2020

TheTax Justice Networksaid reports thatAmazonisn't liable for the U.K.digital services tax on goods it sells directly isn't surprising, and that the larger issue isAmazon'sability to shift profits abroad.

Mindy Herzfeld questions the reasoning behind the recently proposed regulations to overhaul the foreign tax credit.

Europe should levy tariffs on American imports in retaliation for U.S. tariffs imposed in response to the dispute over the EU'sAirbussubsidies, French Finance MinisterBruno Le Mairesaid.

China, Mexico, and South Africa have submitted updated descriptions of their national enforcement practices for inclusion in the next edition of theU.N.transfer pricing manual,whichwill also feature a new section on Kenya.

WASHINGTONÔøΩThere is an enormous gulf between the presidential candidates on tax policyÔøΩwith trillions of dollars at stake over the next decade. President Trump is campaigning to continue his administration's biggest legislative achievement, the 2017 tax law,which lowered taxes on businesses and individualswhile increasing budget deficits. He credits the lawwith helping spur economic growth in 2018 and 2019, a periodwhen the unemployment rate fell to 3.5% from 4.1%, and is pushing for even more tax cuts in a second term.

Taxes aren't quite the certainty they once seemed to Benjamin Franklin. On Monday, the Organization for Economic Cooperation and Development said the new global rules it is developing could add $100 billion a year to multinational companies' tax bills. That might sound like an unappealing prospect for investors, but the OECD painted a bleaker alternative: a chaos of digital taxes and tariffs that could cut global output by 1%. This outcomewould itself hit corporate earnings, even if the new levies didn't.

WASHINGTONÔøΩOn paper, the 21% U.S. corporate tax ratewas a permanent cornerstone of the 2017 tax law, a boon to businesswithout the expiration date attached to other provisions. In reality, that low rate is only as solid as Republicans' ability towield power inwashington.

The use of tax havens by multinational corporations (MNCs) has attracted increasing attention and scrutiny in recent years. This paper provides an exposition of the academic literature on this topic. It beginswith an overview of the basic facts regarding MNCs' use of havens,which are consistentwith the location of holding companies, intellectual property, and financial activities in havens. However, there is also evidence of significant frictions that limit MNCs' use of havens. These limits can be attributed to non-tax frictions (such as the legal and business environment in different jurisdictions), to tax law provisions limiting profit shifting, and to the costs of tax planning.

New lines are being drawn in the OECD digital tax talks overwhich business activitieswill be covered by a measure meant to make multinationals' tax calculations simpler and reduce disputes.Some countrieswant to broaden the scope of business activities covered by part of the Organization for Economic Cooperation and Development's planned global tax overhaul, known as Amount B. For companies, Amount B holds the promise of greater tax certainty but broadening the range of activities could mean some may end up paying more than they do now.

Developing countries could get a new avenue for taxing digital activities in their jurisdictions under a United Nations treaty amendment set for a vote nextweek.The proposal is meant to be an alternative to an OECD digital tax plan also under negotiation, said Rajat Bansal, a member of the U.N. Tax Committee and co-chair of the drafting subcommittee.

Transparency continues to be at the forefront of international tax discussions. It's the topic of articles, the focus of speeches, and the goal of legislation. But those discussions are tense and very divided, even among tax administrators. Advocates for more transparency are looking to identify and minimize a perceived tax gap, including profit shifting, paying nil taxes in low tax jurisdictions, and operating inwhat some call tax havens.

Multinationals are hoping that an OECD-led effort to set a global minimum tax ratewill spare them from complicated calculations to figure outwhat they'll owe. Companies have two months to tell the Organization for Economic Cooperation and Development how to ease compliance burdens they'll face under part of the plan known as Pillar Two.

Francewill go aheadwith plans to collect its contentious digital services tax mid-December, Finance Minister Bruno Le Maire said, keeping Europe on course for a trade battlewith the U.S. over the taxation of tech giants like Facebook Inc. and Alphabet Inc.'s Google.

A United Nations committee thisweek is voting on a new approach to taxing the digital economy that could create another division in the fractured global digital tax debate. The proposed tax treaty changewould give countries a framework for deciding how to tax cross-border digital revenues. The plan's proponents say itwill help developing countries that are disadvantaged in larger global discussions about a digital tax overhaul.

As awhole, the U.S. tax system (federal, state and local) since 1980 has served more and more to increase racializedwealth inequality. The tax system is today operating to entrench the system of advantage based on race that centuries of racial exploitation and unequal access towealth created. As the future face of the nation becomes lesswhite, the U.S. tax system as awhole and the anti-tax rhetoric that has fueled its shift from progressive to regressive are driving economic inequality and racial inequity. More deeply, the tax system is inhibiting broad-scale public investment in the primary resource of the future: human capital.

