2023

A make-or-break year is coming for Pillar One, the first half of a two-part global tax overhaul that aims to reallocate corporate profits to address digitalization of the economy and reform rules for transfer pricing, which dictate how multinational corporations value their intercompany transactions.

The OECD has released an automated tool for pricing a return on sales for baseline distributors that are in scope of the amount B transfer pricing simplified and streamlined approach.

Reuven S. Avi-Yonah explains how reducing the corporate tax rate for domestic manufacturing could encourage multinationals to expand activities in the United States.

The IRS is asking for stakeholder feedback with the intention of proposing regs in line with the OECD’s report on the amount B simplified and streamlined approach for pricing baseline marketing and distribution transactions.

Patrick Driessen argues that the revenue and general nonrevenue policy effects of pillar 2 look more favorable after consideration of the U.S. government’s obligation to regulate foreign tax credits to discourage quid pro quo subsidy schemes of foreign governments.

More than 58,000 exchanges of information on tax rulings took place between 2016 and 2023 under action 5 of the base erosion and profit-shifting project, according to the OECD’s latest peer review report.

Thomas Horst examines differences between the undertaxed payments rule and the UTPR, or undertaxed profits rule, and whether adoption of the former could resolve incongruities between the laws of the United States and the many countries that have enacted the UTPR and provide a legally acceptable alternative to the UTPR.

The continuation of work on the ninth directive on administrative cooperation is the only direct taxation priority listed in the six-month program of the next EU Council presidency.

The United States must continue engaging at the OECD on tax issues like the two-pillar global tax reforms to protect its interests and promote its global leadership, Treasury’s top OECD negotiator said.

Brandon Pizzola and Hilary Gelfond-Gross analyze the economic effects of the foreign-derived intangible income deduction, the economic activity supported by the deduction, and the macroeconomic impacts of repealing it.

The OECD’s transitional peer review process for determining which jurisdictions have enacted measures qualified as in line with the pillar 2 rules is winding down, and a list of those jurisdictions may be published soon.

U.S. guidance on transfer pricing penalties, featured prominently in recent litigation, will be even more critical under the amount B transfer pricing approach under pillar 1 of the OECD’s global tax reform plan, practitioners warn.

Reuven S. Avi-Yonah describes the looming international conflicts regarding the U.S. foreign-derived intangible income provision.

Prita Subramanian and Thomas Zollo examine the evolution of the commensurate with income standard, its current and prospective application, and its practical implications for taxpayers.

Robert Goulder comments on President-elect Trump’s recent tariff threats.

Democrats are planning to move quickly on a bill providing a double taxation fix between the United States and Taiwan, with hopes to get the legislation to President Biden’s desk before the end of the year.

Larissa Neumann, Julia Ushakova-Stein, and Mike Knobler explain how political changes may affect tax legislation and discuss the Tax Court’s ruling on penalties in Microsemi, the interest deduction ruling in Exxon, and comments on section 988 proposed regulations, among other developments.

Mindy Herzfeld examines U.S. tariff history and considers options for the next administration to achieve tariff advocates’ revenue goals and policy objectives.

Daniel Olika proposes a framework to measure success in international tax cooperation, arguing that effectiveness should be measured by both the process and the outcome.

Robert Goulder considers what it will take for Congress to reclaim its tariff authority from the executive branch.

After years of anticipation, the IRS and Treasury have released rules on previously taxed earnings and profits, which are exceptionally detailed and complex.

The European Commission has determined that Luxembourg and the Netherlands did not grant selective state advantages to Amazon, Fiat Chrysler, and Starbucks through advance pricing agreements.

President-elect Donald Trump made tariffs on China a defining feature of his first term. Now Trump is poised to ratchet up the pressure on China and other trading partners again, recently proposing an additional 10% tariff on all products from China and a 25% tariff on all Mexican and Canadian imports.

Mindy Herzfeld examines the differences between tariffs and the VAT in light of upcoming debates over U.S tax rate changes, as well as how the destination-based cash flow tax might fit into the picture.

The U.N. Economic and Social Committee approved the bones of a framework convention on international tax cooperation, despite continued opposition from Global North countries.

Antonio Lanotte explains the European Commission’s VAT in the Digital Age reform for updating VAT regulations and modernizing VAT rules in light of rapid digitalization and increasing cross-border commerce.

The decision ends three of the EU competition regulator’s attempts to crack down on international companies’ tax deals.

The European Commission has singled out Luxembourg as the only EU country that refuses to adequately address aggressive tax planning, while Malta got the benefit of the doubt for promising to take steps to comply.

President-elect Trump announced that he will introduce an additional 25 percent tariff on imports from Canada and Mexico until the countries stop migrants and drugs from crossing at the borders.

Reuven S. Avi-Yonah explains key issues facing the United States as it moves into 2025 with its potential major tax reform from the expiration of the Tax Cuts and Jobs Act.

Xiaoli Ortega analyzes and compares the corporate income tax structure and governmental incentives for U.S. and Chinese corporations. She identifies key differences between the countries’ corporate income tax structures and their implications for U.S. and Chinese economic and political goals, as well as the implementation of pillar 2.

Donald Trump is still two months from returning to the White House, but he’s already wielding tariffs as an all-purpose bludgeon to achieve his political and foreign-policy goals. Markets will have to get used to it because this is going to be Mr. Trump’s second-term method, no matter the economic and strategic ructions.

President-elect Donald Trump pledged that soon after taking office he will slap steep tariffs on Mexico and Canada, two of America’s closest allies, as well as China, the clearest indication since his election victory that he plans to follow through on the tough campaign rhetoric that helped propel him to the White House.

Mindy Herzfeld reviews former U.S. Trade Representative Robert Lighthizer’s 2023 book, No Trade Is Free: Changing Course, Taking on China, and Helping America’s Workers, for insight on possible trade and international tax policy in the next administration.