Int'l Tax News

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MAP Peer Review May Include Business Input, OECD Official Says

The OECD's coming mutual agreement procedure (MAP) peer review should include business input at an early stage, according to Achim Pross, head of the OECD's International Cooperation and Tax Administration Division.
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IRS Bracing for 'Tsunami' of MAP Cases, Official Says

by Stephanie Soong Johnston (Tax Notes)
Although mutual agreement procedures (MAPs) should see improvement under action 14 of the OECD's base erosion and profit-shifting project, the IRS is bracing itself for a "tsunami" of MAP cases soon, a top IRS official said.

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Notice 2016-52 details Section 909 regulations for FTC splitting events arising from foreign-initiated adjustments such as EU state aid

  • By PwC
On September 15, 2016, the IRS issued Notice 2016-52, announcing future Section 909 regulations addressing situations inwhich foreign tax credit splitter arrangements arise due to foreign-initiated adjustments towhich Section 905(c)would apply. The Notice preamble specifically references retroactive payments for prior-year taxes required under the EU State aid rules as adjustments that could raise this issue. However, the future regulations could apply to any foreign-initiated tax adjustment.

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Investing in India: The new normal asset management perspective

  • By PwC
by PwC
India, one of the largest democracies in theworld, today is also the seventh largest economy by nominal Gross Domestic Product (GDP) and the third largest by purchasing power parity (PPP). It is a developing economywith a GDP growth rate of about or over 7% over the last few years. India, as an emerging market, has also been looking to attract more inbound foreign investments through liberalized foreign investment rules and measures to ease conducting business. This publication provides insights on Indian tax policy, recent measures and our expectations regarding the Indian tax and regulatory environmentwith respect to foreign investments, from an asset management perspective.

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No Major Changes Needed to Conform to OECD Standards, Indian Tax Official Says

Therewill be no legislative overhaul to bring India's international tax and transfer pricing laws in linewith the OECD's BEPS project recommendations because the country has already adopted most of the same principles, according to Akhilesh Ranjan, principal chief commissioner of international taxation and transfer pricing for India's MOF.

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China's Bad Rap in International Tax May Be Unfair, Practitioner Says

Transfer pricing guidance issued by China's State Administration of Taxation in 2015 and 2016 does not abandon the arm's-length principle, as some critics have claimed, but instead modifies it to account for the particular issues China faces, according to Brendan Kelly of Baker & McKenzie.

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E.U., Accused of Bias Against U.S. Companies, Opens Tax Inquiry Into French Utility

European Union regulators stand accused of unfairly targeting American companies in a series of inquiries. Sowith the region's antitrust chief visiting the United States thisweek, the bloc's officials said on Monday that theywere investigatingwhether a French company signed a sweetheart tax dealwith Luxembourg.

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News Analysis: The United States as a Tax Haven?

In news analysis, Lee A. Sheppard discusses how the United States fits inwith the OECD's common reporting standard.

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Economic Analysis: A U.S. VAT May Be Closer Than You Think

Two members of the congressional taxwriting committees -- a Democratic senator and a Republican representative -- are proposing that revenue from a new U.S. credit-invoice VAT be used to cut individual income taxes and to reduce or eliminate the corporate tax.

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Executives to EU Nations: Stop State-Aid Investigations

A coalition of U.S. CEOs urged European Union countries to rein in the European Commission following its staggering $14.5 billion decision against Apple Inc. and Ireland.
For the DTR story, gohere. (subscription required)
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Apple Ruling Is 'Old School Europe,' Vestager Tells U.S. Critics

Responding to U.S. claims that the European Commission's decision requiring Apple to pay Ireland ÔøΩ13 billion in back taxes is a violation of tax sovereignty, EU Competition Commissioner Margrethe Vestager called the decision "old school Europe," noting that the commission has been addressing state aid issues since itwas formed.

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M&A transactions - The impact of Brexit

David Smith and Ben Jones, of Eversheds' tax team in London, look at the key tax areaswhere Brexit could have an impact on typical M&A transactions and discuss how parties to such transactions might seek to address the issues.

