Int'l Tax News

This article handles the timely and urgent challenge of international corporate tax avoidance that fills the headlines of leading newspapers, monopolizes political debates between presidential candidates and influences the life of every Americanwho is losing more than 100 Billion U.S. dollars in tax revenues annually,while demanding fair taxation of citizens and multinationals.

The author calls upon Congress to enact a new Internal Revenue Code provision that requires a minimum global effective corporate tax rate. According to his proposal, if the global effective corporate tax rate (of any U.S. multinational and its controlled foreign corporations) falls below 15%, the U.S. Corporationwill be required to close the gap and pay the Internal Revenue Service up to the 15% minimum tax on its global profits as an interim liability.
For the paper, go here.

As more American companies look to flee an uncompetitive tax code, there's fairlywidespread agreement among the political class that something must be done. Somewant complicated new rules to prevent companies from leaving, but most seem to realize that addressing tax code fundamentals is the preferable approach. Lowering rates, closing loopholes, and moving to a territorial system are all rightly on the table. Yet if reformers truly hope to prepare the tax code for modern challenges, they must also include strong protections against the overreach of international tax collectors.
For the Inside Sources article, go here.

Lastweek, criticism of the patent box came from both Europe and the United States.
For the Tax Foundation blog post, go here.

Monique van Herksen, Paul Mulvihill, Justin Liebenberg and Vikita Shah look at how BEPS recommendations affect tax controversy and dispute resolution.

For the ITR story, go here.

European lawmakerson Tuesdaygrilled multinationals, includingAlphabet Inc.'sGoogle,Apple Inc. andMcDonald's Corp., on theirtaxstructures in Europe, raising political pressure on the firms as governments across the bloc attempt towring out more corporatetaxrevenue.
For the Irish Examiner story, go here.

The OECDwill issue standards in 2017 forwhen and how to apply profit-split methods for transfer pricing valuation, and in the meantime, tax authorities shouldn't treat the 2014 discussion draft on profit splits as authoritative guidance, according to Melinda Brown, OECD transfer pricing adviser.
For the TNT story, go here. (subscription required)

Some criticisms of the OECD's new guidance on risk and intangibles in transfer pricing fail to consider the big picture, according to Michael McDonald, financial economist (business and international taxation)with Treasury's Office of Tax Analysis.
For the TNT story, go here. (subscription required)

Houseways and Means Committee Chair Kevin Brady, R-Texas, said March 15 that his committee has been taking a "deeper dive" into pieces of a corporate integration draft that Senate Finance Committee Chair Orrin G. Hatch, R-Utah, has sharedwith him and his staff.
For the TNT story, go here. (subscription required)

The OECD's new transfer pricing guidance should be interpreted holistically given its rich, interrelated "tapestry," a U.S. Treasury official said.
The guidance is "really a good faith effort by the OECD and G-20 countries to address" erosion of the tax base "within the arm's-length principle," Michael McDonald, a financial economistwith Treasury's Office of Tax Analysis, said March 15.
For the DTR story, go here. (subscription required)

House Speaker Paul Ryan says that Republicans subscribe "to the same school of thought that Ireland does,which iswe believe in the tax competition school of thought,which iswe need to make our tax code more competitive and more hospitable to capital".
For the Irish Times story, go here.

The notion of creating a new tax preference for income derived from intellectual property has received a lot of attention in the tax policy community.
For the Treasury release, go here.

Increasing the research credit is a betterway to encourage innovation than taxing income from intellectual property at a preferential rate, according to Jason Furman, chair of the Council of Economic Advisers.
For the TNT story, go here. (subscription required)

James Tobin of Ernst & Young looks at the OECD recommendations in its final base erosion and profit shifting report on hybrid mismatch arrangements.
For the BNA Insight, go here. (subscription required)

Ireland is already applying the OECD's final recommendations on aligning transfer pricing outcomeswith value creationÔøΩcontained in the final reports under Actions 8, 9 and 10 of its Action Plan on Base Erosion and Profit ShiftingÔøΩto international transactions, an Irish Tax and Customs official said.

For the DTR story, go here. (subscription required)

The Australian Taxation Office is examining 300 multinational companies to see if they are subject to the nation's new multinational anti-avoidance law (MAAL), a Treasury official said.

For the DTR story, go here. (subscription required)

The U.S. shouldn't cut taxes on intellectual property income through a "patent box," or innovation box, according to a topwhite House officialÔøΩbut a number of academics disagree.

