2015

Following the questioning of Anheuser-Busch InBev, Coca-Cola, Disney, IKEA, Amazon, Google, HSBC, Barclays, Facebook, Philip Morris International and McDonald's, the mandate of the European Commission's (EC's) TAXE Committee has been extended.
For the ITR story, go here.

George Osborne, UK Chancellor of the Exchequer, has delivered his Autumn Statement, hitting employerswith a new 0.5% charge on employers' payrolls and pledging to bring in an extra £5 billion a year through tax avoidance action.

For the ITR story, go here.

The European Parliament on November 25 voted 508 to 108,with 85 abstaining, to approve the final report of its investigative committee on tax rulings that facilitated aggressive tax avoidance by multinational enterprises in Luxembourg and other low-tax member states.
For thewWTD story, go here. (subscription required)

Jack Bernstein examines the impact that the OECD's final base erosion and profit-shifting report on action 2 may have on the use of hybrid instruments in Canada-U.S. tax planning and financing structures.
For the TNI article, go here. (subscription required)

Mindy Herzfeld highlights recent efforts by the United Kingdom to implement the OECD's BEPS reports, and contrasts the U.K.'s positive approach to implementationwith the views of some in the U.S. that the projectwill be bad for U.S. business and the U.S. fisc.
For the TNI article, go here. (subscription required)

The countdown is on for the release of the full U.S. model treaty,which is expected by year-end, but if the draft provisions regarding special tax regimes and subsequent changes in law are any indication, the final modelwill not be a sweeping revision of U.S. policy.
For the TNT story, go here. (subscription required)

In economic analysis, Martin A. Sullivan argues that raising rates on capital gains and dividendswill redistribute the tax burden among millennials and baby boomers fairly.
For the Tax Notes article, go here. (subscription required)

Pfizer's blockbuster $160 billion mergerwith Irish pharmaceutical maker Allergan is stoking the partisan debate on corporations that move their headquarters overseas to lessen their U.S. tax bills ÔøΩwith Democrats like Hillary Clinton quickly condemning the dealwhile Republicans called it a symptom of a broken tax code.

The deal "will leave U.S. taxpayers holding the bag," Clinton said in a statement Monday, calling on Congress to limit corporations' ability to use the tax-limiting maneuver known as an inversion.


For the Politico story, go here.

A planned merger between pharmaceutical giants Pfizer and Allergan is prompting fresh calls for congressional action to prevent companies from shielding themselves from U.S. taxes by reincorporating overseas.

But an agreement on legislation curbing so-called inversionswill be no easy feat in the midst of an increasingly contentious election cycle.

For The Hill story, go here.

Pfizer's proposed mergerwith Allergan is a blockbuster deal in the pharmaceutical industry. History may remember the deal instead for finally killing off the United States' outdated approach to taxing multinational corporations.

Our tax system is premised on taxing United States-based multinational corporations on 35 percent ofworldwide income,with a credit for foreign taxes paid. This "worldwide" approach is often identified as anachronistic; most of our global trading partners have adopted some form of a "territorial" approach.

In theory, there's not anythingwrongwith taxing American corporations on theirworldwide income. The most vexing problem of international tax ÔøΩ trying to figure out the source of incomewithin a multinational operation ÔøΩwould only be exacerbated by a territorial approach.

In practice, our approach has been a failure. One problem is thatwe allow the deferral of foreign-source income: the profits of foreign subsidiaries are not generally subject to United States tax until "repatriated" in the form of a dividend.
For the New York Times article, go here.

New Zealand's November Taxation Bill has introduced a draft lawwhichwill impose GST on digital goods and services from October 1 2016.
For the ITR story, go here.

Just in time for Thanksgiving, Pfizer Inc. has given us a transaction that's a total turkey for our country: a $160 billion deal thatwill make it the biggest U.S. corporate deserter in history.


For thewashington Post story, go here.

A $160 billion megamerger announced Mondaywould turn U.S. pharmaceutical behemoth Pfizer Inc. into an Irish drug company, using a controversial tactic that allows companies to dodge billions of dollars in corporate taxes by renouncing their U.S. citizenship.

Pfizer's dealwith Botox-maker Allergan,whichwould create theworld's largest drugmaker, immediately sparked criticism from Democrats and Republicans in Congresswho agree that such deals are problematic but have so far not taken legislative action against them.
For thewashington Post story, go here.

Pfizer Inc.'s decision to escape the U.S. tax system by putting its legal headquarters in Ireland has stoked another round of calls inwashington to revamp tax rules and protect the corporate tax base.

But even Pfizer's mergerwith Allergan PLC, the largest inversion deal ever, doesn't look likely to dislodge the obstacles preventing action.

For thewall Street Journal story, go here.

Despite growing pressure inwashington to curb a tax-saving strategy used by American companies, recent proposals by the Treasury Departmentwould not have affected the Pfizer-Allergan merger.

