2015

The Organization for Economic Cooperation and Development's most recent discussion draft under its action plan on base erosion and profit shifting proposes seven possible indicators for judging the effectiveness of measures designed to combat BEPS.
The document, issued April 16, proposes a "dashboard" of seven possible BEPS indicators, based on both aggregate and firm-level data, to show "the general scale of BEPS."
For the BNA story, go here. (subscription required)

The IRS advance pricing and mutual agreement programwill become key to a healthy transfer pricing operation as double taxation disputes increase in thewake of the OECD's base erosion and profit-shifting initiative, according to J. David Varley, acting director of transfer pricing operations, IRS Large Business and International Division.

For the TNT story, go here. (subscription required)

The European Commission's investigations into EU member states' tax arrangementswith multinational companies might lead to retroactive tax adjustments reaching back as far as 10 years, practitioners speaking on a recent panel said.

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

The OECD's most recent discussion draft on analyzing and measuring the size and scope of base erosion and profit shifting is drawing mixed reactions from stakeholders,with some praising the OECD for tackling a difficult task and others criticizing it for not addressing the issue more thoroughly before launching the BEPS project in 2013.
For the TNT story, go here. (subscription required)

The Indian government is attempting to promote a more taxpayer-friendly environment, but is not being helped by demands from the tax authorities for more revenue from multinational companies. Vodafone received a notice thisweek relating to tax assessments for 2009-2010 and 2010-2011.
For the International Tax Review story, go here.

The introduction of the UK's diverted profits tax (DPT) on April 1 2015 has dismayed tax practitioners and their multinational clients. Rushed through parliament, it has been roundly criticised for its breadth and complexity, for the speedwithwhich it has been introduced, for the lack of public consultation and parliamentary scrutiny, and for pre-empting the multilateral response to tax avoidance of the G20/OECD BEPS Project.
For the International Tax Review story, go here.

The Canadian government aims to boost manufacturing research and investment through a proposed 10-year tax incentive financed under a C$100 million ($82 million) fund in its proposed budget for fiscal 2015-16.

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

While Sweden may be seen as effectively preventing base erosion through limiting interest deductions, the effects on businesses and investments must be carefully scrutinised before being considered in other countries, argue Hussein Abdali and Tord Fredriksson of Grant Thornton.
For the International Tax Review story, go here.

The European Commission (EC) has launched an infringement procedure against France concerning its 3% tax on dividend distributions made by companies liable for French corporation tax.
For the International Tax Review story, go here.

Businesses hoping to see an overhaul of the U.S. corporate income taxwill get their answer in the next few months, a Treasury Department official said.
Mark J. Mazur, assistant secretary for tax policy at the department, said April 21 that the "fundamentals for tax reform are as good as they've been since 1986."
For the BNA story, go here. (subscription required)

"The business tax system today is inefficient, overly complex, and too riddledwith loopholes," said Mark Mazur, assistant secretary for tax policy at the U.S. Department of Treasury.
So much so, in fact, that it can't fulfill its function to be aworld-class system, he noted.
For the Accounting Today story, go here.

The continued public outcry about U.S. companies keeping profits overseas in order to avoid U.S. taxes has obscured an interesting fact about much of that money. In fact, about half of the "overseas" cash that businesses are declining to repatriate is already in the U.S. – it's just not taxable.
For the Fiscal Times story, go here.

Onwednesday, China's State Administration of Taxation issued a notice containing regulations governing payments to related parties. The new transfer-pricing rules require that payments to related foreign entities be arm's-length in nature. They also specify four types of payments not considered as such. The four types,which are ruled to be non-deductible, generally include transfers to parties not having business operations and unable to discharge their obligations, payments for labor not conferring economic benefit on Chinese-based payors, royalties for intangible assets not adding value, and royalties for "fringe benefits" relating to capital market activity.

Beijing's attempt to halt questionable related-party payments comes amid the OECD's ongoing "Base Erosion and Profit Shifting" initiative and just days after new policies issued by the European Union, Britain, and Australia.

For the Forbes story, go here.

