2013

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Submissions to the Ways and Means Committees Working Groups on Tax Reform: International

  • By Tax Foundation
A cut in the corporate tax rate and shift to territorialwould keep the U.S. competitive on the international stage.

The U.S. corporate code needs an overhaul. Over the last 30 years the U.S. has fallen behind internationally, as countries from around the globe have cut rates and shifted to a territorial system of taxation. Since 2006, there have been 133 major corporate tax cuts, leaving the U.S.with the highest rate in the OECD. Furthermore, 28 of the 34 OECD countries now operate under a territorial system. In an increasingly globalizedworld, the inaction of the U.S. in the face of corporate tax reform around the globe has put U.S. companies on an uneven playing field. A rate cut and shift to territorialwould lay the framework to make the United States competitive again.

For the submission, go here.

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Emerging Countries and the Taxation of Offshore Accounts

A new international regime inwhich financial institutions function as cross-border tax intermediaries is emerging. The contours of that regimewill be established during a narrowwindow of opportunity over the span of the next few years. The resulting regimewill have especially important consequences for emerging countries. A uniform, multilateral automatic information exchange systemwould improve both these jurisdictions ability to tax the offshore accounts of their residents and their capacity to tax certain domestic-source income from capital.

For the paper, go here.

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Summary Estimates for Multinational Companies: Employment, Sales, and Capital Expenditures for 2011

The US Bureau of Economic Analysis (BEA) has released 2011 advance and 2010 revised summary estimates of the employment, capital expenditures, and sales activity of U.S. multinational companies (comprising both their U.S. and foreign operations) and the corresponding activity of foreign multinational companies in the United States. Preliminary 2011 and revised 2010 statistics based on more complete source data and including country and industry detailwill be released later this year.

For the BEA release, go here.

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IRS Official and Practitioners Explore the Edges of International Joint Venture Guidance

Practitioners on April 24 questioned an IRS official on aspects of international transactions involving domestic and foreign partnerships forwhich guidance has not been issued.

Speaking at a District of Columbia Bar Taxation Section luncheon, David Bailey, branch 4 senior technical reviewer, IRS Office of Associate Chief Counsel (International), offered his view of the transactions discussed by the practitioners, but he pointed out that many of the questions did not have official answers.

For the story, go here. (Subscription required.)

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Tobin tax will only benefit shady fixers

US financial institutions are already preparingworkarounds for the European financial transactions tax,writes John Dizard.

For the commentary, go here.

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Starbucks seeks fresh US tax breaks

Starbucks has launched a fightback in the US to protect and expand tax breaks on foreign profits just months after its tax structure provoked a political backlash and public relations crisis in the UK.

For the story, go here.

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Treasury uses tax levels to woo US groups

The UK Treasury has stepped up its marketing of Britain as arespectable low tax country in a series of high level meetingswith US businesses that played down the recent political row over avoidance.

For the story, go here.

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CTJ: "Bernie Sanders Is Right and the Tax Foundation Is Wrong: The U.S. Has Very Low Corporate Income Taxes"

  • By Citizens for Tax Justice
Senator Bernie Sanders of Vermont recently appeared on Real Timewith Bill Maher and disputed the claim by the Tax Foundation that the U.S. has the highest corporate tax in theworld. Senator Sanders is right, the Tax Foundation iswrong.

For the report, go here.

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European Union: EC Says Financial Transactions Tax Plans Will Not Be Delayed by U.K. Legal Challenge

The European Commission insisted April 22 that plans to conclude a financial transactions tax in 11 European Union member stateswould not be delayed by legal action taken by the United Kingdom to stop the controversial levy on stock and bond trades aswell as derivatives.

For the story, go here. (Subscription required.)

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European Union: European Commission Assembles Tax Expert Group to Monitor Plans to Tackle Tax Abuse

The European Commission set up a new platform April 23 made up of government and nongovernment tax expertswho are to ensure proper implementation of pending recommendations to crack down on tax havens and close corporate tax breaks.

For the article, go here. (Subscription required.)

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Corporate Taxes: Untangling a Multi-Jurisdictional Transaction: Be Prepared!

A seasoned team of legal and tax professionals can help a client navigate the perils and pitfalls of multi-jurisdictional, cross-border transactions in order to arrive at a transaction structure that is mutually beneficial to all parties.

