2016

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OECD members stopped raising taxes in 2015

Governments stopped raising taxes in an effort to narrow budget deficits in 2015 and switched to targeted tax cuts designed to support economic growth, the Organization for Economic Cooperation and Development said Thursday.

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What India Needs To Fix Before Implementing Its Mighty Tax Reform

With the euphoria of the GST (India's biggest tax reform post independence) mellowing down, attention has switched to implementation. Naturally, such a complex change is not going to be easy to implement and carries economic and political downsides if not properly executed. The Indian governmentwants to apply the tax by April 2017 (India's financial year runs from April to March) to ensure the positive effects are felt before the general elections in 2019.
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Vestager Gets Vindictive

  • By Wall Street Journal
Whenwewrote last month that Margrethe Vestagerwas turning the European Union into "a banana republic on high-speed rail" for imposing retroactive tax hikes, evenwe didn't appreciate the lengths towhich the EU's antitrust czarwould go to prove the point.
For thewall Street Journal article, gohere.
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EUs Vestager Sees Clash of Understanding With U.S. Over Apple

Margrethe Vestager, the European Union competition chief, said therewas a "clash of understanding"with the U.S. Treasury over her order for Apple Inc. to pay as much as 13 billion euros ($14.5 billion) in back taxes.

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Apple tax bill just the tip of a $2.4 trillion iceberg

There's a pot of untaxed, corporate profit gold sitting offshore, and the European Union plans to press forwhat it considers its fair share.
The official leading that effort, EU's antitrust commissioner, Margrethe Vestager,was inwashington thisweek to dealwith the blow back from her recent decision to slap Applewith a $14.5 billion tax bill.

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Thoughts on Treasury's White Paper on EU State Aid

In this article, the author provides context and clarity regarding concerns raised in the U.S. Treasury Department'swhite paper on the European Commission's state aid investigations.

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Jury Is Out on OECD Transfer Pricing Guideline Changes

Michael McDonald, Treasury economist and chair of OECDworking Party 6, said it's still unclearwhether key transfer pricing goals set out by the OECD's base erosion and profit-shifting plan have been accomplished by changes in the OECD transfer pricing guidelines thus far, including the OECD Council's approval of incorporating BEPS amendments into the guidelines, announced in June.

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Cyprus issues guidance on notional interest deduction

  • By PwC
Since 2015, Cyprus tax law has provided for a tax deduction on new corporate equity through the notional interest deduction (NID) regime, in an effort to further align the tax treatment of equity and debt financing.
In July 2016, the Cyprus tax authorities (CTA) issued Circular 2016/10 (the Circular) to further clarify the definition of relevant terms and provide guidance on the NID's practical application.

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European Commission opens formal State aid investigation into Luxembourg's tax treatment of GDF Suez (now Engie)

  • By PwC

On September 19, 2016 the European Commission (EC) announced, in a press release, a formal State aid investigation into tax rulings granted by the Luxembourg tax authorities to GDF Suez group (now Engie). The ECwill investigate the treatment of certain financing transactions between four Luxembourg group subsidiaries. The press release describes the reasonswhy the EC believes that the tax treatment applied to those transactions could represent State aid.

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Brady Statement After Meeting with Commissioner Vestager

  • By Committee on Ways and Means
The European Commission's decisions regarding state aid cases harm U.S. companies andworkers, and House Republicans are determined to reform the tax code to ensure "a level playing field" for U.S. businesses in international markets, Houseways and Means Committee Chair Kevin Brady, R-Texas, said in a September 20 release.

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EU tax official fails to win over GOP on Apple tax decision

Congressional Republicans are not satisfiedwith the European Commission's explanation for its decision to require Apple to pay $14.5 billion in back taxes to Ireland.

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European commission plans to overhaul how companies report profits

The European commissionwill launch a further crackdown on tax avoidance by reviving a long-stalled plan to overhaul how companies report their profits, according to Europe's most senior tax policy official.

