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2016

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Reconciling the Profit-Shifting Debate


Erik Cederwall argues that the profit-shifting debate as currently conceived is misguided and does a substantial disservice to the U.S. economy and U.S. taxpayers.
For the Tax Notes viewpoint, go here. (subscription required)

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Corporate Inversions Arent the Half of It


If you thought therewas a problemwith inversions -- deals that allow American companies to relocate their headquarters to lower theirtaxbills --wait until you hear about the real secret to avoiding corporate taxes. It's called earnings stripping, and it is a technique that the Obama administration has so far failed to stop.
For the New York Times story, go here.

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You'd have to pay an exit fee to give up your citizenship. Corporations? Nada.


We all know about the famous Supreme Court decision that said corporations should be treated like people. It's too bad that this ruling doesn't apply to U.S. companies that give up their citizenship in order to cut their taxeswhile remaining in this country and benefiting from all it has to offer.
For thewashington Post column, go here.

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Mauritania's tax regime for 2016 and its impact on economic growth

  • By ITR

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President Obama's FY 2017 budget reaffirms call for business tax reform, significant international and individual tax increases

  • By PwC

President Obama on February 9 submitted an FY 2017 budget to Congress that reaffirms his support for 'business tax reform' thatwould lower the top US corporate tax rate to 28 percent,with a 25-percent rate for domestic manufacturing income. The President's budget again reserves revenue from a large number of previously proposed tax increases to support business tax reform.
For the PwC Insight, gohere.

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Beps averts collapse of global tax rules, conference told


The risk of protectionist tax measures being taken by national governments has abated as a result of the OECD's Base Erosion and Profit Shifting (Beps) project, a key official has told a conference in Dublin.
For the Irish Times story, go here.

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Chile enacts substantial changes to 2014 tax reform

  • By PwC

Chile on February 8, 2016, enacted significant amendments to the country's 2014 tax reform through Law No. 20.899,which amends Law No. 20.780, enacted on September 29, 2014.

Multinational companieswith Chilean subsidiaries should consider how the newly enacted law could affect their structures, operations, or transactions in Chile.

For the PwC Insight, gohere.

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Business Transfer Tax May Harbor Pitfalls, Analyst Says


A flat-rate consumption tax collected at the business level, such as the type proposed by some Republican presidential candidates, could lead to European-style high taxation, a top free-market advocate told the Heritage Foundation.
For the DTR story, go here. (subscription required)

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No Conclusion to BEPS Debate on Treaty Abuse, Attorney Says


Differences between the U.S. and the rest of the OECD on how to approach treaty abuse are likely to continue, a U.S. attorney said at the opening session of a two-day international tax conference in London.
The Treasury Department,which isworking on proposed revisions to the U.S. model income tax convention, "does not like, andwould almost certainly never include in any tax treaty" the principal purpose testÔøΩa general anti-abuse rule, said Kimberly S. Blanchard, a partnerwith New York firmweil, Gotshal & Manges LLP.
For the DTR story, go here. (subscription required)

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News Analysis: Anti-Inversion Measures -- The Other Wall on the Border


Ajay Gupta reviews the history and impact of U.S. anti-inversion measures andweighs the costs that some new measures -- both announced and proposed -- may impose on investors andworkers.
For the TNI news analysis, go here. (subscription required)

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Validity, Scope of Foreign Goodwill Regs Challenged at Hearing


Practitioners on February 8 challenged both the validity and scope of the IRS's proposed rules thatwould eliminate the foreign goodwill exception in the context of recognition of gain upon outbound transfers of intangibles.
For the TNT story, go here. (subscription required)

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Practitioners Chide IRS Over Retroactive Rule on Intangibles


Proposed regulations on outbound transfers of intangibles are in danger of legal challenges because of the Treasury Department's insistence the rules aren't subject to notice and comment requirements of the Administrative Procedure Act, a practitioner said.

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

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31-country agreement will effectuate exchanges of CbC reports

  • By PwC

On January 27, 31 countries signed the Multilateral Competent Authority Agreement (MCAA), allowing automatic exchange of Country-by-Country (CbC) reports described in Action 13 of the Organisation for Economic Co-operation and Development's (OECD) Base Erosion and Profit Shifting (BEPS) Project.
For the PwC Insight, gohere.

