section Badopt a more transactional approachwhile preserving a clear focus on the importance of functions performed, assets used, and risks assumed.
For the story, go here. (Subscription required)
For the discussion draft, go here.
For thewhite Paper, go here.
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August 2013 edition of PwC's International Tax News
International Tax News is designed to help multinational organisations keep upwith the constant flow of international tax developmentsworldwide. Among the topics featured in this month's edition are:
For the August 2013 issue of International Tax News, go here.
- New German tax legislation could affect multinationals
- US Congress considers international tax reform
- Saudi Arabia's tax treaty application simplified
- Hong Kong-Jersey double tax treaty enters into force
For the August 2013 issue of International Tax News, go here.
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Testimony of Dr. Laura DAndrea Tyson (before US Congress Joint Economic Committee)
Testimony of Dr. Laura DAndrea Tyson (before US JEC)
Tax reform should lower the corporate tax rate, broaden the base by eliminating tax expenditures, and shift to a hybrid international tax system to improve U.S. competitivenesswithout increasing the deficit, Laura D'Andrea Tyson of the University of California said at a July 31 Joint Economic Committee hearing.
For the testimony, go here.
Tax reform should lower the corporate tax rate, broaden the base by eliminating tax expenditures, and shift to a hybrid international tax system to improve U.S. competitivenesswithout increasing the deficit, Laura D'Andrea Tyson of the University of California said at a July 31 Joint Economic Committee hearing.
For the testimony, go here.
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UK House of Lords Comm Report: "Tackling corporate tax avoidance in a global economy: is a new approach needed?"
by UK House of Lords Economic Affairs Committee
The UK faces a serious problem of avoidance of corporation tax, due in part to the complexity of the tax regime in the UK, but mainly because the international tax system gives multinational companies opportunities to shift profits between countries inways that reduce their liabilities in the UK. This damages the economy and undermines trust in the tax system.
The UK and the G8 support the Organisation for Economic Cooperation and Development (OECD)'s Action Plan to tackle base erosion, published on 19 July 2013. It sets out a two-year programme to address the most egregious forms of tax avoidance. But it is not yet clear how effective the proposed solutionswill be or whether they can be achievedwithin the timescale.
The UK House of Lords Economic Affairs Committee decided to carry out a short inquiry to see how matters stood and to put forward proposals to help to reduce avoidancewhich the Government could adopt itself at the same time as it pursues agreement to reform the OECD framework governing where multinational companies pay corporation tax.
For the report, go here.
The UK faces a serious problem of avoidance of corporation tax, due in part to the complexity of the tax regime in the UK, but mainly because the international tax system gives multinational companies opportunities to shift profits between countries inways that reduce their liabilities in the UK. This damages the economy and undermines trust in the tax system.
The UK and the G8 support the Organisation for Economic Cooperation and Development (OECD)'s Action Plan to tackle base erosion, published on 19 July 2013. It sets out a two-year programme to address the most egregious forms of tax avoidance. But it is not yet clear how effective the proposed solutionswill be or whether they can be achievedwithin the timescale.
The UK House of Lords Economic Affairs Committee decided to carry out a short inquiry to see how matters stood and to put forward proposals to help to reduce avoidancewhich the Government could adopt itself at the same time as it pursues agreement to reform the OECD framework governing where multinational companies pay corporation tax.
For the report, go here.
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Meaningful Corporate Tax Residence
by Omri Marian (Tax Analysts, Tax Notes Today)
Omri Marian is an assistant professor of law at the University of Florida Levin College of Law.
This report summarizes some conclusions from a coming Boston College Law Review article inwhich Marian recommends a fresh look at corporate tax residence. Marian argues that the perception of meaninglessness is a result of misguided normative discussion and that it cannot be avoided by adopting a territorial system. In his report, Marian develops a functional model underwhich corporate tax residence tests are designed to support the policy purposes of corporate taxation, and the tests are not independently justified in normative terms. A functional approach suggests that the United States should adopt a corporate tax residence test underwhich domestic corporations for tax purposes are corporationswhose securities are listed for public trading in the United States, orwhose place of central management and control is in the United States.
For the article, go here. (Subscription required)
Omri Marian is an assistant professor of law at the University of Florida Levin College of Law.
This report summarizes some conclusions from a coming Boston College Law Review article inwhich Marian recommends a fresh look at corporate tax residence. Marian argues that the perception of meaninglessness is a result of misguided normative discussion and that it cannot be avoided by adopting a territorial system. In his report, Marian develops a functional model underwhich corporate tax residence tests are designed to support the policy purposes of corporate taxation, and the tests are not independently justified in normative terms. A functional approach suggests that the United States should adopt a corporate tax residence test underwhich domestic corporations for tax purposes are corporationswhose securities are listed for public trading in the United States, orwhose place of central management and control is in the United States.
For the article, go here. (Subscription required)
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Too Much Tax? Move To Ireland, From the Comfort of Your Home.
by Kate Linebaugh (Wall Street Journal)
American companies looking for lower taxes used to move to Bermuda. These days, they are heading to the Emerald Isle. At least in spirit.
"It is certainly a trend in the making," said Reuven Avi-Yonah, director of the international tax program at theUniversity of Michigan's law school.
For the story, go here.
American companies looking for lower taxes used to move to Bermuda. These days, they are heading to the Emerald Isle. At least in spirit.
"It is certainly a trend in the making," said Reuven Avi-Yonah, director of the international tax program at theUniversity of Michigan's law school.
For the story, go here.
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ACT Statement on President Obamas Comments on Tax Reform
by Alliance for Competitive Taxation (ACT)
President Obama's corporate tax reform proposal "is another clear sign of growing momentum" for tax reform,which should be revenue-neutral, reduce the corporate tax rate, and shift to a new international tax system, the Alliance for Competitive Taxation said in a July 30 statement.
