2023

Mindy Herzfeld examines how recent congressional efforts to bypass traditional tax treaty requirements for encouraging semiconductor chip trade with Taiwan could be models for innovative international tax agreements.

Ryan Finley explains that some countries' distrust of quantitative screens threatens to derail the OECD's simplified transfer pricing approach for baseline distributors under amount B.

Nana Ama Sarfo reviews the OECD's latest Tax Transparency in Africa report and notes how developments in trade and beneficial ownership transparency could help advance tax transparency on the continent.

Developing countries should think long and hard before signing on to an OECD-brokered two-pillar global corporate tax reform plan while also considering alternative measures, an intergovernmental policy research organization said.

Some developing countries are reluctant to ratify the OECD-led global tax pact until other OECD countries, especially the US, choose to do so. They believe the pact will yield a small amount of revenue and that they risk losing their taxing rights if they ratify it before developed countries do.

Vietnam's investment ministry is considering ways to compensate foreign investors who will be affected by the global minimum tax. The measures include providing financial support, training and R&D assistance, and tax breaks.

Ireland’s Department of Finance is asking for more public input on new aspects of its plan to transpose the EU’s pillar 2 directive, incorporating features of the OECD’s second tranche of pillar 2 administrative guidance.

Ireland is seeking feedback on the six main areas of draft legislation implementing the OECD's 15% global minimum tax. The draft legislation includes safe harbor rules for transitional CbCR and UTPR reporting.

Latin American countries have created a new forum to cooperate on tax issues in response to concerns that the OECD's global tax agreement does not benefit developing countries enough. The forum will be facilitated by the United Nations Economic Commission for Latin America and the Caribbean.

The Vietnamese government will send a draft resolution to the National Assembly proposing the application of global minimum tax rules under pillar 2 of the OECD’s two-pillar global tax reform plan starting January 1, 2024.

Israel's parliament approved tax breaks for investors in Israeli tech startups to boost investment in the sector. Tax credits are available to private investors in pre-seed and seed rounds, as well as tax relief for companies that acquire tech firms and foreign banks that offer loans to Israeli tech startups.

The US semiconductor industry is urging the IRS and Treasury to broaden eligibility for the tax credit for research and manufacturing of semiconductors. The industry wants more of the supply chain to benefit.

Republican lawmakers want the Financial Accounting Standards Board to withdraw its proposal to force companies to report more details about how much they pay in income taxes and where. The lawmakers said the proposal would expose US multinational companies to enhanced review and tax audits by foreign governments and put them at a competitive disadvantage.

Businesses want more opportunities to address complexities in the global minimum tax following new guidance from the OECD. They say the guidance is complex and challenging to implement and call for more simplification measures.

The US is waging a subsidy war with China in an attempt to maintain its technological lead. The European Union is responding with plans to invest billions of euros in clean energy and semiconductor manufacturing.

Tax Justice Network says the UN needs to be involved in global tax administration to help stop $4.7 trillion in lost taxes to multinational companies and wealthy individuals over the next decade.

Martin A. Sullivan explores the concerns of legislators at a recent congressional hearing on the OECD’s minimum tax proposal.

The IRS is providing temporary relief from expansive foreign tax credit rules, allowing taxpayers to use modified old rules, as the agency reexamines provisions that have swept far more broadly than many practitioners thought necessary.

In response to OECD global minimum tax rules, the U.K. Endorsement Board has accepted amendments to a key international accounting standard that provides temporary relief from deferred tax accounting and targeted disclosure requirements.

The IRS is temporarily allowing taxpayers to follow the old rules on the foreign tax credit while it considers whether to modify its newer, controversial standards for claiming the credit. This is a relief for companies that have complained that the new rules are too strict.

Despite multilateral attempts to avoid them, digital services taxes will persist, and it would be better for countries to focus on ensuring that those taxes are adopted and interpreted consistently, a U.N. official said.

A UN official said DSTs are here to stay and countries should find a uniform way to administer them. He suggested using Article 12B of the United Nations model treaty as a starting point.

House taxwriters in both parties came to a rare agreement about the United States’ role in the OECD tax deal concerning the treatment of nonrefundable tax credits.

Republicans are pushing back on the global minimum tax deal, arguing that it would put US companies at a disadvantage. Democrats say that if the US doesn't get on board, it will be left behind.

The G-20’s top finance officials continue to press ahead with the OECD-brokered two-pillar global tax reform plan, recognizing progress on some of the plan’s key features and calling for countries to settle outstanding issues.

