2019

Cryptocurrencies are still capturing the attention of investors, traders and enterprises around the globe, lauded for their potential as a radically transformative force on the existing financial playing field. But legal systems are yet to catch up.

Multinational businesses are simplifying structures to navigate the rules that target controlled foreign corporations (CFCs) and their shareholders. ITR asked those tax headswho have adopted this approach to share their business's operational changes.

Germany's Ursula von der Leyen, seeking to become the first female head of the European Commission, has said shewants U.S. tech giants to pay "fair taxes" in the EU instead of gaming the different systems across the bloc to cut their bills. If she shouldwin the European Parliament's backing for the job, and implement the policy, it could further strain ties between the European Union and the United States, already troubled by differences over trade, antitrust and politics.

Finance officials from the Group of Seven rich democracieswillweigh risks from new digital currencies and debate how to tax tech companies like Google and Amazonwhen they meet at a chateau north of Paris startingwednesday. Those issues, raised by the impact of digitalization on theworld economy, are at the top of the agenda for a two-day gathering hosted by French Finance Minister Bruno Le Maire and including U.S. Treasury Secretary Steven Mnuchin.

The business tax reforms embedded in the Tax Cuts and Jobs Act (TCJA)remain the crown jewel of the Trump administration's economic policy. They are part of the reason that year-over-year macroeconomic growth has ramped up from 1.3 percent in the second quarter of 2016 to over 3 percent in early 2019, that labor productivity growth has rebounded to 2.4 percent in the first quarter of 2019 and that there is reason to expect an upshift from the previous trend growth rate of 2 percent or below. That crown jewelwill be at riskwhen Treasury Secretary Mnuchin attends thisweek's G7 Finance Minister summit in France.

Rule No. 1 for international economic affairs ought to be "Don't give Donald Trump a legitimate excuse for a tradewar." French President Emmanuel Macron missed the memo,which explainswhy Paris is pushing a new digital tax that even the Germans don'twant for Europe. The digital services tax approved by the National Assembly lastweek imposes a 3% levy on sales by global tech companies in France. If the companies have no profits, theywill still pay the tax. The theory is that 80-year-old global agreements that tax profits in a company's home country are outdated in the digital era.

By Tax Analyst

The European Commission explores challenges in the digital economy, protection of price competitionwith EU antitrust rules, and the fight against selective tax advantages in the competition policy 2018 report issued July 15.

By Tax Analyst

The Organization for Economic Cooperation and Development has encouraged taxpayers to complete a mutual agreement procedure questionnaire as part of the ongoing peer review process under action 14 of the BEPS Action Plan; comments on MAP access and availability of relevant guidance should be submitted by August 12.

By Stephanie Soong Johnston

The OECD has recommended that countries increase green taxation and eliminate harmful tax breaks to not only ensure sustainable growth but also reduce pollution and protect the environment.

By Stephanie Soong Johnston

The United Kingdom intends to introduce legislation in the next parliamentary session thatwould set up a public register of property beneficial ownership information so that it starts operating in 2021.

Bywilliam Hoke

Mexico's state-owned oil company, Petroleos Mexicanos (Pemex),will see its tax liability reduced if a proposal announced by President Andrés Manuel López Obrador is approved by the country's congress.

By Annagabriella Colon

The German Council of Economic Experts has delivered a report to Chancellor Angela Merkel highlighting the need for temporary carbon pricing in the transportation and building sectors until the EU emissions trading system is updated.

By Slim Gargouri

Bangladesh's Finance Act 2019 entered into force July 1, providing partial corporate income tax exemptions for selected manufacturing sectors and establishing new rules regarding dividends and retained earnings.

By Mindy Herzfeld

Mindy Herzfeld discusses the OECD's International Compliance Assurance Program for real-time risk assessment between taxpayers and multiple tax administrations simultaneously, askingwhether it can offer options for addressing taxation questions raised by the digital economy.

By Nana Ama Sarfo

In news analysis, Nana Ama Sarfo looks at the tax landscape for inversions post Tax Cuts and Jobs Act and in light of the AbbVie/Allergan announcement.

By Lee A. Sheppard

Lee A. Sheppard explains how the presence of GILTI canwipe out tax attributes andwhy an election to exclude high-taxed income from CFC tested income (thus potentially decreasing GILTI) may make sense for some shareholder taxpayers.

Boris Johnson, the leading candidate to replace Theresa May as British Prime Minister, said on Thursday the government had to find away to tax global technology giants on their income.

When one company seeks to buy another, shareholders of the target company often applaud an immediate run-up in value. But beware: deals can also comewith a huge tax bill unless you're careful. This year has brought a bumper crop of mergers. U.S. merger volume jumped 27% to a record of about $1 trillion in the first half of 2019 comparedwith the same period in 2018, according to data from Dealogic. Not all of this year's dealswill generate big tax bills, but many could.

Greece's opposition conservatives returned to powerwith a landslide victory in snap elections on Sunday, and Prime Minister elect Kyriakos Mitsotakis said he had a clear mandate for change, pledging more investments and fewer taxes.

India's recently reelected government has presented the first budget of its new term, promising to increase taxes on very rich individuals to as much as 42.7%while mostly holding the line on corporate tax rates.