For the release, go here.
President Obama's corporate tax reform proposal "is another clear sign of growing momentum" for tax reform,which should be revenue-neutral, reduce the corporate tax rate, and shift to a new international tax system, the Alliance for Competitive Taxation said in a July 30 statement.
For the release, go here.
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US PIRG: "Offshore Shell Games -- The Use of Offshore Tax Havens by the Top 100 Publicly Traded Companies"
by U.S PIRG
Many large U.S.-based multinational corporations avoid paying U.S. taxes by using accounting tricks to make profits made in America appear to be generated in offshore tax havens countrieswith minimal or no taxes. By booking profits to subsidiaries registered in tax havens, multinational corporations are able to avoid an estimated $90 billion in federal income taxes each year. These subsidiaries are often shell companieswith few, if any employees, andwhich engage in little to no real business activity.
This study reveals that tax haven use is ubiquitous among the largest 100 publicly traded companies as measured by revenue.
For the report, go here.
Many large U.S.-based multinational corporations avoid paying U.S. taxes by using accounting tricks to make profits made in America appear to be generated in offshore tax havens countrieswith minimal or no taxes. By booking profits to subsidiaries registered in tax havens, multinational corporations are able to avoid an estimated $90 billion in federal income taxes each year. These subsidiaries are often shell companieswith few, if any employees, andwhich engage in little to no real business activity.
This study reveals that tax haven use is ubiquitous among the largest 100 publicly traded companies as measured by revenue.
For the report, go here.
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As The Simpler Taxes for America Tour Comes to Pennsylvania, Americas Business Leaders Detail Benefits for Keystone State
by Business Roundtable (website)
Tax reform that reduces corporate tax rates and modifies international tax rules to stimulate investmentwould help Pennsylvania's economy, Business Roundtable said in a July 29 release on the tax reform tour visit to the state by Houseways and Means Committee Chair Dave Camp, R-Mich., and Senate Finance Committee Chair Max Baucus, D-Mont.
For the release, go here.
Tax reform that reduces corporate tax rates and modifies international tax rules to stimulate investmentwould help Pennsylvania's economy, Business Roundtable said in a July 29 release on the tax reform tour visit to the state by Houseways and Means Committee Chair Dave Camp, R-Mich., and Senate Finance Committee Chair Max Baucus, D-Mont.
For the release, go here.
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Tax Evasion: The OECD's Base Erosion Action Plan and Developing Countries
by Michael C. Durst (Bloomberg Daily Tax Report)
The Organization for Economic Cooperation and Development released its recommendations July 19 for global efforts to counter the much-publicized phenomenon ofbase erosion and profit shifting (BEPS).
Although the OECD's membership consists of countrieswith advanced economies, the OECD has taken efforts to consultwith representatives of developing countries, and its report makes special note of the damage that base erosion inflicts on developing economies.
Base erosion is indeed a serious problem for many developing countries, and the OECD is correct in highlighting this fact. Much economic activity in developing countries takes place in the informal sector,where the resulting income is largely immune from taxation. Therefore, an especially large proportion of developing countries' potential revenue base tends to consist of income generated by multinational enterprises' business in the countries.
For the report, go here. (Subscription required)
The Organization for Economic Cooperation and Development released its recommendations July 19 for global efforts to counter the much-publicized phenomenon ofbase erosion and profit shifting (BEPS).
Although the OECD's membership consists of countrieswith advanced economies, the OECD has taken efforts to consultwith representatives of developing countries, and its report makes special note of the damage that base erosion inflicts on developing economies.
Base erosion is indeed a serious problem for many developing countries, and the OECD is correct in highlighting this fact. Much economic activity in developing countries takes place in the informal sector,where the resulting income is largely immune from taxation. Therefore, an especially large proportion of developing countries' potential revenue base tends to consist of income generated by multinational enterprises' business in the countries.
For the report, go here. (Subscription required)
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Australia keen to lead way on BEPS issues
by Matthew Gilleard (ITR)
Australia is gearing up to try and achieve meaningful outcomes on action to tackle base erosion and profit shifting (BEPS) during its chairmanship of the G20 next year.
For the story, go here. (Registration required)
Australia is gearing up to try and achieve meaningful outcomes on action to tackle base erosion and profit shifting (BEPS) during its chairmanship of the G20 next year.
For the story, go here. (Registration required)
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Quick Deliverables Possible From BEPS Action Plan, Practitioner Says
by Randall Jackson (Tax Analysts, Tax Notes Today)
Aspects of the OECD's base erosion and profit shifting (BEPS) action planwill help accelerate the creation of deliverables, answering the charge that the need for domestic legislationwill prevent the action plan from facilitating real change, Manal Corwin of KPMG LLP said in a July 26webcast put on by her firm.
For the story, go here. (Subscription required)
Aspects of the OECD's base erosion and profit shifting (BEPS) action planwill help accelerate the creation of deliverables, answering the charge that the need for domestic legislationwill prevent the action plan from facilitating real change, Manal Corwin of KPMG LLP said in a July 26webcast put on by her firm.
For the story, go here. (Subscription required)
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Tax Reform: Tax Reform Could Be Fueled by OECD BEPS Action Plan, KPMG Practitioners Say
by Alison Bennett (Bloomberg)
Tax reform in the United States could be fueled by the action plan to curb base erosion and profit shifting recently unveiled by the Organization for Economic Cooperation and Development, KPMG LLP practitioners said July 26.
“The OECD report could form a basis for U.S. legislation, Hank Gutman, principal-in-charge of KPMG's Tax Legislative and Regulatory Services group, said on awebcast sponsored by KPMG.
