Int'l Tax News

U.S. multinationals operating in Mexicowill have to bewary of the U.S.'s new 21 percent corporate tax rate triggering Mexico's controlled foreign corporation rules, adding a layer of complexity, tax practitioners told Bloomberg Tax. "The only specific consequence of U.S. tax reform is that passive income in the U.S. is now subject to Mexican CFC rules" now that the U.S. has become a "tax haven" under Mexico's domestic rules, said Rodrigo Gómez Ballina, a partner at Jones Day in Mexico City.

The European Union's plans to impose a new tax on the revenue of internet-based companies like Facebook Inc. and Google Inc. have come under fire from member states' government officials. At a July 2 University of Oxford business tax conference, British, Irish, and German finance department officials cited the range of the European Commission's proposal as an issue for them.

The U.S. Supreme Court's groundbreaking ruling in thewayfair case dealingwith tax from online retailers could spur Canadian governments to start taxing sales of retailerswith no physical presence there.

The Australian tax authority released its administrative policy for a new set of rules for highly leveraged companies, proposed by the Treasury in an effort to ensure that "asset valuations used to justify debt deductions are robust." The rules have yet to be legislated, despite already impacting multinational companies.

Houseways and Means Committee Chairman Kevin Brady (R-Texas) says tax legislation this yearwill clarify international tax issues; and President Donald Trump says hewants to cut the corporate rate.

The U.K. government has cleared theway for scores of its tax treatieswith other countries to change as part of the OECD's project to crack down on tax avoidance among multinational businesses. The U.K. submitted its formal letter of ratification for the project's multilateral instrument (MLI) June 29.

British businesses are disclosing details of their financing structures targeted through a European Union probe into a U.K. tax scheme, shedding light on global companies' offshore planning.

Large companies in Brazil, including multinational subsidiaries, have received a major present from two rulings by the Superior Court of Justice (STJ). Brazil's second highest appeals court ruled that large companieswith tax debts in excess of $270,000 can sign agreementswith the revenue service to pay their debts over a period of 60 months.

In this article, the authors discuss the new foreign-derived intangible income provisions of the Tax Cuts and Jobs Act and reassess the double Irish structure in light of those provisions to determine if it continues to deliver tax savings.

The United Kingdom must make more progress on taxing the digital economy before considering further changes to the broader U.K. tax system, including to business rates, Chancellor of the Exchequer Philip Hammond said.

Historically, U.S. tax law has not required U.S. companies to pay tax on foreign subsidiaries' earnings until remitted by the subsidiary to the parent as a dividend or otherwise. U.S. generally accepted accounting principles have therefore allowed U.S. parent companies to postpone recording deferred tax liabilities (DTLs) on unremitted foreign earnings of their subsidiaries for decades, if the parent companieswere able to show that the earnings of their foreign subsidiarieswould remain invested overseas indefinitely. TheTCJA change this calculus, however, theindefinite investment assertion is far from obsolete.

In this article, the author compares the current situation of Brazil and Mexico and their current tax developments around the OECD BEPS project.

In this article, the author discusses a proposed directive thatwould introduce a digital services tax in the EU. He examines how the 3 percent indirect taxwould operate,what businesses and activitieswould be covered, andwhether the Council of Ministers is likely to approve the directive.

HM Revenue & Customs seems eager to litigate rather than accept reasonable arguments in tax disputes, evenwhen the prospects of success are "less than 50 percent," according to the Chartered Institute of Taxation (CIOT).

EU lawmakers have approved a resolution calling for negotiationswith the United States on a Foreign Account Tax Compliance Act agreement thatwould allow EU "accidental Americans" to easily give up their U.S. citizenship.

Taxing the digital economy has become the hot topic as the taxworld has moved on from baseerosionandprofitshifting and Congress has finally acted on reformingthe U.S.corporate tax system.In this article, Mindy Herzfeld proposes that the topic of how to tax the digital economy is best split into two separate topics.

S&P 500 Index members are gearing up to pay out $124.1 billion in dividends in the coming months, a new quarterly record according to data compiled by Bloomberg.The new highwas ushered in by a lower corporate tax rate and the results of lastweek's Federal Reserve stress tests. Dividend declarations made during the second quarterwere 12 percent higher than in the prior year, two percentage points greater than the increase from 2016 to 2017.

