2015

Developing countries should implement simple, fair, and broad-based tax systems to improve tax ratios and spend extra revenue efficiently to support inclusive growth, IMF Managing Director Christine Lagarde said in July 8 remarks.
For the remarks, go here.

At the final public consultations on the G-20/OECD base erosion and profit-shifting project in Paris July 6 and 7, thoughts turned to the next phase.
For thewWTD story, go here. (subscription required)

The OECD has issued for public comment an options paper on the design and implementation of tax incentives to attract investment in low-income countries; submissions on the paper are due August 5.
For the paper, go here.

U.K. Chancellor of the Exchequer George Osborne's decision to further slash corporation tax rates in 2017 and 2020 should help to encourage multinational companies to continue to invest in the U.K., tax attorneys and analysts told Bloomberg BNA.
In his interim Summer 2015 budget speech, Osborne announced that the U.K.will slash its 20 percent corporate tax rate to 19 percent in 2017, and to 18 percent by 2020.

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

In this exclusive op-ed piece for International Tax Review, Chris Lenon, former head of tax for Rio Tinto and an expertwitness to the Independent Commission for the Reform of International Corporate Taxation (ICRICT), argues that a focus on incentives and ultra low or no tax jurisdictions should be policy makers' priority, rather than ideas included in the commission's report, such as allocation.
For the ITR op-ed, go here.

The EU and its member states should make multinationals report their financial performance, tax details, assets and employee numbers country by country, so as to help fight tax evasion and illicit money flows in developing countries, says Parliament in a non-binding resolution voted onwednesday. MEPs also call on EU financial institutions to ensure that companies receiving EU support do not "participate" in tax evasion.
For the European Parliament news story, go here.

Americans for Tax Fairness executive director Frank Clemente today released the following statement in response to the introduction of a tax reform framework to overhaul the U.S. international tax system drafted by Senators Chuck Schumer (D-NY) and Rob Portman (R-OH). "We are deeply disappointed by the Schumer-Portman tax reform framework. If a plan that followed this frameworkwere enacted itwould be a bigwin for some of theworst tax dodging corporations in America, and a huge loss forworking Americans and small businesses."
For the ATF release, go here.

Tom Zollo, Jason Hoerner, and Sue Yueqianwu argue that Treasury contradicted its own regulations and prior pronouncements by releasing AM 2015-002 and that the IRS shouldwithdraw the memorandum and considerwhether and how to revise the tax rate disparity test through the issuance of updated regulations.
For the Tax Notes viewpoint, go here. (subscription required)

Large firms and listed companies should have to disclose information, country by country, on profits made, tax paid on profits and public subsidies received, said MEPs onwednesday in amendments to draft rules intended to boost transparency and foster shareholders' long-run commitment to companies. They alsowant to empower shareholders to vote at least every three years on directors' pay policy.
For the European Parliament News story, go here.

The UK Budget, released July 8, 2015, announced a tax rate cut and focused on tackling tax avoidance and aggressive tax planning. Piecemeal changes and new initiatives intend to raise approximately £7bn in revenue, butwith no big headline grabbers.

For the PwC Insight, go here.

Two senior senatorswednesday outlined a plan for overhauling the U.S. system of taxing overseas corporate income, and potentially using the revenue as a source of funding for aging highways and infrastructure.
For thewall Street Journal story, go here.

Two senior senators -- one Republican, one Democrat -- proposed onwednesday that the government significantly reduce the tax rate on United States corporate profits overseas, butwith a mandatory transition tax on such profits to pay for an expansive highway and infrastructure program.
For the New York Times story, go here.

Proclaiming that the U.K. is "open for business," Chancellor of the Exchequer George Osborne on July 8 announced in his summer 2015 budget that the government plans to slash its 20 percent corporate tax rate, already the lowest in the G-20, to 19 percent in 2017, then to 18 percent in 2020.
For thewWTD story, go here. (subscription required)

The United States on July 7 signed an income tax treatywith Vietnam, the first ever between the two countries.
For the TNT story, go here. (subscription required)

The Senate Finance Committee's international tax reformworking group released on July 8 its much-anticipated report,which,while lacking in many finer details, describes a bipartisan framework for reform that includes a dividend exemption system, a potential patent box, and base erosion prevention measures.
For the TNT story, go here. (subscription required)

In an attempt to make the U.K.'s tax regime even more competitive, U.K. Chancellor of the Exchequer George Osborne announced plans to further lower the corporation tax rate to 19 percent in 2017, and to 18 percent by 2020.
For the BNA DTR story, go here. (subscription required)

The European Parliament voted overwhelmingly in favor of expanding the scope of the current European Union country-by-country tax reporting requirement to include all listed companies and non-listed companieswith more than 500 employees.

