Int'l Tax News
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Trustees of U.K. Pension Fund May Seek Tax Credit Under EU Law, CJEU Finds
Pension fund trustees can rely on EU law to claim that the foreign income dividends (FIDs) received by domestic companies inwhich they invested must receive the same tax treatment as the domestic dividends those companies received, the Court of Justice of the European Union held, rejecting the U.K. government's claim that the EU's free movement of capital protections do not apply to the trustees.
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Residence-Based Taxation: Is Revenue Neutrality Possible?
Among all the personal income tax reforms on the table, changing the taxation of Americanswho reside overseas is one of the most obscure and least discussed. Americans abroad are ignored for two reasons. First, the amount of tax revenue collected under current law represents an insignificant rounding error in the total U.S. budget, 0.15 percent of total U.S. revenue. Second, most members of Congress focus on servicing residents of their states and consider the issues of Americans resident abroad as esoteric and unworthy of their attention.
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Business Tax Burdens and Tax Reform
Tax reforms affect economic performance by changing incentives for business formation, expansion, and operation. The United States has the highest corporate tax rate among OECD countries in 2017, and despite offering significant additional deductions, exclusions, and tax credits, imposes the heaviest tax burdens. This paper offers a new measure of corporate tax burdens based on information in tax expenditure budgets; this measure implies that the burden of U.S. corporate taxation in 2017 is equivalent to that produced by a corporate tax rate between 31.2-34.6%without additional deductions, exclusions, or tax credits.
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Options for Corporate Tax Reform, 2017
The coming year offers the opportunity to do reforms to fix problems of the corporate tax system that have accumulated over many decades. The Tax Reform Act of 1986 provided a major reform of the personal income tax, reducing the top rate from 50 percent to 28 percent and lowering other rates in a revenue neutral and distributionally neutralway. But it did not improve the corporate tax system.
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Demystifying the Destination-Based Cash-Flow Tax
This paper describes the Destination-Based Cash-Flow Tax (DBCFT), as proposed in 2016 by Republicans in the US House of Representatives, and its potential economic effects. As a new approach and a major departure from the existing business tax system, the DBCFT and its motivation have been poorly understood by many in government, the business community, and the economics profession.
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A Macro Perspective on Border Taxes
Tax policy that differentially treats domestically produced and foreign produced goods have long been a part of the arsenal of policy makers. These 'border taxes' can be explicit and take the form of import tariffs and export subsidies or more subtle in the form of value-added taxes (VAT) and payroll tax cuts.
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BRICS support digitisation to curtail tax evasion
The leaders of Brazil, Russia, India, China and South Africa (BRICS) reaffirmed their commitment to achieving a "fair and modern global tax system" that includes a deeper cooperation between the nations and on the OECD BEPS project. Digital enhancementswill play a large part in their efforts to achieve this.
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Spain Threatens Penalties if Companies Pay National Taxes to Catalonia
Not content towait for the results of a controversial referendum on independence from Spain scheduled for October 1, the government of the region of Catalonia said September 1 that public sector companies must pay national taxes to the region's recently beefed up tax agency. Spain's Ministry of Finance quickly announced that any company that doesn't meet its national tax obligationswill be penalized.
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Switzerlands new corporate tax reform proposals likely to succeed
The Swiss Federal Council has released its new corporate tax reform proposals that resolve many of the issues raised in its earlier failed attempt. However, companies and entrepreneurswill be the ones paying for the changes this time.
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CJEU: French Conditions on Withholding Exemption Violate EU Law
French legislation that conditions an exemption fromwithholding tax on profits distributed by a resident subsidiary to a nonresident parent company controlled by residents in third states on proof that the distribution's purposewasn't to benefit from the exemption violates EU law because it introduces a general presumption of fraud, the Court of Justice of the European Union has held.
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Move Americans to Jobs, Not the Other Way Around
For far too long, U.S. politicians have been promising to bring jobs to Americans. They should instead be encouraging Americans to move to jobs.
The absurdity of tax incentives to "create jobs" reached new heights last monthwithwisconsin's deal to lure iPhone assembler Foxconn Technology Group --whichwill reportedly cost taxpayers more than $100,000 per job. By promising to bring employment to depressed areas, politicians have convinced Americans that they have a right to a jobwhere they live, and not that they should livewhere the jobs are. Even though labor-market incentives to relocate have increased over the past 50 years,with growing differences inwages and unemployment around the country, people actually move forwork less and less.