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EC moving away from OECD model on arm's-length principle

  • By ITR

In its recent state aid rulings, the European Commission (EC) appears to have moved away from the OECD's model treaty and transfer pricing guidelines.
For the ITR story. go here.

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EU proposals will force multinationals to disclose tax arrangements


US multinationals such as Google, Facebook and Amazonwill be forced to publicly disclose their earnings and tax bills in Europe, under legislation being drafted by the EU executive.

The European commission is to table legislation in early April aimed at making theworld's largest multinational corporations open their tax arrangementswith EU governments to full public scrutiny.

For the Guardian story, go here.

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Application of capital gains exemption under India-Mauriyius treaty upheld

  • By PwC

The Indian Authority for Advance Rulings (AAR) in a ruling dated January 11, 2016, upheld application of the capital gains exemption under the India-Mauritius tax treaty to a transfer of shares of an Indian company from Mauritius to Singapore.
For the PwC Insight, go here.

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Why India needs GST

  • By ITR

Ritesh Kanodia and Geet Shah of Dhruva Advisors set out the arguments for a dual GST in India, and look at the obstacles that have stalled implementation so far.
For the ITR article, go here.

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IRS Advises Agents on Cost Sharing, Intercompany Loans


The Internal Revenue Service released two international practice units to train its agents on common fact patterns related to intercompany transactions under tax code Section 482.

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

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European Commission proposes Anti-Tax Avoidance Package

  • By PwC

On 28 January 2016, the EU Commission presented itsAnti-Tax Avoidance Package. The continuing politicalwill to address tax avoidance may result in the 100% consensus required by EU Member States to effect the proposed tax changes. The EU-28 governmentswill have to decide if they arewilling to go further than the G20/OECD BEPS outcomes on interest limitation rules, hybrid mismatches, CFCs, tax treaty abuse and PEs.
For the PwC Tax Policy Bulletin, gohere.

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The OECD's BEPS Project: The Emperor Has No Clothes


Herman Bouma of Buchanan Ingersoll & Rooney reviews the efforts of the OECD's Base Erosion and Profit Shifting project, concluding it has accomplished little and muddied thewaters in transfer pricing. Bouma examines the factors he says led to the project "being such a hugewaste of time for tax authorities, taxpayers and tax advisers."
For the BNA Insight, go here. (subscription required)

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Wolters Kluwer Interviews TCPI Symposium Experts on Tax-Issues Surrounding Global Capital

  • By TCPI.org

The taxation of global capital has become a matter of growing concern among awide variety of businesses from compliance, risk management and planning perspectives. The Tax Council Policy Institute (TCPI), a non-profit, non-partisan organization,will devote its upcoming 17th Annual Tax Policy & Practice Symposium to those concerns,when it presents, "Capital Matters: How Taxes Influence the Global Creation, Deployment, and Mobility of Capital" (February 11-12).
Wolters Kluwer Tax & Accounting sat down recentlywith two principal organizers of this year's TCPI Symposium to preview some of the issues thatwill be discussed.
For the interview, go here.

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Fixing the Corporate Income Tax


Rather than eliminate the corporate income tax, lawmakers should address problemswith the tax through major reforms that permit expensing of capital investment, introduce a corporate rate reduction, and transition the United States to a territorial tax system, according to a February analysis from the Tax Foundation.
For the report, go here.

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Abusing Tax Code Section 956


EY's James Tobin looks at proposed and temporary Section 956 regulations (REG-155164-09; T.D. 9733) that expand the instances requiring an income inclusion as a result of a controlled foreign corporation's holding U.S. property. Though critical of an expanded anti-avoidance rule put in place under the temporary rules, Tobinwrites that it "certainly looks goodwhen compared to the more aggressive approach of the proposed regulations."
For the BNA Insight, go here. (subscription required)

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This is corporate tax desertion taken to a whole new level


If youwant an example of how bizarre U.S.taxlaws can be - and how companies can game the system - look no further than the recently announced deal forJohnson Controls Inc. of Milwaukee to desert our country by combiningwith a previous corporate deserter,Tyco International PLC.
For thewashington Post story, go here.

