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2018

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A simpler way to beat tech behemoths' tax strategy


Paul Forster proposes, in a letter to Financial Times, an alternative to a digital sales tax dilemmaÔøΩlegislate to ensure that all sales of such services are attributable to the countries inwhich their customers reside, and to place a cap ÔøΩ based on a percentage of revenue ÔøΩ on allowable intellectual property royalties

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French Minister Le Maire Insists EU Is Close to Digital Tax Deal

  • By Reuters

French Finance Minister Bruno Le Maire said on Monday that a European Union plan to tax big internet firms such as Google and Facebookwas close to being struck, despite several EU governments having pushed back against the idea.

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Germany Opens Door to Deal on EU Digital Tax at December Meeting

  • By Reuters

German Finance Minister Olaf Scholz said he favors getting a binding deal on a European Union digital tax at a meeting of EU finance ministers in December, and that he supports the French model for the move.

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Dutch to Clamp Down on Early Tax Rulings Involving Letterbox Schemes


The Dutch government is planning to roll out a new measure to prevent requests for advance tax rulings involving arrangements that use shell companieswithin the country's vast trust sector to reroute profits.

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Denmark Says EU Nations Share Commitment to Tax Digital Firms


EU nations share a sense of urgency to agree on taxing digital companieswhile disagreeing "on how to do it in a cleverway," Danish Finance Minister Kristian Jensen said in an interview at parliament.

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Trusts in the spotlight in government review


Changes to Britain's centuries-old trust regime are looming after the government announced a review ofwhether it could be made "simpler, fairer and more transparent". Thisweek, HM Revenue & Customs launched a consultation on trustswhichwill seek views and evidence onwhether there is a need for reform of trust taxation.

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Multinational Trading U.K. Domicile for Ireland, Citing Brexit


A multinational healthcare company headquartered in the United Kingdom is moving to Ireland to protect the financial benefits it accruedwhen it inverted in 2015 from the uncertainty of a post-Brexit United Kingdom.

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EU Revises Technical Provisions of Digital Tax


EU member state representatives did not discuss Germany's request to delay implementation of the proposed digital services tax (DST) at a recent meeting, instead focusing on a new compromise proposal that amends several technical elements.

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Individual Taxpayer Relief Possible for Disparate GILTI Rules


Treasury hopes to assuage the disparate global intangible low-taxed income tax rules,which put individual U.S. shareholders of controlled foreign corporations at a disadvantage compared to corporate shareholders, but some challenges exist.

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UK Publishes Laws To Fight Avoidance, Impose Carbon Tax


The U.K.'s annual finance bill has set out, over 300 pages of laws, to implement global measures against tax avoidance and introduce a new environmental tax on carbon emissions.

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Spanish digital services tax targets big tech companies

  • By ITR Correspondent

Spain's digital services tax (DST) is slated to enter into force in January 2019, despite the criticism and concerns of multinational technology companies. Following the path of the European Commission, the Spanish government has recently filed a preliminary bill to create the DST, an indirect tax on digital serviceswhere there is an essential contribution by the users to the value creations are monetized by the companies. In accordancewith the government's forecast, the DSTwould collect $1.4 billion in FY2019.

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Multinationals Face Tougher Israeli Intercompany Pricing Audits


The Israel Tax Authority is maintaining its strict approach to the tax treatment of intellectual property transferred abroad following the purchase of an Israeli company by a multinational.

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Five-Country Coalition Completes Coordinated Push On Tax Crimes


Top tax officials from five countries concluded aweek-long effort to uncover financial crime enablers and identify new targets of criminal tax investigations. The Joint Chiefs of Global Tax EnforcementÔøΩfrom the U.S., U.K., Canada, Australia, and the NetherlandsÔøΩsent data experts to Amsterdam to increase information sharing and identify patterns to aid future investigations.

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IRS Ramps Up Focus on Tax Overhaul Guidance in New Priority Plan


The IRS has more than doubled its number of priority guidance items related to the 2017 tax overhaul signaling its aim to publish smaller guidance projects more quickly. The new list, released Nov. 8, includes 62 tax reform-related itemsÔøΩincluding base erosion and anti-abuse tax.
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Brazil Approves Tax Breaks for Ford, Fiat, Other Automakers

  • By Reuters

Brazil's President Michel Temer on Thursday signed into law hundreds of millions of dollars in incentives for automakers such as General Motors Co and Volkswagen to produce locally and continue developing engines that run on both gasoline and ethanol.

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Federal Circuit: Ford and Foreign Subsidiary Aren't Same Taxpayer


Ford Motor Co. and its foreign subsidiary aren't the same taxpayer,which prevents the use of a tax interest-netting benefit, a federal appellate court ruled November 9.

