2019

The General Court of the European Union (GCEU) rendered its judgment T-131/16 and T–263/16 regarding the compatibility of the Belgian excess profit ruling system ('Belgian EPR')with the EU State aid rules. PwC summarizes the GCEU judgment, issued on February 14, 2019, that annulled the European Commission's (EC's) final decision.

Brazil's complex federal and state structure has created a litigious framework for tax authorities, making tax reform in Brazil a continued political focus. The production and consumption of goods and services has born the heaviest tax burden in Brazil for years,which has brought forward series of disputes and challenges between Brazilian taxpayers and municipalities. For that reason, the area has beenwidely viewed as the main focus of tax reform in Brazil.

The European Banking Federation has requested clarification that unintended controlled foreign corporations created solely through the repeal of section 958(b)(4) by the Tax Cuts and Jobs Actwill not be treated as U.S. payors andwill not be disqualified from the portfolio interest exemption due to their CFC status.

In this article, the authors discuss recent U.S. international tax developments, including new regulations on the base erosion and antiabuse tax and sales of partnership interest.

Switzerland's Federal Council on February 18warned that if voters reject corporate tax reform legislation in an upcoming referendum, companieswill face legal uncertainty and the country could be subject to foreign countermeasures.

Singapore plans to extend tax incentives to help scale up businesses and offer a new individual income tax rebate to ensure the country remains nimble and progressive in a changingworld, the finance minister said.

The Irish government has called for input on proposals designed to better harmonize domestic transfer pricing ruleswith OECD standards, including adoption of the authorized OECD approach (AOA) to profit attribution and enhanced documentation rules.

EU Competition Commissioner Margrethe Vestager is maintaining a sanguine outlook on state aid-related tax decisions, despite a court's rejection of the commission's ruling that Belgium offered illegal state aid to multinationals.

Golden Gate Private Equity Inc. has urged that proposed base erosion and antiabuse regulations (REG-104259-18) address the use of net operating losses for modified taxable income, the treatment of a life insurance company that reinsures risks to a foreign-related insurance company through a modified coinsurance contract, and the application of the de minimis dealer exception.

The Tax Executives Institute has commented on the proposed base erosion and antiabuse regulations (REG-104259-18) under section 59A, recommending 10 changes thatwould not only ease compliance and administration butwould also serve to better harmonize the final BEAT regswith the BEAT regime's purpose and scope.

The New York State Bar Association is dissatisfiedwith the section 59A proposed regs' inclusion, as a base erosion payment, of a noncash consideration transaction that otherwise qualifies for nonrecognition under the code.

Over a year after the Tax Cuts and Jobs Act enacted the first statutory change to the transfer pricing rules since 1986, efforts to update the regulations and align themwith the statute remain underway.

New Zealandwill likely start consulting on a unilateral digital services tax by May, citing the OECD's slow progress in finding a long-term solution by 2020 to adapt international tax rules for the digital age.

New Zealand's government announced plans on Monday for a new tax targeting online giants like Google and Facebook that earn plenty of money in the country but pay little tax.

As countries continueworkingwithin the OECD framework toward a consensus-based solution to tax the increasingly digital economy, companies shouldn't be complacent because that debate could fundamentally change theway multinationals are taxed, practitionerswarned.

Germany's Finance Ministry confirmed a report that it is reviewingwhether a 15 percentwithholding tax on royalties can be applied to payments received by foreign internet companies like Google and Facebook for online advertising.

All of the OECD's new proposals for taxing the digital economy ÔøΩ including the U.S.-favored marketing intangibles approach ÔøΩwould radically depart from the arm's-length principle, compounding growing international pressures on traditional transfer pricing principles.

A newworld order is emerging from the OECD base erosion and profit-shifting project and U.S. tax reform. Those efforts, combinedwith larger economic and political forces, have mostly laidwaste to the previous international tax regime.

New proposed section 951A regulations provide guidance on how consolidated groups should compute their global intangible low-taxed income.while the crux of filing a consolidated return is treating the group as a single taxpayer for purposes of calculating and paying a single tax liability, the proposed regulations (REG 104390-18) combine single taxpayer treatmentwith single-entity calculations.

Lee A. Sheppard looks at how the Tax Court's decision in Grecian Magnesite remains relevant, even after the passage of the Tax Cuts and Jobs Act.

Austrian Minister of Finance Hartwig Loeger recently issued an ordinance on the application of the controlled foreign corporation tax regime. The ordinance, published in the official gazette on January 25, took effect January 1.

Jurisdictions under the OECD's Inclusive Framework on Base Erosion and Profit Shifting areworking diligently on their treaty relationships and continue to make progress on timely and accessible dispute resolution mechanisms.