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International Tax News - Edition 36 - February 2016

  • 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:

  • New rules and BEPS-inspired measures in France
  • Korean tax law changes for 2016
  • US tax extender and government funding legislation
  • IP Box alignmentwith BEPS Action 5 in Cyprus
For the current edition, gohere.

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European Commission proposes anti-tax-avoidance package

  • By PwC

The European Commission on January 28, 2015, presented an anti-tax-avoidance package that includes a proposed anti-tax-avoidance directive. The directive outlines minimum standards based on proposals from the OECD's BEPS deliverables. The directive differs from corresponding BEPS proposals in some regards and covers additional subjects, such as exit taxation and a minimum tax on third-country income. Enactment, although uncertain,would significantly affect MNEs investing in the EU.
For the PwC Insight, gohere.

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Chile's Bachelet Signs Bill Simplifying Corporate Tax Changes


Chilean President Michelle Bachelet signed into law legislation designed to simplify proposed tax code changes approved in the nation's 2014 tax overhaul.

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

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IRS Changes Allocation Rules for Partners' Foreign Taxes


The special rule for preferential allocations of creditable foreign tax expenditures in a partnership applies only to allocations to a partner that are deductible under foreign law, and not to other items that give rise to deductions under foreign law, the IRS said in temporary and proposed rules.
For the DTR story, go here. (subscription required)

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Temp Regs Crack Down on Partnership FTC Planning


Treasury issued a set of temporary and final regulations February 3 that appear to target partnerships that separated creditable foreign tax expenditures (CFTEs) -- in particular, CFTEs related towithholding taxes -- from the related foreign income.
For the TNT story, go here. (subscription required)

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Dutch: European Commission Applied Own Rules on Starbucks


The European Commission applied its own criterion, one not in linewith national and international rules, in calculating profit in the Starbucks Corp. case, the Dutch government said.

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

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EU Anti-Tax Avoidance Package Presented to Parliament


The European Commission's top tax official briefed members of the EU Parliament on the commission's proposals to curb corporate tax avoidance ahead of a meetingwith EU finance ministers.
"The packagewe presented agrees to a great extentwithwhat you have set out in your reports," EU Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici told members of the European Parliament (MEPs) on Feb. 2 in Strasbourg.

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

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Dutch Finance Secretary Explains EU State Aid Ruling


The Dutch Ministry of Finance on February 2 published a letter from State Secretary of Finance Ericwiebes to the parliament in response to questions about the European Commission's ruling that the Netherlands' approval of Starbucks's transfer pricing arrangements constituted illegal state aid.
For thewWTD story, go here. (subscription required)

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Corporate tax reform should encourage investment, not profit-taking


The United States needs faster growth to create the good jobs and higher living standards that Americans expect. The bestway to produce higher growth is to speed up the rate of investment in new capital equipment (which includes machines, equipment, software and the like), thereby boostingworkers' productivity,which has lagged significantly since the end of the Great Recession. Unfortunately, current U.S. tax policies tend to do a poor job of rewarding capital investment. In fact, rather than encouraging new investments, tax policies encourage companies to distribute profits made from things they have done in the past. It is a recipe for resting on your laurels, not reaching for the future.
For The Hill article, go here.

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US lawmakers slam 'hostile' EU tax climate


The top Republican taxwriters in Congress havewaded into a brewing taxwar between the US and the European Union, decrying the "hostile" environment big American companies are facing in the EU.

The intervention from lawmakers,who rarely agreewith the Obama administration, came soon after the government complained the European Commissionwas unfairly targeting US groups such as Apple and Amazon in a drive against tax avoidance.
For the Financial Times story, go here.

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UK's corporate tax system 'decaying'


Britain's corporate tax system is "decaying", MPswere told on Tuesday, as George Osborne came under renewed fire over the Google tax settlement.

For the Financial Times story, go here.

