2016

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News Analysis: Hybrids, PEs, and State Aid

by Mindy Herzfeld
Mindy Herzfeld examines the recent OECD discussion draft on hybrid mismatches for branches and links concepts from the draft to those in the OECD's final action 2 report, U.K. legislation on hybrid mismatches, recent U.S. Treasury announcements, and the European Commission's state aid investigation.
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New CCCTB Proposal to Increase Tax Certainty, EU Official Says

The European Commission's coming proposal to revive the common consolidated corporate tax base (CCCTB)will not only help curb aggressive tax avoidance practices butwill also increase tax certainty for both companies and EU member states, according to a top commission official.

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State Aid Rules a Tool to Achieve Fair Taxation, Vestager Says

by Alexander Lewis
The European Commission does not intend to create a supranational tax authority, but companies should still checkwith the commission to make sure their tax agreements don't fall afoul of the state aid rules, according to EU Competition Commissioner Margrethe Vestager.
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Caterpillar CEO Cites Need for Reasonable Tax Reform'

The chairman and CEO of Caterpillar Inc. likened a recent European Commission decision involving Apple Inc. and Ireland to an act of "piracy" and said it could spark new discussions of how to overhaul the U.S. corporate tax system.

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Europes cash grab from Apple makes corporate tax reform more urgent

  • By Editorial Board
Apple did not remove the headphone jack from its new iPhone 7 as a protest against the European Commission's decision ordering Ireland to charge the U.S. tech company $14.5 billion in back taxes. Still, Apple is mighty aggrieved at the E.C., and it has a point.
For thewashington Post editorial, gohere.
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Treasury to Revise Earnings-Stripping Regulations

by Michael J. Bologna
The Obama administrationwill revise portions of its earnings-stripping proposal on several fronts including cash pooling, foreign-to-foreign loans and the application of the regulations to financial institutions and regulated industries, a senior Treasury Department attorney said.
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Eurogroup head to US: If you want billion-dollar fines to stop, sort out your taxes

The U.S. must sort out its tax regime if theywant to protect their companies from billion-dollar penalties imposed on Apple by the European Union, the head of the euro zone finance ministers group told CNBC.

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Schaeuble Goes Global to Salvage Financial Transaction Tax

After five years of fruitless talks on a European financial-transaction tax, frustrated policy makers including Germany'swolfgang Schaeuble are talking up the prospect of a global levy thatwould make sure banks pay their fair share.

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Ireland Doesnt Want Apples Back Taxes, but the Irish Arent So Sure

When European officials ordered Ireland to collect a record $14.5 billion in back taxes from Apple, Kieran O'Connell drew up awish list for spending the money.
But Ireland doesn'twant Apple's billions. Instead, the Irish government is appealing Europe's tax ruling, a move that is exposing a rift in a country still feeling the aftershocks from years of harsh cutbacks.

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Warren presses for corporate tax changes in wake of Apple ruling

Congress should pass corporate tax changes that require corporations to pay their "fair share" in light of the European Union's ruling that Apple owes Ireland $14.5 billion in back taxes, Sen. Elizabethwarren (D-Mass.) said Thursday.
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State Aid Rules a Tool to Achieve Fair Taxation, Vestager Says

The European Commission does not intend to create a supranational tax authority, but companies should still checkwith the commission to make sure their tax agreements don't fall afoul of the state aid rules, according to EU Competition Commissioner Margrethe Vestager.

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News Analysis: Hybrids, PEs, and State Aid

Mindy Herzfeld examines the recent OECD discussion draft on hybrid mismatches for branches and links concepts from the draft to those in the OECD's final action 2 report, U.K. legislation on hybrid mismatches, recent U.S. Treasury announcements, and the European Commission's state aid investigation.

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OECD Tax Head Warns Against Departing From Arm's-Length Standard

The European Commission has not yet published its full decision in the Apple state aid case, but OECD officials say they are hopeful that the EU executive arm is not deviating from the arm's-length standard.

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Public comments received on the BEPS discussion drafts on the Attribution of Profits to Permanent Establishments and the Revised Guidance on Profit Splits

  • By OECD

On 4 July 2016, interested partieswere invited to provide comments on the discussion drafts on the Attribution of Profits to Permanent Establishments and the Revised Guidance on Profit Splits. The OECD is grateful to the commentators for their input and now publishes the public comments received.

