2019

The New York State Department of Taxation and Finance has issued a technical memorandum explaining the effects on businesses of the new provisions under the federal Tax Cuts and Jobs Act that address income earned from overseas operations, including mandatory deemed repatriation income, foreign-derived intangible income, and global intangible low-taxed income.

A Kansas measure to exempt global intangible low-taxed income and deferred foreign income from state taxationwas approved by the state Senate.

The French Council of State has upheld a transfer pricing adjustment to the sales price of a subsidiary's shares, holding that sale of a subsidiary's stock for nominal consideration is an indirect transfer of profit.

Proposals submitted to France's National Assemblywould assess financial transaction tax on intraday trading and extend the holding period for exemption from exit tax, thereby undoing recent changes limiting the reach of the regime.

Corporations that elect to file a single consolidated tax return must take into consideration the effect of the Tax Cuts and Jobs Act's base erosion and antiabuse tax. Under section 59A, the BEAT is imposed on corporations having substantial gross receipts that make base erosion payments, or payments to foreign related parties. New proposed regulations (REG-104259-18) address how the BEAT applies to these consolidated groups.

A proposal by the European Commission to impose a 3 percent digital services tax on multinational companies' revenue is discriminatory, likely to lead to double taxation, andwould create a new transatlantic trade barrier, Senate Finance Committee Chair Chuck Grassley, R-Iowa, said in a February 7 floor statement.

S. 223, the Patriot Employer Tax Credit Act, introduced by Senate Democraticwhip Richard J. Durbin of Illinois,would allow a tax credit of up to $15,000 per employee to "patriot" companies that maintain U.S. headquarters and meetwage and benefit requirements.

Taxes on unhealthy foods ÔøΩ and the political support required to implement them ÔøΩ have important roles to play in the fight against several global pandemics, according to a Lancet Commission report.

In 2017, Congress passed the Tax Cuts and Jobs Act. Many of the jobs it is creating, it turns out, are in the tax industry. The overhaul continues to generate thousands of jobs for tax professionals as companies analyze the law, restructure operations and rely on tax experts to do all thework flowing from the legislation and IRS regulations, according to lawyers and executives at tax firms. Business is unusually strong and should remain robust for years as a result of the law, they say.

A report claiming that multinational tax avoidance cost EU governments 825 billion euros ($940 billion) in 2015 relied on outdated data and didn't take into consideration the European Union's Anti-Tax Avoidance Directive, according to a German business group.

Credit Suisse Group AG, Switzerland's second-largest bank, said its earnings last yearwill probably be subject to higher taxes than the bank had assumed because of changes in the U.S.

Major U.S. banks shaved about $21 billion from their tax bills last year ÔøΩ almost double the IRS's annual budget ÔøΩ as the industry benefited more than many others from the Republican tax overhaul.

Many countries, including members of the OECD, raise revenuewith a consumption tax levied on incremental increases in the value of goods and services as they move through the supply chain. These value-added taxes generate considerable income and are relatively efficient to administer.The Congressional Budget Office recently issued a report highlighting this policy option to possibly help reduce the U.S. budget deficit.

Part 2 of this two-part Insight looks at the different forms of digital services tax being introduced as interim measures in a number of jurisdictions until a global solution is reached.

Lawmakers are urging the Dutch government to delay the effective date of a tax measure thatwould hit thousands of the country's largest companies. Several lawmakers urged Dutch State Secretary for Finance Menno Snel on Feb. 6 to make the rules retroactive to Jan. 1, 2019, instead of the proposed Jan. 1, 2018. These are rules thatwould limit the deductibility of intragroup interest payments made by Dutch consolidated companies that file a single tax return.

Companies arewaiting for IRS guidance to seewhether and how they can benefit from a new tax deduction designed to encourage exports under the foreign-derived intangible income provision.

The Treasury Department may or may not give a credit to companies for payments they make under digital tax regimes of other countries said Lafayette G. "Chip" Harter, deputy assistant secretary of international tax affairs at U.S. Treasury.

Merck & Co. Inc. and Honeywell International Inc. revised their estimates for 2017 tax overhaul expenses during their most recent quartersÔøΩa full year after enactment of the law.

Numerous tax jurisdictions have undertaken to ensure internet companies pay their share of tax: new regulations are being implemented, such as a digital services tax ("DST") in the EU, the equalization levy in India, and other similar taxes. Part 1 of this two-part Insight looks at the new digital business models and the challenges they pose to current international corporate tax regulation.

Microsoft Corp.'swin in a landmark tax case at Denmark's Supreme Court may force the Danish tax authority to re-examine theway it goes after global companies.

Simplicity is a main priority of developing countries in the ongoing global discussion about redrawing international tax rulesÔøΩmaking a solution such as formulary apportionment attractive said Ruud de Mooij, chief of the tax policy division at the International Monetary Fund's fiscal affairs unit.

Chile is studying how to incorporate blockchain technology to improve its tax-collection powers as part of a broader move toward digital government. The government is preparing a conceptual model thatwould use blockchain to monitor payments received from banks and other private entities and then automatically inform the corresponding government service said Cristian Cespedes, head of information technology at the General Treasury of the Republic.

Swiss-based multinationals like Cargill and Caterpillarwould have to pay higher taxes under a broad tax reform plan that, if approved in a popular referendum May 19,would become effective next year.

After the most turbulent start to a government in Brazil's recent history the country's congress gets down to business thisweekwith a controversial agenda, but alsowith a scandal to distract it. Jair Bolsonaro, the rightwing former army captainwho rose from political obscurity towin the presidency against a handful of establishment candidates, is hoping he has enough support in a traditionally fractious legislature to push through a radical slate of reforms. One of these reforms include simplifying the country's labyrinthine municipal, state and federal tax systems into single national rates of income and value added tax.

