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Int'l Tax News

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Global minimum tax will put the squeeze on investors’ returns

  • By Financial Times

New international tax rules will force multinational companies to pay an extra 6.5% to 8.1% in tax, according to the OECD. The impact will be felt most acutely by companies that use tax havens, euphemistically known as investment hubs. 

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OECD to Start Work on More Pillar 2 Anti-Arbitrage Guidance

  • By Stephanie Soong

The OECD will soon begin working on broader guidance tackling hybrid arbitrage arrangements involving the pillar 2 global anti-base-erosion rules, and it could release that guidance this year, an OECD adviser said.

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US Rejects Renegotiating Major Parts of Global Tax Treaty

  • By Lauren Vella

After soliciting public feedback on the OECD’s multilateral tax treaty in case any important issues were missed, the US does not plan to reopen negotiations of the document, according to a Treasury Department official. However, some consideration as to the definition of terms in the treaty may be made.

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Treasury Eyes Extraterritorial Taxes in Foreign Tax Credit Regs

  • By Lauren Vella

The Treasury Department is focused on finding a “principled” way to deal with novel extraterritorial taxes like digital services taxes as it considers changes to its foreign tax credit rules. 

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Global minimum tax will boost revenues for tax havens, says OECD

  • By Emma Agyemang

Countries categorized as “investment hubs”, such as Ireland and the Netherlands, will have the largest expected gains from the reforms, with corporate income tax revenues rising from 14 per cent minimum to up to 34 per cent. 

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Platform Contributions: Cost Sharing’s New Definitional Fight

  • By Ryan Finley

Ryan Finley explains why it’s wrong to read special exclusions for items like goodwill into the cost-sharing regulations’ definition of a platform contribution.

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Global Minimum Tax May Raise Extra $192 Billion, OECD Paper Says

  • By Stephanie Soong

The global anti-base-erosion rules could raise as much as $192 billion annually in extra corporate tax revenue and reduce low-taxed profits worldwide by more than two-thirds, according to an OECD working paper.

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Yellen: New Beneficial Ownership Reporting Rules Already Working

  • By Alexander Rifaat

Treasury Secretary Janet Yellen says new requirements for beneficial ownership information reporting implemented by the department’s Financial Crimes Enforcement Network are leading to a noticeable improvement in tax transparency efforts.

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Colombia Looks to Lower Corporate Tax Rate to 30% in Years Ahead

  • By Sam Edwards

Following President Gustavo Petro’s calls for a lower corporate tax rate, Colombia’s finance minister said the government is revising a proposal to gradually reduce the corporate tax rate from 35% to 30% in the coming years.

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SBIE Significantly Cuts Pillar 2 Tax on U.S. Profit

  • By Martin A. Sullivan

Martin A. Sullivan uses several data sets to explore how the substance-based income exclusion affects pillar 2 tax on the profits of U.S. multinationals in various industries and jurisdictions.

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South Korea Sets Up Special Team for Global Tax Reform Rules

  • By Stephanie Soong

South Korea’s tax authority has created an international tax response team to administer new global minimum tax and digital taxation rules and participate in international talks under the OECD’s two-pillar global tax reform plan.

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Vietnam Investment Fund Is Key Amid Pillar 2 Rules, Minister Says

  • By Stephanie Soong

Vietnam’s proposed investment support fund created in response to its adoption of global minimum tax rules is necessary to ensure the country’s continued competitiveness and attractiveness to business, according to a top Vietnamese official.

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Constructive Ownership and the Meaning of Control for CFC Purposes

  • By Lucas De Lima Carvalho

Lucas de Lima Carvalho explains the importance of control in the taxation of controlled foreign corporations and reviews the ordinary meaning of the word and how it relates to its use in tax legislation.

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Hidden Research Incentives Face Progressive Attack

  • By Gary Clyde Hufbauer

Gary Clyde Hufbauer argues that low taxation of intellectual property sourced abroad provides a major, if hidden, tax incentive, and that taxing such income at a higher rate is a bad policy choice that will hinder future U.S. innovation.

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Businesses Warn of Disputes in Global Minimum Tax Peer Review

  • By Lauren Vella

The possibility that countries will interpret the highly complex global minimum tax rules differently and adopt inconsistent legislation raises concern amongst businesses. Disagreements between countries’ interpretation of the rules may lead to double-taxation problems for businesses. 

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New Year, New Expectations for Global Tax Transparency

  • By Nana Ama Sarfo

Nana Ama Sarfo discusses some expected tax transparency activity in 2024.

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A step forward in global corporate taxation

  • By The Editorial Board

The OECD’s global minimum tax of 15% goes into effect this week in several dozen countries. Although the US and China are not part of the economies employing the global minimum tax, enactment in some of the world’s largest economies will raise vital proceeds for governments and end a “race to the bottom” on corporate tax.  

