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2018

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How Data Should (Not) Be Taxed


The core problemwith taxing the digital economy is that some business models allow firms to produce in a given countrywithout a physical presence and avoid (adequate) source taxation in that country. This mismatch of value creation and taxation may require an adjustment of international tax standards. The authors analyze all major digitalization trends as towhether and, if so, towhich extent they allow for value creationwithout taxable nexus in the above sense.while some trends are still adequately covered by the existing set of international tax rules, others allow for remote access to local data sources and networkswithout being liable to source taxation. The authors propose a systematic and administratively feasible approach to allocating taxing rights based onwhat the authors call a sustained user relationship.

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Why the European Council Directive Proposal for a Digital Services Tax Should be Thrown Out


A European Union plan to tax certain digital services has encountered opposition from a number of member states and no agreement has been reached on a final proposal. In the authors' view, such a taxwould be a serious mistake.

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China to Companies: Show Tax Compliance or Risk Punishment


Companies in China face higher tax compliance costs as the country rolls out the tax portion of its "social credit system," but the extra outlay may beworth itÔøΩor even necessaryÔøΩto stay in business.

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Australia Allays Fears on Timing of Tax Mismatch Rules


New guidance from Australia on cross-border financing arrangements has allayed fears of a tax hit for multinational companies in the event of structured arrangements being prematurely scooped up by upcoming anti-tax avoidance rules.

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Lack Of Noncash Exceptions In BEAT Rules Has Wide Scope


Proposed base erosion and anti-abuse tax regulations provide U.S. multinationalswith much-needed answers to calculation questions, but the inclusion of noncash transactionswithout any exceptions ÔøΩ includingwhen there aren't recognized gains or losses ÔøΩ could take companies by surprise.

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Those Paid In Bitcoin Will Owe Income Tax, UK Confirms


U.K. authoritieswednesday described how they intend to tax individuals' use of virtual currencies such as bitcoin, noting that income tax and national insurance are due for anyone paid in the virtual currency. As officials across theworld grapplewith the tax implications of an ever more popular asset class, the guidance from Her Majesty's Revenue and Customs said the governmentwould use existing law to determine how virtual assets that use distributed ledger technologywill be treatedwhen people use them to pay for goods, buy them as an investment or receive them as salary.

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BREAKING: IRS Floats Rules On Share Sales By Foreign Partners


The U.S. Department of Treasury on Thursday proposed rules to treat income from the sale of a foreigner's interest in a U.S. partnership as taxable U.S.-sourced income, counter to a U.S. Tax Court decision that mandated the opposite result.

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European Commission Explores Tax System Intricacies in Report

  • By Tax Analysts

The European Commission has issued a report on tax policies in the European Union, focusing on the performance of the national tax system, policy options, and reforms in member states.

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CJEU Finds German Property Transfer Tax Exemption Isn't State Aid

  • By Tax Analysts

The Court of Justice of the European Union in Germany v. A-Brauerei, C-374/17 (CJEU 2018), held that a real property transfer tax exemption that may be available to companies that acquire a right of ownership to property in the context of corporate group restructuring procedures doesn't constitute state aid under article 107(1) of the Treaty on the Functioning of the EU.

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Canada Finalizes International Tax Proposals: An Update on Conduit, Tracking, and Foreign Affiliate Rules


In this article, the author examines the final version of a package of international business taxation rules that Canada released in late October, including antiavoidance rules that target the use of tracking shares, provisions on controlled foreign affiliate status, alleviating rules for some corporate divisions, and amendments to the cross-border surplus-stripping rules.

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The FDII Regime OECD Headache or Opportunity?


In this article, the author reviews the new foreign derived intangible income regime and links it to discussions regarding the broader direct tax challenges.

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U.K. Tops List of Treaty-Shopping Destinations


Corporate tax avoidance is estimated to cost EU member states around ÔøΩ36 billion annually,with the United Kingdom taking the top spot as an appealing locale for multinational companies looking to treaty shop.

