Int'l Tax News

New Zealand's Labour government, seeking to follow through on campaign promises, has announced that itwill propose a 12.5 percent research and development credit beginning in April 2019.

The Tax Cuts and Jobs Act (P.L. 115-97) contains several provisions that question the premise of the regulatory authority granted by section 367(b) and how that authority has historically been interpreted by Treasury and the IRS. That's because it's no longer clearwhether the reorganization provisions of the code still provide an effective tool for taxpayers to avoid U.S. income taxes in a cross-border setting.whether any of the section 367(b) regulations make sense after enactment of the TCJA is an open question that has mostly escaped public notice.

The IRS intends to issue guidance on how U.S. multinational corporate families that file a single tax return should calculatewhat they owe under a new "base erosion" tax, an agency official said.

An open letter organized by The Australia Institute has urged the Australian Government not to join a race to the bottom on tax and to instead focus on tackling tax avoidance and tax loopholes.

Promised tax cuts in Israel are unlikely after lackluster revenue figureswere releasedÔøΩthough such a movewould be politically popular and could help the country competewith the U.S., practitioners told Bloomberg Tax.

Big banks posted strong and rising returns on equity in the first quarter, some as high as 15%.while the banks' first-quarter ROEswere strong, a significant chunk of the strength stemmed not from growth in the banks' operations, but from the sharply lower tax rates they're now enjoying because of the federal tax overhaul enacted in December, according to an analysis by Thewall Street Journal.

European Union members of parliament accused countries in the bloc of "protecting the interests" of multinational companies by blocking a proposal requiring them to report profits earned and taxes paid on a country-by-country basis.

The EU's proposal to tax the digital economy has the support of 20 of 28 member nations, European Taxation Commissioner Pierre Moscovici said April 19. "I'd say there's a reasonable chanceÔøΩor a reasonable risk, depending onwhere you stand," that the proposal is adopted, Moscovici said at an American Enterprise Institute forum inwashington.

Among President Donald Trump's most deeply held economic convictions is that trade deficits are bad, yet his signature economic policyÔøΩa major tax cutÔøΩlikelywill deepen the trade deficits he abhors for years to come.

European Union member nations have agreed to analyze the tax revenue impact of a stripped-down version of a common corporate tax base (CCTB) for the bloc asway to ensure there are no "winners and losers" because of the reform.

Companies are holding on to a ton of cash that could end up in shareholders' hands, one reason some investors are turning more optimistic about the stock market. A lot of that cash could go towards buybacks as companies figure outwhat to dowith their fatter profits and bring back overseas money as a result of the recent tax-code overhaul.

Big banks just received the first installment of benefits corporate Americawill reap from the new federal tax law. The haul: more than $2.5 billion. The latest gain came Tuesdaywhen Goldman Sachs Group Inc. reported first-quarter profit that rose 26% from a year earlier. Thiswas aided by a lower corporate tax rate that boosted earnings by about $232 million.

The new Dutch government has announced its policy agenda to address tax evasion and tax avoidance in the Netherlandswhilst at the same time maintaining an attractive investment climate for Dutch and foreign multinational companies.

Forcing up-front payment of disputed tax benefits in avoidance probes has been the U.K.'s most effective new law to fight non-compliance in the past five years, according to a government official.

Digitizationwill undoubtedly change how the European Commission reviews competition issues as more industries are affected by digital tax factors, EU Competition Commissioner Margrethe Vestager said April 13.

An EU Councilworking groupwill discuss a recent meeting of the OECD's Forum on Harmful Tax Practices (FHTP),which began reviewing elements of U.S. tax reform that the EU flagged as potentially problematic.

In this article, the authors discuss Luxembourg's proposed intellectual property tax regime, a new policy designed to complywith the OECD's nexus approach and ensure that Luxembourg remains an attractive location for intellectual property investment.

While members of the OECD'sworking Party 6 are near agreement on final profit-split guidance and a new draft on hard-to-value intangibles (HTVIs), countries remain divided on financial transactions, according to an OECD official.

The EU needs to do furtherwork on its transfer pricing framework and is currently focusing on issues such as joint audits and profit splits, a top EU official said.

Despite the challenges inherent in adding participants to a consensus-based process, the base erosion and profit-shifting project's inclusive framework ultimately gives OECD recommendations moreweightwith nonmember countries, according to an OECD official.

Increasing tax neutrality across different types of savings may encourage more inclusive growth, but there is little need to introducewealth taxes in countrieswith broad-based personal capital income taxes, according to the OECD.

In this article, the authors discuss Mexico's special economic zones, the first five ofwhich are slated to become operational this year, including how the zoneswill function and the benefits theywill provide to investors.

Nathan Boidman reflects on the high tax kickout as applied to the GILTI provision.

US companies are expected to shower investorswith a record amount of share buybacks in the current earnings season, as corporate executives take advantage of major tax cuts and a faltering stock market to increase their repurchase programs.

Lower taxes and higher interest rates have helpedBank of America reach an important threshold for profitability for the first time in seven years, the latest sign that the industry bellwether has put its post-crisis malaise behind it.

Donald Trump's tax reforms have yet to deliver their biggest boost to America's banks or economy, Citigroup chief financial officer John Gerspach said on Friday as his company reported solid growth in first-quarter earnings. "The real benefits of tax reform are really yet to be felt in the overall economy and in corporate actions," Mr. Gerspach told reporters.

The U.K. Treasury's tax simplification adviser has called for a detailed review of tax relief available to businesses at significant stages of their development.when "one looks across the tax charges and reliefs applicable to the business lifecycle as awhole, the picture becomes complex and confusing to many," the Office of Tax Simplification said in an April 16 report.

