Int'l Tax News

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Cash-Pooling Concerns Under Microscope in Debt-Equity Rules

The Treasury Department is taking a hard look at how controversial earnings-stripping rules might impact a common cash management technique known as cash pooling, an official said.
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U.S. Official: EU Aid Cases Could Undermine Bilateral Tax Deals

Recent decisions by the European Commission to punish companies like Apple Inc. for allegedly accepting impermissible government aid from Ireland could undermine tax certainty, including bilateral agreements on intercompany pricing, a U.S. Treasury official said.
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News Analysis: Notes From the Tax Wars

In news analysis, Lee A. Sheppard looks at the latest U.S. criticism of the European Commission's state aid decision, and discusses how the United States may have undermined the OECD's base erosion and profit-shifting project.
For the Tax Notes article, gohere. (subscription required)
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EU State Aid Decisions Defy Transfer Pricing Analysis, U.S. Says

A Treasury Department lawyer strongly criticized recent decisions by the European Commission, saying the U.S. government has noway of doing a transfer pricing analysis to determinewhether the commission's determinations that U.S. multinational companies had received illegal state aid are consistentwith accepted arm's-length principles.

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News Analysis: The EU's Other Smoking Gun

Mindy Herzfeld examines an infringement decision by the European Commission that indicated that tax treatieswith limitation on benefits provisions might not be compatiblewith the European treaty and the single market,which she says could harm U.S. treaty relationshipswith EU countries.

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News Release: 367 Fortune 500 Companies Collectively Maintain 10,366 Tax Haven Subsidiaries

  • By Citizens for Tax Justice

In 2015, more than 73 percent of Fortune 500 companies maintained subsidiaries in offshore tax havens, according to "Offshore Shell Games," released today by the U.S. PIRG Education Fund, Citizens for Tax Justice and the Institute on Taxation and Economic Policy. Collectively, multinationals reported booking $2.5 trillion offshore,with just 30 companies accounting for 66 percent of this total. By indefinitely stashing profits in offshore tax havens, corporations are avoiding up to $717.8 billion in U.S. taxes.
For the CTJ report, go here.

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Repatriating Profits Won't Create Jobs

"Bring trillions of dollars back to the U.S. and create jobs." Great politics. Lousy economics.

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The top US tax controversies in 2016

  • By Contributed

There have been a number of significant developments in the area of US tax controversies during 2016. Fenwick &west highlight some of the top US tax cases from this year, including several large § 482 transfer pricing cases that could provide helpful insight for taxpayerswho may be facing similar significant transfer pricing adjustments.

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Some Financial Products May Get Relief in Debt-Equity Rules

The government has been paying close attention to industry concerns that some financial products could be hurt by closelywatched earnings-stripping rules, an IRS official said.

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U.S. Overseas Earnings Rise as Companies Defer Taxes

The amount of earnings U.S. subsidiaries kept overseas have increased 13 percent in recent years as corporations seek to defer tax on the income, according to a letter from the Joint Committee on Taxation.

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OECD's Inclusive Framework Isn't Talk Show': Saint-Amans

Reaching consensus on global tax ruleswith an expanded number of stakeholders isn't a "talk show" but involves real decision-making, the OECD's tax chief said.

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Brady, Neal Highlight Another Reason for Pro-Growth Tax Reform

  • By Committee on Ways and Means
Following a request from Houseways and Means Committee Chair Kevin Brady, R-Texas, and member Richard E. Neal, D-Mass., regarding U.S. corporations' untaxed foreign earnings kept offshore, the Joint Committee on Taxation estimated an amount of $2.6 trillion for 2015, an increase from the $2.3 trillion reported by the IRS for 2012.
The updated estimate comes in an August 31 letter from JCT Chief of Staff Thomas Barthold to Brady and Neal,which the two taxwriters released September 29.

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Private Equity and Venture Capital Funds Wary of BEPS Action 6

With the implementation of action 6 (treaty abuse) of the OECD's base erosion and profit-shifting project, private equity and venture capital funds may be forced to separate investors based on their eligibility for treaty benefits -- namely, reducedwithholding rates -- practitioners say.

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U.K. Opposition Party Leader Pledges Corporate Tax Increase

U.K. Labour Party leader Jeremy Corbyn has promised to raise the country's corporate tax rate to help fund education efforts, much to the chagrin of business trade groups that argue that such a pledgewould damage investment into the U.K.

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Russia Issues 2 CFC Guidance Letters

Russia's Ministry of Finance has made public two guidance letters that clarify tax provisions regarding controlled foreign corporations.

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Taiwan to introduce VAT for online retailers

Taiwan is to become the latest country to levy VAT on online foreign retailers, following similar OECD-inspired laws introduced by the EU and countries including Japan, Russia, South Korea, Australia and New Zealand. Foreign businesses may have only three months to prepare for the changes.

