2015

Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, urged practitioners to be open to changes to transfer pricing in order to make the arm's-length principle sustainable.
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If the OECD's base erosion and profit-shifting drafts on risk and recharacterization and on profit splitswere final deliverables, "Iwould absolutely tell you that they're going too far," Brian Jenn, attorney-adviser in the Treasury Office of International Tax Counsel, said March 30.
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Australia Treasurer Joe Hockey released a long-awaited tax discussion paper on overhauling the country's tax system, throwing open the debate on how to modernize the existing tax structure to reduce the reliance on income taxes and manage the burden of an aging population.

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Pascale Colin, group tax manager at EFG Bank, tells Matthew Gilleard about the role of the tax director, her journey in getting there, and operating successfully in a rapidly-evolving Swiss, European and global tax environment.

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The United Nations Committee of Experts on International Cooperation in Tax Matters plans to issue a draft chapter on intangibles for the 2016 update to the UN Practical Manual on Transfer Pricing for Developing Countries, a UN official said.

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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.

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Hoping to curb base erosion and address intellectual property issues, Rep. Charles Boustany Jr. (R-La.) said hewasworking on bill language to overhaul the international portion of the tax code.

"This is my top priority," Boustany, a senior Houseways and Means Committee member, said March 26. "I'mworking on it as quickly as I can. It's difficult to put a time frame on it."

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Japan's parliament is expected to approve three tax amendments that address separate measures in the Organization for Economic Cooperation and Development's action plan on base erosion and profit shifting, including a plan to apply Japan's consumption tax to providers of cross-border digital services

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Houseways and Means Committee member Charlesw. Boustany Jr., R-La., said March 25 that he plans to introduce an international tax reform bill later this spring thatwould use the 2014 tax reform plan by formerways and Means Chair Dave Camp as a starting point.

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George Osborne, UK chancellor of the exchequer, has delivered his final Budget speech before the general election,withwelcome tax cuts for the UK's oil and gas industry and a reduction in the number of companies that have to submit information to HM Revenue & Customs about their liability, or not, for the controversial diverted profits tax (DPT).

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Changing to a "territorial" tax system in the United Stateswon't ultimately stem the exodus of U.S.-based multinationals to lower-tax countries and could come at a significant cost in terms of good corporate governance, a new study contends.
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After the conclusion of the OECD's base erosion and profit-shifting project in 2015, the next goal for the United Stateswill be to improve international tax administration through expanding mandatory arbitration and best practices, Robert Stack, Treasury deputy assistant secretary (international tax affairs), said March 24.
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A major consequence of the international project to combat base erosion and profit shifting (BEPS)will be heightened levels of transparency into the tax affairs of multinational companies, a Treasury official said.
The biggest change arising from the BEPS project over the next few yearswill be "much greater transparency for companies among tax jurisdictions," U.S. Deputy Assistant Treasury Secretary for International Tax Policy Robert Stack said March 24.
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Revising transfer pricing guidelines to favor use of value-based profit splits under the international action plan on base erosion and profit shiftingwould be "a dangerous road" to take, given current lack of agreement among global tax officials, a U.S. Treasury Department official said in Paris.
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The European Commission (EC) presented a 'Tax Transparency' package on March 18, 2015. The central feature is a transparency requirement for tax rulings. This means that tax authoritieswould be obliged to share a pre-defined set of information on all of their advance cross-border tax rulingswith all other Member States. Recipient Member Stateswould then be allowed to request more detailed information on a particular tax ruling if they believe that it is relevant to their own taxation rules.

With the Tax Transparency package the EC aims to re-establish the link between taxation and real economic activity and tackle corporate tax avoidance.
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Some lawmakers have their eye on a new silver bullet to keep companies paying taxes in the United States ÔøΩ borrowing an idea from Europe in a so-called patent box.

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Delegates from over 90 jurisdictions have gathered at the OECD Conference Centre in Paris in two meetings devoted to discussing solutions to base erosion and profit shifting (BEPS). The Global Forum on Transfer Pricing and the Task Force meetings built on the structured dialoguewith developing countries and complement the direct involvement in the CFA's BEPSwork and theregional meetingson BEPS held in Seoul, Lima, Libreville, Ankara and Pretoria.

For the OECD release, go here.