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Dutch Cabinet Hints at Lower Corporate Tax Rate in Coming Years

The Dutch deputy finance minister hinted that the countrywouldwork to further cut the corporate tax rate in the coming years, a bid to keep pacewith neighboring countries looking to attract foreign businesses after the Brexit vote.

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Tax Policy Reforms in the OECD 2016

  • By OECD
This is the first edition of "Tax Policy Reforms in the OECD". This annual series of reports aims to track and compare tax policy developments over time across OECD countries. This year's edition focuses on the tax reforms thatwere introduced in 2015 and identifies the most significant tax policy reforms aswell as common tax policy trends across groups of countries.
For the OECD report, gohere.
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Luxembourg remains in the spotlight for EC state aid investigations

Luxembourg's tax treatment of another large multinational has been called into question by the European Commission as it looks at the tax rulings between the EU nation and a French company.

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Mexico implements new transfer pricing rules for Advanced Pricing Agreements

  • By PwC
The Mexican government recently enacted a new regulation enabling the Mexican Tax Authorities to perform on-site visits to carry out their own functional analysis as a part of the Advanced Pricing Agreement (APA) process.
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U.S. Debt-Equity Regulations Problematic for BEPS Action 2

In this article, Tiegerman argues that if the proposed regulations under section 385 are finalized, multinational companies in cross-border lending arrange-mentswill face greater risk of double taxation and higher costs in tax controversies because hybrid instruments (and the resulting mismatches) may be created by operation of lawwhen no hybrid arrangementwas intended by the parties.

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Supply Chain Complexities Creating Tax Tension for Companies

Companiesworldwide are rethinking their supply chains to dealwith impending changes in global tax rules and are finding that they need to explain more to tax authorities than ever before.
Robert Tsang, indirect tax leader at Deloitte in Singapore, noted during a panel discussion at a tax conference in Hong Kong that supply chains are "much, much more complex" than theywere 25 years ago and that explaining them to government authorities can be daunting.

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Hatch condemns European Commissions fine on Apple

Sen. Orrin Hatch (R-Utah) ripped the European Commission Monday over its decision to impose hefty back taxes on Apple after a private meetingwith European officials visiting D.C. from Brussels.
For the Hill story, gohere.
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EU-U.S. Tensions Simmer Over Apple, State-Aid Tax Cases

European Competition Commissioner Margrethe Vestager's three-day trip to the U.S. to smooth over cross-Atlantic frustrations over investigations into the tax practices of U.S. companies like Apple Inc. doesn't appear to be bringing the sides closer together.

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News Analysis: Apple State Aid Case: A Spurned Olive Branch?

Ajay Gupta argues that in its final decision in the Apple state aid case, the European Commission sought to extend an olive branch to the U.S. Treasury,whichwas unable to grasp it given the IRS's likely inability to prevail in any enforcement action.

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Hatch Expresses Ongoing Concerns with EC State Aid Rulings

Today, members of the Senate Finance Committee metwith European Commissioner for Competition Margrethe Vestager to discuss the European Commission's (EC) recent ruling regarding Apple and its tax arrangements in Ireland.

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European Commission Probes Luxembourg Tax Rulings on Intragroup Loans

The European Commission has announced an in-depth investigation into tax rulings Luxembourg issued to the GDF Suez group (now Engie),which appear to treat convertible loans between companies in the group as both debt and equity, giving the group an unfair advantage.

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EU-U.S. Tensions Simmer Over Apple, State-Aid Tax Cases (1)

European Competition Commissioner Margrethe Vestager's three-day trip to the U.S. to smooth over cross-Atlantic frustrations over investigations into the tax practices of U.S. companies like Apple Inc. doesn't appear to be bringing the sides closer together.
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EU Targets French Company as Vestager Faces U.S. Critics

The EU's competition commissioner targeted the tax affairs of France's biggest gas distributor as she kicked off meetingswith some of the toughest critics of her investigations of Apple Inc. and other U.S. companies.

