2020

We estimate that 33 of the 100 largest U.S. companies could be subject to President-elect Joe Biden's proposed corporate minimum tax and pay a total extra tax of $20 billion annually if that proposalwere enacted as stand-alone legislation. Because the president-elect has proposed other significant tax increases on U.S. corporations, the effect of the proposed minimum taxwould likely be much less.

As major disagreements persist among governments and the business sector about the OECD's global tax reform project, it may be time for countries to mull striking a limited deal by mid-2021, Business at OECD said.

Johnson & Johnson has proposed a simpler design for a key element of the OECD's global tax reform project that could avoid disputes aboutwhich companies are in and out of scope of the rules.

A Chinese securities regulator said the government should conduct an in-depth study to determinewhether a digital services tax based on the concept that users create value should be implemented.

Countries like France, Switzerland, and India are among the jurisdictions that haven't adopted the OECD's approach to assessing hard-to-value intangible assets. More than half of the 40 countries surveyed haven't implemented the Organization for Economic Co-operation and Development's recommendations, according to an update releasedwednesday.

A number of tech giants, including Microsoft Corp., Spotify AB, and Netflix Inc., are calling for negotiators to require countries to abolish their own digital tax plans as part of an OECD agreement.

The OECD's Pillar One Blueprint, released on Oct. 12, 2020, proposes to redistribute the taxable income of multinational enterprises (MNEs) away from jurisdictions that are home and host to MNEs to the marketswhere MNE products are sold. In the second article of a three-part series, Lorraine Eden examines the OECD's Economic Impact Assessment (EIA) of the Pillar One Blueprint, outlining the complexity and data problems faced in performing the assessment. The article highlights the key roles played by Global In-Scope Destination-based Sales (component C) and Global Residual In-scope Profits (component E) in determining the reallocation impacts of Pillar One. Estimates of the gap between components C and E are used to explore the likely jurisdictional impacts of Pillar One at a more fine-grained level than in the EIA.

Filippa Jörnstedt of Sovos considers the experience of Italy in introducing a digital tax control regime and discusses how the success of the new regime has improved tax administration and revenues.

Comments on the OECD's pillars 1 and 2 blueprints for addressing the taxation of the digitalized economy are due December 14,with a public consultation to be held in mid-January. Expect the OECD to receive hundreds, if not thousands, of pages of comments, most ofwhichwill focus on technical problems posed by the suggested measures. For pillar 1, those include the challenges associatedwith scope thresholds and segmentation, the formula and mechanics for allocating profits (amount A) to market countries, and the prevention of double taxation. Pillar 2 issues include the calculation of the proposed global anti-base-erosion minimum tax and associated backstops, aswell as requests for carveouts.

Contrary to the time-honored goal of Congress and presidents to promote U.S. manufacturing, the deduction for foreign-derived intangible income directly subsidizes the export of U.S. production know-how, and in some circumstances it favors foreign over domestic manufacturing.

Nearly five years after proposing new reporting requirements for multinationals, the European Commission appears poised to advance talks on tax transparency.

The 53 members of the OECD Forum on Tax Administration have issued a communiqué after their December 7-8 virtual meeting, highlighting their newly agreed 2021 tax administration agenda, including moving the international compliance assurance program out of the pilot phase and into an established program between tax administrations.

More than 50 tax administrations say a joint international tax risk assurance program can move beyond the pilot stage, and the IRSwill be among those thatwill stickwith the initiative in 2021.

The OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes is calling for more progress on beneficial ownership transparency,with some members proposing sanctions to motivate more countries to implement uniform standards.

The OECD has refreshed its capacity-building programwith a new strategy to assist developing countries in implementing exchange of information (EOI) and transparency measures to combat tax evasion and other illicit financial flows.

Members of the European Parliament adopted a resolution thatwould make adding or striking a country from the EU list of tax havens a more transparent, consistent, and impartial process, according to a December 10 release.

The OECD's transparency body has released its second round of peer reviews. Cyprus improved regarding accuracy of reported information and timeliness of requests, the review found, noting a 58 percent increase in requests from 2016.

The Senate cleared a defense billwith provisions giving the government power to illuminate ownership structures of shell companies that facilitate tax evasion and money laundering and sent it to the president's desk.

