Int'l Tax News

US oil and gas producers are among companies hit hardest by new restrictions on tax relief for interest payments, an analysis of the impact of the reforms has shown.

Speculation is buzzing that the Singapore governmentwill raise the goods and services tax in its Feb. 19 budget rollout. But GST probablywon't be thewhole story. Authorities have several other options to increase taxes, or at least signal that they're needed in the coming years, as the city state grappleswith rising health and retirement costs as the population ages rapidly.

PNC Financial Services Group Inc. said Friday that fourth-quarter earnings doubled comparedwith a year ago, boosted by a one-time gain from the recently passedtaxoverhaul.

Two of the biggest US banks, JPMorgan Chase andwells Fargo, have vowed to share the spoils of a big cut in the corporate tax rate, holding out the prospect of higher investment, better pay and cheaper prices for their services.

The US corporate tax cutwill trigger a short-term boom but the Federal Reserve is likely to counteract the longer-term economic fillip, according to BlackRock chief executive Larry Fink.

South Africa's tax authority is inviting comment on draft guidance for rules thatwould deny a tax deduction on the royalties or expenses a company pays to a connected party for the use of intellectual property. The budget stated that the lawwas aimed at preventing erosion of the tax base, but as it "may affect legitimate commercial transactions and discourage the use of South African-based group infrastructure to further develop offshore intellectual property," relaxationwould be considered.

Swiss Federal Councillor Ueli Maurer said there's an "urgent" need to reshape Switzerland's corporate tax regime following the historic tax cut in the U.S.

South Korea has announced 17 tax enforcement decrees meant to expand the tax base and spur investment. Thedecrees,which take effect Jan. 30, create incentives for angel investments, venture capital, and over-the-counter market investment.

The European Union is "assessingwhat the best approachwill be" as it prepares to make proposals this spring on how to tax the digital economy, a commission spokeswoman said.

Beijing has adjusted its policies on import tax breaks and foreign investment, in a move that could encourage sales of foreign products in China, including high-end fields such as chip design and artificial intelligence.

Publicly traded Australian multinationalswith business in the U.S. have begun issuing formal statements to the Australian Stock Exchange on how the passage of tax reform in the U.S. impacts their U.S. tax positions.

Swiss bank Credit Suisse Group AG said that it expects towrite-down 2.3 billion francs ($2.3 billion) intax-deferred assets this quarter as a result of the signing of a sweeping U.S.taxoverhaul. Thewrite-down is a one-time accounting adjustment and has minimal impact on the bank's strong regulatory capital position, the bank says.

The pharmaceutical giant is the latest company to outline the impact of the new tax law. Bristol-Myers Squibb Co. said it expects to pay an extra $3 billion intaxeson its overseas cash in the fourth quarter, a result of thetaxoverhaul.

Both Shell and Barclays said thatwhile theywere likely to benefit over time from the reduction in the US corporate tax rate from 35 percent to 21 percent, they expected to take hefty non-cash charges in their fourth-quarter results. Shell expects to take a $2bn-$2.5bn charge against the accounting value of its "deferred tax assets" in response to a sweeping overhaul of the US tax system thatwas signed into law by Mr. Trump. Barclays said it expected to record a £1bn charge in its 2017 results.

Goldman Sachs haswarned that itwill take a $5bn hit to fourth-quarter profits as a result of president Donald Trump's tax overhaul, mostly because of a new levy on overseas earnings.

Credit card company American Express onwednesday said changes to the US tax lawwould reduce its fourth-quarter earnings by $2.4bn and drive it to a quarterly loss.

British petroleum giant BP PLC has joined the ranks of multinational companies that are estimating multibillion-dollar hits to their financial statements as a result of U.S. tax reform.

French bank Societe Generalewill book a charge of $450m in the fourth quarter, in part due to a hit from US tax reform. The Paris-based bank said that US tax reformwould cost it $307m this quarter, largely due to a reduction in the value of deferred tax assets (DTAs).

Delta Air Lines said lower tax rateswill boost its 2018 results, as the US carrier unofficially kicked off a quarterly earnings season that is expected to provide the first signals of the impact of the Trump tax reforms on corporate America.

US corporate tax cuts have already given a boost towells Fargo's profits even though the reformswere signed into law only threeweeks ago – but results from the bank on Friday also showed how it is still struggling to move on from its mis-selling scandal.

Taiwan hopes to sign a tax agreementwith the U.S. in an effort to boost business exports and strengthen bilateral economic relations after the U.S. passed a tax reform package.

British American Tobacco Plc and Micro Focus International Plc have bucked the trend of companies on the U.K.'s benchmark FTSE 100 indexwarning of "one-off" charges through U.S. tax reforms. Theworld's second-largest listed cigarette maker said in aJan. 9 news releasethat itwill receive an "exceptional" tax credit from the U.S. tax code rewrite that lawmakers passed last month.

Israel is assessing Alphabet Inc. subsidiary Google and Facebook Inc. on their operations in the country, Tax Authority Director General Moshe Asher told the Knesset parliament Jan. 8.

Apple has been forced to pay an extra £136m tax bill in the UK after "an extensive audit" by HM Revenue & Customs in the latest crackdown affecting the US tech giant.

Five large U.S. banks are expected to report about $31 billion in tax-related hits for the fourth quarter, though the industry should benefit long-term.

The Cooper Companies Inc., a member of the Standard & Poor's 500 Index, haswarned shareholders over its 31 million-pound "Google tax" charge from the U.K.'s tax authority.

New Dutch rules that reflect the OECD's priorities for combating global profit shiftingwill kill off thousands of resident letterbox companies,lawmakers predict. But views among tax professionals are still divided onwhether itwill spell the end of the country's large letterbox industry.

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.