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European Commission Wants More Than a Commitment on Digital Tax


EU Tax Commissioner Pierre Moscovici said hewants a "decision" on his proposal for a digital services tax (DST) at the December 4 Economic and Financial Affairs Council meeting.

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Release of Interest Deduction Regs Just Days Away


Proposed regulations on business interest deductions could be releasedwithin days, according to a Treasury official.

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Digital Tax Debate May Pave Way for 'BEPS 2.0,' Saint-Amans Says


The OECD is under pressure on taxing the digital economy, but its tax chief remains optimistic that the debatewill not only yield a solution but also extend the base erosion and profit-shifting project.

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News Analysis: Treasury Strikes a Bold Regulatory Path Post-TCJA


Both the House and Senate versions of bills thatwould become the Tax Cuts and Jobs Act (P.L. 115-97) proposed repealing for corporate shareholders the application of section 956 ÔøΩwhich, in conjunctionwith section 951(a)(1)(B), generally requires U.S. shareholders of controlled foreign corporationswith investments in U.S. property to include a corresponding amount in current income. (For the Joint Committee on Taxation's comparison of the bills, see JCX-64-17.)

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Tax Collaboration Group Examines Websites, Enabler Networks


The data analysis group in the new international tax enforcement collaboration between the United States, Australia, Canada, and the Netherlands has developed ideas for new investigation targets and cooperation techniques.

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OIRA Notes Receipt of FTC Regs, Kicks Off Expedited Review


The Office of Management and Budget officially acknowledged receipt of proposed foreign tax credit regulations, starting the clock on their expedited review.

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Trump Open To Raising Corp. Tax Rate For Middle-Class Cuts


President Donald Trump saidwednesday he is open to the idea of raising the corporate tax rate,whichwas slashed by last year's tax overhaul, in exchange for a 10 percent tax cut for middle-income earners.

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A European Digital Retreat

  • By The Editorial Board

As impressive as Emmanuel Macron's reform successes have been, thisweek bringsword of a failure by the French President that'sworth cheering. There are growing signs that the Europe-wide digital tax cherished by Paris is falling by thewayside. Finance ministers from Ireland, Sweden and Denmark thisweek rebuffed the European Commission's digital tax proposal, released earlier this year, and Berlin now appears to have reservations aswell. All signs are that at least some of these governmentswill exercise their veto over the plan at the next finance ministers' summit in December, or kick the plan into the long grass by delaying further action until 2021 or later.

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Paradise Papers fail to expedite tax changes a year after scandal


A year after the release of the Paradise Papers, some politicians, tax justice campaigners, and legal professionals believe too little has changed. Actions beyond BEPS project may be necessary, says one MP.

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What's Inside Poland's New Innovation Box?


Taxpayers in Poland should take stockÔøΩthe planned tax incentive gives an opportunity to apply a lowered 5 percent corporate income tax rate. The tax incentive ("Innovation Box"), is part of a number of comprehensive changes aimed at supporting the innovations of entities investing in Poland.

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Netherlands Rolls Out Anti-Tax Avoidance Directive 1 in 2019


The Netherlands has plans to implement EU Anti-Tax Avoidance Directive 1 from 2019. Howwill this impact multinational corporations that do business in the Netherlands or have holding companies in the Netherlands?

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Israel Extends Key Tax Benefits to Smaller Export Firms


Small export companies in Israel are set to receive generous tax breaks previously provided to only larger companiesÔøΩa move that is likely to attract more foreign investment.

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U.S. Banks May Face Back Taxes in U.K. VAT Crackdown


U.S. banks and insurance companies may face significant, backdated value-added tax bills in the U.K. amid moves to tighten rules that previously permitted exemptions for serviceswithin the same company, tax adviserswarn.

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Anti-Abuse Tax Regulations Move Closer to Publication


Taxpayers are a step closer to seeing guidance on one of the 2017 tax overhaul's anti-abuse measures. The Treasury Department Nov. 6 sent proposed regulations on the law's base erosion and anti-abuse tax to the Office of Management and Budget for review.

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Neal to Focus on 2017 Tax Law in House Ways and Means


Houseways and Means Committee Democrats are preparing for a series of hearings on the 2017 tax law in the new year afterwinning the House in the midterm elections.

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Macron Says Still Pushing for Germans to Back Digital Tax: Zeit

  • By Reuters

French President Emmanuel Macron said he still hopes to persuade Germany to back a European Union-wide digital turnover tax, despite Berlin's preference for a global minimum corporate tax to stop firms shopping around for tax havens.

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How Germany's fraud probe is spreading


When police raided the Munich office of BlackRock, theworld's largest asset manager, thisweek it underlined how a long-running German criminal investigation into alleged tax fraud is gathering pace.

