Int'l Tax News

China has committed to expand value-added tax reforms this year inwhat experts believe could be a positive sign for foreign companies operating here.

Eight multinational companieswill present their global tax positions to a group of tax administrations, including the IRS, as participants in a groundbreaking OECD pilot program designed to limit cross-border disputes.

Over the past few years, policymakers have argued that everything from Apple's Irish tax deal to patent boxes to the LuxLeaks tax rulings represent "harmful tax competition." Despite the ubiquity of this term, however, there is no internationally accepted definition of so-called harmful tax competition. This Article uses the anti-tax-competition measures proposed and implemented over the last twenty years to reverse-engineerwhat policymakers believe to constitute harmful tax competition

As Ireland has long been a prime destination for US investment, the US tax reform has raised questions for the Irish tax model and how itwill stand its own following the Tax Cuts and Jobs Actwas passed. Companies like Facebook and Apple have recently overhauled their tax arrangements, and Ireland faces several other external threats to its tax system.

Justweeks after the federal government adopted the biggest tax overhaul in three decades, the effects are rippling through corner offices and boardrooms,with companies large and small dusting off once-shelved plans, re-evaluating existing projects and exploring new investment in factories and equipment.

Southwest Airlines' profits more than tripled during the fourth quarter as it reaped the benefit of a large exceptional gain as a result of US tax reforms.

US defence groupNorthrop Grummanon Thursday delivered upbeat guidance from a lower tax rate, higher-than-expected quarterly sales and raised its quarterly dividend.

Caterpillar reported a loss for the fourth quarter as it booked a $2.4 billion charge related to changes to the U.S. tax code. Earnings excluding the tax charges and other items topped analysts' expectations. Another U.S. manufacturer,3MCo., said fourth-quarter sales increased 9%. 3M's net income, though, fell 55% as the company recorded expenses of $762 million to complywith provisions in the new federal tax code. 3M raised its 2018 profit forecast on the expectation of lower U.S. income taxes.

A further six countries have signed the BEPS multilateral instrument, enabling them to swiftly amend their double tax treaties to incorporate the recommendations put forward by the OECD as part of its base erosion and profit shifting Action Plan.

The European Commission plans to propose this spring a new tax framework for the digital economy thatwould be compatiblewith the proposed common consolidated corporate tax base.

A much-anticipated decision on the fate of the section 385 debt-equity regulations,which are designed to prevent interest stripping and inversions, is expected soon. The Tax Cuts and Jobs Act (P.L. 115-97) includes anti-interest-stripping and anti-base-erosion measures, but the question remainswhether those provisionswill obviate the need for distribution rules under reg. section 1.385-3.

The Bulgarian presidency of the EU Councilwill separate elements of a proposal for a common corporate tax base (CCTB) in the hope of reaching an agreement before the end of the presidency. The Bulgarian presidencywill try to "seewhat elements are beyond doubts" in the proposal, Bulgarian Finance Minister Vladislav Goranov said at a January 23 press conference after a meeting of the Economic and Financial Affairs Council.

In this article, the author evaluates Brazil's efforts to implement tax policies in linewith the OECD's standards, its position on permanent establishments, and its unique transfer pricing rules.

Canadian corporate tax rates remain competitive after U.S. reductions and Finance Minister Bill Morneau said hewill make sure they stay thatway. Canada's average corporate tax rate is about 27 percent now and the American reductionswill lower theirs to about 26 percent, Morneau said in a Bloomberg Television interview Tuesday from theworld Economic Forum in Davos, Switzerland.

As Ireland has long been a prime destination for US investment, the US tax reform has raised questions for the Irish tax model and how itwill stand its own following the Tax Cuts and Jobs Actwas passed. Companies like Facebook and Apple have recently overhauled their tax arrangements, and Ireland faces several other external threats to its tax system.

Large enterprises looking for investment tax breaks in the most developed parts of Polandwill have to commit at least 100 million zloty ($29.35 million) aswell as score highly against a broad range of qualitative criteria, according to local tax practitioners.

Walt Disney is the latest US company to pay forward itstax billsavings, announcing on Tuesday that itwould give 125,000 employees a $1,000 cash bonus and putting $50m into a new programme to help cover tuition fees for hourlyworkers.