Political pressures motivating some global digital tax discussions appear to originate principally from concernswith the business-to-consumer market, according to a U.S. Treasury official.

U.S. officials believe the OECD'swork on the digital economywill lead to a modest reallocation of taxing rights, most likely based on the marketing intangibles approach set out in the OECD discussion draft.

Treasury appears to be hedging its bets on its June 22 goal for delivering several pieces of international guidance from the U.S. Tax Cuts and Jobs Act thatwould statutorily allow retroactivity for its rules.

The European Commission failed to convince the EU General Court that Belgium's tax rulings exempting companies from tax on "excess profits" attributable to their being part of an international group constituted an illegal state aid scheme.

Germany's finance ministry is looking into the possibility of a 15 percent special tax on online advertising revenue collected by foreign internet companies such as Google or Facebook from German operators,wirtschaftswoche magazine reported on Friday.

President Trump and Republicans bet that the 2017 tax overhaulwould invigorate the U.S. economy after a long but slow expansion, putting controversial economic theories about growth to a crucial test. A broad measure of business investment surged early in 2018 but slowed in the second half of the year, in part reflecting changes in energy prices. Shipments of capital goods tailed off after rising briskly early in the year.

Italy's Banca Mediolanum S.p.A. said its net profit for 2018was reduced by ÔøΩ102.5 million because of extraordinary costs related to the settlement of a tax dispute involving the banking group's Irish unit.

Four U.S. territories ÔøΩ Guam, American Samoa, U.S. Virgin Islands, and Puerto Rico ÔøΩ have been blacklisted by the European Commission for being lax on money laundering and terrorist financing controls.

For the second time in as many hearings on key international provisions from the U.S. Tax Cuts and Jobs Act, government officials sat in silence as tax experts launched critiques on proposed guidance.

A new OECD discussion draft containing more detailed proposals to address the tax challenges of the digital economy is drawing diverse responses from the tax community, setting the stage for lively debates in Paris.

Legislative revisions to the Tax Cuts and Jobs Actwill depend on internal and external policy pressures, including the response from U.S. trading partners, according to a former Senate Finance Committee staffer.

EU finance ministers at a February 12 meeting of the Economic and Financial Affairs Councilwere divided over the European Commission's communication on the possibility of moving toward qualified majority voting (QMV) on tax issues.

Carbon tax advocates recently received a huge boost from awide group of famous economistswho signed a letter supporting a carbon tax that sends revenues directly to citizens and shrinks redundant environmental regulation. A tax of $40 per ton is estimated to generate $2,000 in the first year for a family of four and rebateswould risewith tax rates. Signers include previous chairs of the Council of Economic Advisors and of the Federal Reserve and countless Nobel laureates.

Recent bills in Montana and Oregon thatwould require multinationals to report their global profits present a legally sound option for recouping tax revenue from overseas, but the method has a history of foreign resistance that could remain a challenge.

The National Foreign Trade Council has asked that proposed global intangible low-taxed income regulations (REG-104390-18) include a GILTI high-tax exception, eliminate the basis adjustment rule, narrow the anti-abuse rule, amend the effective date, and clarify that section 245A applies to subpart F dividend income received by domestic corporations and controlled foreign corporations.

The Idaho State Tax Commission adopted a temporary rule that allows taxpayers to exclude repatriated dividend income if the taxpayer can prove that the incomewas previously included in Idaho apportionable income in a prior tax year, and that clarifies the state's treatment of global intangible low-taxed income.

The New York state tax department's recent guidance on global intangible low-taxed income includes factor relief for some corporations, confirmingwhat some practitioners thought the agencywould do.

A European proposal to require tax laws to be passed by a majority vote, rather than through unanimous consent, could be derailed by small member nations at a Feb. 12 meeting.

A small group of hedge funds are being rewarded for backing an $18 billion restructuring of Puerto Rico's sales-tax debt that saddled other investorswith losses.

Indiawill abandon its significant economic presence (SEP) rule and drop the equalisation levy once OECD members come to an agreement on how to tax the digital economy, a leading government figure has said. But taxpayerswant clarity on SEP thresholds now.

A package proposed by the Austrian government includes a reform to platforms' VAT obligations, mirroring the UK's and Germany's laws. Butwith the EU poised to act in 2021,why is Austria bothering to move in 2020?

Tax Executives Institute Inc. has commented on proposed foreign tax credit regulations (REG-105600-18), addressing clarifications under the regs on how deductions are allocated and apportioned and special rules for determining the amount of business profits attributable to a qualified business unit for foreign branch income purposes.