Atlas Air isn't a household-name airline – that'swhat happenswhen you mostly carry cargo – but it buys a lot of big planes. In recent years, it acquired nine new Boeing 747s and six 777s, at a total cost of about $2.5 billion. "Our business has been growing tremendously," said Spencer Schwartz, the company's chief financial officer. "For us to really grow,we need to add capacity,we need to add aircraft, andwe expect to keep doing that."

Schwartz isworried that Congress might soon make it harder for him to invest as much as he likes – by reducing how much of that investment he can quicklywrite off his taxes. It's a valid fear, and it's shared by many companies that are investing in American-made products right now.

It's also a pretty good explanation ofwhywashington isn't anywhere close to getting tax reform done.

For thewashington Post story, go here.

Multinational enterprises (MNEs)will be interested in the results of thework done by economists and others under Action 11 of the Base Erosion and Profit Shifting (BEPS) Action Plan.

There are some firm conclusions about indicators of BEPS in the discussion draft published on 16 April under Action 11. There is also recognition that assessing the extent of BEPS is 'severely constrained' and no attempt is made in the draft to ascertain an overall figure for total BEPS. Two approaches are put forward as alternativeways of seeking to measure BEPS:

• extrapolating from studies assessing the impact of tax rate differentials on the movement of profit from one location to another, and
• adding the amounts identified for each separate BEPS channel (per the Action Plan)with an adjustment for interactions between them.

Existing data sources are considered but questions remain as towhether there are other sources andwhether the datawill be adequate to perform reliable analyses.

For the PwC Tax Policy Bulletin, go here.

Australia and the U.K.will collaborate onways to stop multinational companies diverting profits and avoiding taxes, according to Australian Treasurer Joe Hockey.
For the Bloomberg story, go here.

The IRS Office of Chief Counsel in a chief counsel advice memorandum said an all-or-nothing rule applies in application of the short-term obligation exception under Notice 88-108 for controlled foreign corporations holding obligations that constitute U.S. propertywithin the meaning of tax code Section 956.
For the BNA story, go here. (subscription required)

In news analysis, Marie Sapirie emphasizes thatwriting a rule that applies equally to the instruments and circumstances that should be considered dividend equivalents is challenging.
For the Tax Notes article, go here. (subscription required)

Participants in an April 17world Bank presentation on tax evasion and avoidance stressed the need for developed countries to assist developing countries in improving information exchange and improving the capacity of tax authorities.
For the TNT story, go here. (subscription required)

In news analysis, Lee A. Sheppard reports on the April 17 remarks of Robert Stack, Treasury deputy assistant secretary (international tax affairs), about the transfer pricing, permanent establishment, and multilateral agreement actions of the OECD base erosion and profit-shifting project.
For the Tax Notes story, go here. (subscription required)

Business is braced for a slew of new anti-avoidance measures after the UK general election next month as politicians compete on promises to raise billions of pounds from closing tax loopholes.

Chuka Umunna, the shadow business secretary told a conference that constituentswere "very, very angry indeed" about avoidance by large companies. Nick Boles, Conservative business minister, said therewas "further to go" on tackling avoidance by big global corporations.

For the Financial Times story, go here.

Keeping track of tax law changes around theworld has increasingly become a challenge for businesses. Companies are rapidly expanding their geographic footprint at a timewhen the evolution and developments in jurisdictional tax laws are undergoing nearly constant change. Naturally, changes in tax law have an impact on tax planning, tax return preparation and, ultimately, tax cash flows. Those consequences, however, are often preceded by the impact of such changes on company financial reporting.
This is the third edition of our global publication on tax law enactment and substantive enactment dates. This edition has been updated to include information on 17 additional jurisdictions. It also reflects any changes in our understanding of the lawmaking processes of jurisdictions presented in the previous edition.

For the PwC Tax Accounting Services publication, go here.

Therewas a moment on Tuesday evening – hours before the first public hearing of the Senate inquiry into corporate tax evasion –when Treasurer Joe Hockey and his advisers should have sensed a firestorm approaching.

Sandwiched between a story on a Gold Coast diet blogger accused of pinching other people's recipes and and the tale of a solicitorwho fleeced a dementia patient, Channel Nine's A Current Affair entered the debate on Australia's company tax system. Itwas unusual terrain for the tabloid TV show to cover.

