2016

Thewhite House traded dueling accusations of unpatriotic behaviorwith the chief executive officer of a major drugmaker after unexpectedly tough new rules from the Treasury Department on corporate inversions derailed a $160 billion merger between Pfizer Inc. and Allergan Plc.
The timing and severity of the new rules, issued April 4, took both companies and even many members of Congress by surprise.
For the DTR story, go here. (subscription required)

Senate Finance Committee Chair Orrin G. Hatch, R-Utah,welcomed the news that Pfizer Inc.was terminating its inversion dealwith Allergan PLC, but the taxwriter maintained that lowering corporate rates is the key to discouraging U.S. companies from moving abroad.
For the TNT story, go here. (subscription required)

A review of Airbnb's overseas regulatory filings shows it has a far more extensiveweb of subsidiaries than it has publicly acknowledgedÔøΩmore than 40 in allÔøΩmeaning it pays little tax in the U.S. and countries such as Australia.
Every time Ian Haines rents out his spare room in the Australian port city of Albany, Airbnb Inc. takes a 13 percent cut. Haines,who is semi-retired, uses the extra money to supplement his income running a local farmers market. He says he is careful to pay taxes on the Airbnb money, because the San Francisco company may report the transactions to the Australian government.
For the DTR story, go here. (subscription required)

Pfizer Inc. announced April 6 that it has backed away from its $160 billion inversion dealwith Irish-based Allergan PLC in thewake of Treasury's new anti-inversion guidance.
For the TNT story, go here. (subscription required)

In news analysis, Mindy Herzfeld says it'swrong to label the proposed section 385 regulations as anti-inversion earnings-stripping rules, as they radically alter the landscape of corporate tax planning for multinationals -- both U.S. and foreign -- and effectively overturn decades of guidance applying corporate tax rules to cross-border planning.
For the TNT article, go here. (subscription required)

The OECD plans to advise the G-20 finance ministers at their upcoming meeting to stay the course on internationally agreed tax standards, including that on automatic information exchange, in the aftermath of the Panama Papers investigation.
For thewWTD story, go here. (subscription required)

Pfizernever tried to hide the fact that its proposed $152 billion mergerwithAllergan, based in Ireland,would cut itstaxbill in the United States. But even as it rushed to complete the biggesttax-avoidance deal in the history of corporate America, it continued to promote the strategic and economic benefits of the merger.
Any pretense to a motivation other than dodging taxes has now beenwiped away.Onwednesday, just two days after the Obama administration introduced new rules to narrow the loopholes that the drug companieswere exploiting,Pfizer announced that the dealwithAllerganwas off.
For the New York Times article, go here.

The drug giantPfizerwanted to cut its taxes through a $152 billion takeover of the Dublin-based maker of Botox. AndHalliburtonsought to buy a major rival in the business of selling equipment to oil drillers for nearly $35 billion.
But thisweek, the Obama administration took on both deals -- and it has claimed at least one trophy so far.
For the New York Times story, go here.

A day after the Obama administration limited the ability of U.S. companies to do international deals to lighten theirtaxburdens,Pfizer Inc. andAllergan PLCterminated their planned $150 billion merger and other companies around the globe raced to assess the impact of the new rules.
The new Treasury Department rules drew swift condemnation from Allergan Chief Executive Brent Saunders,who criticized them as "un-American" and "capricious."
For thewall Street Journal story, go here.

President Obama's push to stop American companies from heading overseas to avoid U.S. taxes scored its biggestwin yetWednesdaywhen pharmaceutical giantPfizercalled off a $160 billion mergerwith Dublin-basedAllergan.
The sudden collapse of the deal comes just days after the Treasury Department made a rule change that appeared to be aimed specifically at the transaction, stripping it of many of its benefits.
For thewashington Post story, go here.

Anti-inversion regulations released by the Treasury Departmentwill help "level the playing field for domestic companies competingwith multinationals," but the new regulations may not go far enough to stop "serial inverters," Frank Clemente of Americans for Tax Fairness said in an April 6 statement.
For the statement, go here.

The evolution of international taxation, driven by the OECD's BEPS Actions, is eliciting newways of thinking about the effective management of an internal tax function.
For the ITR article, go here.

