Int'l Tax News

TD Bank became the latest firm to report itwould book a one-time hit due to the Tax Cuts and Jobs Act, estimating the amount at approximately US$400 million.

Irish Finance Minister Paschal Donohoe has said that Ireland's 12.5 percent corporate tax ratewill remain competitive, despite the substantial reduction to the United States corporate tax.

The Philippines Department of Finance has said the countrywill look to install a 25 percent corporate income tax rate on a broader base as part of the second phase of its tax reform process.

The bill that Mr. Trump signed could actually make it attractive for companies to put more assembly lines on foreign soil. Under the new law, income made by American companies' overseas subsidiarieswill face United States taxes that are half the rate applied to their domestic income, 10.5 percent comparedwith the new top corporate rate of 21 percent. The Republican vision for the tax planwas to make the United States a more competitive place to do business. Supporters contend that the new rules do not encourage companies to locate overseas. Rather, they say, slashing the corporate ratewill make it more attractive to set up shop at home, since many other advanced economies now have higher taxes.

Deutsche Bank and Morgan Stanley are the latest banks to reveal hit from U.S. tax reform. Deutsche Bankhaswarned that itwill record its third consecutive annual loss in 2017 because of a ÔøΩ1.5 billion hit from US tax reforms. Morgan Stanley said in a filing that the tax reformswould lead to a gross charge of about $1.4 billion for the period, primarily because of the recalculation of deferred tax assets. The net hitwould be about $1.25 billion.

Taiwanese Premier Lai Ching-Te has directed the Ministry of Finance towork towards a Taiwan-US tax treaty.
Speaking at a strategic briefing to the National Development Council on January 4, 2018, Lai noted that the US is one of Taiwan's most important trading partners. A tax treatywould ensure that the same income is not taxed twice and create a conducive environment for bilateral trade and investment, he said.

The head of Ireland's inward investment promotion agency has said that he does not believe that the US corporate tax cutwill significantly impact investment in the coming months.

The leaders of Hungary and Ireland have both expressed their opposition to the prospect of additional tax harmonizationwithin the EU.

One of the most significant changes of the recent U.S. tax bill informally known as the Tax Cuts and Jobs Act, signed into law by President Trump on December 22, is the replacement of the U.S.worldwide tax systemwith a territorial system similar to those used by many U.S. trading partners. The United Kingdom and Japan adopted territorial systemswithin the past 10 years, and Japan's 2009 transition provides a useful lesson,while also modeling alternative means of addressing transition concerns.

In 2002 the OECD published a report on research and development tax policy trends and issues in 26 OECD member states. Fourteen years later it published another report on R&D tax incentive designs, incidents, and effects for more than 30 OECD members and nonmembers. Comparing data in the reports reveals that between 2002 and 2015, more governments financed R&Dwith direct support and tax incentives, preferred tax credits over allowances, preferred level rather than incremental incentive calculations, and increased R&D support for large firms and startups.

Historic corporate tax cuts in the U.S. are motivating the Swiss government to adopt its own set of tax reforms this year in order to preserve the alpine nation's reputation as an attractive jurisdiction for international investment.

Tax officials in the Philippines are gearing up to make a second round of tax changes this month, after the first set of reforms took effect Jan. 1. The Department of Finance said Jan. 8 the next set of changeswill "lower corporate income taxes and modernize fiscal incentives in a bid to complement the expected incremental revenues from the first package." The packagewon't add to the deficit.

In this paper, the authors analyze the cross-border effects of patent box regimes that reduce the tax rate on income from intellectual property. The authors argue that the tax cut in one location of a multinational enterprise may reduce the user cost of capital for thewhole group if profit shifting is possible. This spillover effect of the foreign tax cut raises domestic R&D investment.

The Tax Cuts and Jobs Act of 2017 (TRA17) represents the most comprehensive reform of US international tax rules since 1962. An important question in evaluating TRA17 is how US trading partnerswill respond to its provisions.

Foreign e-commerce companies, such as Apple Inc. and Expedia Inc., selling to individuals and companies located in Taiwan now must pay 20 percent income tax on those transactions, its tax authority announced.

Although U.S. tax reform gives a long-term boost to corporate profits, many companieswill record late-breaking expensesÔøΩsome required and some at their discretionÔøΩthatwill cut into fourth-quarter profits.

The Brazil unit of Eli Lilly & Co. haswon a disputewith the country's tax department over its transfer pricing calculation, a precedent-setting outcome thatwill impact other companies using the same method.