The absurdity of tax incentives to "create jobs" reached new heights last monthwithwisconsin's deal to lure iPhone assembler Foxconn Technology Group --whichwill reportedly cost taxpayers more than $100,000 per job. By promising to bring employment to depressed areas, politicians have convinced Americans that they have a right to a jobwhere they live, and not that they should livewhere the jobs are. Even though labor-market incentives to relocate have increased over the past 50 years,with growing differences inwages and unemployment around the country, people actually move forwork less and less.
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Austrian conservatives target multinationals and QE in economic draft
The front-runner in Austria's parliamentary election, the conservative People's Party,wants to fight tax avoidance by multinationals and backs a swift end to the European Central Bank's bond purchases, a draft of its economic program shows.
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News Analysis: A Post-Mortem for the Border Adjustment Tax
The border-adjusted tax, a component of the tax reform blueprint released by the U.S. Houseways and Means Committee last June, had a short life. Rumors of its impending demise had been circulating for months, and GOP lawmakers and the Trump administration dealt it a final blowwith the July 27 release of their joint statement on tax reform, saying they had decided to set the policy aside to advance tax reform.
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Large Companies Oppose Idea for Taxing Foreign Profits
Congressional Republicans are trying towrite new rules for taxing foreign profits of U.S. corporations, and a group of large, influential companies iswarning against one prominent option.
Under current law, companies owe the full 35% corporate-tax rate on theirworld-wide earnings and have to pay it on any profits they bring back to the U.S. That system encourages companies to book profits overseas and leave them there. The issue is often a flashpoint in debates over changing the tax code.
Under current law, companies owe the full 35% corporate-tax rate on theirworld-wide earnings and have to pay it on any profits they bring back to the U.S. That system encourages companies to book profits overseas and leave them there. The issue is often a flashpoint in debates over changing the tax code.
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France Considering Temporary Tax on Large Companies
The French government is considering instituting a temporary tax on the largest businesses in France to replace revenues from a 3 percent dividends tax recently struck down by the European Court of Justice.
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Brazils Revenue Service Issues New Rules for Debt Payment Program
Brazilian tax attorneys reactedwith surprise and concern to an unexpected policy alteration by the country's federal revenue service.
On Aug. 21, the service issued Interpretive Declarative Act No. 5,which prohibits tax debts companies have tried to offsetwith tax credits from being included in the government's new program for the payment of tax debts. The Special Program for Tax Regularizationwas created through a decree issued May 31.
On Aug. 21, the service issued Interpretive Declarative Act No. 5,which prohibits tax debts companies have tried to offsetwith tax credits from being included in the government's new program for the payment of tax debts. The Special Program for Tax Regularizationwas created through a decree issued May 31.
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Commission Consults on Expanding EU Code of Conduct on Withholding Tax Relief
The European Commission has released a consultation document on dismantling capital market barriers,which seeks stakeholder views onwhether the focus of the code of conduct onwithholding tax relief principles being developed should be expanded beyond addressing barriers that result from currentwithholding procedures.
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Could Puerto Rico Be the Next Hot Tax Haven?
Some 65,000 Puerto Ricans left their bankrupt U.S. island commonwealth last year. A group of private bankers are moving the otherway. They're increasingly opening offshore banks known as International Financial Entities,whichwere created by a Puerto Rican law in 2012. There are 44 IFEs now,with 18 opening in the past year, according to data compiled by the U.S. territory's financial regulator. "Just in the last six months,we've probably closed seven deals for international banks," says Ryan Christiansen, president of Christiansen Commercial Real Estate, a brokerage based in Puerto Rico that leases office space.
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Chinese Government to Use Blockchain to Prevent Tax Evasion
The Chinese government plans to use blockchain technology for taxation and the issuance of electronic invoices, inwhatwill be the first ever blockchain project to apply to financial and taxation business.
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Singapore Advocates for Tax Certainty for Business in the Digital Economy
As countries diverge on their positions on the taxation of the digital economy, Singapore has clarified its own approach,which includes ensuring tax certainty for businesses, achieving tax neutrality between traditional and digital businesses, and reaching international consensus.
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Ukraine Clarifies Application of Tax Treaty With U.K.
The Ukrainian State Fiscal Service (SFS) has released Guidance Letter 1531/6/99-99-15-02-02-15/IPK (dated August 8), inwhich it clarified the application of Ukraine's tax treatywith the United Kingdom to royalty payments that a Ukrainian legal entity makes to a U.K. resident.
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Saudi Arabia Sets December Deadline for VAT Registration
Saudi Arabia has set a Dec. 20 deadline for mandatory VAT registration, endingweeks of speculation.
