2016

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Public audit scorecards: Why not?

  • By ITR

With tax authorities being granted more and more company data as transparency measures start to hit, Keith Brockman looks at how companies could scrutinise them.

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UK finance chief hints at long-term plan on economy (1)

Theway tax policy is made in the UK needs to be reformed, say business organisations, but the UK's Chancellor of the Exchequer Philip Hammondwill not unveil

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'Anti-abuse' themes in the OECD's Final BEPS Reports

  • By PwC
The OECD's Base Erosion and Profit Shifting (BEPS) project has been the catalyst for a fundamental re-think of the structures and relative coordination of the international tax environment in today's global economy. The scale of thework undertaken is unprecedented and, for the most part, has garneredwidespread acknowledgment of the need for reform.

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Germany plans to cut taxes by 6.3 billion euros a year: sources

  • By Reuters
Annual German tax breaks of 6.3 billion euros could take effect as early as January 2017 after the conservative Christian Democrats reached agreementwith the centre-left Social Democrats, junior partners in the ruling coalition, government sources said onwednesday.

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Lessons For The U.S. From Canada's Ambitious Carbon Tax Plan

Earlier thisweek, Canadian Prime Minister Justin Trudeau dropped a bombshell: He'll require every province to adopt either a carbon tax or develop a carbon trading system by 2018. Polluters in those that don'twould be hit by a gradually increasing federal tax starting that year. The ideaÔøΩparticularly the provincial option– could prove an interesting model for the U.S.

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S&P: Foreign Corporate Cash Could Solve U.S. Infrastructure Woes

Hillary Clinton and Donald Trump agree that the U.S. needs to upgrade its infrastructure. But, as the national debt approaches $20 trillion, there has been little agreement among a divided government on how to pay for it.
Analysts at S&P Global have found an ingenious solution: get companies to use their foreign earnings to pay for it.

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Companies eyeing banks' help with Treasurys debt-equity rules

Many companies could face millions of dollars in compliance costs ÔøΩ and possibly outsource thework to financial services ÔøΩ if the Treasury Department finalizes the debt-to-equity recharacterization rules intended to discourage post-inversion activities.

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A Compromise Proposal for Debt-Equity Documentation Rules

In this article, Axelton and Gramlich argue that the disclosure rules in the proposed debt-equity regulations are unnecessarily burdensome and vague, and they offer a compromise mandatory reporting form designed to efficiently elicit most of the relevant information that Treasury soughtwhen it created the new documentation requirements.
For the Tax Notes viewpoint, gohere. (subscription required)
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Are the EU and U.S. Headed for a Tax War?

Frans Vanistendael discusses the growing tension between the European Union and the United States over the OECD's base erosion and profit-shifting proposals and the European Commission's Apple decision and other state aid investigations.

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Foreign Insurer: To Elect or Not to Elect (That Is a Question)

In this article, the authors discuss how a controlled foreign insurance subsidiary can make a section 953(d) election for domestic taxation treatment, and they provide insight on technical procedures, potential pitfalls, and solutions for inadvertent errors.

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Cameco Case in Canada Puts Transfer Pricing in Spotlight

Lawyers for Cameco Corp., theworld's largest publicly traded uranium producer,will enter a Toronto courtroom Oct. 5 to challenge the Canadian government's claim that its business model is a tax avoidance scam.
More broadly, practitioners are hoping the courtswill clarify the interplay between major elements of Canada's transfer pricing rules, aswell as the appropriateness of the Canada Revenue Agency's aggressive approach to transfer pricing disputes.
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French Constitutional Court strikes down 3% distribution tax exemption for consolidated taxpayers

  • By PwC
The French Constitutional Court on September 30, 2016, ruled that the 3% distribution tax exemption available to members of a French tax consolidation is unconstitutional because it creates an unjustified difference in treatment between entities that are a part of a French tax consolidation and those that are not.
The ruling is expected to result in the application of the distribution tax to all French companies, even if they belong to a French tax consolidation.