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EU's Vestager examines Facebook for potential tax probe


EU competition chief Margrethe Vestager isweighing upwhether there are grounds to open a probe into Facebook's European tax arrangements as she deepens her multinational investigation into sweetheart tax deals, two people close to the case saidwednesday.

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U.K. Opens Digital Services Tax Consultation

  • By Tax Analysts

The U.K. government has launched a consultation on the design, implementation, and the administration of the proposed digital services tax,which is intended to be an interim tax on digital businesses pending international agreement on a long-term approach to tax the digital economy; interested parties should submit comments by February 28, 2019.

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Intangibles, Low-Tax Affiliates Are Key Risk Factors for Sweden


In its updated guidance on transfer pricing and profit attribution examination procedures, the Swedish tax administration has identified intangible transfers, transactionswith affiliates in low-tax jurisdictions, and complex restructurings as important indicators of mispricing risk.

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Netherlands to Introduce Withholding Tax on Royalties, Interest


The Dutch government plans to introduce awithholding tax on royalties and interest to curtail the funneling of capital to tax havens.

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U.K. Digital Tax to Hit Online Dating Sites, Blogging Platforms


The United Kingdom's digital services tax (DST) proposalwill hit a range of business activities including platforms that allow users to share photos, publish blog posts, and make potential love connections.

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IRS Weighing Termination of LB&I Campaigns


With the announcements of 50 compliance campaigns in the Large Business and International Division and more to come, a resource-constrained IRS is now grapplingwith how to announce campaign terminations.

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Proposed U.S. Foreign Tax Credit Regs Submitted for OMB Review


Proposed foreign tax credit regulations thatwill include guidance on expense allocation under new basketing rules have been submitted to the U.S. Office of Management and Budget for review.

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Two Years in, Trump Holds Stock Market Bragging Rights

  • By Reuters

U.S. President Donald Trump has taken credit for the stock market's gains during his nearly two years in thewhite House, and those claims are reasonable given the impact of tax cuts and pro-business policies on investor sentiment. The S&P 500 has risen 28 percent since Trump's election in November 2016 to the eve of congressional midterm elections on Tuesday. This surpasses the market's performance over the same time frame under any other president in the past 64 years. Under President Dwight Eisenhower, the S&P 500 rose 29 percent from his election in November 1952 through November 1954.

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DAC 6 reporting requirements pose numerous compliance problems

  • By Christian Kaeser

The taxpayer challenges arising from the EU's directive on mandatory disclosures for intermediaries (DAC 6) are seemingly countless. DAC 6 obliges intermediaries and taxpayers to report "potentially aggressive tax planning arrangements" to their respective national authorities. The scope of the reporting obligations under the rules is surprisinglywide, requiring boh intermediaries and companieswithin the EU to address those reporting obligations more intensively. In addition, MNEs that advise their group companies could also be caught by the rules as intermediaries.

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Business Groups Protest the Taxing of Technology Sales

  • By Tax Analysts

The United States Council for International Business submitted a letter to EU Tax Commissioner Pierre Moscovici, stating its concerns over the United Kingdom's intention to impose tax on technology company sales.

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Tax-Efficient Repatriation in a Post-TCJA Environment


In this article, the author considers how the participation exemption under IRC section 245 could alter tax planning.

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The BEAT and Treaty Overrides: A Brief Response to Rosenbloom and Shaheen


In this article, the authors argue that the base erosion and antiabuse tax does not violate U.S. tax treaties and is a treaty override.

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Unilateral Action on Digitalization Poses Risks to Innovation


Interim measures are being enacted all over theworld to dealwith taxation of the digital economy, andwhile some engagement is encouraging, there are risks to unilateral actions, an OECD officialwarned.

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EU Finance Ministers Call for Delaying Digital Services Tax


European finance ministers are moving toward postponing implementation of the proposed EU digital services tax (DST) and introducing the tax only if no agreement on digital taxation is reached at the OECD.

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Imperial Brands Reveals Potential $392 Million EU Tax Hit


The maker of Camel's cigarettes, Imperial Brands PLC, has disclosed that its tax liabilities could rise as much as 300 million pounds ($392 million) if the U.K. loses its EU state aid case involving controlled foreign company rules.

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Dutch Lawmakers Flag Loopholes In Letterbox Draft Law


Dutch lawmakers arewarning that loopholes existwithin the country's draft rules to combat tax avoidance using Netherlands-based letterbox companies.

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Businesses Seek More Clarity on Royalty Payments in India


Digital companieswant more certainty and guidance on tax and royalty charges for India-based operations as they become increasingly embroiled in court disputeswith authorities.
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