For the story, go here. (Subscription required)
Tax reform in the United States could be fueled by the action plan to curb base erosion and profit shifting recently unveiled by the Organization for Economic Cooperation and Development, KPMG LLP practitioners said July 26.
“The OECD report could form a basis for U.S. legislation, Hank Gutman, principal-in-charge of KPMG's Tax Legislative and Regulatory Services group, said on awebcast sponsored by KPMG.
For the story, go here. (Subscription required)
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IRS pursuing 'stateless income' tax enforcement: official
by Patrick Temple-West (Reuters)
The U.S. Internal Revenue Service is pursuing tax enforcement cases against companies over the issue of "stateless income," a senior agency official said onwednesday in a reference to corporate profits that are not taxed by any country.
Erik Corwin, an IRS deputy chief counsel, said therewere international tax disputeswith companies, "most involving consequences of complex restructurings designed either to create stateless income or to affect a tax efficient repatriation."
For the story, go here.
The U.S. Internal Revenue Service is pursuing tax enforcement cases against companies over the issue of "stateless income," a senior agency official said onwednesday in a reference to corporate profits that are not taxed by any country.
Erik Corwin, an IRS deputy chief counsel, said therewere international tax disputeswith companies, "most involving consequences of complex restructurings designed either to create stateless income or to affect a tax efficient repatriation."
For the story, go here.
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Tax Evasion: OECD's BEPS Plan Proposes New Groups On Digital Economy, Aggressive Tax Planning
by Rick Mitchell & Alison Bennett (Bloomberg)
The Organization for Economic Cooperation and Development released an action plan July 19 proposing a new task force on taxation of the digital economy and aworking party on aggressive tax planning, as part of the action plan itwill present to finance ministers from theworld's leading economies to reduce abusive base erosion and profit shifting (BEPS).
Among a range of actions, the plan calls for a variety of changes to transfer pricing guidelines to prevent tax evasion, and it says OECDwill devise rules to require taxpayers to disclose aggressive tax planning arrangements. A key focus of the action plan is a crackdown onharmful tax practices,with an emphasis on compulsory, spontaneous exchange of information on rulings related to preferential regimes.
For the article, go here. (Subscription required)
The Organization for Economic Cooperation and Development released an action plan July 19 proposing a new task force on taxation of the digital economy and aworking party on aggressive tax planning, as part of the action plan itwill present to finance ministers from theworld's leading economies to reduce abusive base erosion and profit shifting (BEPS).
Among a range of actions, the plan calls for a variety of changes to transfer pricing guidelines to prevent tax evasion, and it says OECDwill devise rules to require taxpayers to disclose aggressive tax planning arrangements. A key focus of the action plan is a crackdown onharmful tax practices,with an emphasis on compulsory, spontaneous exchange of information on rulings related to preferential regimes.
For the article, go here. (Subscription required)
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Tax Evasion: Top U.S. Officials Praise OECD Action Plan As Step to Avoid Base Erosion, Profit Shifting
by Alison Bennett
Top U.S. officials praised an action plan unveiled by the Organization for Economic Cooperation and Development July 19 as an important step to address base erosion and profit-shifting.
Both Treasury Secretary Jacob J. Lew and Sen. Carl Levin (D-Mich.), chairman of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, said July 19 the action plan is a key step in preventing cross-border tax avoidance.
For the article, go here. (Subscription required)
Top U.S. officials praised an action plan unveiled by the Organization for Economic Cooperation and Development July 19 as an important step to address base erosion and profit-shifting.
Both Treasury Secretary Jacob J. Lew and Sen. Carl Levin (D-Mich.), chairman of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, said July 19 the action plan is a key step in preventing cross-border tax avoidance.
For the article, go here. (Subscription required)
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G20 sharpens attack on international corporate tax avoidance
by Vanessa Houlder (Financial Times)
Finance ministers from the Group of 20 leading nations plan to launch a new phase of the international crackdown on corporate tax avoidance thisweek even as UK business leaders arewarning their government to resistradical new solutions to profit shifting by multinationals.
For the story, go here.
Finance ministers from the Group of 20 leading nations plan to launch a new phase of the international crackdown on corporate tax avoidance thisweek even as UK business leaders arewarning their government to resistradical new solutions to profit shifting by multinationals.
For the story, go here.
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US blocks crackdown on tax avoidance by net firms like Google and Amazon
by Simon Bowers (The Guardian)
France has failed to secure backing for tough new international tax rules specifically targeting digital companies, such as Google and Amazon, after opposition from the US forced thewatering down of proposals thatwill be presented at thisweek's G20 summit.
For the story, go here.
France has failed to secure backing for tough new international tax rules specifically targeting digital companies, such as Google and Amazon, after opposition from the US forced thewatering down of proposals thatwill be presented at thisweek's G20 summit.
For the story, go here.
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OECD Proposes Plan for Crackdown on Companies Tax Avoidance
by Jesse Drucker & Rainer Buergin (Bloomberg)
The Organization for Economic Cooperation and Development proposed a blueprint for cracking down on tax-dodging strategies used by companies such as Google, Apple, and Yahoo!.
German Finance Ministerwolfgang Schaeuble called the OECD's plan amajor step. The proposal aims to develop rules over the next two years preventing companies from escaping taxes by putting patent rights into shell companies, taking interest deductions in one countrywithout reporting taxable profit in another, and forcing them to disclose to regulatorswhere they report their income around theworld.
“It's a matter of justice and fairness that multinational companies pay their fair contribution to national budgets, Schaeuble told reporters today before a meeting of Group of 20 finance chiefs and central bankers in Moscow.withoutfair burden sharing, in the endwewill destroy even a global, open economy, he said.