The Australian government on March 12, 2015, released revised exposure draft legislation for the third and final element of the Investment Manager Regime (IMR 3). Broadly, the revised exposure draft exempts foreign funds (including eligible US onshore and offshore funds) from Australian tax on Australian-source gains. The revised draft also addresses a number of industry concerns regarding previous exposure drafts, by better aligning the draft IMR3 provisionswith the UK's Investment Manager Exemption (IME) equivalent. Consultation on the revised exposure draft legislation closes on April 9, 2015.

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It's the hottest trend among tax collectors, raising a gusher of revenue for spendthrift governmentsworldwide.we refer to the value-added tax (VAT), and a new report from accounting firm Ernst & Young says that VAT "systems are spreading" around theworld and "rates are rising." Americans, bewarned.

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An AstraZeneca Plc official explained in a Paris Organization for Economic Cooperation and Development consultation how the arm's-length principle in the pharmaceutical industry measures related-party "reward to capital" and "reward to capability."

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Participants in Paris for the March 20 OECD consultations on the base erosion and profit-shifting project's action item 10 drafts on transfer pricing for low-value services and commodities agreed that more guidance is needed, but they differed onwhether flexibility should be sacrificed for simplicity.
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In news analysis, Lee A. Sheppard examines how the foreign base company rules apply to intragroup services.
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While participants at the OECD's March 20 consultation on transfer pricing matters agreed that more guidance is needed on the application of profit-split methods to supply chains, they differed onwhether to expand on the situationswhere a profit split should be used.
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U.S.-based multinationals booked a ticket home last year for an estimated $300 billion in foreign profits -- the most in nearly a decade -- chipping away at an enormous offshore cash pile that has drawn scrutiny from regulators and lawmakers.

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Business representatives at a March 19 OECD transfer pricing consultation in Paris acknowledged that there's room in the OECD's draft for additional guidance onwhen contractual arrangements should be respected, but urged that the final report on risk, recharacterization, and special measures not diminish the importance of contracts.

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A new group of developing countrieswill participate in upcoming meetings to discuss transfer pricingwork under the Organization for Economic Cooperation and Development's plan to fight base erosion and profit shifting, the organization's top tax official told Bloomberg BNA.

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An Organization for Economic Cooperation and Development official questioned business delegates to the organization's Paris transfer pricing consultation about the bestway to allocate risk among related parties.

Andrew Hickman, head of the OECD's transfer pricing unit, said during the March 19 Paris consultation that "there is a feeling among the country delegates that someway of being able to verify allocation of risk is necessary to implement the transfer pricing rules."

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The Obama administration just can'twin. Despite a crackdown on foreign mergers that help American firms slash their tax bills, a slew of overseas takeovers continue to rob the Treasury Department of tax revenue.
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Inward investors have expressed concern about proposals that Chinawill levy a 10% capital gains tax on profits earned by foreign investors,with no opportunity to deduct for losses.while some tax adviserswelcomed the clarity, some funds may struggle to pay the higher-than-expected tax bills on gains earned over five years between 2009 and 2014.
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The United Kingdom is set to introduce a 25 percent tax on multinational companies' profits that are diverted from the country by the end of March.

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The OECD's base erosion and profit-shifting project has dominated the international tax scene for over a year. Ever since the G-20 tasked the organizationwith finding solutions to the perceived problem of multinationals paying low effective tax rates, the international tax community has talked about little else. The OECD hoped that BEPSwould preempt unilateral action by developing countries (particularly India, China, and Brazil) to move away from its model treaty and the arm's-length method. In that regard, the BEPS project tried to steal the thunder of another group that has yet to be taken seriously by the developedworld: the United Nations' tax committee.

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The European Commission is promoting its Tax Transparency Package, published March 18, as a tool for "healthier" tax competition aswell as for helping member states identify abusive tax practices.

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Luxembourg's status as a fortress ofwealth in the heart of Europe is in peril.
The country transformed itself from a rural economy into the European Union's richest in less than a century by swapping fields and steel mills for hedge funds and multinationals. That model may now be at risk from regulatory clampdowns, first on banking secrecy and now on the corporate tax accords that helped bring the profits of giant companies such as Amazon.com Inc. to the nation.
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Lowell D. Yoder of McDermottwill & Emery and Marjorie Rollinson, IRS deputy associate chief counsel (international), discussed the application of subpart F rules to intragroup services at the International Tax Institute luncheon on March 18 in New York.