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The Not-So-Obvious Effects of Pillar 2 on Tangible Capital Investment

  • By Martin A. Sullivan

Martin A. Sullivan examines how the pillar 2 anti-base-erosion rules may affect incentives and how some of those detrimental effects could be mitigated.

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Belgium Vows to Move EU Tax Proposals Forward

  • By Elodie Lamer

Belgium is inheriting a heavy tax agenda as it takes over the EU Council presidency from Spain in the new year.

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Global minimum tax on multinationals goes live to raise up to $220bn

  • By Emma Agyemang

Enactment of the OECD’s global minimum tax only needs a critical mass of countries to implement it and result in an increase in annual tax revenue of 9%, while still creating favorable international tax competition in the form of tax credits, grants and subsidies.  

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Colombia Should Lower 35% Corporate Tax Rate, Petro Says

  • By Manuela Tobias and Oscar Medina

Colombian President Gustavo Petro calls for a tax reform proposal to lower the country’s high corporate tax rate, remove the VAT on tourism-related activities and create tax exemptions for clean energy. 

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European Commission to Focus on Decluttering as Mandate Ends

  • By Elodie Lamer

The missions given to EU Tax Commissioner Paolo Gentiloni when he took office have been fulfilled, but the European Commission still has some tax initiatives in the drawer for the closing months of its mandate.

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EU Member States Publish Pillar 2 Laws in Official Gazettes

  • By Stephanie Soong

Bulgaria, Croatia, and the Netherlands recently published laws implementing an EU directive providing for global minimum tax rules in line with an OECD-brokered, two-pillar plan to revamp the international corporate tax system.

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2024 will herald the end of a race to the bottom in corporate tax rates

  • By Paolo Gentiloni, European Commissioner for the Economy

 European Commissioner for the Economy, Paolo Gentiloni, discusses the application of the OECD’s minimum tax rules in jurisdiction around the world. According to Gentiloni, the global minimum tax will put an end to the downward spiral of corporate tax rates over the last four decades. 

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Belgian Parliament Adopts Public CbC Reporting Rules

  • By Elodie Lamer

Belgium's Chamber of Representatives has adopted a draft law transposing the EU directive on public country-by-country reporting, with some changes aimed at making it stronger.

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U.N. General Assembly Adopts International Tax Cooperation Resolution

  • By Sarah Paez

The U.N. General Assembly has adopted a resolution that aims to move negotiations on international tax matters from the OECD to the U.N.

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Switzerland Pillar 2 Top-Up Tax to Take Effect in 2024

  • By Sarah Paez

A Swiss qualified domestic minimum top-up tax will go into effect January 1, 2024, as part of an OECD/G-20-led two-pillar plan to modernize global corporate tax rules.

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European Commission Publishes FAQ on Pillar 2 Implementation

  • By Stephanie Soong

The European Commission has posted a lengthy FAQ in response to a wide range of technical questions from member states and other stakeholders about the application of the EU’s global minimum tax directive.

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R&D Regs, Minimum Tax Changes Top Corporate 2024 Watch List

  • By Caleb Harshberger

Corporate tax advisers are gearing up clients for 2024 tax code changes to research and development expenses, an election year that could determine the fate of some high-profile laws, and corporate minimum taxes, among other regulatory actions from the IRS and Treasury Department. 

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EVs Must Follow Foreign Entity of Concern Rules for Tax Credit

  • By Caleb Harshberger

The IRS updated its clean vehicle tax credits FAQs sheet, emphasizing that vehicles and dealers must follow the rules to be eligible for credits. Vehicles with battery components manufactured or assembled by a foreign entity of concern aren’t eligible for any amount of new clean vehicle credit, even if the vehicle meets the critical mineral applicable percentage requirements for 2024. In addition, qualified manufacturers are required to make an attestation demonstrating compliance with the foreign entity of concern requirements. 

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IRS’s Pillar Two, Foreign Tax Credit Guidance Present Conflicts

  • By Jeffrey Tebbs and Caroline Reaves

Jeffrey Tebbs and Caroline Reaves of Miller & Chevalier Chartered analyze recent guidance addressing the interaction of the US foreign tax credit system with Pillar Two top-up taxes coming into effect in 2024. According to Tebbs and Reaves, it isn’t clear that Pillar Two taxes can (or should) be excluded from the US exceptions for high-taxed income. Nor is it clear how a Pillar Two tax could be ineligible for the US foreign tax credit but nevertheless result in a deemed dividend inclusion. 

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Hong Kong, United Kingdom Start Pillar 2-Related Consultations

  • By Stephanie Soong

Hong Kong started consulting on its implementation of global minimum tax rules for 2025 on the same day the U.K. government announced it is seeking input on more draft guidance for its pillar 2 regime.

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Gibraltar Plans Pillar 2 Top-Up Tax Legislation for Early 2024

  • By Sarah Paez

Gibraltar plans to introduce legislation in 2024 to implement a qualified domestic minimum top-up tax on local subsidiaries and permanent establishments of large multinational enterprises.