For the DTR story, go here. (subscription required)

Democratic senators have offered two bills thisweek designed to crack down on companies moving their headquarters overseas to lower their taxes.
For The Hill story, go here.

EY Mexico analyse income tax considerations related to the foreign exchange effect of the Mexican Peso versus the US Dollar, looking at non-monetary assets, deferred taxes and the impact in the effective tax rate under US-GAAP, IFRS or Mexican Financial Reporting Standards.
For the ITR story, go here.

If a partner that the United States shares country-by-country reporting datawith decides to make those CbC reports public, the U.S.would have the right to stop its exchangeswith that partner, Robert Stack, U.S. Treasury deputy assistant secretary (international tax affairs), said.
For thewWTD story, go here. (subscription required)

Although many countries have implemented a patent box or provide special tax treatment for research and development and intellectual property income, the ideal policy for the United States is less clear, Republican staff of the Joint Economic Committee said in a March 10 release.
For the release, go here.

While the base erosion and profit-shifting projectwas a difficult process thatwill have an "enormous impact" globally, tax policymakers must be careful not to let politics take policy in destabilizing directions as countries move into the post-BEPS implementation phase, Robert Stack, Treasury deputy assistant secretary (international tax affairs), said March 10.
For the TNT story, go here. (subscription required)

The National Foreign Trade Council urged the IRS to consider accepting country-by-country reports during the 2016 so-called gap year, despite the agency's insistence that it isn't technically capable of starting the reporting system in time.

For the DTR story, go here. (subscription required)

Ireland is committed to implementing the final reports under the OECD's Action Plan on Base Erosion and Profit ShiftingÔøΩits international project to combat tax avoidance, a Department of Finance official said.

For the DTR story, go here. (subscription required)

In another move to discourage U.S. companies from redomiciling abroad, a top Senate taxwriter March 10 reintroduced legislation thatwould limit an inverted company's ability to strip its future domestic earnings.
For the TNT story, go here. (subscription required)

While the European Union has resumed efforts to create a common system for calculating the tax base of businesses operating in the EU, the European Commission doesn't plan to harmonize corporate tax rates across member states, an officialwith the commission's Directorate-General for Taxation and Customs Union said.

For the DTR story, go here. (subscription required)

Final UK regulations mandate UK-parented multinational entities (MNEs)with annual consolidated group revenue of ÔøΩ750 million or more to complywith new transfer pricing and transparency requirements,with the first country-by-country report (CBCR) due for fiscal years beginning on or after January 1, 2016. In certain circumstances, UK group entities (other than UK-parented MNEs) also may be obliged to file CBCRs.

For the PwC Insight, gohere

The introduction of tax measures such as so-called knowledge or patent boxes are not a goodway to foster the creation of intellectual property (IP), a leading global tax expert haswarned.
The head of the Paris-based OECD's centre for tax policy, Pascal Saint-Amans, told a conference organised by the Irish Tax Institute in Dublin on Thursday that such measures did little to incentivise companies.
For the Irish Times story, go here.

Conflicting court decisions and IRS notices in the past 15 years aboutwhether over-the-counter foreign currency options and swaps are foreign currency contracts under the mark-to-market provisions of the tax code give taxpayers the latitude to take the position that best suits them.

For the DTR story, go here. (subscription required)

A recent Sixth Circuit opinion inwhich the court looked past years of prior guidance in determining that over-the-counter (OTC) foreign currency options are subject to mark-to-market under section 1256, an issue affecting mostly hedge fund partners,was the subject of a March 9 debate overwhether it represents good law or a mistake by the court.
For the TNT story, go here. (subscription required)

The IRS told its agents to carefully scrutinize both how foreign corporations treat payments of fixed, determinable, annual or periodical (FDAP) income and how nonresident aliens claim deductions on income from a U.S. trade or business.
The guidance came in the form of two new international practice units released March 9 by the Large Business and International Division.

For the DTR story, go here. (subscription required)

Democrats have corporate inversions in their sights again.
Soon-to-be introduced legislation, if enacted,would establish an exit tax and the Treasury Department may soon release new anti-inversion regulations.

For the DTR story, go here. (subscription required)

The number of taxpayers seeking dealswith the IRS to lock in their transfer pricing jumped nearly 70 percent in 2015, according to an agency official,who attributed some of the increase to concerns about changes in international tax rules.