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Invert the Tax Code

It's time to turn the tax code on its head. There are lots of reasons to push for tax reform, but the most proximate demand is the need to end so-called "tax inversions." These started out as situations inwhich a U.S. companywould literally swap the roles of the U.S. headquarters and the foreign subsidiary. By "inverting" the companywould attempt to be subject to the tax rules of the country inwhich the new headquarterswas located. Tax changes in the early 2000s put an end to the plain vanilla tax inversion.

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2016 International Tax Competitiveness Index

  • By Tax Foundation

The structure of a country's tax code is an important determinant of its economic performance. Awell-structured tax code is easy for taxpayers to complywith and can promote economic development,while raising sufficient revenue for a government's priorities. In contrast, poorly structured tax systems can be costly, distort economic decision making, and harm domestic economies.

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Tax policy reforms driven by focus on boosting growth

  • By OECD

While fiscal consolidationwas the key driver of tax reforms in the years following the global economic crisis, the main emphasis of recent tax reforms has shifted back to tax measures aimed at boosting economic growth, according to a new OECD report.

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Consolidated Return Aspects of the Proposed Debt-Equity Regulations

In this article, Howard and Axelrod argue that the proposed debt-equity regulationswould add complexity to an already complicated set of rules regarding consolidated groups and intercompany obligations, and they discuss how the drafters may have overlooked the effect of some existing rules aswell as the effect of the proposed rules in quirky fact patterns.

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Practitioners Hopeful for Cash Pooling Fix in Debt-Equity Regs

Practitioners remain hopeful that the coming final debt-equity regulations under section 385will address the cash pooling problems that have been highlighted since the proposed regswere released, including issueswith the documentation and funding rules.

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OECD Is Neutral on Profit Split Method: U.S. Official

The OECD isn't trying to put its "thumb on the scale" for or against using the profit split method in transfer pricing, a U.S. Treasury official and delegate to the international organization said.

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Hints as Final Debt-Equity Regs Reach Final Review Stage

Practitioners attending the American Bar Association Section of Taxation meeting in Bostonwere hungry for any information government officialswerewilling to share about coming section 385 debt-equity regulations, given that the rules had just been submitted for Office of Management and Budget review September 30.

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Friends Without Benefits? Treasury and EU State Aid

In this report, Shaviro identifies flaws in Treasury'swhite paper condemning recent state aid investigations by the European Commission.

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News Analysis: U.S. Creditability of Foreign Oil and Gas Taxes

Ajay Gupta concludes his look at the fiscal rules governing cross-border oil and gas exploration and development ventures by examining the U.S. creditability of foreign oil and gas taxes.

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News Analysis: Are Patent Boxes State Aid?

In news analysis, Ryan Finley considerswhether EU member states' patent box regimes could be considered state aid in light of the European Commission's changing legal standards evident in its recent state aid decisions.

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Ruling U.K. Party Commits to Corporate Tax Rate Cut, Brexit Plan

U.K. Chancellor of the Exchequer Philip Hammond confirmed the governmentwill stick to its plan to reduce the corporate tax rate from 20 percent to 17 percent over the next three years to put the U.K. in a competitive position after its exit from the EU, a process thatwill begin no later than the end of March 2017, Prime Minister Theresa May said.

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German Finance Committee proposes additional BEPS-related and other tax rules

  • By PwC
The German Finance Committee (the Committee) of the Bundesrat (Federal Council) has presented its recommendations for suggested changes and additions to the draft bill concerning implementation of the EU Directive regarding the mandatory automatic exchange of information in the field of taxation and additional measurements to avoid base erosion and profit shifting (BEPS).

