2020

Agreements between countries on taxes targeting revenue, rather than profits, are acceptable under international law, the top United Nations tax official said Monday. "Bilateral negotiations can take time but they also have a more immediate signaling function on treaty possibilities and on domestic law legitimacy," said Michael Lennard, chief of international tax cooperation in the U.N. Financing for Development Office.

The OECD is asking the business sector for ideas to simplify a key element of its proposed solution for taxing the digital economy, but the taskwon't be easy, OECD and business representatives said.

With many concerned about the foreign tax credit regs' revised definition of foreign income tax, the IRS is asserting that the changewas not simply a response to digital services taxes.

The OECD's global corporate minimum tax proposal might deescalate the race to the bottom on tax among countries, but it could spark intense competition on nontax factors like labor costs, a trade union group has said.

The OECD's blueprint for modernizing international taxes to address the digital economy proposes a hierarchy of market-sourcing methods ÔøΩ including steps involving reasonable approximation ÔøΩ that closely resemble the model approach developed by the U.S. states.

A Biden administration is likely to signal a return to multilateralism, giving hope to some countries and business groups that negotiations on an international tax reform dealwill turn a corner toward agreement by mid-2021.

With Joe Biden's election, his campaign's international tax proposals are getting more attention from the tax community.while the proposals have led to some eye-popping revenue estimates, many questions remain regarding details and implementation.

A new U.S. administration could ease tensionswith Europe and pave theway for consensus on global digital taxation and a better EU-U.S. trade relationship, European Commission President Ursula von der Leyen said.

In this article, the author examines the 2018-2019 increase in cross-border mergers and acquisitions, saying thatwhile a range of factors likely affects the volume of outbound and inbound M&A in any year, the data support the notion that the 2017 tax reform legislation improved the attractiveness of the United States as the tax domicile for multinational enterprises.

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.

German and French officials onwednesday stepped up theirwar ofwordswith the large tech companies,which they say don't pay enough tax. The EU has previously failed to gain consensus on how to tackle taxation of the digital economy. The 27-nation bloc's individual members have often taken contrasting positions during negotiations at the OECD that involve nearly 140 countries.

The just-released Report on Pillar One Blueprint incorporates comments from multinationals and the U.S. request for a safe harbor. Glenn DeSouza identifieswhat's new and important in this release and using public domain information on Apple illustrates how Amounts A, B, and the newly-introduced safe harborwould apply.

Multilateral talks on digital taxation have made more progress than expected, according to German Finance MinisterOlaf Scholz.

Robert Goulder examines recent EU state aid challenges and the implications for digital services taxes.

Although theOECDtook great care to ensure that the economic impact assessment of its pillar 1 and pillar 2 proposalswas reliable, observers differ on some of the key assumptions underlying theOECD's estimates.

Businesses are saying tax uncertainty appears to beworsening ÔøΩ and theOECD'swork on base erosion and profit shifting and the taxation of the digital economy are important factors, according to new research.

IfBill Morneau, Canada's former finance minister, becomes the nextOECDsecretary-general, one of his prioritieswill be getting countries to agree on a common approach for updating global tax rules for the digital age.

Nana Ama Sarfo looks at the OECD's suggestion for a pillar 3 focused on developing country issues.

In news analysis, Martin A. Sullivan examines how the Tax Cuts and Jobs Act's reduction in the corporate tax rate affected tech companies, noting that inwhat is a reversal of fortune, many of those that had been most aggressive previously at shifting profits have generally gained least from the TCJA.

Intellectual Property (IP) migration represents a significant challenge to tax administrations, often involving significant tax revenue. In the Amazon case regarding the transfer of its IP from the US to Luxembourg, the Court rejected the valuations of both parties (US $255 million versus US $3.5 billion) and determined that the "arm's length" valuation should be US $779 million instead. This "loss-loss" decision highlights how the traditional transfer pricing regime has struggled to tackle IP migration structures. On the other side of the Pacific Ocean, despite strong objection from businesses, Australia introduced a comprehensive statutory reconstruction regime empowering its tax administration to disregard intra-group transactions, and it is possibly theworld's first country to do so.

Karnik Gulati, of Coinmen Consultants, discusses a significant casewhereby the India Tax Tribunal reignites the doused fire regarding dividend distribution tax (DDT) and considers the fundamental questionÔøΩis DDT a tax on companies or shareholders?

Karnik Gulati, of Coinmen Consultants, discusses a significant casewhereby the India Tax Tribunal reignites the doused fire regarding dividend distribution tax (DDT) and considers the fundamental questionÔøΩis DDT a tax on companies or shareholders?

The global tax community is in a battle of time andwill to come upwith aworkable solution for taxing multinationals in the digital economy. But the Organization for Economic Cooperation and Development, United Nations, and unilateral legislative initiatives are narrowly focused on the scope and mechanics of implementing this new "tax" regime thatwould satisfy most stakeholders.

As the OECD continues its efforts to find agreement on an international digital tax framework, Annalise Foong of Future-Moves Group provides a view on the challengeswhich lie ahead.

A Biden presidential election victorywould make U.S. agreement more likely on a proposed overhaul of global tax rules, an EU official saidwednesday. The Democratic hopeful Joe Biden is proposing to double the federal minimum tax on U.S. corporations' foreign earnings, known as global intangible low tax income (GILTI), to 21% from 10.5%.were the plan to become law, itwould make the U.S. a "slightly less attractive" choice for company headquarters, Benjamin Angel, director for direct taxation in the European Commission, told a hearing of the European Parliament's tax subcommittee.

