2018

One of the principal U.S. tax policy issues leading up to the Tax Cuts and Jobs Actwas how foreign-source active business income of U.S. multinational enterprises should be taxed by the U.S. if the system of deferring U.S. tax on active foreign income of a foreign subsidiarywas ended. Much of the U.S. multinational business community urged adoption of a territorial or exemption system,while others, including many labor-backed groups, favored adopting an expandedworldwide tax regime. Congress chose both. This report takes a preliminary look at the extent towhich the TCJA's purely outbound international provisions caused a degree of movement in either direction. The authors have concluded that expandedworldwide taxation is the normatively preferred position. The report explains how the new global intangible low-taxed income regime may serve as a platform to shift the U.S. international tax regime to expandedworldwide taxation and identifies steps thatwould accomplish that objective.

The decision of Belgium's prime minister to resign after three years in power means a temporary "stay of execution" for several unpopular tax measures affecting large multinationals.

The 3.83 billion-rupee ($55 million) fine imposed on Hindustan Unilever Ltd. by India's National Anti-profiteering Authority is "a narrow interpretation of the law and does not take into accountwell-established industry practice," the company said in an emailed statement.

Part 2 of this series looks at the new Principal Purpose Test. Is the new Principal Purpose Test a game changer for treaty shopping in relation to holding, financing and royalty structures?

Digital companies are bracing for India's introduction of tax guidelines thatwill make the country one of theworld's toughest for online businesses.

Facebook, Google and other U.S. technology giantswould pay a 3 percent digital-revenue tax in Italy if the government approves a levy that the Chamber of Deputies is set to consider Dec. 28.

The German Federal Parliament and the German Federal Council recently passed a tax bill. The 2018 tax bill covers a broad range of amendments to the German tax law.what should multinational corporations be considering now that the German 2018 Tax Bill has passed?

Transfer pricing cases add detail as to how the international transfer pricing conventions can be applied, and sometimes suggest fundamental issueswhich merit consideration in future iterations of those conventions. The purpose of this article is to summarise some key transfer pricing cases of 2018 and to draw some general conclusions from them.

Infrastructure and middle-class tax relief are two tax items on next year's agenda that could get enough bipartisan support to move under a divided Congress. The issues could gain momentum because they center onworking AmericansÔøΩa goal for Democratswhowill control the HouseÔøΩand alignwith President Donald Trump's stated objectivesÔøΩa boon for Republicanswhowill control the Senate.

Theworld's biggest companieswill find it harder in 2019 to set up some business structures that let them achieve the lowest tax rates, after a novel new multilateral treaty goes into effect.

Indian entrepreneurs and the so-called angel investorswho back them havewarned that hefty tax bills levied on start-ups pose a threat to New Delhi's efforts to remake India as an innovation hub.

Itwas hailed as a "historic victory" by President Donald Trump, and a "heist" by Democratic senator and possible presidential contender Elizabethwarren. A year after the $1.5tn tax cutwas passed into law, the economic effects are becoming apparent.

US executives and analysts are now more focused on tradewar concerns than the benefits of lower corporate taxes, according to a Financial Times analysis of their public remarks since the Tax Cuts and Jobs Act became law a year ago thisweek.

In 2019 the tax debatewill be driven by negotiations between member states on the next European budget.

Much like a smartphone in need of an operating system update to keep upwith security threats and repair glitches, the international tax system may need some fixes to address the tax challenges of the digital economy. And, if the debate in 2018 is any indication, governments appear to be getting close to some agreement on the bestway forward.

Many changes have been made by the Dutch government to the original 2019 Budget. Most notably, dividendwithholding taxwill not be abolished after all.

Countries have introduced specific anti-abuse provisions such as the beneficial ownership clause to counter treaty shopping: however, could the new Principal Purpose Test change the international tax scene?

FedEx Corp. is threatening a court challenge to the government's interpretation of how repatriation taxeswill affect its profitsÔøΩand itwon't be alone. The Treasury Department and the IRSwill likely face awave of such challenges, particularly from multinationals, based on conflicting interpretations of ambiguities in the 2017 tax overhaul.

Critics of President Donald Trump's tax law centerpiece -- slashing the corporate rate -- argued the savingswouldn't spur big companies to expand dramatically. One year later, some key metrics show theywere right.

The OECD solution for solving the digital tax conundrum could address how much tax companies pay andwhere they pay it and the U.S. may be happywith that result said Brian Jenn, deputy international tax counsel at the Treasury Department.

Foreign investors have guidelines on how a new taxwill apply to their gain from the sale of U.S. partnership interests. But the Internal Revenue Service left U.S. partnerswondering how the taxwill actually be collected. The IRS and Treasury Department on Dec. 20 proposed regulations under new tax code Section 864(c)(8),which applies to foreign investors upon sale, disposition, or exchange of U.S. partnership shares made on or after Nov. 26, 2017.

The American Institute of CPAs has suggested that taxpayers be able to exclude the amount of deemed foreign taxes paid in the inclusion year of the transition tax under section 965 (generally 2017) from the calculation of the 150 percent special rule for controlled foreign corporations in Rev. Proc. 2015-13 to prevent the unintended denial of audit protection under that guidance.