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U.S. Multinationals Positive About House Tax Plan, Brady Says

U.S. companieswith global operations are responding positively to House Republicans' so-called tax reform blueprint to fundamentally change individual, corporate, and international tax systems, andwelcome the idea of tax certainty thatwill go alongwith it, said Houseways and Means Committee Chair Kevin Brady, R-Texas.

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IRS Official Offers Assurance in International Tax Disputes

Taxpayerswill get Internal Revenue Service backing in international disputeswhen their practices are defensible, according to a top agency official.
For the DTR story, gohere. (subscription required)
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U.S., India Make Headway on Transfer Pricing Backlog

Some progress has been made since the U.S. and India established a framework for resolving a backlog of transfer pricing cases, but movement remains slow in other areas, an attorney told practitioners at a Hong Kong conference.

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Treasury Maintains Retroactivity of State Aid Rulings Is Unfair

Treasury stands by its claim,which it made in a recentwhite paper, that the European Commission is applying a new interpretation of state aid rules and some new form of the arm's-length standard, Robert Stack, Treasury deputy assistant secretary (international tax affairs), said September 19.

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MAP Peer Review May Include Business Input, OECD Official Says

The OECD's coming mutual agreement procedure (MAP) peer review should include business input at an early stage, according to Achim Pross, head of the OECD's International Cooperation and Tax Administration Division.
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IRS Bracing for 'Tsunami' of MAP Cases, Official Says

by Stephanie Soong Johnston (Tax Notes)
Although mutual agreement procedures (MAPs) should see improvement under action 14 of the OECD's base erosion and profit-shifting project, the IRS is bracing itself for a "tsunami" of MAP cases soon, a top IRS official said.

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Notice 2016-52 details Section 909 regulations for FTC splitting events arising from foreign-initiated adjustments such as EU state aid

  • By PwC
On September 15, 2016, the IRS issued Notice 2016-52, announcing future Section 909 regulations addressing situations inwhich foreign tax credit splitter arrangements arise due to foreign-initiated adjustments towhich Section 905(c)would apply. The Notice preamble specifically references retroactive payments for prior-year taxes required under the EU State aid rules as adjustments that could raise this issue. However, the future regulations could apply to any foreign-initiated tax adjustment.

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Investing in India: The new normal asset management perspective

  • By PwC
by PwC
India, one of the largest democracies in theworld, today is also the seventh largest economy by nominal Gross Domestic Product (GDP) and the third largest by purchasing power parity (PPP). It is a developing economywith a GDP growth rate of about or over 7% over the last few years. India, as an emerging market, has also been looking to attract more inbound foreign investments through liberalized foreign investment rules and measures to ease conducting business. This publication provides insights on Indian tax policy, recent measures and our expectations regarding the Indian tax and regulatory environmentwith respect to foreign investments, from an asset management perspective.

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No Major Changes Needed to Conform to OECD Standards, Indian Tax Official Says

Therewill be no legislative overhaul to bring India's international tax and transfer pricing laws in linewith the OECD's BEPS project recommendations because the country has already adopted most of the same principles, according to Akhilesh Ranjan, principal chief commissioner of international taxation and transfer pricing for India's MOF.

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China's Bad Rap in International Tax May Be Unfair, Practitioner Says

Transfer pricing guidance issued by China's State Administration of Taxation in 2015 and 2016 does not abandon the arm's-length principle, as some critics have claimed, but instead modifies it to account for the particular issues China faces, according to Brendan Kelly of Baker & McKenzie.

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E.U., Accused of Bias Against U.S. Companies, Opens Tax Inquiry Into French Utility

European Union regulators stand accused of unfairly targeting American companies in a series of inquiries. Sowith the region's antitrust chief visiting the United States thisweek, the bloc's officials said on Monday that theywere investigatingwhether a French company signed a sweetheart tax dealwith Luxembourg.

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News Analysis: The United States as a Tax Haven?