In this article, the authors analyse the notion of 'economic reality' in EU VAT and how it is applied by the CJEU in its case law. The purpose is to clarify the concept of economic reality, to establish how it affects the taxation of transactions, and towhat extent it should affect that taxationwhen taking into account the principle of legal certainty.

Theworld's tax policy leaders are currently engaged in debate overwho should tax the income streams producedwith the help of cross-border regulatory coordinationÔøΩthe cooperative surplus over the gains that, in a counterfactualworld,would be available if investmentswere confined to the domestic economy. To the extent there everwas a coherent relationship between consensus tax policy norms and the distribution of cooperative surplus, that relationship is now hopelessly skewed by real life factors, chief among them the rapid advancement of innovative technology that transcends physical boundaries of all kinds. The growing dissatisfaction of those on thewrong side of the skew had already initiated a rise in innovativeways to tax cooperative surpluswhen COVID-19 struck, significantly increasing the stakes for taxation and prompting yet more reform proposals. There are now at least fourteen strategies in play, each drawing varying levels of scrutiny, buy-in, and pushback. This Article examines the fourteen and argues that among them, those seeking to tax revenue flows at source have the best chance to alter the distribution of cooperative surplus in the immediate term, provided some formalistic tropes can be overcome.

International corporate tax planning and corporate social responsibility are topics that might not seem to have common ground at first sight. The aim of this researchwas to prove the contrary. This research addressed international corporate tax planning from various perspectives, such as regulation, ethics, business, and society. Not all forms of legal tax planning are considered (socially) legitimate anymore. Corporate tax planning is a complex issue: on the one hand, it is common corporate practice to keep costs low. On the other hand, corporations have to contribute to society and common goods by paying (corporate income) taxes as any other member of society. Not all kinds of corporate tax practices are (socially) illegitimate per se. Tax planning can be carried out in various forms. This research focused on tax planning activities that remainwithin the boundaries of the law (thus tax evasion is not part of this research).

Between 1985 and 2019, the global average statutory corporate tax rate has fallen from 49 percent to 23 percent, largely due to the rise of international tax competition. The biggestwinners from globalization have received the largest tax cuts. In this paperwe propose a solution to replace this race-to-the-bottomwith a race-to-the-top. Multinational companies that have low effective tax rates in some foreign countries (whatwe call a "tax deficit")would pay an extra tax in their home country.we explain how such a tax should be designed and how it could be collected. The ideal solutionwould be for all countries to jointly start collecting the tax deficit of their multinationals.we describe how defensive measures could be applied against countries refusing to take part in such an agreement, measures that could ultimately pave theway to global corporate tax coordination.

The U.K. government may need tax rises of over £40 billion a year by 2024-2025 "just to stop debt spiraling upwards," but now is not the time for increases, theInstitute for Fiscal Studies(IFS) said.

Members ofthe United Nations' subcommittee on taxing the digital economy have proposed a new treaty article allowing source-country taxation of digital services revenue, partingwayswith the proposal currently under consideration at theOECD.

TheEUwill hold off on unilateral plans to tax digital activity even though theOECDmissed its 2020 deadline to reach agreement on a multilateral approach to modernize global tax rules.

By: Stephanie Soong Johnston

Countries could not agree on a renovation of the international tax system in 2020 as planned, but they now have the blueprints that theOECDhopeswill provide the foundation for an accord in 2021.

Despite legal concerns from the state advisory body, Dutch lawmakers are moving forwardwith a proposal for a "dividend exit tax" thatwould affectcorporations likeUnileverthat are moving their Dutch operations to low-tax jurisdictions.

Within three days of being presentedwith the government's 2021-2022 budget package, theAustralian Parliamentapproved the measures,which include immediate expensing for asset purchases, corporate loss carrybacks, and accelerated tax cuts for individual taxpayers.

TheEU Councilstill has issues to resolve regarding the proposalfor a directive on administrative cooperation(DAC7) thatwould require automatic exchange of information onrevenues generated by sellers on digital platforms.

Theworld's rich nations have drafted a set of technical principleswhichwould revolutionise the corporate taxation of multinational companies and could raise $100bn in extra tax revenues around theworld.

A global economicwatchdog on Monday said talks on how to overhaul taxes on big tech companieswill stretch into 2021 after the coronavirus pandemic and "political issues" prevented the group fromwrapping up by its end of the year deadline. The Organization for Economic Cooperation and Development (OECD) on Tuesday announced a two-pillar proposal to overhaul how big tech companies are taxed. The proposalwas approved by a groupwith participants from 137 countries and jurisdictions.

World governments have failed to agree to new rules on taxing the profits of multinational companies, a long-running point of tension between the U.S. and Europe over levies paid by the likes of Apple Inc. and Google and one that has raised the threat of trans-Atlantic tariffs. More than 130 governments have been trying for years to hash out new rules about how to apportion the profits of multinational companies, aiming to do so by this year. The frictions are so high that the U.S. has threatened tariffs if European countries impose new taxes on American tech giantswithout an international agreement.