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Corporate Tax Chartbook: How Corporations Rig the Rules to Dodge the Taxes They Owe

While the statutory U.S. corporate tax rate is 35 percent, corporations actually pay an effective rate around half that thanks to profit shifting and tax avoidance, according to a September 15 report by the Economic Policy Institute and Americans for Tax Fairness that said U.S. corporations held $2.4 trillion in untaxed profits offshore in 2015.
For the report, gohere.
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State aid: Commission opens in-depth investigation into Luxembourg's tax treatment of GDF Suez (now Engie)

  • By European Commission
The European Commission has opened an in-depth investigation into Luxembourg's tax treatment of the GDF Suez group (now Engie). The Commission has concerns that several tax rulings issued by Luxembourg may have given GDF Suez an unfair advantage over other companies, in breach of EU state aid rules.
For the EC release, gohere.
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EU Commission scoreboard identifies non-EU countries that potentially enable tax avoidance

  • By MNE Tax
As part of an effort to devise an EU-wide common list of tax havens, the EU Commission today released a scoreboard designed to help identify countries located outside the EU that enable multinational corporation tax avoidance.
For the MNE Tax article, gohere.
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U.S. Treasury Targets Foreign Tax Credit Use Amid EUs Probes

The U.S. Treasury Department took fresh steps on Thursday to curb tax avoidance by multinational corporations, announcing new curbs on a loophole throughwhich companies artificially use credits for foreign taxes they pay to improperly lower their U.S. tax bills.

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A tax loophole for U.S. companies operating overseas just got tighter

The Treasury Department sought Thursday to limit the benefits that U.S. companies can claimwhen they pay taxes overseas, an effort to cushion the blow from Europe's demand that Apple pony up $14.5 billion in unpaid taxes.
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M&A transactions - The impact of Brexit (1)

David Smith and Ben Jones, of Eversheds' tax team in London, look at the key tax areaswhere Brexit could have an impact on typical M&A transactions and discuss how parties to such transactions might seek to address the issues.

To read more go here

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EU Parliament backs Commissions state aid verdict against Apple

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Potential Impact of Foreign Credit Shutdown: Beyond Apple?

The Treasury Department's move to shut down foreign tax credit planning for overseas tax adjustments paid by U.S. multinationals goes beyond a potential effort to stop Apple Inc. from claiming a credit for billions itwas ordered to pay Ireland by the European Commission.

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EU Tax Haven Scoreboard Deems U.S. a Risk

A European Union scoreboard to begin screening nations for a tax haven blacklist indicates that more than 80 countries, including the U.S., pose a risk to the continent based on issues such as corporate tax rates, preferential state-aid regimes and lack ofwillingness to exchange bank information.
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Treasury Limits Foreign Tax Credit Availability

In thewake of the European Commission's state aid decision regarding Apple, Treasury has issued a notice stating that it intends to issue new regulations thatwill prevent a company that has been the subject of a foreign-initiated adjustment from obtaining foreign tax creditswithout repatriating the associated income.

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Ethiopia issues transfer pricing rules

  • By PwC
Ethiopia, one of Africa's fastest growing economies, issued transfer pricing rules effective October 12, 2015 through the Ethiopian Ministry of Finance and Economic Development (MoFED).
Whereas Ethiopia has always had a provisionwithin its Income Tax Proclamation (ITP) requiring transactions between related persons to be conducted at arm's length, no guidance had been provided by the Ethiopia Tax Authority (ETA) on how this arm's length standardwas to be implemented.

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Political Paralysis Is the Biggest Threat to U.S. Competitiveness

The U.S. political system is America's "single biggest barrier to competitiveness," according to an annual study by Harvard Business School.
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European Commission Begins Vetting Noncooperative Jurisdictions

The European Commission on September 15 took the first steps in creating a common EU list of noncooperative tax jurisdictions among member states, presenting a "pre-assessment" of jurisdictions, using a scoreboard of neutral and objective indicators, that member states can examine for further screening.

