2018

In this article, the author examines the latest amendments to the EU directive on administrative cooperation, focusing on the new mandatory disclosure rules for tax planning schemes.

Fortune 500 companies are contendingwith billions in tax under dispute, a growth-threatening trend linked to complexity surrounding how corporate value is defined in an increasingly digital economy, according to a new survey.

An interim digital taxwould be difficult to implement in the European Union before the arrival of the OECD's report on taxation of the digital economy in 2020, an OECD adviser told EU lawmakers.

Nikolai Astrup, Norway's minister for international development, and Pascal Saint-Amans, director of the OECD's Centre for Tax Policy and Administration, announced September 10 that Norway and the OECD have agreed to provide approximately ÔøΩ4.6 million in financial support over four year so that developing countries can establish effective tax systems.

German Finance Minister Olaf Scholz surprised his European counterparts during their informal meeting by asking for progress on base erosion and profit shifting.

The OECD is aiming for a multilateral consensus on international tax, but there is still disparity in how tax authorities approach the tax treatment of intra-group financial transactions. Some countries are bound to disagreewith the attempts to forge such a consensus. Glenn Price, Vodafone's head of international tax, speaks to ITR about the risks of double taxation in aworldwithout a consensus on how to tax intra-group transactions.

The Bulgarian Ministry of Finance has released for public consultation a draft bill introducing several tax amendmentswhose aim is to bring the domestic regulation in linewith the EU anti-tax-avoidance directive.

This Articlewas prepared for a symposium on 'What's Law Got Do Towith It? Examining the Role of Law in a Changingworld.' The OECD and G20 Base Erosion and Profits (BEPS) project represents the most comprehensive global cooperative effort to date to inhibit aggressive international tax planning and offshore tax evasion ÔøΩ alongwith related revenue losses.

During the annual OECD seminar at the IFA congress, the chairman said "We are at nothing less than in a state of crisis in international tax," referring to the prospect of difficult negotiations over the allocation of taxing rights.

Countries across the globe instituted tax-cutting measures as monetary policy continued to recede as the primary means of economic support during 2017, according to a report released Tuesday by the Organization for Economic Cooperation and Development.

Government of Ireland

This roadmap published by the Government of Ireland lays out specific action plans for implementing the various commitments the country have made through EU Directives, the OECD BEPS reports and the recommendations set out in the Coffey Review, including: Controlled Foreign Company (CFC) Rules; General Anti-Abuse Rule (ATAD Article 6); BEPS MLI; Exit Tax; Interest Limitation Rules; Hybrid Mismatch Rules; Transfer Pricing Rules; Consideration of a Territorial Regime; Mandatory Disclosure Rules; Dispute Resolution; and International Mutual Assistance Bill.

PWC's monthly publication,International Tax News, offers updates and analysis on developments taking place around theworld. This month's publication includes: China's foreign capital regulations; Cyprus's new rule for investment funds; Hong-Kong's proposed changes for qualifying debt instruments, and an ordinance on tax deduction for capital expenditure; Luxemburg's Bill to approve MLI; Mauritius's tax reform in response to OECD's BEPS initiative; The US's proposed rules on 'toll tax', and the final regulation on inversion transactions under Section 7874; EU's guidance for fair taxation; CJEU's annulment of EC decision holding German 'restructuring clause' to be State aid; and statusofUruguay's MLI ratification.

The European Union must push reforms forward before the EU Parliament elections in May, as the post-electoral panorama may make them harder to approve, EU Economic Affairs Commissioner Pierre Moscovici said at an event in Madrid Sept. 6. Such reforms include proposals on a new digital tax and updating the corporate tax system.

The current global rules don'twork for taxing multinational digital business models, and the conversation about how to change them might be emphasizing thewrong question, a Japanese tax official Hayato Furukawasaid. Concerns that digital companies are not paying their fair share of taxes have sparked a fierce debate aboutwhat kind of business activity constitutes taxable presence in a country.

The chief executive of supermarket J Sainsbury has called for U.K. tax reform to ease the burden of business rates, but cautioned that overhauling the controversial property levywill not in itself reverse the decline of traditional high streets.

The new U.S. base erosion tax "looks like a vote of no confidence" in the arm's length principle, the backbone of transfer pricing, a top OECD tax official said. The BEAT provision applies a 10% minimum tax, though the new law overall shows a lack of confidence in principles of transfer pricing.

Recent tax-code changes encouraged U.S. companies to bring home hundreds of billions of dollars in profits held abroad,which companies are returning to shareholders rather than plowing it into expansions, innovation or other forms of investment.

The New York State Bar Association Tax Sectionwants the IRS to go easy on businessesworking to determinewhat portion of income from the goods and services they sell counts as foreign-derived intangible income in a Sept. 4 letter sent to IRS officials.

A European Parliament committee has backed plans for a new value-added tax system aimed at countering cross-border fraud,which costs the bloc 50 billion euros annually. This plan establishes a single taxable supply chain,where goods to be taxed in the member nation inwhich the transport of the goods ends, aswell as call for a dispute resolution mechanism.

Facebook Inc.'s decision to collect domestic value-added and sales tax on advertising sold by its Canadian officeswon't be a sea change for digital companies in the countryÔøΩa move thought to be an attempt to show good corporate citizenship.Other companies may followsuit drawn by the enticement of a positive public image.

In this article, the authors discuss recent U.N. developments in tax policy and compliance.

The U.S. Treasury Department's final rules on foreign currency hedging should clarify the mark-to-market election's effective date and the scope of the expanded business needs exclusion, according to the New York State Bar Association.

