2015

In economic analysis, Martin A. Sullivan discusseswhy a patent box is a less efficientway to provide incentives for research than a corporate rate cut or an expanded research credit.
For the Tax Notes story, go here. (subscription required)

In news analysis, Ajay Gupta examines two recent decisions from the U.S. Supreme Court and the Court of Justice of the European Union striking down discriminatory tax practices, and faults both courts for failing to delineate the proper limits of tax sovereignty.
For the Tax Notes story, go here. (subscription required)

There are many good reasons to undertake corporate tax reform this year.
For the Forbes article, go here.

Work on the development of the Multilateral‎ Instrument to implement the tax treaty-related Base Erosion and Profit Shifting (BEPS) Action Plan began on 27 May 2015 in Paris.

For the OECD release, go here.

The lack of clarity over the U.S.'s participating status in the OECD's common reporting standard (CRS) should not lead to its treatment as a nonparticipating jurisdiction for purposes of the look-through rules, a Treasury official said May 28.
For the TNT story, go here. (subscription required)

This month's special International Tax Review feature looks at challenges tied to implementing BEPS measures into domestic law.
For the ITR article, go here.

David Bradbury, head of the tax policy and statistics division at the OECD Centre for Tax Policy and Administrationwho is overseeing this aspect of the project, provides exclusive insight into an action point that has not always received as much attention as other items in the Action Plan.
For the International Tax Review story, go here.

The EU has relaunched a plan for a bloc-wide common corporate tax base to combat multinational tax avoidance. But the proposal is liable to trigger concern in countries such as the UK and Ireland.

For the Financial Times story, go here.

Work on the development of the Multilateral‎ Instrument to implement the tax treaty-related Base Erosion and Profit Shifting (BEPS) Action Plan began on 27 May 2015 in Paris. As per the OECD/G20 mandate, the ad hoc Group thatwill complete thework under Action 15 has been established,with over 80 countries participating.
For the OECD release, go here.

Multinational pharmaceutical companies face a joint investigation by tax agencies from several countries and could also be asked to testify before an Australian Senate inquiry into corporate tax avoidance.

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

France annually loses an estimated 10 percent of corporate tax revenue to multinational companies' "manipulation" of transfer pricing to shift profits to low-tax jurisdictions, according to a report by a Banque de France economist.

For the BNA DTR story, and a link to theworking paper, go here. (Subscription required)

The OECD has updated the commentaries on the Model Tax Convention (Commentaries) seeking to clarify the concept of beneficial ownership in tax treaties. But, a Swiss Federal Supreme Supreme Court dispute, known as the 'Swiss swap' case, threatens to challenge the OECD's principles.
For the International Tax Review story, go here.

The Treasury Departmentwill have several questions to considerwhen determiningwhether the U.K.'s recently enacted diverted profits tax (DPT) is creditable for U.S. foreign tax credit purposes, according to Harrison Cohen of Deloitte Tax LLP.
For the Tax Notes article, go here. (subscription required)

As the European Commission pushes to establish a cross-border corporate tax scheme for the digital age, itwill insist that a revised common consolidated corporate tax base (CCCTB) be mandatory and contain a two-step approach to prevent corporate profit shifting.

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

The College of Commissioners today held an orientation debate on measures to make corporate taxation fairer, more growth-friendly and transparent. Itwas agreed that a new EU approach to corporate taxation is needed to successfully address tax abuse, ensure sustainable revenues and foster a better business environment in the internal market.
For the EC press release, go here.

Amazon is changing its EU business structure so that it books retail sales in the U.K. and other EU jurisdictions instead of in Luxembourg, an Amazon spokesman confirmed May 26.

For the Tax AnalystswTD story, go here. (subscription required)

The European Commissionwarned on Tuesday that Amazon's decision to report its sales morewidely across Europewould have no bearing on a landmark probe into the online retailer's tax arrangements in Luxembourg.

This month Amazon overhauled its much-criticised tax structure in the EU, raising expectations that itwill now pay more tax in Germany, Spain, Italy and the UK.

For the Financial Times story, go here.

Ukrainian authorities have approved revisions to the country's tax code that provide new profit tax breaks for overseas investors.
For the BNA DTR story, go here. (subscription required)

The European Unionwill press for countries in the bloc to align their corporate tax bases as part of efforts to overhaul a long-stalled proposal, according to a document prepared for May 27 discussions.
The document doesn't call for EU nations to adopt the same tax rates. Instead, the European Commission aims to make it harder for companies to dodge taxes by aligning theway governments definewhat to tax.
For the BNA DTR story, go here. (subscription required)

Amazon.com Inc. has stopped booking European retail sales largely through its affiliate in low-tax Luxembourg, but thatwon't necessarily translate into a revenuewindfall for the U.K. and other countrieswhere it is now reporting the sales, experts in international taxation told Bloomberg BNA.

