Int'l Tax News

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.

Multinationals indirectly investing into China should examine their restructuring options to take advantage of China's beneficial ownership tax treaty rules that could cutwithholding tax rates on dividends, royalties and interest.

The Senate Republicans' campaign arm is escalating its attacks on Democrats running in key races over opposition to the GOP's tax overhaul.

A liberal group on Monday launched awebsite to track how corporations are responding to the new tax law.

Thewebsite from Americans for Tax Fairness, called "Trump Tax Cut Truths," contains searchable data about the size of corporations' tax cuts aswell as information about bonuses,wage increases, job cuts, new investments and stock buybacks companies have planned following the law's enactment. The database contains information about more than 800 companies.

Paul Crispino analyzes recent court decisions inwhich taxpayers prevailed in arguing that their interpretation of the tax codewas reasonable even though those interpretations may have produced tax benefits that Congress had not contemplated.

Many foreign corporations are refraining from making long-term investments in the U.S., concerned that incentives in the new tax reform lawwon't stick orwill phase out too quickly to help them, practitioners said.

Republicans' pitch on tax cutswas fairly clear: Lower rates on corporationswould spur investment and create new jobs. A new survey published by the Federal Reserve Bank of Atlanta in conjunctionwith Stanford University and University of Chicago Booth School economists shows the new policy measures have done little do bolster corporate investment plans.

U.S. states could learn valuable lessons from the EU's efforts to impose VAT on electronic sales between member states if the Supreme Court overturns its decision in Quill. Richard Asquith, vice president of global indirect tax at Avalara in London, told Tax Analysts there are two reasons the states should look to the EU's efforts to improve VAT collection on e-commerce should the 1992 decision in Quill Corp. v. North Dakota be overturned.

In 1864 Generalwilliam Tecumseh Sherman's army marched from Atlanta to Savannah, carrying out a scorched-earth campaign that eviscerated much of the landscape along theway. The Tax Cuts and Jobs Act (P.L. 115-97) is having a similar effect on large areas of the U.S. international tax regime. It haswreaked havoc by layering new concepts on old, and the two don't meshwell.whether the U.S. Treasury and the IRSwill be able to use regulatory guidance to restore a system thatwas already awobbly house of cards is unclear.

Tax executives almost unanimously consider the U.S. corporate rate to be the tax reform provisionwith the greatest potential to influence business, according to a new survey.

The majority of Canadian firms anticipate "no clear impact" on business activity over the next 12 months from the Trump administration's policy changes on trade and taxes, a quarterly Bank of Canada survey said Monday.

US companies are expected to report earnings growth of 17.1 percent per share for the first three months of the year, as Donald Trump's cut to the corporate tax rate helped to deliverwhatwould be the biggest quarterly increase in seven years.

European executives are targeting U.S. companies as a brighter economic landscape at home and abroad boosts buyer confidence. Lower taxes and favorable foreign exchange rates are increasingly enticing for France's JCDecauxSA,which has looked at U.S. rivals as potential acquisition targets for more than a decade.

Vietnam's excitement for a raft of new trade deals comeswith the side effect of lower tariff revenues, so tax collectorswill help cover the shortfallwith more audits in the coming year, especially for transfer pricing.

India's dreaded long-term capital gains tax has made an "insignificant splash" in the mutual funds and equity markets, according to practitionersÔøΩindicating Indian markets are strong enough to standwithout tax incentives.

The EUwill likely ensnare Germany's massive auto industry as it targets U.S. tech companies for massive tax bills the bloc believes it is owed. Car industry representatives told Bloomberg Tax they fear automakers therewill face undue tax burdens under the European Commission's new tax treatments of digital companies like Facebook Inc. and Alphabet Inc.'s Google.

Companies in Brazil have begun to post victories as they challenge a controversial tie-breaking procedure used by the revenue service's appeals courts. In February and March, the Brazilian units of Delta Airlines and American Airlines blocked rulings they had lost because of a rule that permits the heads of the tax courts to vote twice to break ties.

Opposition lawmakers March 29 applied renewed pressure on the Dutch government to publicly release anonymous versions of individualized tax deals issued to resident companies. Lawmakers made the statements during a plenary debate on tax avoidance duringwhich lawmakers repeatedly pressed the country's finance secretary to do more to tackle tax avoidance by companies and curb profit shifting through the Netherlands.

The Australian opposition Labor Party has initiated a Senate inquiry into business support for the government's plan to reduce the corporate tax rate to 25 percent from 30 percent, even after the government stalled a vote on it. The inquirywill target a commitment given March 21 to the Senate by the Business Council of Australia and 10 of its members, including some of Australia's largest companies.

In comments to the TPMinds International Conference in late March, Deputy Commissioner Mark Konza outlined the Australia Taxation Office's priorities in the area of international tax enforcement,with an especial focus to be placed on the energy and resources sector and pharmaceutical industry.

A bipartisan group of lawmakers, conservative groups and online businesses are urging the Supreme Court to keep in place limits on states' ability to require online retailers to collect their sales taxes.

Several major labor groups are pressing corporations over how they expect to benefit from the GOP tax law and use their savings as the unions prepare to bargain new contracts forworkers.

Financial executives in the U.S., Canada and Mexico are reporting increased confidence about the economy and their companies' prospects following passage of the GOP tax law.

European Union antitrust chief Margrethe Vestager has become the de facto global regulator for U.S. companies such as Google and Apple. Under herwatch, the EU fined Google, ordered Apple to repay ÔøΩ13 billion (about $16 billion) in alleged unpaid taxes to Ireland, and this year hit Qualcomm Inc.with a nearly ÔøΩ1 billion fine for payments it made to Apple that the EU saidwere illegal.