I'm glad to see that the Pfizer-Allergan deal has apparently fallen apart. It probablywasn't a great deal from a business standpoint, especially for the Pfizer shareholderswho may have been over-paying. (Pfizer stock apparently rosewhen the deal collapsed - Allergan stock first fell a lot, then rebounded a little.)

Whatwere the tax advantages that Pfizer hoped to garner from the deal? Robertwillens suggests that enhancement of Pfizer's ability to access some $140 billion in foreign earnings, tax-free, for loans among its affiliated companieswas "100 percent the reason behind this deal."
For the blog post, go here.

President Barack Obama scored a victory thisweekwhen Pfizer scrapped a $160 billion overseas deal thatwould have kept a chunk of the drugmaker's profits beyond the U.S. tax man's reach.
But recent, aggressive federal actions that discouraged Pfizer Inc.'s combinationwith another drugmaker, Allergan PLC,won't stop all so-called inversions, or deals that endwith a company relocating to another country ÔøΩ at least on paper ÔøΩ and trimming its U.S. tax bill in the process.
Tax and legal experts say these deals,which have come under growing criticism from politicians,will remain attractive to some companies until the U.S. pursues a massive tax law overhaul.
For the ABC News story, go here.

The Obama administration's crackdown on corporate inversions has highlighted a fact both parties find disturbing: Companies benefit by having their tax addresses outside the U.S.
Lawmakers on both sides agree the U.S. corporate tax code is broken and in desperate need of an overhaul. Neither side expects change any time soon.
For the Nasdaq story, go here.

The fix to the problem of inversions is not more legislation fine-tuned to specific inversion deals. It is much needed corporate tax reform.
For the Forbes article, go here.

Former Treasury Secretary Hank Paulson told CNBC on Friday he's "troubled and disappointed" by the Obama administration's stopgap answer to trying to prevent corporate inversion deals.

For the CNBC story, go here.

The U.S. Treasury Department issued another volley in their ongoing effort to stop corporate tax inversions thisweek. Large corporations are not happy, but that's only part of the story. The Treasury's re-engineering of the law may have inadvertently created some major obstacles for the broader economy.

For the Forbes article, go here.

A day after the Obama administration limited the ability of U.S. companies to do international deals to lighten their tax burdens,Pfizer and Allergan terminated their planned $150 billion merger and other companies around the globe raced to assess the impact of the new rules.

The new Treasury Department rules drew swift condemnation from Allergan Chief Executive Brent Saunders,who criticized them as "un-American" and "capricious."

For the Fox Business story, go here.

On Monday April 4, Treasury announced our third action to address the problem of corporate inversions. Since that time, the issue has been the subject of extensive media attention and commentary. This is an important issue, and one that Treasury has been intently focused on for several years.

Some recent commentary has inaccurately portrayed Treasury'swork and has failed to recognize Treasury's long record on this issue. Here are the facts:

For the blog post, go here.

The European Commission today [April 7] presented an action planwhich establishesways to improve and modernise the EU VAT system.

For the ITR story, go here.

Corporations pay less in taxes now than they did in 1945, and efforts by lobbyists and lawmakers to lower the U.S. corporate income tax rate ignore "critical facts such as the many large tax breaks, loopholes and other corporate tax exceptions" in the tax code, Citizens for Tax Justice said in an April 7 analysis.

For the CTJ analysis, go here.

The IRS is telling its agents to take a broad viewwhen determiningwhether taxpayers are clearly reflecting income from related-party transactions or are trying to evade taxes under tax code Section 482.
That code section allows the Internal Revenue Service to allocate income if a taxpayer's actions don't pass muster.

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

For months, a bipartisan group of Senate Finance Committee members have complained that the European Union's state-aid investigations could unfairly force some U.S. companies to pay taxes retroactively.
On April 7, they metwith Margrethe Vestager, the European commissioner for competition, to air their grievances and tell her that U.S. companies "were being disproportionately treated" as the EU investigates tax deals between large corporations and member countries.