House Democrats arewilling to considerways to fix errors in the Republican tax law, but any changes are likely subject to "heavy negotiation" between the two political parties, the Houseways and Means Committee's chief tax counsel Andrew Grossman said.

The Jan. 31 deadline for transferring the chosen tax treatment of repatriated assetswill be postponed to 30 days after recently issued rules are published in the Federal RegisterÔøΩin "a couple days," a Treasury official said.

The IRS is taking another crack at proposed rules for preventing abuse of the 2017 tax overhaul's global intangible low-taxed income provision after hearing from tax professionals that the ruleswere too broad.

Countries have changed how they tax multinational companies' income from intellectual property in order to combat harmful tax practices, according to an OECD's head of international cooperation and tax administration Achim Pross. His remarks came during a Jan. 29 OECDwebcast, following the organization's same-day release of its 2018 progress report on preferential tax regimes.

Ireland became the 19th jurisdiction to ratify the multilateral instrument, the OECD's ambitious super-tax treaty designed to crack down on corporate base erosion and profit-shifting.

The OECD said itwill move beyond one of the bedrock principles of international taxation to tackle the problem of taxing corporations in a digital era.with many countries clamoring to collect more tax from multinational companies, especially tech giants, pressure is on the OECD towrite new tax rules that address those concernsÔøΩbut can still find common global agreementÔøΩby its 2020 deadline. Thatwill mean "going beyond" the arm's-length principle, the OECD said in a Jan. 29 statement.

Fund managers are pushing Australia to lowerwithholding tax rates and soften the rules for a proposed investment vehicle they hope could help the country attract foreign investment and become more competitive.

Part 1 of this two-part series summarized the latest 2018 version of Guide to Customs Valuation and Transfer Pricing released by theworld Customs Organization. Part 2 comments on the trends and observations in the interaction between customs valuation and transfer pricing from a China perspective.

Tax directors at Vivendi SA, GE's Baker Hughes, and Johnson & Johnson say they're still strugglingwith adjustment to the U.S. tax law, a year after passage of the tax overhaul.

The European Union's short-term tax targeted at digital advertising is aimed solely at U.S. tech companies Google Inc. and Facebook Inc. and enhances risks of trade retaliation, business tax lobbyists and researchers said.

The OECD has said there is growing consensus behind a US proposal for an overhaul of global corporate tax rules, as countries try to strike a deal on how to levy multinational companies in the digital era.

A planned cut in UK corporation taxwill cost the exchequer some £12bn by 2022, based on new estimates from HM Revenue & Customs that have enraged critics of the government's fiscal policy.

Two insurance trade groups have requested changes to proposed regulations (REG-104390-18) on global intangible low-taxed income to address issues unique to the life insurance industry, including the use of section 954 reserve computations, the full inclusion election, and the determination of net deemed tangible income return.

The National Association of Manufacturers, commenting on proposed global intangible low-taxed income regulations (REG-104390-18), has asked the IRS to clarify the scope of the pro rata share antiabuse rule, clarify that section 245A applies exclusively to subpart F dividend income received by domestic and controlled foreign corporations, to eliminate the mandatory basis requirement, and to adopt an elective high-tax exception.

Mayer Brown, commenting on proposed regulations on global intangible low-taxed income (REG-104390-18), has requested the elimination of reg. section 1.951A-2(c)(5)'s application to section 197 amortization deductions for purposes of determining tested income or tested loss.

Theworking Group for Competitive International Taxation has commented on proposed regulations (REG-104390-18) that provide guidance on global intangible low-taxed income, addressing three areas in computing GILTI and other issues regarding foreign-to-foreign dividends, pro rata antiabuse rules, and lower-tier controlled foreign corporation stock basis from previously taxed income.

EY, on behalf of several global insurance corporations, has asked that proposed global intangible low-taxed income regulations (REG-104390-18) clarify that a controlled foreign corporation's tested income or loss should be determinedwithout regard to a CFC's Subpart F income after applying any election in effect under section 952(c)(1)(B)(vii)(l).

In this article, the authors discuss tax reform efforts and the challenge of taxation and value creation in a digital economy.

The Japanese government has submitted a draft law introducing significant new base erosion and profit-shifting measures, including a stricter interest expense cap and special rules for transfers of hard-to-value intangibles (HTVIs).

The Securities Industry and Financial Markets Association has commented on proposed foreign tax credit regulations (REG-105600-18), addressing issues regarding interest expense, disregarded and intercompany transactions, carryovers, and accrual of foreign taxes.

Deborah Paul of the New York State Bar Association Tax Section has submitted a report on proposed foreign tax credit regulations (REG-105600-18), identifying some clarifications and changes to further the policies underlying the foreign tax credit regime.

The Information Technology Industry Council and National Foreign Trade Council have expressed concerns that some revisions to Form 5471, "Information Return of U.S. Personswith Respect To Certain Foreign Corporations,"will result in significant and costly administrative and compliance burdens, suggesting changes and a delay in the revised form's effective date.

In this article, the authors discuss recent U.S. international tax developments, including proposed anti-hybrid regulations and forthcoming regulations regarding foreign corporationswith previously taxed earnings and profits.

An EU trade group has approached the European Commission to complain about a new Slovak turnover-based retail tax,which it argued is incompatiblewith EU law and discriminates against foreign-owned companies.

Although the Tax Cuts and Jobs Act gave the IRS a clear statutory basis for transfer pricing interpretations historically rejected by the courts, the amendments' language and prospective effects suggest that taxpayer challengeswill continue.

An IRS official stopped short of statingwhether guidance could target a "troublesome" situation inwhich a controlled foreign corporation stock sale avoids tax on subpart F income and global intangible low-taxed income tested income.