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

Under a mandate from the G20 leaders, Mr. Saint-Amans is directing one of the most significant transnational efforts in the history of international taxation, the OECD's Base Erosion and Profit shifting (BEPS) project. Regardless of the final recommendations presented at the G20 meeting in October of this year in Lima, Peru, the BEPS initiative is transforming the landscape of international taxation, redefining the international tax arena for host countries, residence countries, and multinational firms, alike.
For the Tax Foundation article, go here.

Scott Heidecke and Flora Luo of Nexia International member firm Nexia TS (Shanghai) discuss China's latest attempts to implement countrywide standard practices for application of the general anti-avoidance rules,while bringing clarity to foreign entitieswhich are affected.
For the International Tax Review story, go here.

Mindy Herzfeld argues that unless the OECD can properly define a country's tax base, it cannot adequately measure base erosion.
For the Tax Notes International story, go here. (subscription required)

This articlewill address the questionwhether publicly traded US corporations owe a duty to their shareholders to minimize their corporate tax burden in anyway that they may be able to get awaywith from a purely legal perspective. First, however, to render the subsequent discussion a bit more concrete, Iwill describe a recently unveiled case study of corporate tax aggressiveness.
For the paper, go here.

Amazon has started to pay taxes on sales to its UK customers in Britain rather than in Luxembourg, in a climbdown after accusations that it avoided tax in its third largest market.

Amazon's low tax structure,which has sparked intense controversy in the last three years,was overhauled at the beginning of this month and the company is making similar moves elsewhere in Europe.

For the Financial Times story, go here.

It has become a $2 trillion question.why don't companies have to make clear exactly how much of their profits are generated offshore each year and not taxed in this country?why must investors engage in jujitsu to estimate these figures and the risks associatedwith them?
For the New York Times story, go here.

In the continuing battle between European and American tech companies, score one for Europe.
In a move that could put pressure on its rivals to follow suit, Amazonwill start paying taxes in a number of European countrieswhere it has large operations, instead of funneling nearly all its sales through Luxembourg, a low-tax haven that is the home base in the region for Amazon and many other large tech companies.
For the New York Times story, go here.

In a revised discussion draft released May 22 on action 6 (preventing treaty abuse) of its base erosion and profit-shifting project, the OECD proposed putting a "skeletal" limitation on benefits article in its model treaty thatwould be supplemented by guidance in its model commentary, in lieu of a fully drafted provision.
For the TNT story, go here. (Subscription required)

In news analysis, Lee A. Sheppard looks at the reality behind the idea that multinationals are storing cash overseas because of U.S. tax law.
For the TNT article, go here. (Subscription required)

In news analysis, Marie Sapirie says that important questions remain regarding regulations under sections 959 and 961 and that there is renewed practitioner interest in the guidance project.
For the TNT article, go here. (subscription required)

A new draft on the prevention of treaty abuse from the Organization for Economic Cooperation and Development includes a "simplified" limitation on benefits rule,which the guidance says should be pairedwith a "principle purpose test" rule.
For the BNA DTR story, go here. (subscription required)

Dr. Jack Mintz of the University of Calgary offers his latest thinking on the profit shifting phenomenon, sharing his unparalleled insight into the Canadian experiencewith taxing multinational firms.
For the Tax Policy Blog interview, go here.

Public comments are invited on a revised discussion draftwhich includes proposals on how to dealwith the follow-upwork on Action 6 (Prevent Treaty Abuse) of the Action Plan on Base Erosion and Profit Shifting (BEPS).

For the OECD release, go here.

The G20 International Tax Symposiumwas held in Istanbul on 6-8 May 2015. Hosted by the Turkish Ministry of Finance, the symposium included 300 participants from governments, international organisations, business and industry, non-governmental organisations and academia from 60 countries.

The symposium provided a platform to discuss the ongoing OECD/G20 Base Erosion and Profit Shifting (BEPS) Action Plan. It included tax matters and issues relevant to developing countries and how they might benefit from the OECD/G20work on international taxation and other related items.

For the PwC Tax Policy Bulletin, go here.

David Bradbury, head of the tax policy and statistics division at the OECD Centre for Tax Policy and Administrationwho is overseeing this aspect of the project, provides exclusive insight into an action point that has not always received as much attention as other items in the Action Plan.
For the International Tax Review story, go here.