In this article, the author discusses the role of value creation in tax policy and legislation.

In this article, the author questions the concept of taxing incomewhere value is created.

The Netherlands has a reputation problem linked to aggressive tax planning, but it has progressed toward containing base erosion and profit shifting and countering its role as a conduit jurisdiction, a new OECD survey shows.

The OECD has released a discussion draft that provides guidance on the application of updated principles for financial transactions in its 2017 transfer pricing guidelines (TPG).

Washington state voterswill likely decide in Novemberwhether to charge industrial emitters a fee for their carbon pollution, the latest effort yet to pass a carbon-pricing measure to fight climate change.

Section 13301 could affect the lives of millions of Americans.

What does Section 13301 do? It limits the ability of corporations to deduct interest payments from their overall taxes. Previously, companies could take all of their interest payments as a deduction, making financing operations through debt more desirable than through equity. Those days are now over.

Tax havens are first and foremost secrecy havens. Recent events in the United Kingdom confirm this view, as Parliament has taken steps to force fiscal transparency on the British overseas territories through public beneficial ownership registers. The territories are fighting back as though their economic future depends on it. This article explores these developments and askswhether the territories should consider a Brexit of their own.

Denmark has finished overhauling its tax administration in a bid to restore public trust after a tax refund scandal that cost the government billions of Danish kroner and rocked the tax body to its core.

Among five new Large Business and International compliance campaigns announced by the IRS July 2 are two concerning the repatriation of foreign earnings.

Thewhite House, the Trump Treasury Department,and Congressional Republicans have every right to celebrate the sixth-month anniversary of the historic tax cuts enacted in late December. U.S. business investment has been rising smartly and a range of public and private forecasts shows rapid economic growth in the second quarter of this year. And there's more good news as Team Trump shares this burgeoning success storywith friends overseas.

Tax Cuts and Jobs Act ("TCJA") signed into law by President Trump on 22 December 2017 contains multiple provisions that significantly impact Europe and theway European corporations are being taxed by the US. The US corporate tax rate is set to be 21% (reduced from 35%). Most importantly, the shift towards participation exemption and the adoption of the base erosion anti-abuse tax ("BEAT"), the global intangible low-taxed income ("GILTI") and the foreign-derived intangible income ("FDII") changed the delicate balance of US-EU taxation. Nonetheless, TCJA should not be considered as a 'taxwar': it is a long-overdue response to the BEPS by the US and a correct application of the single tax principle to prevent double non-taxation.

In this article, the authors discuss the new definition of permanent establishment included in Argentina's recent tax reforms.

The OECD on June 28 launched a database containing detailed, comparable tax revenue information for 80 countries to help policymakers develop and implement tax policy reforms.The Global Revenue Statistics Database, launched at the fifth plenary meeting of the OECD's Inclusive Framework on Base Erosion and Profit Shifting in Lima, is the largest available public source of comparable tax revenue data, according to an OECD release. The database includes country-specific indicators on tax levels and structures and is intended to help users meet the U.N.'s Sustainable Development Goals and the Addis Ababa Action Agenda by supporting global efforts to raise domestic revenues.

After failing to muster parliamentary support to cut corporate tax rates, Australia's ruling coalition has postponed a vote on the controversial measure until after by-elections scheduled for July 28.

Nationswill soon have a new tool to combat tax avoidance, but some tax professionalsworry that authoritieswill take advantage of its ambiguities to challenge some of multinational companies' favorite business structures.

Poland intends to push beyond the EU's new tax transparency rules by requiring tax advisers and other intermediaries to report both cross-border and domestic tax-planning arrangements that are potentially aggressive.

Multinational companies shouldn't stop documenting their loans even though the IRS is proposing to drop complex requirements for such documentation under debt-equity rules, tax practitioners told Bloomberg Tax.

European Union regulators misused their powers by relying on an untried theory to root out unfair competition, lawyers for Belgium and companies slappedwith back tax bills told the bloc's second-highest court. They are fighting back after the European Commission said in 2016 that some 35 companies unfairly benefited from a Belgian tax program that amounted to handing out illegal state aid amounting to about 800 million euros ($926 million) in return for foreign investment.