For the story, go here.
The Organization for Economic Cooperation and Development proposed a blueprint for cracking down on tax-dodging strategies used by companies such as Google, Apple, and Yahoo!.
German Finance Ministerwolfgang Schaeuble called the OECD's plan amajor step. The proposal aims to develop rules over the next two years preventing companies from escaping taxes by putting patent rights into shell companies, taking interest deductions in one countrywithout reporting taxable profit in another, and forcing them to disclose to regulatorswhere they report their income around theworld.
“It's a matter of justice and fairness that multinational companies pay their fair contribution to national budgets, Schaeuble told reporters today before a meeting of Group of 20 finance chiefs and central bankers in Moscow.withoutfair burden sharing, in the endwewill destroy even a global, open economy, he said.
For the story, go here.
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OECD unveils global crackdown on tax arbitrage by multinationals
by Vanessa Houlder (Financial Times)
Plans for a global crackdown on tax arbitrage markinga turning point in the history of international co-operation on taxationwere unveiled on Friday at the meeting of G20 finance ministers in Moscow.
Thewide-ranging action plan on tacklingbase erosion and profits shifting has been drawn up by the Paris-based Organisation for Economic Co-operation and Development for the G20 in response to sustained criticism of the low tax rates paid by some multinational companies such as Google.
Pascal Saint-Amans, the top tax official at the OECD, said the initiativewould force up tax rates for multinationals that organise their affairs so they paid little tax. He said:They know the golden age ofwe dont pay taxes anywhere is over.
For the story, go here.
Plans for a global crackdown on tax arbitrage markinga turning point in the history of international co-operation on taxationwere unveiled on Friday at the meeting of G20 finance ministers in Moscow.
Thewide-ranging action plan on tacklingbase erosion and profits shifting has been drawn up by the Paris-based Organisation for Economic Co-operation and Development for the G20 in response to sustained criticism of the low tax rates paid by some multinational companies such as Google.
Pascal Saint-Amans, the top tax official at the OECD, said the initiativewould force up tax rates for multinationals that organise their affairs so they paid little tax. He said:They know the golden age ofwe dont pay taxes anywhere is over.
For the story, go here.
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America Goes It Alone on High Corporate Taxes
by Mieko Nakabayashi and James Carter (Wall Street Journal)
What happenswhen the international economy changes but tax policy does not? That is a central question facing the United States and Japan,which have the highest corporate tax rates in the industrializedworld. The need for action is acute, and emerging trends in global commerce demonstrate the need for tax policies that alignwith those trends.
A recent analysis by Thomson Reuters of business acquisitions showed that at least 484 U.S. firms,with a value of more than $43.6 billion, have been acquired by foreign interests this year alone. One factor in these acquisitions is the differentways inwhich nations impose corporate income taxes.
When a company is sold, the price is established by myriad factors, one ofwhich is the tax structure facing the buyer. Corporations based in countrieswith taxes lower than in the U.S. can offer a higher price because of a smaller tax liability after acquiring the new firm. Inwhich countries do companies have the built-in advantage over American firms in a bidding process? The answer is simple. All of them.
For the story, go here.
What happenswhen the international economy changes but tax policy does not? That is a central question facing the United States and Japan,which have the highest corporate tax rates in the industrializedworld. The need for action is acute, and emerging trends in global commerce demonstrate the need for tax policies that alignwith those trends.
A recent analysis by Thomson Reuters of business acquisitions showed that at least 484 U.S. firms,with a value of more than $43.6 billion, have been acquired by foreign interests this year alone. One factor in these acquisitions is the differentways inwhich nations impose corporate income taxes.
When a company is sold, the price is established by myriad factors, one ofwhich is the tax structure facing the buyer. Corporations based in countrieswith taxes lower than in the U.S. can offer a higher price because of a smaller tax liability after acquiring the new firm. Inwhich countries do companies have the built-in advantage over American firms in a bidding process? The answer is simple. All of them.
For the story, go here.
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G-20 Backs Plan to Curb Tax Avoidance by Large Corporations
by Andrew E. Kramer & Floyd Norris (New York Times)
Theworld's richest economies for the first time endorsed a blueprint on Friday to curbwidely used tax avoidance strategies that allow some multinational corporations to pay only a pittance in income taxes.
It could be years before any changes take place in national tax laws and big corporations and other interest groups are sure to lobby heavily to preserve their tax breaks. But the proposalwas the most concrete response yet to the intensifying pressure on governments around theworld to address the issue.
For the story, go here.
Theworld's richest economies for the first time endorsed a blueprint on Friday to curbwidely used tax avoidance strategies that allow some multinational corporations to pay only a pittance in income taxes.
It could be years before any changes take place in national tax laws and big corporations and other interest groups are sure to lobby heavily to preserve their tax breaks. But the proposalwas the most concrete response yet to the intensifying pressure on governments around theworld to address the issue.
For the story, go here.
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G-20 to target global tax loopholes
by Howard Schneider (Washington Post)
Topworld economic officials are expected to agree thisweekend on a major push to tighten global tax laws, touching offwhat could be a sensitive debate as nations vie to protect their favored industries and maintain tax breaks they've used to court investment.
In theory, the 40-pagework plan to be endorsed by the Group of 20 economic powers in Moscow is about shaping the international tax system so it reflects how global companies now operate - and ensures that the Apples and Amazons pay a fairer share of tax in the nationswhere they do business.
But the more detailed discussion thatwill follow over the next two years or so, as countries try to develop changes to tax laws and treaties, could take on far more political tones.
For the story, go here.
Topworld economic officials are expected to agree thisweekend on a major push to tighten global tax laws, touching offwhat could be a sensitive debate as nations vie to protect their favored industries and maintain tax breaks they've used to court investment.