In this article, the author examines a proposal to tax digital services in Mexico, contemplating both its efficacy and itswisdom, and considerswhether existing mechanismswithin the country's tax system could effectively tax the digital economy, at least until there is a multilateral solution in place.

In this article, the author describeswhat he calls the emergence of an international tax "war" and provides an overview of global digital taxation reform efforts. He argues that the global digital tax conflict masks a growing dissatisfactionwith how to tax value associatedwith global transactions.

Malta has ratified into law the EU anti-tax-avoidance directivewith effect from January 1, 2019.

EU member states have reached political agreement on granting the European Banking Authority (EBA) new powers to fight money laundering.

The Israel Tax Authority (ITA) has issued letters informing companies they must amend prior tax returns to complywith a Supreme Court decision earlier in the year on the taxability of employee stock options.

Because Finnish law incorporates the OECD transfer pricing guidelines effective during the tax year, the tax administration cannot use profit splits for pre-2010 years unless the transactions are too closely interrelated to be priced independently.

On December 18, 2018, Luxembourg's parliament approved legislation thatwill implement the European Union Anti-Tax Avoidance Directive (ATAD I). ATAD I contains five legally binding anti-abuse measures,which all member states are required to apply against common forms of aggressive tax planning.

Generic drugmaker Perrigo could owe Ireland over ÔøΩ1.63 billion because of an alleged mischaracterization of income from intellectual property sales, according to a new public disclosure by the company.

Altered in response to recent tax protests, French President Emmanuel Macron's 2019 budget has been approved by the National Assembly on a party-line vote.

Stressing the challenges and opportunities brought on bywhat it described as unprecedented global changes, the Chinese government said recently that it must implement a more proactive fiscal policy, including large-scale tax cuts.

Proposed U.S. regulations addressing hybrid and branch mismatches generally follow practitioners' expectations,with a few minor exceptions and surprises.

The past few years have been tumultuous for the international tax system. First, the OECD shook things upwith its base erosion and profit-shifting project,which the organization saidwould help end multinational companies' practice of playing one country's tax system off another's to reduce global taxes paid. That project produced reams of paper, and perhaps even a fundamental change to the international tax landscapewith the introduction of a multilateral instrument to ensure that tax treaties aren't being used to facilitate tax avoidance. Further, some countries have adopted BEPS-recommended reforms in their domestic laws. And justwhen the taxworld seemed to be quieting down from BEPS frenzy, the U.S. Congress passed the most comprehensive reform of its tax system in decades that involved a rewrite of international tax rules that had been fundamental to cross-border planning since the 1920s.

With many questions answered by the proposed foreign tax credit regulations released November 30, modeling by international tax practitioners involves far less guesswork (REG-105600-18). Herewe describe and introduce (with an example) a spreadsheet that calculates tax liability on global intangible low-taxed income (and the associated section 78 gross-up). The spreadsheet incorporates FTC calculations described in the proposed regulations. (The spreadsheet may be downloaded.)

In this article, the author discusses the Marc Jacob judgment, inwhich the Court of Justice of the European Union consideredwhether French rules on taxing an exchange of shares, in particular rules on deferred taxation,were compatiblewith the EU merger directive and the freedom of establishment.

Seeking to alleviate the unique burden of citizenship-based taxation and provide individualswith some measure of territoriality, a new House billwould introduce a residence-based tax system in the United States.

There is no formal link between a digital services tax and reductions in business rates, members of Parliamentwere told two days after they asked Amazon UK to disclose its U.K. sales and tax liabilities.

The IRS and Treasury, responding to a change in the law that overturned a Tax Court decision, have proposed new rules on foreign partners' sales of U.S. partnership interests.

Treasury and the IRS on December 20 issued proposed regulations addressing hybrid and branch mismatch arrangements under sections 245A and 267A.

Romania's stock market faced one of its biggest falls on record after the government announced a plan to raise 10 billion lei (ÔøΩ2.1bn), or 1 per cent of GDP, in partwith new levies on banks, most ofwhich are foreign-owned.

Fertilizer giant Nutrien must pay Chile about $1 billion in taxes related to the company's sale of a stake in one of theworld's largest lithium producers, Chile's Finance Minister Felipe Larrain said Dec. 19.

Two Dutch tax measures thatwill take effect next year could hurt corporations that own real estate and companieswith heavy losses in the coming years.

Vodafone faces a possibly larger tax bill and continued scrutiny from Indian tax authorities after a recent court ruling, increasing financial pressure on the troubled telecom giant.

The amount of offshore cash corporations are bringing back to the U.S. dropped sharply for a second straight quarter, falling short of the trillions of dollars President Donald Trump had promisedwould result from his tax overhaul.

The French plan to hit big digital companieswith a national tax starting Jan. 1, rather thanwait for an EU measure, looks set for practical and legal hurdles and could face court challenges, tax practitionerswarn.

The European Commission ordered Gibraltar to reclaim around 100 million euros ($114 million) of illegal tax breaks it gave to multinational companies.

Britain risks driving banks overseas if current high levels of taxation on the industry are maintained after Brexit, a bank lobby group said onwednesday.

A Netflix tax proposalwill be on the agenda for the Georgia legislature in 2019ÔøΩpart of a larger movement of states to broaden their sales tax bases to tap into the increasingly digital economy.