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APA signings in India cross the '100-mark'

  • By PwC
On September 23, 2016, the total number of Advance Pricing Agreements (APAs) entered into by India's Central Board of Direct Taxes (CBDT) crossed the '100-mark' to reach 103. The CBDT expects more APAs to be concluded and signed in the near future.
For the PwC Insight, gohere.
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Brokering The Brawl When EU Commission Tax Rulings Become State Aid

The two-year battle between the United States and the European Commission over the latter's state aid investigations harkens back to legendary boxing matches, like the 1975 "Thrilla in Manila" between Joe Frazier and Muhammad Ali.
If the present trajectory of the state aid investigations continues on its predictable course, it is easy to visualize the U.S. and the commission as the exhausted Frazier and Ali at the end of their epic battle. But in theworld of tax and trade policy – not to mention international relations – it is not a good outcome if a dispute between trading partners and allies reduces both sides to a bloody pulp.
For the Forbes article, gohere.
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Future of Foreign Import Tax Bill Murky as Controversy Grows

Legislation thatwould tax foreign imports could add to tax overhaul discussions by House RepublicansÔøΩbut its future remains unclear as supporters and critics take sharply opposing views about the measure's impact on U.S. trade.

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Role of G-20 in Tax Policy Here to Stay:' Treasury Official

Tax officials from the U.S., India and the OECD told those attending the International Fiscal Association's annual congress that the Group of 20 countrieswill continue to drive the international tax policy agenda.

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U.K. Defends Work Helping Developing Nations Adapt to New Tax Standards

The U.K. Department for International Development (DFID) has defended itself against a recent report from an aidwatchdog criticizing it for failing to do enough to help developing nations benefit from new tax standards, noting its progress in boosting developing countries' tax administration capacity.

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How the EU Anti-Tax Avoidance Directive could impact industrial products and services companies investing in Europe

  • By PwC
Member States in the Council of the European Union (EU) recently gave their final approval of the Anti-Tax Avoidance Directive (ATAD),which targetswhat the EU considers tax avoidance practices that directly affect the function of the internal market and applies to all taxpayers subject to corporate tax in one or more Member States.
Implementation of ATAD likelywill limit tax planning opportunities and increase compliance costs for many industrial products and services multinational companies (MNCs) investing in the EU.

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Apple Tax Decision Based in Economic Reality: EU Official

The European Commission's state aid enforcement director, facing criticism that the EC is "living in a timewarp" in telling Ireland to retroactively collect $14.5 billion from Apple Inc., challenged tax lawyers and advisers to read the decision,whichwill be redacted and published in a fewweeks.
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BEPS impact: Indian companies tweak tax planning approach

  • By Press Trust of India
Around 35 percent of businesses in India have changed their tax approach following the OECD Base Erosion and Profit Shifting (BEPS) tax plan, higher than the global average, says a report.

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A value added tax is not a trade barrier

Donald Trump peddled an economic fallacy in Monday night's Presidential debate by suggesting that Mexico's value added tax, or VAT, gives its producers an advantage over American companies. He said, "Whenwe sell into Mexico, there's a tax – automatic, 16 percent, approximately.when they sell to us, there is no tax."
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U.S. Failure to Commit to Information Exchange a Problem'

U.S. reluctance to commit to the OECD's international standard for the automatic exchange of banking information is a problem, but that doesn't mean the countrywill be "the next Switzerland," the organization's top tax official told Bloomberg BNA.
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State Aid Debate, EU Anti-Tax-Avoidance Package Create Legal Uncertainty

The European Commission's recent state aid ruling involving Apple Inc. is considered a deviation from internationally accepted tax law aswell as a source of legal and tax uncertainty, according to practitioners.

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Practitioners Seek Guidance From OECD on Concept of Income Tax

Practitioners have called on the OECD to provide guidance on article 2 of the OECD model tax convention to help countries reach a consensus view of the concepts of tax and of tax on income and capital. Guidance is needed because many countries impose levies or other, similar fees that look like income taxes but may not be creditable under the various article 2 provisions.

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McDonald's State Aid Investigation: What the European Commission Got Wrong

Oliver R. Hoor and Keith O'Donnell summarize the European Commission's state aid investigation of McDonald's, analyze the tax treatment of U.S. branches under Luxembourg domestic tax law and tax treaty law, and conclude that no state aid has been granted to McDonald's.
For the TNI special report, gohere. (subscription required)
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Luxembourg Government proposes new country-by-country reporting obligations

  • By PwC
The Luxembourg Government on August 2, 2016, lodged a draft law introducing country-by-country (CbC) reporting obligations for Luxembourg entities that are part of a Multinational Enterprise Group (MNE Group). CbC obligations constitute one element of the new three-tiered standardized approach to transfer pricing documentation introduced by Action 13 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project.

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Proposed 2017 Dutch tax package provisions would affect multinationals

  • By PwC
The Dutch Ministry of Finance on September 20, 2016, presented the 2017 Dutch tax package (the 'Tax Package') to the legislature, togetherwith certain other tax measures and documents. The package includes several changes of potential importance to multinational enterprises (MNEs).
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Tracking People Will Be Key to CbC Reporting, Tax Executives Say

Alston & Bird's Edward Tanenbaum examines changes to the U.S. Model Income Tax Treaty's provisions on permanent establishments and the protocol to the U.S.-Luxembourg income tax treaty that is under negotiation.
For the BNA Insight, gohere. (subscription required)
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U.S. Bill Proposes Making Global Tax Reports Public

Publicly traded companieswould be required to post global tax information to the Securities and Exchange Commission under recently proposed legislation.

