2015

Are multinational companies paying their fair share of taxes?while the European Commission launched a series of inquiries in all EU member states, the Parliament has set up its own special committee to investigate into tax rulings involving large international companies.we talked to committee chair Alain Lamassoure, a French member of the EPP group, to find out his views and expectations.

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The smart money alwayswagers against tax reform, but 2015 may be the year that the sucker bet pays off, at least for business taxes. The driver could be the outdated corporate tax system: The current 35 percent rate is out of stepwithworld norms and holds back investment in the U.S.

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by Laura Tyson (Project Syndicate)

Corporate tax reform has emerged as an area of potential bipartisan action in the United States Congress over the next few months. But fundamental questions about the right approach remain.

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by Achim Pross (International Tax Review)

Achim Pross, head of the International Cooperation and Tax Administration division at the OECD, and architect of the new automatic exchange of information standard and the multilateral competent authority agreement, discusses the progress made in 2014 and looks at opportunities and challenges ahead.

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by Vanessa Houlder (Financial Times)

George Osborne's flagship policy of cutting taxation on companies has cost nearly £8bn a year but further UK fiscal incentives are needed to stimulate investment and equity financing, an independent think-tank said on Thursday.

The Institute for Fiscal Studies defended corporation tax cuts against the charge that they amounted to a 'tax break for big business'. It said the burden of taxes ultimately fell on people rather than companies,with a "substantial share" falling onworkers. It said: "As such, lower corporate taxes may feed through into higherwages in the medium term."

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Continuous budget cuts have forced the Internal Revenue Service to "re-engineer" its approach to international audits, including an experimentwith a centralized approach to issue identification, an agency official said.

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by Amanda Athanasiou (Tax Analysts)

While Salix Pharmaceuticals Ltd. and Auxilium Pharmaceuticals Inc. have foundways around Notice 2014-52, 2014-42 IRB 712, the guidance hasn't failed to make re-domiciling more difficult, according to observers.

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India aims to cut the corporate tax rate by 5 percentage points over the next four years, replace thewealth taxwith a surcharge on thewealthy and introduce measures to combat tax evasion. Presenting the Finance Ministry's 2015 budget planto parliament Feb. 28, Minister Arun Jaitley said the governmentwants to reduce the corporate tax rate from 30 percent to 25 percent.

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by Eric J. Lyman (Bureau of Nationa Affairs)

An ongoing tax investigation into the Italian activities of California-based Internet giant Google Inc. is just "one of many" against multinational online companies, Italian prosecutors told Bloomberg BNA.

Prosecutors are looking intowhether Google broke tax laws in Italy by illegally classifying income earned in the country as income in Ireland or other low-tax jurisdictions. Prosecutors have reportedly obtained internal Google documents to help make their case.

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Intense media focus and political controversy surrounding international tax structures hasn't changed the substance of tax planning, several corporate tax directors saidÔøΩbut it has changed how they approach it.

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Treasury is still evaluatingwhether the U.K. government's proposed diverted profits taxwould be creditable under section 901 andwhether the taxwould be a candidate for additional guidance under the section 909 foreign tax credit splitter rules, according to Jason Yen, attorney-adviser, Treasury Office of International Tax Counsel.

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by Kevin A. Bell (Bureau of National Affairs)

Three U.S. government officials have said the Organization for Economic Cooperation and Development is likely to adopt a "combination test" to determine the deductibility of interest on related-party debt involving group-wide interest allocation.

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Regulations to implement the anti-inversions Notice 2014-52 remain a top priority even as the Internal Revenue Service must take a "tiered" approach to guidance in the face of budget cuts, officials said.

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The U.S. isworking on a revision to its model tax treaty and plans to release it in draft form to obtain public commentary, a Treasury Department official said.

Danielle Rolfes, international tax counselwith Treasury, saidwork on an international project to combat base erosion and profit shifting (BEPS) has caused the U.S. "to spend a lot of time looking at our tax treaties and how they are functioning."

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The Treasury Department isn't sayingwhen guidance on covered asset acquisitions under tax code Section 901(m)will be released.

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The administration's budget proposal for a minimum tax on foreign earnings serves as "a sort of compromise, split-the-baby approach" to taxing those earnings in away thatwould protect the U.S. tax base, Treasury International Tax Counsel Danielle Rolfes said.

