2016

When UK chancellor George Osborne took to the stage at theworld Economic Forum in Davos to announce that revenue authority HMRC had agreed a dealwith Google to claim unpaid tax from the last decade, he probably expected plaudits – or, at least, some recognition of HMRC'swork.
For the ITR story, go here.

Differenceswithin Belgium's ruling coalition over a European financial transaction tax cast further doubt on the proposal,which is championed by a group of 10 EU states but opposed by the financial industry.

For the Politico story,go here.

Downing Street distanced itself on Monday from George Osborne's claim that the tax dealwith Google represented "a major success", amid growing criticism of the settlement.

Google's agreement to pay £130m in back taxes to the UK government has reignited a controversy that pushed tax avoidance to the top of the international agenda three years ago.

For the Financial Times story, go here.

MPs and tax experts are calling for more explanation of a deal between Google and tax authorities that ended a long-running probe.

Mike Devereux of the Oxford university Centre for Business Taxation, said the outcome ÔøΩ a payment of £130m for the 10 years to 2015 ÔøΩ mightwell be reasonable. But he called on HM Revenue & Customs to reveal the basis of the settlement. "Why can't they make a statement: these are the principleswhichwe are applying?"

For the Financial Times story, go here.

In November of 2014, hundreds of advanced tax agreement (ATAs) issued by Luxembourg's Administration des Contributions Directes (Luxembourg's Inland Revenue, or LACD) to multinational corporate taxpayers (MNCs)were made public. Using an original dataset generated from a hand-coded sample of 172 leaked documents, the Article explores LACD administrative practices in issuing ATAs. The analysis demonstrates how a jurisdiction can be made a tax-haven by administrative practices, rather than by state law. LACD cannot be reasonably viewed – as some have suggested in LACD's defense – a passive player in MNCs' tax avoidance schemes. Rather, LACD is best described as a manufacturer of tax arbitrage opportunities. Specifically, evenwhen the tax laws of the jurisdictions of residence (i.e., investors) and source (i.e., investment) are harmonized, LACD produced regulatory instruments thatwere intended to artificially create legal differences between the tax laws of the source and residence jurisdictions. MNCs could then exploit the manufactured tax differences to their advantage. LACD collected a fee thatwas functionally linked to the amount of taxes avoided by MNCs in the other jurisdictions.

For the paper, go here.

The issue ofwhen companieswill be considered tax residents of foreign countries under guidance intended to curb inversions is a critical one, practitioners told Bloomberg BNA in a series of interviews.
As more companies go global, answers to that question are becoming increasingly complex, they said.
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The European Commission on Jan. 27 plans to propose a new anti-tax avoidance directive designed to implement various components of the OECD's BEPS plan, to force multinational companies to pay tax in the EU member statewhere profits are actually earned, an EU executive body official said.
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Patrick Driessen explains his fears that the recent renaissance of source-based taxes lessens the likelihood that inequalitywill be reduced by the use of residence-based taxation.
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Mindy Herzfeld reviews the latest state aid decision issued by the European Commission finding that Belgium's excess profits regime violates the state aid rules, and discusseswhat that ruling could mean for the tax liabilities and earnings of taxpayers.
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Arkadiusz Myszkowski, a solicitor in England andwales, discusses the limited recommendations made in the OECD's final report on action 5 of the base erosion and profit-shifting project, saying they reflect a lack of agreement on the merits of tax competition.
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Jenswittendorff discusses the OECD's final report on actions 8-10 of the base erosion and profit-shifting project and the new arm's-length principle therein, focusing on the rules on risk allocation and intangible profit allocation.
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Top Chinese leaders have already pledged to cut taxes and expand the government budget deficit this year to support economic growth,which slowed to its lowest level in 25 years in 2015.
For the Fiscal Times story, go here.

The Treasury Department is exploringwhether to give U.S. multinational companies the option to file country-by-country reportswith the IRS in 2016 even though the Internal Revenue Service's reporting requirement does not apply to most taxpayers until after Jan. 1, 2017, an official said.

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The IRSwill characterize foreign base company sales income based on the substance of the transaction and not on how it is designated by parties to a deal, the agency's Large Business and International Division told its agents.

