Int'l Tax News

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Apple Won't Repatriate Earnings Until There's a 'Fair' Rate

by Andrew Velarde
Apple Inc. CEO Tim Cook indicated in a recent interview that the companywill not repatriate its billions in earnings currently sitting offshore and subject them to U.S. tax until the United States lowers its rate to one that is "fair."
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Subpart F: Revised Active Rents and Royalties Exception

by Lowell D. Yoder
Lowell Yoder of McDermottwill & Emery looks at temporary regulations (T.D. 9733) providing that only activities of a controlled foreign corporation's own employees can be taken into account for active business tests used to determinewhether rents or royalties are Subpart F income. The rules specify that cost-sharing arrangements can't be relied on to satisfy the active business tests, hewrites, but clarify that activities can be conducted in multiple countries.
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Inversions, Corporate Deals Sit Atop IRS Guidance Plan

y Laura Davison
The IRS is prioritizing inversion-related regulations in its annual priority guidance plan,which outlines the agency's goals for published guidance for the coming fiscal year.
The 281 projects on the plan include the controversial rules to curb corporate inversions and the regulations to stop earnings stripping. The 2016-2017 Priority Guidance Plan, issued Aug. 15, said the Internal Revenue Service plans to issue final rules in both areas.
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The high political drama of Obama's Section 385 rules

by Brandon Arnold
The post-convention season is in full swing, meaning that lawmakers are primarily focused on the election. Butwhilewashington is paying attention to political theater, in the realworld Americanworkers and businesses are feeling the economic pain caused by the broken the U.S. tax system.
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Culture, Language Challenge Multinational Audits

by Denise Lugo
Some challenges U.S. audit firms facewhen conducting multinational audits stem from cultural and language differences of a foreign jurisdiction, according to an American Accounting Association panel discussion in New York.
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The IRS must release new guidance on cloud transactions to respond to explosive industry growth and combat base erosion and profit shifting, according to attorneys. It can no longer be said that cl

by Allyson Versprille
The IRS must release new guidance on cloud transactions to respond to explosive industry growth and combat base erosion and profit shifting, according to attorneys.
"It can no longer be said that cloud computing has the mere potential to revolutionize theway consumers and businesses interactwith technology; potential has become a current reality," the American Bar Association Section of Taxation said in a letter to the Internal Revenue Service.
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Proposed Canadian Tax Changes Could Catch U.S. Firms Unaware

by Peter Menyasz
Canada is considering changes to its value-added tax that, if adopted,would expose U.S. limited partnerships to penalties for reporting requirements they likelywouldn't be aware even exist.
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OECD BEPS plan failing to combat tax avoidance, MPs warn

by Sinead Moore
A report by the All Party Parliamentary Group (APPG) on Responsible Tax said that the OECD's BEPS proposalswill not be successful in tackling global tax avoidance until full transparency is introduced into the tax system.
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India Races to Implement Epic Tax Reform

After Indian lawmakers took a decade to agree on the nation's biggest tax reform in modern history, Prime Minister Narendra Modi is racing to get it implemented in less than eight months.
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High-Level IRS Scrutiny in Debt-Equity Cases Raises Concerns

Bloomberg

by Alison Bennett
xpanded IRS scrutiny could make it tougher for companies trying to convince the agency that their deals involve tax-favored debt rather than expensive equity.
The IRS announced July 26 that all debt-equity caseswill have to go to a high level of legal reviewÔøΩa move that might reduce taxpayers' ability to argue individual cases, tax attorneys told Bloomberg BNA.
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Multinationals May Challenge Debt-Equity Rules: Attorneys

Bloomberg

by Alison Bennett
Companies may pursue big legal challenges to the Treasury Department's controversial earnings-stripping rules unless the government makes significant changes, tax attorneys told Bloomberg BNA.
The question is a critical one as the governmentworks to finalize rules intended to keep multinationals from shifting income out of the U.S. via loans to subsidiaries.
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Denmark Issues Detailed Technical Ruling On PE Analysis Applicable to Data Centers

Bloomberg

by Gary D. Sprague
Gary D. Sprague of Baker & McKenzie looks at a new ruling from the Danish tax authority analyzingwhether a data center constitutes a permanent establishment for an affiliated nonresident entity that supplies the digital goods or services to the market. Spraguewrites that the ruling "is the most complete expression in the public domain of the technical reasons"why a data center entity doesn't constitute a PE.
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Luxembourg proposes new corporate tax measures