Poland has released a draft regulation updating documentation requirements for transfer pricing and implementing the Organization for Economic Cooperation and Development's soon-to-be-finalized country-by-country reporting rules, according to an alert from EY.

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

The Treasury Department's proposed changes to the U.S. model tax treatywould, if implemented, represent the most dramatic changes in U.S. tax treaty policy in decades, according to some practitioners.
For the TNT story, go here. (subscription required)

The international tax regime is facing a defining moment. As stories of multinational companies expatriating and shifting income around theworldwith seeming impunity continue to emerge, the question of how to divide the international tax base among the countries of theworld increasingly draws attention from policymakers and academics. To date, however, the debate has tended to devolve into one over the two traditional tools used to divideworldwide tax base ÔøΩ transfer pricing and formulary apportionment. This Article demonstrates that such focus is misplaced on the instruments of dividing theworldwide tax base rather than on first principles. Instead, this Articlewill adopt the first principle of maximizing the efficiency of theworldwide tax regime under two key, but realistic, assumptions: first, that the presence of multiple states in theworld is efficient and, second, that there is a declining marginal utility to public goods. Under these assumptions, dividingworldwide tax base efficiently requires balancing the goals of maximizing the neutrality of tax laws and the provision of public goods across all countries.
For the paper, go here.

The Indian government presented the annual India Budget through Finance Bill 2015 (Finance Bill) on February 28, 2015. Both Houses of Parliament have approved the Finance Billwith certain amendments, and the amended bill has received presidential assent. Therefore, the proposals are now effective.

For the PwC Insight, go here.

On May 20, 2015, the US Department of Treasury released proposed revisions to the US model income tax convention. Treasury has requested comments from the business community and other interested stakeholderswith respect to these proposalswithin 90 days.

For the PwC Insight, go here.

Today, the Treasury Department released for public comment draft updates to the U.S. Model Income Tax Convention (the "U.S. Model") ÔøΩ the baseline text used by the Treasury Departmentwhen it negotiates tax treaties. The revisions to the U.S. Model text are intended to ensure that the United States is able to maintain the balance of benefits negotiated under its treaty network as the tax laws of our treaty partners change over time, and to deny treaty benefits to companies that change their tax residence in an inversion transaction. The U.S. Modelwas last updated in 2006.

For the Treasury press release, go here.

Authoritiesworldwide have increased scrutiny of tax-avoidance strategies in the past year, CFOs and finance directors of multinational clients told global tax consulting firm network Taxand.
For the CGMA magazine story, go here.

The OECD has updated the commentaries on the Model Tax Convention (Commentaries) seeking to clarify the concept of beneficial ownership in tax treaties. But, a Swiss Federal Supreme Supreme Court dispute, known as the 'Swiss swap' case, threatens to challenge the OECD's principles.
For the International Tax Review story, go here.

The OECD has released its revised proposals on the Permanent Establishment (PE) rules in Article 5 of the OECD Model Tax Treaty. The earlier OECD proposals,which set out alternative approaches to a number of significant PE issues, have been replaced by a set of definitive proposalswhich are largely focused on expanding the scope of the dependent agent rule (including narrowing the scope of the independent agent rule) and narrowing the scope of the specific activity PE exemptions.


For the PwC Tax Policy Bulletin, go here.

The European Commission's ambitious plans to improve the digital single market include changes to the VAT treatment of the cross-border supply of goods and services.
For the International Tax Review story, go here.

Australian Treasurer Joe Hockey used his annual Budget speech to announce the introduction of Australia's 'Netflix tax' on the cross-border supply of e-commerce goods and services.
For the International Tax Review story, go here.

Andrus Ansip, European Commission vice president for the digital single market, has committed to have a proposal in place for an EU-wide VAT threshold on business-to-consumer (B2C) e-services by the summer.
For the International Tax Review story, go here.

Although European politicians have complained that U.S.-based companies are taking advantage of loopholes in foreign countries' tax laws to reduce their liability, foreign companies operating in the U.S. also benefit by paying lower taxes than their American counterparts, according to a May 18 policy brief by the Progressive Policy Institute (PPI).

For the PPI policy brief, go here.

The Treasury Department on May 20 proposed sweeping changes to the model U.S. tax treaty, including limiting the availability of treaty benefits for taxpayers that benefit from special tax regimes and imposing full U.S.withholding tax rates on inverters.

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

The European Commissionwill study possible compromises on an 11-nation financial transactions tax plan, spokeswoman Vanessa Mock said.

Finance ministers narrowed the range of proposals on the table lastweek in Brussels,without settling on a final plan.

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