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

Jacob J. Lew did something that has been a rarity in his three-plus years as Treasury secretary: surprise people.
Just 37 hours after Lew announced unexpectedly tough guidelines aimed at deterring corporate inversionsÔøΩdeals inwhich U.S.-based companies use an overseas acquisition to relocate their tax addresses to cut their billsÔøΩPfizer Inc. and Allergan Plc said theywould end their $160 billion merger, terminating the largest-ever pharmaceuticals transaction.

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

On April 4, 2016, the IRS and Treasury issued proposed Section 385 regulations that addresswhether an interest in a related corporation is treated as stock or indebtedness, or as in part stock and in part indebtedness.
The Proposed Regulations appear to be intended to limit the effectiveness of certain types of tax planning by characterizing related party financings as equity, even if they are in form straight debt instruments. The types of transactions targeted appear to include debt through note distributions in the inbound and outbound context, and debt repatriation in the outbound context.

It is critical to note, however, that the application of these Proposed Regulations isnotlimited to these types of transactions.

For the PwC Insight, gohere.

The candidates for the Republican presidential nomination may be calling each other "losers" and "lightweights" and "robots" and "cheaters," but there is at least one issue aroundwhich they share common ground ÔøΩcorporate tax reform. Though there are minor differences in specifics there is major agreement that many of the corporate tax rules and laws that date back to the 1960s need to be rewritten.
For the CFO.com story, go here.

President Obama made a forceful caseTuesdayfor stopping corporations from moving their headquarters overseas to avoid U.S. taxes, saying they are taking advantage of the American economic system and saddling the middle classwith the bill.
These companies "effectively renounce their citizenship," Obama said at awhite House news briefing. "They declare that they're based somewhere else, thereby getting all the rewards of being an American companywithout fulfilling the responsibilities to pay their taxes theway everyone else is supposed to pay them."
For thewashington Post story, go here.

The Treasury Department on Monday took aim at U.S. companies moving their headquarters overseas to lower their tax bills, issuing aggressive newrules intended to make such moves less profitable and throwing a potentialwrench into Pfizer's recent $160 billion proposed deal to combinewith Allergen and become an Irish company.
For thewashington Post story, go here.

The Treasury Department's crackdown on tax inversions reverberated through the political and corporateworlds on Tuesday.

Both Democraticwhite House hopefuls endorsed the effort from President Obama's administration.

For The Hill story, go here.

Kerwin Chung, Shiraj Keshvani, and Eddie Morris explain how BEPS guidancewill impact APA programmes globally.

For the ITR story, go here.

New Treasury regulations are a positive step toward ending corporate tax avoidance, but Treasury should take further regulatory action to prevent hopscotch loans and Congress "should stop coddling corporate deserters and enact anti-inversion reforms," Robert S. McIntyre of Citizens for Tax Justice said in an April 5 statement.
For the statement, go here.

Since October 2015, authorities have been reacting to the outcome of the BEPS Project. The implementation of new legislation and adaption of existing regulations to match the new OECD guidelines has already begun to impact multinationalsworldwide. The undeniable headline change has been a broad move to implement country-by-country reporting (CbCR); however the other policy that stands out from the crowd is in the area of patent boxes, as Joelle Jefferis explains.
For the ITR story, go here.

For the past couple of years, President Barack Obama has been accused of failing to prevent US companies from abandoning their home base in search of lower tax rates.
Critics dismissed his administration's early efforts to deter such controversial inversion deals,which companies use to shift their addresses abroad for tax purposes, as timid and ineffectual.
Not any more.
For the Financial Times story, go here.

In keepingwith the reputation that "The United States can always be relied upon to do the right thing ÔøΩ having first exhausted all possible alternatives,"the Obama Treasury has announced its third set of rules aimed at preventing U.S. companies from mergingwith foreign companies based in low-tax countries such as Ireland. These transactions are known as inversions.
Of course, since the 35% U.S. corporate tax rate is the highest among all industrialized nations, the right thing to do is to cut our tax rate to a competitive level, not build a higherwall to prevent companies from leaving.
For the Forbes article, go here.

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:
Romania's new tax code
Treaty benefit implications of the final US Model Income Tax Treaty
Luxembourg's 2017 tax changes
The OECD framework for broader participation in BEPS stage two
For the latest edition, gohere.