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Biden Pushes Strict Climate-Subsidy Rules Despite Energy Producers’ Warnings

  • By Amrith Ramkumar and Richard Rubin

Proposed criteria that would determine who gets generous tax credits for producing hydrogen are too strict and could stifle the industry, energy companies say.

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Canada’s Digital Services Tax Plan Likely to Meet Many Obstacles

  • By Patrick Marley and Kaitlin Gray

Osler’s Patrick Marley and Kaitlin Gray say Canada’s latest move to implement a digital services tax is likely to encounter political and practical challenges related to the tax itself and the OECD’s Pillar One. 

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Colombia’s New Digital Tax Rules Face Implementation Challenges

  • By Juan David Velasco and Juan Diego Fernandez

Baker McKenzie’s Juan David Velasco and Juan Diego Fernandez analyze fiscal challenges arising from economic digitization and Colombia’s recent tax reform. New regulations taking effect on Jan. 1, 2024, consider nonresidents ‘significant economic presence’ as an alternative to the OECD’s proposed guidelines for its two-pillar approach.  

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U.N. Shouldn’t Tinker With Two-Pillar Plan, EU Official Says

  • By Elodie Lamer

Discussions on a plan for international tax cooperation under U.N. auspices is feasible, but rethinking the OECD’s two-pillar global tax reform plan would be “a giant waste of time,” a top European Commission official said.

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The World’s Most Complicated Tax System Just Got Easier

  • By Samantha Pearson

Brazil signed into law an overhaul to simplify a patchwork of tax codes from its states and thousands of municipalities.

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Expectations for 2024: Pillar 1 Finds an Off-Ramp

  • By Robert Goulder

Robert Goulder considers Canada’s refusal to extend the global DST moratorium beyond 2023.

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Leveling the Pillar 2 Playing Field for the Asset Management Industry

  • By Kevin Brogan, Alistair Pepper, and Daren J. Gottlieb

Kevin Brogan, Alistair Pepper, and Daren J. Gottlieb consider the implementation of the pillar 2 global anti-base-erosion rules and ways in which revisions to them may create more consistency with policy objectives.

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2023: The Judiciary Takes Center Stage

  • By Mindy Herzfeld

Mindy Herzfeld looks back at key tax litigation from 2023, including Christensen v. United States.

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Plowgian Hints at Extension of Pillar 1 Negotiation Deadline

  • By Michael Smith

The United States expects an extension of the pillar 1 negotiation deadline into 2024 and is working to extend the digital services tax moratorium as well, Treasury’s outgoing OECD negotiator said.

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Corporate AMT Notice Tackles Double Counting

  • By Chandra Wallace and Andrew Velarde

The IRS and Treasury issued further interim guidance for the corporate alternative minimum tax, addressing potential double counting of income from controlled foreign corporations and modifying prior guidance for tax consolidated groups.

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UK to Tax Climate-Damaging Imports From 2027

  • By Charlie Cooper

The U.K. will impose a tax on imports with a big overseas carbon footprint, the government announced, in a major new commitment that aligns the country with the EU in efforts to use the global trade system to tackle climate change.

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EU Carbon Tax Could Cost Africa $25 Billion, AfDB Chief Says

  • By Ana Monteiro

Africa could lose as much as $25 billion annually due to the European Union’s new carbon border tax, hurting the continent’s trade by penalizing valued-added exports such as iron and fertilizers, African Development Bank Group President Akinwumi Adesina said.

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Tax Havens Race to Lure Companies as 15% Global Levy Looms

  • By Danish Mehboob and Lauren Vella

The 15% global minimum tax, part of the 2021 global tax pact agreed to by more than 140 countries, seeks to end the “race to the bottom” that has nations competing to offer the lowest corporate tax rates to draw big business investment to their shores.

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Australia Asks Digital Service Providers About Minimum Tax Plans

  • By Danish Mehboob

Australia started consultations with digital service providers to inform them on global minimum tax implementation plans, data requirements, and potential solutions for future compliance.

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Supreme Court Wary of Remaking Income Tax

  • By Jess Bravin and Richard Rubin

Justices hearing arguments over whether unrealized income could be taxed appear to shy away from a broad ruling.

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Pillar 2 Makes Some Tax Measures Redundant, EU Stakeholders Say

  • By Elodie Lamer

Several stakeholders have told the European Commission that some anti-tax-avoidance measures, including country-by-country reporting, will not be needed with the implementation of pillar 2 of the global tax reform plan.

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EU Commission Urges Cooperation Between U.N. and OECD on Tax Work

  • By Sarah Paez

The European Commission said the U.N. and the OECD should join forces to avoid any overlaps of their tax work, following a U.N. resolution to move international tax negotiations to the U.N.

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