Int'l Tax News

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Swiss IP Structures Attractive to U.S. Tax Directors

by Kevin A. Bell
Switzerland, a sophisticated, mountainous nation of 8 million already attractive to U.S. tax directors seeking a European jurisdiction for their group intellectual property, is likely to maintain its competitive position in the post-BEPSworld.

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Republicans Raise Heat on Treasury's Debt-Equity Rules

by Kaustuv Basu
Seven Republican members of the Senate Finance Committee piled more pressure on the Treasury Departmentwith a letter asking it to slow down controversial debt-equity rules.
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OECD Discussion Draft Narrows Scope for Profit Splits

by Ryan Finley
Under the OECD's new draft guidance on the profit-split method, use of profit splitswould be confined to situations inwhich the parties share in the "economically significant risks," and theywould not be appropriate for entitieswith a level of operational integration typical for associated enterprises.
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EU Starbucks' Ruling: A New View of Arm's-Length Principle

by Alex M. Parker
A European Commission ruling against Starbucks and the Netherlands isn't intended to replace the tax administrations of European Union countries, but tax practitioners say that appears to bewhat the commission is doing.
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Why Does Subchapter C Address Foreign Corps?

by Jasper L. Cummings Jr.
In this article, Cummings discusses section 367 and asks Treasury: Just because a regulation is permitted under section 367, is it necessary or appropriate under that statute?
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India amends application date of General Anti-Avoidance Rule

International Tax Review

by Amelia Schwanke

Investors in India have been given room to breathe as the Central Board of Direct Taxes (CBDT) amends the effective date of the General Anti-Avoidance Rule (GAAR).

To read more go here

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Taxing vocabulary: a glossary of fiscal terms

  • By European Parliament News

Paying taxes can be complicated, but so can the vocabulary that goeswith it. Tax avoidance is legal, but tax evasion isn't and justwhat exactly is base erosion? As the Parliament's second special committee is having its final recommendations debated and voted on during thisweek's plenary,we take a closer look at the jargon. Read on for an explanation of the terms used.

To read more go here

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Tax Haven Route Won't Work for Post-Brexit UK, OECD Says

  • By Reuters

The United Kingdom is unlikely to try to lure international investment by becoming a tax haven after it leaves the European Union, according to an internal memo prepared by the body responsible for the drafting international tax rules.

To read more go here

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New Brazilian rules on ultimate benefiti

International Tax Review

The Brazilian Internal Revenue Service (IRS) has issued Normative Instruction (NI) No. 1.634with the purpose of updating the main regulatory provisions regarding the Corporate Taxpayer Registry (CNPJ).

To read more go here

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The Platform for Collaboration on Tax releases discussion draft on effective capacity building on tax matters in developing countries

  • By OECD

G20 Finance Ministers, in their communique of February 2016, called upon the IMF, OECD, UN andworld Bank Group to "recommend mechanisms to help ensure effective implementation of technical assistance programmes, and recommend how countries can contribute funding for tax projects and direct technical assistance, and report backwith recommendations" at their July meeting. The four organisations,working jointly as the members of the new Platform for Collaboration on Tax – drawing on their individual experiences in delivering technical advice and their interactionswith other TA providers, development partners, and especially country governments – have developed a series of recommendations and enabling actions in response to this request,which are laid out in this discussion draft.

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First meeting of the new inclusive framework to tackle Base Erosion and Profit Shifting marks a new era in international tax co-operation

  • By OECD

Representatives of more than 80 countries and jurisdictions have gathered in Kyoto, Japan to push forward ongoing efforts to update international tax rules for the 21st century, the latest step in the OECD/G20 Project to tackle Base Erosion and Profit Shifting (BEPS).

To read more go here

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No Loan Recasts in Debt-Equity Rules, D.C. Bar Group Urges

Bloomberg

by Alison Bennett
Pressure is building on the Treasury Department towithdraw language in its controversial earnings-strippings regulations allowing the IRS to recast entire loans as debt,with the D.C. Bar Association Taxation Section adding its voice to the outcry.
To read more go here Subscription Required

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Brexit Probably Won't Affect Taxes As Much As Everyone Fears

It is hard to overstate the magnitude of the shockwave emanating from the United Kingdom in thewake of voters' decision to exit the EU.The surprising victory of the Leave campaignwill almost certainly prompt introspection on the part of EU leaders and force the next U.K. prime minister to confront the serious possibility of a major recession and tangled trade policy.Where the Brexit vote might have a more subtle impact is on the U.K. tax regime.While the United Kingdom might gradually opt to diverge from the EU's VAT rules andwill be spared a potential state aid investigation, the effectswill be small and likelywon't be truly felt for years.