In theory, the 40-pagework plan to be endorsed by the Group of 20 economic powers in Moscow is about shaping the international tax system so it reflects how global companies now operate - and ensures that the Apples and Amazons pay a fairer share of tax in the nationswhere they do business.
But the more detailed discussion thatwill follow over the next two years or so, as countries try to develop changes to tax laws and treaties, could take on far more political tones.
For the story, go here.
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G-20 Nations Fully Endorse OECD Action Plan on Tax Evasion
by Theophilos Argitis & Scott Rose
Group of 20 nationsfully endorse the ambitious and comprehensive plan presented by the Organization for Economic Cooperation and Development, according to a statement published in Moscow today.
“Ensuring that all taxpayers pay their fair share of taxes is a high priority in the context of fiscal sustainability, promoting growth and the needs of developing countries to build capacity for financing development, the G-20 said after a two-day meeting of finance chiefs.
For the story, go here.
Group of 20 nationsfully endorse the ambitious and comprehensive plan presented by the Organization for Economic Cooperation and Development, according to a statement published in Moscow today.
“Ensuring that all taxpayers pay their fair share of taxes is a high priority in the context of fiscal sustainability, promoting growth and the needs of developing countries to build capacity for financing development, the G-20 said after a two-day meeting of finance chiefs.
For the story, go here.
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Treasury Officials Set Expectations for BEPS Action Plan
by David D. Stewart (Tax Analysts, Tax Notes Today)
Treasury officials on July 22 attempted to allay fears about the scope of the OECD's base erosion and profit shifting (BEPS) action plan by stressing that recommended changes to the international tax systemwould be incremental and targeted at unintended consequences of the current system.
Speaking during a Deloittewebcast on the recently released BEPS action plan, Henry Louie, deputy to the Treasury international tax counsel for treaty affairs, said the United States does not see the BEPS project as a "wholesale rethinking of international tax principles" but rather as a targeted approach to areas of international taxation that don'twork as designed.
For the story, go here. (Subscription required)
Treasury officials on July 22 attempted to allay fears about the scope of the OECD's base erosion and profit shifting (BEPS) action plan by stressing that recommended changes to the international tax systemwould be incremental and targeted at unintended consequences of the current system.
Speaking during a Deloittewebcast on the recently released BEPS action plan, Henry Louie, deputy to the Treasury international tax counsel for treaty affairs, said the United States does not see the BEPS project as a "wholesale rethinking of international tax principles" but rather as a targeted approach to areas of international taxation that don'twork as designed.
For the story, go here. (Subscription required)
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G-20 Finance Ministers Endorse OECD Action Plan on BEPS and Automatic Information Exchange
by Kristen A. Parillo (Tax Analysts, Tax Notes Today)
G-20 finance ministers and central bank governors on July 20 said they "fully endorse" the OECD's action plan on base erosion and profit shifting (BEPS) aswell as the OECD's proposed global model for multilateral and bilateral information exchange.
In a communiqué released at the conclusion of their July 19-20 meeting in Moscow, the finance ministers and central bank governors said that ensuring that all taxpayers pay their fair share of taxes is a high priority in the context of fiscal sustainability, economic growth, and the needs of developing countries. "Tax avoidance, harmful practices and aggressive tax planning have to be tackled," theywrote.
The G-20 meeting participants expressed their approval of the "ambitious and comprehensive" BEPS action plan presented to them by the OECD on July 19.
For the story, go here. (Subscription required)
G-20 finance ministers and central bank governors on July 20 said they "fully endorse" the OECD's action plan on base erosion and profit shifting (BEPS) aswell as the OECD's proposed global model for multilateral and bilateral information exchange.
In a communiqué released at the conclusion of their July 19-20 meeting in Moscow, the finance ministers and central bank governors said that ensuring that all taxpayers pay their fair share of taxes is a high priority in the context of fiscal sustainability, economic growth, and the needs of developing countries. "Tax avoidance, harmful practices and aggressive tax planning have to be tackled," theywrote.
The G-20 meeting participants expressed their approval of the "ambitious and comprehensive" BEPS action plan presented to them by the OECD on July 19.
For the story, go here. (Subscription required)
Posted on
The Taxation of Cloud Computing and Digital Content
by David J. Shakow (Tax Analysts, Tax Notes Today)
In this report, Professor David J. Shakow describes the problems cloud computing poses for tax systems. He shows how current law is applied to cloud computing and identifies the difficulties in doing so.
For the report, go here. (Subscription required)
In this report, Professor David J. Shakow describes the problems cloud computing poses for tax systems. He shows how current law is applied to cloud computing and identifies the difficulties in doing so.
For the report, go here. (Subscription required)
Posted on
Joint Action for Efficient and Fair Taxation
by Angel Gurria (Secretary-General of the OECD)
OECD Secretary-General Angel Gurría addressed the G-20 finance ministers' meeting in Moscow on July 20, touting the OECD's base erosion and profit shifting action plan and automatic information exchange proposal as solutions to factors that undermine the fairness and integrity of global tax systems.
For the speech, go here.
OECD Secretary-General Angel Gurría addressed the G-20 finance ministers' meeting in Moscow on July 20, touting the OECD's base erosion and profit shifting action plan and automatic information exchange proposal as solutions to factors that undermine the fairness and integrity of global tax systems.
For the speech, go here.
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Nuts & Bolts of Corporate Tax Reform
by Stevewamhoff (Citizens for Tax Justice)
Lawmakers should repeal deferral of taxes on corporations' offshore profits and reject proposals for a territorial tax system or repatriation holiday to increase revenue from progressive sources, Citizens for Tax Justice said in a July 19 presentation on corporate tax reform.