The search for a new agreement on how countries should tax multinational corporations advancedwednesday, as international negotiators proposed rules thatwould force tech giants such as Facebook Inc., Amazon.com Inc. and Alphabet Inc.'s Google to pay more tax in countrieswhere customers consume their products and services.

Forwall Street, corporate taxes may represent the biggest threat of a Joe Biden presidency. But analysts say it's unlikely firmswould actually pay as much in taxes as the former vice president has proposed, even if hewinswith a Democratic sweep of Congress.

The U.K. government has officially launched its plans for creating a series of low-tax business zones designed to spur economic growth. The so-called freeports are intended to attract businesses following Brexit, andwill include numerous tax incentives such as property tax relief, employment tax relief and reduced tax compliance requirements.

Countries negotiating an overhaul of international tax rules thisweek punted on tackling some contentious issues, including the rate for a global minimum levy. In meetings on Thursday and Friday, countries didn't discuss unanswered questions around several major issues, including a rate for a global minimum tax or how to coordinate its interactionwith the U.S.'s minimum tax, the global intangible low-taxed income (GILTI) rules, sources familiarwith the discussion said.

Countries could see $50 billion to $80 billion per year globally in new corporate income tax revenue under an OECD-led effort to revamp international tax rules. If the estimatewere to also include income raised under already-existing U.S.'s global intangible low-taxed income (GILTI) rules, the total international revenue effectwould be up to $100 billion, the OECD said in to an economic assessment released Monday.

International negotiations on new tax rules for the digital agewill fail to conclude this year, raising the risk of a transatlantic trade conflict and a proliferation of contentious national levies on global tech giants.

The OECDwants to design a tax reporting framework for cryptocurrency assets by 2021, the group's leader said Monday. The project aims "to design a tax reporting framework thatwill ensure tax transparencywith respect to crypto-assets, including the income derived from the sale of such assets," OECD Secretary-General Angel Gurría said in a report to the Group of 20 finance ministers and central bank governors, released Monday.

Members of the U.N. model tax convention subcommittee remain divided on a proposal to treat payments forsoftwareas royalties taxable by source states, a potential revision that has drawn opposition from business groups.

Countries may have a solid foundation for a revamp of the international corporate tax system, but theOECD's chiefwill urgeG-20finance ministers to overcome their political differences to reach agreement on the new rules.

The Spanish Senate gave final parliamentary approval October 7 to controversial taxes on digital services and stock transactions.

Countries now "strongly encourage" the United States to pull back on its base erosion and antiabuse tax as part of a key proposal to introduce global corporate minimum taxation, according to a newly leaked document.

In this article, the authors discussPerrigo, a case involving tax assessments on the sales of a pharmaceutical company's intellectual property pending before theIrish High Court.

During the September 6 meeting of theEconomic and Financial Affairs Council, Ireland said that it had concerns about potential tax conditionality being linked to the disbursement of EU recovery funds.

TheOECD's digital taxationwork has progressedwell, but member states should think further about transitioning from an industrial tax system to a digital one in a post-pandemicworld, according to Estonia's pick forOECDsecretary-general.

Every four years a Democrat runs for president on a platform that includes higher taxes for thewealthy. And every four years a group of people predicts that the skywill fall if those plans are implemented. Yet every time their plans have been implemented, the sky hasn't fallenÔøΩif anything, economic growth and business investment have been stronger under Democratic than Republican presidents.

The first glimpse is emerging of a levy the European Union is drawing up to ensure its Green Deal environmental rules aren't undone by nationswithweaker standards.The measure being drafted by the EU's executive armwill penalize the greenhouse-gas pollution produced by factories outside the region that ship their products into Europe. The so-called Carbon Border Adjustment Mechanism is meant to ensure that domestic industries most at risk from stricter climate policies aren't hurt by the Green Deal.

A license to use copyrightedworks is a taxable supply, an adviser to the European Court of Justice confirmed Thursday in an opinion that complicates arrangements for the collection of royalties in the bloc.

Treasury took a firm stance in newly released proposed rules, saying companies subject to measures like digital services taxes abroad probablywon't be able to receive U.S. credits for those taxes.

African countries must prepare to come upwith their own solution for taxing the digital economy in case international negotiations to rewrite global tax rules fail, a continent-wide forum of tax administrators saidwednesday.

The IRS needs more time for guidance meant to modernize how it treats digital inventories of companieswith foreign assets, an agency official said.The IRS issued final income-sourcing rules under tax code Section 863(b) earlier thisweek. The preamble to the rules acknowledges that Treasury may release future guidance addressing income sourcing from digital transactions.

The Czech Republic expects 2.5 billion koruna ($109 million) in proceeds from its proposed digital tax, according to a 2021 draft national budget obtained by Bloomberg Tax.