  • By PwC

PwC

by PWC
The Luxembourg Government on July 26, 2016, introduced a billwith proposed tax measures for corporations (the Bill) for the 2017 tax year. The proposed changes are in linewith the announcements made by the government earlier this year.
Although the Bill has not been finalized, multinational enterprises operating in Luxembourg should start considering how the proposed measures, if enacted, could affect them.
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Tax obligations for China's oil and gas upstream sector

It is absolutely necessary to plan aheadwhen operating in China's oil and gas upstream sector,which allows international oil companies (IOCs) to participate in and operate the exploration development and production of petroleum resources in China.

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Spain: Participation exemption in 'pure holding companies'

The Spanish Corporate Income Tax Law (CIT Law) contains a tax exemption for income obtained by Spanish entities from the transfer of ownership interests in companies,whether resident or non-resident.

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Inversion Rules Lawsuit Shows Need for Tax Overhaul: Brady

by Alison Bennett
Houseways and Means Committee Chairman Kevin Brady (R-Texas) said a new lawsuit against IRS anti-inversion rules shows they hurt companiesÔøΩand demonstrates the need for the tax overhaul Republicans plan to keep pushing.
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What Goes Around Comes Around: Proposed Regulations Treating U.S. Disregarded Entities as Corporations

by Edward Tanenbaum
Edward Tanenbaum of Alston & Birdwrites proposed rules (REG-127199-15) thatwould treat foreign-owned U.S. disregarded entities as corporations for information reporting purposes are an extension of the anti-tax evasion efforts countries have initiated in thewake of the Foreign Account Tax Compliance Act. Among other factors, Tanenbaum says, the rules are "prompted by the need to clean up the U.S.'s reputation as a tax haven."
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Economic Analysis: Difficulties With the House GOP's Business Cash Flow Tax

by Martin A. Sullivan
In economic analysis, Martin A. Sullivan explainswhy a business cash flow tax doesn't prevent all profit shifting and base erosion.
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News Analysis: The FTT -- Revenue Raiser or Social Policy Tool?

byMindy Herzfeld
Mindy Herzfeld outlines global proposals for a financial transaction tax and the arguments for and against the tax, concluding that itwill be difficult to design a good FTT that could be a social policy tool.
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The Poison Pill of BEPS: M&A and Intercompany Financing Transactions

by Jenswittendorff
Jenswittendorff examines the OECD's new transfer pricing rules on risk allocation and the potential consequences if the risk is reallocated from the creditor to another group company.
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Business groups sue IRS over offshore tax rules

by Naomi Jagoda
The U.S. Chamber of Commerce and the Texas Association of Business on Thursday filed a lawsuit challenging Treasury Department and Internal Revenue Service (IRS) rules aimed at curbing offshore tax deals.
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International Tax News - Edition 42

  • By PwC

by PwC

International Tax News is designed to help multinational organisations keep upwith the constant flow of international tax developmentsworldwide. Among the topics featured in this month's edition are:

  • Poland's draft bills to amend the CIT and PIT laws
  • China's newworking guidelines for the administration and assessment of High and New Technology Enterprises (HNTEs)
  • The new Brazilian CFC rules
  • Retroactive changes to triangular brand rules in the US-Luxembourg treaty
To read more go here

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U.S. Chamber of Commerce Files Suit Challenging Inversion Regs

by Andrew Velarde
The U.S. Chamber of Commerce and the Texas Association of Business filed suit against the IRS and Treasury over their inversion regulations August 4, on the grounds that they violate the Administrative Procedure Act.
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Pfizer Split Not a Quick Tax Fix, Says CEO

by Amanda Anthanaiou
A long-deliberated separation of Pfizer Inc.'s innovative and established products businesses is not a quick route to improving the company's tax situation under present tax law, according to company CEO Ian Read.
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India Unveils Road Map for Epic Tax Overhaul by April 2017

byPradhan, Bidhudayya, Iain Marlow & Madhur Singh
Indian lawmakers took a decade to agree on the nation's biggest tax overhaul in modern history, and Prime Minister Narendra Modi now is racing to put it into place in less than eight months.
"We are going to try to make it reasonably as quick as possible," Finance Minister Arun Jaitley told reporters in New Delhi Aug. 4. "It is always good to set stiff targets and try to meet them, rather than have no targets at all."
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India Passes Landmark Tax Reform in Modis Biggest Win Yet

India's upper house of parliament onwednesday unanimously approved the creation of a national sales tax a decade after the movewas first proposed, the biggest legislative victory for Prime Minister Narendra Modi since he took office in 2014.