At issue is a merger tactic known as an inversion, inwhich a United States company acquires a foreign company locatedwhere taxes are lower and moves the headquarters of the combined company abroad to take advantage of lower tax rates.

For the New York Times story, go here.

For almost four years, Congress and thewhite House have done little to make their long-promised overhaul of the corporate tax code a reality. Now the blockbuster pharmaceutical merger of Pfizer and Allergan has put new pressure on all sides to act.

Pfizer's takeover of Ireland-based Allergan -- the largest deal to date to avoid American taxes by reincorporating in a lower-tax country -- provoked a leading Republican on Monday to call for at least stemming so-called corporate inversions, if a sweeping rewrite of the tax code remains out of reach.

For the New York Times story, go here.

Nicola Lostumbo, Ryan Decker, Richard Dadzie, and Andrew Dust of PwC U.S. offer away to quantify the split of profits to be allocated to production inputs in a transfer pricing context and document the intangibles' increasing role in accounting for company value and profitability.
For thewWTD article, go here. (subscription required)

The Australian government has requested feedback regarding how andwhen to implement the measures recommended in action 2 (neutralizing the effects of hybrid mismatch arrangements) of the OECD's base erosion and profit-shifting project.
For thewWTD story, go here. (subscription required)

Global pharmaceutical giant Pfizer Inc. announced November 23 that itwill be redomiciling into Ireland in a mergerwith Dublin-based Allergan PLC thatwould dwarf all previous inversion deals.
For the TNT story, go here. (subscription required)

The inability of the U.S. government to stop the $160 billion Pfizer-Allergan deal, the biggest inversion in U.S. history,will create pressure on Congress for further actionÔøΩaction that is unlikely to happen outside of tax overhaul, practitioners said.

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

The European Commission (EC) on November 19, 2015, officially asked the Netherlands to amend the limitation on benefits (LOB) clause in the tax treaty between the Netherlands and Japan.

For the PwC Insight, gohere.

The European Parliament is expected to approve areportcalling for a common consolidated corporate tax base, a tax haven crackdown,whistle-blower protection, public access to mandatory company country-by-country tax reporting, stricter transfer pricing rules and a move to eliminate unanimity voting for EU tax legislation.

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

Theworld's major economies could begin deciding in January on details of a framework to ensure that outcomes from the international plan to fight base erosion and profit shifting are enacted across awide spectrum of countries, not justwealthy and emerging economies, a top OECD tax official said.
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Lawmakers have lined up two hearings on the Organization for Economic Cooperation and Development's base erosion and profit shifting project report.
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Pfizer Inc.'s $160 billion megadealwith Allergan Plc,which comeswith the benefit of an overseas tax address, is likely to be envied by competitorswhowon't be able to do much to mimic it.

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David Sicular of the New York State Bar Association Tax Section has submitted a report recommending that the IRS issue guidance undersections 901and903to addresswhether a foreign tax is creditable in circumstances described by tax section members.
The circumstances includewhen a foreign country imposes tax based on an assertion of taxing jurisdiction that reaches beyond conventional limits orwhen the tax is imposed under a regime that imputes income or denies deductions to a taxpayer that engages in behavior perceived by the taxing country potentially to be designed to shrink the taxpayer's local taxable base.
For the NYSBA report, go here.(subscription required)

In this article, Cummings reviews 63 (and counting) international training practice units that are available on the IRSwebsite (if you knowwhere to look). They don't reveal much about the law, but they demonstrate a great confidence in the ability of nonspecialist agents to conduct audits of international transactions, both of individuals and of large corporations.
For the Tax Notes article, go here. (subscription required)

Pfizer Inc. and Allergan Plc agreed on Monday to combine in a record $160 billion deal, creating a giantwith products ranging from Viagra to Botox and a low-cost tax base on the edge ofwestern Europe.

"The lure of tax advantages from a Dublin head office has been a significant factor in driving this deal," said John Colley, a professor atwarwick Business School, in central England,who studies large-scale mergers. "The threat of succumbing to U.S. tax rates has meant that Pfizer has been desperate for a deal outside the U.S."
For the Bloomberg story, go here.

After two rounds of rule-making designed to stymie inversion deals that ship taxable U.S. corporate profits overseas, companies hoping to continue the practice are largely undeterred. Absent legislation from Congress -- and, some argue, a feistier Treasury Department -- corporate profitswon't stop leaving American shores.
For the International Business Times story, go here.

When the Treasury Department unveiled its latest highly anticipated effort to curtail tax-lowering foreign mergers, deal makers reactedwith relief.
After poring over the language of a notice released Thursdayevening, deal lawyers, bankers and policy specialistssaid it is less drastic than feared and mostly makes minor changes to rules U.S. companies must followwhen they acquire a foreign counterpart and movetheir tax addressesabroad.
For thewall Street Journal story, go here.

