2026

A senior European Commission tax official rejected concerns that implementing the OECD pillar 2 “side-by-side” package without amending the EU directive creates legal uncertainty or unfair advantages for the United States. The official argued that the directive already provides sufficient flexibility for member states to implement the safe harbor framework tied to jurisdictions with qualifying minimum tax regimes. The discussion reflects broader debates in Europe over pillar 2 implementation, administrative complexity, and coordination among member states on international tax rules such as transfer pricing.

The U.S. Senate advanced the bipartisan HONOR Act, which would deny foreign tax credits and income tax deductions for taxes paid to Russia by U.S. businesses. The proposal would add Russia to the list of countries subject to the section 901(j) foreign tax credit disallowance rules, alongside jurisdictions like Iran and North Korea. The measure reflects growing efforts to use the tax system as a geopolitical tool to discourage economic activity that could support adversarial governments.

This article examines how Colombia’s dividend-triggered corporate tax system interacts with the U.S. foreign tax credit regime for U.S. shareholders of Colombian corporations. Because Colombian tax on certain corporate earnings is deferred until dividends are distributed, U.S. taxpayers may face timing mismatches that prevent effective use of foreign tax credits against earlier U.S. inclusions such as NCTI. The analysis explores alternative characterizations and planning approaches that could mitigate double taxation under sections 901 and 960.

Meta announced it will begin charging advertisers location-based fees for ads displayed in jurisdictions that impose digital services taxes, including several EU countries, Turkey, and the United Kingdom. The fees correspond to the applicable DST rate in each jurisdiction and are calculated based on where the ad audience or impressions are located. The move reflects a broader trend among large digital platforms such as Amazon and Google that pass DST-related costs on to advertisers operating in affected markets.

The column reviews recent developments in U.S. international tax, including the IRS’s unsuccessful petition for rehearing in the 3M blocked-income case and litigation developments in YA Global concerning effectively connected income. It also analyzes new tax proposals tied to the One Big Beautiful Bill Act and commentary from practitioners on recent IRS notices addressing foreign tax credit timing, subpart F allocations, and sourcing of borrow fees. The discussion highlights ongoing disputes over section 482, international income attribution, and regulatory guidance affecting multinational taxpayers.

The U.K. Court of Appeal held that Muller UK and its related corporate members could not deduct amortization of intellectual property and goodwill transferred into a limited liability partnership. The court concluded that the relevant parties were related for purposes of the Corporation Tax Act 2009, so the transfer did not qualify for the favorable intangible asset regime. The decision reinforces the limits on obtaining corporate tax deductions for intragroup transfers of intangible assets where there is no real change in ownership.

HM Revenue & Customs reported that transfer pricing yield and diverted profits tax receipts reached nearly £3.4 billion and £94 million, respectively, in the 2024–2025 fiscal year. The statistics highlight HMRC’s continued reliance on transfer pricing enforcement, APAs, MAP procedures, and the Profit Diversion Compliance Facility to address multinational profit shifting. The report also notes that the U.K. plans to repeal the diverted profits tax and replace it with the Unassessed Transfer Pricing Profits regime beginning in 2026.

Guernsey announced that territorial corporate tax will no longer be considered as part of its ongoing tax reform review, following industry feedback that emphasized the importance of stability and predictability. The decision reflects the island’s effort to preserve confidence in its tax framework as it seeks to maintain its position as an international finance center. The development highlights how smaller financial jurisdictions are balancing tax reform pressures with competitiveness and the need for policy certainty.