Int'l Tax News

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Private equity funds in Mexica: application for treaty benefits and concerns arising from BEPS Action 6

International Tax Review

by Alfredo Sanchez Torrado and Eduardo Garcia Ruiz
Alfredo Sánchez Torrado and Eduardo García Ruiz examine theway inwhich investments are currently structured in Mexico via private equity funds, the application of treaty benefits by them, aswell as how BEPS Action 6 may affect such application.
To read more go here Subscription Required

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Stack: Debt-Equity Regs Aren't a Very Complicated Sea Change

by Amy S. Elliott (Tax Notes)
While many in the tax bar may be interested in drawing attention to the trauma thatwould be caused by the section 385 debt or equity regulations, Robert Stack, Treasury deputy assistant secretary (international tax affairs),was quick to downplay the impact they'd have on multinationals if they're swiftly finalized.
To read more go here Subscription Required

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'Winning the Tax Wars': Mobilizing Public Revenue, Preventing Tax Evasion

by Christopher Colford (Theworld Bank)
"It is long overdue that Congress restore Subpart F to its original power and end the tax haven drain on our revenues," former Sen. Carl Levin said in May 23 remarks at theworld Bank regarding reducing tax avoidance and secrecy and international tax competition.
To read more go here

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Incentives Key in Developing Countries' Tax Reform Efforts, OEDC Official Says

Tax Analysts

by Alexander Lewis
In the fight against harmful tax competition, the number one issue for developing countries is tax incentives, said Grace Perez-Navarro, deputy director of the OECD's Centre for Tax Policy and Administration.
To read more go here Subscription Required

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Countering Base Erosion Is Impossible Within Current Framework, Panel Says

Tax Analysts

by Ryan Finley
The basic principles of the current international tax regime are fatally flawed and antiavoidance measures that fall short of a complete overhaul are doomed to fail, according to a panel of academics, reform advocates, and other experts.
To read more go here Subscription Required

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European Commission Explains Review of Tax Rulings

Tax Analysts

bywilliam Hoke
Afterweeks of defending itself against criticisms for state aid cases targeting rulings granted to U.S. multinationals, the European Commission has published a detailed paper explaining the criteria for determiningwhether benefits provided by a member state are in violation of EU law.
To read more go here Subscription Required

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Senators Continue to Argue Against EU State Aid Investigations

Tax Analysts

by Kat Lucero
A bipartisan group of Senate taxwriters urged the Treasury Department on May 23 to put pressure on the European Commission to keep it from issuing tax regulations thatwould single out U.S. multinational companies in ongoing state aid investigations.
To read more go here Subscription Required

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Debt-Equity Regs' Contemporaneous Documentation Rules in Context

Tax Analysts

by Amy S. Elliott
Are the documentation requirements in the proposedsection 385debt or equity regulations strict in comparison to those of other countries or do they only seem onerous because U.S. multinationals have historically been lax in achieving the gold standard of contemporaneous documentation?
To read more go here Subscription Required

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Hatch, Wyden: EU State Aid Probe Violates Rule of Law

  • By Alex M. Parker

Bloomberg

by Kevin A. Bell and Alex M. Parker
A bipartisan group of senators, including the chairman and ranking member of the Senate Finance Committee,wrote to the Treasury Department blasting recent European Union "state aid" investigations as violating the rule of law.
For the DTR story, gohere. (subscription required)

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EU Lays Down Law on Tax Deals as Apple Probe Continues

The European Union, locked in a tax battlewith the likes of Apple Inc. and McDonald's Corp., laid down the law in its bid to rein in governments thatwoo multinationalswith special deals allowing them to reduce their fiscal liability by booking profits abroad.
For DTR story, go here Subscription Required

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Boustany: I'll Be Ready With Innovation Box Proposal


Houseways and Means Committee member Charles Boustany Jr. (R-La.) said that although hewasn't happywith the innovation-box draft proposal he released last year, hewill be readywith a revamped plan if there is any Capitol Hill movement on international tax measures.
For the DTR story, go here. (subscription required)

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How the Proposed Section 385 Rules Would Affect Foreign Investment in U.S. Real Property

by John C. Dworkin
John C. Dworkin of John C. Dworkin P.C. looks at how the proposed regulations under Section 385would affect common ownership structures for foreign investment in U.S. real property that have no relation to "inversion" transactions. Dworkin explains how the ruleswould affect foreign operating companies, sovereignwealth funds and foreign family offices.
For the BNA Insight, go here. (subscription required)