More than a million peoplewatched the segment titled "Tax dodgers named and shamed". Itwas the moment the festering issue of corporate tax dodging jumped from the pages of the financial and broadsheet press and firmly into the mainstream.

For the Sydney Morning Herald story, go here.

by Zachary Mider (Bloomberg)

When it comes to taxes, corporate America is getting a bit less corporate. And a bit less American.

Fueled by awave of inversions, a record 54 companies in the Standard & Poor's 500 Index of leading U.S. firms are now at least partially exempt from the corporate income tax. That's more than twice the number four years ago.

For the Bloomberg story, go here.

by Steven Johnson and Madison Marriage (Financial Times)

Listed companies in developed markets are avoiding at least $82bn of tax a year by using tax havens and other minimisation strategies, according to detailed analysis of more than 1,000 businesses.

The revelation comes as campaigners and investors have increased their focus on the impact of corporate tax avoidance on public finances at a time ofwidespread austerity.

For the Financial Times story, go here.

The European Commissionwill review its 2015 changes to VAT paid on business-to-consumer (B2C) supplies of digital services,whichwere implemented on January 1 2015. MOSS critics say that if the review takes too long, it could leave the digital single market "dead in thewater".
For the International Tax Review story, go here.

Dermot Donegan, head of VAT policy at the Irish tax authority (Revenue), speaks exclusively to ITR about the EU's place of supply ruleswere finalised during the Irish presidency of the EU Council, his thoughts around their implementation and the possibility of expanding the mini one-stop shop (MOSS) to cover goods and other services.
For the International Tax Review story, go here.

The international project to fight base erosion and profit shifting made a "political mistake" by focusing too much on U.S. multinationals, undermining American support for BEPS plan outcomes, a Treasury Department official said.
For the BNA story, go here. (subscription required)

At the American Bar Association Section of Taxation/International Bar Association conference in Munich on April 16, the questionwas raisedwhether base erosion and profit-shifting solutions being proposed through the OECDwould not overwhelm tax administrators.
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The Treasury Department is putting a significant amount of effort into international tax overhaul and believes there is still a possibility for movement, Treasury International Tax Counsel Danielle Rolfes said.
For the BNA story, go here. (subscription required)

Contrasting it at timeswith former Houseways and Means Committee Chair Dave Camp's tax reform plan, a Treasury official April 16 extolled the neutral treatment of foreign-owned versus U.S.-owned multinationals in the Obama administration's fiscal 2016 budget international proposals.
For the TNT story, go here. (subscription required)

The Senate Finance Committee's internationalworking group is considering awide range of ideas, from former Houseways and Means Committee Chair Dave Camp's tax reform plan to thewhite House's fiscal 2016 budget, as it grappleswith how to address base erosion concerns, a Senate aide and tax observers recently told Tax Analysts.

For the TNT story, go here. (subscription required)

The Danish government has introduced a Bill (L167) to implement a general anti-avoidance rule (GAAR) in the country for the first time,whichwould enable authorities to deny treaty benefits if obtaining those benefitswas the sole or main purpose of an arrangement.

For the International Tax Review story, go here.

If youwere a multinational firm,wherewould you locate your activities and investments? A handful of economic factors play a role in this decision, but for tax-related aspects, youwould think in terms of an average effective tax rate. It's not that complicated; let me explain.
For the Forbes article, go here.

Jasper L. "Jack" Cummings, Jr. reviewsways to avoid the negative consequences of earnings and profits in foreign corporations andways to increase the E&P accountwhen advantageous.
For the Tax Notes article, go here. (subscription required)

The Organization for Economic Cooperation and Development's base erosion and profit shifting project is becoming increasingly important to discussions about taxes in Congress, a Senate staffer said.
"This is something that is getting more and more attention on Capitol Hill," said Zach Rudisill, tax counsel for Sen. Rob Portman (R-Ohio).
For the BNA story, go here. (subscription required)

Sens. Barbara Boxer (D-Calif.) and Rand Paul (R-Ky.) are planning to introduce a bill soonthatwould establish a voluntary 6.5 percent tax rate on offshore earnings,which Boxer said could be a funding mechanism to help pay for a long-term surface transportation reauthorization.