The Saudi VAT law, gazetted July 28, referred to a deadline of "30 days" from its publicationwithout a specific date, sparking speculation from professional advisers and media that businesses liable to pay VAT had only until Aug. 26 or 27 to register.
The Saudi VAT law, gazetted July 28, referred to a deadline of "30 days" from its publicationwithout a specific date, sparking speculation from professional advisers and media that businesses liable to pay VAT had only until Aug. 26 or 27 to register.
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U.K. Government to Seek Customs, VAT, and Excise Powers Soon
The U.K.will publish a customs bill in the autumn thatwould give the government powers to operate stand-alone customs, VAT, and excise systems to prepare for the possibility that the U.K. and EU are unable to come to a satisfactory post-Brexit customs agreement.
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News Analysis: New Transfer Pricing Challenge in Chinas Domestic Transactions
Chinese tax law provides that transactions between domestic related partieswith the same tax burden are generally not subject to transfer pricing adjustments if the transactions do not directly or indirectly decrease China's overall tax revenue. However, Chinese companies may face a new transfer pricing challenge in this area.
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U.K. Brexit Plans Hint at New VAT, Customs Regime
The U.K. Government's suggestion for a standalone VAT regime has started to unfold in a recently published policy paper on the country's future customs arrangementsÔøΩto ensure "the UK is prepared for all possible outcomes."
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EU Mulls Options for Sanctions for Tax Haven Blacklist
European Union member states are considering various options for sanctions on countries that end up on the EU's tax haven blacklist, including a flexible approach that could lead to different EU countries imposing different measures against the same offending jurisdiction.
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Estonia Welcomes Chance to Steer in EU Digital Tax Storm
EU presidency holder Estonia has committed to doubling down on solving the bloc's tricky digital economy tax issueswhen EU finance ministers meet Sept. 15-16, following revelations U.S.-based Airbnb paid only about 100,000 euros ($117,000) in taxes in France in 2016.
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CCCTBs Research and Development Provisions Insufficient, EU Working Paper Finds
The European Commission's most recent Common Consolidated Corporate Tax Base (CCCTB) proposal includes research and development provisions but is not ambitious enough on its own to reach the European Union's target of investing 3 percent of GDP in R&D by 2020, according to an EUworking paper.
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Brexit stokes tax fight between Ireland and EU
Ireland has loudly proclaimed its unitywith rest of the EU since Britain voted to leave the bloc, but a clash over the Irish low-tax regime could shatter the cohesion.
In Irish business circles, Brexit has triggered a brainstorm on how best to use it as an opportunity to push back on the EU's crackdown on Irish tax policy.
Their nuclear option: "Irexit."
In Irish business circles, Brexit has triggered a brainstorm on how best to use it as an opportunity to push back on the EU's crackdown on Irish tax policy.
Their nuclear option: "Irexit."
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German Authorities Discuss Controversial VAT Measures for Foreign Websites
When the finance ministers of Germany's 16 states concluded a conference in May on how to combat VAT fraud related to online sales, they issued a release saying that solutions under review include a requirement for online platforms to remit tax directly.what they didn't announce publiclywas that they are also considering requirements thatwould makewebsite operators post confidential information about their companies online in machine-readable format and provide details about credit card and other payment flows from customers.
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Brazil Simplifies Regulations to Ease World's Worst Tax Reporting Burden
Brazil's Finance Ministry on August 7 announced a series of measures intended to simplify tax reporting requirements for the nation's business sector. Practitioners say the measures could help soften Brazil's reputation for making businesses jump through often redundant hoops to complywith tax reporting obligations.
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France and Germany Plan Tax Crackdown on U.S. Tech Giants
France isworkingwith Germany and other partners to plug loopholes that have allowed U.S. tech giants like Alphabet Inc.'s Google, Apple Inc., Facebook Inc. and Amazon.com Inc. to minimize taxes and grab market share in Europe at the expense of the continent's own companies.
Francewill propose the "simpler rules" for a "real taxation" of tech firms at a meeting of European Union officials due mid-September in Tallinn, Estonia, French Finance Minister Bruno Le Maire said in an interview in his Paris office on Friday, complaining that Europe-wide initiatives are proving too slow.
Francewill propose the "simpler rules" for a "real taxation" of tech firms at a meeting of European Union officials due mid-September in Tallinn, Estonia, French Finance Minister Bruno Le Maire said in an interview in his Paris office on Friday, complaining that Europe-wide initiatives are proving too slow.