The Indian government plans to phase out profit- and investment-linked exemptions and deductions to fund a gradual corporate tax rate cut from 30 percent to 25 percent over four years and to help simplify the country's tax laws.
For thewWTD story, go here. (subscription required)

The U.S. believes that the OECD's base erosion and profit-shifting final report on transfer pricing provides that some cash boxes may be entitled to more than a risk-free return, IRS Deputy Associate Chief Counsel (International) Anne Devereaux told Tax Analysts November 20.
For thewWTD story, go here. (subscription required)

Howard J. Levinewrites concerning a recent article by Ryan Finley andwilliam Hoke, "Tax Treaties Awaiting Senate Vote Face Uncertain Future,"Tax Notes, Nov. 16, 2015, p. 897. The authors highlighted the changes in the pending tax treatieswith several countries, including Japan, and quoted J. Brian Davis of Ivins, Phillips & Barker as saying the changes "are good for business, for jobs, and inbound investment." However, the article ignored a glaring (and obvious) problemwith the pending Protocol to the Japan-U.S. Income Tax Treaty.
For the Tax Notes letter, go here. (subscription required)

With the release of its new anti-inversion notice November 19, Treasury has increased the intricacy in an already convoluted field of guidance regarding those transactions, tax observers told Tax Analysts.
For the TNT story, go here. (subscription required)

The IRS is aware of the potential for a sharp increase in double-tax cases, one official said,while another addressed questions about the impact of the U.K. diverted profits tax on U.S. companies.

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

Are there policy reasons to further tighten the restrictions on trading tax attributes in cross-border transactions that generate foreign tax credits? That question has arisen yet again following a trial court's finding of economic substance in a structured trust advantaged repackaged securities (STARS) transaction.
For the Tax Notes story, go here. (subscription required)

Lowell Yoder of McDermottwill & Emery looks at an IRS legal advice memorandum that adopts a new approach to applying the Subpart F branch rule tax rate disparity test, used to determinewhether a CFC's income is treated as foreign base company sales income. "The policy rationale behind this new approach is understandable, but the technical basis for it isn't obvious from reading the regulations," hewrites.
For the BNA Insight, go here. (subscription required)

The provision in new IRS anti-inversions guidance making it more difficult for companies to restructure their operations through lower-tax third countries carries a bigwallop and shows the government is broadly interpreting its legal authority to close down these deals, practitioners told Bloomberg BNA.

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

Over the past couple ofweeks there has been a lot discussion about the value-added tax among those in the media and in certain policy circles.
For the Tax Foundation article, go here.

Here's a tax policy issue I humbly submit you should agreewith me on even ifwe have polar opposite views on taxation: an eroding tax base is a bad thing.
For thewashington Post article, go here.

In recent days, the new Speaker of the House Paul Ryan (R-Wis.) signaled a priority for international tax reform in 2016. And if the newest recommendations from the Organization of Economic Cooperation and Development (OECD) are any indication ofwhat's ahead on the global tax scene for American businesses, it should be number one on the legislative agendawhen Congress returns in January.
For The Hill blog post, go here.

The rich have long made the most of cross-border tax avoidance. Developing countries are hit hardest by this practice, but may benefit the least from efforts to tackle it
For the Public Finance International story, go here.

The Treasury Department and the Internal Revenue Service have outlined additional steps they are taking to reduce the tax benefits of corporate inversions, andwhen possible, stop the transactions from occurring.
For the Accounting Today story, go here.

The U.S. strengthened efforts to discourage corporate inversions by making the deals more difficult and limiting the benefits of the transactions, just as an iconic American firm considers shifting its legal address abroad to lower its taxes.
For the Bloomberg Business story, go here.

The Treasury Department and theInternal Revenue Serviceon Thursdayissued new rules aimed at discouraging American companies from moving their headquarters abroad in search of lowertaxrates.
Increasingly, American companies have been trying to reduce theirtaxliabilities through a tactic known as a corporate inversion -- buying smaller foreign competitors and using those purchases to move their headquarters to countrieswith more favorabletaxrates than the United States'.
For the New York Times story, go here.

A recent Australian ruling thatwent against Chevron reflects how thinking has evolved on transfer pricing, even though it turned on old tax law, a senior Australian Taxation Office official said.
"The profit shifting problem has evolved over time andwas one thatwas limited to price, and now I think is recognized and acknowledged as a function of structures," ATO Assistant Commissioner Michael Jenkins said Nov. 18 at a conference in Sydney. "It's a structural issue, not a pricing issue. And interestingly, therewas a flavor of that kind of thinking in the Chevron judgment."
For the DTR story, go here. (subscription required)

Treasury released its new anti-inversion notice on November 19, andwhile placing new limitations on potential inverters, the guidance continues in the same vein as last year's notice.
For the TNT story, go here. (subscription required)