2015

A senior IRS adviser expressedwariness about so-called special measures included in a recent draft of the Organization for Economic Cooperation and Development's action plan on base erosion and profit shifting, claiming the potential for deviation from the arm's-length standard and arbitrary enforcementwould cause headaches for mutual agreement procedure negotiations.

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Implementing the OECD's proposal to permit "special measures" for some intangibleswould lead to a transfer pricing environmentwith no guideposts unless rules are put in place spelling outwhen a tax authority may invoke those measures, an IRS official said January 13.

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The Organization for Economic Cooperation and Development has released public comments on two discussion drafts under its Action Plan on Base Erosion and Profit ShiftingÔøΩa under Action 7 and a draft on preventing treaty abuse under Action 6.
The comments on the draft about avoiding PE status and the treaty abuse draft expressed concerns that the proposals couldlead to double taxation or major complications for transfer pricing.

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The extension of Myanmar's 5% commercial tax on previously exempt industries,which came into effect on April 1 2014, primarily applies to large and foreign corporations. Tax and industry professionals are generally positive about the changing tax regime,which augurswell for Myanmar as it attempts to create a competitive economy for foreign direct investment (FDI).
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From April 1, Japan is cutting its famously high effective corporate tax rate by 2.51 percentage points down to 32.1%,with further increases scheduled for 2016. The government has also approved a reduction on losswrite-offs and improved tax incentive schemes as Abenomics takes off in 2015.
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Congress should reconsider tax code Section 871(m) on dividend equivalents if it undertakes any broad overhaul of the U.S. tax system, a Joint Committee on Taxation attorney said.
Speaking Jan. 8 at a Practising Law Institute tax program on financial products and transactions, Viva Hammer, a legislation counsel on the committee staff, said that any "tax reform" package needs to include a look at Section 871(m),which she saidwas drafted hastily and is "widely disliked."

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The Swedish government recently received a formal notification from the European Commission (EC). In the November 26 notification, the Commission claims that Sweden's interest deduction limitation rules do not complywith European Union (EU) law. In addition, the Supreme Administrative Court (SAC) recently set aside two advance rulings on the application of the rules. The SAC stated that the rules are not suited to be assessedwithin the advance ruling procedure. As such, case law on the application of the rules may not be available until individual cases have made theirway through the normal tax assessment and court litigation procedure. This process could take many years.

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As practitioners await the release of final regulations under the dividend equivalentwithholding provision of section 871(m), Joint Committee on Taxation Legislative Counsel Viva Hammer gave them some food for thought by proposing alternatives to the regime.

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Instead of lowering the OECD model treaty's permanent establishment threshold, the OECD should assume that the threshold is correct, identify how some structures artificially sidestep it, and deviseways to prevent them from doing so, PricewaterhouseCoopers LLP said in comments on the OECD's discussion draft on BEPS action 7.

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The OECD's base erosion and profit-shifting project has led to more aggressive exchange of information requests between countries than has happened in the past, a former IRS official said January 8.

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The Internal Revenue Service is activelyworking on regulations to implement the anti-inversions Notice 2014-52, and may have additional guidance in theworks that could include action on earnings-stripping, a senior official said.
Erik H. Corwin, IRS deputy chief counsel (technical), addressed the pending regulations during a Jan. 5 forum sponsored by Bloomberg BNA Tax & Accounting and hosted by Buchanan Ingersoll & Rooney PC. "We are activelyworking on reg-ifying that notice," Corwin said.

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The Luxembourg Parliament on December 19, 2014, enacted new tax measures for corporations and individuals, including amendments to Luxembourg's transfer pricing legislation and documentation requirements.

Multinationals should consider the measures,which are effective as of January 1, 2015, as they address their existing and future Luxembourg operations. Guidance regarding certain practical aspects of some measures is still outstanding.

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With the administration, lawmakers, and pundits decrying the practice as unpatriotic, the redomiciling of U.S. companies abroad to lower tax jurisdictions following combinationswith foreign competitors took center stage in the past year.

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In news analysis, Lee A. Sheppard discusses how a recent Court of Justice of the European Union decision could help taxpayers recover overpaid dividend taxes.

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In economic analysis, Martin A. Sullivan compares the proposals in the OECD's base erosion and profit shifting draft on interest allocation to a proposal in the fiscal 2015 budget from Treasury.

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The Japanese government has agreed the first in a series of promised corporate tax cuts, as it tries to encourage cash-rich companies to raisewages to spur demand.

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America's corporate income tax rate, at 35%, is the highest in theworld. A rising choruswould like to bring it more in linewith foreign rates,which average around 23%. I have a better ideaÔøΩabolish the tax. The long-term benefitswould greatly outweigh the short-term costs. And revenue from other sources, especially the personal income tax,would quickly make up for it and then some.

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On November 18, 2014, the Venezuelan government published Decrees N° 1,435 and N° 1,436 enacting several significant changes to the Venezuelan income tax and value added tax laws. The changes include new limits on the use of tax loss carryforwards, a repeal of inflationary tax accounting for certain taxpayers, and additional requirements for certain expense deductions.

These changes are effective as of the date of publication and applicable to taxable periods commencing on or after the date of enactment.

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