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EU's bite into Apple makes US tax reform more appetizing

The European Union took a big bite out of Apple lastweek, to the tune of $14.5 billion in retroactive taxes. This action did not just mark the latest escalation on the Continent to target U.S. corporations' profits piling up overseas. It also furtherwhet the appetite for corporate tax reform here at home.

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How the US could have avoided the Apple tax fight with Europe

Apple's Ireland subsidiary paid an Irish tax rate of five one hundredths of one percent in 2014, slightly above zero. The U.S. statutory corporate tax rate is 35%while the effective rate (what corporations pay on average) is 27.1%. Ireland iswidely regarded as a tax haven country. It sells itself as a haven for major US corporations on the basis of very, very low taxes.

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Picking Apples: Tax Policy as State Aid in the European Union

The European Commission's decision to recover ÔøΩ13 billion plus interest in unpaid taxes due Ireland and some other European countries from the Apple corporation raises many questions. Many of these questions, for example on the retroactive nature of the adjustment,will presumably be taken up by Apple and the Irish government in the courts.whether classifying tax policy as state aidwill lead toward tax harmonization in the European Union is for economists to tackle.

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OECD releases comments on draft tax guidance relating to profit splits, permanent establishment

  • By MNE Tax
The OECD today released 107 comment letters, mostly from business representatives, that respond to two OECD discussion drafts providing for common tax rules to be used to allocate multinational corporation profits among the countries inwhich they operate.
For the MNE Tax story, gohere.
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Apple state aid decision: What is the precedent, if any?

  • By ITR Correspondent

The head of tax at Mason Hayes Curran, John Gulliver, considers the key factors tax directors need to consider following the European Commission's state aid decision against Apple and Ireland.

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Apples Tax Avoidance Illustrates Gap Between Law and Economics

American companies like Apple Inc. aren't justworld-class innovators in personal technology and marketing. They are also, it turns out,world-class innovators in tax avoidance.
This is one of the clear lessons from the European Commission's announcement lastweek that Apple owed Ireland up to $14.5 billion in back taxes. As a matter of economics, the EC is right.
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Elizabeth Warren: What Apple Teaches Us About Taxes

Apple got a big surprise lastweekwhen the European Commission ordered Ireland to collect more than $14 billion in back taxes from the company. The global giant had been attributing billions of dollars in profits to a phantom head office, allowing it to pay a tax rate of 1 percent or lower.
Both Apple and Ireland are appealing the decision, but the commission's announcementwas the latest sign that multinational corporations are running out of places to hide from paying taxes.

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The Impact of the Proposed U.S. QI Agreement

Denise Hintzke and Kelly Cruze of Deloitte Tax LLP highlight some of the key changes found in the new proposed qualified intermediary agreement announced in Notice 2016-42.

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Ireland Debates Apple Appeal

Speaking during a debate over an appeal of the European Commission's decision that Apple received unlawful state aid from Ireland, Prime Minister Enda Kenny said "the commission's conclusion that Ireland granted undue tax benefits of up to ÔøΩ13 billion to Apple in away that transgressed EU state aid rules is so profoundlywrong and damaging that it demands an immediate, clear and strong response."

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Ireland Endorses U.S. Arguments in Apple Case

Ireland's finance agency has joined the U.S. Treasury Department in arguing that the European Commission's decision requiring Ireland to retroactively recoup 13 billion euros ($14.5 billion) in unpaid taxes from Apple Inc. undermines the global consensus on international taxation.

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New UK law allows government to introduce public country-by-country reporting by multinationals

Yesterday saw the latest stage in the parliamentary debates on the UK Finance Bill 2016,which brings in tax legislative changes.
One of the amendments proposed by a cross-party group of MPswas to insert a clause allowing the government to bring in a requirement for public country-by-country reporting by multinational corporations. The amendment gained government support, andwas passed. Thiswill become lawwhen it receives Royal Assent later this year.

