2015

Washington is close to a major bipartisan breakthrough, a long-term infrastructure bill using revenues from international tax reform. On the cusp of this massive opportunity, Rep. John Delaney, D-MD, is concerned that confusion over the policy details – and scoring numbers - could derail a good deal. Not all tax reform proposals are the same and there are major differences betweenwhat's known as "deemed repatriation" – a framework forwhich he has built a broad, bipartisan coalition of support – and a misguided "repatriation tax holiday."
For the Hill op-ed from Rep. Delaney, go here.

Today, U.S. Senator Rob Portman (R-Ohio), a member of the Senate Finance Committee, called for permanent tax policy to create a more stable environment for economic growth. During a Senate Finance Committee markup of the tax extenders legislation, Portman highlightedwhy temporary tax policy isn'tworking and called for a permanent policy for American families and businesses.
For the Portman release, go here.

Top lawmakers and thewhite House are in the early stages of discussing an ambitious overhaul of how the U.S. taxes its multinational firms, according to officials involved in the effort.
For thewall Street Journal story, go here.

The Treasury Department shouldn't require taxpayers to apply all items of a tax treaty as it crafts a new U.S. model tax convention, the New York State Bar Association Tax Section said.
A taxpayer's "duty of consistency" in applying treaties should be limited to preventing inappropriate efforts to get treaty benefits, the group told the government in July 14 comments.
For the BNA DTR story, go here. (subscription required)

More than 30 developed and developing countries and regional and international organizations have signed on to the Addis Tax Initiative, a project to improve tax administration and facilitate tax reform, particularly in developing countries.
For thewWTD story, go here. (Subscription required)

The final outcome document for the U.N.'s Third International Conference on Financing for Development includes the rejection of a proposal to create an intergovernmental U.N. tax body but calls for enhanced support for the U.N.'s existing tax committee and stresses "the importance of inclusive cooperation" among tax authorities.
For thewWTD story, go here. (subscription required)

Australian Treasurer Joe Hockey on July 15 said -- almost -- that the United States is muscling in on other countries' tax bases as it expands itsworldwide tax enforcement efforts.
For the TNT story, go here. (subscription required)

While the OECD has said it is moving away from some of the more controversial aspects of the risk and recharacterization draft under its base erosion and profit-shifting project, the changes and their adoption and implementation by tax administrations may be complicated, said Philippe Penelle of Deloitte Tax LLP.
For the TNT story, go here. (subscription required)

In news analysis, Lee A. Sheppard reports on July 11 remarks at a New York State Bar Association Tax Section meeting of Danielle Rolfes, Treasury international tax counsel, on Treasury's new model treaty provisions.
For the TNT story, go here. (subscription required)

U.S. Treasury Secretary Jacob J. Lew pushed back against an initiative by nonprofits and some developing nations to create a new global tax body, claiming it could slow the progress of competing anti-base erosion efforts.
"There's a danger that if you have competing centers of responsibility andwork that you make slower progress and not faster progress," Lew told reporters July 14 during a United Nations Financing for Development conference in Addis Ababa, Ethiopia.
For the BNA DTR story, go here. (subscription required)

Cooperative compliance between governments and multinational enterprises could be critical to efforts to minimise illicit financial flows from Africa, argue Jeffrey Owens and Alicja Majdanska of the Vienna University of Business and Economics.
For the ITR story, go here.

The Senate Finance Committee's international tax reformworking group, chaired by Senators Rob Portman and Chuck Schumer, has released its five-pillar framework for reforming the US tax code, concentrating on frequently-debated topics including a move to a territorial tax system, but therewere also surprises – for example in the strength of recommendation for a US patent box.
For the ITR story, go here.

For the small-business lobby, the idea of revamping America's international tax structure isn't evenworth a comment yet.
But make no mistake: That's a victory for Houseways and Means Committee Chairman Paul Ryan (R-Wis.), Sen. Charles Schumer (D-N.Y.) and thosewhowant to chase an international deal thatwould help fund a long-term highway bill.
For the Hill story, go here.

Congress "must play a significant role" in negotiations over the OECD's base erosion and profit-shifting project, and most if not all the proposals under considerationwill need congressional approval to take effect, the top Senate taxwriter said July 16.
For the TNT story, go here. (subscription required)

The Luxembourg government has proposed a series of tax legislation changes, including a measure thatwould implement European Union revisions to the bloc's parent-subsidiary legislation designed to crack down on intragroup tax avoidance schemes, including hybrid loan mismatches.

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

Erik Corwin, IRS deputy chief counsel (technical), and New York State Bar Association Tax Section members recently discussed the merits of aggregate versus entity treatment for partnerships in controlled foreign corporation loans used in inversions and sales of partnership interests in a U.S. trade or business.
For the TNT story, go here. (subscription required)

Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said he has "serious concerns" about the Organization for Economic Cooperation and Development's base erosion and profit shifting, saying the direction it is taking could hurt not only U.S. companies but Capitol Hill's push for a tax overhaul.
For the BNA DTR story, go here. (subscription required)

Tax justice campaignerswere left disappointed by the UN's third international conference on financing for development thisweek as delegates declined to heed their calls to establish a new global tax body,whichwould take over the roles of the UN and the OECD in setting international tax standards and giving guidance.
For the ITR story, go here.