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EU Finds Gibraltar Gave MNEs $100 Million in Illegal State Aid


Between 2011 and 2013 Gibraltar violated EU state aid ruleswith a corporate tax exemption regime for interest and royalties and five tax rulings that favored multinational enterprises, the European Commission has found.

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French Protests Highlight Difficulty Of Taxing Carbon


French President Emmanuel Macron's reversal on a proposed fuel tax increase in the face of violent protests has cast doubt on the political viability ofwide-ranging consumption taxes that may be necessary to combat climate change.while debates continue over how best to discourage carbon emissions, the French experience highlights the political consequences of using broad-based taxes on gasoline and carbon to combat climate change, and the challenges certain communities face,which policies imposed by central governments may exacerbate.

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The Trump Tax Cuts Boosted Growth and Jobs, but at What Cost?


It has been nearly a year since President Trump signed sweeping tax changes into law. The macroeconomic data already rule out some of the more extravagant claims about immediate jumps inwages and capital. But the more serious debate over the tax cuts' long-run impact is still far from decided.

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Tax chiefs pleased that Netherlands will publish tax rulings


Heads of tax at multinational companies havewelcomed the Dutch government's announcement that itwill publish anonymised summaries of all its tax rulings from July 2019. The measures are designed to allow public scrutiny of rulings and prevent the use of shell companies, and is part of a broader drive by the Netherlands to prevent itself being seen, and used, as a pipeline to tax havens.

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U.S. Tax Review (6)


In this article, the authors discuss recent U.S. international tax developments, including IRS proposed regulations on U.S. corporations that own stock in foreign corporations and comments from the New York State Bar Association on the 100 percent dividends received deduction under section 245A.

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The EU Directive on Aggressive Tax Planning: The Wrong Approach


In this article, the author discusses EU Council Directive 2018/22, otherwise known as DAC6, addressing the automatic exchange of information regarding reportable cross-border arrangements for intermediaries.

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High taxes could hasten bank moves from Britain after Brexit (1)


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

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Protesters, Police Scuffle in Anti-Tax Protests in Jordan

  • By The Associated Press

Hundreds of people have protested in Jordan's capital against the government's planned tax increases and high youth unemployment.

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France accelerates plans for its own digital tax


Francewill move to collect a tax on digital giants from the start of Januarywithoutwaiting for an agreement on a European levy, as its finances come under pressure from measures taken to appease thegilets jaunesprotesters.

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France Pushes to Enact Digital Tax Jan. 1, 2019: Le Maire


Francewill push aheadwith its own digital tax as of Jan. 1, rather thanwaiting for Europe-wide consensus, finance minister Bruno Le Maire said.

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EU Leaders Back Corporate Tax Reform for 2019


European Union leaders agreed on a plan to advance corporate tax reforms next year that they believe are vital in response to U.S. tax law changes adopted a year ago.

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Japan Tackles Tax Avoidance, Base Erosion in Reform Package


Japan's ruling coalition approved a tax reform package for fiscal 2019 that includes new tax avoidance measures for multinational corporations and limits on interest deductions. The reform package includes a mix of international and domestic tax rules, including a 2% consumption tax hike, auto-related tax and housing-loan credits, and revised application of Japan's controlled-foreign-company rules to Japanese multinationals' subsidiaries in the U.S.

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Colombia Faces Downgrade Risk and 'Tax Hell' as Bill Falls Short


As president, Ivan Duque is looking to sign into law a tax bill similar to the ones he used to criticize as a senator,which raises enough to patch a hole in the budget for a year,while kicking other cans down the road. But the tax bill is sowatered down that it may not achieve its main goal of preventing a downgrade to the nation's credit rating, according to Nomura Holdings.

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New U.K. Tax on Overseas Intangibles


A new U.K. tax charge on multinationals using intangibles held in low tax jurisdictions to generate revenue in the U.K. could have a greater impact than the U.K.'s proposed new digital services tax.

