Int'l Tax News

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Business Coalition Presses Treasury Not to Rush New Rules

Treasury should be persuaded to delay the effective date of proposed regulations thatwould allow the IRS to recharacterize debt as equity because theywould increase costs and create uncertainty for businesses, a coalition of business organizations said in a June 14 letter to the leaders of the Houseways and Means and Senate Finance committees.
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OECD Tax Chief Urges U.K. Support for Tax, Profit Reporting

Bloomberg

by Ali Quassim
The OECD's top tax officialwarned the U.K. against rushing to making beneficial ownership registries available to the public, stressing the need first to ensure the successful implementation of country-by-country reporting and automatic exchange of information.
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Treasury Centers Presumed Guilty Under Proposed Debt-Equity Regs

by Garner G. Prillaman, Michael Mou and Aziza Yuldasheva (Tax Notes)
In this article, the authors argue that the proposed debt-equity regulations under section 385 should be modified to exclude routine cash pooling and related transactions that are not motivated by federal income tax considerations.
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Treasury Could Delay Earnings-Stripping Rules to Year's End (1)

Bloomberg

by Kaustuv Basu, Alison Bennett and Laura Davison
The Treasury Department may release controversial final regulations preventing U.S. multinationals from earnings stripping as late as December, as pressure mounts from lawmakers and industry groups for changes to the rules.
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GAAR comes into force in Poland

International Tax Review

Poland has approved a general anti-avoidance rule (GAAR)which may be used retroactivelywith regard to undertakings or arrangements made before its introduction.
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Firms That Left U.S. Still Enjoy Perks

One companywas celebrated at a U.S. embassy. Some traveled theworldwith U.S. officials, promoting productswith the imprimatur of the American government despite moving their legal headquarters outside the U.S. and cutting their taxes. Still others continue to receive U.S. government contracts.

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Tax officials preview coming OECD guidance on profit splits, attribution of profits to PEs

by Julie Martin
Tax officials provided an update of international tax and transfer pricing guidance currently being developed at the OECD, includingwork on profit splits and on attribution of profits to permanent establishments (PEs), atwashington DC conference sponsored by the OECD, USCIB, and BIAC held June 6–7.
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Promoting tax certainty on the agenda of the next G20 presidency

  • By MNE Tax
by MNE Tax
The issue of taxcertaintywill be addressed by the G20when Germany takes up its presidency in 2017, said Martin Kreienbaum, the German Federal Ministry of Finance's Director General of International Taxation, at awashington DC conference sponsored by the OECD, USCIB, and BIAC held June 6–7.
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Disregarded Entity Regs Could Lead to Large Penalties, PwC Says

  • By PwC
by PwC
Global companies could face sizable penalties under rules requiring them to hand over information to the IRS if they are doing business in the U.S. through foreign owners of disregarded entities, previous hitPricewaterhouseCoopersnext hit LLP said in a new analysis.
For the DTR story, gohere. (subscription required)

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Active Financing Made Permanent, but Questions Remain

Paul J. Crispino is a principalwith Deloitte Tax LLP. In this report, Crispino discusses the history of the active financing exception of section 954(h) and some of the challenges in satisfying its provisions. He also suggestsways to modify the rules to accommodate modern business practices.

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Tax Analysts Exclusive: Conversations: Corwin Reflects on Debt-Equity Regs, His Time at IRS

In March Erik H. Corwin left the IRS,where he served as deputy chief counsel (technical) for over four years, to become a principal in KPMG LLP'swashington National Tax practice.

Corwin recently spokewith Tax Analysts' Amy S. Elliott about the requirements in the proposed section 385 debt-equity regulations (REG-108060-15 2016 TNT 65-11: IRS Proposed Regulations),why the proliferation of no-rules in the section 355 tax-free spinoff areawaswarranted, andwhether the IRS Office of Chief Counsel should have more autonomy.

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BEPS Takes Center Stage At US OECD Tax Conference

Hundreds of policymakers, business executives, and senior tax officials met at the OECD International Tax Conference to discuss the recommendations proposed under the base erosion and profit shifting (BEPS) project and their impact on trade and investment.