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

The Democratic and Republican co-chairmen of a Senateworking group making recommendations for a tax overhaul said they have come to a broad agreement on changes to international taxes.
For the BNA DTR story, go here. (subscription required)

Following a Canadian Federal Court (FC) ruling, publicly-listed companies could have to disclose technical analyses of their contingent reserves for potential tax liabilities, leading to fears the information could be used by the Canadian Revenue Agency (CRA) to challenge businesses' tax returns.
For the ITR story, go here.

Free from the constraints of coalition government George Osborne has delivered a radical Tory Budget announcing huge cuts toworking age benefits offset by a new national livingwage.
For in-depth Financial Times coverage of the new budget, go here.

Step aside, Doctorswithout Borders. A new class of professionals is ignoring national frontiers to come to the aid of economically struggling nations.
A team called Tax Inspectorswithout Borderswill begin helping developing countries dealwith the flood of income to low-tax jurisdictions once it's established nextweek by the United Nations and the Organization for Economic Cooperation and Development.
For the Bloomberg Business story, go here.

Top senators rolled out a planwednesday to overhaul the United States's decades-old rules on international taxation, a framework they said could also give the nation's roads and bridges badly needed funding.
The long-awaited proposal from Sens. Rob Portman (R-Ohio) and Charles Schumer (D-N.Y.) could help form the core of a deal in one of the increasingly few potential areas for tax reform agreement this year ÔøΩ international rules for businesses that date back to the days of President John F. Kennedy.
For the Hill story, go here.

The Portuguese Parliament has approved the new special tax regime for the Madeira International Business Centre (MIBC). The regime applies to entities licensed to operate in the MIBC between January 1, 2015, and December 31, 2020.

The regime also has been approved by the European Commission as authorized State Aid. That approval protects the regime through December 31, 2027.

For the PwC Insight, go here.

Provisions in anti-inversions guidance intended to stop the use of certain "slim-down" distributions to avoid taxes are too harsh and need clarification, the New York State Bar Association Tax Section told the government.
At issue is the treatment of "non-ordinary course distributions" under Notice 2014-52, the section said in comments to the Internal Revenue Service and the Treasury Department.
For the BNA DTR story, go here. (subscription required)

When Horizon Pharma PLC completed its takeover of a small, closely held Irish drug company last fall, its timingwas fortuitous.
Horizon, formerly of Illinois, closed its dealwith Dublin-based Vidara Therapeutics International Ltd. in September three days before U.S. regulators cracked down on these tax-beneficial corporate migrations known as inversions. Had the pair been slower to the altar, theywould have been subject to tighter rules that make such overseas mergers more difficult and less lucrative.
For thewall Street Journal story, go here.

Developing countries need to take action themselves to better their tax systems and can't rely on the OECD's base erosion and profit-shifting project to address the problems they face, panelists said at a July 7 discussion of the impact of tax competition on developing countries and the prospects for global tax reform.
For thewWTD story, go here. (subscription required)

OECDworking Party 6 has determined that special guidance isn't needed to address intangibles returns attributed to cash box entities andwill instead rely on the general guidance on intangibles and risk produced through the base erosion and profit-shifting project.
For the TNT story, go here. (subscription required)

The international project to fight base erosion and profit shifting has set aside plans to create "special measures" for fighting BEPS in the context of cash boxes, a top Organization for Economic Cooperation and Development transfer pricing official said.

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

For the first time in five years, more global business leaders rate the United States as their most important market for overseas investment and growth ahead of all others, including China's.

PwC's Doing business in the United States provides a broad understanding of the critical tax issues and breaks downwhat they mean for you and your business.

For the new edition of Doing business in the United States, go here.

The international tax provisions in the Administration's 2016 Budget unfortunatelywould further impair the competitiveness of globally engaged US companies by imposing a new foreign minimum tax on US-headquartered companies as part of a half trillion dollar tax increase on these companies over the next 10 years.
For the Alliance for Competitive Taxation fact sheet, go here.

Businesseswant George Osborne, the UK chancellor of the exchequer, to make the most of tomorrow's Budget, the first since 1997 to be the exclusive product of Conservative party ideas after its general election victory in May.

For the ITR story, go here.

Jim Fuller comments on U.S. tax developmentswith international implications, focusing specifically this month on inversions, proposed changes to the U.S. model income tax treaty, base erosion and profit shifting, permanent establishments relating to action 7, and country-by-country reporting.
For the TNI article, go here. (subscription required)

Without a more strictly crafted definition of hard-to-value intangibles in the OECD's draft under action 8 of the base erosion and profit-shifting project, the guidance could lead to greater uncertainty and double taxationwith tax administrations left to interpretwhen ex post information may be used, practitioners said at a July 6 consultation.
For the TNT story, go here. (subscription required)

Participants in the OECD's July 6 consultation on cost-sharing arrangements under action 8 of the base erosion and profit-shifting project argued that the draft's emphasis on value over costs does not reflect the practice of third parties in such arrangements.
For the TNT story, go here. (subscription required)