For the DTR story, go here. (subscription required)

Steven Hannes of McDermottwill & Emery looks at proposals in the OECD's base erosion and profit shifting report on transfer pricing and value creation, and how those proposals interactwith U.S. treaties and rules under tax code Section 482. Treasury and the IRS face a difficult situation if they try to adopt the type of prescriptive guidance proposed for intangibles pricing, hewrites, as "they run the significant risk of having a court invalidate the regulations as being inconsistentwith the arm's-length standard or for other (e.g., Procedure Act) reasons."

For the BNA Insight, go here. (subscription required)

The IRSwon't be able to accept optional country-by-country report filings in 2016 to help smooth over so-called gap year issues, according to U.S. officials.
For the DTR story, go here. (subscription required)

Global tax rules are changing, and changing rapidly. The final reports on the BEPS Action Plan have been released by the OECD and endorsed by the G20. These reports on the 15 BEPS Action Points recommend significant changes in international tax laws and treaties.

This guidewill provide readerswith practical guidance on how to handle the implications of BEPS.
For the ITR guide, go here.

The Treasury Department is reviewingwhether an obscure 1934 law allows the U.S. to retaliate against the European Union for the European Commission state aid investigations into U.S. companies, a Treasury official said in a letter to Congress.
For the DTR story, go here. (subscription required)

European Union member states reached a tentative "political agreement" thatwill require multinational companies and their subsidiaries doing business in the bloc to file extensive country-by-country tax reports to tax authorities thatwill enhance scrutiny of transfer pricing arrangements and ensure taxes are paid in the countrywhere profits are earned.
For the DTR story, go here. (subscription required)

Administrative guidance from the Treasury Department has helped slow the pace of corporate inversions, but Congress needs to act legislatively if the strategy is to be removed from the arsenal of tax avoidance, Treasury Secretary Jacob Lew told a Senate Appropriations subcommittee March 8.
For the TNT story, go here. (subscription required)

The EU Economic and Financial Affairs Council reached an agreement March 8 on the automatic exchange of country-by-country reports by tax authorities.
For thewWTD story, go here. (subscription required)

Well-known multinational enterprises and tax haven jurisdictionswill be meetingwith the European Parliament's special committee on tax rulings (TAXE II committee) to discuss their tax arrangements on March 14 and 15.
For thewWTD story, go here. (subscription required)

The Indian Finance Minister on February 29, 2016, presented the 2016 budget, the third budget released by the current government. The budget proposals continue to focus on development, improving the ability to conduct business in India, and attracting foreign investment.

Among the proposed amendments in the budget are: a reduction in domestic corporate tax rates for certain taxpayers, incentives for new start-up companies, the introduction of a patent box regime, requirements for country-by-country reporting (CbCR), and a new equalization levy in linewith the OECD's base erosion and profit shifting (BEPS) initiatives.

For the PwC Insight, gohere.

European Unionfinance ministers agreedon Tuesdayto new rules underwhich their countrieswill exchange information on thetaxaffairs of multinationals, a move aimed at ensuring that big companies pay their fair share into government budgets.
For the New York Times story, go here.

The revised US tax treaty model,which is the baseline text used by the US for treaty negotiations, places special consideration on bilateral treaties, aswell as adding a number of benefits for cross-border transactions.
For the ITR story, go here.

Luxembourg's long-awaited tax reform contains a staggered three percentage point corporate tax cut, but lobbyists stillwant a further drop to increase the country's competitiveness.
For the ITR story, go here.

In this article, Osborn and Khripounova examinewhy implementation of the OECD's base erosion and profit-shifting projectwill likely make bilateral advance pricing agreements more attractive than ever to multinational enterprises.
For the Tax Notes viewpoint, go here.(subscription required)

The US "fully expects" to have finalised its country-by-country reporting (CbCR) rules by June 30, according to Robert Stack, Treasury deputy assistant secretary for international tax affairs.
For the ITR story, go here.

Several politicians are looking forways to punish companies considering a specific corporate restructuring known as a corporate inversion (a type of acquisitionwhere a U.S. company purchases a foreign owned company and registers the new entity outside of the U.S.). Hillary Clinton's ill-conceived "exit tax" exemplifies the types of harmful policies that are being proposed.
But,whywould a company consider such a restructuring? The answer: the uncompetitive U.S. corporate income tax code.
For the Forbes article, go here.

The Treasury Department is reviewing an Internal Revenue Code provision that allows it to impose a double rate of tax on citizens and corporations of foreign countries engaging in discriminatory tax practices as it considers its response to recent European Commission state aid rulings.
For the TNT story, go here. (subscription required)