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Public review sought of BEPS Conforming Changes to Chapter IX of the OECD Transfer Pricing Guidelines

  • By OECD

Interested parties are invited to review the conforming changes to Chapter IX of the OECD Transfer Pricing Guidelines, "Transfer Pricing Aspects of Business Restructurings."

To read more go here

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Release of BEPS discussion drafts on attribution of profits to permanent establishments and revised guidance on profit splits

  • By OECD

Public comments are invited on the following discussion drafts:

  • Attribution of Profits to Permanent Establishments,which dealswithwork in relation to Action 7 ("Preventing the Artificial Avoidance of Permanent Establishment Status") of the BEPS Action Plan;
  • Revised Guidance on Profit Splits,which dealswithwork in relation to Actions 8-10 ("Assure that transfer pricing outcomes are in linewith value creation") of the BEPS Action Plan.

For the OECD release, go here.

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UK plans to cut 20% corporate tax rate (1)

Chancellor of the Exchequer George Osborne has said he plans to slash the UK's corporation tax rate to below 15% to attract businesses and investment post-Brexit.

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EU Anti-Avoidance Directive and Irish Holding Companies - Taxation of Dividends

  • By ITR

The hastily adopted EU Anti-Avoidance Directive ("Directive") requires European Union (EU) member states to introduce or amend their existing Controlled Foreign Companies ("CFC") legislation.

To read more go here

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U.S. Finalizes Country-By-Country Tax Reporting Rules -- Are Companies Ready To Comply?

by Joe Harpaz
The U.S. Treasury Department and IRS released final rules today thatwill require large U.S. multinational corporations to file annual reports containing detailed, country-by-country income tax filing information for each country inwhich they do business.
To read more go here

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News Analysis: What Would Happen Upon Brexit, Part 2

by Lee A. Sheppard
In news analysis, Lee A. Sheppard discusses potential financial regulations questions raised by the United Kingdom's exit from the European Union.
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Draft Democratic Plan Supports Action to Stop Inversions

by Kaustuv Basu
Democrats support a crackdown on corporate inversions and a financial transactions tax to lessen excessive speculation and high-frequency trading onwall Street, according to a party platform draft released in advance of the Democratic National Convention.
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New Business Voices Applauding Debt-Equity Rules

by Alison Bennett, Aaron E. Lorenzo & Kaustav Basu
Thousands of U.S. businesses and taxpayers are raising their voices to support the Treasury Department's controversial rules to stop companies from stripping income out of the U.S., in sharp contrast to the growing pressure from multinational corporations to drop the rules.
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Profit-Shifting Structures: Making Ethical Judgments Objectively, Part 2

by Jeffrey M. Kadey & David L. Koontz
This is a two-part report; Part 1 appeared in the June 27 issue of Tax Notes. In the first part, Kadet and Koontz set out an ethical benchmark that multinational corporations can use to objectively test the propriety of their profit-shifting structures. This second part suggests several steps that should be considered by multinational boards, professional tax advisers, Congress, Treasury, and the IRS to improve tax strategies, corporate governance, and the equitable collection of taxes.
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News Analysis: Wake Up and Smell the Coffee: State Aid Power Grab

by Ajay Gupta
On June 27 the European Commission released the nonconfidential version of the final decision of its formal investigation intowhether the advance tax rulings that the Netherlands issued to Starbucks constituted illegal state aid. From reading that decision, it is evident that the commissionwould like to have the final say onwhat constitutes the proper method for determining arm's-length transfer prices, usurping not just the authority of member states but also the influence of intergovernmental bodies like the OECD.
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U.S. Tax Review (1) (2)

by James P. Fuller
In this article, the author discusses recent U.S. international tax developments, including the Medtronic case, the EU state aid investigation, and the New York State Bar Association's comments regarding the proposed application of section 956 to partnership transactions.
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No Loan Recasts in Debt-Equity Rules, D.C. Bar Group Urges (1)

Bloomberg

Pressure is building on the Treasury Department towithdraw language in its controversial earnings-strippings regulations allowing the IRS to recast entire loans as debt,with the D.C. Bar Association Taxation Section adding its voice to the outcry.
To read more go here Subscription Required

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Public comments received for the discussion draft on the development of a multilateral instrument to implement the tax treaty related BEPS measures

  • By OECD

On 31 May 2016, public commentswere invited on technical issues identified in a request for input related to the development of a multilateral instrument to implement the tax-treaty related BEPS measures. The OECD is grateful for the input and now publishes a compilation of the comments received.