Chile's tax authority is putting a microscope on multinationals operating there, releasing an updated list of 891 large companies that should receive special attention from inspectors.

The European Commission's proposed alternative methods for taxing the digital economywould increase administrative and compliance burdens and create barriers to entry for small companies, the Tax Executives Institute said in consultation comments submitted January 2.

The European Commission haswelcomed the entry into force of rules that give national tax authorities direct access to information on the beneficial owners of companies, trusts, and other entities from January 1.

In this article, the authors discuss the taxation of intangibles in India, looking at the inconsistencies in the old indirect tax regime and examining how the recently enacted goods and services tax addresses transactions in intangibles, particularly intellectual property rights.

The effort to get online retailers to pay their share of taxes has crossed the pond. German tax investigators on Thursday seized goods and accounts from Chinese retailers for failing to pay sales taxes on products they sold through Amazon. "A German taxpayers' union said in November that Germany could be losing out on 1 billion euros ($1.2 billion) annually because online retailers from China, or other non-EU states, fail to pay value added taxes of 19 percent, knowingly or not," Reuters reported.

Treasury Secretary Steven Mnuchin, in a letter to the secretary-general of the Council of the European Union, has urged the council to reconsider its decision to subject non-EU jurisdictions to a separate review process and to release its own list of "non-cooperative jurisdictions" for tax purposes and has objected to the inclusion of American Samoa and Guam on that list.

A provision in the new tax law allows sole proprietors ÔøΩ alongwith owners of partnerships or other so-called pass-through entities ÔøΩ to deduct 20 percent of their revenue from their taxable income. The tax savings,which could be around $15,000 per year for many affluent couples, may prove enticing toworkers. "If you're above the median but not at the very, very top, onewould think you'd be thinking it through," said David Kamin, a professor of tax law at New York University.

The treatment under the former version of section 163(j) has long been viewed a culprit in earnings stripping. Comparatively speaking, it ranked among the more permissive interest barriers you'll encounterworldwide. Given the Byrd rule and its resulting need to limit revenue losses, interest expensewas never going to survive tax reformwithout significant tweaking. That'swherewe're at, although the journey involved some unexpected twists. This article examines the provisions of the tax reform bill, known informally as the Tax Cuts and Jobs Act (H.R. 1), dealingwith interest expense, including measures thatwere eliminated during conference negotiations.

Over 2,600 bilateral relationships for the exchange of common reporting standard information have been established, the OECD said in a December 21 release, adding that 39 of the 53 jurisdictions committed to first exchanges in 2018 have implemented the international legal requirements.

This paper studies lobbying on the OECD's BEPS Project by analyzing comment letters to determine the lobbying success of firms, the tax profession, and members of civil society. The authors find evidence that the tax profession and civil society are more influential at the conceptual level, but that at the technical level, atwhich details of a regulation are determined, the individual tax professionals are more successful than firms.

The "fair and efficient" taxation of corporate profits and the fight against tax avoidance and evasion through enhanced administrative cooperation are among the priorities of the new Bulgarian presidency of the European Union,which commenced on January 1, 2018.

Saudi Arabia and the United Arab Emirates have imposed value added tax as the largest Gulf economies seek to boost non-oil income and narrowwide fiscal deficits caused by years of low oil prices.

Federal Reserve board memberswrestledwith how much of an economic impact to expect from Donald Trump's tax cuts as they raised rates last month and continued to be flummoxed by persistent low inflation, according to minutes released onwednesday.

The IRS and Treasury issued Notice 2018-07 (the Notice) on December 29, 2017, providing preliminary administrative guidance and indicating plans to issue regulations relating to the 'toll tax' due upon the mandatory deemed repatriation of certain deferred foreign earnings.The Notice provides guidance for determining aggregate foreign cash positions and accumulated post-1986 deferred foreign income (tested earnings and profits). The Notice also indicates future guidancewill be released addressing the application of stock basis adjustments from previously taxed income distributions, the treatment of affiliated groups for purposes of making a consolidated return, and the impact of certain foreign currency gains or losses recognized on distributions as a result of Section 965's imposition.

Argentina intends to reduce its corporate tax rate by 10 percent by 2020.
The planswere confirmed in the 2018 Budget,whichwas signed off by the Senate on December 27, 2017, and enacted on December 29.