The constitutional amendment, one of India's most significant reforms since the 1990s, now has to be endorsed by the Modi-controlled lower house and then ratified by at least half of all states, a process projected to be concluded before the year ends.

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Reform Corporate Taxes; Don't Stop Corporate Inversions

bywaynewinegarden
In this article,winegarden argues that the economic consequences from corporate inversions arewidely misunderstood andwhile not optimal are growth-enhancing, given the costs imposed by the U.S. corporate income tax system.winegarden also discusses how the positive economic benefits from corporate inversions can be understood only by examining the negative consequences of the U.S. corporate income tax code.
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Q&A: What's the Big Deal About India Goods and Services Tax?

by Unni Krishnan
India's decade-longwait for a national sales tax thatwill create one of theworld's biggest single markets is nearly over.
On Aug. 3, lawmakers in the upper house of parliament approved a constitutional amendment to enable the goods-and-services tax, known as GST (see related story in this issue).
Once fully implemented, the taxwill go a longway toward fulfilling Prime Minister Narendra Modi's pledge to make it easier to do business in theworld's fastest-growing economy.
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In a Victory for Modi, India Overhauls Its Tangled Tax System

by Ellen Barry & Hari Kumar
Lawmakers cleared theway onwednesday for India to forge a single economic zone from its thicket of overlapping federal and state taxes, the most important economic measure since India opened its markets in 1991.
Potentially one of the most dynamic economies in the developingworld, India is hampered by a bewildering array of state-by-state tax codes that discourage doing business across state borders.
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India Tax-Overhaul Bill Moves Forward

by Raymond Zhong
After more than a year of gridlock, the upper house of India's Parliament approved a contentious overhaul of the convoluted tax system, an important step in Prime Minister Narendra Modi's campaign to modernize Asia's third-biggest economy.
Lawmakers votedwednesday to replace India's jumble of federal, state and interstate sales taxeswith a nationwide goods-and-services tax, or GST.
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Cash Pooling Exception Underway for Treasury Debt-Equity Rules

by Alison Bennett
The government isworking to carve out "appropriate" cash pooling arrangements in final earnings-stripping rules, a senior Treasury Department official saidÔøΩa move hundreds of multinational companies are carefullywatching.
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Debt-Equity Loan Recast Rule Shaped by Complexity: Treasury

by Alison Bennett
The Treasury Department's decision to call for automatic loan recasts under controversial earnings-stripping ruleswas made in the face of shrinking IRS resources and tough options, a top agency official said.
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No Definitive Time Frame for Debt-Equity Rule Finalization

by Andrew Velarde
The finalization of the debt-equity regs remains a priority for Treasury, but the agency has not set a deadline for completion, a senior Treasury official said August 2.
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Segmented Foreign-Owned Corporate Record Maintenance

by Robert Feinschreiber & Margaret Kent
In this article, Feinschreiber and Kent discuss potential conflicts among the reporting requirements in Treasury regulations and those in action 13 of the OECD's base erosion and profit-shifting project, and explain how those conflicting requirements could create obstacles for a foreign-owned U.S. business, especially if it is a segmented enterprise.
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Opinion Backs EU Commission in Crucial State Aid' Tax Cases

Bloomberg

by Joe Kirwin
The European Union's high-profile state aid tax cases involving companies such as Apple, Amazon and Starbucks received a boostwhen the EU's top legal adviser insisted the tax breaks are "selective" and therefore illegal, even if they are available to other companies.
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OECD: Countries' Risks Should Dictate Approach to Interest

Bloomberg

by Ricky Mitchell
The OECD is seeking comments on a new discussion draft addressing an outstanding question from the international project to fight corporate tax avoidance: how to treat interest in the banking and insurance sectors.
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EU harmonises VAT rules on vouchers

On June 27 2016, the European Union Council adopted the Voucher Directive,which is aimed at clarifying and harmonising the relevant VAT rules. The directivewill apply from January 1 2019.