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EU finance ministers to discuss how to make tax policy more evenhanded

European Union countries should better coordinate tax rules to avoid hitting corporations too hard, the Slovak presidency of the European Union proposed, in an effort to provide more balance to an EU campaign against tax avoidance by multinational companies.
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Apple: "Attracting investment by granting tax deals is illegal in the EU

  • By European Parliament

The European Commission's ruling that Apple should pay Ireland ÔøΩ13 billion in taxes has reignited the discussion of how much tax large companies should pay.we talked to Markus Ferber, one of the Parliament's leading members on tax issues,who said the Commission's decision enjoyed the Parliament's full backing. He alsowarned that EU countries need to understand that attracting investment by granting tax deals is illegal under EU rules established by member states themselves.

Apple and other large multinationals have explained their position to Parliament's special tax rulings committees.what do they think of the principle that taxes have to be paidwhere the economic activity takes place?


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Analysis of tax developments worldwide - September 2016 edition

  • By PwC
International Tax News is designed to help multinational organisations keep upwith the constant flow of international tax developmentsworldwide. Among the topics featured in this month's edition are:
  • The taxation of capital gain on the sale of shares in Madagascar
  • New Korean tax reform proposals
  • Luxembourg's proposed 2017 tax measures
  • OECD continues BEPS implementation

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Belgium may reduce corporate income tax rate to 20% by 2020 in context of broader tax reform

  • By PwC

The Belgian government isworking on a major corporate tax reform. The discussions include a progressive reduction of the corporate income tax (CIT) rate from 33.99% to 20% by 2020, full exemption of capital gains on shares ÔøΩ replacing the current tax rate of 0.412% on such gains ÔøΩ and an increase in the participation exemption regime for incoming dividends from the current 95% to 100%.

The government also is discussing various 'compensatory' measures to make the reform budget-neutral.
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U.K Paves the Way for Public CbC Reporting but Stresses Multilateral Approach

Tax transparency campaigners havewelcomed the U.K. government's decision to accept a Finance Bill amendment thatwill enable HM Treasury to make regulations requiring large multinationals to publish country-by-country (CbC) reports of their profits and taxes. The government, however, stressed that it intends to seek international agreement on a reporting model before using the new power.

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A Price-Based Royalty Tax?

by Kimberly A. Glausing and Michael C. Durst (Tax Notes)
In this article, the authors consider the merits of a price-based royalty as a tax instrument for extractive industries. A price-based royalty is a royalty forwhich the rate varieswith the product price.
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Multinational under fire: Who will be the Eurpean Commission's next target

International Tax Review

by Amelia Schwanke

Company tax directors are questioningwhether the European Commission acted beyond its powers in fining Apple �13 billion ($14.5 billion) for accepting "illegal" state aid - and they arewonderingwhether they may be next in line. @

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Tax Technology: A brave new world

International Tax Review

by Amelia Schwanke

Tax authoritiesworldwide are increasingly relying on digital technologies to gather and analyse tax data, and implement intelligent systems that provide real-time tax collections and assessments. Moreover, tax data sharing among tax authorities,whichwill become an automated process from 2017,will help tax authorities complete more audits and investigations, creating aworldwhere therewill be nowhere to hide from the tax man. Amelia Schwanke investigates how authorities and taxpayers are adjusting to digital tools and systems andwhat the future holds. @

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EU nations losing billions in uncollected VAT

International Tax Review

by Joe Stanley-Smith and Anajana Haines

The European Commission has released figures on the 'VAT Gap' that support its plan to overhaul the EU's VAT system and introduce a definitive regime for cross-border trade in the EU. @

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Will EU SAF-F reporting be the death of VAT returns?

International Tax Review

by Richard Asquith

Richard Asquith, vice president of global indirect tax at Avalara, provides an analysis of the revolutionary standard audit files for tax (SAF-T) filing requirements that are sweeping across Europe. @

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Production Deduction Rule May Push Jobs Abroad: Publishers

Bloomberg

by Allyson Versprille
Proposed rules to simplifywhat entities are eligible to take the domestic production tax deduction may push production activities of U.S. companies overseas, a publishers' association said.
The ruleswould likely prevent publishers from being eligible for the Section 199 deduction even though they produce and design the content of publications and are the ones that derive gross receipts from the sale of the product to customers, the Association of American Publishers said in a letter to the IRS and Treasury Department released Sept. 6 under provisions of the Freedom of Information Act.
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Irish Branches Didn't Generate Apple Group's Income, Government Says

By attributing all of Apple's Irish-incorporated nonresident entities' income to their Irish branches, the European Commission is effectively forcing Ireland to tax income generated in the United States, according to the Irish government.