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Belgium, France and the Netherlands must eliminate corporate tax exemptions or tax reductions allowed to companies that manage 25 sea ports, including the two largest in Europe at Rotterdam and Antwerp, according to a Jan. 21 European Commission competition authority ruling.

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Lingering disagreement between the United States and other countries that participated in the OECD's base erosion and profit-shifting project reflect thewidespread perception that multinationals have been systematically engaged in abusive tax avoidance, according to Robert Stack, Treasury deputy assistant secretary (international tax affairs).
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The European Commission has ordered the Netherlands to end its corporate tax exemptions for six publicly owned seaports and has proposed changes to Belgian and French legislation thatwould tax ports in the sameway as other enterprises.
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A tax on securities tradingÔøΩwith the potential to raise hundreds of billions over a decadeÔøΩcould be used as an offset in tax overhaul compromises in the coming years.
The possibility of introducing a financial transactions taxÔøΩwhich usually taxes the purchase or sale of stocks, bonds or derivativesÔøΩhas gained momentumwith proposals from lawmakers and Democratic primary presidential candidates touting the tax's ability to raise significant revenue.
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All three Democratic presidential hopefuls, Hillary Clinton, Martin O'Malley, and Bernie Sanders, have proposed financial transactions taxes (FTTs). But could such a levy raise much money and reduce financial sector risk, as their supporters hope? Perhaps, according to a report by my Tax Policy Center colleagues. But if not carefully designed, the tax could do more harm than good to the financial markets and raise much less revenue than proponents hope.
For the Forbes article, go here.

On November 13 2015 the Australian and German finance ministers, Mathias Cormann andwolfgang Schauble, signed a new double tax agreement in Berlin. The agreement represents the first post-BEPS treaty agreed between two major economies.

For the ITR story, go here.

Venezuela published two decrees on December 30, 2015: one amends certain provisions of the existing Income Tax Law; the other creates a new tax on 'large financial transactions.

For the PwC Insight, gohere.

Some of the biggest changes in India's transfer pricing regimewill take place in the February budgetwhen aspects of the OECD's action plan on base erosion and profit shifting are expected to be introduced.

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Although a financial transactions taxwould raise a significant amount of revenue from a large base, itwould likely increase market volatility and "appears poorly targeted at the kinds of financial-sector excesses that led to the Great Recession," researcherswith the Urban-Brookings Tax Policy Center said in a January report.
For the report, go here.

Jonathan Leigh Pemberton and Alicja Majdanska discuss initiatives to address aggressive tax planning, focusing on the potential of the cooperative compliance model to reconcile the competing goals of tax administrations and multinational enterprises and examining the benefits of this model for developing countries.
For the TNI article, go here. (subscription required)

The UK draft Finance Bill 2016was published on December 9 2015. Sandy Bhogal, head of tax at Mayer Brown in London, focuses on two topics of particular interest – new rules on taxation of performance-linked rewards for investment managers and new anti-hybrid rules arising out of the OECD's BEPS Project.
For the ITR article, go here.

Perhaps the only consensus in U.S. politics is that the Byzantine and loophole-riddled corporate tax code needs reform. Hillary Clintonwants to curb the ability of companies to use overseas subsidiaries to shield profits from taxes, and such tax-avoidance strategies have been denounced by other candidates in the 2016 presidential election, including Donald Trump, Bernie Sanders and Jeb Bush, aswell as by President Barack Obama.
For the Bloomberg story, go here.

Plans to restrict the generous tax treatment of interest costs ÔøΩ a key aspect of Britain's business-friendly taxation regime ÔøΩ are unnecessary and potentially damaging, companies have told the Treasury.

Professional bodies and business groups are voicing fears about the restrictions that are set to be introduced as part of a global crackdown on corporate tax avoidance.

For the Financial Times story, go here.

Peter Nias, international tax specialist barrister at Pump Court Tax Chambers in London, analyses trends in international tax dispute resolution, looking at alternative dispute resolution methods andwhether the OECD's recentwork in this area represents a missed opportunity.
For the ITR article, go here.