To read more go here

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Reclassification of Related-Party Corporate Debt:

Bloomberg

by Douglas Nakajima
Douglas Nakajima of Marcum LLP looks at the operation of the IRS proposed rules (REG-108060-15) thatwould allow related-party corporate debt to be reclassified as equity, alongwith implications and considerations for affected taxpayers if they are made final. Announced as part of the ongoing effort to curb corporate inversions, the authorwrites that the new rules "will have implications to the treatment of corporate interests in the targeted cross-border environment, but also in a number of purely domestic situations."
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3M's Challenge to Blocked Income Regulations Draws on Altera

by Ryan Finley (Tax Notes)
The IRS improperly disregarded a foreign law restricting related-party royalties because thesection 482regulations on recognition of foreign legal restrictions suffer from some of the same procedural defects as the regulation at issue inAltera, 3M said in its latest court filing in its transfer pricing disputewith the IRS.
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ECOFIN agrees EU-wide rules in Anti-Tax Avoidance Directive

  • By PwC
by PwC
The EU Member States, via ECOFIN, reached agreement on the Anti-Tax Avoidance Directive on 17 June. ATAD is part of the Anti-Tax Avoidance Package presented on 28 January 2016. The agreement requires Member States to enact laws that largely implement BEPS outcomes on interest limitation rules, hybrid mismatches and CFCs, plus additional measures on exit taxation and a general anti-abuse rule (GAAR). The switch-over clause to require a tax credit rather an exemption on certain incomewas dropped.
ATAD may have a bigger impact in some Member States than others (particularly those that don't currently have CFC rules for example). But most Member Stateswill have to make some changes to their existing tax regimes.
To read more go here

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OECD anti-tax avoidance efforts gain traction at Kyoto meeting

  • By Reuters
by Reuters
More than 80 countries and jurisdictions gathered in Kyoto on Thursday to push for global efforts to stop harmful corporate tax avoidance, the Organisation for Economic Cooperation and Development (OECD) said on Thursday.
To read more go here

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Sweden planning overhaul of VAT law

by Anjana Haines
Companies can look forward to simpler VAT rules as the government begins reviewing legislation.
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Will processes and procedures designed to address 'midnight rule-making' impact the proposed Section 385 regulations

  • By PwC
by PwC
The Proposed Section 385 Regulations, issued April 4, 2016, address the extent towhich an interest in a related corporation is treated as stock or debt. The IRS and Treasury plan to finalize these Regulations quickly, raising concerns because the new rules are complex, expansive, and very controversial. Could this be considered 'midnight rule-making,'where a federal agency issues important regulations in an Administration's final months? How might Congress or the next Administration respond?
To read more go here

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International Tax News - Edition 39, May 2016

  • 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:

  • The 2016 Canadian Federal Budget
  • The UK Budget and Finance Bill's new international and business tax measures
  • Portugal's 2016 State Budget Law
  • Improvements to China's administrative measures for high and new technology enterprises
To read more go here

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Brazil increases certain capital gains tax rates

  • By PwC

Brazil on March 16, 2016, converted Provisional Measure 692/2015 (PM 692) into Law No. 13,259/2016 (Law 13,259). The law amends the capital gains tax rates applicable to individuals and non-resident entities.

Multinational companies that own Brazilian entities should consider how these changes could affect their investments.

To read more go here

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Canada proposes country-by-country reporting it its 2016 federal budget

  • By PwC
On March 22, 2016, the Canadian federal government tabled its annual budget,which proposes implementing annual country-by-country (CbC) reporting for Canadian-parented multinationals (MNEs). This requirement is recommended in Action 13 of the base erosion and profit shifting (BEPS) initiative launched by the Organisation for Economic Co-operation and Development (OECD),which addresses transfer pricing documentation for MNEs.
To read more go here

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Rise in Robotics Requires New Tax Approach, EU Report Warns

by Linda A. Thompson
European lawmakerswarn that the growing use of robots and artificial intelligence may cause job losses across the continent, threatening to result in plummeting tax revenue if current tax frameworks aren't revised to account for the rise of the roboticworkforce.
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CbC Regs Finalized as OECD Issues Voluntary Filing Guidance

by Ryan Finley
On the same day Treasury and the IRS released final country-by-country reporting (CbC) regulations, the OECD issued guidance recommending that other countries accept for years beginning on January 1 reports filed voluntarily in the United States and in other countries that do not require reports.
To read more go here Subscription Required

