Int'l Tax News

This article addresses the latest legal developments on taxation of foreign e-commerce companies in Uruguay. According to recent rules, such companies shall be registeredwith the Uruguayan Tax Office, indicate a local domicile (or instead appoint a local representative), and submit annual tax returns, among other obligations. In addition, the Tax Office has established a timetable for companies catching up on their taxes accrued as from January 1, 2018.

European Union-based vendorswho use platforms like eBay Inc. and Amazon.com Inc. to sell goods into the U.K. face a compliance headache in the event of a hard Brexit, as theywould need to register for value-added tax.

South Africa's government is close to agreeing to new tax breaks for international carmakers including Toyota Motor Corp., Ford Motor Co. and BMW AG in return for initiatives to boost jobs and exports, according to Trade and Industry Minister Rob Davies.

The authors model the effects of cash-flow taxes, differing according to the location of the tax, on the behavior of a multinational producing and selling in two countrieswith three different sources of economic rent. The authors conclude thatwhile a cash-flow tax on a source basis createswelfare-impairing distortions to production and consumption, and is partially incident on non-resident owners of domestic production, a destination-based cash-flow tax, in contrast does not distort behavior, but is incident only on domestic residents.

On August 1, Treasury and the IRS released 249-page proposed regulations under Section 965 (the Proposed 965 Regulations). The Proposed 965 Regulations provide guidance relating to the 'toll tax' due upon the mandatory deemed repatriation of certain deferred foreign earnings. The Proposed 965 Regulations incorporate the rules described in prior guidance and set forth additional guidance on a range of issues relating to the implementation of Section 965.

Recently published German draft legislationwould extend the German non-resident taxation rules on capital gains from disposal of shares in a German corporation to capital gains from disposal of shares in a foreign corporation that is deemed to be 'real estate-rich.' If a 100% participation exemption is deemed available for non-resident corporations, the proposed ruleswould be expected to affect primarily non-resident individuals and partnershipswith individuals as partners.

Hot on the heels of a position paper released June 28, the Australian Treasury Department has followed upwith exposure draft legislation targeting structures set up to convert trading income into more favorably taxed passive income.

Omar Moerer, Daniel Pybus and David Ledure examine the OECD's Discussion Draft on financial transactions and concludewhilst the Draft is a small step in terms of guidance, it is a giant leap for financial transactions transfer pricing.

America's biggest companies are reporting some of the strongest earnings growth since the recession, boosted by lowered tax rates and a robust U.S. economy that is fueling demand across industries.

Pending European Union rules to protectwhistleblowers could leave companies exposed to "dangerous leaks of information" and conflictwith confidentiality obligations, leading tax adviser lobby groups havewarned.

Subaru Corp. reported a sales slide in the U.S., its largest market, and predicted a "big impact" from President Donald Trump's proposed tariffs on imported vehicles following the escalation of a global tradewar.

Altera Corp., a subsidiary of Intel Corp., might get another shot in the Ninth Circuit for its tax case. The U.S. Court of Appeals for the Ninth Circuitwithdrew its July 24 opinion in the case "to allow time for the reconstituted panel to confer on this appeal."

The U.K.'s crown dependencies have proposed rules requiring resident companies to demonstrate economic substance, to prove they aren't there merely for tax purposes.

Illinois Toolworks Inc. avoided a multimillion dollar tax billwhen the U.S. Tax Court ruled against the IRS in finding that a loan between the industrial equipment manufacturer's two foreign units is considered to be debt and not a taxable distribution.

Multinationals are currently exempt from the nation's capital gains tax exit rate of 33 percentÔøΩone of the highest in the European Union. But the Irish governmentwill have to take these privileges away at the end of 2019 to complywith EU anti-tax avoidance legislation. The Irish government should keep the rate of a future exit as low as possible to continue attracting multinational corporations, tax practitioners told Bloomberg Tax.

Spanish Prime Minister Pedro Sanchez has pledged to reform Spain's corporate tax rules so that companies pay an effective rate no lower than 15 percent.