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Treasurywould prefer to develop the text of a model limitation on benefits provision rather than simply describing the general elements of a model LOB under action 6 of the OECD's base erosion and profit-shifting project, Quyen Huynh, Treasury associate international tax counsel, said February 26.

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Robert Stack, Treasury deputy assistant secretary (international tax affairs), addressed base erosion and profit shifting and energetically advocated the rights of U.S. multinationals to fair administration of the rules at the International Fiscal Association USA annual conference inwashington February 26.

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The U.S. is committed to a limitation-on-benefits test to prevent treaty shopping, despite expectations that few countries participating in an international project to combat base erosionwill adopt such a test, a Treasury official said.

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A top Treasury Department official said the U.S. is presenting a "bold, radical, proposal" on controlled foreign corporations to the countries participating in the international project to combat base erosion and profit shifting.

Robert Stack, deputy assistant secretary for international tax policy at Treasury, said Feb. 26 the U.S. is making a proposal on BEPS Action 3 toworking Party No. 11 of the Organization for Economic Cooperation and Development, that is similar to the Obama administration's minimum tax budget proposal. BEPS Action 3 tasks the OECDwith strengthening the rules on CFCs.

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by John Herzfeld (Bureau of National Affairs)

U.S. policy makers should take a fresh look at international tax treaties to make sure their provisions stillwork in the national interest and aren't misused in unintendedways, a Treasury Department official said.

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An animated Danielle Rolfes, Treasury international tax counsel, regaled the tax attorneys attending the New York State Bar Association Tax Section annual meeting in New York February 24 on issues involving U.S. treaty policy, saying itwas necessary to look beyond section 7874 and Notice 2014-52, 2014-42 IRB 712, to address the inversion problem.

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In news analysis, Lee A. Sheppard reports on a February 24 discussion at the New York State Bar Association Tax Section meeting on the U.S. role in shaping the OECD base erosion and profit-shifting initiative.

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As the OECD's base erosion and profit-shifting project moves forward, IRS officials on February 24 voiced concerns about the implementation of country-by-country reporting.

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Martin Lobel argues for a return to a genuinely conservative position inwhich the market picks thewinners in business; the elimination of all business tax subsidies; and an economic structure that allocates capital efficiently, instead of one that lets thewealthy and powerful influence policies that are destructive to middle-income Americans.

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Practitioners and taxpayer representatives blasted recent investigations by the European Commission intowhether some tax arrangements violate European Union laws against state aid for companies, claiming that the enforcement of the rules could prove to be baffling.

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In news analysis, Mindy Herzfeld discusses the challenges the OECDwill face getting the United States and other countries to implement country-by-country reporting.

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With the Indian Budget fast-approaching, Subhankar Sinha, senior vice president, head of tax for the South Asia region at Siemens, looks at the tax measures that could be used to incentivise the government's 'Make in India' campaign.

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by Abi Briggs and Jon Tilson (Internationa Tax Review)

Abi Briggs and Jon Tilson of Deloitte analyse recent developments regarding indirect taxation of the digital economy, taking into account OECD discussions and unilateral actions being proposed.

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Achim Pross, head of the International Cooperation and Tax Administration division at the OECD, and architect of the new automatic exchange of information standard and the multilateral competent authority agreement (MCAA) discusses the progress made in 2014 and looks at opportunities and challenges ahead.

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by Ciaran McEvoy (Investors.com)

The Treasury Department's crackdown on tax inversions last year has slowed but not stopped the movement of U.S. headquarters abroad as American businesses try to reduce tax bills and foreign firms seek to grow.

Indeed,with U.S. companies now virtually barred from relocating overseas in order to trim taxes, the Obama administration's new rules may have turned corporate America into awell-stocked pond of bait for foreign sharks.

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by Mike Godfrey (Tax News)

A repatriation holidaywould have a minimal economic impact andwould be thewrongway to pay for the Highway Trust Fund or any other project, according to a new report by the Heritage Foundation.

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The Treasury Department needs a new position - deputy undersecretary forwhac-a-Mole. Maybe thatwould allow the agency to figure out someway to stop American companies from inverting. That's the process underwhich companies get to stay in the United States and benefit from everything our society has to offer, but technically become subsidiaries of foreign companies,which lets them pay a lot less U.S. income tax that they otherwisewould.