Corporations in the UKwill soon be guilty of a new offence if they fail to prevent their advisers from committing criminal tax evasion.
For the ITR story, go here.

The Australian government released, on July 14 2015, the terms of reference for the Board of Taxation's (BoT) consultation on implementing the OECD's anti-hybrid rules.

For the PwC Insight, go here.

The U.S. system of taxing multinational corporations' earnings encourages companies to direct more investment abroad, either in reality or on paper. The fact that the earnings of the foreign subsidiaries of U.S. corporations are not taxed until they are officially transferred to the domestic parent company leads to an incentive to "permanently reinvest" funds in low-tax jurisdictions and indefinitely defer paying U.S. taxes. This incentive has resulted in multinationals parking huge sums of profits in tax havens (such as Luxembourg, Bermuda, and the Cayman Islands). This report explains and compares several proposals to address this issue, including a repatriation holiday, deemed repatriation, and ending the deferral of taxes on U.S. multinational corporations' foreign earnings.
For the CTJ report, go here.

The ongoing saga of tax reform is reminiscent of the classic 1957 movie "The Incredible Shrinking Man." After a hapless businessman is exposed to a variety of hazards, he shrinks ever smaller, eventually becoming imperceptible to the naked eye.
The sequel now playing on Capitol Hill is creating great peril for our economy. Earlier this year, therewas great enthusiasm in Congress for comprehensive tax reform. But this "comprehensive" reform quickly shrank to the less daunting goal of "business" reform and then an even less ambitious push for "international" reform. Now there's talk that reform may be limited to just trying to pass a handful of permanent tax extenders.
For The Hill story, go here.

Developing nations and advocacy groups at a United Nations conference in Ethiopia are pushing for a new global body to tackle tax avoidance by companies, a move opposed by richer nations.
For the Bloomberg Business story, go here.

During the July 6-7, 2015 public consultation on BEPS Actions 8 through 10, the OECDworking Party 6 announced planned revisions to its proposed changes to the Transfer Pricing Guidelines, including its December 2015 papers on Risk, Recharacterisation and Special Measures and Use of Profit Split Methods and its 2014 draft on Intangibles. The OECD also received feedback from speakerswho had submittedwritten comments to the drafts on Cost Contribution Arrangements and Hard to Value Intangibles (proposed changes to Chapter VI of the Transfer Pricing Guidelines on Intangibles). In providing the updated status of the various transfer pricingworkstreams, the OECD also confirmed the delivery timetable for the transfer pricingwork.

For the PwC Insight, go here.

The European Commission tried to reduce tensionwith the Organization for Economic Cooperation and Development over a list of 30 countries and independent territories the European Union has designated as tax havens by insisting it is not trying to competewith or impede thework of the Paris-based institution.
For the BNA DTR story, go here. (subscription required)

The IRS is open to expanding the list of troublesome foreign splitter transactions set out in final rules under tax code Section 909, but has no immediate plans to do so, an agency official said.

For the BNA DTR story, go here. (subscription required)

Multinational enterpriseswill "always be ahead of the curve" in beating the tax rules in developing countries, so global governance and social responsibility standards should includeways to stigmatize tax avoidance, a U.N. official said July 14.
For thewWTD story, go here. (subscription required)

The OECD'swork on Chapter I of the transfer pricing guidelines is moving in the right direction, but questions remain on the level of substance necessary to recognize a transaction, according to Clark Chandler of KPMG LLP.
For the TNT story, go here. (subscription required)

In news analysis, Lee A. Sheppard reports on a July 14 discussion of the final foreign tax credit splitter rules at an International Tax Institute luncheon in New York.
For the TNT story, go here. (subscription required)

The Center for Freedom and Prosperity, joined by 20 other business advocacy organizations,warned Congress that thework of the international project to combat base erosion and profit shifting lacks oversight.
In a July 14 letter to both houses of Congress, CF&P President Andrew Quinlan said his organization and the other groupsÔøΩwhich the letter collectively referred to as the Coalition for Tax CompetitionÔøΩare deeply concerned that the BEPS process "will result in onerous new reporting requirements and higher taxes on American businesses."
For the BNA DTR story, go here. (subscription required)

George Osborne, UK chancellor of the exchequer, made himself unpopularwith the funds industry by closing loopholes that helped managers avoid full capital gains tax on carried interest, or their share of a fund's profits.
For the ITR story, go here.

A proposed Greek 26% transaction tax,which has caused concern and uncertainty for businesses in Bulgaria, Cyprus and Ireland, is being scrutinised by the European Commission (EC),whichwill convene a meetingwith the parties concerned and provide its opinion on August 18.
For the ITR story, go here.