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Tax-driven wealth chains: A multiple case study of tax avoidance in the Finnish mining sector
This paper contributes to recent discussions of corporate tax avoidance and globalwealth chains. Drawing on multiple case studies,we outline the key strategies adopted by Finnish mining companies as they seek to lower their tax burden. After screening the accounts of the companies mining metallic ores in Finland,we provide an in-depth analysis of the tax avoidance arrangements at three of these mines. The mineswere operated by two Canadian enterprises that utilized seven different tax avoidance arrangements.
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The Platform for Collaboration on Tax Invites Comments on a Draft Toolkit on the Taxation of Offshore Indirect Transfers of Assets
The Platform for Collaboration on Tax – a joint initiative of the International Monetary Fund (IMF), OECD, United Nations andworld Bank Group – is seeking public feedback on a draft toolkit designed to help developing countries tackle the complexities of taxing offshore indirect transfers of assets, a practice bywhich some multinational corporations try to minimize their tax liability.
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U.S. Multinationals and Cash Holdings
U.S. multinational firms hold significantly more cash than domestic firms. I study this cash differential using a dynamic model featuring corporate physical and intangible investment, cross-border decisions, and financial policies. I find that the cash differential diminishes by 42% if repatriation costs are set to zero. Hence, costly repatriation induces cash accumulation offshore.
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Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network
Multinational corporations use highly complex structures of parents and subsidiaries to organize their operations and ownership. Offshore Financial Centers (OFCs) facilitate these structures through low taxation and lenient regulation, but are increasingly under scrutiny, for instance for enabling tax avoidance. Therefore, the identification of OFC jurisdictions has become a politicized and contested issue.we introduce a novel data-driven approach for identifying OFCs based on the global corporate ownership network, inwhich over 98 million firms (nodes) are connected through 71 million ownership relations.
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Netherlands, U.K. Are Largest Financial Conduits to Tax Havens, Report Says
The Netherlands and the U.K. are the two largest conduit financial centers, channeling 37 percent of all corporate offshore investment to and from tax havens, according to a new report.
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Lessons From India's Ambitious Tax Reform Adventure
Will tax reform necessarily contribute to economic growth? It's tempting to answerwith a resounding yes, but the better response is more cautious. The outcome depends on the details, suggesting that stakeholderswould dowell to manage their expectations.
The relative success of any tax reform effort is partly a function of one's starting point. The greater your preexisting inefficiencies, the stronger the potential for reform to be transformative. A useful illustration is provided by India's recent experience.
The relative success of any tax reform effort is partly a function of one's starting point. The greater your preexisting inefficiencies, the stronger the potential for reform to be transformative. A useful illustration is provided by India's recent experience.
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Post-Brexit Luxembourg May Be More Attractive with Tax Reform, OECD Says
Luxembourg's financial center could become more attractive after Brexit as it implements anti-tax-avoidance legislation, including the outcomes of the base erosion and profit-shifting project, to help level the playing field in corporate taxation, a new OECD report says.
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Brazil's Rejection of VAT on Web Ads a Boost for Google, Facebook
Internet giants Google and Facebook havewon important court victories in Brazil, reversing the taxation of their advertising revenue by Brazilian states.
In separate cases, the tax court of Sao PauloÔøΩBrazil's business center and its key financial stateÔøΩruled that the internet advertising revenue of both Alphabet Inc.'s Google and Facebook Inc. aren't subject to value-added tax (ICMS), the main source of revenue for Brazil's states.
In separate cases, the tax court of Sao PauloÔøΩBrazil's business center and its key financial stateÔøΩruled that the internet advertising revenue of both Alphabet Inc.'s Google and Facebook Inc. aren't subject to value-added tax (ICMS), the main source of revenue for Brazil's states.
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France and Germany Revive Discussions About Tax Harmonization, FTT
Although the years-long efforts by the governments of France and Germany to persuade other EU member states to adopt a common corporate tax base and a financial transaction tax (FTT) appeared recently to be going nowhere, high-level officials in both countries have started talking up the two proposals again in recentweeks.
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EU Takes Legal Action Against Portugal, Two Others on Tax Deals
The European Commission launched legal proceedings against Portugal, Bulgaria, and Cyprus for not adopting, in their national laws, European Union legislation requiring all EU countries to exchange tax rulings granted to multilateral companies.
The legislationwas adopted in thewake of the 2014 LuxLeaks scandal that revealed more than 100 individualized tax rulings the Luxembourg government secretly signedwith multinational companies such as McDonald's Corp. and Amazon.com Inc. The measure (EEC/2015/2376)was required to be on the books of each EU country by the end of 2016; the first exchange among EU country tax authorities is due to take place in September.