In news analysis, Lee A. Sheppard discusses how the United States fits inwith the OECD's common reporting standard.

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Economic Analysis: A U.S. VAT May Be Closer Than You Think

Two members of the congressional taxwriting committees -- a Democratic senator and a Republican representative -- are proposing that revenue from a new U.S. credit-invoice VAT be used to cut individual income taxes and to reduce or eliminate the corporate tax.

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Executives to EU Nations: Stop State-Aid Investigations

A coalition of U.S. CEOs urged European Union countries to rein in the European Commission following its staggering $14.5 billion decision against Apple Inc. and Ireland.
For the DTR story, gohere. (subscription required)
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Apple Ruling Is 'Old School Europe,' Vestager Tells U.S. Critics

Responding to U.S. claims that the European Commission's decision requiring Apple to pay Ireland ÔøΩ13 billion in back taxes is a violation of tax sovereignty, EU Competition Commissioner Margrethe Vestager called the decision "old school Europe," noting that the commission has been addressing state aid issues since itwas formed.

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M&A transactions - The impact of Brexit

David Smith and Ben Jones, of Eversheds' tax team in London, look at the key tax areaswhere Brexit could have an impact on typical M&A transactions and discuss how parties to such transactions might seek to address the issues.

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Corporate Tax Chartbook: How Corporations Rig the Rules to Dodge the Taxes They Owe

While the statutory U.S. corporate tax rate is 35 percent, corporations actually pay an effective rate around half that thanks to profit shifting and tax avoidance, according to a September 15 report by the Economic Policy Institute and Americans for Tax Fairness that said U.S. corporations held $2.4 trillion in untaxed profits offshore in 2015.
For the report, gohere.
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State aid: Commission opens in-depth investigation into Luxembourg's tax treatment of GDF Suez (now Engie)

  • By European Commission
The European Commission has opened an in-depth investigation into Luxembourg's tax treatment of the GDF Suez group (now Engie). The Commission has concerns that several tax rulings issued by Luxembourg may have given GDF Suez an unfair advantage over other companies, in breach of EU state aid rules.
For the EC release, gohere.
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EU Commission scoreboard identifies non-EU countries that potentially enable tax avoidance

  • By MNE Tax
As part of an effort to devise an EU-wide common list of tax havens, the EU Commission today released a scoreboard designed to help identify countries located outside the EU that enable multinational corporation tax avoidance.
For the MNE Tax article, gohere.
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U.S. Treasury Targets Foreign Tax Credit Use Amid EUs Probes

The U.S. Treasury Department took fresh steps on Thursday to curb tax avoidance by multinational corporations, announcing new curbs on a loophole throughwhich companies artificially use credits for foreign taxes they pay to improperly lower their U.S. tax bills.

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A tax loophole for U.S. companies operating overseas just got tighter

The Treasury Department sought Thursday to limit the benefits that U.S. companies can claimwhen they pay taxes overseas, an effort to cushion the blow from Europe's demand that Apple pony up $14.5 billion in unpaid taxes.
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M&A transactions - The impact of Brexit (1)

David Smith and Ben Jones, of Eversheds' tax team in London, look at the key tax areaswhere Brexit could have an impact on typical M&A transactions and discuss how parties to such transactions might seek to address the issues.

To read more go here

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EU Parliament backs Commissions state aid verdict against Apple

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Potential Impact of Foreign Credit Shutdown: Beyond Apple?

The Treasury Department's move to shut down foreign tax credit planning for overseas tax adjustments paid by U.S. multinationals goes beyond a potential effort to stop Apple Inc. from claiming a credit for billions itwas ordered to pay Ireland by the European Commission.

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EU Tax Haven Scoreboard Deems U.S. a Risk

A European Union scoreboard to begin screening nations for a tax haven blacklist indicates that more than 80 countries, including the U.S., pose a risk to the continent based on issues such as corporate tax rates, preferential state-aid regimes and lack ofwillingness to exchange bank information.
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