For the presentation, go here. (Subscription required)
Lawmakers should repeal deferral of taxes on corporations' offshore profits and reject proposals for a territorial tax system or repatriation holiday to increase revenue from progressive sources, Citizens for Tax Justice said in a July 19 presentation on corporate tax reform.
For the presentation, go here. (Subscription required)
Posted on
It's not just Google...
by Tom Bergin
More than half the top U.S. tech firms minimise tax bills by using structures that some governmentswant to change. Itwon't be easy.
For the report, go here.
More than half the top U.S. tech firms minimise tax bills by using structures that some governmentswant to change. Itwon't be easy.
For the report, go here.
Posted on
Transfer Pricing: Going Past' Arm's Length Standard Means Recognizing Economic Reality,' Official Says
by Deloresw. Gregory (Bloomberg Daily Tax Report)
The Organization for Economic Cooperation and Development's assertion that it mightgo beyond the arm's length principle in its bid to fix international transfer pricing rules does not mean that it has embraced a formulary approach, a U.S. Treasury Department official said July 22.
For the story, go here. (Subscription required)
The Organization for Economic Cooperation and Development's assertion that it mightgo beyond the arm's length principle in its bid to fix international transfer pricing rules does not mean that it has embraced a formulary approach, a U.S. Treasury Department official said July 22.
For the story, go here. (Subscription required)
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A Global Revenue Grab: The G-20 unveils a plan to limit international tax competition. .
bywall Street Journal
After five years of failing to spur a robust economic recovery through spending and tax hikes, theworld's richest countries have hit upon a new idea that looks a lot like the old: International coordination to raise taxes on business.
The Organization for Economic Cooperation and Development on Friday presented its action plan to combatwhat it calls "base erosion and profit shifting," or BEPS. This is bureaucratese for not paying as much tax as governmentwishes you did. The plan bemoans the danger of "double non-taxation,"whatever that is, and even raises the specter of "global tax chaos" if this bogeyman called BEPS isn't tamed.
For the editorial, go here.
After five years of failing to spur a robust economic recovery through spending and tax hikes, theworld's richest countries have hit upon a new idea that looks a lot like the old: International coordination to raise taxes on business.
The Organization for Economic Cooperation and Development on Friday presented its action plan to combatwhat it calls "base erosion and profit shifting," or BEPS. This is bureaucratese for not paying as much tax as governmentwishes you did. The plan bemoans the danger of "double non-taxation,"whatever that is, and even raises the specter of "global tax chaos" if this bogeyman called BEPS isn't tamed.
For the editorial, go here.
Posted on
BEPS Project Has Consequences for U.S. Tax Treaties
by Jeremiah Coder
The OECD's newly released action plan to combat base erosion and profit shifting (BEPS)will have an impact on treaty issues as the United Statesworks to update existing treaty agreements and enter into new ones, Arlene Fitzpatrick, attorney-adviser in the Treasury Office of International Tax Counsel, said July 24.
For the story, go here. (Subscription required)
The OECD's newly released action plan to combat base erosion and profit shifting (BEPS)will have an impact on treaty issues as the United Statesworks to update existing treaty agreements and enter into new ones, Arlene Fitzpatrick, attorney-adviser in the Treasury Office of International Tax Counsel, said July 24.
For the story, go here. (Subscription required)
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IRS Economist Discusses Challenges of Intangibles in Transfer Pricing
by Matthew R. Madara
The difficulty the IRS has had in resolving transfer pricing issues involving intangibles is chiefly because of the Tax Court's decision in Veritas Software Corp. v. Commissioner, 133 T.C. 297 (2009), according to Bill Morgan, senior economic adviser (transfer pricing operations), IRS Large Business and International Division.
For the story, go here. (Subscription required)
The difficulty the IRS has had in resolving transfer pricing issues involving intangibles is chiefly because of the Tax Court's decision in Veritas Software Corp. v. Commissioner, 133 T.C. 297 (2009), according to Bill Morgan, senior economic adviser (transfer pricing operations), IRS Large Business and International Division.
For the story, go here. (Subscription required)
Posted on
Transfer Pricing: OECD Action Plan Raises Questions About Scope, Timing of Consensus on BEPS
by Deloresw. Gregory, Rick Mitchell & Kevin A. Bell (Bloomberg Daily Tax Report)
An action plan for dealingwith base erosion announced by the Organization for Economic Cooperation and Development July 19 has raised a number of questions among practitioners in the United States and abroadwho are concerned about assertions the plan mightgo beyond the arm's-length principle in a bid to fix international transfer pricing rules.
For the report, go here.
An action plan for dealingwith base erosion announced by the Organization for Economic Cooperation and Development July 19 has raised a number of questions among practitioners in the United States and abroadwho are concerned about assertions the plan mightgo beyond the arm's-length principle in a bid to fix international transfer pricing rules.
For the report, go here.
Posted on
The OECD's BEPS report: How did others react?
by Matthew Gilleard (ITR)
Now the dust from lastweek's G20 finance ministers meeting in Moscow is beginning to settle, the question is towhat extent the OECD's action plan for tackling base erosion and profit shifting (BEPS) marks a turning point in the history of international taxation, andwhether the timeframes outlined in the report are realistic.
For the story, go here.
Now the dust from lastweek's G20 finance ministers meeting in Moscow is beginning to settle, the question is towhat extent the OECD's action plan for tackling base erosion and profit shifting (BEPS) marks a turning point in the history of international taxation, andwhether the timeframes outlined in the report are realistic.
For the story, go here.