The legislationwas adopted in thewake of the 2014 LuxLeaks scandal that revealed more than 100 individualized tax rulings the Luxembourg government secretly signedwith multinational companies such as McDonald's Corp. and Amazon.com Inc. The measure (EEC/2015/2376)was required to be on the books of each EU country by the end of 2016; the first exchange among EU country tax authorities is due to take place in September.
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Malaysia Releases Updated Transfer Pricing Guidelines
Malaysian tax authorities on July 11 released updated transfer pricing guidelines covering, in particular, the arm's-length principle, intangibles, commodity transactions, and documentation. This article highlights the main developments in the chapter on the arm's-length principle.
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OECD Releases Updated Transfer Pricing Guidelines
The OECD has published a 2017 version of its transfer pricing guidelines that incorporates revisions made during the base erosion and profit-shifting project.
The OECD's July 10 release of its Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2017) marks the first full update of the guidelines since 2010. The revisions incorporate the substantive changes made by the 2015 final BEPS report on actions 8-10 and the documentation and country-by-country reporting requirements of the action 13 report. The changes provide up-to-date guidance on the application of the arm's-length principle,which "remains the international consensus on the valuation, for income tax purposes, of cross-border transactions between associated enterprises," according to an OECD press release.
The OECD's July 10 release of its Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2017) marks the first full update of the guidelines since 2010. The revisions incorporate the substantive changes made by the 2015 final BEPS report on actions 8-10 and the documentation and country-by-country reporting requirements of the action 13 report. The changes provide up-to-date guidance on the application of the arm's-length principle,which "remains the international consensus on the valuation, for income tax purposes, of cross-border transactions between associated enterprises," according to an OECD press release.
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OECD releases the draft contents of the 2017 update to the OECD Model Tax Convention
The OECD Committee on Fiscal Affairs has just released the draft contents of the 2017 update to the OECD Model Tax Convention prepared by the Committee'sworking Party 1. The update has not yet been approved by the Committee on Fiscal Affairs or by the OECD Council, although, as noted below, significant parts of the 2017 updatewere previously approved as part of the BEPS Package. Itwill be submitted for the approval of the Committee on Fiscal Affairs and of the OECD Council later in 2017. This draft therefore does not necessarily reflect the final views of the OECD and its member countries.
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IDFC Bank: A Bank In A Hurry
IDFC Ltd, among the more successful infrastructure lenders in the country,was one of 26 entities that applied for a banking licence in 2013. Itwas one of only two (Bandhan Financial being the second) that managed to pass the many rounds of scrutiny that each licence-aspirantwas subjected to by the Reserve Bank of India (RBI). The fact that IDFC got the nod to launch a universal bankwas partly due to its diversified ownership, but itwas as much a testament to the track record established by the organisation since its inception in 1997.
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EU Financial Transactions Tax Talks Kicked to End 2017
A pivotal meeting of 10 European Union finance ministers on a financial transactions tax, due to take place July 10, has been postponed until the end of 2017 at the earliest.
The 10 EU countries officially pursuing the financial transactions tax are Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain.
The 10 EU countries officially pursuing the financial transactions tax are Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain.
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Russia Clarifies PE Determinations Under Tax Treaty With U.K.
The Russian Ministry of Finance has released Guidance Letter 03-08-05/36799 (dated June 14),which clarifies the permanent establishment determinations under Russia's tax treatywith the United Kingdom.
Under article 7 of Russia's Tax Code, the corporate tax liabilities of a taxpayer in Russia (whether resident or nonresident) must be determined in light of the provisions of any applicable tax treaty (or treaty protocol). The treaty provisions prevail over any conflicting Russian tax laws and regulations.
Under article 7 of Russia's Tax Code, the corporate tax liabilities of a taxpayer in Russia (whether resident or nonresident) must be determined in light of the provisions of any applicable tax treaty (or treaty protocol). The treaty provisions prevail over any conflicting Russian tax laws and regulations.
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OECD releases latest updates to the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations
The OECD Transfer Pricing Guidelines provide guidance on the application of the "arm's length principle",which represents the international consensus on the valuation, for income tax purposes, of cross-border transactions between associated enterprises. In today's economywhere multinational enterprises play an increasingly prominent role, transfer pricing continues to be high on the agenda of tax administrations and taxpayers alike. Governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdiction and that the tax base reported by MNEs in their country reflects the economic activity undertaken therein and taxpayers need clear guidance on the proper application of the arm's length principle.
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Indias set to roll out its biggest tax reform in 70 years. Heres what it means
One of India's most ambitious economic reform plans in 70 yearswill ultimately boost tax receipts and provide simplicity for businesses, but the true impact may not be felt for at least a decade due to implementation challenges, experts said.
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