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Analysis of tax developments worldwide - October 2016 edition

  • By PwC
International Tax News is designed to help multinational organisations keep upwith the constant flow of tax developmentsworldwide. Among the topics featured in this month's edition are:
  • European Commission finds that Ireland has granted unlawful State aid to Apple
  • Singapore's new R&D Technical Advisory Panel and 'preclaim evaluation' process for R&D projects
  • Belgium's proposal for a corporate tax reform
  • Brazil releases Public Consultation on mutual agreement procedures

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EU extends Gibraltar State aid investigation to include rulings

  • By PwC
On September 23, 2016 the European Commission (EC) published the full text of its letter dated October 1, 2014 to the UK governmentwhere it announced that itwould examine the Gibraltar tax rulings practice from the perspective of the EU State aid rules. Previously thiswas only available as a summary press release. This decision is part of an on-going State aid investigation into the Gibraltar corporate tax system,whichwas opened in October 2013.

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IRS May Tweak Proposed Debt-Equity Regs for Consolidated Groups

The one corporation rule for consolidated groups in the proposed section 385 debt-equity regs has some unintended consequences, Kevin M. Jacobs, branch 4 senior technician reviewer, IRS Office of Associate Chief Counsel (Corporate), said September 30.
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Apple, Irish to Claim EU Switched Gears on Transfer Pricing

Apple Inc. and Ireland are preparing appeals to argue that European Union competition investigators unfairly kept them in the dark during a probe that ended in a record 13 billion-euro ($14.6 billion) tax bill, peoplewith knowledge of their case say.

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Earnings-Stripping Rules Consistent With New Global Tax Norms

Proposed U.S. regulations targeting corporate earnings stripping are consistentwith new tax standards from the OECD, two Treasury Department officials said.
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Cash-Pooling Concerns Under Microscope in Debt-Equity Rules

The Treasury Department is taking a hard look at how controversial earnings-stripping rules might impact a common cash management technique known as cash pooling, an official said.
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U.S. Official: EU Aid Cases Could Undermine Bilateral Tax Deals

Recent decisions by the European Commission to punish companies like Apple Inc. for allegedly accepting impermissible government aid from Ireland could undermine tax certainty, including bilateral agreements on intercompany pricing, a U.S. Treasury official said.
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News Analysis: Notes From the Tax Wars

In news analysis, Lee A. Sheppard looks at the latest U.S. criticism of the European Commission's state aid decision, and discusses how the United States may have undermined the OECD's base erosion and profit-shifting project.
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EU State Aid Decisions Defy Transfer Pricing Analysis, U.S. Says

A Treasury Department lawyer strongly criticized recent decisions by the European Commission, saying the U.S. government has noway of doing a transfer pricing analysis to determinewhether the commission's determinations that U.S. multinational companies had received illegal state aid are consistentwith accepted arm's-length principles.

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News Analysis: The EU's Other Smoking Gun

Mindy Herzfeld examines an infringement decision by the European Commission that indicated that tax treatieswith limitation on benefits provisions might not be compatiblewith the European treaty and the single market,which she says could harm U.S. treaty relationshipswith EU countries.

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News Release: 367 Fortune 500 Companies Collectively Maintain 10,366 Tax Haven Subsidiaries

  • By Citizens for Tax Justice

In 2015, more than 73 percent of Fortune 500 companies maintained subsidiaries in offshore tax havens, according to "Offshore Shell Games," released today by the U.S. PIRG Education Fund, Citizens for Tax Justice and the Institute on Taxation and Economic Policy. Collectively, multinationals reported booking $2.5 trillion offshore,with just 30 companies accounting for 66 percent of this total. By indefinitely stashing profits in offshore tax havens, corporations are avoiding up to $717.8 billion in U.S. taxes.
For the CTJ report, go here.

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Repatriating Profits Won't Create Jobs

"Bring trillions of dollars back to the U.S. and create jobs." Great politics. Lousy economics.

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The top US tax controversies in 2016

  • By Contributed

There have been a number of significant developments in the area of US tax controversies during 2016. Fenwick &west highlight some of the top US tax cases from this year, including several large § 482 transfer pricing cases that could provide helpful insight for taxpayerswho may be facing similar significant transfer pricing adjustments.