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S Corporations: Give Us a Break Under Final Debt-Equity Rules

by Alison Bennett
Tax-favored S corporationswant a break under controversial earnings-stripping rules.
The rules (REG-108060-15) are meant to discourage companies from shifting profits offshore through loans to subsidiaries, but could have the unintended outcome ofwrecking companies' S corporation statusÔøΩan outcomewith dire tax consequences, the industry is telling Treasury.
For the DTR story, go here. (subscription required)

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IRS Guidance Tightens Inversions Rules Awaiting Tax Reform

by Helena Klumpp
Bloomberg BNA's Samuel P. Starr and Helena Klumppwrite thatwhile Congress ponders corporate tax reform, corporate inversion transactions have provided self-help opportunities for U.S. companies. They review the IRS's new anti-inversion rules (T.D. 9761) that target such transactions, aswell as post-inversion transactions that facilitated the removal of U.S. and offshore income from the U.S. tax net.
For the BNA Insight, go here. (subscription required)

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JCT Issues Report on Debt Benefits Over Stock Equity

by Aaron E. Lorenzo
For tax purposes, debt is better than stock equity for corporate capitalization for a number of reasons, according to a Joint Committee on Taxation report.
For the DTR story, gohere. (subscription required)

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News Analysis: Why the New Model Treaty?

by Lee A. Sheppard
Beforewe meditate aboutwho might actually sign the new U.S. model treaty 2016 TNT 32-29: Model Tax Treaties, let's look for a ray of hope in men's fashion.
For the Tax Notes article, go here. (subscription required)

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News Analysis: What's So Bad About BEPS?

The OECD's base erosion and profit-shifting project is based in large part on the premise that those practices are harmful because they deprive governments of needed revenues. Few have disputed this assumption, and even the corporate tax community has not defended base erosion practices.

Among the fewwho arewilling to challenge this basic assumption is Daniel Mitchell of the Cato Institute,whose blog defends international tax competition.

For the TNI article, gohere. (subscription required)

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TAXE II Committee Members Optimistic About EU Tax Base Harmonization

by Ryan Finley
The string of revelations and scandals that have made taxation a major political issue in Europe have provided an "incredible opportunity" for member states to reach consensus on a common consolidated corporate tax base, according to Alain Lamassoure, chair of the TAXE II Committee.
For thewWTD story, go here. (subscription required)

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Adobe Subsidiary Not a PE, Delhi High Court Rules

by Alexander Lewis
The Delhi High Court on May 16 ruled in Adobe Systems Inc. vs. ADIT that a U.S.-based software company's Indian subsidiary is not a permanent establishment under the India-U.S. income tax treaty.
For thewWTD story, go here Subscription Required

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India: Taxing digital transactions in India

by Rakesh Dharawat & Hariharan Gangadharan
The digital age has given rise to significant tax policy challenges in terms of nexus, characterisation of income and other consequential issues.
For the ITR story, go here.

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Asia Tax Forum 2016 - the full story

by Ralph Cunningham
Itwas difficult to escape the overhang of BEPS at International Tax Review's Asia Tax Forum in Singapore this year.
For the ITR story, go here.

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US group urges Congress to cut OECD funding, claims US harmed by BEPS international tax standards

  • By MNE Tax
by MNE Tax
Representatives about 20 US advocacy groups, in a May 12 letter, urged Congress to stop funding the OECD, arguing that itswork developingworldwide standards to tax multinational corporations is contrary to US interests.
For the MNE Tax News story, gohere.

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Is a U.S. Patent Box a Good Idea?

by Yair Holtzman

It may bewise to give favored tax treatment to intellectual property in exchange for keeping it domestic, evenwithout corporate tax reform.
For the CFO.com story, go here.

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Related-Party Debt Not a Rose: IRS Rules Could Make It Stock

by George R. Goodman & Raj Tanden
George R. Goodman and Raj Tanden of Foley & Lardner examine the operation of the IRS's proposed rules on the treatment of related-party debt and how theywould affect corporate groups. "These regulationswould complicate financial planning and increase tax compliance burdens and uncertainties for groupswith corporate members," the authorswrite.
For the BNA Insight, go here. (Subscription required)

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Endangered Species: The U.S.-Based Multinational

by Ken Brewer
In this article, Ken Brewer argues that politicians arewrong aboutwhat causes inversions andwrong about the cure. He offers suggestions for an effective solution.
For the Tax Notes viewpoint, go here. (subscription required)

