2021

The United States has suspended plans to impose punitive tariffs on French goods in response to France's controversial digital services tax, citing ongoing probes into the digital taxes of 10 other trading partners.

The Office of the U.S. Trade Representative (USTR) has determined that India's equalization levy and the digital services taxes of Italy and Turkey unfairly target U.S. business interests, but has no immediate plans to act on those conclusions.

The USwill delay imposing tariffs on $1.3bn of French goods in response to the country's digital services tax, heading off an escalation in transatlantic trade tensions just ahead of Joe Biden's inauguration.

The UK tax authority has opened multiple criminal investigations after probingwhether large companies arewrongly paying less UK tax as a result of their cross-border financialarrangements.

A growing body of economics literature shows thatmultinationalcorporations(MNCs) shift their profits totaxhavens. The authors contribute to thisevidenceby comparing a range of available data sets focusing on US MNCs, includingcountry-by-countryreporting data released in December 2018 for the first time.with each of the datasets, the authors analyze the effectivetaxrates that US MNCs face in eachcountryandthe amount of profits they report. Usingcountry-by-countryreporting data, the authors established that lower effective corporatetaxrates are associatedwith higher levels of reported profitswhen comparedwith different indicators of real economic activity. This corresponds to the notion that MNCs often shift profits to countrieswith low effectivetaxrates –without also shifting substantive economic activity. The authors identify the most importanttaxhavens for US MNCs as countrieswith both low effectivetaxratesandhigh profits misalignedwith economic activity.

By: Stephanie Soong Johnston

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.In a lengthy December 14 comment letter, the group noted its members had difficulties agreeing on the design details of two OECD blueprints outlining proposals to modernize the corporate tax system for an increasingly digital and globalizedworld.

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 proposal by two prominent German politicians to tax online purchases to fund relief for traditional brick-and-mortar stores hurt by COVID-19 has drawn criticism from the country's largest association of retailers

A member of the European Parliament (MEP) is calling for more cooperation among national tax authorities in sharing information about online sales platforms such as Amazon, eBay, Airbnb, and Uber.

Despite the OECD's best efforts to convince countries to sign off on proposals to tax the digital economy ÔøΩ during a pandemic, no less ÔøΩ a deal remains elusive, awaiting signals from the Biden administration in 2021.

Detente is ending in the global fight over tech taxes. Earlier this year, France agreed to suspend collection of a tax on digital revenue from large technology companies such as Facebook Inc., Amazon.com Inc. and Alphabet Inc.'s Google. Meanwhile, the U.S. delayed the application of tariffs itwas putting on French goods in retaliation for the tax.

Negotiators are strugglingwith how to prevent multinationals from being hitwith a double tax under an OECD-led effort to set a global minimum rate, a U.K. official said.The interaction of the plan's minimum rate and the U.S.'s global intangible low-taxed income rules have been a major concern for U.S. companiesworried about the extra tax hit and compliance issues they could face if subject to both sets of rules.

Substantive progress on tax and digitalization faces many obstacles and doesn't look promising aswe enter 2021.will Morris examines the challenges, considers the possible outcomes, and concludes that aworkable (and improvable) multilateral agreement is preferable to a free-for-all of DSTs, tariffs, and revenue grabs.

Next year signals a potential reboot of parts of the OECD-led effort to overhaul global tax rules as negotiators try to hammer out the final details of a deal. The pandemic and political disagreements derailed efforts to get 137 countries to agree to a plan in 2020 thatwould change how andwhere multinationals are taxed and set a global minimum tax rate.

Next year signals a potential reboot of parts of the OECD-led effort to overhaul global tax rules as negotiators try to hammer out the final details of a deal. The pandemic and political disagreements derailed efforts to get 137 countries to agree to a plan in 2020 thatwould change how andwhere multinationals are taxed and set a global minimum tax rate.

The current Treasurywill likely try to finalize certain international regulations stemming from the Tax Cuts and Jobs Act regulations before Jan. 20 to avoid having them pulled by the new administration,writes Doug Poms of KPMG. The author also looks atwhat a new Treasury may do, such as reinstating a tradition of providing legislative proposals (often referred to as Green Book proposals) alongwith its annual proposed budgetÔøΩincluding suggested legislative changes to international tax provisions.

The European Unionwill have two main tax policy priorities in 2021ÔøΩfinding away to tax the digital economy and using taxation to meet the bloc's goal of cutting greenhouse gas emissions to net-zero by 2050.