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Some Financial Products May Get Relief in Debt-Equity Rules

The government has been paying close attention to industry concerns that some financial products could be hurt by closelywatched earnings-stripping rules, an IRS official said.

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U.S. Overseas Earnings Rise as Companies Defer Taxes

The amount of earnings U.S. subsidiaries kept overseas have increased 13 percent in recent years as corporations seek to defer tax on the income, according to a letter from the Joint Committee on Taxation.

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OECD's Inclusive Framework Isn't Talk Show': Saint-Amans

Reaching consensus on global tax ruleswith an expanded number of stakeholders isn't a "talk show" but involves real decision-making, the OECD's tax chief said.

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Brady, Neal Highlight Another Reason for Pro-Growth Tax Reform

  • By Committee on Ways and Means
Following a request from Houseways and Means Committee Chair Kevin Brady, R-Texas, and member Richard E. Neal, D-Mass., regarding U.S. corporations' untaxed foreign earnings kept offshore, the Joint Committee on Taxation estimated an amount of $2.6 trillion for 2015, an increase from the $2.3 trillion reported by the IRS for 2012.
The updated estimate comes in an August 31 letter from JCT Chief of Staff Thomas Barthold to Brady and Neal,which the two taxwriters released September 29.

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Private Equity and Venture Capital Funds Wary of BEPS Action 6

With the implementation of action 6 (treaty abuse) of the OECD's base erosion and profit-shifting project, private equity and venture capital funds may be forced to separate investors based on their eligibility for treaty benefits -- namely, reducedwithholding rates -- practitioners say.

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U.K. Opposition Party Leader Pledges Corporate Tax Increase

U.K. Labour Party leader Jeremy Corbyn has promised to raise the country's corporate tax rate to help fund education efforts, much to the chagrin of business trade groups that argue that such a pledgewould damage investment into the U.K.

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Russia Issues 2 CFC Guidance Letters

Russia's Ministry of Finance has made public two guidance letters that clarify tax provisions regarding controlled foreign corporations.

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Taiwan to introduce VAT for online retailers

Taiwan is to become the latest country to levy VAT on online foreign retailers, following similar OECD-inspired laws introduced by the EU and countries including Japan, Russia, South Korea, Australia and New Zealand. Foreign businesses may have only three months to prepare for the changes.

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APA signings in India cross the '100-mark'

  • By PwC
On September 23, 2016, the total number of Advance Pricing Agreements (APAs) entered into by India's Central Board of Direct Taxes (CBDT) crossed the '100-mark' to reach 103. The CBDT expects more APAs to be concluded and signed in the near future.
For the PwC Insight, gohere.
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Brokering The Brawl When EU Commission Tax Rulings Become State Aid

The two-year battle between the United States and the European Commission over the latter's state aid investigations harkens back to legendary boxing matches, like the 1975 "Thrilla in Manila" between Joe Frazier and Muhammad Ali.
If the present trajectory of the state aid investigations continues on its predictable course, it is easy to visualize the U.S. and the commission as the exhausted Frazier and Ali at the end of their epic battle. But in theworld of tax and trade policy – not to mention international relations – it is not a good outcome if a dispute between trading partners and allies reduces both sides to a bloody pulp.
For the Forbes article, gohere.
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Future of Foreign Import Tax Bill Murky as Controversy Grows

Legislation thatwould tax foreign imports could add to tax overhaul discussions by House RepublicansÔøΩbut its future remains unclear as supporters and critics take sharply opposing views about the measure's impact on U.S. trade.

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Role of G-20 in Tax Policy Here to Stay:' Treasury Official

Tax officials from the U.S., India and the OECD told those attending the International Fiscal Association's annual congress that the Group of 20 countrieswill continue to drive the international tax policy agenda.

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U.K. Defends Work Helping Developing Nations Adapt to New Tax Standards

The U.K. Department for International Development (DFID) has defended itself against a recent report from an aidwatchdog criticizing it for failing to do enough to help developing nations benefit from new tax standards, noting its progress in boosting developing countries' tax administration capacity.

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