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Sanders joins Dems urging public country-by-country tax reporting for US multinationals

  • By MNE Tax

US Democratic presidential candidate Sen. Bernie Sanders (I-VT) and three Senate colleagues on June 8 urged the Obama administration to require public disclosure of country-by-country tax reports of large multinational companies.

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GAAR comes into force in Poland

  • By ITR
by ITR
Poland has approved a general anti-avoidance rule (GAAR)which may be used retroactivelywith regard to undertakings or arrangements made before its introduction.
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Taxation and responsible business conduct

The OECD hosted a global responsible business conduct forum following the release of the Guidelines for Multinational Enterprises,which recognised timely compliance in taxation as a key driver for a fairer international tax system.

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Australian Federal Budget: Proposals to impact foreign MNCs

  • By PwC
by PwC
The Australian 2016-17 Federal Budget (the Budget) released on May 3, 2016 proposes new measures relevant to multinational corporations (MNCs). In this Insight,we summarize the proposed Diverted Profits Tax (DPT) and anti-hybrid rules,which are expected to have a significant impact on many MNCs. In addition,we highlight the key features of the proposal to adopt revised OECD transfer pricing guidance and transparency measures, aswell as the Australian Taxation Office (ATO) tax taskforce focused on MNCs. The rumored further tightening of thin capitalization ruleswas not announced.
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Sanders joins Dems urging public country-by-country tax reporting for US multinationals (1)

  • By MNE Tax
by MNE Tax
US Democratic presidential candidate Sen. Bernie Sanders (I-VT) and three Senate colleagues on June 8 urged the Obama administration to require public disclosure of country-by-country tax reports of large multinational companies.
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Debt-Equity Regs Could Apply to Millions of Closely Held Corps

by Amy S. Elliott
The government is rethinking the bifurcation rule in the proposed debt-equity regulations,which currently applies to a modified expanded group and includes broad attribution rules, but one practitioner thinks that if the regs are changed as envisioned, millions of closely held corporations could be affected.
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Banks Should Quickly Weigh in on New International Rules: IRS

by John Herzfeld
Financial institutions concerned about their internationalwithholding and reporting requirements should submit comments quickly once a new draft agreement for qualified intermediaries comes out, an IRS attorney said.
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News Analysis: Should the OECD Take Over the Tax World?

by Mindy Herzfeld
Mindy Herzfeld discusses two recent international tax conferences -- sponsored by two very different groups -- and considerswhich groups have credibility to advance the cause of developing nations in setting future international tax policy.
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Offshore Captive Insurance Companies Under BEPS Attack

by Oscar Grisales-Racini
Oscar Grisales-Racini discusses the general legal and tax framework of captive insurance companies in the United States and United Kingdom in the limited context of the long-standing challenges against the industry, as exacerbated by the release of the OECD's final base erosion and profit-shifting reports.
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Lawmakers Looking to Dial Back Treasury Debt-Equity Rules

Lawmakers and industry groups are trying to slow down a proposed IRS regulation that grants the agency the ability to recast intercompany debt as equitywhile some consider a legal challenge.
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Senate Finance Democrats Working on Anti-Inversion Package

by Alex M. Parker
Democrats on the Senate Finance Committee areworking on a package of anti-inversion measures, according to a stafferwith the committee.
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U.S. Multinationals Hurt by Debt-Equity Rules, Businesses Say

by Alison Bennett
The Treasury Department's proposed earnings-stripping rules could do significant damage to U.S. multinationals, costing millions in compliance and snarling normal operations, business groups are telling the government.
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The OECD/G20 BEPS recommendations: boosting U.S. tax reform

Most American policymakers believe the U.S. corporate tax system needs reforming – and the facts back up their view This system is bad for domestic job creation, penalizes the entire U.S. economy, and needs to be fixed urgently.

Despitewidespread agreement about these deficiencies, the push for U.S. corporate tax reform has been all talk,with no action for 30 years. But now, a project that had caused much consternation in American tax policy circles may offer away forward for this vital effort.