The U.K. tax authority is recommendingways to soften the impact of a Financial Conduct Authority proposal linked to property fund investments. Her Majesty's Revenue and Customswants to allow investments in open-ended property funds through tax-free retail investment accounts to maintain their tax-free status. The status became at risk after the FCA proposed adding a mandatory notice period of between 90 and 180 days for investorswanting to cash in their investments in the funds.

A United Nations committee has signaled support for an effort to help developing countries tax tech giants, but final approvalwill likelywait until 2021. The U.N.'s Tax Committee of Experts,which has been in discussions over twoweeks, voted 12-10 Oct. 23 to include an amendment, known as Article 12B, to its model treaty. But the committee is expected towait on final approval to give opposing countries time to draft language that outlines their objections in the finished version, two sources familiarwith the discussion told Bloomberg Tax Tuesday.

Public perception that tech companies didwell in the pandemic raises the stakes for OECD-led digital tax talks, an official said. An increase in public dissatisfactionwith how tech giants are taxed makes a "counterfactual" outcome of more unilateral measures more likely if there is no global agreement, Tibor Hanappi, an economist at the Organization for Economic Cooperation and Development's Center for Tax Policy and Administration, said Monday. Hewas speaking during a virtual event hosted by the Tax Foundation and the European Tax Policy Forum.

Will Morris of PwC observes the clouds gathering on the international tax horizon, and asks if a storm is coming to the post-Covidworld. He considerswhat governments, international organizations, and businesses should keep in mind to achieve beneficial solutions for everyonewhen this storm does strike.

TheEuropean Commissionhas postponed the release of a communication on business taxation because of delays in OECD-led negotiations to reach a global consensus on digital and corporate taxation, anEUtax official said.

A U.N.proposal to tax digital services revenue may have its shortcomings, but it could still influenceOECDnegotiations for consensus on a global tax overhaul by mid-2021, an Indian official said.

TheOECDhas published a new package of documents on the peer review process for country-by-country reporting,whichwill applyfor jurisdictions participating in new rounds of reviews that began in late 2020.

The U.S. position on pillar 1 of theOECD's international tax overhaul could remain a problem next year, raising the questionwhether pillar 2 could proceed on its own, according to a Canadian official.

Robert Goulder examines how the presidential candidateswould change the global intangible low-taxed income rules enacted as part of the Tax Cuts and Jobs Act of 2017.

Politicians and businesses must "talk the talk andwalk thewalk" if they are serious about agreement on a global corporate tax overhaul to avoid the chaos of unilateral measures, theOECD's tax chief said.

EU member states have discussed reforming the Code of Conduct for business taxation in two stages to allow international talks on digital taxation to influence their discussions.

The alternative to not getting an international deal on digital taxation is not the status quo,Pascal Saint-Amans, director of theOECD Centre for Tax Policy and Administrationsaid.

In this article, the authors review the tax plan of Democratic presidential candidateJoe Bidenand vice presidential candidateKamala Harris, focusing on proposed changes to the U.S. international tax system.

TheEuropean Commissionis considering potential changes to a 1970s-era VAT exemption for financial and insurance services, aiming to reduce complexity, legal uncertainty, and costs for sector operators and, ultimately, their customers.

TheEuropean Commissionis ready to propose a tax on digital companies in light of the lack of international agreement amongOECDcountries on a solution to tax the digital economy.

Businesses andwealthy individuals are preparing for the potential for former Vice President Joe Biden to raise taxes if hewins the presidential election.

The idea that the agenda of Joe Bidenwould be positive for the economy is taken to mean that his plan to increase taxeswould also be positive for the economy. However, it is a mistake to think the corporate or individual income taxes can be raisedwithout negative effects.

The Cayman Islandswere added to the EU's "Annex 1" list in February of this year. The list names jurisdictions deemed as non or partly compliantwith international tax standards. Allison Nolan of Athena International Management explains how Cayman has been removed from the list and affirmed by the EU as a cooperative jurisdiction for tax purposes and implements the highest of regulatory standards.

Lynn Cramer and Niamh Cross of Maples Group describe the tax and fiscal measures taken by the Irish government in response to the Covid-19 pandemic, including those in the recently announced Budget 2021.

The OECD's Inclusive Framework on BEPSwill pursue itswork plan on the tax challenges of digitalization until at least the middle of 2021. The cost of simply determining how the proposed ruleswould apply to a multinational group's business could be substantial,writes Jeff VanderWolk of Squire Patton Boggs. Dec. 14 is the deadline forwritten comment. The author says itwould be prudent for businesses to take advantage of the opportunity forwritten comments now and speak at the scheduled January meeting.

A Mexican government proposal to shut downwebsites not complyingwith a new digital taxwould breach the United States-Mexico-Canada Agreement and other laws, a group of U.S. and Canadian business associationswarned in a letter Friday to Mexican lawmakers.

Companies should engage in the OECD's digital tax overhaul, or they'll face chaos and trade sanctions, the organization's tax chiefwarned Monday. "I think awake-up call is necessary" for businesses, said Pascal Saint-Amans, director of the Organization for Economic Cooperation and Development's Center for Tax Policy and Administration.

Countries may have fallen short in reaching a global tax reform agreement in 2020, but theG-20still supports those efforts, even ifit means getting a deal over the finish line by mid-2021.

TheHungarian parliamentis considering a bill thatwould provide tax incentives and assistance to businesses and sectors struggling during the coronavirus-induced economic crisis.

The Czech government has extended tax breaks introduced earlier in the year for individuals and businesses affected by the COVID-19 pandemic.