Texas Instruments' quarterly earnings dropped 67 per cent due to unexpected tax expenses on the heels of the latest legislative overhaul, sending the US-based chipmaker's shares lower in after-hours trading.

Like many US companies, United announced a one-time tax impact of the US tax reform bill passed at the end of last year. The company said it took a one-time $192m benefit due to tax reform. United Continental shares rose in after-market trading after the carrier beat market expectations for fourth-quarter earnings. Since, United Continental shares have reversed those gains and are trading down 6.5 percent.

Recent changes to the US tax haveweighed heavily on the bottom line of Capital One, pushing the credit card company to a loss in the December quarter. Capital One reported a pre-tax impact of $1.77bn owing to those changes, taking the company to a net loss of $971m in the three months ended December 31, compared to a $791m profit a year earlier.

The U.S.will try to ease European Union concerns that some measures in the new U.S. tax law don't conform toworld Trade Organization rules and are counter to the OECD's actions to combat base erosion and profit shifting.

The cut to corporate tax rates in the US is already prompting business to look at making new investments in the country, bank bosses said on Tuesday.

On Jan. 12, the U.S. Supreme Court decided to hear the case of South Dakota v.wayfair Inc. If you haven't been following along, this is a big deal and may affect households across the country ÔøΩ it's about internet sales taxes. Thewayfair case pits the "Kill Quill" movement against internet retailers. As riveting as it sounds, this isn't a new Quentin Tarantino film about sales taxes. The Kill Quill movement is a group of state tax administrators, brick-and-mortar retailers and their allies,whose goal is to overturn the ruling in the 1992 Supreme Court case of Quill Corp. v. North Dakota.with the current court agreeing to hear thewayfair case, Quill looks to be on its last breath.

The IRS has issued guidance (Notice 2018-13) describing additional regulations that it intends to issue for determining amounts included in gross income by a U.S. shareholder under section 951(a)(1) as a result of section 965,which imposes a transition tax on the untaxed foreign earnings of foreign subsidiaries of U.S. companies under the Tax Cuts and Jobs Act (TCJA).

India is to cut goods and services tax rates for awide range of goods and services from January 25, 2018, and pilot the e-way bill from February, the nation's GST Council has agreed.

The Norwegian Government is considering possibilities for the taxation of multinational companies' "value creation" in Norway, including in the area of value-added tax, although it said that itwould prefer a multilateral agreement on any new measure.

At the current stage, it is difficult to predict a potential application of the principal purposes test (PPT) and its outcome since it has not entered into force in the 72 Signatories of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). However, assuming that this happens in the near future, an attempt can be made to disperse some of the confusion that arose among practitioners and scholars in respect of the potential application of the PPT – the procedural issues regarding burden of proof

In a movewhich seemingly vindicates the tax cuts in the US tax reform bill, Apple has announced itwill be expanding its US operations. But this may just be the tip of the iceberg, as some of the biggest companies in theworld are looking to follow Apple's example.

The global economywill gain momentum in 2018, driven in large part by recently approved U.S. tax-code changes, according to the latest forecasts of the International Monetary Fund.world output, adjusted for inflation, is estimated to grow 3.9% a year in 2018 and 2019, the strongest since 2011.

United Nations' figures show a 16% drop, a 10% rise had been predicted. Businesses around theworld cut back on their overseas investments for the second straight year in 2017, a surprise development that suggests the globalization of economic activity may be slowing. The U.N. said a recentoverhaul of U.S. company taxationwill have an impact on the volume and destination of FDI flows this year.

International investors are urging South Korea to reconsider a tax revision aimed at levying capital gains tax on awider range of foreign-based buyers,warning of a "disastrous consequence" for the Korean stock market.

US tax overhaul spurs near-$30bn spree but somewarn of bubble amid high valuations. Healthcare companies have announced almost $30bn of acquisitions since the beginning of the year in the sector's strongest start for dealmaking in more than a decade, as Big Pharma scrambles to replace ageing blockbusters by paying top dollar for new medicines.

South Korea has responded quickly and forcefully to aUS decisionto slap tariffs on importedwashing machines and solar panels,with officials in the east Asian nation seeking to reinstate levies on imported American products.