U.S. trade officials are launching a probe of France's planned tax on digital services, kicking off a spatwith Paris aswell as a global fight over how to tax the growing internet economy. U.S. Trade Representative Robert Lighthizer saidwednesday his officewould launch a probe of the digital services tax, or DST, under the same broad law the Trump administration relied on for its trade conflictwith China.

Minimum tax red flags have appeared in recent legislation as countries and organizations race to address perceived inequitieswithin the international tax regime.

By Ryan Finley and Stephanie Soong Johnston

The United Kingdom has released draft legislation on its 2 percent digital services tax proposal,which allows a deduction for revenue subject to tax in multiple countrieswhile offering some relief for unprofitable activities.

By Stephanie Soong Johnston

Brazil may be ready to harvest the fruits of a joint projectwith the OECD as it considers two options to bring its transfer pricing regime in linewith OECD standards.

By Jad Chamseddine

Lawmakers from both parties are questioning plans by France and the United Kingdom to impose a digital services tax on U.S. multinational technology companies,warning that doing sowould threaten trade negotiations.

By Tax Analyst

The German Banking Industry Committee and the German Derivatives Association have again raised concernswith aspects of the section 871(m) rules that they say create a disproportionate burden for some German financial institutions, seeking to reach a long-term solutionwith Treasury as full implementation of the rules.

By Annagabriella Colon

Québécoise Minister of Justice and Attorney General Sonia LeBel confirmed that the provincewill join Saskatchewan's fight against the Greenhouse Gas Pollution Pricing Act ÔøΩ and more specifically, the federal carbon tax ÔøΩ before Canada's Supreme Court.

By Sandy Bhogal

Sandy Bhogal discusses the United Kingdom's proposed digital services tax in the context of OECD and EU efforts to address the perceived tax concerns arising from the digitalization of business.

By Tax Analyst

The Court of Justice of the European Union has published the reference for a case (C-337/19 P) onwhether the Court should overturn a General Court of the European Union judgment (T-131/16 and T-263/16 (GCEU 2019)) that annulled a November 2015 European Commission decision (C(2015) 9837 final) that Belgium's "excess profit" tax scheme violated EU state aid rules by granting selective advantages to multinational corporations.

By Annagabriella Colon

The U.N.'s 2019 tax treaty negotiation manual contains several changes reflected in its updated model tax treaty, including revisions developed as part of the OECD's base erosion and profit-shifting project.

By Tax Analyst

Steptoe & Johnson LLP has asked that the proposed section 163(j) business interest deduction limit not apply to controlled foreign corporations that earn no effectively connected income or that Treasury consider alternatives, such as adopting the firm's recommended safe harbors or applying section 163(j) only to CFCswith specified characteristics.

By B. Anthony Billings, Kyungjin Kim and Santanu Mitra

B. Anthony Billings, Kyungjin Kim, and Santanu Mitra explain the incentives and operation of the global intangible low-taxed income and foreign-derived intangible income provisions under the Tax Cuts and Jobs Act and recently proposed regulations.

By Andrew Goodall

Discussing the OECD's efforts to find a global solution to tax the digital economy, tax professionals stressed the importance of establishing agreed principles and finding the right balance between simplicity and accuracy.

By Tax Analyst

The IRS has scheduled a July 10 public hearing on proposed regulations (REG-104464-18) that provide guidance on the deduction for foreign-derived intangible income and global intangible low-taxed income under section 250.

By Tax Analyst

HM Revenue & Customs has published draft regulations to ensure that new rules on the taxation of hybrid capital instrumentswork as intended for instrumentswith a takeover or change of control clause; the consultation period closes August 9.

By Teri Sprackland

The French National Assembly has passed a bill to introduce a digital services tax,which is expected to receive final approval from the Senate July 11.

By Tax Analyst

Advocate General Juliane Kokott in Tesco-Global Áruházak Zrt. v. Hungary, C√¢$323/18, advised the Court of Justice of the European Union that a Hungarian progressive turnover tax does not violate EU state aid rules or infringe on freedom of establishment.

By Jennifer Mcloughlin

A new mechanism designed to facilitate faster resolution of tax disputes between EU member states took effect July 1.

By Elodie Lamer

The debate that fueled anti-tax-avoidance measures at the international levelwas poorly informed, and corporate tax increases can only harm revenues collection, growth, and employment, according to an EU advisory body study.

By Ryan Finley

In a case that may affect future digital services tax challenges, a new advocate general opinion says that Hungary's progressive turnover tax does not violate the EU's freedom of establishment or state aid laws.

By Andrew Goodall

International discussions for consensus on a solution to tax the digital economy are progressing quickly, according to the OECD's tax chief,who stressed the need for political agreement as soon as possible.

By Carrie Brandon Elliot

Carrie Brandon Elliot describes how the section 267A proposed regulations apply to reverse hybridswhich are not covered by the statute.

By Mindy Herzfeld

In news analysis, Mindy Herzfeld discusses the recent temporary and proposed section 245A regulations that Treasury says are needed to prevent taxpayer abuse of the integrated international tax system put in place by the Tax Cuts and Jobs Act.

By Tom O'shea

Tom O'shea examines the Court of Justice of the European Union's judgment in X GmbH v. Germany, inwhich the Court upheld the application of German controlled foreign corporation rules regarding a Swiss company owned by X GmbH.

By Stephanie Soong Johnston

Although the United Kingdom has missed the deadline to transpose an EU directive setting out a new tax dispute resolution mechanism, it expects to adopt it before the end of the year,with retroactive effect.