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A strangely popular proposalwould give companies a temporary tax holiday, letting corporations bring back their money on paper, or "repatriate" it at an extremely low tax rate, thereby encouraging more corporate tax dodging in the future. The most ridiculous part? Some Members of Congresswant to use this tax break that costs money to "pay for" badly needed infrastructure investments. How does that even make sense?

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As many as two dozen jurisdictions that have failed to fully implement the international standard for tax information exchange on request could feel increased pressure to do so from theworld's biggest economies in 2015, the head of the OECD's tax transparency body said.

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A goal of tax reform is to make the U.S. tax code more neutral and to encourage economic growth. One step toward this goal is the elimination of the double tax on corporate income. Short of a complete overhaul of the tax code, integration of the corporate and individual income tax code is an option to eliminate double taxation.

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In a February 20 letter to US Senate Majority Leader Mitch McConnell (R – Kentucky), the National Foreign Trade Council and other leading business organizations urged action on pending bilateral double taxation agreements (DTAs) and protocols.

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Seychelles has become the 85th jurisdiction to sign a multilateral tax convention intended to ramp up tax transparency around theworld, the Organization for Economic Cooperation and Development accounced.

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Acknowledging disappointment from the business community over the OECD's base erosion and profit-shifting projectwork pertaining to dispute resolution in its action 14 draft, specifically mandatory binding arbitration, a Treasury official urged patience as the United States convinces more countries of the benefits of its style of arbitration.
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The Organization for Economic Cooperation and Developmentwill issue another version of its discussion draft on the transfer pricing aspects of intangibles "around April," an official told the annual Pacific Rim Tax Institute.
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The definition of fundamental economic attributes in the OECD consultation draft for action items 8-10 is a "surprising area ofweakness," a practitioner said February 19.
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The government in Indiawill announce its Budget (including tax and policy proposals) on February 28, 2015. As this is slated to be the first serious Budget for the new government after being elected 8 months ago, the government likelywill push through significant policy measures to revive economic growth and boost foreign investment. There is also high expectation from foreign investors and multinational companies for the government to address several long standing and pressing tax issues.

Join specialists from PwC's International Tax Services team to understand how the Indian Budget 2015 might impact foreign investors and multinational companies.

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Comments the OECD has received on its base erosion and profit-shifting transfer pricing discussion draft reveal that the draft seems to have struck four different "nerves," Andrew Hickman, head of the OECD's transfer pricing unit, said February 19.
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Uncoordinated implementation of OECD's base erosion and profit-shifting project raises the possibility of increased disputes, a senior IRS official said February 19.
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In a February 18 report, Senate Budget Committee ranking minority member Bernard Sanders, I-Vt., listed information on Business Roundtable members that use offshore tax havens, including location of headquarters, bailout money received, subsidiaries in tax havens, profits kept offshore, and potential taxes on repatriated profits.
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As outlined in the Tax Insight dated December 2, 2014, Italy has introduced a Patent Box regime based on the "nexus approach" set out by the Organisation for Economic Co-operation and Development (OECD). Only a month after the Italian Parliament approved the 2015 Finance Act (Law no 190 of December 23, 2014),which enacted the Italian Patent Box regime, the Italian Government has extended its scope through a Law Decree "Investment Compact",which is due to be converted into lawwithin 60 days of its publication in the Official Gazette on January 24, 2015.

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Old legislation aimed at offshore tax havens is on itsway back.
Senate Budget Committee ranking member Bernard Sanders (I-Vt.) plans to reintroduce a bill he has backed before to better ensure U.S. taxes get paid on corporate profits allegedly shifted to offshore tax haven subsidiaries. If enacted, it could help capture at least an estimated $280 billion in forgone tax revenue, according to a report Sanders released Feb. 18.
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The Obama administration has proposed a balanced solution that fairly addresses the problems of overseas cash trapped abroad, good jobs and income leaving the United States and an unreasonably high current corporate federal income tax rate. The recommendations also take into consideration the goal that U.S. companies not to be put in an untenable competitive tax disadvantagewith foreign rivalswhich are generally not taxed on income from sources outside their place of residence.
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The Senate Finance Committee's top Democrat called corporate tax inversions a "virus" on Thursday, saying they threaten to spread unlesswashington moves quickly to overhaul the U.S. tax code.
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