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News Analysis: Treasury Offers Few Assurances on Proposed Debt-Equity Regs

In news analysis, Lee A. Sheppard discusses recent Treasury comments regarding the controversial section 385 regulations,which the government has said it isn't planning to capitulate on.

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Pascrell Border Tax Proposal Targets Indirect Tax Systems

A senior House Democratic taxwriter plans to introduce legislation thatwould impose a tax on imported goods from countries that fall under an indirect tax system, a proposal similar to the border-adjustable tax policy included in House Republicans' tax reform blueprint.

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International Risks Remain Top Priority for Audit Regulator

Perils associatedwith cross-border audits are the highest enforcement priority for the Public Company Accounting Oversight Board's enforcement division, director Claudius Modesti said.
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Final Report on OECD Action 14 Coming Soon, Official Says

The OECD soonwill release the final report on action 14 of its base erosion and profit-shifting project, detailing the mutual agreement procedure peer review process, according to Achim Pross, head of the International Cooperation and Tax Administration Division of the OECD's Centre for Tax Policy and Administration.

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Tracking People Will Be Key to CbC Reporting, Tax Executives Say (1)

In thewake of the OECD's base erosion and profit-shifting project, tracking people and functions in extreme detail has become a central pillar of tax compliance, according to Christian Kaeser, global head of tax at Siemens.

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Remarks by U.S. Treasury Secretary Lew at Meeting with Argentine Finance Minister Prat-Gay

  • By U.S. Department of the Treasury
The United States and Argentina are negotiating an income tax treaty thatwould provide for the exchange of tax information, Treasury Secretary Jacob Lew said at a September 26 meeting in Buenos Aireswith Argentine Finance Minister Alfonso Prat-Gay.

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Carbon Pricing an Underused Tool to Cut Emissions, OECD Report Says

Governments can use carbon pricing as a tool to reduce greenhouse gas emissions in a cost-effectiveway and transition to low-carbon economieswithout damaging long-term competitiveness, an OECD official said.

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Troubled waters - global transparency and controversy in uncertain times

  • By Contributed

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U.S. Senate's top tax lawmaker targets corporate offshore profits

The U.S. Senate's senior Democratic tax lawwriter says hewill rip up a root of corporate tax avoidance if his partywins Senate control in November, targeting trillions of dollars in tax-deferred profits being held abroad by U.S. companies.
For the Reuters story, gohere.
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The international profits of US multinationals belong in the United States, a senior tax official at an influential global economic think tank has said.

  • By Independent
Although declining to comment specifically on the Apple case, Pascal Saint-Amans, the director of tax policy at the Organisation for Economic Cooperation and Development (OECD), suggested the profits of large American technology and pharmaceutical firms should be taxed in the US.

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OECD official says EU Apple ruling not precedent for future tax cases

  • By WHTC
A multi-billion euro back tax bill handed to Apple by the European Commission should not be seen as a precedent for future tax cases as itwas based on state aid rather than tax law, the OECD official spearheading global tax reform said on Monday.
For thewHTC story, gohere.
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Irelands corporate tax not under threat, OECD tax chief says

Ireland's 12. 5 per cent corporate tax rate is not under threat from moves to reform the global tax system, the OECD's tax policy chief has said.
On a visit to Dublin, Pascal Saint-Amans said therewas no longer any questioning of the rates set by some countries.
For the Irish Times story, gohere.
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News Analysis: The Tech Mahindra Case -- Royalties Derived Through a PE

An Indian technical services firm's attempt to avoid Australian tax by relying on a clever, but ultimately unsuccessful, "loop" argument based on the business profits and royalties articles of the Australia-India income tax treaty may emerge as an important precedent on the holistic approach to interpreting tax treaties.

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Economic Analysis: Drug Giants Keep Effective Tax Rates Low

In economic analysis, Martin A. Sullivan looks at the tax profiles of nine large pharmaceutical companies and explainswhy their U.S. effective tax rates have been dropping over the last decade.

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News Analysis: Hope Springs Eternal for the CCCTB

In news analysis, Marie Sapirie examines how a proposal by the European Commission to consolidate a corporate group's profits and losseswould affect U.S. companies.

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A More Subjective Permanent Establishment Standard

Todd Izzo, Cassie McCormick and Maggie Reilly of Deloitte Tax examine the more subjective permanent establishment standard embodied in recent OECD base erosion and profit shifting guidance, aswell as implications for multinational groups. "Businesseswill need to react, and may need to alter their legal structure, information reporting systems, andwarehouse and logistic arrangements to address these important changes," the authorswrite.

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Panel Explores Role of Human Rights Considerations in Tax Policy

Tax professionals have certainly played a role in the shortcomings of the international tax system, but the degree towhich human rights should be considered in designing a more appropriate structure remains uncertain, according to a panel of law professors.

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