Int'l Tax News

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.

U.S. multinational companies that now have to bring home their accumulated overseas earnings and profits have questions about the impact of stock attribution rules that Congress expanded in its tax code overhaul.

Irish Prime Minister Leo Varadkar has said that the EU "should not give advantages" to its competitors by "acting unilaterally" on tax.
Varadkar made the comments during a speech to the European Parliament on January 17.

The Swiss Federal Council is consulting on recommendations made by the Global Forum on Transparency and Exchange of Information for Tax Purposes, to improve the transparency of beneficial ownership information.
The OECD's Global Forum conducts peer reviews of member countries in two phases. Phase 1 covers the legal and regulatory framework in the country concerned. Phase 2, towhich Switzerlandwas admitted in 2015, assesses the efficiency of the exchange of information in practice.

Israel's efforts to levy taxes on multinational internet giantswill be limited to thosewith physical operationswithin its borders, the head of Israel's Tax Authority said.

Shareholderswill be the biggestwinners from the new tax law, Bank of America said after it brushed aside losses from the Steinhoff scandal to generate its highest annual profit since 2006.

US telecoms group Verizon onwednesday said the biggest American tax overhaul in decadeswill drive a one-time reduction in net deferred income tax liabilities of about $16.8bn and boost its fourth quarter earnings.

LB&I examinerswill be required to undergo a new approval processwhen switching a multinational company's transfer pricing method that is included in its tax documentation or an advance pricing agreement submission.

The lower corporate tax rate under the new tax law spurred some confusion for corporationswhose taxable years don't begin on Jan. 1. How the new corporate rate applies to companieswith a non-calendar taxable year is outlined inSection 15 of the Internal Revenue Code.

Fund managers are lobbying the UK for favourable tax treatment if they relocate billions of pounds of cash from European countries after Brexit.

Apple Inc. paid a total of 217 million pounds ($299.1 million) in extra U.K. corporate taxes last year after an official inspection of accounts from Her Majesty's Revenue and Customs.

The European Unionwill probably remove South Korea, the United Arab Emirates, aswell as Barbados, Grenada, Macau, Mongolia, Panama, and Tunisia, from a blacklist of tax havens later this month, lifting the threat of reputational damage and punitive economic measures.

UnitedHealth Group shares advanced after the company boosted its full-year profit outlook by more than 16 percent, citing a benefit from tax rules pushed through by Republicans late last year.

Citigroup has said the new US tax lawwill help it surpass its financial goals, even after the overhaul forced the bank to take an upfront $22bn accounting hit that triggered its first annual loss since 2009.

As taxpayers await a decision from Treasury about changes to the final branch currency regs, at least one expert is predicting that any modificationswill include a requirement of loss deferral. "I get the impression that the Treasury Department doesn't care all that much how section 987 gain or loss is computed. There may be alternativeways of computing it," Jeffrey Dorfman of PwC said on awebcast sponsored by the Practising Law Institute on January 16. Dorfmanwas the principal author of the 2006 proposed regs.

The Supreme Courtwill decidewhether businesses must collect sales tax on online transactions in stateswhere they don't have a physical presence, in a case closelywatched by lawmakers, states and online retailers.

The General Court of the European Union has ruled that EDF, the energy company,was right to repay unlawful state aid granted to it by the French state, bringing to a close a long-running case dating back to 2003.
The case concernedwhether, in absolving EDF from liability to corporate tax of EUR888.89m, the company had been granted unlawful state aid, as the European Commission argued, orwhether, as a stakeholder in EDF, the French state had acted at arm's length such that relieving EDF of the tax liabilitywas tantamount to an investor forgoing a debt in favor of recapitalizing the company to benefit from the company's future enhanced prosperity.

The three political parties set to form Germany's next governing coalition have agreed to reduce the solidarity tax burden, according to the text of the recently released agreement.
Used to help fund economic development in the east of Germany, the solidarity tax is a 5.5 percent surtax on both corporate and individual income. The agreement between the Christian Democrat Union, the Social Democrat Party, and the Free Democrat Party states that the incoming Governmentwould reduce the tax for those on low and middle incomes, as a first step towards gradually abolishing it.

Following the introduction of value-added tax (VAT) on January 1, 2018, the Federal Tax Authority has clarified the import procedures non-VAT registered businesses should follow.
Non-registered businesses seeking to import into the UAE must follow standard customs procedures, and must either complete a declaration and pay through the e-Dirham system or through the eServices portal on the FTAwebsite; via a clearing company approved by the FTA at the port of entry; via a freight forwarder approved by the FTA; or via a courier companywhere the goods are delivered to the importer.

Italy is set to impose a new tax on digital transactions, potentially setting a trend for Europe as away to tackle the problem of tax avoidance among high-tech companies. But is unilateral action theway forward?

Businesses should expect disruption and cashflow issues as the tax authorities in Saudi Arabia and the United Arab Emirates (UAE) come to termswith the long-awaited implementation of VAT

It'sway too early to determinewhether the law has had a significant impact on the economy. Perhapswal-Mart did raise its hourlywage due to the tax law, as it claimed. Or maybe it just needs to compete forworkers in a labor market that has gotten increasingly competitive even before the law. Maybe the corporate stock buybackswere a result of the tax lawÔøΩbut maybe not. These stories are anecdotes, great for PR but almost meaningless if you're looking at the real impact of a sweeping, long-term reform.

In a legal memorandum, the IRS concluded that an arrangement between members of a taxpayer group and the group's affiliated insurance company involving foreign currency fluctuations does not constitute insurance.

The enactment of the Tax Cuts and Jobs Act, introduces a new chapter in the global debate over the benefits of tax coordination versus tax competition. Theweeks-old U.S. tax reform has already sparked intense debate in other countries over the bestway to respond. In many respects, the reform can be understood as the ultimate competitive act: Congress acted unilaterally, and made no pretense of trying to harmonize or coordinate many of the new provisionswith those of other countries or the BEPS project. At the same time, however, concerns about and responses to the BEPS project are evident in many of the TCJA's international provisions.