The LATAM countries are introducing anti-avoidance rules to follow the global trend of tackling tax avoidance:what are the similarities and differences in the approach taken by different countries? This analysis provides a summary of the main topics identified in connectionwith the establishment of tax anti-avoidance rules in Latin American countries, considering the situation in a representative group of countries such as Argentina, Brazil, Chile, Colombia, Mexico and Peru (the "LATAM countries").

The U.K. Treasury'swatchdog has backed plans for a levy on companies' payments to offshore havens that forms part of the latest government efforts to combat tax avoidance. In aJan. 22 reporton the U.K.'s 2017 Autumn Budget, the Treasury select committee said it "welcomes the Government's initiatives to address tax avoidance" though the penalty.

European Union finance ministers Jan. 23will remove eight countriesÔøΩincluding South Korea, Panama and the United Arab EmiratesÔøΩfrom the EU's tax haven blacklist. The finance ministers, set to meet in Brussels, also expect to consider their next moves in response to the recently approved U.S. tax law.

Mounting pressure for tax measures targeting multinational digital companies ÔøΩ or a "Google tax" ÔøΩ is understandable, but Norway's focus is on developing an international solution to taxing the digital economy, according to Finance Minister Siv Jensen.

The Tax Cuts and Jobs Act (TCJA) includes several provisions that may be viewed as potential violations of US tax treaties. However, most of those potential violations, such as new IRC section 951A and to a large extent new IRC section 59A, are covered by the Savings Clause (US model article 1(4)). The only remaining question iswhether IRC section 59A (the "Base Erosion Anti-Abuse Tax", or BEAT) violates the non-discrimination provision (article 24),which is exempted from the Savings Clause. The answer is no, because foreign related parties are not comparable to US related parties receiving interest or royalties.

If taxpayers and lawmakerswere expecting that a new 37-page reportwould provide a definitive road map of how New York State might sidestep the effects of President Trump's new federal tax plan and its sharp reduction in the deductibility of state and local taxes, they instead got a view of just how complicated this is. The report, released thisweek, laid out at least a half-dozenways New York could rewrite its tax code,with no indication ofwhich option legislators might pursue. Therewas a potpourri of progressive rates,wage credits and tax-withholding schemes,with officials cautioning that all the optionswould require further study. No bills have been drafted.

The OECD has published stakeholder comments on a discussion draft for mandatory disclosure rules designed to target intermediaries involved in the design, marketing, or implementation of common reporting standard avoidance arrangements or offshore structures.

European Union finance ministers face critical tax issues in 2018, including how to tax profits from large internet companies, but the cloud hanging over all EU tax deliberationswill be the new U.S. tax law and how the bloc should respond.

China is re-evaluating its business environment to halt an exodus of foreign capital and companies after the U.S. slashed its corporate tax rate.

Brazil's manufacturing sector bears the brunt of the country's heavy tax load, according to a new study.

The year ahead for the Australian economy and its corporate tax systemwill present major challenges for the government. Playing a key role in the government's company tax reform agendawill be the impact of the U.S. lowering its corporate tax rate to 21 percent from 35 percent as part of a tax cut act.

Now that big banks havefinished reporting fourth-quarter earningsfilledwith noise from the new tax law, how much do they expect to actually pay in taxes going forward? A lot less than in the past.

U.S. multinational companies thatwant to repatriate their valuable intangible assets have several choicesÔøΩbut keeping them offshore may still be the most attractive option.

EU Tax Commissioner Pierre Moscovici has said it is a positive thing that some of the countries on the EU's black list of non-cooperative tax jurisdictions have made commitments to change their tax laws.
Reports thisweek suggested that EU officials have recommended delisting eight jurisdictions that have made commitments to amend their tax rules. Moscovici confirmed to a press conference that EU finance ministerswill decide nextweek onwhether to delist a number of countries based on these commitments.

AppleInc.'s plans for a repatriation tax payment may signal a tipping point for U.S. corporate offshore cash hoards.

The European Commission proposed Jan. 18 to give EU member nations more flexibility in setting value-added tax rates for goods and services despitewarnings thiswill hamper cross-border business in the single market.