The Australia Tax Office is seeking feedback on a draft risk assessment framework for inter-group pricing audits of offshore entities that purchase and re-sell business consumables at a markup. The June 27 draft relates to "non-core procurement hubs" that are often centralized companies based in low-tax jurisdictions.

The ambitious super-tax treaty known as the multilateral instrumentwill go into force July 1 for the first five countries that deposited their instruments of ratificationwith the OECD. The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting is a major milestone in the OECD's quest to combat base erosion and profit shifting. Butwhat does that really mean for multinational companies? Here'swhat you need to know.

New Zealand, Serbia, and Sweden joined the small but growing group of jurisdictions thatwill begin to see their tax treaties modified by a first-of-its-kind multilateral tax treaty in 2019, the OECD announced in a June 27 statement.

The tax records of all private companies in Australia earning between A$50 million ($37 million) and A$200 million may become public under a bill now facing the House of Representatives. Lawmakers in the Senate passed the bill June 25. The push fits into broader efforts to crack down on tax avoidance.

The Australian tax authority is extending its rules for disclosure, of contestable tax positions to large and multinational companieswith annual turnovers of more than A$250 million ($184 million). Companies that meet the threshold must now complete and file their "Reportable Tax Position" (RTP) questionnairewith their 2018 tax return.

U.K. lawmakers have renewed criticisms of the government's planned reductions in the top corporate tax rate, adding to the scrutiny over Britain's public finances as it prepares to leave the European Union.

Germany is considering tightening legislation to hold the likes of Amazon.com Inc. and eBay Inc. accountable for lost taxes from foreign-partner vendors. The German Finance Ministrywants online retailers to be liable for unpaid value-added taxes by vendorswho aren't registeredwith German tax authorities.

The digital consulting arms of large accounting firms, including the Big Four, are reaping the benefits of tax reformwith increased demand for their services. Companies are looking to invest their tax savings in digital transformation consulting. For help, some companies are largely turning to the digital consulting divisions of the Big Four accounting firms.

U.S. companies are funneling extra money into their pension funds to take advantage of temporary tax savings, moves that are helping suppress yields on long-term Treasurys. S&P 500 companies are contributing to pension plans this year at a pace expected to nearly match 2017's level,which at $63 billionwas the most since 2003, according to Goldman Sachs Asset Management. Last year's contributionswere spurred in part by companies anticipating changes in the U.S. tax-code overhaul.

U.S. companies have brought home only a sliver of their more than $2 trillion in profits stashed overseas, a sign that this year's corporate spending spree on things like buybacks and new equipment is only just beginning.

The era of U.S. companies hoarding cash offshore may be coming to an end as a result of the new U.S. tax law, a development that raises concerns about corporate credit risk for more indebted companies down the line, according to S&P Global Ratings.

Multinational companies are trying to beat a new tax called the BEAT. The BEAT is the Base Erosion and Anti-Abuse Tax, a complex minimum tax meant to prevent theworld's biggest corporations from shifting profits from the U.S. to other countries. Turned from idea into law last year as part of the tax-code revamp, the BEAT is now frustrating corporate executives and spurring fresh tax-avoidance strategies.

The global intangible low-taxed income provision ÔøΩ new section 951A, combinedwith new section 250 ÔøΩ in the Tax Cuts and Jobs Act (P.L. 115-97) includes rules unlike any that have ever been part of the Internal Revenue Code. Tax advisers and regwriters have beenwrestlingwith concepts that eliminate deferral on any foreign earnings over a fixed return on tangible assets, separate GILTI taxes into their own basket, allow a GILTI deduction at the parent level, and net controlled foreign corporations that have positive tested incomewith those that have negative tested income. Many of those concepts can be traced to international tax reform proposals that have been discussed for over a decade. Review and analysis of the earlier proposals could help inform both advisers and regulationwriters.

The IRS plans to propose new regulations on "previously taxed income"ÔøΩmeant to prevent double taxation of controlled foreign corporations. The new tax law has heightened the need for new rules, an official said.

The U.K. government is still reviewing policy issues for imposing a new tax on the revenue of digital companies like Facebook Inc. and Google Inc., despite claims it had backtracked on original plans.