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Major Court Cases Shaping IRS Approach to Tax Law Rules


The IRS is making it a point to fully explain the proposed rules it issues on 2017 tax law changes, after being challenged in court for not doing so. In recent litigation over intercompany pricingÔøΩcaseswhich often involve very large sums of moneyÔøΩthe companies have challenged theway the IRS issued regulations in the past, using the Administrative Procedure Act to argue that the agency didn't fully take taxpayer comments into account. The IRS is in the process of releasing major guidance to implement the 2017 tax law. Avoiding extensive litigationwould be a boon for the agency and the companies it ends up against.

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Next Wave of Tax Guidance Will be 'Cleanup' of Old Rules


The IRSwill begin next summer to revisit the old guidance "that needs to be conformed to the newworld" after the 2017 tax overhaul. The first priority is building the "newworld core structure"with guidance on new international provisions such as the tax code Section 965 transition tax and the base erosion and anti-abuse tax said David Kautter, assistant Treasury secretary for tax policy.

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Rules Limiting Anti-Base Erosion Tax a Win for Companies


Internal Revenue Service rules clarifying that companieswon't have to pay an unpopular anti-base erosion tax on some payments for services arewelcome news. The Dec. 13 proposed rules brought companies the answer that theywanted: only the markup, not the entire payment, is eligible for the BEAT.

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Taxation of Global Business Models: Restore Confidence in the System? A More Balanced Approach Please!


Eric Vroemen of PWC Netherlands argues thatwhile the OECD's Base Erosion and Profit Shifting initiative may restore the confidence of governments in the system for taxing multinational enterprises, the same confidence isn't being achieved for the MNEs. The current proposed measures are likely to result in double taxation and an excessive compliance burden for MNEs, the author says.

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Big Law Strikes Back: Firms' Consulting, Crisis PR Test Big Four


Global law firms are turning the tables on the Big Four accounting firms' incursions into the legal industry by setting up consultancies that assist clientswith non-legal matters. Top law firms have branched outwith new units that help clients manage cyber risks, provide intelligence and security assessments, boost crisis communications, and develop new forms of legal technology-which are designed to compete directlywith Big Four offerings

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Starr International's $38 Million Tax Refund Suit Reinstated


The U.S. appeals court inwashington, D.C., revived a 2014 lawsuit filed by Maurice "Hank" Greenberg's Starr International Co., challenging an Internal Revenue Service denial of claim. Zurich-based Starr sought a 2007 tax refund on U.S.-source dividend income under the U.S.-Swiss tax treaty.

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How U.S. Multinationals Can Win from China Trade Dispute


Shanghai transfer pricing economist Glenn DeSouza posits a contrarian view that the massive trade dispute bedeviling theworld's two greatest trading nationswon't necessarily hurt U.S. multinational investment in the middle kingdom. Instead, tax directors of U.S. multinationals have a unique, nuanced, opportunity, to map out a holistic strategy to exploit the business and tax opportunities that lay below the surface.

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Distributions From the U.S.: Withholding Tax Considerations


Stephen Jackson and Julia Tonkovich of Ernst & Young discuss the considerations and potential complications involved in makingwhatwould appear to be a simple cash distribution from a U.S. corporation to a non-U.S. parent corporation shareholder.

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Canada focus: how Uber v Quebec tax tussle was resolved


When tax investigators raided the Montreal offices of Uber in 2015, it marked a flashpoint after years of tension between the ride-sharing service and authorities in Quebec. Eventually, the Canadian province's government issued an ultimatum: Uber and its drivers must become fully tax compliant or be barred from operating in the jurisdiction.

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Opinion today: Time to crack down on buybacks?


Corporate America is on a spending spree. Flushwith cash from President Donald Trump's 2017 tax cuts, companies are on track to shell out more than $1tn on stock buybacks this year. Critics such as US senator Elizabethwarren say this is bad news. Buybacks may boost prices in the short run, they claim, but a betterway to boost the value of a corporation is to invest in the future. Ought the US to be making moves to restrict the rush of activity?

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Swedish Political Crisis Deepens as Opposition Get Its Budget Passed

  • By Reuters

Sweden's political crisis deepened onwednesday as parliament rejected the caretaker government's budget in favor of a tax-cutting one from the opposition.