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Brady Calls for Fresh Thinking on Tax Reform


Houseways and Means Chair Kevin Brady, R-Texas, said after a committee hearing February 2 that fresh thinking is needed on how the United States taxes business income and on how to get to a business tax rate that is 15 or 20 percent.
For the TNT story, go here. (subscription required)

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ABA Meeting: Tax Bar Struggles With Proposed Change to Foreign Goodwill Rules


The favorable tax treatment of outbound transfers of foreign goodwill and going concern value is set to change as soon as Treasury finalizes regs proposed in September 2015, and practitioners are already sweating over the choice they'll have to make: elect into recognition of a continuous stream of income associatedwith foreign goodwill and going concern value or roll the audit lottery dice.
For the TNT story, go here. (subscription required)

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International Tax Overhaul Top Priority of Ways and Means


An overhaul of the international tax code is a top priority of theways and Means annual agenda and the committee is atwork on producing a draft, Chairman Kevin Brady (R-Texas) said.

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

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Business Groups Press Senate for Action on Tax Treaties


Ten major business groups are teaming up to push the Senate to ratify eight tax treaties that have long been stuck on Capitol Hill, citing fears that U.S. businesseswill suffer and that treaty partnerswill view the U.S. as not being serious about already-signed pacts.

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

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A Tale of Two Cities: Washington, Brussels, and BEPS


In this article, Avi-Yonah argues that the United States needs to join the European Union in curbing tax evasion and avoidance.
For the Tax Notes viewpoint, go here. (subscription required)

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Google Settlement Not a 'Glorious Moment,' Says U.K. Business Secretary


Google's announcement that itwill pay £130 million in back taxes owed to the U.K. since 2005 "wasn't a glorious moment," according to Sajid Javid, U.K. secretary of state for business, innovation, and skills, but he added itwas a success because itwill change taxpayer behavior.
For thewWTD story, go here. (subscription required)

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Boustany Tasked With International Tax Reform Bill


Houseways and Means Committee Chair Kevin Brady, R-Texas, is tasking Tax Policy Subcommittee Chair Charlesw. Boustany Jr., R-La.,with drafting an international tax reform bill that the committee could vote on.
For the TNT story, go here. (subscription required)

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New French finance law adopts country-by-country reporting

  • By PwC

The new French Finance Law for 2016 adopted the new OECD country-by-country (CbC) reporting obligations relating to Action 13 of the OECD's Base Erosion and Profit Shifting (BEPS) initiatives (article 223 quinquies C of the French Tax Code). This measurewill be effective for fiscal years that begin on or after January 1, 2016.
For the PwC Insight, gohere.

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Russian deal advances Hong Kong's DTA agreements


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US Lawmakers Push Tax Reform After EU Action


House of Representativesways and Means Committee Chairman Kevin Brady (R – Texas) and the Chairman of the Tax Policy Subcommittee, Charles Boustany (R – Louisiana), have urged the need for US international tax reform in response to the European Commission's anti-tax avoidance package on January 28.
For the tax-news.com story, go here.

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EC releases anti-tax avoidance directive


The European Commission (EC) has released a package of measures including a much-anticipated proposal for an anti-tax avoidance directive.
For the ITR story, go here.

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Committee suggests improvements to New Delhi Income Tax Act


teaseIndia's Income Tax Simplification Committee (ITSC) has recommended amending income tax laws, specifically the Income Tax Act (ITA), to make it easier to do business in the country.
For the ITR story, go here.

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U.S. Officials: Proposed Model Treaty Changes Dynamic'


Provisions in the new U.S. model tax treaty that cancel benefits in cases of special tax regimes and subsequent changes in law are meant to make the treaties more "dynamic," officials from the Treasury Department said.

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

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Officials: New Section 367 Rules Reflect Congressional Intent


Proposed regulations thatwould eliminate the tax-free exception for foreign goodwill and going concern value transferred under tax code Section 367 are in keepingwith the legislative history behind the provision, Treasury and IRS officials said.

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

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News Analysis: Escape From U.S. Tax Jurisdiction


"Will They Never Let You Escape Thisworld?"was the title for the international panel at the January 26 New York State Bar Association annual meeting. It's a highly fitting title for an obituary of the otherworldly Bowie,whowas a tax exile in Switzerland before coming to the United States. The title refers to escape from U.S. tax jurisdiction, because corporate income taxes in the land of theworld's reserve currency are just so onerous, don't you know.
For the Tax Notes article, go here. (subscription required)

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