In an increasingly globalizedworld, the design of international tax systems in terms of taxation on foreign corporate incomes has received much attention from policymakers and economists alike. In the past, Japan'sworldwide tax system taxed foreign source income upon repatriation. However, to stimulate dividend repatriations from Japanese-owned foreign affiliates, Japan introduced a foreign dividend exemption in 2009 that exempts dividends remitted by Japanese-owned foreign affiliates to their parent firms from home taxation. This paper examines the effect of this dividend exemption on profit repatriations by Japanese multinationals. The authors find that the response of Japanese-owned affiliates to the dividend exemptionwas heterogeneous.
For the paper, go here.

As part ofwhat experts call awar on tax competition and low taxes, a coalition of high-tax governments from around theworld isworking to erect a radical new planetary taxation regime thatwould further smotherwhat remains of financial privacy and national sovereigntywhile seriously harming the global economy.
For the New American story, go here.

The OECD and the United Nations Development Programme on July 13 launched Tax Inspectorswithout Borders, a joint initiative offering targeted tax audit assistance to developing countries.
For thewWTD story, go here. (subscription required)

In news analysis, Marie Sapirie discusses the benefits of binding arbitration as a means of resolving treaty disputes.
For the Tax Notes article, go here. subscription required)

Developing nations and advocacy groups at a U.N. conference in Ethiopia are pushing for a new global body to tackle tax avoidance by companies, a move opposed by richer nations.
Responsibility for tax standards should be moved to the United Nations from the Organization for Economic Cooperation and Development, a group of 34wealthy countries, according to a position paper endorsed by civil society groups.
For the BNA DTR story, go here. (subscription required)

The Australian Taxation Office is developing a standardized approach for determining an economic group's totalworldwide profit from Australian-linked business activities and the Australian and offshore tax paid on that profit, according to the senatorwho initiated the current inquiry into corporate tax avoidance.
For the BNA DTR story, go here. (subscription required)

Jeffery M. Kadet uses hypothetical but realistic examples to show how the IRS could combat profit shifting by directly taxing the effectively connected income of controlled foreign corporations.
For the Tax Notes special report, go here. (subscription required)

The OECD and the United Nations Development Programme (UNDP) have launched a new initiative to help developing countries bolster domestic revenues by strengthening their tax audit capacities.
For the OECD release, go here.

George Osborne's surprise corporation tax cutwill push foreign investment into Britain up by 2 per cent in the long run but could risk the UK being branded a tax haven, according to some experts.

Mr Osborne used his summer Budget to promise to "go further in creating a Britain that is one of the most competitive economies in theworld" by cutting the rate to 18 per cent ÔøΩ the lowest rate in the G20 ÔøΩ by 2020.

For the Financial Times story, go here.

Theworld Bank and IMF have launched a joint initiative to help developing countries strengthen tax systems, increase tax revenue, and participate in international tax policy debates, according to a July 10 release.
For the release, go here.

A new OECD consultation paper seeking feedback onways low-income countries can effectively use tax breaks to attract investmentwill help developing nations "protect themselves from toxic tax incentives," Pascal Saint-Amans, director of the OECD's Centre for Tax Policy and Administration, told Tax Analysts.
For thewWTD story, go here. (subscription required)

Mindy Herzfeld reviews selected presentations from two recent conferences at Oxford and discusseswhy they refute the popular notion that fairness should drive the reform of international tax policy.
For the Tax Notes International article, go here. (subscription required)

Change in leadership of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations could mean a friendlier hearing environment for businesses, as some see evidenced in an upcoming panel on the tax motivation behind foreign mergers.
For the TNT story, go here. (subscription required)

Patent box proposals are very much in play in international tax overhaul talks, according to Houseways and Means Committee Chairman Paul D. Ryan (R-Wis.).

For the BNA DTR story, go here. (subscription required)

Some members of Congress are pushing a tax reform deal thatwould kill two birdswith one stone: Itwould remove pressure on U.S. companies to move out of the country and unlock billions in tax revenues to replenish the empty highway trust fund. But the idea,which some analysts have described as a fad for its sudden popularity, faces some major obstacles.
For thewashington Examiner story, go here.

BEPS, the OECD's Base Erosion and Profit Shifting plan, lays out actions designed to realign current tax policywith the realities of the global economy.
For the CFO.com story, go here.

The United Nations has published itsworld Investment Report 2015 - Reforming International Investment Governance (UNCTAD/WIR/2015),which includes, in Chapter V "International Tax and Investment Policy Coherence," the comment that corporate tax anti-avoidance discussions should pay more attention to investment policy in developing countries and proposes a set of guidelines for tax and investment policy. The authors claims that the chapter helps lay the foundation for a discussion on harmful tax competition.
The chapter suggests that "The policy imperative is, and should be, to take action against tax avoidance to support domestic resource mobilization and to continue to facilitate productive investment."
For the UN report, go here.