The international project to combat base erosion and profit shifting should address the issue of financing separately from itswork on cost contribution arrangements, a top business representative said.
The Organization for Economic Cooperation and Development released its non-consensus draft on cost contribution arrangements (CCAs) on April 29 under its 15-item action plan for fighting BEPS. The draft states that value, rather than cost, governs in evaluating CCAs
For the BNA DTR story, go here. (subscription required)

India's advance pricing agreement program continues to make headway,with the Income Tax Department confirming that an APAwas signedwith an information technology company at the end of JuneÔøΩthe first major APA in this sector.
The unilateral APAwith BNP Paribas Solutions, the local arm of the European bank, is significant because it should pave theway for improving the currently aggressive transfer pricing environment, tax experts say. Sophan Ghar, a senior official in the department, told Bloomberg BNA that information technology and IT-enabled services (ITeS) companies have proved enthusiastic about APAs.
For the BNA DTR story, go here. (subscription required)

The Organization for Economic Cooperation and Development is considering adopting additional exemptions beyond those proposed in its recent discussion draft on hard-to-value intangibles to limit the scope of re-evaluations based on evidence obtained after the fact, an OECD official said.
For the BNA DTR story, go here. (subscription required)

Richard Collier comments on the OECD's recent proposals on the dependent and independent agent provisions,which he noteswill lead to a material lowering of the permanent establishment threshold.
For thewWTD Viewpoint, go here. (subscription required)

Recently approved European Union legislation requiring country-by-country tax reporting by banks and other financial services is flawed and some financial institutions have seized upon the deficiencies to avoid specifyingwhere profits are made andwhere taxes are paid, according to tax reform advocate Richard Murphy.
For the BNA DTR story, go here. (subscription required)

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:

• OECD issues revised discussion draft on treaty abuse
• Italy's notional interest deduction anti-avoidance rules
• Canada's upstream loan rules in the foreign affiliate arena
• New taxation agreement between the EU and Switzerland

For the latest issue of International Tax News, go here.

Withworld leaders, environmentalists and even Pope Francis clamoring for tough action to slow the rate of growth of greenhouse gasemissions -- a major factor in climate change -- the idea of imposing a tax on industrial carbon emissions and pollutants is getting a fresh look.
For the Fiscal Times story, go here.

The Obama administration quietly handed a victory to U.S. companies that avoid taxes by claiming a foreign address, suggesting that virtually all of them are still eligible for government contracts.
For the Bloomberg Business story, go here.

The IRS is seeking to train exam agents to give them a deep understanding in particular issues likely to come up in an audit, rather than a broad understanding of overall business operations.

"Rather than relying solely on groups of generalists, they're trying to get additional specializationwithin those cadres, similar to the Transfer Pricing Practice established three years ago," Michael Danilack, global tax controversy and dispute resolution principal at PricewaterhouseCoopers LLP, said June 30 on awebcast hosted by the firm.

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

While the OECD has political backing and momentum behind it, the organisation has no binding authority to implement legislation, so the engagement of key jurisdictions including the USwill be central to the project's ultimate success.

For the ITR story, go here.

The tax classification of a foreign pension fund investing in the United States has major implications in terms ofwho is subject to tax, the applicable tax rate and the associated reporting obligations. Francis Helverson ofwTS explainswhy pension fundswith certain characteristics may have significant advantages over other pension funds aswell as over other types of foreign investors.
For the ITR story, go here.

Action 3 of the OECD's Base Erosion and Profit Shifting (BEPS) agenda promised to address how countries could use controlled foreign corporation (CFC) rules to combat BEPS. Unfortunately (or fortunately, depending upon one's vantage point), as is pretty much universally agreed, the OECD's draft report on CFC rules (the "draft")1 failed in every conceivableway to address the issues presented by the use of CFCs.
For the Bloomberg BNA article, go here.

To escape the developedworld's highest corporate tax rate, U.S. companies have sought to change their corporate "citizenship" by purchasing foreign partners and merging into them -- called an inversion.while the Obama administration has tried to deter inversions, the benefits of avoiding U.S. corporate taxation are so great that foreign companies are now buying up American companies instead. The pharmaceutical industry illustrates both the need for effective tax reform and the futility of piecemeal solutions.
For thewall Street Journal article, go here.

Although proponents of a financial transactions tax (FTT) say that such a taxwould discourage risky speculation and recoup revenue lost in the Great Recession, a June report by the Urban-Brookings Tax Policy Center says that an FTT is only a "second-best solution" and suggests that a VAT or financial activity tax might be more effective.

For the TPC report, go here.

Multinational companies, not governments, have set corporation tax policy, encouraging some countries in a race to cut corporate tax rates, according to a U.K. barrister specializing in international taxation.

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