As the nation is experiencing the need for ever-increasing government expenditures to address COVID-19 disruptions, rebuild the nation's infrastructure, and many otherworthy causes, conventional thinking calls for restoring at least a portion corporate taxes eliminated by the 2017 Tax Cuts and Jobs Act, especially from progressive circles. In thisworking paper, Edward Lane and L. Randallwray examinewho really pays the corporate income tax and argue that it does not serve the purposes most people believe.

The authors analyze the initial corporate response to the 2017 enactment of TCJA. Based on sample of U.S. corporate tax returns, the authors find that corporations accelerated deductions into 2017 and delayed income into 2018, thereby minimizin their taxes. Based on a study of the detailed tax returns of 81 large corporations, the authors estimate an income and deduction shiftin tax elasticity of -0.11 and 0.08, respectively.

American progressives call for higher corporate and personal taxes. Conservativeswant no tax increases. Given that President-elect Joe Biden's "green energy" plan requires a robust American manufacturing sector,we need a more nuanced tax scenario. The Biden campaign proposal to increase the nation's corporate tax rate to 28 percentwould leave that rate below pre-Trump corporate tax levels but still put the United States above most European rates and leave American manufacturing at a competitive disadvantage.

New U.S. leadership could open up stalled talks on a digital tax overhaul, an OECD official said. "We're hoping now,with a new administration coming in,we can have a bit of a restart and fresh start to close these discussions and address these key issues," said Grace Perez-Navarro, deputy director of the Center for Tax Policy and Administration at the Organization for Economic Cooperation and Development.

A planned U.N. model treaty measurewill help discourage countries from taking unilateral action on digital taxes, one of its authors said. The U.N. aims to update its model tax treaty to allow countrieswith certain domestic digital tax plans to agree on such measureswith treaty partner countriesÔøΩknown as 'Article 12B'. It's intended to offer developing countries a simple solution for taxing digital activity.

The election of Joe Biden to be the next president of the U.S. has given new hope to European government officialswho are pushing for a global agreement thatwould enlarge the taxing rights of market countrieswith respect to the profits of highly digitalized nonresident businesses. The Trump Administration, like the Obama Administration before it, evinced little enthusiasm for the project,whichwould hit U.S.-based multinationals in the technology sector hardest.

The U.K. government is considering toughening up tax rules on activities in the sharing economy, such as rideswith Uber Technologies Inc. or bookings made on Airbnb Inc., in a bid to raise more revenue and create a "level playing field" for businesses. In a consultation document publishedwednesday, the Treasury said it is reviewing how value-added tax is applied in the sector, because traditional businesses are more likely to be hit by the levy compared to thosewhich are more digitally focused.

WASHINGTONÔøΩA Trump administration regulation that cut the tax bills of companies such as Philip Morris International Inc. and Sealed Air Corp. could be poised for reversal in 2021 as the Biden administration tries to deliver on its campaign promise to raise taxes on corporations.The rule,which gives some corporations a path out of a U.S. minimum tax on foreign earnings, has drawn criticism from progressives, including Sen. Ronwyden of Oregon, the top Democrat on the Finance Committee.

The EUwants to resolve trade conflictswith the United States andwork together on taxation of the digital economy, according to the European Commission's new transatlantic agenda.

The COVID-19 pandemic has accelerated the digitalization of the global economy, but Canada's Department of Finance said it has a plan for taxing digital giants even ifwork at the OECD fails to produce a consensus.

The EU might adopt a digital tax thatwould be compatiblewith a future OECD solution, a European Commission official said.

French Finance Minister Bruno Le Maire said he believes all the elements are there to reach an international agreement on digital taxation and a corporate minimum tax, and his German counterpart also appeared hopeful.

While the incoming Joe Biden administration may be contemplating changes to recent Tax Cuts and Jobs Act guidance, competing pressures and procedural hurdles mean that modifications to some high-profile rules are far from guaranteed.

France hopes to get clarification from the incoming Biden administration about the U.S. position on digital taxation ahead of a key European Council meeting in March 2021, a French finance ministry source said.

Francewill restart collection of its digital services tax as global tax reform talks miss a key 2020 deadline, but a U.S. lawmaker says the United Stateswill defend itself against the DST and similar taxes.

Boris Johnson has raised the prospect of business tax cuts next year in an attempt to revive the Covid-ravaged British economy, even as chancellor Rishi Sunak looks to increase taxes to repair the public finances.

Although countries missed their original deadline to reach agreement on a global tax reform, leaders of G-20 countries vowed to stickwith the project, urging continuedwork toward an agreement by mid-2021.