Posted on
Practitioners Air Concerns About OECD's BEPS Action Plan
by Kristen A. Parillo & Stephanie Soong Johnston
The OECD's newly released action plan to combat base erosion and profit shifting (BEPS) is ambitious but rifewith challenges for both multinationals and governments, practitioners at PricewaterhouseCoopers LLP and Ernst & Young LLP said July 23.
During separatewebcasts hosted by PwC and E&Y, practitioners from those firms' U.S. and international offices discussed the implications of the action plan for multinational enterprises and tax authorities. The OECD presented the plan,which identifies 15 actions it says should be undertaken by countries in a coordinated manner to address the sources of BEPS, to the G-20 finance ministers at their July 19-20 meeting in Moscow. In a communiqué released at the conclusion of the meeting, the finance ministers said they "fully endorse" the action plan.
For the story, go here. (Subscription required)
The OECD's newly released action plan to combat base erosion and profit shifting (BEPS) is ambitious but rifewith challenges for both multinationals and governments, practitioners at PricewaterhouseCoopers LLP and Ernst & Young LLP said July 23.
During separatewebcasts hosted by PwC and E&Y, practitioners from those firms' U.S. and international offices discussed the implications of the action plan for multinational enterprises and tax authorities. The OECD presented the plan,which identifies 15 actions it says should be undertaken by countries in a coordinated manner to address the sources of BEPS, to the G-20 finance ministers at their July 19-20 meeting in Moscow. In a communiqué released at the conclusion of the meeting, the finance ministers said they "fully endorse" the action plan.
For the story, go here. (Subscription required)
Posted on
Letter to U.S. Senators on Baucus-Hatch Tax Reform Plan
by Louis R. Chenevert, Chair, Tax & Fiscal Policy Cmte, Business Roundtable
Revenue-neutral tax reform that promotes economic growth and job creation can be accomplished by cutting the corporate tax rate to 25 percent, shifting to a territorial tax system, and reforming corporate tax expenditures, the Business Roundtable said in a July 22 letter to senators.
For the letter, go here.
Revenue-neutral tax reform that promotes economic growth and job creation can be accomplished by cutting the corporate tax rate to 25 percent, shifting to a territorial tax system, and reforming corporate tax expenditures, the Business Roundtable said in a July 22 letter to senators.
For the letter, go here.
Posted on
Tax Evasion: Practitioners: OECD's BEPS Action Plan Could Have Big Consequences for Multinationals
by Lydia Beyoud (Bloomberg, Daily Tax Report)
Multinational corporations mustwait until the Organization for Economic Cooperation and Development's issues country-specific recommendations on changes to domestic rules related to base erosion and profit shifting activities before they can fully evaluate how theywill be impacted by the BEPS action plan, a practitioner said July 23.
“Once the OECD recommendations have been made, itwill be for the individual countries to decidewhether,when, and how to implement the recommendations, Mat Mealey, leader of Ernst & Young's International Tax Services in the United Kingdom and Ireland, said during awebinar sponsored by E&Y.
For the story, go here. (Subscription required)
Multinational corporations mustwait until the Organization for Economic Cooperation and Development's issues country-specific recommendations on changes to domestic rules related to base erosion and profit shifting activities before they can fully evaluate how theywill be impacted by the BEPS action plan, a practitioner said July 23.
“Once the OECD recommendations have been made, itwill be for the individual countries to decidewhether,when, and how to implement the recommendations, Mat Mealey, leader of Ernst & Young's International Tax Services in the United Kingdom and Ireland, said during awebinar sponsored by E&Y.
For the story, go here. (Subscription required)
Posted on
Multinational Corporations: Changing Headquarters Landscape 2000-2012: Corporate Taxation and the Impact of Emerging Market Economies
by Thomas Kinrade and Tom Neubig (Bloomberg, Daily Tax Report)
The international business landscape, once dominated by multinational corporations from a few developed economies, is nowwell represented by corporations from both established and emerging economies.
In fact, as the gross domestic product levels of emerging markets have grown, so too has the number of companieswith headquarters in these countries. Over approximately the past decade, the share of theworld's largest companieswith headquarters in emerging markets has more than quintupled, from 4 percent in 2000 to 22 percent in 2012.
While the increase in company headquarters locations in emerging markets can be attributed in part to the growth of economies in those regions, the evidence suggests that, in today's competitive international business landscape, tax policy continues to play an important role.
For the report, go here. (Subscription required)
The international business landscape, once dominated by multinational corporations from a few developed economies, is nowwell represented by corporations from both established and emerging economies.
In fact, as the gross domestic product levels of emerging markets have grown, so too has the number of companieswith headquarters in these countries. Over approximately the past decade, the share of theworld's largest companieswith headquarters in emerging markets has more than quintupled, from 4 percent in 2000 to 22 percent in 2012.
While the increase in company headquarters locations in emerging markets can be attributed in part to the growth of economies in those regions, the evidence suggests that, in today's competitive international business landscape, tax policy continues to play an important role.
For the report, go here. (Subscription required)
Posted on
New OECD Report on Tax Avoidance Lags Behind Global Transparency Movement
by Tom Cardamone (GFI)
Global Financial Integrity on July 19 criticized the OECD action plan addressing base erosion and profit shifting, presented at the G-20 finance ministers' meeting in Moscow, saying that it does not "fully embrace" country-by-country reporting for multinationals and calling on the G-20 to endorse a disaggregated accounting standard.
For the GFI response, go here.
Global Financial Integrity on July 19 criticized the OECD action plan addressing base erosion and profit shifting, presented at the G-20 finance ministers' meeting in Moscow, saying that it does not "fully embrace" country-by-country reporting for multinationals and calling on the G-20 to endorse a disaggregated accounting standard.
For the GFI response, go here.