The US's long-awaited tax reform has brought the country's corporate tax rate down to 21% - below 2017's OECD average rate of around 25%.will this spark a newwave of tax competition?

Corporate finance teams are scrambling to save even more on taxes before the Republicans' big cut goes into effect. Companies are scoping out last-minute opportunities to maximize those deductions before the new system takes effect, accountants said.

President Donald Trump and congressional Republicans are betting their tax overhaulwill jolt the economy after a long but slow expansion. A sharp cut in the corporate-tax rate is meant to spur business investment and hiring. A rewrite of tax laws covering international profits is meant to bring corporate funds home. Lower individual rates are meant to give households more money to spend or bolster their finances. Still, the case for sustained faster growth is murkywhen looked at through the lens of history, and no sure thing now.

EU-member nations Dec. 20 backed laws to crack down on tax evasion and money laundering that include new transparency rules to prevent individuals and companies from setting up shell companies to hidewealth. The revisions to the EU Anti-Money Laundering Directivewill require EU countries to set up public registries listing individualswith a share of 25 percent or more of a company.

The European Union's tax chief is optimistic that structural reform of the bloc's tax systemÔøΩthrough a common consolidated corporate tax base (CCCTB)ÔøΩis possible, but admits that "it depends" on governments such as Ireland.Ireland,with its 12.5 percent corporate tax rateÔøΩamong the lowest in the blocÔøΩis expected to be less inclined to agree to a CCCTB.

Is the real lesson from tax reform that Americans rely too much on the income tax to fund their government? Time and again, that box has proven too small a revenue pot to do all that it's asked by taxwriters. And this leads to decisions, howeverwell-intentioned, that contribute to distortions down the road. Most other industrial nations lighten the load on their income tax by combining itwith some form of consumption taxes ÔøΩ a hard sell in today'swashington. But given the partisan carnage of this latest tax fight, the uncertain result, and very real debt crisis facing the nation, is it time for both parties to start looking at other options?

The European Commission has approved an Irish tax incentive for employee share schemes offered by SMEs – the Key Employee Engagement Programme (KEEP).

Australia's Finance Minister has said that company tax cuts are now "even more urgent" and that itwould be "absolutely reckless and irresponsible" for the opposition to continue to block reform legislation.

Indiawill trial a new system thatwill enable goods to be sent to other Indian stateswithout border checks under the country's new goods and services tax (GST) regime from February 2018.

One potential boost for the U.S. currency could come if corporations bring home cash held overseas. Under the Republican tax plan, U.S. corporationswill pay a one-timetaxof up to 15.5% on the profits they have stockpiled abroad,which could boost demand for the dollar as companies buy the currency to meet the levy and return assets to the U.S.

The U.K. government haswon a court bid to claim up to 1.2 billion pounds ($1.6 billion) in taxes linked to the collapse of Lehman Brothers Holdings Inc. in 2008, leaving the bank's creditors in line for a smaller slice of its remaining funds than they'd expected.

Singaporewill not tax funds that are coming in from foreign countries, in some cases, even if those countries do not first levy a dividend tax on the funds, according to a notice on the city-state's tax agency.

The Australian Tax Office released two key guidance documents Dec. 18 on laws affecting multinational companies and their cross-border transactions.

Amazon.com Inc.will pay 100 million euros ($118 million) to the Italian tax authorities for the period of 2011-2015 in a settlement that closes the fiscal probe by the country's tax police. Amazon confirmed in a separate statement that it reached an agreement and its local branch now has all revenues, expenses and taxes accounted for in Italy.

The IRS has requested comments on Form 8858, "Information Return of U.S. Personswith Respect to Foreign Disregarded Entities," and its related Schedule M; comments are due by February 20, 2018.

The OECD has issued peer review reports that evaluate how Austria, France, Germany, Italy, Liechtenstein, Luxembourg, and Sweden are implementing minimum standards on resolving tax treaty-related disputes in accordancewith action 14 of the base erosion and profit-shifting project. The OECD peer reviewswere available atgoo.gl/HbV3QN as of December 15, 2017.

EU member nations and the European Parliamentwill use the second phase of Brexit negotiations, due to begin in 2018, to ensure the U.K. adheres to tax policies that don't distort single market competition. At the same time, member nations and Parliament are expected to exert Brexit pressure to regulate Gibraltar and crack down on U.K. overseas territories and crown dependencies, according to EU officials.

U.K. government officials are "aware" some multinational companies are struggling to use a recently launched e-portal as they submit their first global tax reports.