For the article, go here. (Subscription required.)

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Passthrough Entities Budget Proposal on Dispositions by Foreign Partners Offers Ruling Teeth, Official Says

President Obama's budget proposal to codify a controversial ruling on the tax treatment of dispositions by foreign partners is intended to remind taxpayers of the government's views on the issue and to provide awithholding mechanismwithteeth, an Internal Revenue Service official said April 24.

For the story, go here. (Subscription required.)

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The "Silver Blaze" Search for Inflation

Twice a year, the International Monetary Fund and theworld Bank convene meetings inwashington to discuss current issues facing the global economy. The spring meetings occurred lastweek, and one of the important questions addressedwas,Where is inflation in theworld today amidst all theworld's monetary stimulus?

For the article, go here.

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Why Is Treasury Protecting Tax Havens for Multinationals?

Martin Lobel argues that the United States needs to change its transfer-pricing-based international tax system because it is broken.

For the viewpoint, go here. (Subscription required.)

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News Analysis: The Digital Economy and Permanent Establishment

In news analysis, Lee A. Sheppard considers a recent American Bar Association/International Fiscal Association meeting's discussion on permanent establishment and the digital economy.

For the article, go here. (Subscription required.)

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Economic Analysis: Designing Anti-Base-Erosion Rules

In economic analysis, Martin A. Sullivan discusses various anti-base-erosion proposals in tax reform plans offered by President Obama, Houseways and Means Committee Chair Dave Camp, R-Mich., and others.

For the article, go here. (Subscription required.)

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Transfer Pricing: OECD to Deliver Base Erosion Action Plan To Top Finance Ministers in July, Official Says

The Organization for Economic Cooperation and Development will deliver its action plan to address base erosion and profit shifting by July, its top tax official confirmed April 18.

Pascal Saint-Amans, head of the OECD's Center for Tax Policy and Administration, said the BEPS project is on track. The OECD is actively working to develop an action plan, to be delivered to Group of 20 finance ministers in July, setting out a road map and process for furtherwork.

For the story, go here. (Subscription required.)

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Tax Reform: Rep. Brady Sees a Chance to Agree On Shift to Territorial Tax on Foreign Income

Settling the debate over shifting from aworldwide to a territorial tax system could be closer than it appears, according to Rep. Kevin Brady (R-Texas), and observers suggest could bodewell for broader corporate tax reform.

For the story, go here. (Subscription required.)

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Summary Estimates for Multinational Companies, 2011

Worldwide employment by U.S. multinational companies (MNCs) increased 1.5 percent in 2011 to 34.5 millionworkers,with the increase primarily reflecting increases abroad. In the United States, employment by U.S. parent companies increased 0.1 percent to 22.9 millionworkers, comparedwith a 1.8 percent increase in total private-industry employment in the United States.

For the news release, go here.

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News Analysis: Offshored Intangibles and the OECD Base Erosion Project

In news analysis, Lee A. Sheppard reports on remarks by Danielle Rolfes, Treasury's international tax counsel, that suggest that the United States is offering little support for the base erosion and profit-shiftingwork being done by the OECD.

For the article, go here. (Subscription required.)

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U.S. Officials Active on OECD Project As G-20 Deadline Nears, Rolfes Reports

U.S. officials areworkingwith other countries toward a June deadline for a comprehensive action plan to address issues raised by the Organization for Economic Cooperation and Development's base erosion and profit shifting (BEPS) project, a Treasury Department official said April 18.

For the story, go here. (Subscription required.)

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House Democrat Tries Again With New Bill Taxing Financial Transactions at Tiered Rates

Thewhite House has been cool to a new tax on financial transactions, but a Democratic lawmaker proposing to introduce one has not given up on the Obama administration.

For the story, go here. (Subscription required.)

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Markets Insight: High price of ignoring EUs tax on trades

A bungled bail-out of Cyprus?wewill get over it. Political stalemate in Italy?whatever. Global financial markets are in a forgiving moodwhen it comes to European political missteps. The prevalent view is that the European Central Bankwill avert catastrophes and the eurozone has moved towards a recovery phase.

Such a frame of mind explainswhy markets have paid so little attention as yet to Brussels plans for a financial transactions tax that, if implemented, could drive up costs significantly, slash volumes and reshape the financial industry across Europe. The assumption is that such far-reaching proposalswill never actually be implemented.