Switzerlandwants to see the introduction of an internationally applicable standard for the taxation of the digital economy.

The Tax Cuts and Jobs Act (TCJA) is the most eagerly-awaited tax bill in a generation,with implications for trillions of dollarsworldwide. International Tax Review looks at the trends since tax reform came into force.

The Brazilian tax system is broadly recognised as complex a result of several different taxes levied on similar tax bases, different levels of taxation and legislations imposed at national, state and municipal level, and high rates affecting products and corporate transactions.

By: Joshwhite

Facebook expects to take a tax hit after the Internal Revenue Service (IRS)won a landmark case against Intel Corporation's subsidiary Altera.

The United States must nominate "a strong advocate" as ambassador to the OECD to address the EU's digital services tax proposal and defend the Tax Cuts and Jobs Act, Republican lawmakers urged the Trump administration.

The Internal Revenue Service said in a legal memorandum dated Thursday that itwon't rebate any such overpayments or credit them toward tax bills not tied to repatriation, such as annual bills for corporate income.

This issueof PwC's International Tax Newsaddresses, among other topics, implementation of the EU anti-tax avoidance directive in Denmark, potential tightening of Germany's real estate transfer tax rules upon transfers of shares; BEPS implementation in New Zealand, and U.S. tax reform implementation.

Facebook, Google, and many other U.S. companieswill need to adjust their financial statements after an unanticipated federal court ruling that backed IRS policy. The decision in Altera Corp. v. Commissioner has major implications for companies that share costs for developing intangible assetswith their related entities.

Apple Inc.will share the expenses of stock-based compensationwith its foreign subsidiaries following a federal court decision that backed IRS cost-sharing regulations, the company said.

One year after India introduced a consumption tax, the results have been mixed. Hailed as one of the biggest reforms by Prime Minister Narendra Modi, the goods-and-services levy has helped increase tax collections in a countrywhere compliance is historically low.while monthly receipts have picked up after a chaotic rollout, they are still not strong enough to meet the government's annual tax target.

Inquiries that fell into the scope of the U.K.'s "Google tax" have resulted in a 388-million pound ($509 million) clawback for the Treasury, up 38 percent from the previous year. The amountwas collected from just 22 businesses, indicating the size of the charges levied.

The German Cabinet adopted a bill Aug. 1 thatwould make e-commerce platforms like Amazon.com Inc. and eBay Inc. liable for users' unpaid value-added tax,while setting stringent new registration requirements for new traders.

Asset managers that are negatively affected by the European Union's moves to tax financial transactions are likely to relocate to the U.K. after Brexit, analysts say.

The Canadian government has proposed limiting the amount holding companies can recover from value-added and sales tax they pay on goods and services purchased for an operating subsidiary. The measure, if adopted,will hit industries like the mining industry,which commonly uses input tax credits. The changewould also make subsidiaries more expensive to operate and could ultimately affect companies' investment decisions, tax lawyers told Bloomberg Tax.

The Australian tax authoritywants to review intragroup company payments involving cross-border related parties against risk indicators that include the tax deductibility of payments aswell as liability forwithholding tax. The approachwas set out in guidance issued Aug. 1 by the Australian Tax Office, detailing how it plans to assess compliance for related party derivative transactions,with effect from July 1, 2017, for existing and newly created financing arrangements.

The introduction of value-added tax in the United Arab Emirates on Jan. 1 forced many companies to overhaul their invoicing and accounting systems and re-appraise their business operations. For the first time, businesses must check their supply-chain documentation for procurement and sales. They must also assess their supply chains for tax efficiency. Those tasks are complicated by the country's 23 "designated zones,"which are subject to special VAT rules. According to a practitioner, "a lot of people are confused about their supply chains running through free zones and designated zones. . . ."

A U.K. proposal requiring the platform economy to pay employment tax for theirworkerswould likely raise costs andworkloads for the companies,which include Uber Technologies Inc., practitionerswarn.