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U.K. Treasury Official Reaffirms Corporate Tax Rate Cut to 17 Percent

The U.K. government may be pushing through a corporate tax rate cut to 17 percent by 2020 in its Finance Bill 2016 to show that the U.K. is open for business, but creating a competitive environment for businesses means more than just offering low tax rates, a top HM Treasury official said.
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Australian Taxation Office Warns MNEs Against Tax Avoidance Schemes

The Australian Taxation Office has issued taxpayer alertswarning multinational entities that might be tempted to "push the boundaries" to beware of entering into either of a pair of arrangements intended to shift taxable profits away from Australia and into more favorable tax jurisdictions.

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How FATCA and CRS Affect U.S. Investment

William Ahern of Ahern Lawyers and Josh Maxwell of Hone Maxwell LLP compare the automatic exchange of tax information under the U.S. Foreign Account Tax Compliance Act and the common reporting standard and examine the effects both systems have on international finance centers.

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PROBLEMS UNSOLVED AND A NATION DIVIDED

This report provides an overview of the authors' findings on the evolution of the U.S. economy, the state of U.S. competitiveness in 2016, and priorities for the next President and Congress, drawing on our research and the May–June 2016 surveys of alumni and the general public.

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News Analysis: Is the EU a Country? Creditability of State Aid

by Mindy Herzfeld
Mindy Herzfeld discusses the European Commission's recent decision in the Apple state aid case andwhether the United Stateswill end up covering part of the costs of that decision.
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Questions and Answers on the common EU list of non-cooperative tax jurisdictions

  • By European Commission

The European Commission has released a Fact Sheet providing Questions and Answers on the common EU list of non-cooperative tax jurisdictions.

For the EC release, go here.

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Public comments received on the discussion draft on approaches to address BEPS involving interest in the banking and insurance sectors under Action 4

  • By OECD

On 28 July 2016, interested partieswere invited to provide comments on a discussion draft (French version available here)which dealswith approaches to address BEPS involving interest in the banking and insurance sectors under Action 4 (Interest deductions and other financial payments) of the BEPS Action Plan. The OECD is grateful to the commentators for their input and now publishes the comments received.

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Fair Taxation: Commission launches work to create first common EU list of non-cooperative tax jurisdictions

  • By European Commission

The European Commission is forging aheadwithwork to draw up a first common EU list of non-cooperative tax jurisdictions by presenting a pre-assessment ('scoreboard of indicators') of all third countries according to key indicators.

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GOP senator requests hearing on international tax issues

Sen. Dean Heller (R-Nev.) is asking the Senate Finance Committee to hold a hearing on international tax issues, such as the Treasury Department's proposed rules aimed at curbing offshore tax deals and the European Union's investigations of U.S. companies.
For the Hill story, gohere.
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House Republicans Ask Lew to Slow Debt-Equity Rules

Houseways and Means Committee Republicans asked Treasury Secretary Jacob J. Lew to slow down finalization of earnings-stripping regulations that have generated consternation among multinational corporations and some on Capitol Hill.

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Large Companies Claimed Most U.K. Patent Box Benefits in Fiscal 2014

More than 95 percent of the nearly £343 million in tax benefits claimed during the first year of the U.K.'s patent box schemewent to large companies, according to a report by HM Revenue & Customs.

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Tax Policy Rising to Prominence in R&D Incentives, OECD Says

Tax policy is becoming increasingly important among incentives meant to encourage research and development and innovative growth in countries, but governments must be careful in designing such policies to ensure they do not have any unintended harmful consequences, such as the creation of arbitrage opportunities, according to a new OECD report.

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MEPs Underwhelmed by Tax Reform Content of State of EU Speech

Tax reform didn't receive enough attention in European Commission President Jean-Claude Juncker's State of the Union Address 2016wTD 179-17: News Releases delivered September 14, according to members of the European Parliament (MEPs) from various political groups.

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Apple Ruling Is EU Power Grab, U.K. and Irish MEPs Argue

Although the European Commission's recent Apple decision received strong support overall, several members of the European Parliament (MEPs) reiterated claims that it undermines Ireland's tax sovereignty during a September 14 debate.

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U.S. Entities Concerned About Data Protection

U.S. banks and their clients areworried about protecting datawhen more than 100 nations begin exchanging financial information to complywith the OECD's common reporting standard.