Canada will introduce a digital services tax in 2024 despite US opposition. The Canadian government made a concession by delaying its DST and believes it is necessary to defend the country’s interests.

The US Senate passed legislation approving a trade deal with Taiwan, which could lead to stronger tax ties between the two countries. The bill also includes transparency and cooperation guidelines for future agreements negotiated under the initiative.

The OECD has opened an additional consultation on two amount B alternatives to simplify routine marketing and distribution transactions for transfer pricing. The options could include an examples-based determination of non-baseline distribution activities.

The OECD finalized the information return that multinational companies will use to file their taxes under the new global minimum tax. The return is designed to strike a balance between providing tax administrations with the data they need to ensure compliance while limiting the cost of compliance for companies.

The OECD released a model treaty provision for the global tax deal's subject-to-tax rule, which is meant to help low-income countries collect more tax under treaties that set low withholding rates.

The OECD clarified that the global minimum tax will treat the Inflation Reduction Act’s transferable tax credits as additional income rather than a reduction in tax paid. This means that businesses will not be subject to the undertaxed profits rule if they use the credits to lower their tax expenses.

Under the updated agreement negotiated by the Treasury Department, U.S.-based companies will have an extra year (until 2026) before foreign countries can start imposing new taxes on any U.S. companies deemed to pay too little tax in the United States. In addition, the clean-energy tax credits at the core of last year’s Inflation Reduction Act will be counted in a more favorable way than some companies had feared, offering certainty as a tax-credit trading market gets under way.

Nana Ama Sarfo examines the OECD’s latest report on tax transparency in Latin America and questions whether the organization’s tax transparency standards could be a useful tool in improving the region’s slow economic growth.

Martin A. Sullivan argues that even if pillar 2 is adopted, multinationals’ income stemming from intellectual property transfers to low-tax jurisdictions is likely to remain as tax advantaged as it is now.

Mindy Herzfeld examines what the United States stands to lose if it enacts or rejects pillar 2, and what can be done to lessen the impact.

EU finance ministers did not sound impressed by the European Commission’s idea to allocate to the EU budget a new statistics-based levy on large companies’ profits.

Luxembourg will be referred to the Court of Justice of the European Union for its continued failure to correctly incorporate the anti-tax-avoidance directive into domestic law, according to the European Commission.

EU finance ministers rejected the European Commission's proposal to levy a charge based on a calculation of surplus corporate profits. The ministers said the levy would be regressive and difficult to implement.

If the United States isn’t among the critical mass of jurisdictions needed to sign and ratify the OECD’s pillar 1 multilateral convention, then the reforms won’t be able to proceed globally, EU researchers said.

Germany’s Ministry of Finance has circulated plans for the largest corporate tax reform since 2008, calling for an extended research allowance, a revised interest barrier rule, and notification for national tax arrangements, among other issues.

The global tax deal on Pillar One requires ratification by 30 signatory jurisdictions representing 60% of multinational groups covered by the deal. The US represents 46% of these groups, so the deal cannot go ahead without US ratification.

Businesses want to see more progress on Pillar One, and African countries are concerned about the extended moratorium on new digital services taxes.

Canadian Finance Minister Chrystia Freeland has doubled down on the government’s plans to introduce a digital services tax after refusing to agree on a one-year extension of an OECD moratorium on new digital taxes.

The top congressional taxwriters released a discussion draft of legislation for a tax agreement with Taiwan, hoping to clarify committee jurisdictions on the issue of ending the burden of double taxation for those in the region.

House GOP appropriators voted to zero out U.S. funding of the OECD in a spending bill that advanced July 12, complaining that the organization promotes higher tax rates and “digital tax schemes that target the American tax base.”

The OECD extended the global freeze on new digital taxes for one year. However, Canada refused to endorse the deal, raising the possibility of trade tensions between the US and its close ally.

The OECD announced progress on the global tax deal, but acknowledged that differences remain between countries. The organization said governments are nearing an agreement on Amount A, and it will release a consultation document next week on Amount B.

Tax officials from 143 jurisdictions had hoped to seal an agreement on a new way to divide the taxes levied on the profits of about 100 of the world’s biggest companies. Such a deal would reallocate the taxation of some $200 billion in corporate profits across the world. Failure could lead some nations to impose their own levies.

Nearly 140 countries have backed a statement on the OECD’s two-pillar tax reform plan that confirms agreement on the text of a pillar 1 tax convention and on extending a digital services tax moratorium.

The OECD has struck back at accusations that it had a hand in weakening Australian country-by-country reporting legislation, but critics have said that Secretary-General Mathias Cormann’s explanation sounds more like an admission.