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With U.K. Out, Renewed Push for Common EU Tax Base

by Alex M. Parker
The U.K.'s surprising vote to disconnectwith the European Union has given some hope that the body's 15-year project to harmonize its tax rules and implement a formulary tax systemwill get a shot in the arm.
It still has a longway to go.
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Economic Analysis: Conservatives Challenging Long-Standing Tax Orthodoxy

by Martin A. Sullivan
In economic analysis, Martin A. Sullivan looks at how conservative tax policy is evolving in the United States and United Kingdom in response to rising economic populism.
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U.S. Tax Review (1) (1)

by James P. Fuller
In this article, the author discusses recent U.S. international tax developments, including the IRS's final regulations requiring CbC reporting, ECOFIN's agreement on the EU anti-tax avoidance directive, Brexit, and the OECD's recent discussion draft on profit splits.
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Ireland clarifies VAT exemption for fund management

by Joe Stanley-Smith
Companies receive clarity on the Irish VAT treatment for the management of special investment funds following the ECJ judgment in GfBk.
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News Analysis: Change in Chengdu: The G-20's New Tax Pillar

by Stephanie Soong Johnston
Transformation and the pursuit of successwere the underlying themes during the high-level G-20 tax policy symposium in Chengdu, China, as finance ministers and treasury officials discussedways inwhich they can use and have used tax policy to promote more inclusive, innovation-driven growth, aswell as greater tax certainty.
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OECD and EU to Align Listing Criteria, Tax Chief Says

by Stephanie Soong Johnston
The OECD and the European Commission are meeting regularly andworking closely together to ensure their respective criteria for identifying and listing noncooperative jurisdictions are not contradictory, the OECD's tax chief said.
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News Analysis: Your Summer Reading: Subpart F Treatment of Inbound Loans

by Lee A. Sheppard
In news analysis, Lee A. Sheppard analyzes a recent discussion of section 956 issues involving inbound loans.
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Financial Transactions Tax Idea Creates Buzz Among Democrats

by Kaustuv Basu & Aaron E. Lorenzo
A confluence of factors in this presidential election cycle is focusing attention on a financial transactions tax andwhat it can achieve.
And it goes beyond the Bernie effect.
Although presidential candidate Bernie Sanders has talked about a broad FTT, there is also a need for new funding sources to get to a revenue-neutral tax overhaulwhile there is tentative movement on such a tax in the European Union.
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Status Changes of Corporations Owning PFIC Shares

by Kimberly S. Blanchard
Kimberly S. Blanchard ofweil, Gotshal & Manges looks at issues raised by the IRS's proposed changes to the "next day rule" and related consolidated return regulationswhere a target corporation owns shares in a passive foreign investment company.
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News Analysis: Will the OECD's 'Pragmatic Fudge' Save Transfer Pricing?

by Mindy Herzfeld
The July 19-21 transfer pricing symposium organized by the National Association for Business Economics (NABE) left the impression that the changes to the OECD transfer pricing guidelines as part of the base erosion and profit-shifting project have not solved the problems theywere intended to, but instead left the field in a state of confusion.
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Tax fraud: 75% of Europeans want EU to do more to fight it

  • By European News Parliament
byEuropean News Parliament
Only death and taxes are certain in life - as the cliché goes - but that doesn't mean you have to like either. In the case of taxes, it's madeworse by not everyone paying their fair share. According to the latest Eurobarometer survey commissioned by the European Parliament, 75% of all Europeans believe the EU should do more to fight tax fraud.
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OECD Looks at BEPS Effect on Interest in Banking, Insurance

by Alexander Lewis
The OECD on July 28 issued a discussion draft regarding potential approaches -- including the application of modified fixed ratio and group ratio rules under action 4 of the base erosion and profit-shifting project --to address the potential impact of BEPS on interest in the banking and insurance sectors.
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A financial transaction tax would help ensure Wall Street works for Main Street

by Josh Bivens & Hunter Blair
What this report finds: Awell-designed financial transaction tax (FTT)ÔøΩa small levy placed on the sale of stocks, bonds, derivatives, and other investmentsÔøΩwould be an efficient and progressiveway to generate tax revenues.
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