A new international tax thatwas supposed to deter U.S. technology and pharmaceutical companies from shifting their profits offshore could instead catchwall Street banks in its crosshairs. The levy on international profits -- called Gilti -- is only supposed to kick in if a company is paying an especially low tax rate in foreign countries. But quirks in theway the tax is calculated mean itwill likely hit big bankswith offshore operations, evenwhen they already pay effective foreign tax rates above the threshold.

European Union member nations are divided over a plan to add company beneficial ownership transparency standards to the criteria used to draw up the bloc's tax haven blacklist.

China on July 20 released a tax reform plan aimed at creating a more unified taxation system across the country. Reforms include integrating "national and local taxation offices at and below the provincial level to enable the taxation system to better play its supportive role in state governance," and easing "collection procedures for taxes and fees, lower collection costs and improve the business environment."

Canada's Liberal government is scaling back elements of its planned carbon-tax regime to addressworries from the business community about global competition.

Amazon's main UK subsidiary paid £1.7m rather than £13.9m after a massive deduction from share-based awards that offer a legalway for companies to reduce payments to the exchequer.

The US Treasury has set out details of tax reforms to tackle $3tnworth of corporate earnings hoarded overseas, as it introduces a regime it hopeswill boost investment in the country.

Instead of following other jurisdictions, African countries must take charge by initiating changes in the international tax agenda to influence thework on topics like digital taxation and ensure their needs are met, officials urged.

Canada's impending federal carbon tax is facing new legal challenges despite the government's effort to decrease the tax's potential impact by increasing carbon tax subsidy rates.

The government of South Korea is reportedly preparing legislation thatwould make Amazon, Apple, Google, and other digital companieswithout a permanent establishment in the country subject to tax.

The Australian government has released draft legislation thatwould restrict multinationals' flexibility in determining assets and liabilities under the country's thin capitalization regime, including by requiring consistencywith values used for financial reporting purposes.

Lengthy transition tax regs may offer practitioners some reassurance in fleshing out more details, but they don't venture much outside the original scope of previous guidance.

Congress, by the Tax Cuts and Jobs Act of 2017, amended the Internal Revenue Code so that patents and inventions created by the personal efforts of a taxpayer disposing of them are not capital assets, and therefore generate ordinary gain or loss. In and of itself, the action seems straightforward enough. It represents a policy choice aboutwhich reasonable minds can certainly differ, but it is a clear policy choice.
Congress, however, did not repeal or amend another, pre-existing, provision specifically granting capital gain treatment to specifically the same class of assets.what is the effect of Congress's action under the circumstances? It is possible to reconcile the provisions as a matter of pure textual analysis. That reconciliation, however, seems quite contrary to the desire or intent of thosewho initiated the amendment because it leaves most gain from the disposition of the assets in question taxed at capital rather than ordinary rates.

In this installment,which is Chapter 5 of a book published by Michael C. Durst, the author considers five kinds of policy instruments that might offer significant protections against base erosion for lower-income countries.

Thisarticleexamines some of the factual assumptions and economic arguments presented in the European Commission staff's ''Commission Staffworking Document ÔøΩ Impact Assessment,'' issued on March 21, 2018, to accompany two draft Directives the EC released relating to taxation of the digital economy.

PwC summarizes guidance put forward by the EU's inter-governmental Code of Conduct Group (Business Taxation) (CoCG)recentlyfor determining substancewhen consideringwhether a tax measure is harmful or 'fair'. Theguidance includes elements of behaviour that Member States must meet and requirements that nonmember States must adopt in order to avoid being included on the so-called blacklist of non-cooperative non-EU, third countries.

This paper reviews the empirical literature on international tax avoidance by multinational corporations, includingevidence on main channels of corporate tax avoidancesuch astransfer mispricing, international debt shifting, treaty shopping, tax deferral and corporate inversions.It performs a meta analysis of the extensive literature that estimates the overall size of profit shifting, andextends earlier literature reviews by Dharmapala (2014), Hines (2014) and OECD (2015). Theresults suggestthat a 1 percentage point larger tax rate differential reduces reported pre-tax profits of an affiliate by 1 percent. The authors alsoillustrate the revenue impact of tax avoidance for 81 countries.