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Debt-Equity Rules Could Include Brother-Sister Corporations

by Paul Stinson
Brother-sister corporations could be included in the definition of an expanded group under proposed earnings-stripping rules, an IRS official said.
The question is a significant one under the rules (REG-108060-15) intended to stop multinational companies from stripping income out of the U.S. via loans to subsidiaries.
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New IRS LB&I Campaigns Approved With More Under Evaluation

by Stephanie Soong Johnston
The transfer pricing practicewithin the IRS Large Business and International Division has an audit campaign underway focused on issues related to inbound distributors, and has approved two others,with more under evaluation.
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Inbound Distributors Target of IRS Transfer Pricing Campaign

by Alison Bennett
The IRS has launched a "campaign" targeting possible transfer pricing noncompliance by inbound distributors, an official saidÔøΩthe firstword on a specific campaign under a new structure for the Large Business and International Division.
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EU Official Conditionally Endorses OECD Guidelines

by Kevin A. Bell
The European Commission's preliminary notice on how itwill regulate state aid in transfer pricing cases constitutes a conditional endorsement of the OECD transfer pricing guidelines, a commission official said.
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Working Party 6 Expecting More PEs as a Result of BEPS

by Alexander Lewis
OECDworking Party 6 (WP6),which is focusing on profit attribution rules under the authorized OECD approach (AOA) to transfer pricing for permanent establishments, expects the OECD's base erosion and profit-shifting project to lead to more findings of PEs, according to Brian Jenn, attorney-adviser, Treasury Office of International Tax Counsel.
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Legislation on Discouraging Inversions Expected Soon

The Senate Finance Committee and the Joint Committee on Taxation areworking together onways to decrease incentives for corporate inversions, and expect to produce legislation later this summer.

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European Commission State Aid 'Mess' No Closer to Resolution

by Ryan Finley
Top officials from the U.S. Treasury Department and European Commission showed no signs of softening their stances inwhat Robert Stack, Treasury deputy assistant secretary (international tax affairs), described as the "extraordinary mess" caused by the commission's investigations into transfer-pricing-related tax rulings.
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Cross-Border Partnership Transfer Rules Liberalization Possible

by Andrew Velarde
Liberalization of previously released guidance on cross-border partnership transfers is possible in forthcoming regulations, an IRS official said June 9.
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Parliament calls for crackdown on corporate tax avoidance

  • By European Parliament News

The EU Commission proposal for an EU anti-tax avoidance directivewaswelcomed by Parliament in a resolution voted onwednesday. MEPs nonetheless advocated stricter limits on deductions for interest payments and tougher rules on foreign income. They also called for more transparency for trust funds and foundations, common rules for "patent box" tax reductions on intellectual property earnings, and an EU blacklist of tax havens and sanctions against uncooperative jurisdictions.

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Guiding Principles for Tax Reform

  • By Citizens for Tax Justice
by Citizens for Tax Justice
Tax reform should raise revenue, reduce income inequality by increasing taxes on high-income taxpayers, cut back on tax breaks for large corporations, and end the deferral of taxes on corporate income, Citizens for Tax Justice said in a June 8 report recommending principles for tax reform.
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Countries May Get Together on Company Financial Reports: IRS

by Alison Bennett
Countries couldwork together to figure out tax avoidance risks by putting the nation-specific tax and profits data multinational companies are reporting under the microscopeÔøΩbut that shouldn't be the only source of information they use, a senior IRS official said.
The question ofwhat is going to happen to this data is one of the big ones under the Organization for Economic Cooperation and Development's effort to combat tax base erosion and profit shifting.
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IRS Considering Extra Time to Amend Country Reports in 2016

by Alex M. Parker
The IRS is looking at giving taxpayers more time to amend their country-by-country reports filed in the first year of the new requirement, an official said.
The agency may allow an extra three-month periodÔøΩbetween Sept. 15 and Dec. 31, 2017ÔøΩfor companies that file under a voluntary option currently under consideration by the Internal Revenue Service and Treasury Department for tax years beginning on or after Jan. 1, 2016.
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IRS Creating New Age of Uncertainty, Tax Litigators Say