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The Ineluctable Logic of Adopting an IP Box Tax Regime

by Ike Brannon
In this article, Ike Brannon argues that the adoption of an intellectual property box regime is an achievable corporate tax reform that could return investment and jobs to the United Stateswhile sacrificing relatively little tax revenue.
For the Tax Notes viewpoint, go here. (subscription required)

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Debt-Equity Rules Harmful, Overbroad, Tax Attorney Tells IRS

by Alison Bennett
The government's controversial debt-equity rules are bad news for taxpayers and spell immediate trouble for ordinary intercompany cash loans, a tax partner at a major law firm told the Internal Revenue Service.
For the DTR story, gohere. (subscription required)

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Fewer Shareholders Pay U.S. Taxes on Dividends

A new study showing that a shrinking fraction of shareholders of U.S. corporations pay taxes on dividends is bolstering a drive to revamp the corporate tax system.

The specter of double taxation,which animates complaints about today's U.S. corporate tax code, is receding, according to a new study from the Tax Policy Center.

For thewall Street Journal story, gohere.

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China targets multinationals that shift profits among countries

  • By EJ Insight

China is planning to require multinationals to disclose more detailed information about their overseas affiliates as part of an international effort against tax evasion.

The proposalwould make it more difficult for large companies to avoid taxes by shifting profits among different countries, thewall Street Journal reports, citing tax consultants.

For the EJI Insight story, gohere.

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Partnership Debt Subject to Earnings-Stripping Rules: Treasury

by Alison Bennett
The controversial new earnings-stripping rules are intended to apply to partnership debt, government officials said, but there is stillwork ahead to craft the contours of that application, including looking at how the debt-equity rules can be harmonizedwith the existing partnership tax regime.
For the DTR story, go here. (subscription required)

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Cash Pools May Get Documentation Break in Debt-Equity Rules

by Alison Bennett
Taxpayerswith common central financing arrangements known as cash pools might get a break on tough documentation requirements at the outset of those pools under controversial earnings-stripping rules, a Treasury official said.
For the DTR story, go here. (subscription required)

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Hong Kong's 16.5 Percent Rate Helps Region Attract U.S. IP

by Kevin A. Bell
Alongwith the region's 16.5 percent tax rate, recent global focus on so-called DEMPE transfer pricing functionsÔøΩthe development, enhancement, maintenance, protection and exploitation of intangiblesÔøΩbenefits Hong Kong as it seeks to attract U.S. group intellectual property.
For the DTR story, go here. (subscription required)

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Treasury Official: Model Treaty Guidance Due This Summer

by John Herzfeld
A technical explanation of aspects of the active-trade-or-business test in the U.S. Model Income Tax Treaty, originally due this spring, is now expected to come out by the end of the summer, a Treasury Department official said.
For the DTR story, go here. (subscription required)

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Study: Australian Corporate Tax Cut to Benefit U.S. Most

by Murray Griffin
Australia's proposal to cut the corporate tax ratewill benefit the U.S. government the most because of existing double taxation agreements thatwould boost U.S. tax revenues, according to a study by the Australia Institute.
For the DTR story, go here. (subscription required)

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Debt/Equity Regs May Encourage Foreign Buyout of U.S. Businesses

by Amy S. Elliott
The proposed related-party debt regulations risk creating noneconomic incentives for U.S. companies to become targets for leveraged buyouts, according to one practitioner May 17,with another calling the related provision in the reg package its "most revolutionary part."
For the TNT story, go here. (subscription required)

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New U.S. Model Treaty Evolved From Negotiations

by Lee A. Sheppard
Provisions in the new U.S. model tax treaty evolved from previous negotiations and the development of a limitation on benefits provision for the OECD's base erosion and profit-shifting project, according to Quyen Huynh, Treasury associate international tax counsel.
For the TNT story, gohere. (subscription required)

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Levin Introduces Bill to Target Hopscotch Lending, Decontrolling

by Kat Lucero
The House's top Democratic taxwriter continues to target inversion-related practiceswith new legislation thatwould further restrict a controlled foreign corporation's ability to bypass U.S. taxation using lending and stock ownership strategies.
For the TNT story, go here. (subscription required)

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Countries targeted US companies in BEPS project to increase tax revenue, US Treasury official charges

by Julie Martin
Countries participating in the OECD/G20 base erosion profit shifting (BEPS) project sought to rewrite international tax rules for the digital economy and for intellectual property to increase their tax take at the expense of the United States, said Robert Stack, Treasury deputy assistant secretary (International Tax Affairs), May 13, at a National Tax Association conference inwashington.
For the MNE News story, go here.