For the story, go here.

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Tax Plan May Provide Boost

Despite the austerity mood inwashington, President Obama's proposed budgetwould provide tax relief to some foreign investors, a move the U.S. real-estate industry has been seeking for years.

As part of a larger push to spur private investment in U.S. infrastructure, Mr. Obama has proposed changes to a 1980s tax policy called the Foreign Investment in Real Property Tax Act, or Firpta, thatwould exempt foreign pension funds from paying taxes on gains from real-estate sales.

For the story, go here.

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Tax Court Holds Corporation Received Dividends From CFC

The Tax Court, sustaining accuracy-related penalties, held that funds a corporation received through a purported reinvestment plan from a controlled foreign corporationwere in substance dividend payments and taxable under section 301 and that the value of property transferred to the corporationwas includable in its income.

For the opinion, go here. (Subscription required.)

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U.S. Tax Reform: Full-Inclusion Over Territorial System Compelling

Jeffery M. Kadet argues that rather than implementing a territorial system or continuingwith the current deferral system, the United States should implement aworldwide full-inclusion system.

For the article, go here. (Subscription required.)

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We tried a Tobin tax and it didnt work

Europe is making a mistake. In February, the European Commission published a proposal for a financial transaction tax also called a Tobin orRobin Hood tax in the EU. Eleven states have been granted the right to impose a minimum 0.1 per cent tax on equity and debt transactions and a minimum 0.01 per cent charge on derivatives transactions. If the experience of Sweden's use of such a tax is anything to go by, this move is extremely unwise.

For the article, go here.

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UK Shadow Business Secretary Chuka Umunna would not back an FTT without New York

The opposition Labour member of Parliament said itwould belunacy for the UK to unilaterally adopt a financial transaction tax (FTT).

For the article, go here. (Subscription required.)

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Levin: Corporations should pay fair share

In a USA Today op-ed piece, Sen. Sander Levin (D-MI), argues that loopholes allow some companies to pay no taxes, putting added burden on Americans.

For the article, go here.

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Fairness in International Taxation Act Would Limit Treaty Benefits for Some Corporations

  • By House Ways and Means Committee
The Fairness in International Taxation Act, introduced by Houseways and Means Committee member Lloyd Doggett, D-Texas,would limit treaty benefits for corporations attempting to avoid U.S. taxes.

For the bill, go here.

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Doggett Bill Would Introduce Measures Against International Corporate Tax Avoidance

  • By House Ways and Means Committee
The International Tax Competitiveness Act of 2013, introduced by Houseways and Means Committee member Lloyd Doggett, D-Texas,would modify the treatment of foreign corporations managed as U.S. domestic corporations and change the tax treatment of royalties received from controlled foreign corporations.

For the bill, go here.

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Stop Tax Haven Abuse Act Would Restrict Use of Offshore Tax Havens

  • By House Ways and Means Committee
The Stop Tax Haven Abuse Act, introduced by Houseways and Means Committee member Lloyd Doggett, D-Texas,would implement various measures intended to reduce tax evasion through offshore tax havens, including expanded information reporting and increased penalties against tax shelter promoters.

For the bill, go here.

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Doggett Announces Legislation to Combat Tax Haven Abuse

  • By House Ways and Means Committee
The Stop Tax Haven Abuse Act, the International Tax Competitiveness Act, and the Fairness in International Taxation Actwould each provide measures to crack down on corporations' use of tax havens to avoid U.S. taxes, according to an April 15 release from Houseways and Means Committee member Lloyd Doggett, D-Texas.

For the article, go here.

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On Tax Day, Complexity Trumps Competitiveness

  • By Slaughter & Rees Report

Today is tax day in the United States, the deadline for filing income tax returns and making any outstanding tax payments for the previous calendar year. Youwould be hard-pressed to find any U.S. taxpayerwho loves (or even likes) Americas current tax system.what American citizens and companies alike find especially troubling is the systems complexity that increasingly penalizes America in the global economy.

For article, go here.

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CTJ: "The U.S. Continues to Be One of the Least Taxed of the Developed Countries "

  • By Citizens for Tax Justice
The U.S.was the third least taxed country in the Organization for Economic Cooperation and Development (OECD) in 2010, the most recent year forwhich OECD has complete data.