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House Republicans Ask Lew to Slow Debt-Equity Rules (1)

Houseways and Means Committee Republicans asked Treasury Secretary Jacob J. Lew to slow down finalization of earnings-stripping regulations that have generated consternation among multinational corporations and some on Capitol Hill.
For the DTR story, gohere. (subscription required)
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Ikea on EU Tax Radar as Vestager Looks Beyond Apple, U.S.

European Union regulatorswho slapped Apple Inc.with a 13 billion-euro ($14.6 billion) tax bill are examining allegations that Ikea dodged at least 1 billion euros in taxes over the past six years.
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News Analysis: BEPS Failure and Multilateral Initiatives

In a September 13 speech in Toronto titled "Making Globalizationwork for All," IMF Managing Director Christine Lagarde urgedwestern governments to take better care of their citizenswhile denouncing "tax systems that allow multinational companies andwealthy individuals not to paywhat manywould consider a fair share." But as the populist rebellion against globalization, the European Union, and multinational greed is finally sinking inwith the European elite, their American counterparts demonstrated that they are only just beginning to get it.

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Without A Deft Touch, Treasury Risks Writing Inversion Rules That Benefit Wall Street

by Carter Dougherty (Inside Sources)
In the murky and arcaneworld of tax law, unintended consequences are not hard to come by. In the case of the Treasury Department's years-long battle to fight international tax avoidance, the newest one may be that rules aimed at industrial corporations end up benefiting large banks onwall Street and elsewhere in theworld.
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London Business School Review

Forbes

by Catherine Magelssen and Ioannis Ioannou
The issue of corporate tax avoidance is often discussed in relative isolation,without really considering the efficiency and effectiveness those funds are used by governments or by the tax avoiding corporates.what "fair taxation" is, of course, maywell be a philosophical discussion. Yet the recent EU decision about Apple's tax ruling raises a number of questions that, in our view, have ramificationswell beyond the domain of tax avoidance and competitiveness.
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An unabashed EU cash grab

by Alexander Hendrie (Thewashington Post)
Despite the protests of both country and company, the European Commission has declared Apple's Irish tax rates constitute "illegal state aid," and are telling the company they must pay the Irish government 13 billion euros (about $14.5 billion) plus interest. EU bureaucrats do not allege that Apple dodged taxes, but rather they did not pay enough, a decision that upends the established international tax system by opening the door to retroactive taxation based on subjective accusations of "fairness."
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The Apple ruling aims at the wrong problem

  • By Live Mint

In 2014, Apple's effective corporate tax ratewas allegedly 0.005%. That is one of the eye-catching figures European Union competition commissioner Margrethe Vestager ledwith lastweekwhile declaring the findings of a three-year inquiry into Apple's tax arrangements in Ireland. Here's another: the European Commission (EC) has charged Irelandwith recovering $14.5 billion from the tech giant. Together, they sum up the problemswith the rulingÔøΩa blinkered view of a situation fraughtwith ambiguities and an approach that could prove counterproductive in tackling a legitimate problem.

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The Real Motivation Behind the EUs Attack on Ireland and Apple

Here's a name to conjurewith: Margrethe Vestager. Ring a bellwith you? An old girlfriend from your backpacking days around Europe maybe? Or Emmanuelle's best friend in the 1970s "sophisticated" series of sex movies perhaps? No? Nothing else come to mind? Okay, I'll give you a clue. She's Danish and she's just told the Apple Corporation to pay the Irish government $13 billion in back taxes that Ireland says Apple doesn't owe.
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Understanding the European Commissions Recent Tax Rulings

On August 30th the EC announced that two of Apple's tax agreementswith Ireland violated the state aid clause in the Treaty on the Functioning of the European Union (TFEU), a clause guarding against states giving an advantage to a particular business or industry. This ruling set off a firestorm of criticism for recent EC rulings that have used the state aid clause to strike down tax agreements and force collection of back taxeswith interest.

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Treasury Secretary Jack Lew on Apple's tax bill and the next financial downturn

It's been eight years since the financial crisis and the U.S. economy is still in recovery mode, though it may be the envy of Europe, China, and other countries around theworld.
Earlier this year, Treasury Secretary Jack Lew spoke to us about America's role in theworld economy and tax inversions.
We caught upwith him again to discuss our country's economic health.

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