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New Model Treaty Seeks Factual Connection' for Activities

by Alex M. Parker
by Alex M. Parker
New language in the U.S. Model Income Tax Treaty seeks to establish a "factual connection" to activities in order to apply the active trade or business test, according to a Treasury Department official.
For the DTR story, gohere. (subscription required)

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Another (Critical) Look at the Inversion Excise Tax

by David I.walker
David I.walker argues that regardless ofwhat one thinks of inversions generally, section 4985 should be repealed or replacedwith a direct penalty on corporate inversions.
For the Tax Notes report, go here. (subscription required)

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Anti-Inversion, Anti-Expatriation, and the Abandonment of Principle

by James M. Maynor Jr.
James M. Maynor Jr. explains how recent U.S. anti-inversion and anti-expatriation legislation represents an abandonment of the benefit principle,which has consistently served as a bedrock of international taxation.
For the Tax Notes report, go here. (subscription required)

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Tax Chiefs Push Ahead With CbC and CRS Data Exchange System

by Stephanie Soong Johnston
The heads of 44 tax administrations have designed and agreed on the creation of a system thatwill enable them to effectively and efficiently share data gathered from the automatic exchange of financial account information under the common reporting standard (CRS) and from country-by-country (CbC) reports.
For thewWTD story, go here. (subscription required)

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Revised India and Mauritius treaty ends decade-long tax debate

by Amelia Schwanke
India and Mauritius have signed a protocol that amends certain measures in their Double Tax Agreement (DTA),whichwill help to prevent tax avoidance as part of the India Government's efforts to tackle BEPS.
For the ITR story, gohere.

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Integration of Corporate and Shareholder Taxes

by Michael J. Graetz & Alvin C.warren Jr.
Integration of the corporate and individual income taxes can be achieved by
providing shareholders a credit for corporate taxes paidwith respect to corporate
earnings distributed as dividends. Integrationwould provide a framework for addressing current concerns for tax incentives for U.S. companies to shift income to foreign affiliates in lower-taxedcountries or to expatriate in "inversion" transactions.
For the draft paper, gohere.

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CbC Reporting Remains Of Concern For US: Boustany

by Mike Godfrey
During a recent hearing on US tax reform, House of Representativesways and Means Tax Policy Subcommittee Chairman Charles Boustany (R – Louisiana) expressed his continuing concern regarding the operation of the proposed US Treasury regulations on country-by-country (CbC) reporting.
For the Tax-News story, go here.

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Integrating the Corporate and Individual Tax Systems: The Dividends Paid Deduction Considered

  • By United States Senate Committee on Finance

The Senate Finance Committee on May 17 held a hearing on corporate tax integration.


For the member andwitness statements from the hearing, go here.

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The Inadequacy Of BEPS To Fix What's Wrong With The Corporate Income Tax

by Robert Goulder
Conventionalwisdom tells us the OECD's base erosion and profit-shifting initiative is the most significant development in tax policy in decades. Not so, says Reuven Avi-Yonah, a law professor at the University of Michigan and one of the leading critical thinkers in global taxation.
For the Forbes article, gohere.

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Coalition For Tax Competition Letter Urges Congress to Defund the OECD, Oppose BEPS

  • By Center for Freedom and Prosperity
byCenter for Freedom and Prosperity
Despite receiving $74 million in U.S. funding in fiscal 2015, the OECD's final base erosion and profit-shifting project recommendations indicate the OECD has "targeted American corporations for a massive tax grab," the Coalition for Tax Competition said in a May 12 letter to Congress that recommends the United States should cut off its funding.
For the letter, go here.

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U.S. Using BEPS Project to Safeguard Tax Base, Stack Says

by Alexander Lewis
Since the OECD's base erosion and profit-shifting project began, the U.S. has changed its mandate from stamping out tax havens to guarding the tax base at home, according to Treasury Deputy Assistant Secretary Robert Stack.
For the TNT story, gohere. (subscription required)

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Lew Calls for Congress to Strengthen Tax Information Sharing

by Kat Lucero
The United States is among the global leaders in tax information sharing, but congressional action is needed to maintain that status, Treasury Secretary Jacob Lew said May 13.
For the TNT story, go here. (subscription required)

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