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Australia Government Launches Strategy to Develop Itself as Battery Hub

  • By Reuters

Australia is seeking investment to develop a battery industry towring more value from its mineralswealth. Under the strategy, the governmentwill offer yearly tax offsets of up to A$200,000 (113,105 pounds) per year for investors and a 10-year exemption on capital gains taxes for investments held for at least a year.

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Justin Trudeau's Carbon Tax Push Finds Critics on All Sides


When Mr. Trudeau came to office three years ago, combating climate changewas near the top of his agenda and putting a price on carbon pollutionwas his government'sweapon of choice. But Mr. Trudeau's climate program has increasingly been targeted by critics at both ends of the political spectrum, and conservative governments in several provinces have refused to participate, forcing federal intervention.

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Big Firms Could Help Rein in French Deficit: Minister

  • By Reuters

Finance Minister Bruno Le Maire said onwednesday he favored calling on big companies to contribute to efforts to keep France's budget deficit as close as possible to the EU limit next year.

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Taxpayers Always Lose Industry's Shell Game With Jobs

  • By NYT Editorial Board

Federal, state and local governments have gotten into the habit of providing corporationswith incentives to move, incentives to stay, bailouts to stave off failure and tax benefits to build on success and create more jobs. All are based on promises about job creation and economic development that more often than not prove hollow.

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Fiat Chrysler May Review $5.7 Billion Plan if Italy Taxes Diesel, Petrol Cars

  • By Reuters

Fiat Chrysler could review its 5 billion euro ($5.7 billion) Italian investment plan,which includes a shift to cleaner engines, if Rome raises taxes on petrol and diesel cars.

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Tax Treaties Create $4.2 Trillion Cash Flow Through Netherlands

  • By Reuters

A network of favorable tax treaties and an industry devoted to minimizing tax bills has made the Netherlands the conduit for an annual flow of capital five times the size of its own economy. Statistics show that the country had received 4.6 trillion euros ($5.2 trillion) in "foreign direct investment" in 2017.

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European Commission Issues Decision in Luxembourg Case

  • By Tax Analysts

In a case concerning the double nontaxation of profits earned by McDonald's, the European Commission found that the Luxembourg-U.S. tax treatywas not misapplied by Luxembourg.

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McDonald's Tax Rulings From Luxembourg Aren't Unique


McDonald's cited information obtained through LuxLeaks to show that tax rulings it obtained from Luxembourg didn't convey a selective advantage or constitute illegal state aid.

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Three Sens. Target GILTI, Ask GM To Halt Stock Buybacks


Three senators from states affected by General Motors' recent decision to shutter manufacturing plants have asked the company to demonstrate how it has benefited from the federal tax overhaul's global intangible low-taxed income provision and to cancel planned stock buybacks. Sens. Chris Van Hollen, D-Md., Amy Klobuchar, D-Minn., and Tammy Duckworth, D-Ill., asked the auto manufacturer to provide a country-by-country breakdown of how the company has used the Tax Cuts and Jobs Act's GILTI and to not follow through on proposed stock buybacks in a letter sent Friday.

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Proposed Section 250 Deduction Regs at OMB


Proposed section 250 regulations,whichwill address the deductions available under the global intangible low-taxed income and foreign-derived intangible income (FDII) regimes, have been sent to the U.S. Office of Management and Budget for review.

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Treasury Pairs Certainty, Higher Compliance Burden in PTI Notice


The U.S. Treasury Department's latest tranche of guidance dealingwith previously taxed earnings and profits (PTEP) provides taxpayerswith awelcome bit of certainty, but comeswith the cost of a significant compliance burden.

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Top 5 International Tax Cases Of 2018


The past year saw a number of important international tax cases, including rulings about conflicting statutory and regulatory language involving U.S.-held foreign financial accounts and $608 million paid by Boston Scientific Corp. in a transfer pricing dispute.

The article picks the top five international tax cases of 2018.

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Trump Administration Blocks Tax Break for Alcohol Companies


The Trump administration on Monday finalized a regulation limiting the ability of U.S.wineries and global alcohol companies to reduce import taxes. In the government's view, the new rules stopwine and spirits companies from double-dipping on tax breaks.

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