The Biden administration could help reset negotiationswithin the OECD framework on a two-pillar international tax reform proposal and provide clarity onwhat the United States' negotiating position really is, OECD and government officials said.

Nana Ama Sarfo looks at potential beneficial ownership reform under the incoming Biden administration.

Mindy Herzfeld likens the solutions for taxing the digital economy offered by international organizations to George C. Parker's famous con involving selling pieces of the Brooklyn Bridge to unknowing tourists.

The coronavirus pandemic has sped up theworld's digital transition in business, education, and tax administration, but bureaucratic challenges remain for taxation of digital economic activity, say young tax professionals.

French tax authorities have begun demanding millions of euros from US technology groups as they push aheadwith a new digital services tax that has enragedwashington.

The U.S.will soon issue the results of probes into Austria, Italy and India's decisions to tax local revenue of Internet companies such as Facebook Inc.,which could pave theway for retaliatory tariffs, people familiarwith the situation said. Determinations on the three countries are due because all of them have instituted so-called digital services taxes -- or levies on local sales of companies such as Alphabet Inc.'s Google -- this year, said the peoplewho couldn't be identified because the information is private. There may also be findings on Indonesia, U.K. and Turkey, one of the people said.

A rift between European Union leaders over the bloc's next budget threatens to derail a decision on budgetary revenues that for the first timewould include EU-wide taxes. Agreement on the so-called own resources decision,which sets out how the EUwill fund its budget from 2021-2027, has been stalled by the governments of Hungary and Poland,which are unhappy at some of the conditions other countrieswant to attach to disbursement of EU funds.

A global OECD tax agreementwill most likely include a list of digital tax measures implemented by countries like the U.K. and France that must be removed, a senior official said. The Organization for Economic Cooperation and Development hopes the incoming Biden administration may help unlock talks, Pascal Saint-Amans, director of the OECD's Center for Tax Policy and Administration, said Monday during an online conference hosted by the University of Oxford. But supportwill hinge on the removal of unilateral measures to collect digital services taxes, he said.

Governments should cut fossil fuel subsidies and implement other measures to diversify their tax bases to raise revenue after the pandemic, the OECD said. "Low oil prices make increasing the cost of emitting carbon and other pollutants via raising carbon taxes, fuel taxes or other mechanisms such as emissions trading and eliminating fossil fuel subsidies especially timely," the Organization for Economic Cooperation and Developmentwrote to Group of 20 leaders, in a report published Sunday.

Regarding "Car Makers Keen on Electric Push" (Business News, Nov. 10): It is true thatwe can do better than our current patchwork of state and federal auto regulations. Yet no matter how many electric vehicleswe put on the road, more is needed to reduce our carbon emissions.we need to incentivize a gradual transition to clean-energy sources throughout our entire economy.

President-elect's tax plans likely hinge onwhether Democrats canwin two January runoffs in Georgia.

Private equity funds are asking Treasury to help them avoid a tax hit on offshore income. Treasury isworking on finalizing rules thatwould allow companies already paying at least 18.9% in taxes offshore to opt out of taxes on two types of offshore incomeÔøΩglobal intangible low-taxed income (GILTI) and Subpart F income.

Choosing to earn a living from home once the pandemic ends is a privilege that you should pay for, according to strategists from Deutsche Bank AG's research arm. "Working from homewill be part of the 'new normal'well after the pandemic has passed," the strategists led by Luke Templemanwrote in a note. "We argue that remoteworkers should pay a tax for the privilege."

From NATO to climate change, the relationship between the U.S. and Europe is in dire need of a reboot after four years of President Donald Trump's abrasive "America First" policies.TechnologyÔøΩcovering 5G networks, digital taxation, privacy rules, cross border data flows and moreÔøΩmay not be the most obvious place to start fixing a transatlantic security alliance formed before the dawn of the Internet. But as Joe Biden heads to thewhite House, it's arguably the most urgent, if difficult.

President-elect Joe Biden's Treasury Department is facing a narrowwindow if itwants to put its stamp on an OECD-led effort to overhaul global tax rules in 2021. The OECDwants to get nearly 140 countries to agree to a plan by next summerÔøΩwhichwon't leave much time for Treasury staffers to take on their new roles after Biden takes office Jan. 20, firm up the U.S.'s negotiating position going forward, and engage in the talks.