In its recently published Engie state aid decision, the European Commission has doubled down on its view that a corporate tax system's objective is always to tax all corporate profit, regardless of its specific provisions.

In this article, the author examines the OECD's recent publication of guidance on the application of the approach to hard-to-value intangibles. He notes his concerns about the approach and the failure of the OECD to consider the comments submitted by practitioners during the consultation period.

Poland's Ministry of Finance released a draft bill proposing preferential tax treatment for income from intellectual property rights, restricted tax breaks under bilateral treaties and domestic law, and lower corporate tax on small and medium-size enterprises. The tax measures are expected to take effect January 1, 2019.

U.S. companies have repatriated billions in offshore cash since the passage of the Tax Cuts and Jobs Act, according to a new analysis that suggests share buybacks are a top use for the repatriated funds.

When a court creates or shapes a general antiavoidance rule, it has a duty to also oversee how a tax administration applies that rule, a French judge said.

That sales of foreign company stock between two U.S. parties can be structured to minimize the seller's global intangible low-taxed income for the transaction year raises policy concerns for the IRS.

Countries are progressing on long-term solutions to tax digitalization,with the United States mulling reforms that may focus on marketing intangibles so more profits are allocated to a market jurisdiction, an OECD official said.

Although the Eighth Circuit's decision remanding Medtronic does not resolve the case, the opinion's emphasis on the need to follow the regulations could have far-reaching effects for this and other major transfer pricing disputes.

Taxpayers that reported provisional amounts in their 2017 financial statements because of the Tax Cuts and Jobs Act (P.L. 115-97) have some flexibility in determining how to treat the myriad Treasury and IRS guidance recently issued.

The Houseways and Means Committeewill meet to consider "tax reform 2.0" legislation theweek of September 10 thatwill make permanent the expiring individual and small business provisions of the 2017 tax law.

A former tax director cannot claim Sarbanes-Oxley protection for insisting on disclosure to the IRS of a potential transfer pricing issue because she couldn't have reasonably thought the company had acted illegally.

The European Commission's package of proposals to tax the digital economy is not an ideal solution but a political answer to growing EU pressures, a top commission official said.

Jones Day has recommended changes to proposed transition tax regulations (REG-104226-18), asserting that the regs have exceeded their intended effect in a few areas, penalizing transactions that are consistentwith congressional purpose or else not relevant to the policies of section 965.

The OECD has issued a report that reviews tax reforms in 35 OECD countries, highlighting corporate and personal income tax reductions, stabilization of VAT rates, and the introduction of new excise taxes to deter harmful consumption.

In this article, the author discusses the challenges of implementing the EU anti-tax-avoidance directive.

The gain allocated to prior years on the sale of passive foreign investment company stock that increases the current-year tax liability can't be used to extend the statute of limitations.

The OECD has issued peer review reports that evaluate how Australia, Ireland, Israel, Japan, Malta, Mexico, New Zealand, and Portugal are implementing BEPS minimum standards on improving tax dispute resolution mechanisms.

Polish companies making substantial dividend, royalty or interest payments to foreign entities face additional scrutiny as part of a fresh round of proposals designed to fight tax avoidance. These companieswill have to paywithholding taxes at full ratesÔøΩ19% for dividends, 20% for royalties and interestÔøΩand then request a refund pending official review of applicable tax exemptions and beneficial owner status of the recipient of payment.

Companies in Brazil landed an important court victory,when a Sao Paulo court ruled they can continue using corporate credits until the end of the year to cover monthly income tax payments.

Complex transfer pricing cases and a shortage of staffers have contributed to a dip in the number of advance pricing agreements India has signed in the past year, according to a report released Friday by the country's Income Tax Department.

The IRS has provided (Rev. Proc. 2018-36) the current list of countries towhich the interest reporting requirement in reg. section 1.6049-4(b)(5) and 1.6049-8(a) applies, effective for interest paid on or after January 1, 2019. The guidance also provides the current list of countrieswithwhich Treasury and the IRS have determined that it is appropriate to have an automatic exchange relationship regarding the information collected under the regulation.

Ecuador has enacted a law that raises the corporate tax rate and establishes new, progressive capital gains tax rates, among other things. Law SAN-2018-1358was published in the official gazette August 21,with immediate effect.

An Irish technology company has become the latest foreign multinational to cite the Tax Cuts and Jobs Act (P.L. 115-97) as a reason for retooling itself as a U.S. company.

The OECD's base erosion and profit-shifting projectwas built on the premise that multinationals' profits should be alignedwith value creation, a premise reemphasized by G-20 finance ministers at their July meeting.

Frank Hirth Plc has urged the IRS to provide transitional rules to permit taxpayers to apply credits in the general limitation "basket" carried forward from 2017 and prior years to offset tax on income in either the general category or foreign branch baskets from 2018 forward. The company asserts that allocating the carryovers freely among the post-Tax Cuts and Jobs Act (P.L. 115-97) foreign branch and general category baskets doesn't represent awindfall to those taxpayers.

Caroline Harris of the U.S. Chamber of Commerce has raised concerns that existing foreign tax credit carryforwards could be subject to mandatory allocation to new foreign income categories created by the Tax Cuts and Jobs Act (P.L. 115-97), suggesting that Treasury issue regulations that include prior FTC carryforward transition rules and provide a permissive allocation approach.

Treasury could issue proposed regulations soonwithdrawing the burdensome debt-equity documentation rules, but the fate of the anti-inversion, anti-interest-stripping distribution rules remains unknown.