Drugmakers have been hitworst among Europe's largest economies from a one-off U.S. levy on corporations' overseas earnings, a result of the deal-making boom in the pharmaceutical sector.

Many tax authorities are becoming increasingly specialized in intercompany pricing arrangements of multinationals,which is leading to more audits, practitioners said.

The new U.S. base erosion and anti-abuse tax suggests that U.S. policymakers have lost confidence in the ability of transfer pricing to solve the problem of corporate tax evasion, the OECD's tax policy chief said.

U.S. multinationals are starting to feel the impact of the new tax law's levy onwhat is called global intangible low-taxed incomeÔøΩand analysts and tax practitioners see more effects to come. The announcement of a GILTI-related higher tax rate by Tupperware Brands Corp. is an example ofwhat other companies could face, they told Bloomberg Tax.

Foreign-derived intangible income (FDII) provisions in the new U.S. tax law could activate a "defensive measure" under German law thatwould deny deductions for royalty payments made to U.S. companies, a German tax official said.

The EU still hopes to find an international answer to tax policy changes for internet based companies, a senior official said. "We are now embarking on discussions at the EU level, but that does not mean thatwe've given up on the international discussion, or thatwe in anywaywithdraw from the international discussion," said Bernardus Zuijdendorp, head of the European Commission's Company Taxation Initiatives unit.

The push to overhaul the European Union value-added tax regime has stalled because a majority of member nations oppose an exemption for companies to transition to a destination-based scheme for cross-border sales.

The OECD has published new transfer pricing country profiles for Australia, China, Estonia, France, Georgia, Hungary, India, Israel, Liechtenstein, Norway, Poland, Portugal, Sweden, and Uruguay, bringing the number of such overviews published by the OECD to 44.

HM Revenue and Customs (HMRC) has launched a consultation inviting input on proposals to tackle arrangements entered into by individuals, partnerships, or companies that aim to move UK profits outside the scope of UK taxation, typically through the use of offshore trusts and companies.

The Bank of Canada has published the findings of its latest business outlook survey,which shows some concern among firms over the impact of US trade and tax policies.

Since the spring of 2017, the Bank has asked firmswhether policy announcements from the Trump administration – or the uncertainty around them – have had, or are expected to have, an impact on their business.

Republicans on the House's tax-writing committee are clinging to the new tax-cut law in their reelection races, as the odds of a bluewave in November appear to be increasing

The view that inequality is harmful for growth is increasingly fashionable among policymakers around theworld. In the strongest form of this argument, high levels of inequality can make sustained growth impossible or even cause recessions. In aweaker form, lower levels of inequality are good for growth. Among policymakers this view has almost entirely supplanted the traditional economic view that therewas a tradeoff between inequality and growth, and that greater inequality might be the cost of higher levels of growth. This paper is not a fresh attempt to assess the empirical evidence on inequality and growth or a survey of the existing literature. Instead this paper addresses the question ofwhether policymakers should even be interested in this question in its traditional form, answeringwith a resounding no for three reasons.

Illinois Toolworks Inc. has asked Treasury and the IRS to issue guidance indicating that, for purposes of the foreign tax credit limitation under section 904(a), indirect expenses are not apportioned to any amount includable in the gross income of a U.S. shareholder as global intangible low-taxed income under section 951A.

Issuing guidance on the application of the base erosion antiabuse tax (BEAT) aggregation rule is a top priority for the IRS, according to an agency official. Speaking April 10 at an International Tax Institute luncheon in New York, Daniel McCall, IRS deputy associate chief counsel (international-technical), said the IRS has made it a top priority to issue guidance on the application of the BEAT aggregation rule to groups attempting to determinewhether they meet the rule's $500 million average annual gross receipts test or fall under the 3 percent de minimis exception (also known as the BEAT percentage).

The challenges of taxing the digital economy are "not something you can fixwith antiabuse rules," according to Valeska Gronert, head of sector in the European Commission's Directorate-General for Taxation and Customs Union. It's not about aggressive tax planning, it's about an "outdated tax system," she said.

The United Nations and the OECDwill be rolling out more international tax guidance aimed at developing countries, as non-OECD economies have joined the global project to combat base erosion and profit shifting.

As the OECD's super-tax treatyÔøΩthe multilateral instrumentÔøΩnears its entry into effect, practitioners representing multinational companies remain concerned about a provision designed to avoid treaty abuses.

The IMF iswading into a thorny debate overwhether online giants such as Facebook Inc. andAmazon.comInc. pay enough taxes. Some digital industries are prone to become monopolies, because the first company that establishes a technology often becomes dominant, the IMF said in an analysis released April 12."The resulting market distortions are best addressed through regulatory rather than tax measures. However, in their absence, the high profit generated provides an attractive tax base, especially given that some technology giants are among the largest companies in theworld," the fund said.

Trade union and tax justice groups insist an upcoming European Commission company law legislative package include an economic substance test to combat letterbox company tax abuse. Due to be released April 25, the new commission legislative package aims to modernize EU company law in the digital era.

The taxworld could see the development of international common law for transfer pricing as countries fight for their slice of multinationals' profits, such as in the case of Ireland, the European Union, the U.S., and Apple Inc, a U.K. tax barrister said.

Business leaders in the Philippines say they fully support the Duterte Administration's proposed corporate tax reforms and investment incentives package.

Describing the reforms as "a bold move" to sharpen the Philippines' regional competitiveness, the Management Association of the Philippines, an association of over 1,000 business executives from the country's largest local and multinational companies, said lowering corporate income tax rateswill put the country on parwith its ASEAN peers. It also praised proposals to modernize investment incentives, and make these perks time-bound and performance-based.