Of all the OECD countries,which are essentially the countries the U.S. tradeswith and competeswith, only Chile and Mexico collect less taxes as a percentage of their overall economy (as a percentage of gross domestic product, or GDP).

For the CTJ report, go here.

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"Tech Companies Love Dublin's Tax Rates"

Dublin's Grand Canal Square, just south of the River Liffey, is known as Googletown. In 2011, Google (GOOG),which employs more than 2,500 people in Ireland, bought the neighborhood's 15-story Montevetro building. Nearby is Facebook's (FB) European headquarters, alongwith outposts for LinkedIn (LNKD), Yahoo! (YHOO), and other U.S. technology companies, some of them Dublin fixtures for over a decade. Theyve been drawn to expand there by the strapped government's flat 12.5 percent corporate tax rate.

For the article, go here.

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Stakeholders Agree on Approach to Tackling Base Erosion and Profit Shifting

Business representatives and OECD and government officialswho attended a recent Paris meeting on the OECD's base erosion and profit shifting (BEPS) initiative seemed to agree that fundamental international tax standards should be tweaked, not replaced, to combat BEPS, David Ernick of PricewaterhouseCoopers LLP told Tax Analysts April 5.

For the article, go here. (Subscription required.)

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News Analysis: Is Multinational Tax Planning Over?

In news analysis, Lee A. Sheppard says the European Union's strugglewith aggressive tax planning shows that the OECD base erosion and profit shifting project is genuine and that the golden age for tax planning might be over.


For the article, go here. (Subscription required.)

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Baucus and Camp: "Tax Reform Is Very Much Alive and Doable "

Everyweek Congress has been in session for the past two years, one of us has made the shortwalk across the Capitol to the other's office.we crowd into a roomwith our policy experts to chart a path to our mutual goal -- comprehensive tax reform.

Whilewe are from different political parties,we agree that America's tax code is broken. That iswhywe have beenworking together as the chairmen of Congress's two-taxwriting committees to make it fairer for families and spark a more prosperous economy.

The last overhaul of the tax codewas more than a quarter century ago, and there is a need to get rid of its unnecessary complexity. Taxpayers spend more than six billion hours filling out documents to complete filings. They struggle to understand the rules,which amount to almost four millionwords. That is neither a productive use of time or resources.we can and must do better.

For the article, go here.

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Tax Policy Bulletin: OECD iniative on Base Erosion and Profit Shifting (BEPS)

  • By PwC
This bulletin addresses the Base Erosion and Profit Shiftingwork-stream of the Organisation for Economic Cooperation and Development (OECD) and the OECD's progress report on the topic for the G20.

For the article, go here.

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International Implications of Corporate Tax Rate Reductions

Corporate tax rates and all that
•what are the international implications of potential U.S. corporate tax rate reductions?
• Thatwould depend, of course, on exactlywhat additional provisions, including revenue enhancing base broadeners, are included alongwith any corporate tax reductions.
• Evidence from OECD tax changes from 1980-2004 is that half the time corporate statutory rate changes are accompanied by base changes, though more often than not tax rate reductions are imposed alongwith base narrowing.
• For now, however, consider only rate changes.

For full presentation go here:

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Picking Up the Tab 2013

Some U.S.-based multinational firms and individuals avoid paying U.S. taxes by using accounting tricks to shift profits made in America to offshore tax havens countrieswith minimal or no taxes. They benefit from their access to Americas markets,workforce, infrastructure and security; but they pay little or nothing for it violating the basic fairness of the tax system and forcing other taxpayers to pick up the tab.

For article go here.

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Economic Analysis: U.S. Contract Manufacturing and Dave Camp's Option C

Nearly a decade ago, H. David Rosenbloom of New York University School of Law asked: "Why should U.S. companies be required to situate economic functions abroad to achieve a desirable result?"

Rosenbloomwent on to suggest that the practical exemption from U.S. tax for foreign-based companies that perform a "middleman function" should be extended to subsidiaries performing the same function in the United States. That might erode the U.S. corporate tax base, but, Rosenbloom countered, itwould eliminate distortions, promote U.S. employment, and have no detrimental effects on the competitiveness of U.S. multinationals. (Prior coverage: "Why Not Des Moines? A Fresh Entry in the Subpart F Debate," Tax Notes, Jan. 12, 2004, p. 2742004 TNT 8-31: Viewpoint.)