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Country-by-Country Rules Final; More IRS Guidance to Come

by Kevin A. Bell
by Kevin A. Bell
Final rules on country-by-country reporting contain few changes from regulations proposed in December, but the IRS promises further guidance on a mechanism to allow voluntary filings for companies required to complywith both the U.S. rules and those in a foreign countrywith an earlier effective date.
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Reinsurance Group to Meet With Treasury on Debt-Equity Rules

by Alison Bennett
Insurance companies and reinsurerswould suffer a harsh burden and should be exempt from controversial new rules intended to combat earnings stripping, industry representatives are expected to tell the IRS and Treasury Department in a June 30 meeting.
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New OECD guidance on country-by-country reporting of multinational companies' tax and profits tackles thornytransition issues that arise when jurisdictions' reporting regimes have different effecti

by Rick Mitchell
New OECD guidance on country-by-country reporting of multinational companies' tax and profits tackles thorny "transition issues" that arisewhen jurisdictions' reporting regimes have different effective dates.
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Throw Out Loan Recasts Under Debt-Equity Rules: NYSBA Group

by Alison Bennett
The government shouldn't go forwardwith rules that allow entire loans to be recast as equity in an attempt to stop earnings stripping, the New York State Bar Association Tax Section said in nearly 200 pages of comments to the government.
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D.C. and New York Bars Submit Comments on Debt-Equity Regs

by Amy S. Elliott & Lee A. Sheppard
The District of Columbia Bar Taxation Section and the New York State Bar Association Tax Section both submitted comments on the proposed debt or equity regulations June 29, urging Treasury not to finalize the recast rules in prop. reg. section 1.385-3.
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U.K. Lawmakers Approve Corporation Tax Cut

by Andrew Goodall
The U.K.'s low corporation tax rate attracts jobs and investment, and itwould be a grave mistake to cancel a further cut to 17 percent planned for 2020, Financial Secretary to the Treasury David Gaukewarned members of Parliament before they approved the cut by a vote of 308 to 255.
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U.K. Tax Code Could Entice Companies

by Richard Rubin
While some companies consider moving operations from the United Kingdom after its expected exit from the European Union, the U.K. could use its tax code to entice businesses.
The U.K. outside the EUwould be liberated of the bloc's coordinated tax rules, giving the country an opportunity to cut taxes for companies, grant more financial aid to ailing firms and dangle breaks to attract corporations.
To read more go here

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Loss Symmetry for Start-Ups With an Anti-Inversion Chaser

by Patrick Driessen
In this article, Driessen suggests that the typical inversion script might be sidestepped by allowing new corporations to temporarily receive immediate cash payments from the U.S. government in lieu of carrying forward net operating losses -- an election of early refundability thatwould require companies to permit the Treasury secretary to veto any potential future inversion.
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Brexit: UK could legislate against application of ECJ case law

by Anjana Haines
The UK's exit from the EU means that case law from the European Court of Justice (ECJ) may cease to apply.
To read more go here

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IRS inversion rules face blowback

A regulatory effort by the Obama administration to crack down on tax deals is facing backlash from business groups and lawmakers on both sides of the aisle.
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CbC Measure Defeated by Narrow Margin in U.K. Parliament

by Andrew Goodall
Transparency advocates expressed optimism in the face of defeat after members of the U.K. Parliament defeated by just 22 votes a Finance Bill amendment calling for public country-by-country (CbC) reporting of large multinationals' profits and taxes.
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Ways & Means GOP to Treasury: Proposed Regulations Threaten Jobs & Economic Growth

by Jacob Lew (Committee onways and Means)
The Treasury Department exceeded its authority by issuing proposed debt-equity regulations under section 385 to clamp down on corporate inversions and earnings stripping, Republican members of the Houseways and Means Committee said in a June 28 letter to Treasury Secretary Jacob Lew.
To read more go here

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Article IV Consultation with the United States of America: Concluding Statement of the IMF Mission

  • By International Monetary Fund
by International Monetary Fund
A comprehensive reform of the U.S. tax system should aim to remove tax exemptions, simplify the system, rebalance from direct taxes to indirect taxes, and reduce statutory rates for individual and corporate income taxes, the IMF said in a June 22 release on the conclusion of the its Article IV consultation.
To read more go here

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