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

Two proposals to address multinational corporations' large stockpile of offshore profits ÔøΩ a transition tax on those profits and a repatriation tax holiday ÔøΩ may appear similar at first blush but are opposites in manyways. A transition tax is a sound policy thatwould raise revenues for infrastructure investments or other uses; a repatriation holiday is a tax cut that loses revenue and consequently could not pay for anything.
For the CBPP report, go here.

French Finance Minister Michel Sapin and Minister of State for the Budget Christian Eckert have announced four new measures to boost tax transparency and improve relations between tax officials and businesses.
Stability, security and visibility are the three pillars of taxation that enable businesses to invest and operate transparently, the statement said.
For the BNA story, go here. (subscription required)

Counting all federal, state, and local taxes, the U.S.was the fourth-least taxed country among the 34 OECD countries in 2013, at 25.1 percent, above only Korea, Chile, and Mexico, Citizens for Tax Justice said in an April 9 release.
For the CTJ report, go here.

Government representatives from Japan and nine other Asian jurisdictionswho met in Tokyo discussed challenges including tax avoidance through base erosion and profit shifting (BEPS) on the last day of a three-dayworkshop on international taxation presented by the International Monetary Fund and Japan's Ministry of Finance.
For the BNA story, go here. (subscription required)

Major accounting firms say they are not doing anything illegal in helping corporations to minimise tax liabilities.
For the ABC (Australia) story, go here.

Australian Treasurer Joe Hockey isworking on new laws to counter tax avoidance by global companies, but the OECD is urging countries not to go it alone. The Paris-based institution has beenworking on a so-called base erosion and profit-shifting action plan through the G20 since 2013 and is aiming to complete itswork by October.
For the news.com.au story, go here.

Designed to help multinationals stay aware of tax accounting and regulatory developments under US GAAP and IFRS,whilst providing technical guidance on challenging tax accounting areas. Among the topics featured in this edition are:
FASB's exposure draft on intra-entity asset transfers and balance sheet classification of deferred assets and a proposed exposure draft on tax accounting for stock compensation
The IFRS Interpretation Committee's exposure draft on the measurement of uncertain tax positions
SEC staff's tax accounting areas of focus
OECD's country-by-country reporting (CBCR) implementation package recommending that multinationalswith revenues above Euro 750 million file CBCR startingwith fiscal years beginning on or after 1 January 2016
Enactment of the UK Diverted Profits Tax
The European Commission's package of tax transparency measures
Technical guidance onwhich standards apply to various types of taxes or tax systems that could be helpful in accounting considerations associatedwith new or unusual taxes

For the PwC newsletter, go here.

Ahead of thisweek's income tax filing deadline, the National Association of Manufacturers and the Manufacturers Alliance for Productivity and Innovation Foundation said the U.S. should exempt its companies' foreign earnings from corporate taxes.
For the manufacturing.net story, go here.

Public Comments are invited on adiscussion draftwhich dealswith Action 11 (Improving the analysis of BEPS) of the BEPS Action Plan.
Action 11 of the BEPS Action Plan focuses on improving the availability and analysis of data on BEPS, including to monitor the implementation of the Action Plan and to evaluate the effectiveness and economic impact of actions to address BEPS on an ongoing basis.
For the OECD release and discussion draft, go here.

Tax planning figures prominently in decision-making for large public companies looking to grow,with only 10 percent of tax directors saying their primary concern is that business decisions are being madewithout it.
"When seeking expansion opportunities, integrating tax planning into the early stages of that process can have a positive impact on both the organization and the jurisdiction inwhich itwill operate," said Matthew Becker, partner in the tax practice at BDO USA LLP.
For the BNA story, go here. (subscription required)

Two Treasury Department officials say the forthcoming rewrite of Chapter 5 of the OECD's transfer pricing guidelines on documentationwill provide multinational enterpriseswith the necessary flexibility as they complete the new country-by-country reporting template.

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

by Kevin A. Bell (Bureau of National Affairs)

A Microsoft tax official said that an example involving product recall risk in the Organization for Economic Cooperation and Development's discussion draft on risk, recharacterization and special measures should adopt a pricing analysis.

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

The Seychelles Revenue Commission has issued a draft public ruling on applying the transfer pricing arm's-length principle to business transactions under the 2009 Business Tax Act.

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