Posted on
Levin statement on OECDs offshore tax action plan
from Senator Carl Levin (D-Mich)website
An Organisation for Economic Cooperation and Development report on stopping offshore profit shifting indicates "growing global demand for reining in corporate offshore tax abuses," said Sen. Carl Levin, D-Mich., chair of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, in a July 19 statement.
For the release, go here.
An Organisation for Economic Cooperation and Development report on stopping offshore profit shifting indicates "growing global demand for reining in corporate offshore tax abuses," said Sen. Carl Levin, D-Mich., chair of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, in a July 19 statement.
For the release, go here.
Posted on
OECD Action Plan on Base Erosion and Profit Shifting Draws Mixed Reactions
by Stephanie Soong Johnston & David D. Stewart (Tax Analysts, Tax Notes)
The OECD's highly anticipated action plan on base erosion and profit shifting (BEPS), presented to G-20 finance ministers in Moscow on July 19, received mostly positive reactions from governments, tax practitioners, and business groups but drew sharp criticism from advocacy groups that said the plan failed to address corporate transparency and excluded developing countries.
The action plan identifies 15 specific actions that the OECDwill accomplish by December 2015 in order to give international governments the tools needed to clamp down on corporate tax avoidance, a growing global concern. Actions include examining and addressing the challenges of taxing the digital economy; neutralizing the effects of hybrid mismatch arrangements; curbing treaty abuse; bolstering controlled foreign corporation rules; reevaluating transfer pricing documentation; and requiring taxpayers to disclose any aggressive tax planning strategies they may be using.
International governments, on thewhole,welcomed the OECD's efforts. The U.K. pledged its full support,with Chancellor of the Exchequer George Osborne announcing that HM Treasury, alongwith France and Germany,will provide $400,000 to the OECD to facilitate the action plan's progress.
For the article, go here. (Subscription required)
The OECD's highly anticipated action plan on base erosion and profit shifting (BEPS), presented to G-20 finance ministers in Moscow on July 19, received mostly positive reactions from governments, tax practitioners, and business groups but drew sharp criticism from advocacy groups that said the plan failed to address corporate transparency and excluded developing countries.
The action plan identifies 15 specific actions that the OECDwill accomplish by December 2015 in order to give international governments the tools needed to clamp down on corporate tax avoidance, a growing global concern. Actions include examining and addressing the challenges of taxing the digital economy; neutralizing the effects of hybrid mismatch arrangements; curbing treaty abuse; bolstering controlled foreign corporation rules; reevaluating transfer pricing documentation; and requiring taxpayers to disclose any aggressive tax planning strategies they may be using.
International governments, on thewhole,welcomed the OECD's efforts. The U.K. pledged its full support,with Chancellor of the Exchequer George Osborne announcing that HM Treasury, alongwith France and Germany,will provide $400,000 to the OECD to facilitate the action plan's progress.
For the article, go here. (Subscription required)
Posted on
News Analysis: OECD BEPS Action Plan: Trying to Save the System
by Lee A. Sheppard (Tax Analysts, Tax Notes)
The OECD Centre for Tax Policy and Administration released its action plan to dealwith base erosion and profit shifting (BEPS) lastweek. As predicted, it is a multifaceted attempt to shore up the current international consensus of separate company accounting and transfer pricing.
Around here, your correspondent has never had much good to say about the current system,which is moribund and doesn't deliver a fair share of business income tax revenue to affected countries. But the action plan is a good-faith effort to save the current system, andwith it, the OECD's reputation.
For the article, go here. (Subscription required)
The OECD Centre for Tax Policy and Administration released its action plan to dealwith base erosion and profit shifting (BEPS) lastweek. As predicted, it is a multifaceted attempt to shore up the current international consensus of separate company accounting and transfer pricing.
Around here, your correspondent has never had much good to say about the current system,which is moribund and doesn't deliver a fair share of business income tax revenue to affected countries. But the action plan is a good-faith effort to save the current system, andwith it, the OECD's reputation.
For the article, go here. (Subscription required)
Posted on
Treasury Official Addresses Foreign Currency/Subpart F Questions
by Lee A Sheppard (Tax Analysts, Tax Notes)
Danielle Rolfes, Treasury's international tax counsel, came to New York to discuss section 988 questions at the International Tax Institute on July 18.with herwere Chip Harter of PricewaterhouseCoopers LLP, Yaron Z. Reich of Cleary Gottlieb Steen & Hamilton LLP, and Michael Farber of Davis Polk &wardwell LLP.
Multinationals' principal risk exposure that requires hedging is foreign currency exposure. The tax rules are not terribly accommodating to their usual practices, as Harter has frequently explained. The IRS is auditing foreign currency issues.
The crux of the problem is that financial accounting permits all sorts of hedges, including balance sheet hedges and hedges of shareholdings, that multinationalswant to be treated as hedges, or at least offsetting items, for tax purposes so they don't have to book tax liabilities.
For the article, go here. (Subscription required.)
Danielle Rolfes, Treasury's international tax counsel, came to New York to discuss section 988 questions at the International Tax Institute on July 18.with herwere Chip Harter of PricewaterhouseCoopers LLP, Yaron Z. Reich of Cleary Gottlieb Steen & Hamilton LLP, and Michael Farber of Davis Polk &wardwell LLP.
Multinationals' principal risk exposure that requires hedging is foreign currency exposure. The tax rules are not terribly accommodating to their usual practices, as Harter has frequently explained. The IRS is auditing foreign currency issues.
The crux of the problem is that financial accounting permits all sorts of hedges, including balance sheet hedges and hedges of shareholdings, that multinationalswant to be treated as hedges, or at least offsetting items, for tax purposes so they don't have to book tax liabilities.
For the article, go here. (Subscription required.)
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