For article go here.

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Small Businesses Hurt by Tax Breaks For Multinational Firms, Group Complains

Tax havens for multinational corporations are bad for small business, a group opposed to the tax benefits reported April 4.

The U.S. Public Interest Research Group reported that multinational corporations gain an unfair competitive advantage by averting about $90 billion annually in taxes through tax code provisions like the indefinite deferral of taxes on profits earned outside the United States.

For the article, go here. (Subscription required.)

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SIFMA Urges Lew to Push Europe To Pare Back Financial Transactions Tax Plan

  • By Bloomberg
Treasury Secretary Jacob J. Lew should push European policymakers to pare back plans for a broad financial transactions tax, industry opponents to the tax said in an April 3 letter to Lew.

For the article, go here. (Subscription required.)

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3M Fighting IRS in Tax Court Over Imputed Royalties; Says Regs Are Invalid

U.S. technology company 3M Co. is taking the IRS to Tax Court over adjustments resulting from the agency's decision to allocate $23.6 million of additional royalty income from the company's Brazilian subsidiary to its U.S. headquarters, even though Brazilian law prohibits payment of the royalties to the parent.

For the article, go here. (Subscription required.)

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Christian Aid: "Multinational Corporations and the Profit-Sharing Lure of Tax Havens"

In February 2013, the Organisation for Economic Co-operation and Development (OECD) published its report Addressing Base Erosion and Profit Shifting. The report is the OECD's initial response to the mandate it received in 2012 from some political leaders in developed countries,which showed concern about the problem of tax-base erosion and profit shifting by multinational corporations (MNCs).

In the report, the OECD acknowledges that the current international tax system has not kept pacewith developments in the business environment, providing MNCswith plenty of opportunities to exploit legal loopholes and enjoy double non-taxation of income (ie tax-free earnings).

The adoption of profit-shifting strategies by MNCs is identified as one of the main causes of base erosion. According to the OECD, abusive tax avoidance by MNCs raises serious issues of fairness and compliance.

How tax avoidance and evasion can hamper development efforts has been an important area of research in the past few years. This paper contributes to the debate by investigating the link between tax evasion and avoidance, profit shifting and tax havens.

For the paper, go here.

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Peterson Institute: "Corporate Tax Reform and U.S. MNCs: Ensuring a Competitive Economy"

The debate about "tax reform," during the 2012 presidential race and congressional budget battles this year has centered on closing loopholes, creating new incentives for growth, and raising revenue through higher personal taxation ofwealthy Americans. But the debate overlooks an important priority for future US economic growth: the urgent need to reform the corporate tax. US-based multinational corporations (MNCs) are hobbled by an outmoded tax structure as they compete in the age of globalization.

For the paper, go here.

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Bank of America Finds Profit in Foreign Tax Credit Moves

Bank of America Corp. more than doubled its profits in 2012 --with some help from the tax code.

What the bank calls restructuring of its non-U.S. operations yielded $1.7 billion in foreign tax credits, or 41 percent of the $4.2 billion the company reported in 2012 earnings, according to securities documents including the form 10-K it filed Feb. 28.while the maneuvers didnt provide an immediate cash tax benefit for Bank of America, the foreign tax credits count toward net income under accounting rules.

The transactions and the banks decision to take some risk that the creditswill expire unused indicate the sometimes contradictory incentives that companies have under the U.S. tax codes treatment of income earned overseas.

For the article, go here.

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Economic Analysis: U.S. Contract Manufacturing and Dave Camp's Option C

On March 15 at awashington conference sponsored by the Tax Policy Center and the International Tax Policy Forum, titled "Tax Policy and U.S. Manufacturing in a Global Economy," the conversation focused onwhether manufacturing should get preferential tax treatment. Those in favor said manufacturing is mobile and research-intensive and that there is a strong economic case that mobile capital and research should be tax favored. Opponents said mobile capital and research should be subsidized directly if necessary, not manufacturing generally, and that in any case, the political and administrative difficulties of definingwinners and losers greatly dilute any potential benefits.

For the article, go here. (Subscription required.)

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