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New tax-transparency requirements between multinational corporations and European governments may be broadened further this year to encompass public disclosure of the companies' tax arrangements in Europe.

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European Union officials onwednesday proposed new rules to try to discourage tax-avoidance dealswith multinational corporations,which critics say give some countries unfair business advantages.

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by Rebecca Christie and Stephanie Bodoni (Bloomberg Business)

The European Union launched a new salvo in its battle against tax evasionwith a slate of proposals thatwould make it harder for companies to avoid taxes.

Countrieswould need to share information on cross-border tax rulings every three months under one piece of the tax package, announced in Brusselswednesday.

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The Obama administration just can'twin. Despite a crackdown on foreign mergers that help American firms slash their tax bills, a slew of overseas takeovers continue to rob the Treasury Department of tax revenue.

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The current U.S. system of international taxation is complex and induces inefficient behavioral responses, Rosanne Altshuler of Rutgers University said at a March 17 Senate Finance Committee hearing atwhich she highlighted six areas that are important for U.S. policymakers to consider as they contemplate international tax reform.

For the testimony, go here.

Countries interested in promoting mandatory binding arbitration to resolve double tax disputes may have found away forward, despite a lack of consensus from countries participating in the Organization for Economic Cooperation and Development's project on base erosion, a Treasury Department official said.

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by Jeffrey M. Kadet (Tax Analysts)

Jeffery M. Kadet suggests two approaches to identifying controlled foreign corporation earnings that should be subject to the full 35 percent corporate tax ratewhen transitioning to a new tax system.

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by Senate.gov

There is no normative reason to privilege foreign business income beyond allowing a credit for foreign income taxes, Stephen Shay of Harvard Law School said at a March 17 Senate Finance Committee hearing atwhich he recommended taxing foreign business income broadlywhile allowing a foreign tax credit, alongwith other international tax reforms.

For the testimony, go here.

Anthony H. Smith of Thermo Fisher Scientific Inc. at a March 17 Senate Finance Committee hearing suggested several specific areas Congress should prioritizewhen considering U.S. international tax system reform,which he said should be designed to end the uncertainly that currently pervades the tax system for U.S. companieswith global operations.

For the testimony, go here.

The European Commission today presented a package of tax transparency measures as part of its ambitious agendato tackle corporate tax avoidance and harmful tax competition in the EU. A key element of this Tax Transparency Package is a proposal to introduce the automatic exchange of information between Member States on their tax rulings.

For the release, go here.

The U.S. international tax system has fallen behind other countries' efforts to attract investment and promote growth, and it is time for Congress to enact tax reform that reduces the U.S. rate, broadens the base, and increases U.S. competitiveness, Pamela Olson of PricewaterhouseCoopers LLP said at a March 17 Senate Finance Committee hearing.

For the testimony, go here.

U.K. Chancellor of the Exchequer George Osborne announced an array of tax cuts, higher economic growth, and help for the North Sea oil industry in a push for a Conservative victory in May's general election.
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The OECD's nexus approach toward patent boxes under the base erosion and profit-shifting project should serve as awake-up call for the United States if itwishes to keep research and developmentwithin its borders, Senate Finance Committee member Charles E. Schumer, D-N.Y., said at a March 17 committee hearing.

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The treasurer of a U.S. company that is projecting a global tax rate of less than 3 percent this year said the country's tax system makes it difficult to compete in overseas markets.

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The notion of moving an overhaul of international taxes on a separate track than a business tax code rewrite may have the approval of some in the businessworld, but policy makers and practitioners say it isn't likely.

During a March 17 Senate Finance Committee hearing on making international tax law more competitive, Sen. Pat Roberts (R-Kan.) asked awitnesswhether splitting off an international tax revamp to curb base erosion and profit shifting aswell as corporate inversionswas preferable towaiting for a broader tax code overhaul.

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When the Obama administration changed the rulesto make it harder for US companies to move their headquartersÔøΩand their taxable profitsÔøΩoverseas through the reverse mergers called tax inversions, it put the kibosh on at least one such deal. But now critics of the move say rules have made it easier for foreign companies to scoop up USfirms.

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