Recent transfer pricing cases in the U.S. Tax Court reveal a troubling pattern on the part of the IRS, practitioners say,with the agencywalking away from long-standing agreements on matters taxpayers thought had been settled.
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Transfer Pricing Enforcement Views Entire Landscape': IRS

The IRSwill look at a company'sworldwide situation in deciding on transfer pricing enforcement under a new agency structure, a senior agency official said.
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People Missed Point of BEPS Transfer Pricing Report, Bello Says

by Ryan Finley
Consistentwith the U.S. regulations, the message regarding intangibles in the OECD's base erosion and profit-shifting report on transfer pricing is that related parties must receive arm's-length compensation for their contributions to value, according to Christopher Bello, branch 6 chief, IRS Office of Associate Chief Counsel (International).
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LB&I's First Audit Campaigns to Be Announced Soon

by Amy S. Elliott
The first IRS Large Business and International Division audit campaigns should be announced "very shortly" andwill likely involve midmarket taxpayers, Rosemary Sereti, deputy commissioner at LB&I, said June 8 at the Texas Federal Tax Institute in San Antonio.
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India introduces new equalization levey on online advertising revenue

  • By PwC

PwC

The Indian government on February 29, 2016 introduced an equalization levy on online advertising revenue earned from India by non-resident e-commerce companies,which became effective on June 1, 2016.
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U.K. Treaty Conflict: Unintended (?) Consequences of the U.S. Debt-Equity Regulations

by Robert H. Dilworth
Robert H. Dilworth provides a summary of the provisions of the proposed section 385 regulations thatwould have the greatest impact on U.S. investment by U.K. companies and the ability of U.S. companies to make or maintain investments in the U.K.
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Country-by-Country Reporting May Help Resolve Tax Disputes

Bloomberg

by Alison Bennett
Country-by-country tax and profits reporting could help competent authoritieswork together to resolve cases faster through mutual agreement procedures, says Douglas O'Donnell, commissioner of the IRS Large Business and International Division.
As the number of MAP cases climbs, tax authorities should take advantage of all having the same information on multinational enterprises seeking case resolution, he said at the 2016 OECD International Tax Conference.
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Explosion' of Double-Tax Cases Growing, IRS Official Says

Taxing authorities around theworld are seeing "an explosion of double-tax cases" seeking resolution through mutual agreement proceduresÔøΩa trend that may be exacerbated by changes to transfer pricing guidelines under the OECD's project to curb base erosion and profit shifting, a senior IRS official said.
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CbC Regs on Schedule as Work on Optional Filing Continues

The Treasury Department isworking to resolve the "gap year" problem for U.S. multinationals through optional country-by-country (CbC) reporting for 2016, but a voluntary reporting mechanismwon't be in the final CbC regulations due by June 30, according to Robert Stack, Treasury deputy assistant secretary (international tax affairs).
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Mazur Still Aiming to Finalize Debt-Equity Regs This Year

by Amy S. Elliott
Treasury Assistant Secretary for Tax Policy Mark Mazur said June 2 that there haven't been any comments submitted so far thatwould persuade him against finalizing thesection 385debt or equity regulations swiftly as planned, despite the concerns of some that the tight timetable threatens the development of good tax policy.
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U.S. Seeking Certainty' in New Permanent Establishment Rules

by Alex M. Parker
The U.S. is hoping to see "more certainty" in how countries apply new OECD rules on the threshold to determine a permanent establishment before adopting it into the U.S. model treaty, a Treasury Department official said.
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Treasury Official Dismisses Hatch's Corporate Integration Idea

Bloomberg

Corporate integration doesn't seem to offer the right policy prescription to address cross-border tax problems, a Treasury Department official said.

President Barack Obama's administration has proposed shifting to more of a territorial tax system on foreign income,with a minimum tax. Meanwhile, Senate Finance Committee Chairman Orrin Hatch (R-Utah) is developing a dividend-deduction planwith awithholding tax to get rid of a double layer of tax on corporate income.
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No Discussion Draft Expected for OECD Multilateral Treaty Tool

by Alex M. Parker
The OECD likelywon't release a full discussion draft of the multilateral instrument currently being devised to implement its new measures to combat tax base erosion and profit shifting, an official from the organization said.
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