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Portman, Brady react to EUs retroactive tax ruling against Apple

  • By Ripon Advance News Service
U.S. Sen. Rob Portman (R-OH) and U.S. Rep. Kevin Brady (R-TX) reacted on Tuesday to news that the European Union (EU) Commissionwould levy a multi-billion dollar tax on Apple, Inc.
Following the ruling, Portman called for international tax reform and said that the EU Commission continues to ignore serious concerns from the Treasury Department.

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Apple tax decision based on facts

  • By Reuters
An EU ruling that Apple Inc must pay a huge tax bill to Irelandwas clearly based on facts and existing rules andwas not a decision aimed against the US, European Commission (EC) President Jean-Claude Juncker said on Sunday.
Lastweek, EU antitrust regulators ­ordered Apple to pay up to 13 billion euros ($14.5 billion) in taxes to the Irish ­government after ruling that a practice of routing profits through Irelandwas illegal state aid.

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Apple tax crackdown not an attack on US, says EU Commission president

The European Union ruling that US tech giant Apple must pay ÔøΩ13bn (£10.9bn, $14.50bn) in back taxeswas clearly based on facts and existing rules and not an action taken "against the United States of America", EU Commission President Jean-Claude Juncker said on Sunday.

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Irish government to appeal against Apple's $13bn tax bill

The Irish government has decided to appeal against the European commission's ruling that Applewas given a sweetheart tax deal and should hand Dublin ÔøΩ13bn (£11bn) in fiscal payments.
Apple tax: European commissioner defends ÔøΩ13bn ruling
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G20 leaders endorse new international standard for tax transparency

  • By MNE Tax
G20 leaders during their summit in Hangzhou, China, held September 4–5 endorsed a proposal setting out objective criteria to be used to identifywhether countries are sufficiently tax transparent or not.

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UK parliament debates public country-by-country reporting

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The UK is debatingwhether Britain should become one of the first countries in theworld to introduce public country-by-country reporting (CbCR). The measure is one of many tax proposals on the parliamentary agenda, including lowering the corporate tax rate.

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U.K. Tax Simplification Office Calls for Clearer Strategy, Better Public Debate

The increased use of roadmaps setting out the direction of U.K. tax policywould increase confidence and trust in the tax system and help to reduce uncertainty arising from the Brexit vote, the Office of Tax Simplification (OTS) has said in response to a joint project to improve tax policymaking.

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U.K. Lawmakers to Debate Public CbC Reporting as Tax Expert Urges Caution

Members of the U.K. Parliament have been urged not to risk "confrontation"with U.S. lawmakers by breaking ranks on public country-by-country (CbC) reporting, as they prepare to debate for a second time a finance bill amendment thatwould pave theway for mandatory public CbC reporting by large multinationals.

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Ireland to Appeal Apple Ruling, Review Corporation Tax Code

Ireland's Cabinet has unanimously voted to appeal the European Commission's findings that the country provided Apple Inc.with approximately ÔøΩ13 billion in state aid through selective tax rulings.

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News Analysis: Tax Extortion -- the European Version

Mindy Herzfeld reviews the European Commission's recently announced decision that in two tax rulings, Ireland granted ÔøΩ13 billion in illegal state aid to Apple Inc., and examines the commission's shifting rationale for its decision.

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Apple Ruling to Be Appealed as Irish Cabinet Ends Squabble

Ireland's government agreed to fight the European Union's Aug. 29 decision forcing Apple Inc. to pay it vast tax arrears, ending a squabblewhich threatened to destabilize Prime Minister Enda Kenny's administration.
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EU Apple Tax Decision Ducks Arm's-Length Controversy

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The European Commission decision requiring Ireland to retroactively recoup $14.5 billion in unpaid taxes from Apple Inc. suggests the commission didn'twant to become embroiled in a spat over the international arm's-length standard.
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Apple CEO says EU tax ruling 'total political crap': Irish Independent

byConor Humphries(Yahoo)
Apple's Chief Executive Tim Cook described an EU ruling that it must pay a huge tax bill to Ireland as "total political crap", but France joined Germany on Thursday in backing Brussels as transatlantic tensions grow.
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