The European Parliament has adopted a nonbinding resolution that money recovered in state aid cases should be transferred to the countries hurt by illegal tax deals or into a general EU fund.
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Two House lawmakers are adding their voices to concern about the U.S. implementation of the country-by-country reporting and other transfer pricing documentation recommended by the OECD's base erosion and profit shifting project in October.

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If the European Commission decides that an EU member state should recover money from a company due to infringements of tax-related state aid rules, this money should be returned not to the same member state, but to member states that have suffered an erosion of their tax bases or to the EU budget, says the European Parliament in a resolution approved on Tuesday by 500 votes to 137,with 73 abstentions.
For the European Parliament release, go here.

In this report, Jack Cummings discusses the secretiveworld of Luxembourg preferred equity certificates. These hybrid instruments are so routinely used for outbound investments that even the general business tax practitioner must have aworking knowledge of how they function. The bottom line is a foreign interest deduction and no U.S. income inclusion.what could be better?
For the Tax Notes special report, go here. (subscription required)

In news analysis, Lee A. Sheppard looks at the state of dividend equivalentwithholding after the release of final temporary regulations on section 871(m).
For the Tax Notes article, go here. (subscription required)

In the first of a three-part series on the BEPS action 6 recommendations to combat treaty abuse, Mindy Herzfeld takes a closer look at the objective of the OECD's base erosion and profit-shifting project to end double nontaxation, focusing onwhether that goal is consistentwith important aspects of treaty policy.
For the TNI article, go here. (subscription required)

Loans made by controlled foreign corporations to foreign partnerships as part of routine operations should pass muster under proposed and temporary Section 956 regulations, the National Foreign Trade Council urged the government.

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A bipartisan group of senators, including the chairman and the ranking member of the Senate Finance Committee,wrote to the Department of Treasury blasting recent European Union "state aid" investigationsÔøΩand urging the administration to consider retaliatory tax hikes.

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On November 13 2015 the Australian and German finance ministers, Mathias Cormann andwolfgang Schauble, signed a new double tax agreement in Berlin. The agreement represents the first post-BEPS treaty agreed between two major economies.
For the ITR article, go here.

The top U.S. House and Senate taxwriters plan to start nextweek on a new effort to make significant changes to international corporate taxes.

For the Bloomberg Politics article, go here.

Stemming corporate inversions and bringing home corporate profits trapped abroadwill be two areas the Houseways and Means Committeewill focus on in 2016, the House's top taxwriter said January 14.
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The Treasury Department said it is "exploring discussions"with foreign jurisdictions to ease any administrative hassles or privacy concerns due to a one-year delay in the implementation of U.S. country-by-country reporting requirements.
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Work on an international tax code overhaulwill begin this year, butwhether Congress can pass a bill before 2017 remains unclear, Houseways and Means Chairman Kevin Brady (R-Texas) said.

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The European Commission's top tax official has said countries have "looked the otherway" in the face of serious tax avoidance and pledged to take action this year to improve transparency.
Speaking at a hearing on the European Parliament's special committee on tax rulings and economic and monetary affairs on Monday, Pierre Moscovici said corporate tax reform and fiscal transparency should be top of the commission's agenda this year.
For the Public Finance International story, go here.

The Treasury Department has received a number of comments on proposed regulations aimed at attacking "aggressive" tax positions on outbound transfers of intangibles under tax code Section 367, but none so far have offered a clearway forward on the difficult question of how to define foreign goodwill, a U.S. official said.
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Congresswill likely move forwardwith international tax reform legislation in 2017with a new president, House Budget Committee Chair Tom Price, R-Ga., said January 13, offering a more cautious prediction for the prospects for reform than the House's top taxwriter.
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Although tax reform appears unlikely to pass Congress before 2017, the Senate Finance Committee's ongoingwork on corporate integration could produce a discussion draft in the coming months, several tax lobbyists said January 13.
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The decision to delay IRS rules implementing country-by-country reporting requirements from the OECD is stoking fears of increased administrative complexity for the upcoming year.


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The government is considering more guidance onwhat it means to be a tax resident as itworks on regulations to make it harder for U.S. companies to invert, according to Treasury Department official Brenda Zent.

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In this article, Bill Parks and Jerrywegman explore the benefits of using apportionment as away to repatriate U.S. multinationals' untaxed overseas profits.
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