As the U.S. took tougher steps Monday to limit the tax-cutting power of corporate inversions, analysts said the new rules may put a planned $160 billion merger between Pfizer Inc. and Allergan Plc in jeopardy.

The Treasury Department said Monday the ruleswould limit companies' ability to participate in inversion transactions if they've already done themwithin the past 36 months. Allergan has been involved in several mergers in that time frame. In a corporate inversion, a U.S. company mergeswith a smaller foreign firm and then transfers the new company's tax address offshore.

For the Bloomberg story, go here.

The European Commission is scrutinizing more than 100 advance transfer pricing tax rulings that multinational companies have signedwith European Union member states over concerns the terms give an incomplete picture of the group's profits and could result in new illegal state aid decisions.
For the DTR story, go here. (subscription required)

The U.S. government is taking more steps to clamp down on companies that try to reduce their tax bills by mergingwith foreign firms.
On Monday, the Treasury announced new regulations intended to further discourage so-called inversions,which have been on the rise in recent years.
For the CNN story, go here.

The top Republican taxwriters in the House and Senate are unhappywith the Treasury Department's latest actions aimed at deterring companies from moving their legal residences overseas to lower their taxes.
For The Hill story, go here.

The Treasury Department imposed tough new curbs on corporate inversions Monday, shockingwall Street and throwing into doubt the $150 billion merger between Pfizer Inc. and Allergan PLC,whichwas on track to be the biggest deal of its kind.

"It's going to be a major impediment. They're pretty much taking all of the juice out of inversions," said Robertwillens, a New York-based tax analyst. "They've addressed literally every benefit that one attempted to gain from an inversion and shut them all down systematically."
For thewall Street Journal story, go here.

The Treasury Department took new steps on Monday to further curtail a popular type of merger inwhich an American company buys a foreign counterpart, then moves abroad to lower its tax bill.

The new rules, announced in conjunctionwith the Internal Revenue Service, take particular aim at foreign companies that have completed multiple dealswith American companies in a short period,what the regulator calls "serial inverters."
For the New York Times story, go here.

Ways and Means Committee Ranking Member Sander Levin (D-MI) released a statement after the U.S. Treasury Department took steps to further limit corporate tax inversions and address the use of earnings stripping by U.S. corporations.
For the statement, go here.

Senate Finance Committee Ranking Member Ronwyden, D-Ore., issued a statement regarding the Treasury Department's new guidance on tax inversions.

For the statement, go here.

The U.S. Treasury Department has issued proposed regulations aimed at curbing earnings stripping, a common practice used by companies that redomicile, or invert, their headquarters overseas for tax purposes. The Department also issued additional anti-inversion guidance and released an updated framework for business tax reform. In response, Senate Finance Committee Chairman Orrin Hatch (R-Utah) issued a statement.
For the statement, go here.

Houseways and Means Chairman Kevin Brady (R-TX) released a statement after the U.S. Treasury Department announced further regulatory developments aimed at penalizing American companies that are already burdened by an outdated and uncompetitive U.S. tax system.
For the statement, go here.

Treasury issued temporary and proposed regs on April 4 to further combat inversions and more broadly address earnings stripping among foreign-owned multinationals for transactions thatwould otherwise generate large interest deductions in the United States.
For the TNT story, go here. (subscription required)

The Treasury Department took another major step to put more limits on corporate inversions,where U.S. companies change their tax residence to cut or avoid U.S. taxes, issuing long-awaited guidance that also targets earnings stripping.
The proposed, final and temporary rulesÔøΩwhich could take away the benefits of some recent dealsÔøΩcome as the U.S. has struggled to stop massive inversionswhere companies have structured their transactions around existing laws.
For the DTR story, go here. (subscription required)

The new chief executive officer of insurer Travelers Companies Inc. called on U.S. lawmakers to reduce corporate taxes or risk harming businesses.
For the DTR story, go here. (subscription required)

The OECD has put out a consultation about how to accommodate unregulated investment fundswith treaty benefits. This call for comments comes on top of treaty commentary calling for recognition of regulated investment funds as treaty residents of the countries inwhich they are organized. Are unregulated investment funds any closer to treaty relief? Only if they manage to construct a narrative that makes tax administrators feel better about recommending it.
For the Tax Notes article, go here. (subscription required)